UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): September 13, 2017

 

Tremont Mortgage Trust

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

 

000-1708405

 

82-1719041

(State or Other Jurisdiction of
Incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

Two Newton Place,
255 Washington Street, Suite 300,
Newton, Massachusetts

 

02458-1634

(Address of Principal Executive Offices)

 

(Zip Code)

 

617-796-8317

(Registrant’s Telephone Number, including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2 below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

x    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

 

 

 



 

Item 1.01               Entry into a Material Definitive Agreement.

 

At a closing held on September 18, 2017 (the “ Closing ”), Tremont Mortgage Trust (the “ Company ”) completed the issuance and sale of 2,500,000 common shares of beneficial interest, par value $0.01 per share, of the Company (the “ Common Shares ”) in its initial public offering, at a price of $20.00 per Common Share, pursuant to an underwriting agreement (the “ Underwriting Agreement ”), described below, that the Company and its manager, Tremont Realty Advisors LLC (the “ Manager ”), entered into on September 13, 2017 with UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC, as representatives of the several underwriters of the offering named therein (the “ Underwriters ”).

 

The Common Shares issued and sold by the Company were offered pursuant to a registration statement on Form S-11 (Registration No. 333-219205) for the Company’s initial public offering (“ IPO ”) initially filed by the Company with the United States Securities and Exchange Commission (the “ Commission ”) on July 7, 2017, and which, as amended, was declared effective by the Commission on September 13, 2017 (such registration statement as amended, the “ Registration Statement ”). The prospectus (the “ Prospectus ”) for the IPO dated September 13, 2017 was filed with the Commission on September 15, 2017 pursuant to Rule 424(b)(4) promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”).

 

The Manager is a wholly-owned subsidiary of The RMR Group LLC (“ RMR LLC ”), which is the majority owned operating subsidiary of The RMR Group Inc., a holding company listed on The Nasdaq Stock Market LLC (“ Nasdaq ”) under the symbol “RMR” (“ RMR INC ”).  At the Closing, the Company entered into a management agreement (the “ Management Agreement ”) with the Manager, described below, and completed the issuance and sale of 600,000 Common Shares to the Manager pursuant to a private placement purchase agreement (the “ Private Placement Purchase Agreement ”), described below, entered into by the Company and the Manager on September 13, 2017.

 

Underwriting Agreement

 

In connection with the IPO, on September 13, 2017, the Company entered into the Underwriting Agreement providing for the issuance and sale by the Company, and purchase by the Underwriters, of 2,500,000 Common Shares at $20.00 per Common Share. The Underwriting Agreement also granted the Underwriters a 30-day option to purchase up to an additional 375,000 Common Shares on the same terms to cover overallotments, if any.

 

The Underwriting Agreement contains customary representations, warranties and agreements of the Company and the Manager, and customary conditions to closing, obligations of the parties and termination provisions.  The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act and to contribute to payments the Underwriters may be required to make because of any of those liabilities.  Under the Underwriting Agreement, the Manager agreed to pay 100% of the initial organizational costs related to the Company’s formation and the costs of the IPO, including the underwriting discounts and commissions.  Under the Underwriting Agreement, subject to certain exceptions, the Company may not, without the prior written approval of UBS Securities LLC, offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, Common

 

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Shares or securities convertible into or exchangeable or exercisable for Common Shares for a period of 180 days after the date of the Prospectus.  Among other things, pursuant to exceptions, the Company may issue Common Shares pursuant to the Company’s 2017 Equity Compensation Plan (the “ 2017 Plan ”), as described below.

 

The foregoing summary of the Underwriting Agreement is not complete and is qualified in its entirety by reference to the Underwriting Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 1.1 and incorporated in this Item 1.01 by reference.

 

Private Placement Purchase Agreement

 

On September 13, 2017, concurrently with the entry into the Underwriting Agreement, the Company entered into the Private Placement Purchase Agreement with the Manager providing for the issuance and sale to the Manager concurrently with the Closing of 600,000 Common Shares, at $20.00 per Common Share, the same price per Common Share as the initial public offering price in the IPO.  Pursuant to the Private Placement Purchase Agreement, the Manager also received demand and piggyback registration rights, subject to certain limitations, covering the Common Shares owned by it.

 

The foregoing summary of the Private Placement Purchase Agreement is not complete and is qualified in its entirety by reference to the Private Placement Purchase Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated in this Item 1.01 by reference.

 

Management Agreement

 

On September 18, 2017, at the Closing, the Company entered into the Management Agreement with the Manager, pursuant to which the Manager will implement the Company’s business strategies subject to the oversight of the Company’s board of trustees (the “ Board ”) and is responsible for the Company’s day to day operations and to perform (or cause to be performed) corporate office functions for the Company.

 

Term and Termination .  The initial term of the Management Agreement ends on December 31, 2020. The Management Agreement will automatically renew for successive one year terms beginning January 1, 2021 and each January 1 thereafter, unless it is sooner terminated upon written notice delivered no later than 180 days prior to a renewal date by the affirmative vote of at least two-thirds (2/3) of the Independent Trustees of the Company based upon a determination that (a) the Manager’s performance is unsatisfactory and materially detrimental to the Company or (b) the base management fee and incentive fee, taken as a whole, payable to the Manager under the Management Agreement are not fair to the Company (provided that in the instance of (b), the Manager will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). The Management Agreement may be terminated by the Manager before each annual renewal upon written notice delivered to the Board no later than 180 days prior to an annual renewal date.

 

The Company may also terminate the Management Agreement at any time, including during the initial term, without the payment of any termination fee, with at least 30 days’ prior

 

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written notice from the Company upon the occurrence of a “cause event,” as defined in the Management Agreement.

 

The Manager may terminate the Management Agreement if the Company becomes required to register as an investment company under the Investment Company Act of 1940, as amended, with such termination deemed to occur immediately before such event. In addition, the Manager may terminate the Management Agreement upon 60 days’ written notice for a material breach by the Company, as defined in the Management Agreement, which includes if the Company defaults in the performance or observance of any material term, condition or covenant contained in the Management Agreement, the consequence of which was materially adverse to the Manager and which did not result from and was not attributable to any action, or failure to act, of the Manager and the default continues for a period of 30 days after written notice to the Company requesting that the default be remedied within that period, the Company materially reduces the Manager’s duties and responsibilities or scope of its authority under the Management Agreement or the Company ceases or take steps to cease to conduct the business of originating or investing in commercial real estate loans.

 

Fees and Expense Reimbursements . Under the Management Agreement, the Company is responsible to pay the Manager the following:

 

·                   Base Management Fee .  The Company is required to pay the Manager an annual base management fee equal to 1.5% of the Company’s “ Equity ”, payable in cash quarterly (0.375% per quarter) in arrears. Under the Management Agreement, “ Equity ” means (a) the sum of (i) the proceeds received by the Company from the IPO and the concurrent private placement of Common Shares to the Manager, plus (ii) the net proceeds received by the Company from any future sale or issuance of shares of beneficial interest of the Company, plus (iii) the Company’s cumulative Core Earnings (as defined in the Management Agreement) for the period commencing on the completion of the IPO to the end of the most recent calendar quarter, less (b) (i) any distributions previously paid to holders of the Common Shares, (ii) any incentive fee previously paid to the Manager and (iii) any amount that the Company may have paid to repurchase Common Shares. All items in the foregoing sentence (other than clause (a)(iii)) are calculated on a daily weighted average basis.

 

·                   Incentive Fee . Starting in the first full calendar quarter following the first anniversary of the Closing, the Company is required to pay the Manager quarterly an incentive fee in arrears in cash equal to the difference between: (a) the product of (i) 20% and (ii) the difference between (A) the Company’s Core Earnings for the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (B) the product of (1) the Company’s Equity in the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (2) 7% per year and (b) the sum of any incentive fees paid to the Manager with respect to the first three calendar quarters of the most recent 12 month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). No incentive fee shall be

 

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payable with respect to any calendar quarter unless the Company’s Core Earnings for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters from the date of the completion of this Offering) in the aggregate is greater than zero. The incentive fee may not be less than zero.

 

For purposes of the calculation of base management fees and incentive fees payable to the Manager, “ Core Earnings ” is defined as net income (or loss) attributable to common shareholders of the Company, computed in accordance with generally accepted accounting principles in the United States (“ GAAP ”), including realized losses not otherwise included in GAAP net income (loss), and excluding: (a) the incentive fees earned by the Manager; (b) depreciation and amortization (if any); (c) non-cash equity compensation expense (if any); (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income or loss under GAAP); and (e) one time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussions between the Manager and the Independent Trustees of the Company and approved by a majority of such Independent Trustees. Pursuant to the terms of the Management Agreement, the exclusion of depreciation and amortization from the calculation of Core Earnings shall only apply to owned real estate. Shares of beneficial interest of the Company that are entitled to a specific periodic distribution or have other debt characteristics will not be included in “ Equity ” for the purpose of calculating incentive fees payable to the Manager. Instead, the aggregate distribution amount that accrues to such shares during the calendar quarter of such calculation will be subtracted from Core Earnings for purposes of calculating incentive fees, unless such distribution is otherwise already excluded from Core Earnings. Equity and Core Earnings as defined in the Management Agreement are non-GAAP financial measures and may be different than shareholders’ equity and net income of the Company calculated according to GAAP.

 

·                   Termination Fee . In the event the Management Agreement is terminated by the Company without a cause event or by the Manager for a material breach, the Company will be required to pay the Manager a termination fee equal to (a) three times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee, in each case paid or payable to the Manager during the 24 month period immediately preceding the most recently completed calendar quarter prior to the date of termination or, if such termination occurs within 24 months of its initial commencement, the base management fee and the incentive fee will be annualized for such two year period based on such fees earned by the Manager during such period, plus (b) an amount equal to the initial organizational costs related to the Company’s formation and the costs of the IPO and the concurrent private placement paid by the Manager. No termination fee will be payable if the Management Agreement is terminated by the Company for a cause event or by the Manager without the Company’s material breach.

 

·                   Expense Reimbursement . The Manager, and not the Company, will be responsible for the costs of the Manager’s employees who provide services to the Company,

 

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including the cost of the Manager’s personnel who originate the Company’s loans, unless any such payment or reimbursement is specifically approved by a majority of the Independent Trustees of the Company, is a shared services cost or relates to awards made under any equity compensation plan adopted by the Company from time to time.  The Company is required to pay or to reimburse the Manager and its affiliates for all other costs and expenses of the Company’s operations, including but not limited to, the costs of rent, utilities, office furniture, equipment, machinery and other overhead type expenses, the costs of legal, accounting, auditing, tax planning and tax return preparation, consulting services, diligence costs related to the Company’s investments, investor relations expenses and other professional services, and other costs and expenses not specifically required under the Management Agreement to be borne by the Manager.  Some of these overhead, professional and other services will be provided by RMR LLC pursuant to a shared services agreement between the Manager and RMR LLC.  The Company currently expects that the amount of the RMR shared services cost which the Manager will pay and the Company will reimburse during the Company’s first year of operations will be approximately $1.5 million.  In addition, the Company will also pay its pro rata costs of any combined directors and officers liability or other insurance programs arranged by RMR LLC for public companies managed by RMR LLC or its affiliates and the Company’s pro rata portion of internal audit costs incurred by RMR LLC on behalf of the Company and other public companies to which RMR LLC or its affiliates provides management services.

 

The foregoing summary of the Management Agreement is not complete and is qualified in its entirety by reference to the Management Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.2 and incorporated in this Item 1.01 by reference.

 

Indemnification Agreements

 

In connection with the IPO, the Company entered into indemnification agreements (each, an “ Indemnification Agreement ”) with each of the Trustees and officers of the Company (each, an “ Indemnitee ”).  Each Indemnification Agreement requires the Company to, among other things, indemnify the Indemnitee named therein against certain liabilities that may arise in connection with the Indemnitee’s status or service as one of the Company’s Trustees, officers or agents or in such Indemnitee’s capacity at other specified entities at which the Indemnitee serves at the Company’s request and to advance such Indemnitee’s expenses incurred as a result of any proceeding for which the Indemnitee may be entitled to indemnification. Each Indemnification Agreement otherwise provides for indemnification rights to the maximum extent permitted under Maryland law and is in addition to any other rights an Indemnitee may have under the Company’s organizational documents or applicable law.

 

The foregoing summary of the Indemnification Agreements is not complete and is qualified in its entirety by reference to the form of Indemnification Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.5 and incorporated in this Item 1.01 by reference.

 

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Certain Relationships

 

As more fully described under the captioned sections “Our Manager and our Management Agreement” and “Our relationship with our Manager, RMR and other entities managed by RMR” in the Prospectus, which sections are incorporated in this Item 1.01 by reference, the Manager currently owns approximately 19.4% of our outstanding Common Shares. The Manager is owned by RMR LLC, which is the majority owned operating subsidiary of RMR INC, a holding company listed on Nasdaq. RMR INC is controlled by the Company’s Managing Trustees. One of the Company’s Managing Trustees, Mr. Adam Portnoy, is a managing director, president and chief executive officer and controlling shareholder of RMR INC, an officer of RMR LLC and a director and officer of the Manager. The Company’s other Managing Trustee, Mr. Barry Portnoy, is a managing director, officer and controlling shareholder of RMR INC, an officer of RMR LLC and a director of the Manager. The Company’s Managing Trustees are managing directors or managing trustees of other entities to which RMR LLC or its affiliate provides management or advisory services. Each of the Company’s executive officers also is an officer and employee of the Manager or RMR LLC, and some of the Company’s executive officers are also officers of other entities to which RMR LLC or its affiliate provides management or advisory services.

 

Item 3.02                                           Unregistered Sales of Equity Securities.

 

Concurrently with the Closing, the Company completed the issuance and sale of 600,000 Common Shares to the Manager pursuant to the Private Placement Purchase Agreement at $20.00 per Common Share, the same price per Common Share as the initial public offering price in the IPO, for an aggregate purchase price of $12,000,000.

 

The Manager is an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act, and is acquiring the Common Shares pursuant to the Private Placement Purchase Agreement for its own account, only for investment purposes and not with a view to, or for resale in connection with, any public distribution or public offering thereof within the meaning of the Securities Act.

 

The foregoing summary of the sale of unregistered equity securities is not complete and is qualified in its entirety by reference to the Private Placement Purchase Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated in this Item 3.02 by reference.

 

Item 3.03                                           Material Modification of the Rights of Security Holders.

 

The information set forth under Item 5.03 below regarding the amendment and restatement of the Company’s Declaration of Trust is incorporated in this Item 3.03 by reference.

 

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Item 5.02                                           Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Election of Trustees

 

Effective September 14, 2017, the size of the Board was increased from two to five members and each of John L. Harrington, Joseph L. Morea and Jeffrey P. Somers were elected as Independent Trustees of the Company and appointed to the Audit Committee, Compensation Committee and Nominating and Governance Committee of the Board.  Also effective September 14, 2017, the Board was classified into three classes and the Trustees of the Company were classified as follows:

 

·                  the Class I Managing Trustee is Barry M. Portnoy and the Class I Independent Trustee is Jeffrey P. Somers, each of whose term shall continue until the first annual meeting of shareholders of the Company held after September 14, 2017 and until his successor is elected and qualified;

 

·                  the Class II Managing Trustee is Adam D. Portnoy and the Class II Independent Trustee is John L. Harrington, each of whose term shall continue until the second annual meeting of shareholders of the Company held after September 14, 2017 and until his successor is elected and qualified; and

 

·                  the Class III Independent Trustee is Joseph L. Morea, whose term shall continue until the third annual meeting of shareholders of the Company held after September 14, 2017 and until his successor is elected and qualified.

 

Additional information concerning each of Messrs. Harrington, Morea and Sommers is described under the caption “Management — Trustees and officers” in the Prospectus, and such information is incorporated in this Item 5.02 by reference.

 

2017 Equity Compensation Plan

 

The Board approved, and the Manager, as the Company’s then sole shareholder, adopted, effective September 14, 2017, the 2017 Plan.  Under the 2017 Plan, the Company may from time to time make awards of Common Shares to its Trustees and executive officers and to employees of the Manager or its affiliates who provide services to the Company. The Company has reserved for future issuance under the 2017 Plan a number of Common Shares that equals 7.5% of the Common Shares of the Company outstanding following consummation of the IPO (including Common Shares issued pursuant to the Underwriters’ exercise of their overallotment option and Common Shares issued to the Manager in the concurrent private placement).  The 2017 Plan will be administered by the Company’s Compensation Committee.

 

Information concerning the 2017 Plan was disclosed in the Prospectus under the caption “Management — Equity Compensation Plan” and is incorporated in this Item 5.02 by reference.  The foregoing summary of the 2017 Plan is not complete and is qualified in its entirety by reference to the 2017 Plan, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.3 and incorporated in this Item 5.02 by reference.

 

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Item 5.03                                           Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

Effective September 14, 2017, in connection with the IPO, the Company amended and restated its Declaration of Trust and Bylaws to give effect to the changes thereto contemplated by the Prospectus. The provisions of the Amended and Restated Declaration of Trust and the Amended and Restated Bylaws are substantially in the forms of such documents filed as Exhibits 3.1 and 3.2, respectively, to the Registration Statement and as described in the Prospectus.

 

The foregoing summary of the Amended and Restated Declaration of Trust and the Amended and Restated Bylaws is not complete and is qualified in its entirety by reference to the Amended and Restated Declaration of Trust and the Amended and Restated Bylaws, copies of which are attached to this Current Report on Form 8-K as Exhibits 3.1 and 3.2, respectively, and are incorporated in this Item 5.03 by reference.

 

Item 8.01                                           Other Events.

 

Effective September 14, 2017, the Board adopted compensation arrangements for the Company’s Trustees.  A summary of the Company’s currently effective trustee compensation arrangement is attached as Exhibit 10.6 to this Current Report on Form 8-K and is incorporated in this Item 8.01 by reference.

 

Item 9.01                                           Financial Statements and Exhibits.

 

(d)       Exhibits.

 

Exhibit
Number

 

Description

 

 

 

1.1

 

Underwriting Agreement, dated September 13, 2017, by and among Tremont Mortgage Trust, Tremont Realty Advisors LLC and UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC, as representatives of the several underwriters

 

 

 

3.1

 

Amended and Restated Declaration of Trust of Tremont Mortgage Trust effective September 14, 2017.

 

 

 

3.2

 

Amended and Restated Bylaws of Tremont Mortgage Trust dated September 14, 2017.

 

 

 

5.1

 

Opinion of Venable LLP

 

 

 

10.1

 

Private Placement Purchase Agreement, dated as of September 13, 2017, by and between Tremont Mortgage Trust and Tremont Realty Advisors LLC

 

 

 

10.2

 

Management Agreement, dated as of September 18, 2017, among Tremont Mortgage Trust, Tremont Realty Advisors LLC and, solely in respect to Section 29 thereof, The RMR Group Inc.

 

 

 

10.3

 

2017 Equity Compensation Plan

 

 

 

10.4

 

Form of Share Award Agreement

 

 

 

10.5

 

Form of Indemnification Agreement

 

 

 

10.6

 

Tremont Mortgage Trust Summary of Trustee Compensation

 

 

 

23.1

 

Consent of Venable LLP (included in the opinion filed as Exhibit 5.1)

 

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EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

 

1.1

 

Underwriting Agreement, dated September 13, 2017, by and among Tremont Mortgage Trust, Tremont Realty Advisors LLC and UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC, as representatives of the several underwriters.

 

 

 

3.1

 

Amended and Restated Declaration of Trust of Tremont Mortgage Trust effective September 14, 2017.

 

 

 

3.2

 

Amended and Restated Bylaws of Tremont Mortgage Trust dated September 14, 2017.

 

 

 

5.1

 

Opinion of Venable LLP

 

 

 

10.1

 

Private Placement Purchase Agreement, dated as of September 13, 2017, by and between Tremont Mortgage Trust and Tremont Realty Advisors LLC.

 

 

 

10.2

 

Management Agreement, dated as of September 18, 2017, among Tremont Mortgage Trust, Tremont Realty Advisors LLC and, solely in respect of Section 29 thereof, The RMR Group Inc.

 

 

 

10.3

 

2017 Equity Compensation Plan

 

 

 

10.4

 

Form of Share Award Agreement

 

 

 

10.5

 

Form of Indemnification Agreement

 

 

 

10.6

 

Tremont Mortgage Trust Summary of Trustee Compensation

 

 

 

23.1

 

Consent of Venable LLP (included in the opinion filed as Exhibit 5.1)

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

TREMONT MORTGAGE TRUST

 

 

 

Date: September 18, 2017

By:

/s/ David M. Blackman

 

 

David M. Blackman
Chief Executive Officer

 


Exhibit 1.1

 

TREMONT MORTGAGE TRUST

 

2,500,000 Shares

 

Common Shares of Beneficial Interest

($0.01 par value per share)

 

UNDERWRITING AGREEMENT

 

September 13, 2017

 



 

UNDERWRITING AGREEMENT

 

September 13, 2017

 

UBS Securities LLC

Citigroup Global Markets Inc.

RBC Capital Markets, LLC.

as Representatives of the several Underwriters

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

Ladies and Gentlemen:

 

Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Company ”), proposes to issue and sell to the underwriters named in Schedule A attached hereto (the “ Underwriters ”), for whom UBS Securities LLC (“ UBS ”), Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as representatives (the “ Representatives ”), an aggregate of 2,500,000 (the “ Firm Shares ”) common shares of beneficial interest, $0.01 par value per share (the “ Common Shares ”), of the Company. In addition, solely for the purpose of covering overallotments, the Company proposes to grant to the Underwriters the option to purchase from the Company up to an additional 375,000 Common Shares (the “ Additional Shares ”). The Firm Shares and the Additional Shares are hereinafter collectively sometimes referred to as the “ Shares .”  The Shares are described in the Prospectus which is referred to below.

 

The Company is a real estate finance company that plans to focus primarily on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate.  The Company will be managed by Tremont Realty Advisors LLC, a Maryland limited liability company (the “ Manager ”), which is owned by The RMR Group LLC, a majority owned operating subsidiary of The RMR Group Inc., a management holding company listed on the NASDAQ Stock Market LLC (the “ NASDAQ ”).

 

Concurrently with the sale of the Shares, the Company will sell 600,000 Common Shares in a transaction not subject to the registration requirement of Section 5 of the Securities Act of 1933, as amended (together with the rules and regulations thereunder, the “ Act ”), to the Manager at a price per share of $20.00 (the “ Concurrent Offering ”).

 

The Company has prepared and filed, in accordance with the provisions of the Act, with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-11 (File No. 333-219205) under the Act, including a prospectus, relating to the Shares.

 

Except where the context otherwise requires, “ Registration Statement ,” as used herein, means the registration statement, as amended, at the time of such registration statement’s effectiveness for purposes of Section 11 of the Act, as such section applies to the respective Underwriters (the “ Effective Time ”), including (i) all documents filed as a part thereof, (ii) any information contained in a prospectus filed with the Commission pursuant to Rule 424(b) under the Act, to the extent such information is deemed, pursuant to Rule 430A or Rule 430C under the Act, to be part of the registration statement at the Effective Time, and (iii) any registration

 



 

statement filed to register the offer and sale of Shares pursuant to Rule 462(b) under the Act (“ Rule 462(b) Registration Statement ”).

 

Except where the context otherwise requires, “ Prospectus ,” as used herein, means the prospectus, relating to the Shares, filed by the Company with the Commission pursuant to Rule 424(b) under the Act on or before the second business day after the date hereof (or such earlier time as may be required under the Act), or, if no such filing is required, the final prospectus included in the Registration Statement at the time it became effective under the Act, in each case in the form furnished by the Company to you for use by the Underwriters and by dealers in connection with the offering of the Shares.

 

Applicable Time, ” as used herein, means 7:20 P.M., New York City time, on September 13, 2017.

 

Covered Exempt Communication ,” as used herein, means (i) each Covered Exempt Written Communication and (ii) each Exempt Oral Communication.

 

Covered Exempt Written Communication ,” as used herein, means (i) each Exempt Written Communication that is not a Permitted Exempt Written Communication and (ii) each Permitted Exempt Written Communication.

 

Covered Free Writing Prospectuses ,” as used herein, means (i) each “issuer free writing prospectus” (as defined in Rule 433(h)(1) under the Act), if any, relating to the Shares, which is not a Permitted Free Writing Prospectus and (ii) each Permitted Free Writing Prospectus.

 

Disclosure Package ,” as used herein, means, collectively, the pricing information set forth on Schedule B attached hereto under the heading “Pricing Information Provided by Underwriters,” the Preliminary Prospectus and all Permitted Free Writing Prospectuses (excluding, any “ bona fide electronic road show,” as defined in Rule 433 under the Act), if any, considered together.

 

Exempt Oral Communication ,” as used herein, means each oral communication made prior to the filing of the Registration Statement by the Company or any person authorized to act on behalf of the Company made to one or more qualified institutional buyers as such term is defined in Rule 144A under the Act (“ QIBs ”) and/or one or more institutions that are accredited investors, as defined in Rule 501(a) under the Act (“ IAIs ”), to determine whether such investors might have an interest in a contemplated securities offering.

 

Exempt Written Communication ,” as used herein, means each written communication, if any, by the Company or any person authorized to act on behalf of the Company made to one or more QIBs and/or one or more IAIs to determine whether such investors might have an interest in a contemplated securities offering.

 

Permitted Exempt Written Communication ,” as used herein, means the documents listed on Schedule B attached hereto under the heading “Permitted Exempt Written Communications.”

 

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Permitted Free Writing Prospectuses ,” as used herein, means the documents listed on Schedule B attached hereto under the heading “Permitted Free Writing Prospectuses” and each “road show” (as defined in Rule 433 under the Act), if any, related to the offering of the Shares contemplated hereby that is a “written communication” (as defined in Rule 405 under the Act).  The Underwriters have not offered or sold and will not offer or sell, without the Company’s consent, any Shares by means of any “free writing prospectus” (as defined in Rule 405 under the Act) that is required to be filed by the Underwriters with the Commission pursuant to Rule 433 under the Act, other than a Permitted Free Writing Prospectus.

 

Preliminary Prospectus ,” as used herein, means the prospectus furnished to the Underwriters for use in connection with the Offering of the Shares prior to the effectiveness of the Registration Statement and any prospectus that omitted information pursuant to Rule 430A under the Act that was so furnished after such effectiveness and prior to the execution and delivery of this Agreement.

 

As used in this Agreement, “ business day ” shall mean a day on which the NASDAQ is open for trading. The terms “herein,” “hereof,” “hereto,” “hereinafter” and similar terms, as used in this Agreement, shall in each case refer to this Agreement as a whole and not to any particular section, paragraph, sentence or other subdivision of this Agreement.  The term “or,” as used herein, is not exclusive.

 

The Company has prepared and filed, in accordance with Section 12 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “ Exchange Act ”), a registration statement (as amended, the “ Exchange Act Registration Statement ”) on Form 8-A (File No. 001-38199) under the Exchange Act to register, under Section 12(b) of the Exchange Act, the class of securities consisting of the Common Shares.

 

The Company, the Manager and the Underwriters agree as follows:

 

1.                                       Sale and Purchase .  Upon the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the respective Underwriters and each of the Underwriters, severally and not jointly, agrees to purchase from the Company the number of Firm Shares set forth opposite the name of such Underwriter in Schedule A attached hereto, subject to adjustment in accordance with Section 10 hereof, in each case at a purchase price of $20.00 per Firm Share, and, concurrently with such issuance and sale, the Manager agrees to pay the Underwriters underwriting discounts and commissions of $1.25 per Firm Share.  The Company is advised by you that the Underwriters intend (i) to make a public offering of their respective portions of the Firm Shares as soon after the effective date of the Registration Statement as in your judgment is advisable and (ii) initially to offer the Firm Shares upon the terms set forth in the Prospectus.  You may from time to time increase or decrease the public offering price after the initial public offering to such extent as you may determine.

 

In addition, the Company hereby grants to the several Underwriters the option (the “ Overallotment Option ”) to purchase, and upon the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Underwriters shall have the right to purchase, severally and not jointly, from the Company, ratably in accordance with the number of Firm Shares to be purchased by each of them, all or a portion of the Additional Shares

 

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as may be necessary to cover overallotments made in connection with the offering of the Firm Shares, at the same purchase price per share to be paid by the Underwriters to the Company for the Firm Shares, and, concurrently with any such purchase of Additional Shares, the Manager shall pay the Underwriters underwriting discounts and commissions of $1.25 per Additional Share.  The Overallotment Option may be exercised by the Representatives on behalf of the several Underwriters at any time and from time to time on or before the thirtieth day following the date of the Prospectus, by written notice to the Company.  Such notice shall set forth the aggregate number of Additional Shares as to which the Overallotment Option is being exercised and the date and time when the Additional Shares are to be delivered (any such date and time being herein referred to as an “ additional time of purchase ”); provided , however , that no additional time of purchase shall be earlier than the “time of purchase” (as defined below) nor earlier than the second business day after the date on which the Overallotment Option shall have been exercised nor later than the tenth business day after the date on which the Overallotment Option shall have been exercised.  Upon any exercise of the Overallotment Option, the number of Additional Shares to be sold to, and purchased by, each Underwriter shall be the number which bears the same proportion to the aggregate number of Additional Shares being purchased as the number of Firm Shares set forth opposite the name of such Underwriter on Schedule A hereto bears to the total number of Firm Shares (subject, in each case, to such adjustment as the Representatives may determine to eliminate fractional shares), subject to adjustment in accordance with Section 10 hereof.

 

2.                                       Payment and Delivery .  Payment of the purchase price for the Firm Shares shall be made to the Company by federal funds wire transfer against delivery of the certificates for the Firm Shares to you through the facilities of The Depository Trust Company (“ DTC ”) for the respective accounts of the Underwriters. Payment of the underwriting discounts and commissions relating to the Firm Shares shall be made by the Manager to the Company by federal funds wire transfer to an account specified by the Representatives. Such payments and delivery shall be made at 10:00 A.M., New York City time, on September 18, 2017 (unless another time shall be agreed to by you and the Company or unless postponed in accordance with the provisions of Section 10 hereof).  The time at which such payments and delivery are to be made is hereinafter sometimes called the “ time of purchase .”  Electronic transfer of the Firm Shares shall be made to you at the time of purchase in such names and in such denominations as you shall specify.

 

Payment of the purchase price and the underwriting discounts and commissions for the Additional Shares shall be made at the additional time of purchase in the same manner and time of day as the payments for the Firm Shares.  Electronic transfer of the Additional Shares shall be made to you at the additional time of purchase in such names and in such denominations as you shall specify.

 

Deliveries of the documents described in Section 8 hereof with respect to the purchase of the Shares shall be made at the offices of Sidley Austin LLP at 787 7th Avenue, New York City, New York, 10019 at 9:00 A.M., New York City time, on the date of the closing of the purchase of the Firm Shares or the Additional Shares, as the case may be.

 

3.                                       Representations and Warranties of the Company .  The Company represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the time of purchase and each additional time of purchase, if any, and agrees with each Underwriter, as follows:

 

(a)                                  Each of the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment thereto has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement, any Rule

 

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462(b) Registration Statement or any post-effective amendment thereto has been issued under the Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are threatened by the Commission, and any request on the part of the Commission for additional information has been complied with. The Exchange Act Registration Statement has become effective as provided by Section 12 of the Exchange Act.

 

At the respective times the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto became effective, the Registration Statement, the Rule 462(b) Registration Statement and any amendments thereto complied in all material respects with the requirements of the Act and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  As of its date and at the time of purchase (and, if any Additional Shares are purchased, at the additional time of purchase), the Prospectus will comply in all material respects with the requirements of the Act. Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued and at the time of purchase (and, if any Additional Shares are purchased, at the additional time of purchase), included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

As of the Applicable Time, neither (x) the Disclosure Package nor (y) any individual Covered Free Writing Prospectus, when considered together with the Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

Notwithstanding the foregoing, the Company makes no representation or warranty in this Section 3(a) with respect to any statement contained in the Registration Statement, any Rule 462(b) Registration Statement or any post-effective amendments thereto, the Disclosure Package or any Permitted Free Writing Prospectus made in reliance upon and in conformity with information concerning an Underwriter and furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use therein.

 

Each Covered Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Shares or until any earlier date that the Company notified or notifies the Representatives as described in Section 5(e) hereof, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.

 

Prior to the execution of this Agreement, the Company has not, directly or indirectly, offered or sold any Shares by means of any “prospectus” (within the meaning

 

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of the Act) or used any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Shares, in each case other than the Preliminary Prospectus, the Permitted Free Writing Prospectuses, if any, and the Permitted Exempt Written Communications, if any.  The Company has not, directly or indirectly, prepared, used or referred to any Permitted Free Writing Prospectus except in compliance with Rules 164 and 433 under the Act.  Neither the Company nor the Underwriters are disqualified, by reason of subsection (f) or (g) of Rule 164 under the Act, from using, in connection with the offer and sale of the Shares, “free writing prospectuses” (as defined in Rule 405 under the Act) pursuant to Rules 164 and 433 under the Act.  The Company is not an “ineligible issuer” (as defined in Rule 405 under the Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Act with respect to the offering of the Shares contemplated by the Registration Statement, without taking into account any determination by the Commission pursuant to Rule 405 under the Act that it is not necessary under the circumstances that the Company be considered an “ineligible issuer.”

 

The Company has made available a “ bona fide electronic road show,” as defined in Rule 433 under the Act, in compliance with Rule 433(d)(8)(ii) under the Act such that no filing of any “road show” (as defined in Rule 433(h) under the Act) is required in connection with the offering of the Shares.

 

The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement, the Prospectus or any amendments or supplements thereto or any Covered Free Writing Prospectus made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use therein, such information being limited to the information described in Section 12.

 

(b)                                  Each Preliminary Prospectus (including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto) complied when so filed in all material respects with the Act and each Preliminary Prospectus and the Prospectus delivered to the Underwriters for use in connection with the offering of the Shares was identical to the electronically transmitted copies thereof filed with the Commission pursuant to the Commission’s Electronic Data Gathering, Analysis and Retrieval System (“ EDGAR ”), except to the extent permitted by Regulation S-T.

 

(c)                                   At the time of filing the Registration Statement, any 462(b) Registration Statement and any post-effective amendments thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the Act.

 

(d)                                  The Company has not (i) engaged in any Covered Exempt Communication other than Covered Exempt Communications with the prior written consent of the Representatives with entities that are QIBs or IAIs or (ii) authorized anyone other than the trustees and officers of the Company, Manager and its directors and officers and the Representatives to engage in Covered Exempt Communications. The Company reconfirms that the Representatives have been authorized to act on its behalf in

 

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undertaking Covered Exempt Communications. The Company has not distributed any Covered Exempt Written Communications other than those listed on Schedule B hereto under the heading “Permitted Exempt Written Communications.”

 

(e)                                   As of the date of this Agreement (or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Covered Exempt Communication), the Company qualifies as an emerging growth company (“ EGC ”) as defined in Section 2(a)(19) of the Act.

 

(f)                                    Each Covered Exempt Written Communication, if any, did not as of its date include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(g)                                   The Company has filed publicly on the Commission’s EDGAR database at least 15 calendar days prior to any “road show,” (as defined in Rule 433 under the Act) any confidentially submitted registration statements and registration amendments relating to the offer and sale of the Shares.

 

(h)                                  The accounting firm that certified the financial statements and supporting schedules included in the Registration Statement, the Disclosure Package and the Prospectus is an independent public accounting firm as required by the Act and by the rules of the Public Company Accounting Oversight Board.

 

(i)                                      The financial statements of the Company and its consolidated subsidiaries included in the Registration Statement, the Disclosure Package and the Prospectus, together with the related schedules and notes, present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated; said financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“ GAAP ”) applied on a consistent basis throughout the periods involved.  The supporting schedules, if any, present fairly in all material respects the information set forth therein.  The selected financial data and the summary selected financial information included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement. Except as included in the Registration Statement, the Disclosure Package and the Prospectus, no historical or pro forma financial statements or supporting schedules are required to be included in the Registration Statement, the Disclosure Package or the Prospectus pursuant to the Act.  The Company and its consolidated subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the Registration Statement (excluding the exhibits thereto), the Disclosure Package and the Prospectus; and all disclosures contained in the Registration Statement, the Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Exchange Act, and Item 10 of Regulation S-K under the Act and the Exchange Act, to the extent applicable.

 

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(j)                                     Since the respective dates as of which information is given in the Registration Statement, the Disclosure Package and the Prospectus, except as otherwise disclosed therein, (i) there has been no material adverse change in the condition, financial or otherwise, or in the results of operations, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “ Material Adverse Effect ”), (ii) there have been no transactions entered into by the Company or any of its subsidiaries, other than those arising in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, (iii) there has not been any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by the Company or any subsidiary, which is material to the Company and its subsidiaries taken as a whole, (iv) there has not been any change in the capital shares or outstanding indebtedness of the Company or any subsidiaries and (v) there has not been any dividend or distribution of any kind declared, paid or made by the Company on any class of its shares of beneficial interest.

 

(k)                                  The Company has been duly organized and is validly existing as a real estate investment trust (a “ REIT ”) in good standing with the State Department of Assessments and Taxation of Maryland (the “ SDAT ”) and has trust power and authority to own, lease and operate the properties owned by the Company on the date hereof and to conduct its business as described in the Registration Statement, the Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign trust to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect.

 

(l)                                      Each of the Company’s subsidiaries has been duly formed or organized, as the case may be, and is validly existing as a corporation, limited liability company, partnership, trust or other organization under the laws of the jurisdiction of its formation or organization and is in good standing under the laws of its jurisdiction of formation or organization, has corporate, limited liability, partnership, trust or other power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the Disclosure Package and the Prospectus and is duly qualified as a foreign corporation, limited liability company, partnership, trust or other organization to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.  The Company has no “significant subsidiary,” as that term is defined in Rule 1-02(w) of Regulation S-X under the Act.

 

(m)                              The authorized, issued and outstanding shares of beneficial interest of the Company are as set forth in the Prospectus under the caption “Capitalization” (except for subsequent issuances pursuant to this Agreement or the Private Placement Purchase

 

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Agreement (as defined below), or, if any, pursuant to reservations, agreements or benefit or equity compensation plans referred to in the Registration Statement, the Disclosure Package and the Prospectus).  The issued and outstanding shares of beneficial interest of the Company have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of beneficial interest of the Company were issued in violation of the preemptive or other similar rights of any shareholder of the Company.

 

(n)                                  This Agreement has been duly authorized, executed and delivered by the Company.

 

(o)                                  The private placement purchase agreement relating to the Concurrent Offering, dated as of the date of this Agreement (the “ Private Placement Purchase Agreement ”), between the Company and the Manager, has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.

 

(p)                                  The Company will enter into a Management Agreement, dated September 18, 2017 (the “ Management Agreement ”), with the Manager. The Management Agreement has been duly authorized by the Company, and when executed and delivered by the Company and the Manager will constitute a valid and binding agreement of the Company enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws affecting the enforceability of creditors’ rights and general principles of equity.

 

(q)                                  The Shares to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale by the Company to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable; the Common Shares conform to all statements relating thereto contained in the Prospectus and such description conforms to the rights set forth in the instruments defining the same; no holder of the Shares will be subject to personal liability by reason of being such a holder; and the issuance of the Shares is not subject to the preemptive or other similar rights of any shareholder of the Company.

 

(r)                                     The Common Shares to be sold in the Concurrent Offering have been duly authorized for issuance and sale, and when issued and delivered by the Company pursuant to the Private Placement Purchase Agreement, will be validly issued and fully paid and non-assessable, and free and clear of any pledge, lien, encumbrance, security interest or other claim.

 

(s)                                    Neither the Company nor any of its subsidiaries is in violation of its organizational documents or in default in the performance or observance of any

 

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obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject (collectively, “ Agreements and Instruments ”), except for such defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance of this Agreement and the Private Placement Purchase Agreement by the Company and the consummation by the Company of the transactions contemplated herein, therein and in the Registration Statement (including the issuance and sale of the Shares pursuant to this Agreement and Common Shares pursuant to the Private Placement Purchase Agreement and the use of the proceeds from such sales as described in the Prospectus under the caption “Use of Proceeds”) and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary trust action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to the Agreements and Instruments (except for such conflicts, breaches, defaults or Repayment Events or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the organizational documents of the Company or any of its subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations.  As used herein, a “ Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

 

(t)                                     Neither the Company nor any of its subsidiaries has any employees.

 

(u)                                  There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries which is required to be disclosed in the Registration Statement, the Disclosure Package or the Prospectus (other than as disclosed therein), or which, if determined adversely to the Company, would result in a Material Adverse Effect, or adversely affect the consummation by the Company of the transactions contemplated in this Agreement or the Private Placement Purchase Agreement or the performance by the Company of its obligations hereunder or thereunder; the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their property or assets is the subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, would not result in a Material Adverse Effect.

 

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(v)                                  There are no contracts or documents which are required to be described in the Registration Statement, the Disclosure Package or the Prospectus or to be filed as exhibits thereto which have not been so described and filed as required.

 

(w)                                The Company or its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “ Intellectual Property ”) necessary to carry on the business as described in the Registration Statement, the Disclosure Package and the Prospectus, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect.

 

(x)                                  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations under this Agreement or the Private Placement Purchase Agreement, in connection with the offering, issuance or sale of the Shares pursuant to this Agreement and Common Shares pursuant to the Private Placement Purchase Agreement or the consummation of the transactions contemplated hereunder or thereunder, except such as have been already obtained or as may be required under the Act, state securities laws, the rules of the Financial Industry Regulatory Authority Inc. (“ FINRA ”) or the rules of NASDAQ.

 

(y)                                  Neither the Company nor any affiliate of the Company has taken, nor will the Company or any affiliate of the Company take, directly or indirectly, any action which is designed to or which has constituted or which would reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

 

(z)                                   The Company or its subsidiaries have made or will make in a timely manner all necessary filings required under any applicable law, regulation or rule and possess or will possess such permits, licenses, approvals, consents and other authorizations issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business of the Company and its subsidiaries as described in the Registration Statement, the Disclosure Package and the Prospectus (collectively, “ Governmental Licenses ”), except where the failure so to possess would not, singly or in the aggregate, result in a Material Adverse Effect; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect

 

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would not, singly or in the aggregate, result in a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

 

(aa)                           The Company and its subsidiaries have no property (real or personal, excluding for the purposes of this Section 3(aa), Intellectual Property) or other assets other than as set forth in the Company’s balance sheet as of June 30, 2017 included in the Registration Statement, the Disclosure Package and the Prospectus.

 

(bb)                           Neither the Company nor any of its subsidiaries is required, and upon the issuance and sale of the Shares pursuant to this Agreement and Common Shares pursuant to the Private Placement Purchase Agreement as herein and therein contemplated and the application of the net proceeds therefrom as described in the Prospectus under the caption “Use of Proceeds” will not be required, to register as an “investment company” under the Investment Company Act of 1940, as amended.

 

(cc)                             The Company and its subsidiaries and their respective properties, assets and operations are in compliance with, and the Company and each of its subsidiaries holds all permits, authorizations and approvals required under, Environmental Laws (as defined below), except to the extent that failure to so comply or to hold such permits, authorizations or approvals would not, individually or in the aggregate, have a Material Adverse Effect; there are no past, present or, to the Company’s knowledge, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to give rise to any material costs or liabilities to the Company or any subsidiary under, or to interfere with or prevent compliance by the Company or any subsidiary with, Environmental Laws; except as would not, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of its subsidiaries (i) is the subject of any investigation, (ii) has received any notice or claim, (iii) is a party to or affected by any pending or, to the Company’s knowledge, threatened action, suit or proceeding, (iv) is bound by any judgment, decree or order or (v) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined below) (as used herein, “ Environmental Law ” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and “ Hazardous Materials ” means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law).

 

(dd)                           Except as otherwise disclosed in the Registration Statement, the Disclosure Package and the Prospectus, there are no persons with registration rights or

 

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other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Act.

 

(ee)                             The Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company is not aware of any material weakness in the Company’s internal control over financial reporting (whether or not remediated), it being understood that the Company is not required as of the date hereof to comply with the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act.

 

(ff)                               The Company and its subsidiaries employ disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, as appropriate, to allow timely decisions regarding disclosure.

 

(gg)                             There is and has been no failure on the part of the Company or, to the Company’s knowledge, any of the Company’s trustees or officers, in their capacities as such, to comply with any applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

 

(hh)                           All United States federal income tax returns regarding the Company and any of its subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken in good faith and as to which adequate reserves have been provided and will be maintained.  The Company and its subsidiaries have filed (or caused to be filed) all tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law except insofar as the failure to file such returns would not result in a Material Adverse Effect, and have paid (or caused to be paid) all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any of its subsidiaries, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided and will be maintained.  The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not result in a Material Adverse Effect.

 

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(ii)                                   Upon using the proceeds from the sale of the Shares pursuant to this Agreement and the Common Shares pursuant to the Private Placement Purchase Agreement as described in the Prospectus, the Company and its subsidiaries will be entitled to the benefits of insurance (other than insurance coverage for officers and trustees of the Company) with, to the knowledge of the Company, financially sound and reputable insurers, in such amounts as are commercially reasonable for the properties then owned by the Company and its subsidiaries and covering such risks, as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance will be in full force and effect. Neither the Company nor any of its subsidiaries has been denied any insurance coverage which it has sought or for which it has applied.

 

(jj)                                 Each “forward-looking statement” (within the meaning of Section 27A of the Act or Section 21E of the Exchange Act) contained in the Registration Statement, the Disclosure Package and the Prospectus has been made or reaffirmed with a reasonable basis and in good faith.

 

(kk)                           Any statistical and market-related data included in the Registration Statement, the Disclosure Package and the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate, and the Company has obtained, if required, the written consent to the use of such data from such sources requiring consent.

 

(ll)                                   The Company, from its date of inception for federal income tax purposes, will be organized and, upon and after giving effect to the issuance of the Shares pursuant to this Agreement and Common Shares pursuant to the Private Placement Purchase Agreement and the application of the net proceeds therefrom as described in the Registration Statement, the Disclosure Package and the Prospectus, will continue to be organized and will operate, in a manner so as to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the “ Code ”), and the rules and regulations thereunder, and the Company will make a timely election to be taxed as a REIT under the Code effective for its taxable year ending December 31, 2017.

 

(mm)                   Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any trustee, officer, agent, affiliate or other person acting on behalf of the Company or any of its subsidiaries has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “ FCPA ”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company, its subsidiaries and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures

 

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designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(nn)                           Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any trustee, officer, agent, affiliate or person acting on behalf of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered or enforced by the Office of Foreign Assets Control of the U.S. Treasury Department, the United Nations Security Council, the European Union, Her Majesty’s Treasury or any other relevant sanctions authority; and the Company will not directly or indirectly use the proceeds from the offering of the Shares pursuant to this Agreement or from the offering of Common Shares pursuant to the Private Placement Purchase Agreement, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered or enforced by such authorities.

 

(oo)                           The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the USA Patriot Act, the Bank Secrecy Act of 1970, as amended, the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator or non-governmental authority involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the Company’s knowledge, threatened.

 

In addition, any certificate signed by any officer of the Company or any of its subsidiaries and delivered to any Underwriter or counsel for the Underwriters in connection with the offering of the Shares shall be deemed to be a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.

 

4.                                       Representations and Warranties of the Manager .  The Manager represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the time of purchase and each additional time of purchase, if any, and agrees with each Underwriter, as follows:

 

(a)                                  The information (including the information set forth under the heading “Our Manager and our Management Agreement—Prior Performance of Certain Real Estate Companies Managed by RMR LLC”) regarding the Manager and its affiliates (other than the Company and its subsidiaries) in the Registration Statement, the Disclosure Package and the Prospectus is true and correct in all material respects.

 

(b)                                  The Manager has been duly organized and is validly existing as a limited liability company in good standing with the SDAT and has limited liability company power and authority to own, lease and operate the properties owned by the Manager on the date hereof and to conduct its business as described in the Registration Statement,

 

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the Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement, the Private Placement Purchase Agreement and the Management Agreement; the Manager is duly qualified as a foreign limited liability company to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in, singly or in the aggregate, a material adverse effect in the condition, financial or otherwise, or in the results of operations, business affairs or business prospects of the Manager and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “ Manager Material Adverse Effect ”).

 

(c)                                   This Agreement has been duly authorized, executed and delivered by the Manager.

 

(d)                                  The Private Placement Purchase Agreement has been duly authorized, executed and delivered by the Manager and constitutes a valid and binding agreement of the Manager, enforceable against the Manager in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.

 

(e)                                   The Manager will enter into the Management Agreement with the Company. The Management Agreement has been duly authorized by the Manager, and when executed and delivered by the Manager will constitute a valid and binding agreement of the Manager enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws affecting the enforceability of creditors’ rights and general principles of equity.

 

(f)                                    Except as described in the Registration Statement, the Disclosure Package and the Prospectus, since the respective dates as of which information is given in the Registration Statement, the Disclosure Package or the Prospectus, there has been no Manager Material Adverse Effect.

 

(g)                                   The Manager is duly registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “ Advisers Act ”), and the Manager is not prohibited by the Advisers Act from acting under the Management Agreement as the manager of the Company, as contemplated by the Registration Statement, the Disclosure Package and the Prospectus.

 

(h)                                  Neither the Manager nor any of its subsidiaries is in violation of its organizational documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Manager or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Manager or any of

 

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its subsidiaries is subject (collectively, “ Manager Agreements and Instruments ”), except for such defaults that would not result in a Manager Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Private Placement Purchase Agreement and the Management Agreement by the Manager and the consummation by the Manager of the transactions contemplated herein, therein and in the Registration Statement and compliance by the Manager with its obligations hereunder and thereunder have been duly authorized by all necessary trust action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Manager Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Manager or any of its subsidiaries pursuant to, the Manager Agreements and Instruments (except for such conflicts, breaches, defaults or Manager Repayment Events or liens, charges or encumbrances that would not result in a Manager Material Adverse Effect), nor will such action result in any violation of the provisions of the organizational documents of the Manager or any of its subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Manager or any of its subsidiaries or any of their assets, properties or operations.  As used herein, a “ Manager Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Manager or any of its subsidiaries.

 

(i)                                      No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Manager of its obligations under this Agreement or the Private Placement Purchase Agreement, or the consummation of the transactions contemplated by this Agreement and the Private Placement Purchase Agreement, other than any such filing, authorization, approval, consent, license, order, registration, qualification or decree that has already been made or obtained or will be timely made.

 

(j)                                     There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Manager, threatened, against or affecting the Manager or any of its subsidiaries, which, if determined adversely to the Manager, would result in a Manager Material Adverse Effect, or affect the consummation of the transactions contemplated in this Agreement, the Private Placement Purchase Agreement or the Management Agreement or the performance by the Manager of its obligations under this Agreement, the Private Placement Purchase Agreement and the Management Agreement; the aggregate of all pending legal or governmental proceedings to which the Manager or any of its subsidiaries is a party or of which any of their property or assets is the subject, including ordinary routine litigation incidental to the business, would not result in a Manager Material Adverse Effect.

 

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(k)                                  The Manager or its subsidiaries have made or will timely make all necessary filings required under any applicable law, regulation or rule and possess such permits, licenses, approvals, consents and other authorizations issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary for the performance by the Manager of its obligations under the Management Agreement (collectively, “ Manager Governmental Licenses ”), except where the failure so to possess would not, singly or in the aggregate, result in a Manager Material Adverse Effect; the Manager and its subsidiaries are in compliance with the terms and conditions of all such Manager Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Manger Material Adverse Effect; all of the Manager Governmental Licenses are valid and in full force and effect, except where the invalidity of such Manager Governmental Licenses or the failure of such Manager Governmental Licenses to be in full force and effect would not, singly or in the aggregate, result in a Manager Material Adverse Effect; and neither the Manager nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Manager Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Manager Material Adverse Effect.

 

(l)                                      The Manager intends to operate under a system of internal accounting controls in order to provide reasonable assurance that (i) transactions effectuated by the Manager on behalf of the Company pursuant to the Manager’s duties set forth in the Management Agreement will be executed in accordance with its management’s general or specific authorization, and (ii) access to assets of the Company and its subsidiaries is permitted only in accordance with its management’s general or specific authorization.

 

(m)                              Neither the Manager nor any of its subsidiaries nor, to the knowledge of the Manager, any director, trustee, officer, agent, affiliate or other person acting on behalf of the Manager or any of its subsidiaries has taken any action, directly or indirectly, that would result in a violation by such persons of the FCPA, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Manager, its subsidiaries and, to the knowledge of the Manager, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(n)                                  Neither the Manager nor any of its subsidiaries nor, to the knowledge of the Manager, any director, trustee, officer, agent, affiliate or person acting on behalf of the Manager or any of its subsidiaries is currently subject to any U.S. sanctions administered or enforced by the Office of Foreign Assets Control of the U.S. Treasury Department, the United Nations Security Council, the European Union, Her Majesty’s Treasury or any other relevant sanctions authority. Since its inception, the Manager has

 

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not knowingly engaged in, or is now knowingly engaged in, any dealings or transactions with any person that at the time of the dealing or transaction is or was subject to any U.S. sanctions or with any country subject to any U.S. sanctions.

 

(o)                                  The operations of the Manager and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Money Laundering Laws and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator or non-governmental authority involving the Manager or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the Manager’s knowledge, threatened.

 

(p)                                  The Manager has not taken and will not take, directly or indirectly, any action which is designed, or would reasonably be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

 

(q)                                  The Manager has not been notified that (i) any of its executives or any of its key personnel plans to terminate employment with the Manager or (ii) any such executive or key personnel is subject to any non-compete, non-disclosure, confidentiality, employment, consulting or similar agreement that would be violated by either the Manager’s present or proposed business activities, except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a Manager Material Adverse Effect.

 

In addition, any certificate signed by any officer or other representative of the Manager delivered to the Representatives or to counsel for the Underwriters in connection with the offering of the Shares shall be deemed a representation and warranty by the Manager to each Underwriter as to the matters covered thereby.

 

5.                                       Certain Covenants of the Company .  The Company hereby agrees:

 

(a)                                  to furnish such information as may be required and otherwise to cooperate in qualifying the Shares for offering and sale under the securities or blue sky laws of such states or other jurisdictions as you may designate and to maintain such qualifications in effect so long as you may reasonably request for the distribution of the Shares; provided , however , that the Company shall not be required to qualify as a foreign corporation or to consent to the service of process under the laws of any such jurisdiction (except service of process with respect to the offering and sale of the Shares); and to promptly advise you of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for offer or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

(b)                                  to make available to the Underwriters in New York City, as soon as practicable after this Agreement has been executed, and thereafter from time to time to furnish to the Underwriters, as many copies of the Prospectus (or of the Prospectus as amended or supplemented if the Company shall have made any amendments or

 

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supplements thereto after the effective date of the Registration Statement) as the Underwriters may request for the purposes contemplated by the Act; in case any Underwriter is required to deliver (whether physically or through compliance with Rule 172 under the Act or any similar rule), in connection with the sale of the Shares, a prospectus after the nine-month period referred to in Section 10(a)(3) of the Act, the Company will prepare, at the Manager’s expense, promptly upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act;

 

(c)                                   if, at the time this Agreement is executed and delivered, it is necessary or appropriate for a post-effective amendment to the Registration Statement, or a Registration Statement under Rule 462(b) under the Act, to be filed with the Commission and become effective before the Shares may be sold, the Company will use its reasonable best efforts to cause such post-effective amendment or such Registration Statement to be filed and become effective, and the Manager will pay any applicable fees in accordance with the Act, as soon as possible; and the Company will advise you promptly and, if requested by you, will confirm such advice in writing, (i) when such post-effective amendment or such Registration Statement has become effective, and (ii) if Rule 430A under the Act is used, when the Prospectus is filed with the Commission pursuant to Rule 424(b) under the Act (which the Company agrees to file in a timely manner in accordance with such Rules);

 

(d)                                  for so long as a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with the Offering of the Shares, to notify you immediately upon an event that causes the Company to no longer qualify as an EGC;

 

(e)                                   to advise you promptly, confirming such advice in writing, of any request by the Commission for amendments or supplements to the Registration Statement or the Exchange Act Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or for additional information with respect thereto, or of notice of institution of proceedings for, or the entry of a stop order, suspending the effectiveness of the Registration Statement and, if the Commission should enter a stop order suspending the effectiveness of the Registration Statement, to use its best efforts to obtain the lifting or removal of such order as soon as possible; to advise you promptly of any proposal to amend or supplement the Registration Statement or the Exchange Act Registration Statement, any Preliminary Prospectus or the Prospectus, and to provide you and underwriters’ counsel copies of any such documents for review and comment a reasonable amount of time prior to any proposed filing and to file no such amendment or supplement to which you shall reasonably object as soon as reasonably practicable in writing;

 

(f)                                    subject to Section 5(e) hereof, to timely file all reports and documents and any preliminary or definitive proxy or information statement required to be filed by the Company with the Commission in order to comply with the Exchange Act for so long as a prospectus is required by the Act to be delivered (whether physically or through

 

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compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Shares; and to provide you with one business day advance notice of any filing to be made by the Company pursuant to Section 13, 14 or 15(d) of the Exchange Act during such period;

 

(g)                                   until the earlier of (i) such period as you are no longer required by the Act to deliver a prospectus and (ii) the expiration of nine months after the time of issue of the Prospectus to advise the Underwriters promptly of the happening of any event in connection with any sale of Shares, which event could require the making of any change in the Prospectus then being used so that the Prospectus would not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, and to advise the Underwriters promptly if, during such period, it shall become necessary to amend or supplement the Prospectus to cause the Prospectus to comply with the requirements of the Act, and, in each case, during such time, subject to Section 5(e) hereof, to prepare and furnish, at the Manager’s expense, to the Underwriters promptly such amendments or supplements to such Prospectus as may be necessary to reflect any such change or to effect such compliance, and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon the request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as such Underwriter may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;

 

(h)                                  to make generally available (within the meaning of Rule 158 under the Act) to its security holders, and, if not available on EDGAR, to deliver to you, an earnings statement of the Company (which will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the termination of such twelve-month period but in any case not later than the date determined in accordance with the provisions of the last paragraph of Section 11(a) of the Act and Rule 158(c) thereunder;

 

(i)                                      to furnish to you one copy for each Representative and one copy for underwriters’ counsel copies of the Registration Statement, as initially filed with the Commission, and of all amendments thereto (including all exhibits thereto) and sufficient copies of the foregoing (other than exhibits) for distribution of a copy to each of the other Underwriters;

 

(j)                                     if requested by you, to furnish to you as early as practicable prior to the time of purchase and any additional time of purchase, as the case may be, but not later than two business days prior thereto, a copy of the latest available unaudited interim and monthly consolidated financial statements, if any, of the Company and its subsidiaries which have been read by the Company’s independent registered public accountants, as stated in their letter to be furnished pursuant to Section 8(d) hereof, provided , however ,

 

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that the Company shall not be required to furnish any materials pursuant to this clause if such materials are available via EDGAR;

 

(k)                                  to apply the net proceeds from the sale of the Shares pursuant to this Agreement and the Common Shares pursuant to the Private Placement Purchase Agreement in the manner set forth under the caption “Use of Proceeds” in the Prospectus and to file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required by Rule 463 under the Act;

 

(l)                                      to comply with Rule 433(d) under the Act (without reliance on Rule 164(b) under the Act) and with Rule 433(g) under the Act;

 

(m)                              beginning on the date hereof and ending on, and including, the date that is 180 days after the date of the Prospectus (the “ Lock-Up Period ”), without the prior written consent of UBS, not to (i) issue, sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, with respect to, any Common Shares or any other securities of the Company that are substantially similar to Common Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (ii) file or cause to become effective a registration statement under the Act relating to the offer and sale of any Common Shares or any other securities of the Company that are substantially similar to Common Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Shares or any other securities of the Company that are substantially similar to Common Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, whether any such transaction is to be settled by delivery of Common Shares or such other securities, in cash or otherwise or (iv) publicly announce an intention to effect any transaction specified in clause (i), (ii) or (iii), except, in each case, for (A) the registration of the offer and sale of the Shares as contemplated by this Agreement, (B) issuances of Shares as contemplated by this Agreement, (C) issuances of Common Shares to the Manager pursuant to the Private Placement Purchase Agreement and (D) the filing of a registration statement on Form S-8 relating to the issuance of Common Shares pursuant to the Company’s 2017 Equity Compensation Plan (the “ 2017 Plan ”) described in the Registration Statement, the Disclosure Package and the Prospectus and the issuance by the Company of Common Shares pursuant to the 2017 Plan;

 

(n)                                  prior to the time of purchase or any additional time of purchase, as the case may be, to provide you with reasonable advance notice of and opportunity to comment on any press release or other communication directly or indirectly and hold no press conferences with respect to the Company or any subsidiary, the financial condition,

 

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results of operations, business, properties, assets, or liabilities of the Company or any subsidiary, or the offering of the Shares, and to issue no such press release or communications or hold such press conference without your prior consent, which consent shall not be unreasonably withheld, conditioned or delayed;

 

(o)                                  not, at any time at or after the execution of this Agreement, to, directly or indirectly, offer or sell any Shares by means of any “prospectus” (within the meaning of the Act), or use any “prospectus” (within the meaning of the Act) in connection with the offer or sale of the Shares, in each case other than the Prospectus;

 

(p)                                  not to, and to cause its subsidiaries not to, take, directly or indirectly, any action designed, or which will constitute, or has constituted, or might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;

 

(q)                                  to use its best efforts (i) to cause the Common Shares, including the Shares, to be listed for quotation on the NASDAQ and (ii) unless the board of trustees determines otherwise, to maintain such listing;

 

(r)                                     to use its best efforts to qualify and to elect to qualify for taxation as a REIT, under the Code effective for its taxable year ending December 31, 2017, and, unless the board of trustees determines otherwise, to remain qualified for taxation as a REIT thereafter;

 

(s)                                    for so long as the Company is subject to the reporting requirements of Section 13(g) or 15(d) of the Exchange Act, to maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the Common Shares.

 

6.                                       Covenants of the Manager . The Manager hereby agrees:

 

(a)                                  that, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172 under the Act, would be) required by the Act to be delivered in connection with sales of the Shares, it shall notify the Underwriters and the Company of the occurrence of any change that results in or would result in any Material Adverse Effect and the Manager will forthwith supply such information to the Company as shall be necessary in the opinion of counsel to the Company and the Underwriters for the Company to prepare any amendment or supplement to the Registration Statement, the Disclosure Package and the Prospectus so that, as so amended or supplemented, the same will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein (except in the case of the Registration Statement, in the light of the circumstances existing at the time it is delivered to a purchaser) not misleading; and

 

(b)                                  to pay all costs, expenses, fees and taxes in connection with (i) the preparation and filing of the Registration Statement, each Preliminary Prospectus, the

 

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Prospectus, each Permitted Free Writing Prospectus and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Underwriters and to dealers (including costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the Shares to the Underwriters, including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance or delivery of the Shares to the Underwriters, (iii) the producing, word processing, and/or printing of this Agreement, any Agreement Among Underwriters, any dealer agreements and any closing documents (including compilations thereof) for the offering of the Shares and the reproduction and/or printing and furnishing of copies of each thereof to the Underwriters and (except closing documents) to dealers (including costs of mailing and shipment), (iv) the qualification of the Shares for offering and sale under state or foreign laws and the determination of their eligibility for investment under state or foreign law (including the legal fees and filing fees and other disbursements of counsel for the Underwriters) and the printing and furnishing of copies of any blue sky surveys or legal investment surveys to the Underwriters and to dealers related to the Offering, (v) any qualification of the Shares for quotation on the NASDAQ and any registration thereof under the Exchange Act, (vi) any filing for review of the public offering of the Shares in the Offering by FINRA, including the legal fees and filing fees and other disbursements of counsel to the Underwriters relating to FINRA matters (such fees not to exceed $35,000), (vii) the initial fees and related disbursements of any transfer agent or registrar for the Shares, (viii) the costs and expenses relating to presentations or meetings undertaken by the Company in connection with the marketing of the offering and sale of the Shares to prospective investors and the Underwriters’ sales forces, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the officers of the Company and any such consultants, the pro rata cost of any aircraft chartered in connection with the road show, and the costs of all Covered Exempt Communications, (ix) the costs and expenses of initially qualifying the Shares for inclusion in the book-entry settlement system of the DTC, (x) the preparation and filing of the Exchange Act Registration Statement, including any amendments thereto, and (xi) the performance of the Company’s other obligations hereunder (but not including the Company’s obligations (for which any costs, expenses, fees and taxes will be paid by the Company) under Sections 5(h), 5(k), 5(m), 5(q)(ii), 5(r), 5(s) or 11). Except as provided in this Section 6(b), Section 7 and Section 11, the Underwriters will pay all of their costs and expenses, including, without limitation, fees and disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make.

 

7.                                       Reimbursement of the Underwriters’ Expenses .  If, after the execution and delivery of this Agreement, the Shares are not delivered for any reason other than the termination of this Agreement pursuant to subsection (ii) of the second paragraph of Section 9 hereof or the fifth paragraph of Section 10 hereof or the default by one or more of the Underwriters in its or their respective obligations hereunder, the Manager shall, in addition to paying the amounts described in Section 6(b) hereof, reimburse the Underwriters for all of their out-of-pocket expenses, including the fees and disbursements of their counsel.

 

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8.                                       Conditions of the Underwriters’ Obligations .  The several obligations of the Underwriters hereunder are subject to the accuracy of the representations and warranties on the part of the Company and the Manager on the date hereof, at the time of purchase and, if applicable, at the additional time of purchase, the performance by the Company and the Manager of their respective obligations hereunder and to the following additional conditions precedent:

 

(a)                                  The Company shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with an executed copy for each Representative and an executed or reproduced copy for each other Underwriter, and in form and substance satisfactory to the Representatives.

 

(b)                                  The Company shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Venable LLP, Maryland counsel for the Company, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with an executed copy for each Representative and an executed or reproduced copy for each other Underwriter, and in form and substance satisfactory to the Representatives.

 

(c)                                   The Company shall furnish to you at the time of purchase and, if applicable, at the additional time of purchase, an opinion of Sullivan & Worcester LLP, tax counsel for the Company, addressed to the Underwriters, and dated the time of purchase or the additional time of purchase, as the case may be, with an executed copy for each Representative and an executed or reproduced copy for each other Underwriter, and in form and substance satisfactory to the Representatives.

 

(d)                                  You shall have received from Ernst & Young LLP letters dated, respectively, the date of this Agreement, the date of the Prospectus, the time of purchase and, if applicable, the additional time of purchase, and addressed to the Underwriters (with an executed copy for each Representative and an executed or reproduced copy for each other Underwriter) in the forms satisfactory to the Representatives, which letters shall include statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters covering, without limitation, (i) the balance sheet (and the notes thereto) and the various other financial disclosures contained in the Registration Statement, the Disclosure Package and the Prospectus with respect to the Company; and (ii) the various financial disclosures contained in the Registration Statement, the Disclosure Package and the Prospectus with respect to Hospitality Properties Trust, Senior Housing Properties Trust, Select Income REIT, Government Properties Income Trust and RMR Real Estate Income Fund.

 

(e)                                   You shall have received at the time of purchase and, if applicable, at the additional time of purchase, the favorable opinion of Sidley Austin LLP, counsel for the Underwriters, dated the time of purchase or the additional time of purchase, as the case may be, in form and substance reasonably satisfactory to the Representatives.

 

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(f)                                    No Prospectus or amendment or supplement to the Registration Statement or the Prospectus shall have been filed to which you shall have reasonably objected as soon as reasonably practicable in writing.

 

(g)                                   The Registration Statement the Exchange Act Registration Statement and any registration statement required to be filed, prior to the sale of the Shares, under the Act pursuant to Rule 462(b) under the Act shall have been filed and shall have become effective under the Act or the Exchange Act, as the case may be.  If Rule 430A under the Act is used, the Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M., New York City time, on the second full business day after the date of this Agreement (or such earlier time as may be required under the Act).

 

(h)                                  Prior to and at the time of purchase, and, if applicable, the additional time of purchase, (i) no stop order with respect to the effectiveness of the Registration Statement shall have been issued under the Act or proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the Registration Statement and all post-effective amendments thereto shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) neither the Preliminary Prospectus nor the Prospectus, and no amendment or supplement thereto, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; (iv) no Disclosure Package, and no amendment or supplement thereto, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and (v) none of the Permitted Free Writing Prospectuses, if any, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

 

(i)                                      The Company will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate of its Chief Executive Officer and its Chief Financial Officer, on behalf of the Company, dated the time of purchase or the additional time of purchase, as the case may be, in the form attached as Exhibit B hereto.

 

(j)                                     The Company will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate of its Chief Financial Officer, on behalf of the Company, dated the time of purchase or the additional time of purchase, as the case may be, in the form attached as Exhibit C .

 

(k)                                  The Manager will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate of its Chief Executive Officer and its Chief Financial Officer, on behalf of the Manager, dated the time of purchase or the additional time of purchase, as the case may be, in the form attached as Exhibit D hereto.

 

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(l)                                      The Manager will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate of its Chief Financial Officer, on behalf of the Manager, dated the time of purchase or the additional time of purchase, as the case may be, in the form attached as Exhibit E .

 

(m)                              You shall have received each of the signed agreements (the “ Lock-Up Agreements ”) in the form set forth as Exhibit A hereto from each of the parties set forth in Exhibit A-1 hereto, and each such Lock-Up Agreement shall be in full force and effect at the time of purchase and the additional time of purchase, as the case may be.

 

(n)                                  The Company shall have furnished to you such other documents and certificates as to the accuracy and completeness of any statement in the Registration Statement, any Preliminary Prospectus, the Disclosure Package, the Prospectus or any Permitted Free Writing Prospectus as of the time of purchase and, if applicable, the additional time of purchase, as you may reasonably request.

 

(o)                                  The Shares shall have been approved for quotation on the NASDAQ, subject only to notice of issuance and evidence of satisfactory distribution at or prior to the time of purchase or the additional time of purchase, as the case may be.

 

(p)                                  FINRA shall not have raised any objection with respect to the fairness or reasonableness of the underwriting, or other arrangements of the transactions, contemplated hereby.

 

9.                                       Effective Date of Agreement; Termination .  This Agreement shall become effective when the parties hereto have executed and delivered this Agreement.

 

The obligations of the several Underwriters hereunder shall be subject to termination in the absolute discretion of the Representatives, if (i) since the time of execution of this Agreement or the earlier respective dates as of which information is given in the Registration Statement, the Disclosure Package and the Prospectus there has been any change or any development involving a prospective change in the business, properties, prospects, management, financial condition or results of operations of the Company and its subsidiaries taken as a whole, the effect of which change or development is, in the sole judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares on the terms and in the manner contemplated in the Registration Statement, the Disclosure Package and the Prospectus or (ii) since the time of execution of this Agreement, there shall have occurred: (A) a suspension or material limitation in trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the NASDAQ; (B) a suspension or material limitation in trading in the Company’s securities on the NASDAQ; (C) a general moratorium on commercial banking activities declared by either federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (D) an outbreak or escalation of hostilities or acts of terrorism involving the United States or a declaration by the United States of a national emergency or war; or (E) any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event

 

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specified in clause (D) or (E), in the sole judgment of the Representatives, makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares on the terms and in the manner contemplated in the Registration Statement, the Disclosure Package and the Prospectus.

 

If the Representatives elect to terminate this Agreement as provided in this Section 9, the Company and each other Underwriter shall be notified promptly in writing.

 

If the sale to the Underwriters of the Shares, as contemplated by this Agreement, is not carried out by the Underwriters for any reason permitted under this Agreement, or if such sale is not carried out because the Company shall be unable to comply with any of the terms of this Agreement, the Company shall not be under any obligation or liability under this Agreement (except to the extent provided in Section 11 hereof), the Manager shall not be under any obligation or liability under this Agreement (except to the extent provided in Sections 6(b) and 7 hereof) and the Underwriters shall be under no obligation or liability to the Company under this Agreement (except to the extent provided in Section 11 hereof) or to one another hereunder.

 

10.                                Increase in Underwriters’ Commitments .  Subject to Sections 8 and 9 hereof, if any Underwriter shall default in its obligation to take up and pay for the Firm Shares to be purchased by it hereunder (otherwise than for a failure of a condition set forth in Section 8 hereof or a reason sufficient to justify the termination of this Agreement under the provisions of Section 9 hereof) and if the number of Firm Shares which all Underwriters so defaulting shall have agreed but failed to take up and pay for does not exceed 10% of the total number of Firm Shares, the non-defaulting Underwriters (including the Underwriters, if any, substituted in the manner set forth below) shall take up and pay for (in addition to the aggregate number of Firm Shares they are obligated to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be purchased by all such defaulting Underwriters, as hereinafter provided. Such Shares shall be taken up and paid for by such non-defaulting Underwriters in such amount or amounts as you may designate with the consent of each Underwriter so designated or, in the event no such designation is made, such Shares shall be taken up and paid for by all non-defaulting Underwriters pro rata in proportion to the aggregate number of Firm Shares set forth opposite the names of such non-defaulting Underwriters in Schedule A .

 

Without relieving any defaulting Underwriter from its obligations hereunder, the Company agrees with the non-defaulting Underwriters that it will not sell any Firm Shares hereunder unless all of the Firm Shares are purchased by the Underwriters (or by substituted Underwriters selected by you with the approval of the Company or selected by the Company with your approval).

 

If a new Underwriter or Underwriters are substituted by the Underwriters or by the Company for a defaulting Underwriter or Underwriters in accordance with the foregoing provision, the Company or you shall have the right to postpone the time of purchase for a period not exceeding five business days in order that any necessary changes in the Registration Statement and the Prospectus and other documents may be effected.

 

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The term “Underwriter” as used in this Agreement shall refer to and include any Underwriter substituted under this Section 10 with like effect as if such substituted Underwriter had originally been named in Schedule A hereto.

 

If the aggregate number of Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase exceeds 10% of the total number of Firm Shares which all Underwriters agreed to purchase hereunder, and if neither the non-defaulting Underwriters nor the Company shall make arrangements within the five business day period stated above for the purchase of all the Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall terminate without further act or deed and without any liability on the part of the Company to any Underwriter and without any liability on the part of any non-defaulting Underwriter to the Company.  Nothing in this paragraph, and no action taken hereunder, shall relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

 

11.                                Indemnity and Contribution .

 

(a)                                  The Company agrees to indemnify, defend and hold harmless each Underwriter, its partners, directors, officers, employees and members, any person who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and any “affiliate” (within the meaning of Rule 405 under the Act) of such Underwriter, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, any such Underwriter or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Company), or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in the Registration Statement or arises out of or is based upon any omission or alleged omission to state a material fact in the Registration Statement in connection with such information, which material fact was not contained in such information and which material fact was required to be stated in such Registration Statement or was necessary to make such information not misleading or (ii) any untrue statement or alleged untrue statement of a material fact included in any Prospectus (the term Prospectus for the purpose of this Section 11 being deemed to include any Preliminary Prospectus, the Prospectus and any amendments or supplements to the foregoing), in any Covered Free Writing Prospectus, in any Covered Exempt Written Communication, in any “issuer information” (as defined in Rule 433 under the Act) of the Company, which “issuer information” is required to be, or is, filed with the Commission, or in any Prospectus together with any combination of one or more of the

 

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Covered Free Writing Prospectuses, if any, and one or more Covered Exempt Written Communications , if any, or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except, with respect to such Prospectus or any Permitted Free Writing Prospectus or any Permitted Exempt Written Communication, insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, such Prospectus or Permitted Free Writing Prospectus or Permitted Exempt Written Communication or arises out of or is based upon any omission or alleged omission to state a material fact in such Prospectus or Permitted Free Writing Prospectus or Permitted Exempt Written Communication in connection with such information, which material fact was not contained in such information and which material fact was necessary in order to make the statements in such information, in the light of the circumstances under which they were made, not misleading, and, subject to subsection (c) below, will reimburse each “indemnified party” (defined below) for any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending against any loss, damage, expense, liability, claim, action, litigation, investigation or proceeding whatsoever (whether or not such indemnified party is a party thereto), whether threatened or commenced, and in connection with the enforcement of this provision with respect to the above as such fees and expenses are incurred.

 

(b)                                  Each Underwriter severally agrees to indemnify, defend and hold harmless the Company, its trustees and officers, and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Company or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Company), or arises out of or is based upon any omission or alleged omission to state a material fact in such Registration Statement in connection with such information, which material fact was not contained in such information and which material fact was required to be stated in such Registration Statement or was necessary to make such information not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to the Company expressly for use in, a Prospectus or a Permitted Free Writing Prospectus or a Permitted Exempt Written Communication, or arises out of or is based upon any omission or alleged omission to state a material fact in such Prospectus or Permitted Free Writing Prospectus or Permitted

 

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Exempt Written Communication in connection with such information , which material fact was not contained in such information and which material fact was necessary in order to make the statements in such information, in the light of the circumstances under which they were made, not misleading.

 

(c)                                   If any action, suit or proceeding (each, a “ Proceeding ”) is brought against a person (an “ indemnified party ”) in respect of which indemnity may be sought against the Company or an Underwriter (as applicable, the “ indemnifying party ”) pursuant to subsection (a) or (b), respectively, of this Section 11, such indemnified party shall promptly notify such indemnifying party in writing of the institution of such Proceeding and such indemnifying party shall assume the defense of such Proceeding, including the retention of counsel reasonably satisfactory to such indemnified party, and pay all legal or other fees and expenses related to such Proceeding or incurred in connection with such indemnified party’s successful enforcement of subsection (a) or (b) of this Section 11; provided , however , that the omission to so notify such indemnifying party shall not relieve such indemnifying party from any liability that such indemnifying party may have to any indemnified party or otherwise.  The indemnified party or parties shall have the right to retain its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the retention of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such Proceeding, (ii) the indemnifying party shall not have, within a reasonable period of time in light of the circumstances, retained counsel to defend such Proceeding or (iii) if the defendants in any such action include both the indemnified party and the indemnifying party and such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them that are different from, additional to or in conflict with those available to such indemnifying party (in which case such indemnifying party shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties), in any of which events such reasonable fees and expenses shall be borne by such indemnifying party and paid as incurred (it being understood, however, that such indemnifying party shall not be liable for the fees or expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding).  The indemnifying party shall not be liable for any settlement of any Proceeding effected without its written consent but, if settled with its written consent, such indemnifying party agrees to indemnify and hold harmless the indemnified party or parties from and against any loss or liability by reason of such settlement.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this Section 11(c), then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have fully reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days’ prior notice of its intention to settle.  No indemnifying party shall,

 

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without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault or culpability or a failure to act by or on behalf of such indemnified party.

 

(d)                                  If the indemnification provided for in this Section 11 is unavailable to an indemnified party under subsections (a) and (b) of this Section 11 or insufficient to hold an indemnified party harmless in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same respective proportions as the total proceeds from the offering (before deducting expenses) received by the Company, and the total underwriting discounts and commissions received by the Underwriters, bear to the aggregate public offering price of the Shares.  The relative fault of the Company on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to in this subsection shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating, preparing to defend or defending any Proceeding.

 

(e)                                   The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 11 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in subsection (d) above.  Notwithstanding the provisions of this Section 11, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by such Underwriter and distributed to the public were offered to the public exceeds the amount of any damage which such Underwriter has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent

 

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misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The Underwriters’ obligations to contribute pursuant to this Section 11 are several in proportion to their respective underwriting commitments and not joint.

 

(f)                                    The indemnity and contribution agreements contained in this Section 11 and the covenants, warranties and representations of the Company and the Manager contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of any Underwriter, its partners, directors, officers, employees, affiliates or members or any person (including each partner, officer, director or member of such person) who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of the Company, its trustees or officers or any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall survive any termination of this Agreement or the issuance and delivery of the Shares. The Company and each Underwriter agree promptly to notify each other of the commencement of any Proceeding against it and, in the case of the Company, against any of the Company’s officers or trustees in connection with the issuance and sale of the Shares, or in connection with the Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus.

 

12.                                Information Furnished by the Underwriters .  The statements set forth in: (i) the last paragraph on the cover page of the Prospectus; (ii) the fourth and fifth paragraphs under the caption “Underwriting” in the Prospectus regarding the Underwriters’ intent to make a market in Common Shares and the distribution of Prospectuses electronically; and (iii) the second, third and fourth sentences under the caption “Underwriting—Underwriting discounts and commissions” in the Prospectus; and (iv) “Underwriting—Price Stabilization, short positions” in the Prospectus, insofar as such statements relate to stabilization activities that may be undertaken by the Underwriters, constitute the only information furnished by or on behalf of the Underwriters, as such information is referred to in Sections 3 and 11 hereof.

 

13.                                Notices .  Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by telegram or facsimile and, if to the Underwriters, shall be sufficient in all respects if delivered or sent to UBS Securities LLC, 1285 Avenue of the Americas, New York, New York 10019, Attention: Syndicate (facsimile: (212) 713-3371); Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York 10013 Attention: General Counsel, (facsimile: (646) 291-1469); and RBC Capital Markets, LLC, 200 Vesey Street, 8th Floor, New York, NY 10281 and if to the Company or the Manager, shall be sufficient in all respects if delivered or sent to the Company or the Manager at the offices of the Company and the Manager at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 (facsimile: (617) 928-1305), Attention: David M. Blackman, Chief Executive Officer.

 

14.                                Governing Law; Construction .  This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement (“ Claim ”), directly or indirectly, shall be governed by, and construed in accordance with, the

 

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laws of the State of New York without regard to the conflicts of law principles thereof.  The section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement.

 

15.                                Submission to Jurisdiction .  Except as set forth below, no Claim may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company consents to the jurisdiction of such courts and personal service with respect thereto.  The Company hereby consents to personal jurisdiction, service and venue in any court in which any Claim arising out of or in any way relating to this Agreement is brought by any third party against any Underwriter or any indemnified party. Each Underwriter and the Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) waive all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement.  The Company agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other courts to the jurisdiction of which the Company is or may be subject, by suit upon such judgment. Each Underwriter agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon it and may be enforced in any other courts to the jurisdiction of which it is or may be subject, by suit upon such judgment.

 

16.                                Parties at Interest .  The Agreement herein set forth has been and is made solely for the benefit of the Underwriters and the Company and to the extent provided in Section 11 hereof the controlling persons, partners, trustees, directors, officers, members and affiliates referred to in such Section, and their respective successors, assigns, heirs, personal representatives and executors and administrators.  No other person, partnership, association or corporation (including a purchaser, as such purchaser, from any of the Underwriters) shall acquire or have any right under or by virtue of this Agreement.

 

17.                                No Fiduciary Relationship . The Company and the Manager each hereby acknowledge that the Underwriters are acting solely as underwriters in connection with the purchase and sale of the Company’s securities. The Company and the Manager each further acknowledge that the Underwriters are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s length basis, and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to the Company, the Manager, the management, the Manager, shareholders or creditors of either the Company or the Manager or any other person in connection with any activity that the Underwriters may undertake or have undertaken in furtherance of the purchase and sale of the Company’s securities, either before or after the date hereof.  The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company and the Manager, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Company and the Manager each hereby confirm their respective understanding and agreement to that effect.  The Company, the Manager and the Underwriters agree that they are each responsible for making their own independent judgments with respect to any such transactions

 

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and that any opinions or views expressed by the Underwriters to the Company or the Manager regarding such transactions, including, but not limited to, any opinions or views with respect to the price or market for the Company’s securities, do not constitute advice or recommendations to the Company or the Manager. The Company, the Manager and the Underwriters agree that the Underwriters are acting as principal and not the agent or fiduciary of the Company or the Manager and no Underwriter has assumed, and none of them will assume, any advisory responsibility in favor of the Company or the Manager with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether any Underwriter has advised or is currently advising the Company or the Manager on other matters).  The Company and the Manager each hereby waive and release, to the fullest extent permitted by law, any claims that the Company or the Manager may have against the Underwriters with respect to any breach or alleged breach of any fiduciary, advisory or similar duty to the Company or the Manager in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.

 

18.                                Counterparts .  This Agreement may be signed by the parties in one or more counterparts which together shall constitute one and the same agreement among the parties.

 

19.                                Successors and Assigns .  This Agreement shall be binding upon the Underwriters and the Company, the Manager and their respective successors and assigns and any successor or assign of any substantial portion of the Company’s, the Manager’s and any of the Underwriters’ respective businesses and/or assets.

 

20.                                Compliance with USA Patriot Act . In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company and the Manager, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.

 

21.                                Miscellaneous .  UBS, an indirect, wholly owned subsidiary of UBS AG, is not a bank and is separate from any affiliated bank, including any U.S. branch or agency of UBS AG.  Because UBS is a separately incorporated entity, it is solely responsible for its own contractual obligations and commitments, including obligations with respect to sales and purchases of securities.  Securities sold, offered or recommended by UBS are not deposits, are not insured by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or agency, and are not otherwise an obligation or responsibility of a branch or agency.

 

[ The Remainder of This Page Intentionally Left Blank; Signature Page Follows ]

 

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If the foregoing correctly sets forth the understanding among the Company, the Manager and the several Underwriters, please so indicate in the space provided below for that purpose, whereupon this Agreement and your acceptance shall constitute a binding agreement among the Company, the Manager and the several Underwriters.

 

 

Very truly yours,

 

 

 

TREMONT MORTGAGE TRUST

 

 

 

 

 

By:

/s/ Jennifer B. Clark

 

 

Name: Jennifer B. Clark

 

 

Title: Secretary

 

 

 

 

 

TREMONT REALTY ADVISORS LLC

 

 

 

 

 

By:

/s/ Adam D. Portnoy

 

 

Name: Adam D. Portnoy

 

 

Title: President and Chief Executive Officer

 



 

Accepted and agreed to as of the date first above written, on behalf of themselves and the other several Underwriters named in Schedule A

 

 

 

UBS SECURITIES LLC

 

CITIGROUP GLOBAL MARKETS INC.

 

RBC CAPITAL MARKETS, LLC.

 

 

 

 

 

By: UBS SECURITIES LLC

 

 

 

By:

/s/ Bethany Ropa

 

 

Name: Bethany Ropa

 

 

Title: Executive Director

 

 

 

By:

/s/ Sebastian Nakab

 

 

Name: Sebastian Nakab

 

 

Title: Director

 

 

 

 

 

By: CITIGROUP GLOBAL MARKETS INC.

 

 

 

 

 

By:

/s/ Adam C. Pozza

 

 

Name: Adam C. Pozza

 

 

Title: Vice President

 

 

 

 

 

By: RBC CAPITAL MARKETS, LLC.

 

 

 

 

 

By:

/s/ John Perkins

 

 

Name: John Perkins

 

 

Title: Managing Director

 

 



 

SCHEDULE A

 

Underwriter

 

Number of
Firm Shares

 

UBS SECURITIES LLC

 

612,500

 

CITI GROUP GLOBAL MARKETS INC.

 

675,000

 

RBC CAPITAL MARKETS, LLC

 

612,500

 

BB&T CAPITAL MARKETS, A DIVISION OF BB&T SECURITIES, LLC

 

150,000

 

FBR CAPITAL MARKETS & CO. (“FBR”)

 

150,000

 

JANNEY MONTGOMERY SCOTT LLC

 

150,000

 

OPPENHEIMER & CO. INC.

 

150,000

 

 

 

 

 

Total

 

2,500,000

 

 



 

SCHEDULE B

 

Permitted Free Writing Prospectuses

 

Term Sheet, dated September 13, 2017, as filed with the Commission on September 14, 2017.

 

Permitted Exempt Written Communications

 

Investor Presentation date September 4, 2017

 

Pricing Information Provided by Underwriters

 

Term Sheet, dated September 13, 2017, as filed with the Commission on September 14, 2017.

 



 

EXHIBIT A

 

Lock-Up Agreement

 

                      , 2017

 

UBS Securities LLC

Together with the other Underwriters

named in Schedule A to the Underwriting Agreement

referred to herein

 

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

Ladies and Gentlemen:

 

This Lock-Up Agreement is being delivered to you in connection with the proposed Underwriting Agreement (the “ Underwriting Agreement ”) to be entered into by Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Company ”), Tremont Realty Advisors LLC, a Maryland limited liability company and the Company’s manager, and the underwriters to be named in Schedule A thereto, for whom UBS Securities LLC (“ UBS ”), Citigroup Global Markets Inc. and RBC Capital Markets, LLC intend to act as representatives, with respect to the public offering (the “ Offering ”) of common shares of beneficial interest, $0.01 par value per share, of the Company (the “ Common Shares ”).

 

In order to induce you to enter into the Underwriting Agreement, the undersigned agrees that, for a period (the “ Lock-Up Period ”) beginning on the date hereof and ending on, and including, the date that is 180 days after the date of the final prospectus relating to the Offering, the undersigned will not, without the prior written consent of UBS, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in the filing of) a registration statement with the Securities and Exchange Commission (the “ Commission ”) in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (the “ Exchange Act ”) with respect to, any Common Shares or any other securities of the Company that are substantially similar to Common Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Shares or any other securities of the Company that are substantially similar to Common Shares, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, whether any such transaction is to be settled by delivery of Common Shares or such other securities, in cash or otherwise or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii).  The

 

A- 1



 

foregoing sentence shall not apply to (a) the registration of the offer and sale of Common Shares as contemplated by the Underwriting Agreement and the sale of the Common Shares to the Underwriters (as defined in the Underwriting Agreement) in the Offering, (b) bona fide gifts, provided the recipient thereof agrees in writing with the Underwriters to be bound by the terms of this Lock-Up Agreement or (c) dispositions to any trust for the direct or indirect benefit of the undersigned and/or the immediate family of the undersigned, provided that such trust agrees in writing with the Underwriters to be bound by the terms of this Lock-Up Agreement, and (d) dispositions of Common Shares acquired pursuant to the Company’s 2017 Equity Compensation Plan solely in an amount necessary to satisfy tax withholding obligations in connection with such acquisition, provided that the related Form 4 notes in a footnote that such disposition was undertaken solely to satisfy tax obligations. For purposes of this paragraph, “immediate family” shall mean the undersigned and the spouse, any lineal descendent, father, mother, brother or sister of the undersigned.

 

In addition, the undersigned hereby waives any rights the undersigned may have to require registration of Common Shares in connection with the filing of a registration statement relating to the Offering.  The undersigned further agrees that, for the Lock-Up Period, the undersigned will not, without the prior written consent of UBS, make any demand for, or exercise any right with respect to, the registration of Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares, or warrants or other rights to purchase Common Shares or any such securities.

 

In addition, the undersigned hereby waives any and all preemptive rights, participation rights, resale rights, rights of first refusal and similar rights that the undersigned may have in connection with the Offering or with any issuance or sale by the Company of any equity or other securities before the Offering, except for any such rights as have been heretofore duly exercised.

 

The undersigned hereby authorizes the Company and its transfer agent, during the Lock-Up Period, to decline the transfer of or to note stop transfer restrictions on the share register and other records relating to Common Shares or other securities subject to this Lock-Up Agreement of which the undersigned is the record holder, and, with respect to Common Shares or other securities subject to this Lock-Up Agreement of which the undersigned is the beneficial owner but not the record holder, the undersigned hereby agrees to cause such record holder to authorize the Company and its transfer agent, during the Lock-Up Period, to decline the transfer of or to note stop transfer restrictions on the share register and other records relating to such shares or other securities.

 

*     *     *

 

A- 2



 

If (i) the Company notifies you in writing that it does not intend to proceed with the Offering, (ii) the registration statement filed with the Commission with respect to the Offering is withdrawn or (iii) for any reason the Underwriting Agreement shall be terminated prior to the “time of purchase” (as defined in the Underwriting Agreement), this Lock-Up Agreement shall be terminated and the undersigned shall be released from its obligations hereunder.

 

 

Yours very truly,

 

 

 

 

 

 

 

Name:

 

A- 3



 

EXHIBIT A-1

 

LIST OF PARTIES TO EXECUTE LOCK-UP AGREEMENTS

 

Name

 

Position

 

 

 

1.               Barry M. Portnoy

 

Managing Trustee

 

 

 

2.               Adam D. Portnoy

 

Managing Trustee

 

 

 

3.               John L. Harrington

 

Independent Trustee

 

 

 

4.               Joseph L. Morea

 

Independent Trustee

 

 

 

5.               Jeffrey P. Somers

 

Independent Trustee

 

 

 

6.               David M. Blackman

 

Chief Executive Officer

 

 

 

7.               Daniel O. Mee

 

Co-President and Chief Operating Officer

 

 

 

8.               Richard C. Gallitto

 

Co-President and Chief Investment Officer

 

 

 

9.               G. Douglas Lanois

 

Chief Financial Officer and Treasurer

 

 

 

10.        Tremont Realty Advisors LLC

 

The Manager

 

 

 

11.        The RMR Group Inc.

 

The managing member of The RMR Group LLC

 

 

 

12.        The RMR Group LLC

 

The sole member of the Manager

 

A-1- 1



 

EXHIBIT B

 

OFFICERS’ CERTIFICATE

 

Each of the undersigned, David M. Blackman, Chief Executive Officer of Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Company ”), and G. Douglas Lanois, Chief Financial Officer and Treasurer of the Company, on behalf of the Company, does hereby certify on behalf of the Company pursuant to Section 8(i) of that certain Underwriting Agreement dated [ · ], 2017 (the “ Underwriting Agreement ”) among the Company, Tremont Realty Advisors LLC, a Maryland limited liability company and the Company’s manager, and the underwriters named in Schedule A thereto, for whom UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as representatives, that as of [ · ], 2017:

 

1.               He has reviewed the Registration Statement, each Preliminary Prospectus, the Prospectus and each Permitted Free Writing Prospectus.

 

2.               The representations and warranties of the Company as set forth in the Underwriting Agreement are true and correct as of the date hereof and as if made on the date hereof.

 

3.               The Company has performed all of its obligations under the Underwriting Agreement as are to be performed at or before the date hereof.

 

4.               The conditions set forth in paragraph (h) of Section 8 of the Underwriting Agreement have been met.

 

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

 

IN WITNESS WHEREOF, the undersigned have hereunto set their hands on this [ · ], 2017.

 

[ Signature Page Follows]

 

B- 1



 

 

TREMONT MORTGAGE TRUST

 

 

 

 

 

 

 

Name:

David M. Blackman

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

Name:

G. Douglas Lanois

 

Title:

Chief Financial Officer and Treasurer

 

B- 2



 

EXHIBIT C

 

CHIEF FINANCIAL OFFICER’S CERTIFICATE

 

[ · ], 2017

 

The undersigned, G. Douglas Lanois, Chief Financial Officer of Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Company ”), on behalf of the Company, does hereby certify on behalf of the Company pursuant to Section 8(j) of the Underwriting Agreement dated [ · ], 2017 (the “ Underwriting Agreement ”) among the Company, Tremont Realty Advisors LLC, a Maryland limited liability company and the Company’s manager, and the underwriters named in Schedule A thereto (the “ Underwriters ”), for whom UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as representatives, that:

 

(i)                                      I am the duly appointed, qualified and acting Chief Financial Officer of the Company and, solely in my capacity as such, I am providing this certificate based on my examination of the Company’s financial records and schedules.

 

(ii)                                   I am knowledgeable with respect to the accounting records and internal accounting practices, policies, procedures and controls of the Company and its subsidiaries and have responsibility for financial and accounting matters with respect to the Company and its subsidiaries.

 

(iii)                                I have read and am familiar with, and have supervised the compilation of, the disclosures (including the financial statements and other financial data of the Company and its subsidiaries) contained in the preliminary prospectus dated [ · ], 2017 (the “ Preliminary Prospectus ”) and the final prospectus dated [ · ], 2017 (the “ Final Prospectus ”).

 

(iv)                               I have reviewed the circled information contained on the pages attached hereto as Exhibit A (the “ circled information ”) and included in the Preliminary Prospectus [and the Final Prospectus] and such information (a) has been accurately derived from the internal accounting and financial records of the Company and its subsidiaries, (b) has been prepared in good faith and based on fair and reasonable assumptions and (c) is accurate and complete.  As of the date hereof, nothing has come to my attention that has caused me to believe that the circled information is not accurate or is misleading in any material respect and I am not aware of any adjustments that would reasonably be expected to cause such circled information to vary from the amounts presented therein in any material respect.

 

This certificate is being furnished to the Underwriters to assist them in documenting their investigation of the Company in connection with the transactions contemplated by the Underwriting Agreement.

 

[ Signature Page Follows]

 

C- 1



 

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first written above.

 

 

 

TREMONT MORTGAGE TRUST

 

 

 

 

 

 

 

Name:

G. Douglas Lanois

 

Title:

Chief Financial Officer

 

C- 2



 

EXHIBIT D

 

MANAGER’S OFFICERS’ CERTIFICATE

 

Each of the undersigned, Adam D. Portnoy, President and Chief Executive Officer of Tremont Realty Advisors LLC, a Maryland limited liability company (the “ Manager ”), and Matthew P. Jordan, Senior Vice President, Treasurer and Chief Financial Officer of the Manager, on behalf of the Manager, does hereby certify on behalf of the Manager pursuant to Section 8(k) of that certain Underwriting Agreement dated [ · ], 2017 (the “ Underwriting Agreement ”) among Tremont Mortgage Trust, a Maryland real estate investment trust, the Manager and the underwriters named in Schedule A thereto, for whom UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as representatives, that as of [ · ], 2017:

 

1.               He has reviewed the Registration Statement, each Preliminary Prospectus, the Prospectus and each Permitted Free Writing Prospectus.

 

2.               The representations and warranties of the Manager as set forth in the Underwriting Agreement are true and correct as of the date hereof and as if made on the date hereof.

 

3.               The Manager has performed all of its obligations under the Underwriting Agreement as are to be performed at or before the date hereof.

 

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Underwriting Agreement.

 

IN WITNESS WHEREOF, the undersigned have hereunto set their hands on this [ · ], 2017.

 

[ Signature Page Follows]

 

D- 1



 

 

TREMONT REALTY ADVISORS LLC

 

 

 

 

 

Name:

Adam D. Portnoy

 

Title:

President and Chief Executive Officer

 

 

 

 

 

 

 

Name:

Matthew P. Jordan

 

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 

D- 2



 

EXHIBIT E

 

MANAGER’S CHIEF FINANCIAL OFFICER’S CERTIFICATE

 

[ · ], 2017

 

The undersigned, Matthew P. Jordan, Chief Financial Officer of Tremont Realty Advisors LLC, a Maryland limited liability company (the “ Manager ”), on behalf of the Manager, does hereby certify on behalf of the Manager pursuant to Section 8(l) of the Underwriting Agreement dated [ · ], 2017 (the “ Underwriting Agreement ”) among Tremont Mortgage Trust, a Maryland real estate investment trust, the Manager and the underwriters named in Schedule A thereto (the “ Underwriters ”), for whom UBS Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as representatives, that:

 

(i)                                      I am the duly appointed, qualified and acting Chief Financial Officer of the Manager and, solely in my capacity as such, I am providing this certificate based on my examination of the Manager’s financial records and schedules.

 

(ii)                                   I am knowledgeable with respect to the accounting records and internal accounting practices, policies, procedures and controls of the Manager and its subsidiaries and have responsibility for financial and accounting matters with respect to the Manager and its subsidiaries.

 

(iii)                                I have read and am familiar with, and have supervised the compilation of, the disclosures relating to the Manager contained in the preliminary prospectus dated [ · ], 2017 (the “ Preliminary Prospectus ”) and the final prospectus dated [ · ], 2017 (the “ Final Prospectus ”).

 

(iv)                               I have reviewed the circled information contained on the pages attached hereto as Exhibit A (the “ circled information ”) and included in the Preliminary Prospectus [and the Final Prospectus] and such information (a) has been accurately derived from the internal accounting and financial records of the Manager and its subsidiaries, (b) has been prepared in good faith and based on fair and reasonable assumptions and (c) is accurate and complete.  As of the date hereof, nothing has come to my attention that has caused me to believe that the circled information is not accurate or is misleading in any material respect and I am not aware of any adjustments that would reasonably be expected to cause such circled information to vary from the amounts presented therein in any material respect.

 

This certificate is being furnished to the Underwriters to assist them in documenting their investigation of the Manager in connection with the transactions contemplated by the Underwriting Agreement.

 

[ Signature Page Follows]

 

E- 1



 

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first written above.

 

 

 

TREMONT REALTY ADVISORS LLC

 

 

 

 

 

 

 

Name:

Matthew P. Jordan

 

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 

E- 2


Exhibit 3.1

 

TREMONT MORTGAGE TRUST

 

ARTICLES OF AMENDMENT AND RESTATEMENT

 

FIRST :  Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Trust ”), formed under Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland, hereby amends and restates its Declaration of Trust as currently in effect as provided herein, so that the following provisions are all the provisions of the Declaration of Trust of the Trust as so amended and restated:

 

ARTICLE I

FORMATION

 

Section 1.1            Formation .  Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Trust ”) is a real estate investment trust within the meaning of Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland (“ Title 8 ”).  The Trust shall not be deemed to be a general partnership, limited partnership, joint venture, joint stock company or a corporation, but nothing herein shall preclude the Trust from being treated for tax purposes as an association under the Internal Revenue Code of 1986, as amended, including the regulations and rulings promulgated thereunder, all as from time to time in effect, or any successor law, regulations and rulings (the “ Code ”); nor shall the trustees of the Trust (hereinafter, each a “ Trustee ” and, collectively, the “ Trustees ”) or shareholders of the Trust or any of them for any purpose be, nor be deemed to be, nor be treated in any way whatsoever as, liable or responsible hereunder as partners or joint venturers.

 

ARTICLE II

NAME

 

Section 2.1            Name .  The name of the Trust is:

 

Tremont Mortgage Trust

 

The Board of Trustees of the Trust (the “ Board of Trustees ” or “ Board ”) may, in its sole discretion, change or use any other designation or name for the Trust.

 

ARTICLE III

PURPOSES AND POWERS

 

Section 3.1            Purposes .  The purposes for which the Trust is formed are to engage in any lawful act or activity for which real estate investment trusts may be organized under the general laws of the State of Maryland as now or hereinafter in force

 



 

including engaging in business as a real estate investment trust within the meaning of Sections 856 through 860 of the Code (a “ REIT ”).

 

Section 3.2            Powers .  The Trust shall have all of the powers granted to real estate investment trusts by Title 8 and all other powers set forth in the Declaration of Trust that are not inconsistent with law and are appropriate to promote and attain the purposes set forth in the Declaration of Trust.

 

ARTICLE IV

RESIDENT AGENT

 

Section 4.1            Resident Agent .  The name of the resident agent of the Trust in the State of Maryland is CSC-Lawyers Incorporating Service Company, whose address is 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202.  The resident agent is a Maryland corporation.  The Trust may change such resident agent from time to time as the Board of Trustees shall determine.  The Trust may have such offices or places of business within or outside the State of Maryland as the Board of Trustees may from time to time determine.

 

ARTICLE V

BOARD OF TRUSTEES

 

Section 5.1            Powers .  Subject to any express limitations contained in the Declaration of Trust or adopted by the Board in the Bylaws of the Trust (the “ Bylaws ”), (a) the business and affairs of the Trust shall be managed under the direction of the Board of Trustees and (b) the Board shall have full, exclusive and absolute power, control and authority over any and all assets of the Trust.  The Board may take any action as in its sole discretion it deems necessary or appropriate to conduct the business and affairs of the Trust.  The Declaration of Trust shall be construed with the presumption in favor of the grant of power and authority to the Board.  Any construction of the Declaration of Trust or determination by the Board concerning its powers and authority hereunder shall be conclusive.  The enumeration and definition of particular powers of the Board of Trustees included in the Declaration of Trust or in the Bylaws shall in no way be construed or deemed by inference or otherwise in any manner to exclude or limit the powers conferred upon the Board or the Trustees under the general laws of the State of Maryland or any other applicable laws.

 

The Board, without any action by or approval of the shareholders of the Trust, shall have and may exercise, on behalf of the Trust, without limitation, the power to terminate the status of the Trust as a REIT, to determine that compliance with any restriction or limitations on ownership and transfers of Shares (as defined in Section 6.1 ) set forth in Article VII is no longer required in order for the Trust to qualify for taxation as a REIT, to adopt, amend and repeal the Bylaws, to elect officers in the manner

 

2



 

prescribed in the Bylaws, to solicit proxies from holders of Shares and to do any other acts and deliver any other documents necessary or appropriate to the foregoing powers.

 

Section 5.2            Manager .  The Board of Trustees shall have the power to appoint, employ or contract with any Person (including any Trustee or any Person affiliated with any Trustee, any Person of which any Trustee is a trustee, director, officer or employee or any Person in which any Trustee has a material financial or other interest) as the Board in its sole discretion deems necessary or desirable as Manager to conduct the day to day management of the Trust’s operations.  The Board may grant or delegate such power and authority to the Manager as the Board in its sole discretion deems necessary or desirable. For purposes of the Declaration of Trust, “ Manager ” means Tremont Realty Advisors LLC, a Maryland limited liability company, and its successors and assigns, or such other Person(s) as the Board shall from time to time engage to conduct the day to day management of the Trust’s operations and the Manager shall be deemed to be an “agent” of the Trust.

 

Section 5.3            Initial Trustees; Classification; Number; Qualifications; Election; Vacancies .

 

(a)           Initial Trustees .  The initial Trustees are Adam D. Portnoy and Barry M. Portnoy.  As of the time these Articles of Amendment and Restatement become effective (the “ Effective Time ”), the number of Trustees shall be increased from two to five, Adam D. Portnoy and Barry M. Portnoy shall be the Managing Trustees and John L. Harrington, Joseph L. Morea, and Jeffrey P. Somers shall be the Independent Trustees, with the terms of office as set forth herein.

 

(b)           Classification .  As of and after the Effective Time, the terms for which Trustees severally serve shall be staggered into the following three classes (each a “ Class ”): (i) Class I, whose term shall continue until the first annual meeting of shareholders of the Trust held after the Effective Time and until their successors are elected and qualified; (ii) Class II, whose term shall continue until the second annual meeting of shareholders of the Trust held after the Effective Time and until their successors are elected and qualified; and (iii) Class III, whose term shall continue until the third annual meeting of shareholders of the Trust held after the Effective Time and until their successors are elected and qualified.  The Trustees serving at the Effective Time shall be assigned to the following Classes:

 

Name of Trustee

 

Type of Trustee

 

Class

Jeffrey P. Somers

 

Independent Trustee

 

I

Barry M. Portnoy

 

Managing Trustee

 

I

John L. Harrington

 

Independent Trustee

 

II

 

3



 

Adam D. Portnoy

 

Managing Trustee

 

II

Joseph P. Morea

 

Independent Trustee

 

III

 

Beginning with the first annual meeting of shareholders of the Trust after the Effective Time, at each annual meeting of shareholders, the successors of the Class of Trustees whose term continues until that meeting shall be elected to serve for a term continuing until the annual meeting of shareholders of the Trust held in the third year following the year of their election and the election and qualification of his or her successor.

 

The Board of Trustees may, without any action by or approval of the shareholders of the Trust, determine by resolution those Trustees in each Class that shall be elected by shareholders of a particular class or series of Shares and reassign Trustees from one Class to another Class at any time and from time to time.  If the number of Trustees is changed, any increase or decrease shall be apportioned among the Classes by resolution of the Board of Trustees.  Each Class shall consist of at least one Trustee.  No reduction in the number of Trustees shall have the effect of removing any Trustee from serving as a Trustee unless the Trustee is specifically removed pursuant to Section 5.4 at the time of the decrease.

 

(c)           Number of Trustees .  The number of Trustees may be increased or decreased only by the Board of Trustees, subject to the express voting powers of any class or series of Shares hereafter authorized and then outstanding.

 

(d)           Qualifications .  A Trustee must be at least 21 years of age, not under legal disability, not have been convicted of a felony and meet the qualifications of an “Independent Trustee” or a “Managing Trustee,” as applicable.  An “ Independent Trustee ” is one who is not an employee of the Manager or its parent, who is not involved in the Trust’s day to day activities and who meets the qualifications of an independent director under the applicable rules and requirements of the principal securities exchange upon which the Shares are listed for trading and the Securities and Exchange Commission, as those requirements may be amended from time to time. A “ Managing Trustee ” is one who has been an employee, officer or director of the Manager or its parent or involved in the Trust’s day to day activities for at least one year prior to his or her election as a Trustee.  A majority of the Trustees holding office shall at all times be Independent Trustees, except for temporary periods due to vacancies.  If the number of Trustees, at any time, is set at less than five, at least one Trustee shall be a Managing Trustee.  So long as the number of Trustees shall be five or greater, at least two Trustees shall be Managing Trustees, except for temporary periods due to vacancies.  The Board may at any time and from time to time, by amendment of the Bylaws, establish different or additional qualifications for Trustees, including, without limitation, by establishing qualifications for Independent Trustees or Managing Trustees different from or additional to the definitions in this Section 5.3(d)  or altering the number of Independent Trustees and Managing Trustees.  Nothing herein shall preclude any Trustee from also serving as an officer, representative, employee or agent of the Trust, or as a director, trustee, officer, owner, representative, employee or agent of the Manager, any affiliate of the Manager or

 

4



 

any other Person, nor shall anything herein be construed to require that a Trustee own any Shares.

 

(e)           Voting for Election of Trustees by Shareholders .  Except as otherwise provided by a provision in the Bylaws approved by the Board of Trustees, and subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, a plurality of all the votes cast by shareholders of the Trust entitled to vote in the election of Trustees at a meeting of shareholders of the Trust duly called and at which a quorum is present is required to elect a Trustee.  In case of the failure to elect any Trustee at an annual meeting of shareholders of the Trust, the incumbent Trustee who was up for election at that meeting may hold over and continue to serve as a Trustee for the full term of the trusteeship in which he or she was nominated and until the election and qualification of his or her successor.  The failure of shareholders of the Trust to elect Trustees at an annual meeting of shareholders shall not cause vacancies on the Board of Trustees requiring the officers of the Trust to call a special meeting of shareholders to elect Trustees pursuant to Section 8.1 unless all Trustees, including holdover Trustees, are unwilling or unable to continue to serve.

 

(f)            Vacancies on the Board .  Subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, any vacancy in the position of Trustee as a result of any reason, including a vacancy caused by the death, resignation, retirement, removal or incapacity of any Trustee, or resulting from an increase in the number of Trustees, may be filled only by the affirmative vote of a majority of the Trustees then remaining in office, even if the remaining Trustees do not constitute a quorum, and any Trustee elected to fill a vacancy shall serve for the remainder of the full term of the trusteeship in which such vacancy occurred and until the election and qualification of his or her successor.  If for any reason any or all of the Trustees cease to be Trustees, such event shall not terminate the Trust or affect the Declaration of Trust or the Bylaws.

 

Section 5.4            Resignation or Removal .  Any Trustee may resign or retire as a Trustee by an instrument in writing signed by him or her and delivered to the Secretary of the Trust, and such resignation or retirement shall be effective upon such delivery or at a later date specified in the instrument.  The acceptance of a resignation or retirement shall not be necessary to make it effective unless otherwise stated in the resignation or retirement.  A Trustee judged incompetent or for whom a guardian or conservator has been appointed shall be deemed to have resigned as of the date of such adjudication or appointment.  A Trustee may be removed only for cause, at a meeting of shareholders of the Trust properly called for that purpose, by the affirmative vote of the holders of not less than two-thirds of the Shares then outstanding and entitled to vote in the election of such Trustee.  For the purpose of this paragraph, “cause” shall have the meaning assigned to it in a provision of the Bylaws approved by the Board of Trustees.

 

Section 5.5            Determinations by Board .  The determination as to any of the following matters, made by or pursuant to the direction of the Board of Trustees, shall be final and conclusive and shall be binding upon the Trust and every holder of Shares:

 

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the amount of the net income of the Trust for any period and the amount of assets at any time legally available for the payment of dividends, acquisition of Shares or the payment of other distributions on Shares; the amount of paid-in surplus, net assets, other surplus, cash flow, funds from operations, adjusted funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created or shall have been set aside, paid or discharged); any interpretation or resolution of any ambiguity with respect to any provision of the Declaration of Trust (including any of the terms, preferences, conversion or other rights, voting or other powers, restrictions, limitations as to dividends or distributions, qualifications or terms or conditions of redemption of any class or series of Shares) or of the Bylaws; the number of issued and outstanding Shares of any class or series of the Trust; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Trust or of any Shares; any matter relating to the acquisition, holding or disposition of any assets by the Trust; any interpretation of the terms and conditions of one or more agreements with any Person; the compensation of Trustees, officers, employees or agents of the Trust; or any other matter relating to the business and affairs of the Trust or required or permitted by applicable law, the Declaration of Trust or the Bylaws or otherwise to be determined by the Board of Trustees.

 

ARTICLE VI

SHARES OF BENEFICIAL INTEREST

 

Section 6.1            Authorized Shares .  The beneficial interest of the Trust shall be divided into shares of beneficial interest (the “ Shares ”).  The Trust has authority to issue 25,000,000 Shares, consisting of 25,000,000 common shares of beneficial interest, $0.01 par value per share (“ Common Shares ”).  If Shares of one class or series are classified or reclassified into Shares of another class or series of Shares pursuant to this Article VI , the number of authorized Shares of the former class or series shall be automatically decreased and the number of Shares of the latter class or series shall be automatically increased, in each case by the number of Shares so classified or reclassified, so that the aggregate number of Shares of all classes and series that the Trust has authority to issue shall not be more than the total number of Shares of beneficial interest set forth in the second sentence of this paragraph.  The Board of Trustees, without any action by or approval of the shareholders of the Trust, may amend the Declaration of Trust from time to time to increase or decrease the aggregate number of Shares or the number of Shares of any class or series that the Trust has authority to issue.

 

Section 6.2            Common Shares .  Subject to the provisions of Article VII , and except as may be otherwise specified in the Declaration of Trust, each Common Share shall entitle the holder thereof to (a) one vote on each matter upon which holders of Common Shares are entitled to vote and (b) one vote for each Trustee to be elected and for whose election the holder is entitled to vote.  Subject to the provisions of any class or

 

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series of Shares hereafter authorized and then outstanding, there will be no cumulative voting in the election of Trustees by shareholders of the Trust.  The Board of Trustees may, without any action by or approval of the shareholders of the Trust, reclassify any unissued Common Shares from time to time into one or more classes or series of Shares, and such reclassified Shares may have powers, preferences and rights that are preferential, rank prior or are superior to those of any other class or series of a class of Shares, including the Common Shares.

 

Section 6.3            Classified or Reclassified Shares .  Prior to issuance of classified or reclassified Shares of any class or series, the Board of Trustees by resolution shall (a) designate that class or series; (b) specify the number of Shares to be included in the class or series; (c) set, subject to the provisions of Article VII , the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for such class or series; and (d) cause the Trust to file articles supplementary with the State Department of Assessments and Taxation of Maryland (the “ SDAT ”).  Any of the terms of any class or series of Shares set pursuant to clause (c) of this Section 6.3 may be made dependent upon facts or events ascertainable outside the Declaration of Trust (including the occurrence of any event, determination or action by the Trust or any other person or body) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of Shares is clearly and expressly set forth in the articles supplementary filed with the SDAT.

 

Section 6.4            Authorization by Board of Share Issuance .  The Board of Trustees may authorize the issuance from time to time of Shares of any class or series, whether now or hereafter authorized, or securities, rights or warrants convertible into or exercisable for Shares of any class or series, whether now or hereafter authorized, for such consideration (whether in cash, property, past or future services, obligation for future payment or otherwise) as the Board of Trustees may deem advisable (or without consideration), subject to such restrictions or limitations, if any, as are set forth in the Declaration of Trust or the Bylaws.

 

Section 6.5            Declaration of Trust and Bylaws .  All rights, powers and privileges of all holders of Shares and the terms of all Shares are subject to the provisions of the Declaration of Trust and the Bylaws.  All Persons who acquire or receive Shares, or any interest therein, shall be held, by virtue of such acquisition or receipt, to have expressly assented and agreed to the Declaration of Trust and the Bylaws and to have acquired or received such Shares or interest subject to the provisions of the Declaration of Trust and the Bylaws.  The Bylaws may contain any provision that is not inconsistent with law or the Declaration of Trust, including, without limitation, provisions, (a) for informational and other requirements for shareholders of the Trust proposing the nomination of one or more individuals for election as a Trustee or any other business for consideration at a meeting of shareholders of the Trust, (b) interpreting or carrying out the intent and purposes of the Declaration of Trust and (c) for the forum with respect to any disputes, claims or controversies, including any disputes, claims or controversies brought by or on behalf of any present or former holder of Shares either on his, her or its

 

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own behalf, on behalf of the Trust or on behalf of any class or series of Shares or present or former holders of Shares, and such provisions in the case of (c) may provide that any such forum may or may not be exclusive or mandatory.  The Board of Trustees shall have the exclusive power to make, alter, amend or repeal the Bylaws.

 

Section 6.6            Dividends and Distributions .  The Board of Trustees may from time to time authorize and cause the Trust to declare and pay to holders of any class or series of Shares such dividends or other distributions, in cash or other assets of the Trust or in Shares or other securities of the Trust or from any other source as the Board of Trustees in its sole discretion shall determine.  Shareholders of the Trust shall have no right to any dividend or distribution unless and until authorized by the Board of Trustees and declared by the Trust.  The exercise of the powers and rights of the Board of Trustees pursuant to this Section 6.6 shall be subject to the provisions of any class or series of Shares then outstanding.

 

Section 6.7            General Nature of Shares .  All Shares shall be personal property entitling the shareholders of the Trust only to those rights provided in the Declaration of Trust and the Bylaws.  The shareholders of the Trust shall have no interest in the assets of the Trust and shall have no right to compel any partition, division, dividend or distribution of the Trust or of the assets of the Trust.  The death of a shareholder of the Trust shall not terminate the Trust or affect its continuity nor give his or her legal representative any rights whatsoever, whether against or in respect of other shareholders, the Trustees or the trust estate or otherwise, except the sole right to demand and, subject to the provisions of the Declaration of Trust, the Bylaws and any requirements of law, to receive a new certificate for Shares registered in the name of such legal representative, in exchange for the certificate held by such shareholder.  The Trust is entitled to treat as shareholders of the Trust only those persons in whose names Shares are registered as holders of Shares on the beneficial interest ledger of the Trust.

 

Section 6.8            Fractional Shares .  The Trust may, without any action by or approval of the shareholders of the Trust, issue fractional Shares, eliminate a fraction of a Share by rounding up or down to a full Share, arrange for the disposition of a fraction of a Share by the person entitled to it or pay cash for the fair value of a fraction of a Share.

 

Section 6.9            Divisions and Combinations of Shares .  To the maximum extent that Maryland law in effect from time to time permits, and subject to an express provision to the contrary in the terms of any class or series of Shares hereafter authorized and then outstanding, the Board of Trustees shall have the power to divide, split or combine (by issuing or redeeming, as applicable, Shares pro rata or by any other lawful means) the outstanding Shares of any class or series, without any action by or approval of the shareholders of the Trust.

 

Section 6.10          Tax on Disqualified Organizations . In accordance with Treasury Regulations § 1.860E-2(b)(4), the Board of Trustees may, in its sole discretion, cause the Trust to reduce the distributions payable to any “disqualified organization” (as defined in Section 860E(e)(5) of the Code) to the extent the Trust incurs any tax liability

 

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as a result of such disqualified organization’s ownership of Shares with respect to: (a) any “excess inclusion” income (within the meaning of Section 860E of the Code) of the Trust; or (b) any similar income of the Trust resulting under Section 7701(i)(3) of the Code.

 

ARTICLE VII

RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES

 

Section 7.1            Definitions .  Capitalized terms used in this Article VII , shall have the following meanings:

 

Affiliate ” shall mean, with respect to any Person, another Person controlled by, controlling or under common control with such Person.

 

Beneficial Ownership ” shall mean ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly (including through a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code.  The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.

 

Charitable Beneficiary ” shall mean one or more beneficiaries of a Charitable Trust as determined pursuant to Section 7.3(g) , provided that each such organization shall be described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions to each such organization shall be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

 

Charitable Trust ” shall mean any trust provided for in Section 7.2(a)(ii)  and Section 7.3(a) .

 

Charitable Trustee ” shall mean each Person, unaffiliated with the Trust and any Prohibited Owner, that is appointed by the Trust from time to time to serve as a trustee of a Charitable Trust as provided by Section 7.3(a) .

 

Code ” shall have the meaning set forth in Section 1.1 .

 

Common Shares ” shall have the meaning set forth in Section 6.1 .

 

Constructive Ownership ” shall mean ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly (including through a nominee), and shall include any interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, or treated as beneficially owned under Rule 13d-3 under the Exchange Act.  The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

 

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Excepted Holder ” shall mean (a) a shareholder of the Trust for whom an Excepted Holder Limit (if any) is created by the Board of Trustees pursuant to Section 7.2(e)(i) , (b) TRA, (c) RMR, (d) the Managed Entities and (e) Affiliates of TRA, RMR or the Managed Entities.

 

Excepted Holder Limit ” shall mean, provided that and only so long as the affected Excepted Holder complies with all of the requirements (if any) established by the Board of Trustees pursuant to Section 7.2(e) , the percentage limit (if any) established by the Board of Trustees with respect to such Excepted Holder.

 

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

 

Managed Entities ” shall mean the Persons to whom RMR, directly or indirectly, provides management services.

 

Market Price ” with respect to Shares on any date shall mean the last sale price for such Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Shares, in either case as reported on the principal consolidated transaction reporting system with respect to such Shares, or if such Shares are not listed or admitted to trading on any National Securities Exchange, the last sale price in the over the counter market, or if no trading price is available for such Shares, the fair market value of such Shares as determined by the Board of Trustees.

 

National Securities Exchange ” shall mean a securities exchange registered with the Securities and Exchange Commission under Section 6(a) of the Exchange Act.

 

Ownership Limit ” shall mean (a) with respect to Common Shares, 9.8% (in value or number of shares, whichever is more restrictive) of the Common Shares outstanding at the time of determination and (b) with respect to any other class or series of Shares, 9.8% (in value or number of shares, whichever is more restrictive) of the Shares of such class or series outstanding at the time of determination.

 

Person ” shall have the meaning set forth in Section 13.5 .

 

Prohibited Owner ” shall mean any Person that, but for the provisions of this Article VII , would Beneficially Own or Constructively Own Shares in excess of the Ownership Limit and, if appropriate in the context, shall also mean any Person that would have been the holder of record on the books of the Trust or the Trust’s transfer agent of Shares that the Prohibited Owner would have so owned.

 

REIT ” shall have the meaning set forth in Section 3.1 .

 

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RMR ” shall mean The RMR Group Inc., a Maryland corporation, its successors and assigns, and their consolidated subsidiaries, together and each individually.

 

Shares ” shall have the meaning set forth in Section 6.1 .

 

TRA ” shall mean Tremont Realty Advisors LLC, a Maryland limited liability company.

 

Transfer ” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event (or any agreement to take any such action or cause any such event) that causes, or but for the provisions of this Article VII would cause, any Person to acquire Beneficial Ownership or Constructive Ownership of Shares or the right to vote or receive distributions on Shares, including (a) any change in the capital structure of the Trust which has the effect of increasing the total equity interest of any Person in the Trust, (b) a change in the relationship between two or more Persons which causes a change in ownership of Shares by application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, (c) the grant or exercise of any option or warrant (or any disposition of any option or warrant, or any event that causes any option or warrant not theretofore exercisable to become exercisable), pledge, security interest or similar right to acquire Shares, (d) any disposition of any securities or rights convertible into or exchangeable for Shares or any interest in Shares or any exercise of any such conversion or exchange right, and (e) transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Shares, in each case, whether voluntary or involuntary, whether owned of record or Beneficially Owned or Constructively Owned, and whether by operation of law or otherwise.  The terms “Transferring” and “Transferred” shall have the correlative meanings.

 

Trust ” shall have the meaning set forth in Section 1.1 .

 

Section 7.2            Restrictions on Ownership .

 

(a)           Ownership Limitations .

 

(i)             Basic Restrictions .  (A) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Shares in excess of the Ownership Limit.  (B) No Excepted Holder shall Beneficially Own or Constructively Own Shares in excess of the Excepted Holder Limit (if any) applicable to such Excepted Holder.  (C) No Person shall Beneficially Own or Constructively Own Shares to the extent that such Beneficial Ownership or Constructive Ownership of Shares would result in the Trust failing to qualify for taxation as a REIT, including such Beneficial Ownership or Constructive Ownership resulting in the Trust (x) being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or (y) owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Trust (or its subsidiaries) from such tenant

 

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would cause the Trust to fail to satisfy any of the gross income requirements of Section 856(c) of the Code. (D) Subject to Section 7.6 , notwithstanding any other provisions contained herein, any Transfer of Shares (whether or not such Transfer is the result of a transaction entered into through the facilities of a National Securities Exchange or automated inter-dealer quotation system) that, if effective, would result in Shares being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio , and the intended transferee shall acquire no rights in such Shares.

 

The number and value of the outstanding Shares (or any class or series thereof) held or owned by any Person (including within the meaning of (A) Section 542(a)(2) of the Code as modified by Section 856(h) of the Code, or (B) Section 856(d) of the Code) shall be determined by the Board of Trustees, which determination shall be conclusive for all purposes.

 

(ii)            Transfer in Trust or Voided Transfer .  If any Transfer occurs (whether or not such Transfer is the result of a transaction entered into through the facilities of a National Securities Exchange or automated inter-dealer quotation system) which, if effective, would result in any Person Beneficially Owning or Constructively Owning Shares in violation of Section 7.2(a)(i)(A) , Section 7.2(a)(i)(B)  or Section 7.2(a)(i)(C) , as applicable (any such violation an “ Ownership Violation ”), then: (A) that number of Shares, the Beneficial Ownership or Constructive Ownership (as applicable) of which otherwise would cause an Ownership Violation by such Person (rounded upward to the nearest whole share, and such excess shares, as so rounded, the “ Excess Shares ”), shall be automatically transferred to a Charitable Trust or Charitable Trusts for the benefit of a Charitable Beneficiary, as described in Section 7.3 , effective as of the close of business on the business day prior to the date of such determination of such Transfer, and such Person shall acquire no rights in the Excess Shares; or (B) if the transfer to the Charitable Trust or Charitable Trusts described in Section 7.2(a)(ii)(A)  would not be effective for any reason to prevent an Ownership Violation, then the Transfer of that number of Shares that otherwise would cause an Ownership Violation by any Person (rounded up to the nearest whole share) shall be void ab initio , in which case the intended transferee shall acquire no rights in the Excess Shares.

 

In determining which Shares are to be transferred to a Charitable Trust in accordance with this Section 7.2(a)(ii)  and Section 7.3 , Shares shall be so transferred to a Charitable Trust in such manner that minimizes the aggregate value of the Shares that are transferred to the Charitable Trust (except to the extent that the Board of Trustees determines that the Shares transferred to the Charitable Trust shall be those directly or indirectly held or Beneficially Owned or Constructively Owned by a Person or Persons that caused or contributed to the application of this Section 7.2(a)(ii) ), and to the extent not inconsistent therewith, on a pro rata basis.

 

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(iii)           Cooperation .  The shareholder that would otherwise constitute a Prohibited Owner absent the application of the provisions of Section 7.2(a)(ii)  shall use best efforts and take all actions necessary or requested by the Trust to cooperate with effecting the actions taken by the Board of Trustees pursuant to Section 7.2(a)(ii) , including informing the Trust where and by whom any Excess Shares may be held and instructing its agents to cooperate in the prompt implementation and effectuation of the actions so taken by the Board of Trustees.

 

(b)           Remedies for Breach .  If the Board of Trustees shall at any time determine that a Transfer or other event has taken place that results in a violation of Section 7.2(a)(i)  or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any Shares in violation of Section 7.2(a)(i)  (whether or not such violation is intended), the Board of Trustees is authorized to take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including causing the Trust to redeem Shares, refusing to give effect to such Transfer on the books of the Trust or the Trust’s transfer agent or instituting proceedings to enjoin such Transfer or other event; provided , however , that any Transfer or attempted Transfer in violation of Section 7.2(a)(i)  (or other event that results in a violation of Section 7.2(a)(i) ) shall automatically result in the transfer to a Charitable Trust as described above, or, if applicable, shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Trustees.  Such Person shall be liable, without limitation, for all costs incurred in connection therewith and pursuant to Section 8.7 , including the costs and expenses of the Charitable Trustee under Section 7.4 .  This Section 7.2(b)  shall not in any way limit the provisions of Section 7.2(a)(ii) .

 

(c)           Notice of Restricted Transfer .  Any Person that acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Shares that will or may violate Section 7.2(a)(i) , or any Person that would have owned Excess Shares, shall immediately give written notice to the Trust of such event, or in the case of such a proposed or attempted transaction, shall give at least 15 days prior written notice to the Trust and provide to the Trust such other information as the Trust may request.

 

(d)           Owners Required to Provide Information .  Every Person that is a Beneficial Owner or Constructive Owner of five percent or more (or such lower percentage as required by the Code) of the Shares of any series or class outstanding at the time of determination, within 30 days after the end of each taxable year and also within three business days after a request from the Trust, shall give written notice to the Trust stating the name and address of such owner, the number of Shares Beneficially Owned and (if requested by the Trust) Constructively Owned by it, and a description of the manner in which such Shares are held; provided that a shareholder that holds Shares as nominee for another Person, which other Person is required to include in gross income the distributions received on such Shares (an “ Actual Owner ”), shall give written notice to the Trust stating the name and address of such Actual Owner and the number of Shares of such Actual Owner with respect to which the shareholder is the nominee.  Each Person

 

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that is a Beneficial Owner or Constructive Owner of Shares and each Person (including the shareholder) that is holding Shares for a Beneficial Owner or Constructive Owner shall provide in writing to the Trust such information as the Trust may request in order to determine the Trust’s qualification for taxation as a REIT and the Trust’s compliance with other applicable laws or requirements of any governmental authority and to comply with the requirements of any taxing authority or other governmental authority or to determine such compliance.

 

(e)           Exceptions .

 

(i)                    Subject to Section 7.2(a)(i)(C) , the Board of Trustees, in its sole discretion, may exempt (prospectively or retroactively) any Person from any of the ownership limitations set forth in Section 7.2(a)(i)  and establish or increase an Excepted Holder Limit for such Person if:  (A) such Person provides to the Board of Trustees, for the benefit of the Trust, such representations and undertakings, if any, as the Board of Trustees may, in its sole discretion, determine to be necessary or advisable in order for it to make the determination that the Beneficial Ownership or Constructive Ownership of Shares by such Person in excess of the Ownership Limit will not now or in the future jeopardize the Trust’s ability to qualify for taxation as a REIT under the Code; (B) such Person’s ownership of Shares pursuant to an exception granted hereunder (together with the ownership of Shares by all other Persons as permitted under this Article VII , taking into account any previously granted exceptions pursuant hereto) would not cause a default under the terms of any contract to which the Trust or any of its subsidiaries is a party or reasonably expects to become a party; (C) such Person’s ownership of Shares in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of Shares by all other Persons as permitted under this Article VII , taking into account any previously granted exceptions pursuant hereto) is in the best interests of the Trust, as determined by the Board of Trustees; and (D) such Person agrees that any violation of such representations and undertakings or any attempted violation thereof will give rise to the application of the remedies set forth in Section 7.2(a)(ii)  and Section 7.2(b)  with respect to Shares held in excess of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with respect to such Person unless the Board determines that the agreement set forth in this Section 7.2(e)(i)(D)  is not necessary or advisable.

 

(ii)                  Prior to granting any exception pursuant to Section 7.2(e)(i) , the Board of Trustees may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Trustees in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Trust’s qualification for taxation as a REIT.  Notwithstanding the receipt of any ruling or opinion, the Board of Trustees may impose such conditions or restrictions as it deems appropriate in connection with granting such exemption or waiver or creating any Excepted Holder Limit.

 

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(iii)                 In determining whether to grant any exemption pursuant to Section 7.2(e)(i) , the Board of Trustees may, but need not, consider, among other factors, (A) the general reputation and moral character of the Person, (B) whether the Person’s ownership of Shares would be direct or through ownership attribution, (C) whether the Person’s ownership of Shares would interfere with the conduct of the Trust’s business, including the Trust’s ability to make additional investments, (D) whether granting an exemption for the Person would adversely affect any of the Trust’s existing contractual arrangements or the execution of any of the Trust’s strategies or business policies, (E) whether the Person to whom the exception would apply has been approved as an owner of the Trust by all regulatory or other governmental authorities with jurisdiction over the Trust and (F) whether the Person to which the exemption would apply is attempting to change control of the Trust or affect its policies in a way that the Board of Trustees, in its sole discretion, considers adverse to the best interests of the Trust or the shareholders of the Trust.  Nothing in this Section 7.2(e)(iii)  shall be interpreted to mean that the Board of Trustees may not act in its sole discretion in making any determination under Section 7.2(e)(i) .

 

(iv)                An underwriter or initial purchaser that participates in a public offering, a private placement or a forward sale or distribution of Shares (or securities convertible into or exchangeable for Shares) may Beneficially Own or Constructively Own Shares (or securities convertible into or exchangeable for Shares) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public offering, private placement or forward sale or distribution as determined by the Board of Trustees.

 

(f)            Increase or Decrease in Ownership Limit . Subject to Section 7.2(a)(i)(C) , the Board of Trustees may from time to time increase the Ownership Limit (or any portion thereof) for one or more Persons and decrease the Ownership Limit (or any portion thereof) for all other Persons; provided , however , that (i) any such decreased Ownership Limit (or portion thereof) will not be effective for any Person whose ownership in Shares is in excess of the decreased Ownership Limit (or portion thereof) until such time as such Person’s ownership in Shares equals or falls below the decreased Ownership Limit (or such decreased portion thereof), but any further Transfers of any Shares resulting in such Person’s Beneficial Ownership or Constructive Ownership thereof creating an increased excess over the decreased Ownership Limit (or portion thereof) will be in violation of the decreased Ownership Limit (or portion thereof); and (ii) any new Ownership Limit (or portion thereof) would not result in the Trust being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) if five unrelated individuals were to Beneficially Own the five largest amounts of Shares permitted to be Beneficially Owned under such new Ownership Limit, taking into account clause (i) of this proviso permitting ownership in excess of the decreased Ownership Limit (or portion thereof) in certain cases.

 

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Section 7.3            Transfer of Shares .

 

(a)           Ownership in Charitable Trust .  Upon any purported Transfer or other event described in Section 7.2(a)(ii)  that results in a transfer of Shares to a Charitable Trust, such Shares shall be deemed to have been transferred to the Charitable Trustee as trustee or trustees, as applicable, of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries (except to the extent otherwise provided in Section 7.3(e) ).  Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the business day prior to the purported Transfer or other event that results in the transfer to the Charitable Trust pursuant to Section 7.2(a)(ii) .  Any Charitable Trustee shall be appointed by the Trust and shall be a Person meeting the qualifications set forth in Section 7.1 .  Each Charitable Beneficiary shall be designated by the Trust as provided in Section 7.3(g) .

 

(b)           Status of Shares Held by a Charitable Trustee .  Shares held by a Charitable Trustee shall be issued and outstanding Shares of the Trust.  Except to the extent otherwise provided in this Section 7.3 , the Prohibited Owner shall:

 

(i)                    have no rights in the Shares held by the Charitable Trustee;

 

(ii)                  not benefit economically from ownership of any Shares held in trust by the Charitable Trustee;

 

(iii)                 have no rights to dividends or other distributions with respect to Shares held in the Charitable Trust;

 

(iv)                not possess any rights to vote or other rights attributable to the Shares held in the Charitable Trust; and

 

(v)                  have no claim, cause of action or other recourse whatsoever against the purported transferor of such Shares.

 

(c)           Ordinary Dividend and Voting Rights .  The Charitable Trustee shall have all voting rights and rights to ordinary dividends or other distributions with respect to Shares held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary (except to the extent otherwise provided in Section 7.3(e) ).  Any ordinary dividend or other distribution paid with respect to any Shares which constituted Excess Shares at such time and prior to the discovery by the Trust that the Shares have been transferred to the Charitable Trustee shall be paid by the Prohibited Owner to the Charitable Trustee upon demand and any ordinary dividend or other distribution authorized but unpaid with respect to such Shares shall be paid when due to the Charitable Trustee.  Any ordinary dividends or other distributions so paid to the Charitable Trustee shall be held in trust for the Charitable Beneficiary.  The Prohibited Owner shall have no voting rights with respect to Shares held in the Charitable Trust and, effective as of the date that Shares have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner with respect to such

 

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Shares at any time such Shares constituted Excess Shares with respect to such Prohibited Owner and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided , however , that if the Trust has already taken irreversible action, as determined by the Board of Trustees, then the Charitable Trustee shall not have the power to rescind and recast such vote.  Notwithstanding the provisions of this Article VII , until the Trust has received notification that Shares have been transferred into a Charitable Trust, the Trust shall be entitled to rely on its share transfer and other shareholder records for purposes of preparing lists of shareholders of the Trust entitled to vote at meetings, determining the validity and authority of proxies, and otherwise conducting votes of shareholders of the Trust.

 

(d)           Rights upon Liquidation .  Upon any voluntary or involuntary liquidation, dissolution or winding up of or any distribution of the assets of the Trust, the Charitable Trustee shall be entitled to receive, ratably with each other holder of Shares of the class or series of Shares that is held in the Charitable Trust, that portion of the assets of the Trust available for distribution to the holders of such class or series (determined based upon the ratio that the number of Shares of such class or series of Shares held by the Charitable Trustee bears to the total number of Shares of such class or series of Shares then outstanding).  The Charitable Trustee shall distribute any such assets received in respect of the Shares held in the Charitable Trust in any liquidation, dissolution or winding up or distribution of the assets of the Trust, in accordance with Section 7.3(e) .

 

(e)           Extraordinary Distribution and Sale of Shares by Charitable Trustee .  Unless otherwise directed by the Board of Trustees, as soon as reasonably practicable after receiving notice from the Trust that Shares have been transferred to the Charitable Trust (and no later than 20 days after receiving notice in the case of Shares that are listed or admitted to trading on any National Securities Exchange), the Charitable Trustee shall sell the Shares held in the Charitable Trust (together with the right to receive dividends or other distributions with respect to such Shares as to any Shares transferred to the Charitable Trustee as a result of the operation of Section 7.2(a)(ii) ) to a Person, designated by the Charitable Trustee, whose ownership of the Shares will not violate the ownership limitations set forth in Section 7.2(a)(i) .  Upon such sale, the interest of the Charitable Beneficiary in the Shares sold shall terminate.  Upon any such sale or any receipt by the Charitable Trust of an extraordinary dividend or other distribution, the Charitable Trustee shall distribute the net proceeds of the sale or extraordinary dividend or other distribution to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 7.3(e) .

 

A Prohibited Owner shall receive the lesser of (A) the price paid by the Prohibited Owner for the Shares or, if the Prohibited Owner did not give value for the Shares in connection with the event causing the Shares to become Excess Shares (for example, in the case of a gift, devise or other such transaction), the Market Price of the Shares on the day of the event causing the Shares to become Excess Shares, in each case reduced by any amounts previously received by the Prohibited Owner pursuant to this

 

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Section 7.3(e)  in connection with prior extraordinary dividends or other distributions and (B) the proceeds received by the Charitable Trustee (net of any commissions and other expenses of the Trustee as provided in Section 7.4 ) from the sale or other disposition of the Shares held in the Charitable Trust plus any extraordinary dividends or other distributions received by the Charitable Trustee.  The Charitable Trustee may reduce the amount payable to the Prohibited Owner by the amount of ordinary dividends or other distributions which have been paid to the Prohibited Owner and is owed by the Prohibited Owner to the Charitable Trustee pursuant to Section 7.3(c) .  Any net sales proceeds and any extraordinary dividends or other distributions in excess of the amount payable to the Prohibited Owner shall be paid to the Charitable Beneficiary, less the costs, expenses and compensation of the Charitable Trustee and the Trust as provided in Section 7.4 .  If, prior to the discovery by the Trust that Shares have been transferred to the Charitable Trustee, such Shares are sold by a Prohibited Owner, then (A) such Shares shall be deemed to have been sold on behalf of the Charitable Trust and (B) to the extent that the Prohibited Owner received an amount for such Shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 7.3(e) , such excess shall be paid promptly to the Charitable Trustee upon demand.

 

(f)            Trust’s Purchase Right in Excess Shares .  Notwithstanding any transfer of Excess Shares to a Charitable Trust pursuant to this Article VII , Excess Shares shall be deemed to have been offered for sale to the Trust, or its designee, at a price per Share equal to the lesser of (i) the price per Share in the transaction that resulted in such Shares becoming Excess Shares (or, if the Prohibited Owner did not give value for such Shares, such as in the case of a gift, devise or other such transaction, the Market Price per Share on the day of the event causing the Shares to become Excess Shares) and (ii) the Market Price per Share on the date the Trust, or its designee, accepts such offer.  The Trust shall have the right to accept such offer until the Charitable Trustee, if any, has sold the Shares held in the Charitable Trust, if any, pursuant to Section 7.3(e) .  Upon such a sale to the Trust, if a Charitable Trust has been established pursuant to this Article VII , the interest of the Charitable Beneficiary in the Shares sold shall terminate.  The Charitable Trustee shall distribute the net proceeds of the sale in accordance with Section 7.3(e) .

 

(g)           Designation of Charitable Beneficiaries .  By written notice to the Charitable Trustee, the Trust shall designate from time to time one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) Shares held in the Charitable Trust would not violate the restrictions set forth in Section 7.2(a)(i)  in the hands of such Charitable Beneficiary and (ii) contributions to each such organization shall be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.  The Charitable Beneficiary shall not obtain any enforceable right to the Charitable Trust or any of its trust corpus until so designated and thereafter any such rights remain subject to the provisions of this Article VII , including Section 7.3(h) .  Neither the failure of the Trust to make such designation nor the failure of the Trust to appoint the Charitable Trustee before the automatic transfer provided for in Section 7.2(a)(ii)  shall make such transfer ineffective, provided that the Trust thereafter makes such designation and appointment.  The Trust

 

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may, in its sole discretion, designate a substitute or additional nonprofit organization meeting the requirements of this Section 7.3(g) as the Charitable Beneficiary at any time and for any or no reason. Any determination by the Trust with respect to the application of this Article VII shall be binding on each Charitable Beneficiary.

 

(h)           Retroactive Changes .  Notwithstanding any other provisions of this Article VII , the Board of Trustees is authorized and empowered to retroactively amend, alter or repeal any rights which the Charitable Trust, the Charitable Trustee or the Charitable Beneficiary may have under this Article VII , including granting retroactive Excepted Holder status to any otherwise Prohibited Owner, with the effect of any transfer of Excess Shares to a Charitable Trust being fully and retroactively revoked; provided , however , that the Board of Trustees shall not have the authority or power to retroactively amend, alter or repeal any obligations to pay amounts incurred prior to such time and owed or payable to the Charitable Trustee pursuant to Section 7.4 .

 

Section 7.4            Costs, Expenses and Compensation of Charitable Trustee and the Trust .

 

(a)           The Charitable Trustee shall be indemnified by the Trust or from the proceeds from the sale of Shares held in the Charitable Trust, as further provided in this Article VII , for its costs and expenses reasonably incurred in connection with conducting its duties and satisfying its obligations pursuant to this Article VII .

 

(b)           The Charitable Trustee shall be entitled to receive reasonable compensation for services provided by the Charitable Trustee in connection with serving as a Charitable Trustee, the amount and form of which shall be determined by agreement of the Board of Trustees and the Charitable Trustee.

 

(c)           Costs, expenses and compensation payable to the Charitable Trustee pursuant to Section 7.4(a) and Section 7.4(b)  may be funded from the Charitable Trust or by the Trust.  The Trust shall be entitled to reimbursement on a first priority basis (after payment in full of amounts payable to the Charitable Trustee pursuant to Section 7.4(a)  and Section 7.4(b) ) from the Charitable Trust for any such amounts funded by the Trust.

 

(d)           Costs and expenses incurred by the Trust in the process of enforcing the ownership limitation set forth in Section 7.2(a)(i) , in addition to reimbursement of costs, expenses and compensation of the Charitable Trustee which have been funded by the Trust, may be collected from the Charitable Trust; provided , however , that the ability of the Trust to fund its costs from the Charitable Trust shall not relieve the Prohibited Owner from his or her obligation to reimburse the Trust for costs under Section 8.7 , except to the extent the Trust has in fact been previously paid from the Charitable Trust; nor will the possibility of the Trust receiving payment from the Charitable Trust create a marshalling obligation which would require the Trust to reimburse itself from the Charitable Trust before enforcing the Trust’s claims under Section 8.7 or otherwise.

 

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Section 7.5            Legend .  Each certificate for Shares, if any, shall bear a legend describing the restrictions on transferability of Shares contained herein or, instead of a legend, the certificate may state that the Trust will furnish a full statement about certain restrictions on transferability to a shareholder on request and without charge.

 

Section 7.6            Transactions on a National Securities Exchange .  Nothing in this Article VII shall preclude the settlement of any transaction entered into through the facilities of a National Securities Exchange or any automated inter-dealer quotation system.  The fact that the settlement of any transaction takes place shall not negate the effect of any other provision of this Article VII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VII .

 

Section 7.7            Authority and Enforcement .  The Board of Trustees shall have all power and authority necessary or advisable to implement the provisions of this Article VII . The Trust is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VII . Nothing contained in this Article VII shall limit the authority of the Board of Trustees to take such other action as it deems necessary or advisable to protect the Trust and the interests of its shareholders in preserving the Trust’s qualification for taxation as a REIT.

 

Section 7.8            Non-Waiver .  No delay or failure on the part of the Trust or the Board of Trustees in exercising any right hereunder shall operate as a waiver of any right of the Trust or the Board of Trustees, as the case may be, except to the extent specifically waived in writing.

 

Section 7.9            Enforceability .  If any of the restrictions on Transfer of Shares contained in this Article VII are determined to be void, invalid or unenforceable by any court of competent jurisdiction, then, to the maximum extent permitted by law, the Prohibited Owner may be deemed, at the option of the Trust, to have acted as an agent of the Trust in acquiring such Shares and to hold such Shares on behalf of the Trust.

 

ARTICLE VIII

SHAREHOLDERS

 

Section 8.1            Meetings of Shareholders .

 

There shall be an annual meeting of the shareholders of the Trust, to be held on proper notice at such time and convenient location as shall be determined by or in the manner prescribed in the Bylaws, for the election of the Trustees, if required, and for the transaction of any other business within the powers of the Trust.  Except as otherwise provided in the Declaration of Trust, meetings of the shareholders of the Trust, including the annual meeting and any special meetings, may be called only by the Board of Trustees.  If there are no Trustees, the officers of the Trust shall promptly call a special meeting of the shareholders of the Trust entitled to vote for the election of successor

 

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Trustees.  Any meeting may be adjourned and reconvened as the Board of Trustees in its sole discretion shall determine or as shall be set forth in a provision of the Bylaws approved by the Board of Trustees.

 

No business shall be transacted at a special meeting of shareholders of the Trust other than business that is either (i) brought before a meeting of shareholders pursuant to the Trust’s notice of meeting by or at the direction of the Board of Trustees or (ii) otherwise properly brought before the meeting by or at the direction of the Board of Trustees.

 

Section 8.2            No Shareholder Action by Written Consent .  Shareholders of the Trust shall not be authorized or permitted to take any action, including whether required or permitted to be taken at a meeting of shareholders, by written consent, and actions of shareholders of the Trust may only be taken at a meeting of shareholders of the Trust called and held in accordance with the Declaration of Trust and the Bylaws.

 

Section 8.3            Voting Rights .

 

(a)           Subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, the shareholders of the Trust shall be entitled to vote only on the following matters:  (a) the election of Trustees as provided in Section 5.3 and the removal of Trustees for cause as provided in Section 5.4 ; (b) an amendment of the Declaration of Trust to the extent shareholder approval is required by Section 10.3 and provided such amendment has first been approved by two-thirds of the Trustees then in office; (c) the termination of the Trust to the extent shareholder approval is required by Section 12.2 and provided such termination has first been approved by two-thirds of the Trustees then in office; (d) the merger, conversion or consolidation of the Trust to the extent shareholder approval is required by Title 8 and provided such merger, conversion or consolidation has first been approved by two-thirds of the Trustees then in office; (e) the sale, lease, exchange or other transfer of all or substantially all of the assets of the Trust to the extent a shareholder vote is required by Title 8 and provided such sale, lease, exchange or other transfer has first been approved by two-thirds of the Trustees then in office; and (f) such other matters with respect to which the Board of Trustees has first adopted a resolution declaring that a proposed action is advisable and directing that the matter be submitted to the shareholders of the Trust for approval or ratification.  Except with respect to the foregoing matters, no action taken by the shareholders of the Trust at any meeting or otherwise shall in any way bind the Board of Trustees or the Trust.

 

(b)           Except as otherwise provided in the Declaration of Trust or provisions of the Bylaws approved by the Board or mandated by applicable law, and subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, at a meeting of shareholders of the Trust duly called and at which a quorum is present, with respect to any matter submitted by the Board of Trustees to shareholders of the Trust for approval or otherwise voted upon by shareholders of the Trust, a majority of all the votes cast shall be required to approve the matter.  Subject to the provisions of

 

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any class or series of Shares hereafter authorized and then outstanding, on any matter submitted to a vote of shareholders of the Trust, all Shares then entitled to vote shall, except as otherwise provided in the Declaration of Trust or provisions of the Bylaws approved by the Board, be voted in the aggregate as a single class without regard to class or series of Shares, except that if the Board of Trustees has determined that the matter affects only the interests of one or more series or classes of Shares, only shareholders of such series or classes shall be entitled to vote thereon.

 

Section 8.4            Preemptive and Appraisal Rights .  Except as is expressly provided by the Board of Trustees in the terms of classified or reclassified Shares pursuant to Section 6.2 or Section 6.3 , or as may otherwise expressly be provided by a contract approved by the Board of Trustees, no holder of Shares of any class or series shall, as such holder, (a) have any preemptive right to purchase or subscribe for any additional Shares of any class or series or any other security of the Trust which the Trust may issue or sell or (b) have any right to require the Trust to pay to such holder the fair value of such holder’s Shares in an appraisal or similar proceeding, whether at common law or otherwise, including any right to exercise the rights of an objecting shareholder provided for under Title 8 and Title 3, Subtitle 2 of the Maryland General Corporation Law or any successor statute (the “ MGCL ”).

 

Section 8.5            Extraordinary Actions .  Except as specifically provided in Section 5.4 (relating to removal of Trustees) or provisions of the Bylaws approved by the Board, and subject to Section 8.6 and Section 10.3 , notwithstanding any provision of law permitting or requiring any action to be taken or authorized by the affirmative vote of the holders of a greater number of votes, any such action shall be effective and valid if approved or declared advisable by the Board of Trustees and taken or approved by the affirmative vote of the holders of Shares entitled to cast a majority of all the votes entitled to be cast on the matter.

 

Section 8.6            Board Approval .  The submission of any action to shareholders of the Trust for their consideration shall first be approved or advised by the Board of Trustees, and shareholders of the Trust shall not otherwise be entitled to act thereon except as otherwise expressly required by law.

 

Section 8.7            Indemnification of the Trust .  To the maximum extent permitted by Maryland law in effect from time to time, each shareholder will be liable to the Trust for, and shall indemnify and hold harmless the Trust (and any affiliates thereof) from and against, all costs, expenses, penalties, fines or other amounts, including reasonable attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s breach of or failure to fully comply with any covenant, condition or provision of the Declaration of Trust or the Bylaws or any action by or against the Trust in which such shareholder is not the prevailing party, and shall pay such amounts on demand, together with interest on such amounts, which interest will accrue at the lesser of 18% per annum and the maximum amount permitted by law, from the date such costs or other amounts are incurred until the receipt of payment.

 

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Section 8.8            Compliance with Law .  Each shareholder shall comply with the Declaration of Trust and the Bylaws and shall comply, and assist the Trust in complying, with all applicable requirements of federal and state laws, including all rules and regulations promulgated thereunder, and the contractual obligations of the Trust, in connection with such shareholder’s ownership interest in the Trust and all other laws which apply to the Trust or any subsidiary of the Trust or their respective businesses, assets or operations and which require action or inaction on the part of the shareholder.

 

ARTICLE IX

 

LIABILITY LIMITATION, INDEMNIFICATION

AND TRANSACTIONS WITH THE TRUST

 

Section 9.1            Limitation of Shareholder Liability .  No present or former shareholder of the Trust shall be personally liable for any debt, claim, demand, judgment or obligation of any kind of the Trust solely by reason of being or having been a shareholder.

 

Section 9.2            Limitation of Trustee and Officer Liability .  To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of trustees and officers of a real estate investment trust, no current or former Trustee or officer of the Trust shall be liable to the Trust or to any shareholder for money damages.  Neither the amendment nor repeal of this Section 9.2 , nor the adoption or amendment of any other provision of the Declaration of Trust inconsistent with this Section 9.2 , shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.  In the absence of any Maryland statute limiting the liability of trustees and officers of a Maryland real estate investment trust for money damages in a suit by or on behalf of the Trust or by any shareholder, or arising by reason of his or her action on behalf of the Trust, no Trustee or officer of the Trust shall be liable to the Trust or to any shareholder for money damages except to the extent that (a) the Trustee or officer actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received, or (b) a judgment or other final adjudication adverse to the Trustee or officer is entered in a proceeding based on a finding in the proceeding that the Trustee’s or officer’s action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.

 

Section 9.3            Express Exculpatory Clauses and Instruments .  Any written instrument creating an obligation of the Trust shall, to the extent practicable, include a reference to the Declaration of Trust and provide that neither the shareholders of the Trust nor the Trustees nor any officers, employees or agents (including the Manager) of the Trust shall be liable thereunder and that all persons shall look solely to the trust estate for the payment of any claim thereunder or for the performance thereof; provided , however , that the omission of such provision from any such instrument shall not render

 

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any shareholder, any Trustee, or any officer, employee or agent (including the Manager) of the Trust liable, nor shall the shareholders of the Trust, any Trustee or any officer, employee or agent (including the Manager) of the Trust be liable to any Person for such omission.

 

Section 9.4            Indemnification .

 

(a)           The Trust shall, to the maximum extent permitted by Maryland law in effect from time to time, indemnify, and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse expenses in advance of final disposition of a proceeding to, (i) any individual who is a present or former Trustee or officer of the Trust and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity or (ii) any individual who, while a present or former Trustee or officer of the Trust and at the request of the Trust, serves or has served as a trustee, director, officer, partner, member, manager, employee or agent of another real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity.  The rights to indemnification and advancement of expenses provided in the Declaration of Trust and the Bylaws shall vest immediately upon election of a Trustee or officer and neither the amendment nor repeal of this Section 9.4 , nor the adoption or amendment of any other provision of the Declaration of Trust or Bylaws inconsistent with this Section 9.4 , shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. The Trust shall have the power, with the approval of the Board of Trustees, to provide such indemnification and advancement of expenses (x) to a person that served a predecessor of the Trust in any of the capacities described in (i) or (ii) above and (y) to any employee or agent of the Trust or a predecessor of the Trust.  Except as otherwise provided in a provision of the Bylaws approved by the Board of Trustees, this Section 9.4(a)  shall not obligate the Trust to indemnify or advance expenses to any person referenced in (i) or (ii) above for any proceeding initiated by such person against the Trust unless such proceeding was authorized by the Board of Trustees or is a proceeding to enforce rights to indemnification.

 

(b)           The Trust shall have the power, with the approval of the Board of Trustees, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to any Person, including (i) the Manager and its affiliates and (ii) any present or former employee, manager or agent of the Trust, the Trust’s subsidiaries, the Manager, any former Manager or any affiliate of the Trust, the Trust’s subsidiaries, the Manager or any former Manager.

 

(c)           The indemnification and payment or reimbursement of expenses provided in this Section 9.4 shall not be deemed exclusive of or limit in any way any other rights to which any Person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any statute, bylaw,

 

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resolution, insurance, agreement, vote of shareholders of the Trust or disinterested Trustees or otherwise.

 

Section 9.5            Transactions Between the Trust and its Trustees, Officers, Employees and Agents .

 

(a)           Subject to any express restrictions adopted by the Board of Trustees in the Bylaws or by resolution, the Trust may enter into any contract or transaction of any kind, whether or not the Manager, any affiliate of the Manager or any of the Trustees, officers, employees or agents of the Trust or any affiliate of any of the foregoing Persons has a financial interest in such contract or transaction, with any Person, including the Manager, any affiliate of the Manager or any Trustee, officer, employee or agent of the Trust or any Person related to or affiliated with the Manager or any Trustee, officer, employee or agent of the Trust or any Person in which the Manager, any affiliate of the Manager or any Trustee, officer, employee or agent of the Trust has a material financial interest.

 

(b)           To the extent permitted by Maryland law, a contract or other transaction between the Trust and any Trustee or officer of the Trust, between the Trust and any Person in which any Trustee or officer of the Trust is a director, trustee, general partner or officer or has a material financial interest, or between the Trust and the Manager or any affiliate of the Manager, any Person to which the Manager or any affiliate of the Manager provides management services or any Person in which the Manager, any affiliate of the Manager or any Person to which the Manager or any affiliate of the Manager provides management services has a financial interest, shall not be void or voidable if:

 

(i)             the fact of such other director, trustee, general partner or officer position or interest is disclosed to or known by:

 

(A)           the Board of Trustees or a committee thereof, and the Board of Trustees or such committee authorizes, approves or ratifies the contract or transaction by the affirmative vote of a majority of disinterested Trustees, even if the disinterested Trustees constitute less than a quorum or, if there are no disinterested Trustees, then the approval shall be by a majority vote of the entire Board of Trustees and by a majority vote of the Independent Trustees; or

 

(B)           shareholders of the Trust entitled to vote on the matter, and the contract or transaction is authorized, approved, or ratified by a majority of the votes cast by shareholders of the Trust entitled to vote on the matter other than the votes of Shares owned of record or beneficially by the interested Trustee, officer, corporation, trust, firm or other Person; or

 

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(ii)            the contract or other transaction is fair and reasonable to the Trust.

 

Common or interested Trustees or the Shares owned by them or by an interested officer, corporation, trust, firm or other Person may be counted in determining the presence of a quorum at a meeting of the Board of Trustees or a committee thereof or at a meeting of shareholders of the Trust, as the case may be, at which the contract or transaction is authorized, approved or ratified and may be counted for purposes of any other vote with respect to the contract or transaction.  The presence of, or a vote cast by, a common or interested Trustee does not affect the validity of any action taken under clauses (i) or (ii) of this Section 9.5(b)  if the contract or other transaction is otherwise authorized, approved or ratified as provided herein.

 

(c)           The failure of a contract or other transaction described in Section 9.5(b)  to satisfy the criteria set forth in clause (i) , (ii)  or (iii)  of Section 9.5(b)  shall not create any presumption that such contract or other transaction is void, voidable or otherwise invalid, and any such contract or other transaction shall be valid to the maximum extent permitted by Maryland law.  To the maximum extent permitted by Maryland law, (i) the fixing by the Board of Trustees of compensation for a Trustee (whether as a Trustee or in any other capacity) and (ii)  Section 9.4 or any provision of the Bylaws or any contract or transaction requiring or permitting indemnification (including advancement of expenses) in accordance with terms and procedures not materially less favorable to the Trust than those described in Section 2-418 (or any successor section thereto) of the MGCL (as in effect at the time such provision was adopted or such contract or transaction was entered into or as it may thereafter be in effect) shall be deemed to be fair and reasonable and have satisfied the criteria set forth in Section 9.5(b) .

 

Section 9.6            Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property and to Engage in Other Business .  Subject to any express restrictions adopted by the Board of Trustees in the Bylaws or by resolution, the Manager and its affiliates and any Trustee or officer, employee or agent of the Trust may acquire, own, hold and dispose of Shares, for its, his or her individual account, and may exercise all rights of a shareholder to the same extent and in the same manner as if it, he or she were not the Manager or an affiliate of the Manager or a Trustee or officer, employee or agent of the Trust.  The Manager and its affiliates and any Trustee or officer, employee or agent of the Trust may, in its, his or her personal capacity or in the capacity of trustee, officer, director, stockholder, partner, member, advisor or employee of any Person or otherwise, have business interests and engage in business activities similar to or in addition to those relating to the Trust, which interests and activities may be similar to and competitive with those of the Trust and may include the origination, acquisition, syndication, holding, management, development, operation or disposition, for its, his or her own account, or for the account of such Person or others, including others to which the Manager or its affiliates provides management services, of interests in mortgages, mezzanine or other loans, debt obligations or securities secured by real property or interests in Persons directly or indirectly owning real property, interests in Persons directly or indirectly owning real property or interests in Persons engaged in the real

 

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estate business.  Any Trustee or officer, employee or agent of the Trust may be interested as a trustee, officer, director, stockholder, partner, member, advisor or employee of, or otherwise have a direct or indirect interest in, any Person who may be engaged to render advice or services or provide goods to the Trust, and may receive compensation from such Person or compensation from the Trust in that capacity, as well as compensation as a Trustee, officer, employee or agent or otherwise hereunder.

 

Section 9.7            Business Opportunities .  If any Trustee or officer of the Trust who is also a director, trustee, officer, employee or agent of the Manager, any affiliate of the Manager, any Person to which the Manager or any affiliate of the Manager provides management services or any affiliate of any of the foregoing Persons (each a “ Manager Related Person ”) acquires knowledge of a potential business opportunity, the Trust renounces, on its behalf and on behalf of its subsidiaries, any potential interest or expectation in, or right to be offered or to participate in, such business opportunity to the maximum extent permitted from time to time by Maryland law.  Accordingly, to the maximum extent permitted from time to time by Maryland law (a) no such Trustee or officer is required to present, communicate or offer any business opportunity to the Trust or any of its subsidiaries and (b) such Trustee or officer, on his or her own behalf or on behalf of any Manager Related Person, shall have the right to hold and exploit any business opportunity or to direct, recommend, offer, sell, assign or otherwise transfer such business opportunity to any Person other than the Trust and its subsidiaries.  The taking by any such Trustee or officer for himself or herself, or the offering or other transfer to another Person, of any potential business opportunity, whether pursuant to the Declaration of Trust or otherwise, shall not constitute or be construed or interpreted as (x) an act or omission of the Trustee or officer committed in bad faith or as the result of active or deliberate dishonesty or (y) receipt by the Trustee or officer of an improper benefit or profit in money, property, services or otherwise.  None of these activities shall be deemed to breach its, his or her duties or impair its, his or her powers as a Trustee or officer, employee or agent of the Trust.

 

Section 9.8            Persons Dealing with Trustees, Officers, Employees or Agents .  Any act of the Trustees or of the officers, employees or agents of the Trust purporting to be done in their capacity as such shall, as to any Persons dealing with such Trustees, officers, employees or agents, be conclusively deemed to be within the purposes of the Trust and within the powers of such Trustees or officers, employees or agents.  No Person dealing with the Board or any of the Trustees or with the officers, employees or agents of the Trust shall be bound to see to the application of any funds or property passing into their hands or control.  The receipt of the Board or any of the Trustees, or of authorized officers, employees or agents of the Trust, for moneys or other consideration, shall be binding upon the Trust.

 

Section 9.9            Reliance .  Each Trustee, officer, employee and agent of the Trust shall, in the performance of his or her duties with respect to the Trust, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Trust or by the Manager, accountants, appraisers or other experts or consultants selected by the

 

27



 

Board of Trustees or officers of the Trust, regardless of whether such counsel or expert may also be a Trustee.

 

ARTICLE X

 

AMENDMENTS

 

Section 10.1          General .  The Trust reserves the right from time to time to make any amendment to the Declaration of Trust, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Declaration of Trust, of any Shares.  All rights and powers conferred by the Declaration of Trust on shareholders of the Trust, Trustees and officers are granted subject to this reservation.   All references to the Declaration of Trust shall include all amendments and supplements thereto.

 

Section 10.2          By Trustees .  The Board of Trustees with the approval by two-thirds of the Trustees then in office may amend the Declaration of Trust from time to time, in the manner provided by Title 8, without any action by or approval of the shareholders of the Trust, to qualify for taxation as a REIT or as a real estate investment trust under Title 8 and as otherwise provided in Section 8-501(e) of Title 8 and the Declaration of Trust, including, to the extent permitted by law, supplying any omission, curing any ambiguity, correcting any defective or inconsistent provision or error or clarifying the meaning and intent of the Declaration of Trust.  If permitted by Maryland law as in effect from time to time, the Board of Trustees may amend the Declaration of Trust from time to time in any other respect, in accordance with such law, without any action by or approval of the shareholders of the Trust.

 

Section 10.3          By Shareholders .  Except as otherwise provided in Section 10.2 and subject to the following sentence, any amendment to the Declaration of Trust must first be approved by two-thirds of the Trustees then in office, and then shall be valid only if approved by the affirmative vote of a majority of all the votes entitled to be cast on the matter.  Any amendment to Section 5.3(b)  or Section 5.4 or to this sentence of the Declaration of Trust shall be valid only if approved by the Board of Trustees and then by the affirmative vote of two-thirds of all votes entitled to be cast on the matter.

 

ARTICLE XI

 

MERGER, CONVERSION CONSOLIDATION OR SALE OF TRUST ASSETS

 

Section 11.1          Merger, Conversion or Consolidation or Sale .  Subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, the Trust may (a) merge with or into one or more other entities, (b) convert into another entity or (c) consolidate with one or more other entities into a new entity.  Any such action must first be approved by two-thirds of the Trustees then in office and, to the extent a shareholder vote is required under Title 8, then approved by the affirmative vote of a majority of all the votes entitled to be cast on the matter.

 

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Section 11.2          Sale of All or Substantially All of Trust Assets .  Subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, the Trust may sell, lease, exchange or otherwise transfer all or substantially all of the Trust’s assets.  Any such action must first be approved by two-thirds of the Trustees then in office and, to the extent a shareholder vote is required under Title 8, then approved by the affirmative vote of a majority of all the votes entitled to be cast on the matter.

 

ARTICLE XII

 

DURATION AND TERMINATION OF TRUST

 

Section 12.1          Duration .  The Trust shall continue perpetually unless terminated pursuant to Section 12.2 .

 

Section 12.2          Termination .

 

(a)           Subject to the provisions of any class or series of Shares hereafter authorized and then outstanding, the Trust may be terminated and its business and affairs wound up and remaining assets distributed to shareholders of the Trust upon (i) the approval by two-thirds of the Trustees then in office, which action is approved by the affirmative vote of a majority of the votes cast on the matter, (ii) the sale or transfer of all or substantially all of the Trust’s assets, unless otherwise determined by the Board of Trustees or (iii) the reduction of the number of the Trust’s shareholders to zero.  Upon the termination of the Trust:

 

(i)             The Trust shall carry on no business except for the purpose of winding up its affairs.

 

(ii)            The Board of Trustees shall wind up the affairs of the Trust and all of the powers of the Board of Trustees under the Declaration of Trust shall continue, including the powers to fulfill or discharge the Trust’s contracts, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining assets of the Trust to one or more persons at public or private sale for consideration which may consist in whole or in part of cash, securities or other assets of any kind, discharge or pay its liabilities and do all other acts appropriate to liquidate its business.

 

(iii)           After paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and agreements as the Board of Trustees deems necessary for its protection, the Trust may distribute the remaining assets of the Trust among the shareholders of the Trust so that, after payment in full or the setting apart for payment of such preferential amounts, if any, to which the holders of any Shares at the time outstanding shall be entitled, the remaining assets of the Trust shall, subject to any participating or similar rights of Shares at the time outstanding, be distributed ratably among the holders of Common Shares at the time outstanding.

 

29



 

(b)           After termination of the Trust, the liquidation of its business and the distribution to the shareholders of the Trust as herein provided, a majority of the Trustees shall execute and file with the Trust’s records a document certifying that the Trust has been duly terminated and the Trustees shall be discharged from all liabilities and duties hereunder, and the rights and interests of all shareholders of the Trust shall cease.

 

ARTICLE XIII

MISCELLANEOUS

 

Section 13.1          Governing Law .  The Declaration of Trust is executed and delivered with reference to the laws of the State of Maryland, and the rights of all parties and the validity, construction and effect of every provision hereof shall be subject to and construed according to the laws of the State of Maryland.

 

Section 13.2          Ambiguity .  In the case of an ambiguity in the meaning or application of any provision of the Declaration of Trust or any definition contained in the Declaration of Trust, the Board of Trustees shall have the sole power to determine the meaning and application of such provision(s) with respect to any situation based on the facts known to it and such determination by the Board shall be final and binding unless a court, arbitration panel or other adjudicative body, in each case, of competent jurisdiction finds such determination of the Board to have been made in bad faith.

 

Section 13.3          Reliance by Third Parties .  Any certificate shall be final and conclusive as to any person dealing with the Trust if executed by the Secretary or an Assistant Secretary of the Trust or a Trustee, and if certifying to: (a) the number or identity of Trustees, officers of the Trust or shareholders of the Trust; (b) the due authorization of the execution by or on behalf of the Trust of any document; (c) the action or vote taken, and the existence of a quorum, at a meeting of the Board of Trustees, a committee thereof, or the shareholders of the Trust; (d) any action taken by the Board, or a committee thereof, by written consent; (e) a copy of the Declaration of Trust or of the Bylaws as a true and complete copy as then in force; (f) an amendment or supplement to the Declaration of Trust; (g) the termination of the Trust; or (h) the existence of any fact relating to the affairs of the Trust.  No purchaser, lender, transfer agent or other person shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trust on its behalf or by any Trustee, officer, employee or agent of the Trust.

 

Section 13.4          Severability .

 

(a)           The provisions of the Declaration of Trust are severable, and if the Board of Trustees shall determine that any one or more of such provisions (the “ Conflicting Provisions ”) are in conflict with the Code, Title 8 or other applicable federal or state laws, the Conflicting Provisions, to the extent of the conflict, shall be deemed never to have constituted a part of the Declaration of Trust, even without any amendment

 

30



 

of the Declaration of Trust pursuant to Article X and without affecting or impairing any of the remaining provisions of the Declaration of Trust or rendering invalid or improper any action taken or omitted (including the election of Trustees) prior to such determination.  No Trustee shall be liable for making or failing to make such a determination.  In the event of any such determination by the Board of Trustees, the Board shall amend the Declaration of Trust in the manner provided in Section 10.2 .

 

(b)           If any provision of the Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such holding shall apply only to the extent of any such invalidity or unenforceability in such jurisdiction and shall not in any manner affect, impair or render invalid or unenforceable such provision in any other jurisdiction or any other provision of the Declaration of Trust in any jurisdiction.

 

Section 13.5          Construction .

 

(a)           In the Declaration of Trust, unless the context otherwise requires, (i) words used in the singular or in the plural include both the plural and singular, (ii) references to the Declaration of Trust and all expressions like “ herein ,” “ hereof ” and “ hereunder ” shall be deemed to refer to the Declaration of Trust as amended or supplemented from time to time, including as affected by any such amendments and supplements, (iii) “ or ,” “ either ” and “ any ” are not exclusive, (iv) “ including ” and its variants mean “including, without limitation,” and its variants, (v) references to “ written ,” “ in writing ” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form, (vi) all pronouns and any variations thereof refer to the masculine, feminine or neuter as the context may require, (vii) “ Articles ” and “ Sections ” refer to Articles and Sections of the Declaration of Trust unless otherwise specified, (viii) “ Dollars ” and “ $ ” mean U.S. Dollars, (ix) the word “ extent ” in the phrase “ to the extent ” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if” and (x) “ Person ” means and includes individuals, corporations, limited liability companies, real estate investment trusts, partnerships, statutory and other trusts, associations, firms, joint ventures and other entities, whether or not legal entities, as well as governments and agencies and political subdivisions thereof, and any quasigovernmental agencies or instrumentalities.

 

(b)           The headings in the Declaration of Trust are for reference purposes only and shall not in any way affect the meaning or interpretation of the Declaration of Trust.  References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder and any successor statute or statutory provision.  References to any Person include the successors and permitted assigns of that Person.  References to any agreement, document or instrument are to that agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.

 

(c)           In defining or interpreting the powers and duties of the Trust and its Trustees and officers, reference may be made by the Trustees or officers, to the extent appropriate and not inconsistent with the Code, to Title 8 or to Titles 1 through

 

31



 

3 of the Corporations and Associations Article of the Annotated Code of Maryland.  In furtherance and not in limitation of the foregoing, in accordance with the provisions of Title 3, Subtitles 6, 7 and 8, of the Corporations and Associations Article of the Annotated Code of Maryland, the Trust shall be included within the definition of “corporation” for purposes of such provisions.

 

Section 13.6          Independent Significance .  Any action validly taken pursuant to one provision of the Declaration of Trust shall not be deemed invalid solely because it is identical or similar in substance to an action that could have been taken pursuant to another provision of the Declaration of Trust but fails to satisfy one or more requirements prescribed by such other provision.

 

SECOND :  The amendment to and restatement of the Declaration of Trust of the Trust as hereinabove set forth have been duly advised by the Board of Trustees and approved by the sole shareholder of the Trust as required by law.

 

THIRD : The name and address of the Trust’s current resident agent are as set forth in Article IV of the foregoing amendment and restatement of the Declaration of Trust of the Trust.

 

FOURTH : The number of Trustees of the Trust and the names of those currently serving are as set forth in Article V of the foregoing amended and restated Declaration of Trust of the Trust.

 

FIFTH : The total number of shares of beneficial interest which the Trust had authority to issue immediately prior to this amendment and restatement was 1,000,000,000, consisting of 1,000,000,000 common shares of beneficial interest, $0.01 par value per share. The aggregate par value of all shares of beneficial interest having par value was $10,000,000.

 

SIXTH : The total number of shares of beneficial interest which the Trust has authority to issue pursuant to the foregoing amendment and restatement of the Declaration of Trust is 25,000,000, consisting of 25,000,000 common shares of beneficial interest, $0.01 par value per share. The aggregate par value of all authorized shares of beneficial interest having par value is $250,000.00

 

SEVENTH :  These Articles of Amendment and Restatement shall become effective at 9:00 a.m. on September 14, 2017.

 

The undersigned Chief Executive Officer acknowledges these Articles of Amendment and Restatement to be the trust act of the Trust and, as to all matters or facts required to be verified under oath, the undersigned Chief Executive Officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Trust has caused these Articles of Amendment and Restatement to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary on this 13 th  day of September, 2017.

 

ATTEST:

 

TREMONT MORTGAGE TRUST

 

 

 

 

 

 

By:

/s/ Jennifer B. Clark

 

By:

/s/ David M. Blackman

Name:

Jennifer B. Clark

 

Name:

David M. Blackman

Title:

Secretary

 

Title:

Chief Executive Officer

 


Exhibit 3.2

 

TREMONT MORTGAGE TRUST

 

AMENDED AND RESTATED BYLAWS

 

As Amended and Restated September 14, 2017

 



 

TABLE OF CONTENTS

 

ARTICLE I OFFICES

1

Section 1.1

Principal Office

1

Section 1.2

Additional Offices

1

ARTICLE II MEETINGS OF SHAREHOLDERS

1

Section 2.1

Place

1

Section 2.2

Annual Meeting

1

Section 2.3

Special Meetings

1

Section 2.4

Notice of Annual or Special Meetings

1

Section 2.5

Notice of Adjourned Meetings

2

Section 2.6

Meeting Business

2

Section 2.7

Organization of Shareholder Meetings

2

Section 2.8

Quorum

3

Section 2.9

Proxies

3

Section 2.10

Record Date

3

Section 2.11

Voting of Shares by Certain Holders

4

Section 2.12

Inspectors

4

Section 2.13

Nominations and Other Proposals to be Considered at Meetings of Shareholders

4

Section 2.14

No Shareholder Actions by Written Consent

13

Section 2.15

Voting by Ballot

14

Section 2.16

Proposals of Business Which Are Not Proper Matters For Action By Shareholders

14

ARTICLE III TRUSTEES

14

Section 3.1

General Powers; Qualifications

14

Section 3.2

Independent Trustees and Managing Trustees

14

Section 3.3

Annual and Regular Meetings

14

Section 3.4

Special Meetings

15

Section 3.5

Notice

15

Section 3.6

Quorum

15

Section 3.7

Voting

15

Section 3.8

Telephone Meetings

16

Section 3.9

Action by Written Consent of Trustees

16

Section 3.10

Waiver of Notice

16

Section 3.11

Compensation

16

Section 3.12

Surety Bonds

16

Section 3.13

Reliance

17

Section 3.14

Interested Trustee Transactions

17

Section 3.15

Certain Rights of Trustees, Officers, Employees and Agents

17

Section 3.16

Emergency Provisions

17

Section 3.17

Removal for Cause

17

ARTICLE IV COMMITTEES

18

Section 4.1

Number; Tenure and Qualifications

18

Section 4.2

Powers

18

Section 4.3

Meetings

18

 

i



 

Section 4.4

Telephone Meetings

18

Section 4.5

Action by Written Consent of Committees

18

Section 4.6

Vacancies

19

ARTICLE V OFFICERS

19

Section 5.1

General Provisions

19

Section 5.2

Removal and Resignation

19

Section 5.3

Vacancies

19

Section 5.4

Chief Executive Officer

19

Section 5.5

Co-Presidents

20

Section 5.6

Chief Operating Officer

20

Section 5.7

Chief Financial Officer

20

Section 5.8

Vice Presidents

20

Section 5.9

Secretary

20

Section 5.10

Treasurer

20

Section 5.11

Assistant Secretaries and Assistant Treasurers

21

ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS

21

Section 6.1

Contracts

21

Section 6.2

Checks and Drafts

21

Section 6.3

Deposits

21

ARTICLE VII SHARES

21

Section 7.1

Certificates

21

Section 7.2

Transfers

21

Section 7.3

Lost Certificates

22

Section 7.4

Fixing of Record Date

22

Section 7.5

Share Ledger

22

Section 7.6

Fractional Shares; Issuance of Units

22

ARTICLE VIII REGULATORY COMPLIANCE AND DISCLOSURE

23

Section 8.1

Actions Requiring Regulatory Compliance Implicating the Trust

23

Section 8.2

Compliance With Law

23

Section 8.3

Limitation on Voting Shares or Proxies

23

Section 8.4

Representations, Warranties and Covenants Made to Governmental or Regulatory Bodies

24

Section 8.5

Board of Trustees’ Determinations

24

ARTICLE IX FISCAL YEAR

24

Section 9.1

Fiscal Year

24

ARTICLE X DIVIDENDS AND OTHER DISTRIBUTIONS

24

Section 10.1

Dividends and Other Distributions

24

ARTICLE XI SEAL

24

Section 11.1

Seal

24

Section 11.2

Affixing Seal

24

ARTICLE XII WAIVER OF NOTICE

25

Section 12.1

Waiver of Notice

25

ARTICLE XIII AMENDMENT OF BYLAWS

25

Section 13.1

Amendment of Bylaws

25

ARTICLE XIV MISCELLANEOUS

25

Section 14.1

References to Declaration of Trust

25

 

ii



 

Section 14.2

Costs and Expenses

25

Section 14.3

Ratification

26

Section 14.4

Ambiguity

26

Section 14.5

Inspection of Bylaws

26

Section 14.6

Control Share Acquisition Act

26

ARTICLE XV EXCLUSIVE FORUM FOR CERTAIN DISPUTES

26

Section 15.1

Exclusive Forum

26

 

iii



 

TREMONT MORTGAGE TRUST

 

AMENDED AND RESTATED BYLAWS

 

These AMENDED AND RESTATED BYLAWS (these “ Bylaws ”) are made as of the date set forth above by the Board of Trustees.

 

ARTICLE I

 

OFFICES

 

Section 1.1            Principal Office .  The principal office of the Trust shall be located at such place or places as the Board of Trustees may designate.

 

Section 1.2            Additional Offices .  The Trust may have additional offices at such places as the Board of Trustees may from time to time determine or the business of the Trust may require.

 

ARTICLE II

 

MEETINGS OF SHAREHOLDERS

 

Section 2.1            Place .  All meetings of shareholders shall be held at the principal office of the Trust or at such other place as is designated by the Board of Trustees, a Managing Trustee (as defined in the Declaration of Trust) or the chief executive officer.

 

Section 2.2            Annual Meeting .  An annual meeting of the shareholders for the election of Trustees and the transaction of any business within the powers of the Trust shall be held at such times as the Board of Trustees may designate.  Failure to hold an annual meeting does not invalidate the Trust’s existence or affect any otherwise valid acts of the Trust.

 

Section 2.3            Special Meetings .  Special meetings of shareholders may be called only by the Board of Trustees.  If there shall be no Trustees, the officers of the Trust shall promptly call a special meeting of the shareholders entitled to vote for the election of successor Trustees for the purpose of electing Trustees.

 

Section 2.4            Notice of Annual or Special Meetings .  Notice given in writing or by electronic transmission specifying the place, day and time of any annual or special meeting of shareholders, the purposes of the meeting, to the extent required by law to be provided, and all other matters required by law shall be given to each shareholder of record entitled to vote, sent to his or her address appearing on the books of the Trust or theretofore given by him or her to the Trust for the purpose of notice, by presenting it to such shareholder personally, by leaving it at the shareholder’s residence or usual place of business or by any other means permitted by Maryland law.  If mailed, such notice shall be deemed to be given once deposited in the U.S. mail addressed to the shareholder at his or her post office address as it appears on the records of the Trust, with postage thereon prepaid.  If transmitted electronically, such notice shall be deemed to be given when transmitted to the shareholder by an electronic transmission to any address or

 



 

number of the shareholder at which the shareholder receives electronic transmissions.  It shall be the duty of the secretary to give notice of each meeting of the shareholders.  The Trust may give a single notice to all shareholders who share an address, which single notice shall be effective to any shareholder at such address, unless a shareholder objects to receiving such single notice or revokes a prior consent to receiving such single notice.  Failure to give notice of any meeting to one or more shareholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this ARTICLE II or the validity of any proceedings at any such meeting.

 

Section 2.5            Notice of Adjourned Meetings .  It shall not be necessary to give notice of the time and place of any adjourned meeting of shareholders or of the business to be transacted thereat other than by announcement at the meeting at which such adjournment is taken.

 

Section 2.6            Meeting Business .  Except as otherwise expressly set forth in the Declaration of Trust or elsewhere in these Bylaws, no business shall be transacted at an annual or special meeting of shareholders except as specifically designated in the notice or otherwise properly brought before the meeting of shareholders by or at the direction of the Board of Trustees.

 

Section 2.7            Organization of Shareholder Meetings .  Every meeting of shareholders shall be conducted by an individual appointed by the Board of Trustees to be chairperson of the meeting or, in the absence of such appointment or the absence of the appointed individual, by one of the following officers present at the meeting in the following order: the chairman of the board, if there be one, a Managing Trustee (in their order of seniority), the chief executive officer, the co-presidents (in their order of seniority), the vice presidents (in their order of seniority), the secretary, or, in the absence of such officers, a chairperson chosen by the shareholders by the vote of holders of shares of beneficial interest representing a majority of the votes cast on such appointment by shareholders present in person or represented by proxy.  The secretary, an assistant secretary or a person appointed by the Board of Trustees or, in the absence of such appointment, a person appointed by the chairperson of the meeting shall act as secretary of the meeting and record the minutes of the meeting.  If the secretary presides as chairperson at a meeting of the shareholders, then the secretary shall not also act as secretary of the meeting and record the minutes of the meeting.  The order of business and all other matters of procedure at any meeting of shareholders shall be determined by the chairperson of the meeting.  The chairperson of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairperson, are appropriate for the proper conduct of the meeting, including, without limitation: (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to shareholders of record of the Trust, their duly authorized proxies or other such persons as the chairperson of the meeting may determine; (c) limiting participation at the meeting on any matter to shareholders of record of the Trust entitled to vote on such matter, their duly authorized proxies or other such persons as the chairperson of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any shareholder or other person who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairperson of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the

 

2



 

meeting; and (i) complying with any state and local laws and regulations concerning safety and security.  Without limiting the generality of the powers of the chairperson of the meeting pursuant to the foregoing provisions, the chairperson may adjourn any meeting of shareholders for any reason deemed necessary by the chairperson, including, without limitation, if (i) no quorum is present for the transaction of the business, (ii) the Board of Trustees or the chairperson of the meeting determines that adjournment is necessary or appropriate to enable the shareholders to consider fully information that the Board of Trustees or the chairperson of the meeting determines has not been made sufficiently or timely available to shareholders or (iii) the Board of Trustees or the chairperson of the meeting determines that adjournment is otherwise in the best interests of the Trust.  Unless otherwise determined by the chairperson of the meeting, meetings of shareholders shall not be required to be held in accordance with the general rules of parliamentary procedure or any otherwise established rules of order.

 

Section 2.8            Quorum .  At any meeting of shareholders, the presence in person or by proxy of shareholders holding or representing not less than a majority of the total outstanding shares of beneficial interest entitled to vote at such meeting shall constitute a quorum for the transaction of business at that meeting; but this section shall not affect any requirement under any statute or the Declaration of Trust for the vote necessary for the adoption of any measure.  If, however, such quorum shall not be present at any meeting of the shareholders, the chairperson of the meeting shall have the power to adjourn the meeting from time to time without the Trust having to set a new record date or provide any additional notice of such meeting, subject to any obligation of the Trust to give notice pursuant to Section 2.5.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  The shareholders present, either in person or by proxy, at a meeting of shareholders which has been duly called and convened and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal of shareholders entitled to cast enough votes to leave less than a quorum then being present at the meeting.

 

Section 2.9            Proxies .  A shareholder may cast the votes entitled to be cast by him or her either in person or by proxy executed by the shareholder or by his or her duly authorized agent in any manner permitted by law.  Such proxy shall be filed with such officer of the Trust or third party agent as the Board of Trustees or the chairperson of the meeting shall have designated for such purpose for verification at or prior to such meeting.  Any proxy relating to votes entitled to be cast by holders of the Trust’s shares of beneficial interest shall be valid until the expiration date therein or, if no expiration is so indicated, for such period as is permitted pursuant to Maryland law.  At a meeting of shareholders, all questions concerning the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by or on behalf of the chairperson of the meeting, subject to Section 2.12.

 

Section 2.10          Record Date .  The Board of Trustees may fix the date for determination of shareholders entitled to notice of and to vote at a meeting of shareholders.  If no date is fixed for the determination of the shareholders entitled to vote at any meeting of shareholders, only persons in whose names shares entitled to vote are recorded on the share records of the Trust on the later of:  (i) the close of business on the day on which notice of such meeting of shareholders is first mailed by the Trust or (ii) the thirtieth (30th) day before the date of such meeting shall be entitled to vote at such meeting.

 

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Section 2.11          Voting of Shares by Certain Holders .  Shares of beneficial interest of the Trust registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner, managing member or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such shares pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or pursuant to an agreement of the partners of the partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such shares.  Any trustee or other fiduciary may vote shares registered in his, her or its name as such fiduciary, either in person or by proxy.  Notwithstanding the apparent authority created by the prior two sentences of this Section 2.11, the Board of Trustees or the chairperson of the meeting may require that such person acting for a corporation, partnership, trust or other entity provide documentary evidence of his or her authority to vote such shares and of the fact that the beneficial owner of such shares has been properly solicited and authorized such person to vote as voted and, in the absence of such satisfactory evidence, the Board of Trustees or the chairperson may determine whether such votes have been validly cast.

 

Section 2.12          Inspectors .

 

(a)           Before or at any meeting of shareholders, the chairperson of the meeting may appoint one or more persons as inspectors for such meeting.  Except as otherwise provided by the chairperson of the meeting, such inspectors, if any, shall (i) ascertain and report the number of shares of beneficial interest represented at the meeting, in person or by proxy, and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairperson of the meeting and (iv) perform such other acts as are proper to conduct the election or voting at the meeting.  In the absence of such an appointment, the secretary may act as the inspector.

 

(b)           Each report of an inspector shall be in writing and signed by him or her.  The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof, but the decision or determination of the chairperson of the meeting in any such matter shall be final and binding on all shareholders.

 

Section 2.13          Nominations and Other Proposals to be Considered at Meetings of Shareholders .  Nominations of individuals for election to the Board of Trustees and the proposal of other business to be considered by the shareholders at a meeting of shareholders may be properly brought before the meeting only as set forth in this Section 2.13.  Nothing in this Section 2.13 shall be deemed to affect any right of a shareholder to request inclusion of a non-binding precatory proposal in, or the right of the Trust to omit a proposal from, any proxy statement filed by the Trust with the U.S. Securities and Exchange Commission (the “ SEC ”) pursuant to Rule 14a-8 (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”).  All judgments and determinations made by the Board of Trustees or the chairperson of the meeting, as applicable, under this Section 2.13 (including, without limitation, judgments and determinations as to the propriety of a proposed nomination or a proposal of other business for consideration by shareholders) shall be final and binding unless determined to have been made in bad faith.

 

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Section 2.13.1              Annual Meetings of Shareholders .

 

(a)           Any shareholder may recommend to the Nominating and Governance Committee of the Board of Trustees an individual as a nominee for election to the Board of Trustees.  Such recommendation shall be made by written notice to the Chair of such committee and the secretary, which notice should contain or be accompanied by the information and documents with respect to such recommended nominee and shareholder that such shareholder believes to be relevant or helpful to the Nominating and Governance Committee’s deliberations.  In considering such recommendation, the Nominating and Governance Committee may request additional information concerning the recommended nominee or the shareholder(s) making the recommendation.  The Nominating and Governance Committee of the Board of Trustees will consider any such recommendation in its discretion.  Any shareholder seeking to make a nomination of an individual for election to the Board of Trustees at an annual meeting of shareholders must make such nomination in accordance with Section 2.13.1(b)(ii).

 

(b)           Nominations of individuals for election to the Board of Trustees and the proposal of other business to be considered by the shareholders at an annual meeting of shareholders may be properly brought before the meeting (i) pursuant to the Trust’s notice of meeting or otherwise properly brought before the meeting by or at the direction of the Board of Trustees or (ii) by any one or more shareholders of the Trust who (A) have each continuously owned (as defined below) shares of beneficial interest of the Trust entitled to vote in the election of Trustees or on a proposal of other business, for at least three (3) years  (or, if prior to September 21, 2020, since September 21, 2017) as of the date of the giving of the notice provided for in Section 2.13.1(c), the record date for determining the shareholders entitled to vote at the meeting and the time of the annual meeting (including any adjournment or postponement thereof), with the aggregate shares owned by such shareholder(s) as of each of such dates and during such three (3) year period representing at least one percent (1%) of the Trust’s shares of beneficial interest, (B) holds, or hold, a certificate or certificates evidencing the aggregate number of shares of beneficial interest of the Trust referenced in subclause (A) of this Section 2.13.1(b)(ii) as of the time of giving the notice provided for in Section 2.13.1(c), the record date for determining the shareholders entitled to vote at the meeting and the time of the annual meeting (including any adjournment or postponement thereof), (C) is, or are, entitled to make such nomination or propose such other business and to vote at the meeting on such election or proposal of other business, and (D) complies, or comply, with the notice procedures set forth in this Section 2.13 as to such nomination or proposal of other business.  For purposes of this Section 2.13, a shareholder shall be deemed to “own” or have “owned” only those outstanding shares of the Trust’s shares of beneficial interest as to which the shareholder possesses both the full voting and investment rights pertaining to such shares and the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the number of shares calculated in accordance with the foregoing shall not include any shares (x) sold by such shareholder or any of its affiliates in any transaction that has not been settled or closed or (y) borrowed by such shareholder or any of its affiliates for any purposes or purchased by such shareholder or any of its affiliates pursuant to an agreement to resell.  Without limiting the foregoing, to the extent not excluded by the immediately preceding sentence, a shareholder’s “short position” as defined in Rule 14e-4 under the Exchange Act shall be deducted from the shares otherwise “owned.”  A shareholder shall “own” shares held in the name of a nominee or other intermediary so long as the shareholder retains the right to instruct how the shares are voted

 

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with respect to the election of Trustees or the proposal of other business and possesses the full economic interest in the shares.  For purposes of this Section 2.13, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.  For purposes of this Section 2.13, the period of continuous ownership of shares must be evidenced by documentation accompanying the nomination or proposal.  Whether shares are “owned” for purposes of this Section 2.13 shall be determined by the Board of Trustees.

 

(c)           For nominations for election to the Board of Trustees or other business to be properly brought before an annual meeting by one or more shareholders pursuant to this Section 2.13.1, such shareholder(s) shall have given timely notice thereof in writing to the secretary in accordance with this Section 2.13 and such other business shall otherwise be a proper matter for action by shareholders.  To be timely, the notice of such shareholder(s) shall include all documentation and set forth all information required under this Section 2.13 and shall be delivered to the secretary at the principal executive offices of the Trust not later than 5:00 p.m. (Eastern Time) on the ninetieth (90th) day nor earlier than the one-hundred twentieth (120th) day prior to the first (1st) anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided , however , that if the annual meeting is called for a date that is more than thirty (30) days earlier or later than the first (1st) anniversary date of the preceding year’s annual meeting, notice by such shareholder(s) to be timely shall be so delivered not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day following the earlier of the day on which (i) notice of the date of the annual meeting is mailed or otherwise made available or (ii) public announcement of the date of the annual meeting is first made by the Trust; provided , further , however that for the Trust’s annual meeting of shareholders to be held in 2018, written notice of nominations of individuals for election as Trustees or other matters to be considered at that annual meeting of our shareholders by one or more of our shareholders must be delivered to our Secretary at our principal executive offices not later than 5:00 p.m. (Eastern Time) on December 15, 2017 nor earlier than November 15, 2017. Neither the postponement or adjournment of an annual meeting, nor the public announcement of such postponement or adjournment, shall commence a new time period (or extend any time period) for the giving of a notice of one or more shareholders as described above.

 

A notice of one or more shareholders pursuant to this Section 2.13.1(c) shall set forth:

 

(i)            separately as to each individual whom such shareholder(s) propose to nominate for election or reelection as a Trustee (a “ Proposed Nominee ”), (1) the name, age, business address, residence address and educational and professional background of such Proposed Nominee, (2) a statement of whether such Proposed Nominee is proposed for nomination as an Independent Trustee or a Managing Trustee (each as defined in the Declaration of Trust) and a description of such Proposed Nominee’s qualifications to be an Independent Trustee or Managing Trustee, as the case may be, and such Proposed Nominee’s qualifications to be a Trustee pursuant to the criteria set forth in Section 3.1, (3) the class, series and number of any shares of beneficial interest of the Trust that are, directly or indirectly, beneficially owned or owned of record by such Proposed Nominee, (4) a description of the material terms of each Derivative Transaction (as defined below) in which such Proposed Nominee, directly or indirectly, has an interest, including, without limitation, the counterparties to each Derivative Transaction, the class or series and number or amount of securities of the Trust to which each Derivative

 

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Transaction relates or provides exposure, and whether or not (x) such Derivative Transaction conveys any voting rights, directly or indirectly, to such Proposed Nominee, (y) such Derivative Transaction is required to be, or is capable of being, settled through delivery of securities of the Trust and (z) such Proposed Nominee and/or, to their knowledge, the counterparty to such Derivative Transaction has entered into other transactions that hedge or mitigate the economic effect of such Derivative Transaction, (5) a description of all direct and indirect compensation and other agreements, arrangements and understandings or any other relationships, between or among any shareholder making the nomination, or any of its respective affiliates and associates, or others acting in concert therewith, on the one hand, and such Proposed Nominee, or his or her respective affiliates and associates, on the other hand, and (6) all other information relating to such Proposed Nominee that would be required to be disclosed in connection with a solicitation of proxies for election of the Proposed Nominee as a Trustee in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Section 14 (or any successor provision) of the Exchange Act or that would otherwise be required to be disclosed pursuant to the rules of any national securities exchange on which any securities of the Trust are listed or traded;

 

(ii)           as to any other business that such shareholder(s) propose to bring before the meeting, (1) a description of such business, (2) the reasons for proposing such business at the meeting and any material interest in such business of such shareholder(s) or any Shareholder Associated Person (as defined in Section 2.13.1(g)), including any anticipated benefit to such shareholder(s) or any Shareholder Associated Person therefrom, (3) a description of all agreements, arrangements and understandings between such shareholder(s) and Shareholder Associated Person amongst themselves or with any other person or persons (including their names) in connection with the proposal of such business by such shareholder(s) and (4) a representation that such shareholder(s) intend to appear in person or by proxy at the meeting to bring the business before the meeting;

 

(iii)          separately as to each shareholder giving the notice and any Shareholder Associated Person, (1) the class, series and number of all shares of beneficial interest of the Trust that are owned of record by such shareholder or by such Shareholder Associated Person, if any, and (2) the class, series and number of, and the nominee holder for, any shares of beneficial interests of the Trust that are, directly or indirectly, beneficially owned but not owned of record by such shareholder or by such Shareholder Associated Person, if any;

 

(iv)          separately as to each shareholder giving the notice and any Shareholder Associated Person, (1) a description of all purchases and sales of securities of the Trust by such shareholder or Shareholder Associated Person during the period of continuous ownership required by Section 2.13.1(b)(ii), including the date of the transactions, the class, series and number of securities involved in the transactions and the consideration involved, (2) a description of the material terms of each Derivative Transaction that such shareholder or Shareholder Associated Person, directly or indirectly, has, or during the period of continuous ownership required by Section 2.13.1(b)(ii) had, an interest in, including, without limitation, the counterparties to each Derivative Transaction, the class or series and number or amount of securities of the Trust to which each Derivative Transaction relates or provides exposure, and whether or not (x) such Derivative Transaction conveys or conveyed any voting rights, directly or indirectly, to such shareholder or Shareholder Associated Person, (y) such Derivative

 

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Transaction is or was required to be, or is or was capable of being, settled through delivery of securities of the Trust and (z) such shareholder or Shareholder Associated Person and/or, to their knowledge, the counterparty to such Derivative Transaction has or had entered into other transactions that hedge or mitigate the economic effect of such Derivative Transaction, (3) a description of the material terms of any performance related fees (other than an asset based fee) to which such shareholder or Shareholder Associated Person is entitled based on any increase or decrease in the value of shares of beneficial interest of the Trust or instrument or arrangement of the type contemplated within the definition of Derivative Transaction, and (4) any rights to dividends or other distributions on the shares of beneficial interest of the Trust that are beneficially owned by such shareholder or Shareholder Associated Person and that are separated or separable from the underlying shares of beneficial interest of the Trust;

 

(v)           separately as to each shareholder giving the notice and any Shareholder Associated Person with a material interest described in clause (ii)(2) above, an ownership interest described in clause (iii) above or a transaction or right described in clause (iv) above, (1) the name and address of such shareholder and Shareholder Associated Person, and (2) all information relating to such shareholder and Shareholder Associated Person that would be required to be disclosed in connection with a solicitation of proxies for election of Trustees in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Section 14 (or any successor provision) of the Exchange Act, or that would otherwise be required to be disclosed pursuant to the rules of any national securities exchange on which any securities of the Trust are listed or traded; and

 

(vi)          to the extent known by the shareholder(s) giving the notice, the name and address of any other person who beneficially owns or owns of record any shares of beneficial interest of the Trust and who supports the nominee for election or reelection as a Trustee or the proposal of other business.

 

(d)           A notice of one or more shareholders making a nomination or proposing other business pursuant to Section 2.13.1(c) shall be accompanied by a sworn verification of each shareholder making the nomination or proposal as to such shareholder’s continuous ownership of the shares referenced in subclause (A) of Section 2.13.1(b)(ii) throughout the period referenced in such subclause, together with (i) a copy of the share certificate(s) referenced in subclause (B) of Section 2.13.1(b)(ii) above; (ii) if any such shareholder was not a shareholder of record of the shares referenced in subclause (A) of Section 2.13.1(b)(ii) above continuously for the three (3) year period referenced therein, reasonable evidence of such shareholder’s continuous beneficial ownership of such shares during such three (3) year period, such reasonable evidence may include, but shall not be limited to, (A) a copy of a report of the shareholder on Schedule 13D or Schedule 13G under the Exchange Act filed on or prior to the beginning of the three (3) year period and all amendments thereto, (B) a copy of a statement required to be filed pursuant to Section 16 of the Exchange Act (or any successor provisions) by a person who is a Trustee or who is directly or indirectly the beneficial owner of more than ten percent (10%) of the shares of beneficial interest of the Trust filed on or prior to the beginning of the three (3) year period and all amendments thereto, or (C) written evidence that each shareholder making the nomination or proposal maintained throughout the chain of record and non-record ownership continuous ownership of such shares (i.e. possession of full voting and investment rights pertaining to, and

 

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full economic interest in, such shares) throughout the required period, including written verification of such ownership from each person who was the “record” holder of such shares during such period (including, if applicable, the Depository Trust Company) and each participant of the Depository Trust Company, financial institution, broker-dealer or custodian through which the shares were owned; and (iii) with respect to nominations, (A) a completed and executed questionnaire (in the form available from the secretary) of each Proposed Nominee with respect to his or her background and qualification to serve as a Trustee, the background of any other person or entity on whose behalf the nomination is being made and the information relating to such Proposed Nominee and such other person or entity that would be required to be disclosed in connection with a solicitation of proxies for election of the Proposed Nominee as a Trustee in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Section 14 (or any successor provision) of the Exchange Act, and the rules and regulations promulgated thereunder, or that would otherwise be required to be disclosed pursuant to the rules of any national securities exchange on which any securities of the Trust are listed or traded, and (B) a representation and agreement (in the form available from the secretary) executed by each Proposed Nominee pursuant to which such Proposed Nominee (1) represents and agrees that he or she is not and will not become a party to any agreement, arrangement or understanding with, and does not have any commitment and has not given any assurance to, any person or entity, in each case that has not been previously disclosed to the Trust, (x) as to how he or she, if elected as a Trustee, will act or vote on any issue or question, or (y) that could limit or interfere with his or her ability to comply, if elected as a Trustee, with his or her duties to the Trust, (2) represents and agrees that he or she is not and will not become a party to any agreement, arrangement or understanding with any person or entity, other than the Trust, with respect to any direct or indirect compensation, reimbursement or indemnification in connection with or related to his or her service as, or any action or omission in his or her capacity as, a Trustee that has not been previously disclosed to the Trust, (3) represents and agrees that if elected as a Trustee, he or she will be in compliance with and will comply with, applicable law and all applicable publicly disclosed corporate governance, conflict of interest, corporate opportunity, confidentiality and share ownership and trading policies and guidelines of the Trust and (4) consents to being named as a nominee and to serving as a Trustee if elected.

 

(e)           Any shareholder(s) providing notice of a proposed nomination or other business to be considered at an annual meeting of shareholders shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.13 is true and correct as of the record date for such annual meeting and as of a date that is ten (10) business days prior to such annual meeting, and any such update shall be delivered to the secretary at the principal executive offices of the Trust not later than the close of business on the fifth (5th) business day after the record date (in the case of an update or supplement required to be made as of the record date), and not later than the close of business on the eighth (8th) business day prior to the date of the annual meeting (in the case of an update or supplement required to be made as of ten (10) business days prior to the meeting).

 

(f)            A shareholder making a nomination or proposal of other business for consideration at an annual meeting may withdraw the nomination or proposal at any time before the annual meeting.  After the period specified in the second sentence of Section 2.13.1(c), a shareholder nomination or proposal of other business for consideration at an annual meeting may

 

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only be amended with the permission of the Board of Trustees.  Notwithstanding anything in the second sentence of Section 2.13.1(c) to the contrary, if the number of Trustees to be elected to the Board of Trustees is increased and there is no public announcement of such action at least one-hundred thirty (130) days prior to the first (1st) anniversary of the date of the proxy statement for the preceding year’s annual meeting, the notice required by this Section 2.13.1 also shall be considered timely, but only with respect to nominees for any new positions created by such increase, if such notice is delivered to the secretary at the principal executive offices of the Trust not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day immediately following the day on which such public announcement is first made by the Trust.  If the number of the Trustees to be elected to the Board of Trustees is decreased, there shall be no change or expansion in the time period for shareholders to make a nomination from the time period specified in the second sentence of Section 2.13.1(c). Any change in time period for shareholders to make a nomination shall not change the time period to make any other proposal from the time period specified in the second sentence of Section 2.13.1(c).

 

(g)           For purposes of this Section 2.13, (i) “Shareholder Associated Person” of any shareholder shall mean (A) any person acting in concert with such shareholder, (B) any direct or indirect beneficial owner of shares of beneficial interest of the Trust beneficially owned or owned of record by such shareholder and (C) any person controlling, controlled by or under common control with such shareholder or a Shareholder Associated Person; and (ii) “Derivative Transaction” by a person shall mean any (A) transaction in, or arrangement, agreement or understanding with respect to, any option, warrant, convertible security, stock appreciation right or similar right with an exercise, conversion or exchange privilege, or settlement payment or mechanism related to, any security of the Trust, or similar instrument with a value derived in whole or in part from the value of a security of the Trust, in any such case whether or not it is subject to settlement in a security of the Trust or otherwise or (B) transaction, arrangement, agreement or understanding which included or includes an opportunity for such person, directly or indirectly, to profit or share in any profit derived from any increase or decrease in the value of any security of the Trust, to mitigate any loss or manage any risk associated with any increase or decrease in the value of any security of the Trust or to increase or decrease the number of securities of the Trust which such person was, is or will be entitled to vote, in any such case whether or not it is subject to settlement in a security of the Trust or otherwise.

 

Section 2.13.2              Shareholder Nominations or Other Proposals Causing Covenant Breaches or Defaults .  At the same time as the submission of any shareholder nomination or proposal of other business to be considered at a shareholders meeting that, if approved and implemented by the Trust, would cause the Trust or any subsidiary (as defined in Section 2.13.5(c)) of the Trust to be in breach of any covenant or otherwise cause a default (in any case, with or without notice or lapse of time) in any existing debt instrument or agreement of the Trust or any subsidiary of the Trust or other material contract or agreement of the Trust or any subsidiary of the Trust, the notice provided pursuant to Section 2.13.1(c) shall disclose: (a) whether the lender or contracting party has agreed to waive the breach of covenant or default, and, if so, shall include reasonable evidence thereof, or (b) in reasonable detail, the plan of the proponent shareholder(s) for the repayment of the indebtedness to the lender or curing the contractual breach or default and satisfying any resulting damage claim, specifically identifying the actions to be taken and the source of funds for any such repayment, and such notice shall be

 

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accompanied by a copy of any commitment letter(s) or agreement(s) for the financing of such plan.

 

Section 2.13.3              Shareholder Nominations or Other Proposals Requiring Governmental Action .  If (a) any shareholder nomination or proposal of other business to be considered at a shareholders meeting could not be considered or, if approved, implemented by the Trust without the Trust, any subsidiary of the Trust, any proponent shareholder, any Proposed Nominee of such shareholder, any Shareholder Associated Person of such shareholder, the holder of proxies or their respective affiliates or associates filing with or otherwise notifying or obtaining the consent, approval or other action of any federal, state, municipal or other governmental or regulatory body (a “ Governmental Action ”) or (b) any proponent shareholder’s ownership of shares of beneficial interest of the Trust or any solicitation of proxies or votes or holding or exercising proxies by such shareholder, any Proposed Nominee of such shareholder, any Shareholder Associated Person of such shareholder, or their respective affiliates or associates would require Governmental Action, then, in the notice provided pursuant to Section 2.13.1(c) the proponent shareholder(s) shall disclose (x) whether such Governmental Action has been given or obtained, and, if so, such notice shall be accompanied by reasonable evidence thereof, or (y) in reasonable detail, the plan of such shareholder(s) for making or obtaining the Governmental Action.

 

Section 2.13.4              Special Meetings of Shareholders .  As set forth in Section 2.6, only business brought before the meeting pursuant to the Trust’s notice of meeting or otherwise properly brought before the meeting by or at the direction of the Board of Trustees may be considered at a special meeting of shareholders.  Nominations of individuals for election to the Board of Trustees only may be made at a special meeting of shareholders at which Trustees are to be elected: (a) pursuant to the Trust’s notice of meeting; (b) if the Board of Trustees has determined that Trustees shall be elected at such special meeting; or (c) if there are no Trustees and the special meeting is called by the officers of the Trust for the election of successor Trustees; provided , however , that nominations of individuals to serve as Trustees at a special meeting called in the manner set forth in subclauses (a)-(c) above may only be made by (1) the applicable Trustees or officers of the Trust who call the special meeting of shareholders for the purpose of electing one or more Trustees or (2) any one or more shareholder(s) of the Trust who (A) satisfy the ownership amount, holding period and certificate requirements set forth in Section 2.13.1(b)(ii), (B) have given timely notice thereof in writing to the secretary at the principal executive offices of the Trust, which notice contains or is accompanied by the information and documents required by Section 2.13.1(c) and Section 2.13.1(d), (C) satisfy the requirements of Section 2.13.2 and Section 2.13.3 and (D) further update and supplement such notice in accordance with Section 2.14; provided further , that, for purposes of this Section 2.13.4, all references in Section 2.13.1, Section 2.13.2 and Section 2.13.3 to the annual meeting and to the notice given under Section 2.13.1 shall be deemed, for purposes of this Section 2.13.4, to be references to the special meeting and the notice given under this Section 2.13.4.  To be timely, a shareholder’s notice under this Section 2.13.4 shall be delivered to the secretary at the principal executive offices of the Trust not earlier than the one-hundred twentieth (120th) day prior to such special meeting and not later than 5:00 p.m. (Eastern Time) on the later of (i) the ninetieth (90th) day prior to such special meeting or (ii) the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting.  Neither the postponement or adjournment of a special meeting, nor the public announcement of such postponement or

 

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adjournment, shall commence a new time period (or extend any time period) for the giving of a shareholder(s)’ notice as described above.

 

Section 2.13.5              General .

 

(a)           If information submitted pursuant to this Section 2.13 by any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders shall be deemed by the Board of Trustees incomplete or inaccurate, any authorized officer or the Board of Trustees or any committee thereof may treat such information as not having been provided in accordance with this Section 2.13.  Any notice submitted by a shareholder pursuant to this Section 2.13 that is deemed by the Board of Trustees inaccurate, incomplete or otherwise fails to satisfy completely any provision of this Section 2.13 shall be deemed defective and shall thereby render all proposals and nominations set forth in such notice defective.  Upon written request by the secretary or the Board of Trustees or any committee thereof (which may be made from time to time), any shareholder proposing a nominee for election as a Trustee or any proposal for other business at a meeting of shareholders shall provide, within three (3) business days after such request (or such other period as may be specified in such request), (i) written verification, satisfactory to the secretary or any other authorized officer or the Board of Trustees or any committee thereof, in his, her or its discretion, to demonstrate the accuracy of any information submitted by the shareholder pursuant to this Section 2.13, (ii) written responses to information reasonably requested by the secretary, the Board of Trustees or any committee thereof and (iii) a written update, to a current date, of any information submitted by the shareholder pursuant to this Section 2.13 as of an earlier date.  If a shareholder fails to provide such written verification, information or update within such period, the secretary or any other authorized officer or the Board of Trustees may treat the information which was previously provided and to which the verification, request or update relates as not having been provided in accordance with this Section 2.13.  It is the responsibility of a shareholder who wishes to make a nomination or other proposal to comply with the requirements of Section 2.13; nothing in this Section 2.13.5(a) or otherwise shall create any duty of the Trust, the Board of Trustees or any committee thereof nor any officer of the Trust to inform a shareholder that the information submitted pursuant to this Section 2.13 by or on behalf of such shareholder is incomplete or inaccurate or not otherwise in accordance with this Section 2.13 nor require the Trust, the Board of Trustees, any committee of the Board of Trustees or any officer of the Trust to request clarification or updating of information provided by any shareholder, but the Board of Trustees, a committee thereof or the secretary acting on behalf of the Board of Trustees or a committee, may do so in its, his or her discretion.

 

(b)           Only such individuals who are nominated in accordance with this Section 2.13 shall be eligible for election by shareholders as Trustees and only such business shall be conducted at a meeting of shareholders as shall have been properly brought before the meeting in accordance with this Section 2.13.  The chairperson of the meeting and the Board of Trustees shall each have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 2.13 and, if any proposed nomination or other business is determined not to be in compliance with this Section 2.13, to declare that such defective nomination or proposal be disregarded.

 

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(c)           For purposes of this Section 2.13: (i) “public announcement” shall mean disclosure in (A) a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or any other widely circulated news or wire service or (B) a document publicly filed by the Trust with the SEC; (ii) “subsidiary” shall include, with respect to a person, any corporation, partnership, joint venture or other entity of which such person (A) owns, directly or indirectly, ten percent (10%) or more of the outstanding voting securities or other interests or (B) has a person designated by such person serving on, or a right, contractual or otherwise, to designate a person, so to serve on, the board of directors (or analogous governing body); and (iii) a person shall be deemed to “beneficially own” or “have beneficially owned” any shares of beneficial interest of the Trust not owned directly by such person if that person or a group of which such person is a member would be the beneficial owner of such shares under Rule 13d-3 and Rule 13d-5 of the Exchange Act.

 

(d)           Notwithstanding the foregoing provisions of this Section 2.13, a shareholder shall also comply with all applicable legal requirements, including, without limitation, applicable requirements of state law and the Exchange Act and the rules and regulations thereunder, with respect to the matters set forth in this Section 2.13.  Nothing in this Section 2.13 shall be deemed to require that a shareholder nomination of an individual for election to the Board of Trustees or a shareholder proposal relating to other business be included in the Trust’s proxy statement, except as may be required by law.

 

(e)           The Board of Trustees may from time to time require any individual nominated to serve as a Trustee to agree in writing with regard to matters of business ethics and confidentiality while such nominee serves as a Trustee, such agreement to be on the terms and in a form determined satisfactory by the Board of Trustees, as amended and supplemented from time to time in the discretion of the Board of Trustees.  The terms of any such agreement may be substantially similar to the Code of Business Conduct and Ethics of the Trust or any similar code promulgated by the Trust or may differ from or supplement such Code.

 

(f)            Determinations required or permitted to be made under this Section 2.13 by the Board of Trustees may be delegated by the Board of Trustees to a committee of the Board of Trustees, subject to applicable law.

 

(g)           Notwithstanding anything in these Bylaws to the contrary, except as otherwise determined by the chairperson of the meeting, if the shareholder giving notice as provided for in this Section 2.13 does not appear in person or by proxy at such annual or special meeting to present each nominee for election as a nominee or the proposed business, as applicable, such matter shall not be considered at the meeting.

 

Section 2.14          No Shareholder Actions by Written Consent .  Shareholders shall not be authorized or permitted to take any action, including whether required or permitted to be taken at a meeting of shareholders, by written consent, and actions of shareholders may only be taken at a meeting of shareholders called and held in accordance with the Declaration of the Trust and these Bylaws.

 

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Section 2.15          Voting by Ballot .  Voting on any question or in any election may be by voice vote unless the chairperson of the meeting or any shareholder shall demand that voting be by ballot.

 

Section 2.16          Proposals of Business Which Are Not Proper Matters For Action By Shareholders .  Notwithstanding anything in the Declaration of Trust or these Bylaws to the contrary, subject to applicable law, any shareholder proposal for business the subject matter or effect of which would be within the exclusive purview of the Board of Trustees or would be reasonably likely, if considered by the shareholders or approved or implemented by the Trust, to result in an impairment of the limited liability status for the shareholders, shall be deemed not to be a matter upon which the shareholders are entitled to vote.  The Board of Trustees in its discretion shall be entitled to determine whether a shareholder proposal for business is not a matter upon which the shareholders are entitled to vote pursuant to this Section 2.16, and its decision shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

 

ARTICLE III

 

TRUSTEES

 

Section 3.1            General Powers; Qualifications .  The business and affairs of the Trust shall be managed under the direction of its Board of Trustees.  To qualify for nomination or election as a Trustee, an individual, at the time of nomination and election, shall, without limitation, (a) meet the qualifications to serve as a Trustee set forth in the Declaration of Trust and these Bylaws, including the qualifications of an Independent Trustee or a Managing Trustee, as the case may be, depending upon the position for which such individual may be nominated and elected and (b) have been nominated for election to the Board of Trustees in accordance with Section 2.13.

 

Section 3.2            Independent Trustees and Managing Trustees .  A majority of the Trustees holding office shall at all times be Independent Trustees; provided , however , that upon a failure to comply with this requirement as a result of the creation of a temporary vacancy which shall be filled by an Independent Trustee, whether as a result of enlargement of the Board of Trustees or the resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable.  If at any time the Board of Trustees shall not be comprised of a majority of Independent Trustees, the Board of Trustees shall take such actions as will cure such condition; provided that the fact that the Board of Trustees does not have a majority of Independent Trustees or has not taken such action at any time or from time to time shall not affect the validity of any action taken by the Board of Trustees.  If at any time the Board of Trustees shall not be comprised of a number of Managing Trustees as is required under the Declaration of Trust, the Board of Trustees shall take such actions as will cure such condition; provided that the fact that the Board of Trustees does not have the requisite number of Managing Trustees or has not taken such action at any time or from time to time shall not affect the validity of any action taken by the Board of Trustees.

 

Section 3.3            Annual and Regular Meetings .  An annual meeting of the Board of Trustees shall be held immediately after the annual meeting of shareholders, no notice other than

 

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this Bylaw being necessary.  The time and place of the annual meeting of the Board of Trustees may be changed by the Board of Trustees.  The Board of Trustees may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Trustees without other notice than such resolution.  If any such regular meeting is not so provided for, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Trustees.

 

Section 3.4            Special Meetings .  Special meetings of the Board of Trustees may be called at any time by any Managing Trustee, the chief executive officer or any co-president or the secretary pursuant to the request of any two (2) Trustees then in office.  The person or persons authorized to call special meetings of the Board of Trustees may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Board of Trustees called by them.

 

Section 3.5            Notice .  Notice of any special meeting shall be given by written notice delivered personally or by electronic mail, telephoned, facsimile transmitted, overnight couriered (with proof of delivery) or mailed to each Trustee at his or her business or residence address.  Personally delivered, telephoned, facsimile transmitted or electronically mailed notices shall be given at least twenty-four (24) hours prior to the meeting.  Notice by mail shall be deposited in the U.S. mail at least seventy-two (72) hours prior to the meeting.  If mailed, such notice shall be deemed to be given when deposited in the U.S. mail properly addressed, with postage thereon prepaid.  Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Trust by the Trustee.  Telephone notice shall be deemed given when the Trustee is personally given such notice in a telephone call to which he is a party.  Facsimile transmission notice shall be deemed given upon completion of the transmission of the message to the number given to the Trust by the Trustee and receipt of a completed answer back indicating receipt.  If sent by overnight courier, such notice shall be deemed given when delivered to the courier.  Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Trustees need be stated in the notice, unless specifically required by statute or these Bylaws.

 

Section 3.6            Quorum .  A majority of the Trustees then in office shall constitute a quorum for transaction of business at any meeting of the Board of Trustees, provided that, if less than a majority of the Trustees then in office are present at a meeting, a majority of the Trustees present may adjourn the meeting from time to time without further notice, and provided , further , that if, pursuant to the Declaration of Trust, these Bylaws or a resolution of the Board of Trustees, the vote of a particular group or committee of the Board of Trustees is required for action, a quorum for that action shall be a majority of the Trustees then in office that comprise such group or committee.  The Trustees present at a meeting of the Board of Trustees which has been duly called and convened and at which a quorum was established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of such number of Trustees as would otherwise result in less than a quorum then being present at the meeting.

 

Section 3.7            Voting .  The action of the majority of the Trustees present at a meeting at which a quorum is or was present shall be the action of the Board of Trustees, unless the concurrence of a greater proportion is required for such action by specific provision of an applicable statute, the Declaration of Trust or these Bylaws.  If enough Trustees have withdrawn

 

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from a meeting to leave fewer than are required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of Trustees necessary to constitute a quorum at such meeting shall be the action of the Board of Trustees, unless the concurrence of a greater proportion is required for such action by applicable law, the Declaration of Trust or these Bylaws.

 

Section 3.8            Telephone Meetings .  Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time.  Participation in a meeting by these means shall constitute presence in person at the meeting.  Such meeting shall be deemed to have been held at a place designated by the Board of Trustees at the meeting.

 

Section 3.9            Action by Written Consent of Trustees .  Any action required or permitted to be taken at any meeting of the Board of Trustees may be taken without a meeting, if a majority of the Trustees shall individually or collectively consent in writing or by electronic transmission to such action, unless the concurrence of a greater proportion is required for such action by a specific provision of an applicable statute, the Declaration of Trust or these Bylaws, in which case, such greater proportion of Trustees shall be required to consent in writing or by electronic transmission to such action.  Such written or electronic consent or consents shall be filed with the records of the Trust and shall have the same force and effect as the affirmative vote of such Trustees at a duly held meeting of the Trustees at which a quorum was present.

 

Section 3.10          Waiver of Notice .  The actions taken at any meeting of the Trustees, however called and noticed or wherever held, shall be as valid as though taken at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the Trustees not present waives notice, consents to the holding of such meeting or approves the minutes thereof.

 

Section 3.11          Compensation .  The Trustees shall be entitled to receive such reasonable compensation for their services as Trustees as the Board of Trustees may determine from time to time.  Trustees may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Trustees or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity performed or engaged in as Trustees.  The Trustees shall be entitled to receive remuneration for services rendered to the Trust in any other capacity, and such services may include, without limitation, services as an officer of the Trust, services as an employee of the Manager (as defined in the Declaration of Trust), legal, accounting or other professional services, or services as a broker, transfer agent or underwriter, whether performed by a Trustee or any person affiliated with a Trustee.

 

Section 3.12          Surety Bonds .  Unless specifically required by law, no Trustee shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.

 

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Section 3.13          Reliance .  Each Trustee, officer, employee and agent of the Trust shall, in the performance of his or her duties with respect to the Trust, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Trust or by the Manager, accountants, appraisers or other experts or consultants selected by the Board of Trustees or officers of the Trust, regardless of whether the Manager or any such accountant, appraiser or other expert or consultant may also be a Trustee.

 

Section 3.14          Interested Trustee Transactions .   Section 2-419 of the Maryland General Corporation Law (the “ MGCL ”) (or any successor statute) shall be available for and apply to any contract or other transaction between the Trust and any of its Trustees or between the Trust and any other trust, corporation, firm or other entity in which any of its Trustees is a trustee or director or has a material financial interest.

 

Section 3.15          Certain Rights of Trustees, Officers, Employees and Agents .  A Trustee shall have no responsibility to devote his or her full time to the affairs of the Trust.  Any Trustee or officer, employee or agent of the Trust, in his or her personal capacity or in a capacity as an affiliate, employee or agent of any other person, or otherwise, may have business interests and engage in business activities similar or in addition to those of or relating to the Trust.

 

Section 3.16          Emergency Provisions .  Notwithstanding any other provision in the Declaration of Trust or these Bylaws, this Section 3.16 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Trustees under ARTICLE III cannot readily be obtained (an “ Emergency ”).  During any Emergency, unless otherwise provided by the Board of Trustees, (a) a meeting of the Board of Trustees may be called by any Managing Trustee or officer of the Trust by any means feasible under the circumstances and (b) notice of any meeting of the Board of Trustees during such an Emergency may be given less than twenty-four (24) hours prior to the meeting to as many Trustees and by such means as it may be feasible at the time, including publication, television or radio.

 

Section 3.17          Removal for Cause .  A shareholder(s) proposing to remove one or more Trustees for cause shall meet and comply with all requirements in these Bylaws for a nomination of an individual for election to the Board of Trustees at an annual meeting of shareholders or a proposal of other business to be properly brought by such shareholder(s) at a meeting of the shareholders as set forth in Section 2.13.1, including the timely written notice, ownership amount, holding period, certificate, information and documentation requirements of Section 2.13.1(b), Section 2.13.1(c), Section 2.13.1(d), Section 2.13.2 and Section 2.13.3.  For purposes of the provisions in the Declaration of Trust regarding the removal of a Trustee and these Bylaws, “ cause ” means, with respect to a particular Trustee, the incapacity of such Trustee, such Trustee’s conviction of a felony or a final, non-appealable judgment of a court or arbitration panel of competent jurisdiction holding that such Trustee caused demonstrable, material harm to the Trust through bad faith or active and deliberate dishonesty.

 

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ARTICLE IV

 

COMMITTEES

 

Section 4.1            Number; Tenure and Qualifications .  The Board of Trustees shall appoint an Audit Committee, a Compensation Committee and a Nominating and Governance Committee.  Each of these committees shall be composed of three or more Trustees, to serve at the pleasure of the Board of Trustees.  The Board of Trustees may also appoint other committees from time to time composed of one or more members, at least one of whom shall be a Trustee, to serve at the pleasure of the Board of Trustees.  The Board of Trustees shall adopt a charter with respect to the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, which charter shall specify the purposes, the criteria for membership and the responsibility and duties and may specify other matters with respect to each committee.  The Board of Trustees may also adopt a charter with respect to other committees.

 

Section 4.2            Powers .  The Board of Trustees may delegate any of the powers of the Board of Trustees to committees appointed under Section 4.1 and composed solely of Trustees, except as prohibited by law.  If a charter has been adopted with respect to a committee composed solely of Trustees, the charter shall constitute a delegation by the Board of Trustees of the powers of the Board of Trustees necessary to carry out the purposes, responsibilities and duties of a committee provided in the charter or reasonably related to those purposes, responsibilities and duties, to the extent permitted by law.  Except as may be otherwise provided by the Board of Trustees, any committee may delegate some or all of its power and authority to one or more subcommittees, composed of one or more members, as the committee deems appropriate in its sole discretion.

 

Section 4.3            Meetings .  Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Trustees.  One-third (1/3), but not less than one, of the members of any committee shall be present in person at any meeting of a committee in order to constitute a quorum for the transaction of business at a meeting, and the act of a majority present at a meeting at the time of a vote if a quorum is then present shall be the act of a committee.  The Board of Trustees or, if authorized by the Board in a committee charter or otherwise, the committee members may designate a chairman of any committee, and the chairman or, in the absence of a chairman, a majority of any committee may fix the time and place of its meetings unless the Board shall otherwise provide.  In the absence or disqualification of any member of any committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of absent or disqualified members.

 

Section 4.4            Telephone Meetings .  Members of a committee may participate in a meeting by means of a conference telephone or similar communications equipment and participation in a meeting by these means shall constitute presence in person at the meeting.

 

Section 4.5            Action by Written Consent of Committees .  Any action required or permitted to be taken at any meeting of a committee of the Board of Trustees may be taken without a meeting, if a consent in writing or by electronic transmission to such action is signed by a majority of the committee, unless the concurrence of a greater proportion is required for

 

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such action by a specific provision of an applicable statute, the committee’s charter, the Declaration of Trust or these Bylaws, in which case, such greater proportion of members of the committee shall be required to consent in writing or by electronic transmission to such action, and such written or electronic consent is filed with the minutes of proceedings of such committee.

 

Section 4.6            Vacancies .  Subject to the provisions hereof, the Board of Trustees shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee.

 

ARTICLE V

 

OFFICERS

 

Section 5.1            General Provisions .  The officers of the Trust shall include a chief executive officer, co-presidents, a secretary and a treasurer.  In addition, the Board of Trustees may from time to time elect such other officers with such titles, powers and duties as set forth herein or as the Board of Trustees shall deem necessary or desirable, including a chairman of the board, a vice chairman of the board, a chief operating officer, a chief financial officer, one or more vice presidents, one or more assistant secretaries and one or more assistant treasurers.  The officers of the Trust shall be elected annually by the Board of Trustees.  Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal in the manner hereinafter provided.  Any two (2) or more offices, except that of the co-presidents and vice president, may be held by the same person.  In their discretion, the Board of Trustees may leave unfilled any office except that there must be at least one president, treasurer and secretary.  Election of an officer or agent shall not of itself create contract rights between the Trust and such officer or agent.

 

Section 5.2            Removal and Resignation .  Any officer or agent of the Trust may be removed, with or without cause, by the Board of Trustees if in its judgment the best interests of the Trust would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Any officer of the Trust may resign at any time by delivering his or her resignation to the Board of Trustees or to any co-president or the secretary of the Trust.  Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation.  The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.  Such resignation shall be without prejudice to the contract rights, if any, of the Trust.

 

Section 5.3            Vacancies .  A vacancy in any office may be filled by the Board of Trustees for the balance of the term.

 

Section 5.4            Chief Executive Officer .  Except as the Board of Trustees may otherwise provide, the chief executive officer shall have the duties usually vested in a chief executive officer.  The chief executive officer shall have such other duties as may be assigned to the chief executive officer by the Board of Trustees from time to time.  The chief executive officer may execute any deed, mortgage, bond, lease, contract or other instrument, except in cases where the

 

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execution thereof shall be expressly delegated by the Board of Trustees or by these Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed.

 

Section 5.5            Co-Presidents .  Except as the Board of Trustees may otherwise provide, the co-presidents shall have the duties usually vested in a president.  The co-presidents shall have such other duties as may be assigned to each such co-president by the Board of Trustees from time to time.  Each co-president may execute any deed, mortgage, bond, lease, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Trustees or by these Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed.

 

Section 5.6            Chief Operating Officer .  If elected, except as the Board of Trustees may otherwise provide, the chief operating officer shall have the duties usually vested in a chief operating officer.  The chief operating officer shall have such other duties as may be assigned to the chief operating officer by any co-president or the Board of Trustees from time to time.

 

Section 5.7            Chief Financial Officer .  If elected, except as the Board of Trustees may otherwise provide, the chief financial officer shall have the duties usually vested in a chief financial officer.  The chief financial officer shall have such other duties as may be assigned to the chief financial officer by any co-president or the Board of Trustees from time to time.

 

Section 5.8            Vice Presidents .  In the absence or disability of the chief executive officer and co-presidents, the vice president, if any (or if there is more than one, the vice presidents in the order designated or, in the absence of any designation, then in the order of their election), shall perform the duties and exercise the powers of the president.  The vice president(s) shall have such other duties as may be assigned to such vice president by the chief executive officer, any co-president or the Board of Trustees from time to time.  The Board of Trustees may designate one or more vice presidents as executive vice president, senior vice president or vice presidents for particular areas of responsibility.

 

Section 5.9            Secretary .  Except as the Board of Trustees may otherwise provide, the secretary (or his or her designee) shall (a) keep the minutes of the proceedings of the shareholders, the Board of Trustees and committees of the Board of Trustees in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the Trust records and of the seal of the Trust, if any; and (d) maintain a share register, showing the ownership and transfers of ownership of all shares of beneficial interest of the Trust, unless a transfer agent is employed to maintain and does maintain such a share register.  The secretary shall have such other duties as may be assigned to the secretary by any co-president or the Board of Trustees from time to time.

 

Section 5.10          Treasurer .  Except as the Board of Trustees may otherwise provide, the treasurer shall (a) have general charge of the financial affairs of the Trust; (b) have or oversee in accordance with Section 6.3 the custody of the funds, securities and other valuable documents of the Trust; (c) maintain or oversee the maintenance of proper financial books and records of the Trust; and (d) have the duties usually vested in a treasurer.  The treasurer shall have such other duties as may be assigned to the treasurer by any co-president or the Board of Trustees from time to time.

 

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Section 5.11          Assistant Secretaries and Assistant Treasurers .  The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by any co-president or the Board of Trustees from time to time.

 

ARTICLE VI

 

CONTRACTS, LOANS, CHECKS AND DEPOSITS

 

Section 6.1            Contracts .  The Board of Trustees may authorize any Trustee, officer or agent (including the Manager or any affiliate of the Manager or any officer of the Manager or its affiliates) to execute and deliver any instrument in the name of and on behalf of the Trust and such authority may be general or confined to specific instances.  Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Trust when duly authorized or ratified by action of the Board of Trustees and executed by an authorized person.

 

Section 6.2            Checks and Drafts .  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Trust shall be signed by such officer or agent of the Trust in such manner as the Board of Trustees, any co-president, the treasurer or any other officer designated by the Board of Trustees may determine.

 

Section 6.3            Deposits .  All funds of the Trust not otherwise employed shall be deposited or invested from time to time to the credit of the Trust as the Board of Trustees, any co-president, the treasurer or any other officer designated by the Board of Trustees may determine.

 

ARTICLE VII

 

SHARES

 

Section 7.1            Certificates .  Ownership of shares of any class of shares of beneficial interest of the Trust shall be evidenced in book entry form or at the election of a shareholder by certificates.  Unless otherwise determined by the Board of Trustees, any such certificates shall be signed by the officers of the Trust in any matter permitted by Maryland law and may be sealed with the seal, if any, of the Trust.  The signatures may be either manual or facsimile.  Certificates shall be consecutively numbered and if the Trust shall from time to time issue several classes of shares, each class may have its own number series.  A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued.

 

Section 7.2            Transfers .

 

(a)           Shares of beneficial interest of the Trust shall be transferable in the manner provided by applicable law, the Declaration of Trust and these Bylaws.  Certificates shall be treated as negotiable and title thereto and to the shares they evidence shall be transferred by delivery thereof to the same extent as those of a Maryland stock corporation.

 

(b)           The Trust shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other

 

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claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided in these Bylaws or by the laws of the State of Maryland.

 

Section 7.3            Lost Certificates .  For shares evidenced by certificates, any officer designated by the Board of Trustees may direct a new certificate to be issued in place of any certificate previously issued by the Trust alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed.  When authorizing the issuance of a new certificate, an officer designated by the Board of Trustees may, in such officer’s discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or the owner’s legal representative to advertise the same in such manner as he shall require and/or to give bond, with sufficient surety, to the Trust to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate.

 

Section 7.4            Fixing of Record Date .

 

(a)           The Board of Trustees may set, in advance, a record date for the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or determining shareholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of shareholders for any other proper purpose.

 

(b)           If no record date is fixed for the determination of shareholders, (i) the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day on which the notice of meeting is mailed or the thirtieth (30th) day before the meeting, whichever is the closer date to the meeting; and (ii) the record date for the determination of shareholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the Board of Trustees, declaring the dividend or allotment of rights, is adopted.

 

(c)           When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any postponement or adjournment thereof unless the Board of Trustees shall set a new record date with respect thereto.

 

Section 7.5            Share Ledger .  The Trust shall maintain at its principal office or at the office of its counsel, accountants or transfer agent a share ledger containing the name and address of each shareholder and the number of shares of each class of shares of beneficial interest of the Trust held by such shareholder.

 

Section 7.6            Fractional Shares; Issuance of Units .  The Board of Trustees may authorize the issuance of fractional shares or provide for the issuance of scrip, all on such terms and under such conditions as it may determine.  Notwithstanding any other provision of the Declaration of Trust or these Bylaws, the Trustees may issue units consisting of different securities of the Trust.  Any security issued in a unit shall have the same characteristics as any identical securities issued by the Trust, except that the Trustees may provide that for a specified period securities of the Trust issued in such unit may be transferred on the books of the Trust only in such unit.

 

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ARTICLE VIII

 

REGULATORY COMPLIANCE AND DISCLOSURE

 

Section 8.1            Actions Requiring Regulatory Compliance Implicating the Trust .  If any shareholder (whether individually or constituting a group, as determined by the Board of Trustees), by virtue of such shareholder’s ownership interest in the Trust or actions taken by the shareholder affecting the Trust, triggers the application of any requirement or regulation of any federal, state, municipal or other governmental or regulatory body on the Trust or any subsidiary (for purposes of this ARTICLE VIII, as defined in Section 2.13.5(c)) of the Trust or any of their respective businesses, assets or operations, including, without limitation, any obligations to make or obtain a Governmental Action (as defined in Section 2.13.3), such shareholder shall promptly take all actions necessary and fully cooperate with the Trust to ensure that such requirements or regulations are satisfied without restricting, imposing additional obligations on or in any way limiting the business, assets, operations or prospects of the Trust or any subsidiary of the Trust.  If the shareholder fails or is otherwise unable to promptly take such actions so to cause satisfaction of such requirements or regulations, the shareholder shall promptly divest a sufficient number of shares of beneficial interest of the Trust necessary to cause the application of such requirement or regulation to not apply to the Trust or any subsidiary of the Trust.  If the shareholder fails to cause such satisfaction or divest itself of such sufficient number of shares of beneficial interest of the Trust by not later than the tenth (10th) day after triggering such requirement or regulation referred to in this Section 8.1, then any shares of beneficial interest of the Trust beneficially owned by such shareholder at and in excess of the level triggering the application of such requirement or regulation shall, to the fullest extent permitted by law, be deemed to constitute shares held in violation of the ownership limitations set forth in ARTICLE VII of the Declaration of Trust and be subject to the provisions of ARTICLE VII of the Declaration of Trust and any actions triggering the application of such a requirement or regulation may be deemed by the Trust to be of no force or effect.  Moreover, if the shareholder who triggers the application of any regulation or requirement fails to satisfy the requirements or regulations or to take curative actions within such ten (10) day period, the Trust may take all other actions which the Board of Trustees deems appropriate to require compliance or to preserve the value of the Trust’s assets; and the Trust may charge the offending shareholder for the Trust’s costs and expenses as well as any damages which may result to the Trust.

 

Section 8.2            Compliance With Law .  Shareholders shall comply with all applicable requirements of federal and state laws, including all rules and regulations promulgated thereunder, in connection with such shareholder’s ownership interest in the Trust and all other laws which apply to the Trust or any subsidiary of the Trust or their respective businesses, assets or operations and which require action or inaction on the part of the shareholder.

 

Section 8.3            Limitation on Voting Shares or Proxies .  Without limiting the provisions of Section 8.1, if a shareholder (whether individually or constituting a group, as determined by the Board of Trustees), by virtue of such shareholder’s ownership interest in the Trust or its receipt or exercise of proxies to vote shares owned by other shareholders, would not be permitted to vote such shares or proxies for such shares in excess of a certain amount pursuant to applicable law (including by way of example, applicable state insurance regulations) but the Board of Trustees determines that the excess shares or shares represented by the excess proxies

 

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are necessary to obtain a quorum, then such shareholder shall not be entitled to vote any such excess shares or proxies, and instead such excess shares or proxies may, to the fullest extent permitted by law, be voted by the Manager (or by another person designated by the Board of Trustees) in proportion to the total number of votes otherwise cast on such matter.

 

Section 8.4            Representations, Warranties and Covenants Made to Governmental or Regulatory Bodies .  To the fullest extent permitted by law, any representation, warranty or covenant made by a shareholder with any governmental or regulatory body in connection with such shareholder’s interest in the Trust or any subsidiary of the Trust shall be deemed to be simultaneously made to, for the benefit of and enforceable by, the Trust and any applicable subsidiary of the Trust.

 

Section 8.5            Board of Trustees’ Determinations .  The Board of Trustees shall be empowered to make all determinations regarding the interpretation, application, enforcement and compliance with any matters referred to or contemplated by these Bylaws.

 

ARTICLE IX

 

FISCAL YEAR

 

Section 9.1            Fiscal Year .  The fiscal year of the Trust shall be the calendar year.

 

ARTICLE X

 

DIVIDENDS AND OTHER DISTRIBUTIONS

 

Section 10.1          Dividends and Other Distributions .  Dividends and other distributions upon the shares of beneficial interest of the Trust may be authorized and declared by the Board of Trustees.  Dividends and other distributions may be paid in cash, property or shares of beneficial interest of the Trust.

 

ARTICLE XI

 

SEAL

 

Section 11.1          Seal .  The Board of Trustees may authorize the adoption of a seal by the Trust.  The Board of Trustees may authorize one or more duplicate seals.

 

Section 11.2          Affixing Seal .  Whenever the Trust is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Trust.

 

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ARTICLE XII

 

WAIVER OF NOTICE

 

Section 12.1          Waiver of Notice .  Whenever any notice is required to be given pursuant to the Declaration of Trust, these Bylaws or applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.  Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice or waiver by electronic transmission, unless specifically required by statute.  The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

 

ARTICLE XIII

 

AMENDMENT OF BYLAWS

 

Section 13.1          Amendment of Bylaws .  Except for any change for which these Bylaws require approval by more than a majority vote of the Board of Trustees, these Bylaws may be amended or repealed or new or additional Bylaws may be adopted only by the vote or written consent of a majority of the Board of Trustees as specified in Section 3.9.

 

ARTICLE XIV

 

MISCELLANEOUS

 

Section 14.1          References to Declaration of Trust .  All references to the Declaration of Trust shall include any amendments and supplements thereto.

 

Section 14.2          Costs and Expenses .  In addition to, and as further clarification of each shareholder’s obligation to indemnify and hold the Trust harmless pursuant to these Bylaws or Section 8.7 of the Declaration of Trust, to the fullest extent permitted by law, each shareholder will be liable to the Trust (and any subsidiaries or affiliates thereof) for, and indemnify and hold harmless the Trust (and any subsidiaries or affiliates thereof) from and against, all costs, expenses, penalties, fines or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s breach of or failure to fully comply with any covenant, condition or provision of these Bylaws or the Declaration of Trust (including Section 2.13 of these Bylaws) or any action by or against the Trust (or any subsidiaries or affiliates thereof) in which such shareholder is not the prevailing party, and shall pay such amounts to such indemnitee on demand, together with interest on such amounts, which interest will accrue at the lesser of eighteen percent (18%) per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of payment.

 

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Section 14.3          Ratification .  The Board of Trustees or the shareholders may ratify and make binding on the Trust any action or inaction by the Trust or its officers to the extent that the Board of Trustees or the shareholders could have originally authorized the matter.  Moreover, any action or inaction questioned in any shareholder’s derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a Trustee, officer or shareholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Trustees or by the shareholders and, if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Trust and its shareholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

 

Section 14.4          Ambiguity .  In the case of an ambiguity in the application of any provision of these Bylaws or any definition contained in these Bylaws, the Board of Trustees shall have the sole power to determine the application of such provisions with respect to any situation based on the facts known to it and such determination shall be final and binding unless determined by a court of competent jurisdiction to have been made in bad faith.

 

Section 14.5          Inspection of Bylaws .  The Trust shall keep at the principal office for the transaction of business of the Trust the original or a copy of these Bylaws as amended or otherwise altered to date, certified by the secretary, which shall be open to inspection by the shareholders at all reasonable times during office hours.

 

Section 14.6          Control Share Acquisition Act .  Notwithstanding any other provision contained in the Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of beneficial interest of the Trust.  This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

 

ARTICLE XV

 

EXCLUSIVE FORUM FOR CERTAIN DISPUTES

 

Section 15.1          Exclusive Forum .  The Circuit Court for Baltimore City, Maryland shall be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Trust, (2) any action asserting a claim for breach of a duty owed by any Trustee, officer, manager, agent or employee of the Trust or any affiliate of the foregoing to the Trust or the shareholders of the Trust, (3) any action asserting a claim against the Trust or any Trustee, officer, manager, agent or employee of the Trust or any affiliate of the foregoing arising pursuant to applicable law or the Declaration of Trust or these Bylaws, including any disputes, claims or controversies brought by or on behalf of any shareholder (which, for purposes of this ARTICLE XV, shall mean any shareholder of record or any beneficial owner of any class or series of shares of beneficial interest of the Trust, or any former holder of record or beneficial owner of any class or series of shares of beneficial interest of the Trust), either on his, her or its own behalf, on behalf of the Trust or on behalf of any series or class of shares of beneficial interest of the Trust or shareholders against the Trust or any Trustee, officer, manager, agent or employee of the Trust or any affiliate of the foregoing including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of the Declaration of Trust or these Bylaws, including this ARTICLE XV, or (4) any action asserting a claim against the Trust or any Trustee, officer, manager, agent or employee of the Trust or any affiliate of the foregoing that is governed by the internal affairs doctrine of the State of Maryland.  Failure to enforce the foregoing provisions would cause the Trust irreparable harm and the Trust shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions.  Any person or entity purchasing or otherwise acquiring any interest in shares of beneficial interest of the Trust shall be deemed to have notice of and consented to the provisions of this ARTICLE XV.

 

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Exhibit 5.1

 

[LETTERHEAD OF VENABLE LLP]

 

September 18, 2017

 

Tremont Mortgage Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

 

Re:                              Registration Statement on Form S-11

 

Ladies and Gentlemen:

 

We have served as Maryland counsel to Tremont Mortgage Trust, a Maryland real estate investment trust (the “Company”), in connection with certain matters of Maryland law relating to the registration by the Company of up to 2,875,000 common shares (the “Shares”) of beneficial interest, par value $0.01 per share (the “Common Shares”), of the Company (including up to 375,000 Shares which the underwriters in the initial public offering have an option to purchase), covered by the above-referenced Registration Statement, and all amendments thereto (the “Registration Statement”), filed by the Company with the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”).

 

In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the “Documents”):

 

1.                                       The Registration Statement and the related form of prospectus included therein, substantially in the form in which it was transmitted to the Commission under the 1933 Act;

 

2.                                       The Declaration of Trust of the Company, certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”);

 

3.                                       The Bylaws of the Company, certified as of the date hereof by an officer of the Company;

 

4.                                       A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;

 



 

Tremont Mortgage Trust

September 18, 2017

Page 2

 

5.                                       Resolutions adopted by the Board of Trustees of the Company relating to, among other matters, the authorization of the sale, issuance and registration of the Shares (the “Resolutions”), certified as of the date hereof by an officer of the Company;

 

6.                                       A certificate executed by an officer of the Company, dated as of the date hereof; and

 

7.                                       Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions, limitations and qualifications stated herein.

 

In expressing the opinion set forth below, we have assumed the following:

 

1.                                       Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.

 

2.                                       Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.

 

3.                                       Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.

 

4.                                       All Documents submitted to us as originals are authentic.  The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered.  All Documents submitted to us as certified or photostatic copies conform to the original documents.  All signatures on all Documents are genuine.  All public records reviewed or relied upon by us or on our behalf are true and complete.  All factual representations, warranties, statements and information contained in the Documents are true and complete.  There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.

 



 

Tremont Mortgage Trust

September 18, 2017

Page 3

 

5.                                       The Shares will not be issued or transferred in violation of the restrictions on transfer and ownership contained in Article VII of the Charter.

 

Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:

 

1.                                       The Company is a real estate investment trust duly formed and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.

 

2.                                       The issuance of the Shares has been duly authorized and, when issued and paid for pursuant to the Resolutions and the Registration Statement, the Shares will be validly issued, fully paid and nonassessable.

 

The foregoing opinion is limited to the laws of the State of Maryland and we do not express any opinion herein concerning any other law.  We express no opinion as to the applicability or effect of federal or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers.  To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter.  The opinion expressed herein is subject to the effect of any judicial decision which may permit the introduction of parol evidence to modify the terms or the interpretation of agreements.

 

The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated.  We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.

 

This opinion is being furnished to you for submission to the Commission as an exhibit to the Registration Statement.  We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein.  In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act.

 

 

Very truly yours,

 

 

 

/s/ Venable LLP

 


Exhibit 10.1

 

PRIVATE PLACEMENT PURCHASE AGREEMENT

 

This PRIVATE PLACEMENT PURCHASE AGREEMENT (this “ Agreement ”) is made as of September 13, 2017, by and between Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Trust ”), and Tremont Realty Advisors LLC, a Maryland limited liability company (the “ Manager ”).

 

WHEREAS, the Trust has filed a registration statement on Form S-11 (File No. 333-219205) (as amended, the “ IPO Registration Statement ”) under the Securities Act with the Securities and Exchange Commission (the “ SEC ”) for a proposed initial public offering (the “ IPO ”) of the Trust’s common shares of beneficial interest, par value $0.01 per share (the “ Shares ”); and

 

WHEREAS, the Manager is currently the Trust’s sole shareholder and the Trust desires to issue and sell, and the Manager desires to purchase, concurrent with the consummation of the IPO, upon the terms and conditions set forth in this Agreement, 600,000 Shares (the “ Private Placement Shares ” and each, a “ Private Placement Share ”).

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

1.                                       Sale and Purchase of Private Placement Shares .  Subject to and concurrent with the consummation of the IPO, the Trust shall issue and sell to the Manager and the Manager shall purchase from the Trust, the Private Placement Shares at a purchase price per Private Placement Share equal to the initial public offering price per Share in the IPO.

 

2.                                       Closing .  The closing of the purchase and sale of the Private Placement Shares hereunder, including payment for and delivery of the Private Placement Shares, will take place at the offices of the Trust or the Trust’s legal counsel concurrently with, and shall be subject to, the completion of the IPO.

 

3.                                       Representations and Warranties of the Trust .  In connection with the issuance and sale of the Private Placement Shares, the Trust hereby represents and warrants to the Manager the following:

 

(a)                                  The Trust is a real estate investment trust duly formed, validly existing and in good standing under the Laws of the State of Maryland and the Trust has all necessary power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

 

(b)                                  All action necessary to be taken by the Trust to authorize the execution, delivery and performance of this Agreement has been duly and validly taken and this Agreement has been duly executed and delivered by the Trust. Assuming due execution by the Manager, this Agreement constitutes a valid and binding agreement of the Trust, enforceable against the Trust in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights

 



 

generally and by general equitable principles. The issuance and sale by the Trust of the Private Placement Shares does not conflict with the Trust’s organizational documents or any material contract by which the Trust or its property or assets are bound, or any federal or state Laws or decree, ruling or judgment of any United States or state court applicable to the Trust or its property or assets.

 

(c)                                   The Private Placement Shares have been duly authorized for issuance and sale, and when issued and delivered by the Trust in accordance with, and payment therefore is made pursuant to, the terms hereof, the Private Placement Shares will be validly issued and fully paid and non-assessable, and free and clear of any pledge, lien, encumbrance, security interest or other claim.

 

(d)                                  The Trust has a substantive, pre-existing relationship with the Manager and was directly contacted by the Manager or its agents. The Trust (i) did not identify or contact the Manager through the marketing of the IPO and (ii) was not independently contacted by the Manager as a result of the general solicitation by means of the IPO Registration Statement.

 

4.                                       Representations and Warranties of the Manager .  The Manager hereby represents and warrants to the Trust that:

 

(a)                                  The Manager is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Maryland. The Manager has all necessary power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

 

(b)                                  All action necessary to be taken by the Manager to authorize the execution, delivery and performance of this Agreement and all other agreements and instruments delivered by the Manager in connection with the transactions contemplated hereby has been duly and validly taken and this Agreement has been duly executed and delivered by the Manager. Assuming due execution by the Trust, this Agreement constitutes a valid and binding agreement of the Manager, enforceable against the Manager in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general equitable principles. The purchase by the Manager of the Private Placement Shares does not conflict with the organizational documents of the Manager or with any material contract by which the Manager or its property or assets are bound, or any Laws or decree, ruling or judgment of any court applicable to the Manager or its property or assets.

 

(c)                                   The Manager is an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act, and is acquiring the Private Placement Shares for its own account, only for investment purposes and not with a view to, or for resale in connection with, any public distribution or public offering thereof within the meaning of the Securities Act. The Manager has had access to such financial and other information concerning the Trust and the Private Placement Shares as it deemed necessary or appropriate in order to make an informed investment decision with respect to its purchase of the Private Placement Shares, including an opportunity to ask questions of and request information from the Trust.

 

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(d)                                  The Manager understands and acknowledges that (i) the offering of the Private Placement Shares pursuant to this Agreement will not be registered under the Securities Act on the basis that the offering and sale of the Private Placement Shares is exempt from registration under the Securities Act pursuant to Section 4(a)(2) thereof and exempt from registration pursuant to applicable state securities or blue sky laws and, therefore, the Private Placement Shares will be characterized as “restricted securities” under the Securities Act and such Laws and may not be sold unless the Private Placement Shares are subsequently registered under the Securities Act and qualified under state Law or unless an exemption from such registration and such qualification is available.

 

(e)                                   The Manager has a substantive, pre-existing relationship with the Trust and was directly contacted by the Trust or the Trust’s agents. The Manager (i) was not identified or contacted through the marketing of the IPO and (ii) did not independently contact the Trust as a result of the general solicitation by means of the IPO Registration Statement.

 

(f)                                    The Manager (i) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Private Placement Shares; (ii) is able to bear the economic risk of its investment in the Private Placement Shares; and (iii) has not been offered the Private Placement Shares by any form of advertisement, article, notice or other communication published in any newspaper, magazine or similar medium; or broadcast over television or radio; or any seminar or meeting whose attendees have been invited by any such medium.

 

5.                                       Conditions to Closing .

 

(a)                                  Conditions to each party’s obligation .  The respective obligation of each party to consummate the closing of the purchase and sale of the Private Placement Shares is subject to the satisfaction or waiver of the following conditions:

 

(i)                                      No Injunction .  No judgment, injunction, decree or other legal restraint (each, an “ Order ”) prohibiting the consummation of the Transactions shall have been issued by any Governmental Entity and be continuing in effect, there shall be no pending proceeding commenced by a Governmental Entity seeking an Order that would prohibit the Transactions, and the consummation of the Transactions shall not have been prohibited or rendered illegal under any applicable Law.

 

(ii)                                   Management Agreement .  Seller and Manager shall have entered into the Management Agreement substantially in the form attached as Exhibit 10.2 to the IPO Registration Statement, with such changes as are acceptable to them.

 

(b)                                  Condition to the Manager’s obligation .  The obligation of the Manager to consummate the closing of the purchase and sale of the Private Placement Shares is subject to the satisfaction or waiver of the following condition:

 

(i)                                      The representations and warranties of the Trust contained in Section 3 shall be true and correct in all material respects as of the closing of the purchase and sale of the Private Placement Shares with the same effect as if made at the time of such closing

 

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(except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date).

 

(c)                                   Condition to the Trust’s obligation . The obligation of the Trust to consummate the closing of the purchase and sale of the Private Placement Shares is subject to the satisfaction or waiver of the following condition:

 

(i)                                      The representations and warranties of the Manager contained in Section 4 shall be true and correct in all material respects as of the closing of the purchase and sale of the Private Placement Shares with the same effect as if made at the time of such closing (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date).

 

6.                                       Registration rights .

 

(a)                                  Demand Registration .

 

(i)                                      General Request for Registration .  At any time during the Registration Period, any Shareholder may make a written demand for registration of all or part of the Registrable Securities owned by it.  Any such written demand for a registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof.  The registration so demanded by such Shareholder is referred to herein as a “ Demand Registration ” and Shareholders making such requests as “ Demanding Shareholders .”  If the Trust is eligible to utilize a Registration Statement on Form S-3 to sell securities in a secondary offering on a delayed or continuous basis in accordance with Rule 415 under the Securities Act (a “ Shelf Registration ”), any Demand Registration made pursuant to this Section 6(a)(i) shall, at the option of Demanding Shareholder(s) holding a majority of the Registrable Securities subject to the Demand Registration, be a demand for a Shelf Registration.  For the avoidance of doubt, if a Shelf Registration is so requested pursuant to this Section 6(a)(i) , any reference to a Demand Registration in this Agreement also refers to a Shelf Registration.

 

(ii)                                   Underwritten Offering .  If Demanding Shareholder(s) holding a majority of the Registrable Securities subject to the Demand Registration so advise the Trust as part of their written demand(s) for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering.  In such case, each Demanding Shareholder shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such underwriting by Shareholders holding a majority of the Registrable Securities subject to the Demand Registration (which Underwriter(s) shall be reasonably acceptable to the Trust), complete and execute any questionnaires, powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other documents reasonably required or which are otherwise customary under the terms of such underwriting agreement and furnish to the Trust such information as the Trust may reasonably request in writing for inclusion in the Registration Statement.

 

(iii)                                Reduction of Offering .  If the managing Underwriter(s) for a Demand Registration that is to be an underwritten offering advise(s) the Trust and the Demanding Shareholder(s) that the dollar amount or number of Registrable Securities which the

 

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Demanding Shareholder(s) have agreed may be included in the offering exceeds the maximum dollar amount or maximum number of Shares or other securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method or the probability of success of such offering (such maximum dollar amount or maximum number of Shares or other securities, as applicable, the “ Maximum Number of Shares ”), then the Trust shall include in such registration: (A) first, the Registrable Securities which the Demanding Shareholder(s) have demanded be included in the Demand Registration; provided, however, if the aggregate number of Registrable Securities as to which Demand Registration has been requested exceeds the Maximum Number of Shares, then the number of Registrable Securities that may be included shall be reduced to the Maximum Number of Shares and the participation in the Demand Registration shall be allocated to Demanding Shareholders pro rata (in accordance with the number of Registrable Securities which each Demanding Shareholder has requested be included in the Demand Registration); (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Shares or other securities that the Trust desires to sell that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Shares or other securities for the account of other security holders of the Trust that can be sold without exceeding the Maximum Number of Shares.

 

(iv)                               Withdrawal .  In the case of a Demand Registration, if a Demanding Shareholder disapproves of the terms of any underwriting or is not entitled to include all of its Registrable Securities in any offering, such Demanding Shareholder may elect to withdraw from such offering no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s) by giving written notice to the Trust and the Underwriter(s) of its request to withdraw.  In such event, if there are no other Shareholders included in the Demand Registration, the Trust need not proceed with the offering.  If the Demanding Shareholder’s withdrawal is based on (A) a material adverse change in circumstances with respect to the Trust and not known to such Demanding Shareholder at the time the Demanding Shareholder makes its written demand for such Demand Registration, (B) the Trust’s failure to comply with its obligations under this Agreement or (C) a reduction pursuant to Section 6(a)(iii) of ten percent (10%) or more of the number of Registrable Securities which such Demanding Shareholder has requested be included in the Demand Registration, such registration shall not count as a Demand Registration for purposes of Section 7(a)(i)(3) or Section 7(a)(i)(5) .  If the Demanding Shareholder’s withdrawal is based on the circumstances described in clause (A) or (B) of the preceding sentence, the Trust shall pay or reimburse all expenses otherwise payable or reimbursable by such Demanding Shareholder in connection with such Demand Registration pursuant to Section 7(c) and such registration shall not count as a Demand Registration for purposes of Section 7(a)(i)(3) or Section 7(a)(i)(5) .

 

(b)                                  Piggy-Back Registration .

 

(i)                                      Piggy-Back Rights .  If, at any time during the Registration Period, the Trust proposes to file a Registration Statement under the Securities Act with respect to an offering of Shares, or securities or other obligations exercisable or exchangeable for, or convertible into, Shares, by the Trust for its own account or for any other shareholder of the Trust for such shareholder’s account, other than a Registration Statement (A) filed in connection with any employee benefit plan, (B) for an

 

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exchange offer or offering of securities solely to the Trust’s existing shareholders, (C) for an offering of debt securities convertible into equity securities of the Trust, (D) for a dividend reinvestment plan or (E) filed on Form S-4 (or successor form), then the Trust shall (X) give written notice of such proposed filing to each Shareholder as soon as practicable but in no event less than ten (10) Business Days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter(s), if any, of the offering and (Y) offer to each Shareholder in such notice the opportunity to register the sale of such number of its Registrable Securities as such Shareholder may request in writing within five (5) Business Days following receipt of such notice (a “ Piggy-Back Registration ”).  If a Shareholder so requests to register the sale of some of its Registrable Securities, the Trust shall cause such Registrable Securities to be included in the Registration Statement and shall use commercially reasonable efforts to cause the managing Underwriter(s) of the proposed underwritten offering to permit the Registrable Securities requested to be included in the Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Trust and other shareholders of the Trust and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof.  If the Piggy-Back Registration involves one or more Underwriters, the Shareholder shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Piggy-Back Registration by the Trust, complete and execute any questionnaires, powers of attorney, indemnities, lock-up agreements, securities escrow agreements and other documents reasonably required or which are otherwise customary under the terms of such underwriting agreement and furnish to the Trust such information as the Trust may reasonably request in writing for inclusion in the Registration Statement or such information that is otherwise customary.

 

(ii)                                   Reduction of Offering .  If the managing Underwriter(s) for a Piggy-Back Registration that is to be an underwritten offering advises the Trust and the holders of Registrable Securities that the dollar amount or number of Shares or other securities which the Trust desires to sell, taken together with Shares or other securities, if any, as to which registration has been requested pursuant to written contractual arrangements with Shareholders and other Persons, the Registrable Securities as to which registration has been requested under this Section 6(b)(ii) , and the Shares or other securities, if any, as to which registration has been requested pursuant to the written contractual demand or piggy-back registration rights of other shareholders of the Trust, exceeds the Maximum Number of Shares, then the Trust shall include in any such registration:

 

(1)                                  If the registration is undertaken for the Trust’s account: (x) first, the shares or other securities that the Trust desires to sell that can be sold without exceeding the Maximum Number of Shares; and (y) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (x), the shares or other securities, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders (pro rata in accordance with the number of Shares or other securities which each such Person has actually requested to be included in such registration, regardless of the number of shares or other securities with respect to which such Persons have the

 

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right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares; and

 

(2)                                  If the registration is a “demand” registration undertaken at the demand of Persons, other than a Shareholder, pursuant to written contractual arrangements with such Persons, (x) first, the Shares or other securities for the account of the demanding Persons that can be sold without exceeding the Maximum Number of Shares; (y) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (x), the Shares or other securities that the Trust desires to sell that can be sold without exceeding the Maximum Number of Shares; and (z) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (x) and (y), the shares or other securities, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights, which other shareholders desire to sell (pro rata in accordance with the number of Shares or other securities which each such Person has actually requested to be included in such registration, regardless of the number of Shares or other securities with respect to which such Persons have the right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares.

 

(iii)                                Withdrawal .  A Shareholder may elect to withdraw its request for inclusion of its Registrable Securities in any Piggy-Back Registration by giving written notice to the Trust of such request to withdraw no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s).  The Trust may also elect to withdraw from a registration at any time no later than the time at which the public offering price and underwriters’ discount are determined with the Underwriter(s).  If a Shareholder’s withdrawal is based on (i) the Trust’s failure to comply with its obligations under this Agreement or (ii) a reduction pursuant to Section 6(b)(ii) of ten percent (10%) or more of the number of Registrable Securities which such Shareholder has requested be included in the Piggy-Back Registration, the Trust shall pay or reimburse all expenses otherwise payable or reimbursable by such Shareholder in connection with such Piggy-Back Registration pursuant to Section 7(c) .

 

7.                                       Registration Procedures .

 

(a)                                  Filings; Information .  Whenever the Trust is required to effect the registration of any Registrable Securities pursuant to Section 6 , the Trust shall use its commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

 

(i)                                      Filing Registration Statement .  The Trust shall, as expeditiously as possible and in any event within thirty (30) days after receipt of a request for a Demand Registration pursuant to Section 6(a) , prepare and file with the SEC a Registration Statement on any form for which the Trust then qualifies or which counsel for the Trust shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder and the intended method(s) of distribution thereof, and shall use commercially

 

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reasonable efforts to cause such Registration Statement to become and remain effective for the period required by Section 7(a)(iii) ; provided, however, that:

 

(1)                                  In the case of demand under Section 6(a) for a Shelf Registration, the Registration Statement shall be on Form S-3;

 

(2)                                  the Trust shall have the right to defer any Demand Registration and any Piggy-Back Registration for a reasonable period of time if, in the good faith judgment of the Board of Trustees or the officers of the Trust (and the Trust shall furnish to the holders a confirmatory certificate signed by a principal executive officer or principal financial officer of the Trust), it would (A) materially interfere with a significant acquisition, disposition, financing or other transaction involving the Trust, (B) result in the disclosure of material information that the Trust has a bona fide business purpose for preserving as confidential that is not then otherwise required to be disclosed or (C) render the Trust unable to comply with requirements under the Securities Act or the Exchange Act; in such event, (X) if the applicable Registration Statement has become effective, each requesting Shareholder will forthwith discontinue (or cause the discontinuance of) disposition of Registrable Securities until it is advised by the Trust that the use of such Registration Statement may be resumed or (Y) each requesting Shareholder shall be entitled to withdraw its request for the filing of the applicable Registration Statement and, if such request is withdrawn, such request shall not count as one of the permitted requests for registration hereunder and the Trust shall pay all customary costs and expenses in connection with such withdrawn registration; provided, further, however, that the Trust may not exercise the right set forth in this subsection (2) in respect of a request by a Shareholder, for more than one hundred twenty (120) days in any 365 day period in respect of a Demand Registration (including in such one hundred twenty (120) days, any deferral under subsection (4) of this Section 7(a)(i) if the Registration Statement was not timely filed thereunder);

 

(3)                                  the Trust shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if the Trust has already completed two (2) Demand Registrations requested by a Shareholder within the past twelve (12) month period;

 

(4)                                  the Trust shall not then be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if the Trust shall furnish to Shareholders a certificate signed by a principal executive officer or principal financial officer of the Trust stating that the Trust expects to file, within ninety (90) days of receipt of the written demand for a Demand Registration, a Registration Statement and offer to each Shareholder the opportunity to register its Registrable Securities thereunder in accordance with Section 6(b) ;

 

(5)                                  the Trust shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand

 

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Registration from a Shareholder if the Trust has, within the ninety (90) day period preceding the date of the written demand for a Demand Registration, already effected a Demand Registration;

 

(6)                                  the Trust shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if all Registrable Securities could be sold within ninety (90) days pursuant to Rule 144 under the Securities Act; and

 

(7)                                  the Trust shall not be obligated to effect any registration of Registrable Securities upon receipt of a written demand for a Demand Registration if all Registrable Securities are proposed to be offered at an expected aggregate offering price of less than $50.0 million (net of registration expenses set forth in Section 7(c) ), provided, that this subsection (7) shall not apply to a Shelf Registration.

 

(ii)                                   Copies .  If a Shareholder has included Registrable Securities in a registration, the Trust shall, prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish to such Shareholder and its counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus) and such other documents as such Shareholder or counsel for such Shareholder may reasonably request in order to facilitate the disposition of the Registrable Securities included in such registration.

 

(iii)                                Amendments and Supplements .  If a shareholder has included Registrable Securities in a registration, the Trust shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities, and all other securities covered by such Registration Statement, have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement (which period shall not exceed the sum of one hundred eighty (180) days plus any period during which any such disposition is interfered with by any stop order or injunction of the SEC or any Governmental Entity) or such securities have been withdrawn.

 

(iv)                               Notification .  If a Shareholder has included Registrable Securities in a registration, after the filing of the Registration Statement, the Trust shall promptly, and in no event more than two (2) Business Days after such filing, notify such Shareholder of such filing, and shall further notify such Shareholder promptly and confirm such notification in writing in all events within two (2) Business Days of the occurrence of any of the following:  (A) when such Registration Statement becomes effective; (B) when any post-effective amendment to such Registration Statement becomes effective; (C) the issuance or threatened issuance by the SEC of any stop order (and the Trust shall use reasonable best efforts to prevent the entry of such stop order or to remove it if entered); and (D) any request by the SEC for any amendment or supplement to such Registration Statement or any Prospectus relating thereto or for additional

 

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information or of the occurrence of an event requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to such Shareholder any such supplement or amendment; except that before filing with the SEC a Registration Statement or Prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Trust shall furnish to such Shareholder and to its counsel, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such Shareholder and its counsel with a reasonable opportunity to review such documents and comment thereon, and the Trust shall not file any Registration Statement or Prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such Shareholder or its counsel shall reasonably object.

 

(v)                                  State Securities Laws Compliance .  If a Shareholder has included Registrable Securities in a registration, the Trust shall use commercially reasonable efforts to (A) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as Manager (in light of the intended plan of distribution) may request and (B) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other federal or state authorities as may be necessary by virtue of the business and operations of the Trust and do any and all other acts and things that may be necessary or advisable to enable such Shareholder to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Trust shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 7(a)(v) or subject itself to taxation in any such jurisdiction.

 

(vi)                               Agreements for Disposition .  If a Shareholder has included Registrable Securities in a registration, (A) the Trust shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and use commercially reasonable efforts to take such other actions as are required in order to expedite or facilitate the disposition of such Registrable Securities and (B) the representations, warranties and covenants of the Trust in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of applicable Shareholders.  For the avoidance of doubt, Shareholder(s) may not require the Trust to accept terms, conditions or provisions in any such agreement which the Trust determines are not reasonably acceptable to the Trust, notwithstanding any agreement to the contrary herein.  No Shareholder shall be required to make any representations or warranties in the underwriting agreement except as reasonably requested by the Underwriters or the Trust and, if applicable, with respect to such Shareholder’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such Shareholder’s material agreements and organizational documents, and with respect to written information relating to such Shareholder that such Shareholder has furnished in writing expressly for inclusion in such Registration Statement, in each case, as applicable to such Shareholder.  Each Shareholder, however, shall agree to such covenants and indemnification and contribution obligations for selling stockholders as are reasonable and customarily contained in agreements of that type.

 

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(vii)                            Cooperation .  The Trust shall cooperate in any offering of Registrable Securities under this Agreement, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents and participation in meetings with Underwriters, attorneys, accountants and potential investors.  Each Shareholder shall cooperate in the preparation of the Registration Statement and other documents relating to any offering in which it includes securities pursuant to this Agreement.  If a Shareholder has included Registrable Securities in a registration, such Shareholder shall also furnish to the Trust such information regarding itself, the Registrable Securities held by it, and the intended method(s) of disposition of such securities as the Trust and/or its counsel shall reasonably request in order to assure full compliance with applicable provisions of the Securities Act and the Exchange Act in connection with the registration of the Registrable Securities.

 

(viii)                         Records .  If a Shareholder has included Registrable Securities in a registration, upon reasonable notice and during normal business hours, subject to the Trust receiving any customary confidentiality undertakings or agreements, the Trust shall make available for inspection by such Shareholder, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by a Shareholder or any Underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Trust as shall be necessary to enable them to exercise their due diligence responsibility, and shall cause the Trust’s officers, directors and employees to supply all information reasonably requested by such Shareholder in connection with such Registration Statement.

 

(ix)                               Opinions and Comfort Letters .  If a Shareholder has included Registrable Securities in a registration, the Trust shall use commercially reasonable efforts to furnish to each Shareholder signed counterparts, addressed to such Shareholder, of (A) any opinion of counsel to the Trust delivered to any Underwriter and (B) any comfort letter from the Trust’s independent public accountants delivered to any Underwriter; provided, however, that counsel to the Underwriter shall have exclusive authority to negotiate the terms thereof.  In the event no legal opinion is delivered to any Underwriter, the Trust shall furnish to a Shareholder, at any time that such Shareholder elects to use a Prospectus in connection with an offering of such Shareholder’s Registrable Securities, an opinion of counsel to the Trust to the effect that the Registration Statement containing such Prospectus has been declared effective, that no stop order is in effect and such other matters as Persons holding a majority of the Registrable Securities subject to the registration may reasonably request as would customarily have been addressed in an opinion of counsel to the Trust delivered to an Underwriter.

 

(x)                                  Earning Statement .  The Trust shall comply with all applicable rules and regulations of the SEC and the Securities Act, and make generally available to its shareholders, as soon as practicable, an earning statement satisfying the provisions of Section 11(a) of the Securities Act, provided that the Trust will be deemed to have complied with this Section 7(a)(x) if the earning statement satisfies the provisions of Rule 158 under the Securities Act.

 

(xi)                               Listing .  The Trust shall use commercially reasonable efforts to cause all Registrable Securities included in any registration to be listed on such exchanges or

 

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otherwise designated for trading in the same manner as similar shares of the Trust are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to each Shareholder whose Registrable Securities are included in the registration.

 

(b)                                  Shelf Offering .  In the event that a Registration Statement with respect to a Shelf Registration is effective, each Shareholder may make a written request to sell pursuant to an offering (including an underwritten offering) Registrable Securities available for sale pursuant to such Registration Statement (a “ Shelf Offering ”) so long as such Registration Statement remains in effect and to the extent permitted under the Securities Act.  Any written request for a Shelf Offering shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof.  Upon receipt of a written request for a Shelf Offering, the Trust shall, as expeditiously as possible, use its commercially reasonable efforts to facilitate such Shelf Offering.

 

(c)                                   Registration Expenses .  Except to the extent expressly provided by Section 6(a)(iv) or Section 6(b)(iii) or in connection with a Piggy-Back Registration relating to a registration by the Trust on its own initiative (and not as a result of any other Person’s or entity’s right to cause the Trust to file, cause and effect a registration of the Trust securities) and for the Trust’s own account (in which case the Trust will pay all customary costs and expenses of registration), each Shareholder whose Registrable Securities are included in the registration shall pay, or promptly reimburse the Trust for, its pro rata share of all customary costs and expenses incurred in connection with any Demand Registration effected pursuant to Section 6(a) or Piggy-Back Registration pursuant to Section 6(b) , such pro rata share to be in proportion to the number of shares such Shareholder is selling, after giving effect to any reduction pursuant to Section 6(a)(iii) or Section 6(b)(ii) , in such Demand or Piggy-Back Registration relative to the total number of shares being sold in the registration, of all customary costs and expenses incurred in connection with such registration, in each case whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) fees imposed by the Financial Industry Regulatory Authority, Inc.; and (v) fees and disbursements of counsel for the Trust and fees and expenses for independent registered public accountants retained by the Trust (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 7(a)(ix) ).  The Trust shall have no obligation to pay for the fees and expenses of counsel representing Shareholder(s) in any Demand Registration or Piggy-Back Registration.  The Trust shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by any Shareholder, which underwriting discounts or selling commissions shall be borne solely by such Shareholder.  For the avoidance of doubt, Shareholders shall have no obligation to pay any underwriting discounts or selling commissions attributable to the shares being sold by any other Person.  Additionally, in an underwritten offering, Shareholders, the Trust and any other Person whose Shares or other securities are included in the offering shall bear the expenses of the Underwriter(s) pro rata in proportion to the respective amount of shares each is selling in such offering.  For the avoidance of doubt, Shareholders hall have no obligation to pay, and the Trust shall bear, all internal expenses of the Trust (including, without limitation, all fees, salaries and expenses of its officers, employees and management) incurred in connection with performing or complying with the Trust’s obligations under this Agreement.

 

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(d)                                  Information .  Each Shareholder shall provide such information as may reasonably be requested by the Trust, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any of its Registrable Securities under the Securities Act pursuant to this Agreement and in connection with the Trust’s obligation to comply with federal and applicable state securities Laws.

 

(e)                                   Shareholder Obligations .  No Shareholder may participate in any underwritten offering pursuant to this Agreement unless such Shareholder (i) agrees to only sell Registrable Securities on the basis reasonably provided in any underwriting agreement and (ii) completes, executes and delivers any and all questionnaires, lock-up agreements, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably or customarily required by or under the terms of any underwriting agreement or as reasonably requested by the Trust.

 

(f)                                    Lock-Up in an Underwritten Public Offering .  If requested by the Underwriter(s) of a registered underwritten public offering of securities of the Trust, a Shareholder will enter into a lock-up agreement in customary form pursuant to which it shall agree not to offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any Shares or other securities of the Trust or any securities convertible into or exercisable or exchangeable for Shares or other securities of the Trust (except as part of such registered underwritten public offering or as otherwise permitted by the terms of such lock-up agreement) for a lock-up period that is customary for such an offering.

 

8.                                       Indemnification .

 

(a)                                  Indemnification by the Trust .  The Trust shall, to the extent permitted by applicable Law, indemnify and hold harmless each Shareholder, its subsidiaries, each of their respective directors, trustees, officers, employees, representatives and agents in their capacity as such and each Person, if any, who controls a Shareholder within the meaning of the Securities Act or the Exchange Act, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Shareholder Indemnified Parties ”) from and against any and all damages, claims, losses, expenses, costs, obligations and liabilities, including liabilities for all reasonable attorneys’, accountants’, and experts’ fees and expenses (collectively, “ Covered Liabilities ”), suffered, directly or indirectly, by any Shareholder Indemnified Party by reason of or arising out of any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in the Registration Statement under which the sale of Registrable Securities was registered under the Securities Act (or any amendment thereto), or any Prospectus, preliminary Prospectus, or free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) relating to such Registration Statement, or any amendment thereof or supplement thereto, or by reason of or arising out of the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or any amendment or supplement thereto, in the light of the circumstances under which they were made), not misleading; provided, however,

 

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that (i) the Trust will not be liable in any such case to the extent that any such Covered Liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made or incorporated by reference in such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus, amendment or supplement in reliance upon and in conformity with information furnished to the Trust by or on behalf of such Shareholder expressly for use in such document or documents and (ii) the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such Covered Liability if such settlement is effected without the consent of the Trust (which consent shall not be unreasonably withheld).  The indemnity in this Section 8(a) shall remain in full force and effect regardless of any investigation made by or on behalf of any Shareholder Indemnified Party.  For the avoidance of doubt, the Trust and its subsidiaries are not “Shareholder Indemnified Parties.”

 

(b)                                  Indemnification by Shareholders .  Each Shareholder shall, severally and not jointly, to the extent permitted by applicable Law, indemnify and hold harmless the Trust, its subsidiaries each of their respective trustees, directors, officers, employees, representatives and agents, in their capacity as such and each Person, if any, who controls the Trust within the meaning of the Securities Act or the Exchange Act, and the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Trust Indemnified Parties ”) from and against any and all Covered Liabilities suffered, directly or indirectly, by any the Trust Indemnified Party by reason of or arising out of any untrue statement or alleged untrue statement or omission or alleged omission contained or incorporated by reference in the Registration Statement under which the sale of Registrable Securities was registered under the Securities Act (or any amendment thereto), or any Prospectus, preliminary Prospectus, or free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) related to such Registration Statement or any amendment thereof or supplement thereto, in reliance upon and in conformity with information furnished to the Trust by such Shareholder expressly for use therein; provided, however, that (i) the indemnity agreement contained in this Section 8(b) shall not apply to amounts paid in settlement of any such Covered Liability if such settlement is effected without the consent of such Shareholder (which consent shall not be unreasonably withheld), and (ii) in no event shall the total amounts payable in indemnity by a Shareholder under this Section 8(b) exceed the net proceeds received by such Shareholder in the registered offering out of which such Covered Liability arises.  The indemnity in this Section 8(b) shall remain in full force and effect regardless of any investigation made by or on behalf of any Trust Indemnified Party.  For the avoidance of doubt, a Shareholder is not a Trust Indemnified Party.

 

(c)                                   Contribution . If the indemnification provided for in Section 8(a) or Section 8(b) is unavailable, because it is prohibited or restricted by applicable Law, to an indemnified party under either such Section in respect of any Covered Liabilities referred to therein, then in order to provide for just and equitable contribution in such circumstances, each party that would have been an indemnifying party thereunder shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such Covered Liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and such indemnified party on the other in connection with the untrue statement or omission, or alleged untrue statement or omission, which resulted in such Covered Liabilities, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact

 

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relates to information supplied by the indemnifying party or such indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The Trust and the Shareholders agree that it would not be just and equitable if contribution pursuant to this Section 8(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8(c) .  For the avoidance of doubt, the amount paid or payable by an indemnified party as a result of the Covered Liabilities referred to in this Section 8(c) shall include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing or defending, settling or satisfying any such Covered Liability. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

(d)                                  Certain Limitations, Etc .  The amount of any Covered Liabilities for which indemnification is provided under this Agreement shall be net of (i) any amounts actually recovered or recoverable by the indemnified parties under insurance policies and (ii) other amounts actually recovered by the indemnified party from third parties, in the case of (i) and (ii), with respect to such Covered Liabilities.  Any indemnifying party hereunder shall be subrogated to the rights of the indemnified party upon payment in full of the amount of the relevant indemnifiable loss.  An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provision hereof, have any subrogation rights with respect thereto.  If any indemnified party recovers an amount from a third party in respect of an indemnifiable loss for which indemnification is provided in this Agreement after the full amount of such indemnifiable loss has been paid by an indemnifying party or after an indemnifying party has made a partial payment of such indemnifiable loss and the amount received from the third party exceeds the remaining unpaid balance of such indemnifiable loss, then the indemnified party shall promptly remit to the indemnifying party the excess of (x) the sum of the amount theretofore paid by such indemnifying party in respect of such indemnifiable loss plus the amount received from the third party in respect thereof, less (y) the full amount of such Covered Liabilities.

 

9.                                       Rule 144 .  The Trust covenants that it shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the Manager may reasonably request, all to the extent required from time to time to enable the Manager to sell its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, or any similar provision thereto, but not Rule 144A.

 

10.                                Successors and Assigns .  This Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.  Except as set forth in this Section 10 , this Agreement and the rights, interests and obligations of the parties hereunder may not assigned, transferred or delegated without the written consent of the other party.  This Agreement and the rights, interests and obligations of the Manager hereunder may be assigned, transferred or delegated by the Manager, in whole or in part, (a) to any of its affiliates or (b) to any other Person in conjunction with and only to the extent of any transfer of Registrable Securities to such Person, which Person agrees in a writing delivered to the Trust to be subject to and bound by all interests and obligations set forth in this Agreement,

 

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whereupon any such transferee will have all rights, interests and obligations hereunder in addition to the Manager to the extent that the Manager continues to own Shares.

 

11.                                Amendments .  This Agreement may not be amended, modified or waived, in whole or in part, except by an agreement in writing signed by each of the parties hereto.

 

12.                                Counterparts; Facsimile .  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. This Agreement or any counterpart may be executed via facsimile transmission, and any such executed facsimile copy shall be treated as an original.

 

13.                                Governing Law .  This Agreement shall for all purposes be deemed to be made under and shall be construed in accordance with the Laws of the State of Maryland.

 

14.                                Consent to Jurisdiction and Forum .  The exclusive jurisdiction and venue in any action brought by any party hereto pursuant to this Agreement shall lie in the Circuit Court for Baltimore City, Maryland (or, if no state court located within the State of Maryland has subject matter jurisdiction, the U.S. District Court for Maryland).  Each of the parties hereby irrevocably and unconditionally agrees to request or consent to the assignment of any such proceeding to the Business and Technology Case Management Program of the Circuit Court for Baltimore City, Maryland. By execution and delivery of this Agreement, each party hereto irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action.  The parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action.  The parties further agree and consent to the service of any process required by any such court by delivery of a copy thereof in accordance with Section 20 and that any such delivery shall constitute valid and lawful service of process against it, without necessity for service by any other means provided by statute or rule of court.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute (as defined below) is made pursuant to Section 15 , this Section 14 shall not preempt resolution of the Dispute pursuant to Section 15 .

 

15.                                Arbitration .

 

(a)                                  Procedures for Arbitration of Disputes .  Any disputes, claims or controversies arising out of or relating to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of a party or any holder of equity interests (which, for purposes of this Section 15 , shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of a party, either on his, her or its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this

 

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arbitration agreement or the governing documents of a party, (all of which are referred to as “ Disputes ”) or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “ Rules ”) of the American Arbitration Association (the “ AAA ”) then in effect, except as those Rules may be modified in this Section 15 .  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those individuals or entities and a party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.  For purposes of this Section 15 , the term “ equity interest ” shall mean (i) in respect of the Trust, shares of beneficial interest of the Trust, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.

 

(b)                                  Arbitrators .  There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration.  If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA.  If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

(c)                                   Place of Arbitration .  The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

 

(d)                                  Discovery .  There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the

 

17



 

avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(e)                                   Awards .  In rendering an award or decision (an “ Award ”), the arbitrators shall be required to follow the Laws of the State of Maryland without regard to principles of conflicts of law.  Any arbitration proceedings or Award and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based.  Any monetary Award shall be made and payable in dollars free of any tax, deduction or offset.  Subject to Section 15(g) , each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

 

(f)                                    Costs and Expenses .  Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s Award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

 

(g)                                   Appeals .  Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “ Appellate Rules ”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 15(f) shall apply to any appeal pursuant to this Section 15(g) and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

 

(h)                                  Final and Binding .  Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 15(g) , an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the maximum extent permitted by Law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any Award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

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16.                                Third Party Beneficiaries .  Except as otherwise provided in Sections 6 , 8 and 15 , no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

 

17.                                Survival .  The representations and warranties made by the parties herein (a) are made solely as of the date hereof and (b) shall survive the closing of the purchase and sale of the Private Placement Shares until, and shall terminate on, the date that is eighteen (18) months after such closing.  Each covenant and agreement made by the parties herein that by its terms contemplates performance after the closing of the purchase and sale of the Private Placement Shares shall survive such closing and remain in full force and effect in accordance with its terms.

 

18.                                Legends .  Each certificate, if any, evidencing the Private Placement Shares shall, in addition to any legend required by applicable Law, be endorsed with the following legend or a substantially similar legend:

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and are “restricted securities” as defined in Rule 144 promulgated under the Securities Act. The securities may not be sold or offered for sale or otherwise distributed except (i) in conjunction with an effective registration statement for the shares under the Securities Act of 1933, as amended, or (ii) pursuant to an opinion of counsel, satisfactory to the Trust, that such registration or compliance is not required as to said sale, offer, or distribution. The securities represented by this certificate are subject to the terms and conditions of the Private Placement Purchase Agreement, dated as of September 13, 2017, by and between Tremont Mortgage Trust and Tremont Realty Advisors LLC.”

 

19.                                Severability .  In case any provision of this Agreement shall be found by a court of law to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

 

20.                                Notices .  Any notice, report or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, (a) upon confirmation of receipt when transmitted by facsimile transmission, (b) on the next Business Day if transmitted by a nationally recognized overnight courier or (c) on the third (3rd) Business Day following mailing by first class mail, postage prepaid, in each case as follows (or at such other United States address or facsimile number for a party as shall be specified by like notice):

 

If to the Trust:

 

Tremont Mortgage Trust
Two Newton Place
255 Washington Street
Newton, Massachusetts 02458
Attn:  Secretary
Facsimile:  (617) 454-3645

 

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If to the Manager:

 

Tremont Realty Advisors LLC
Two Newton Place
255 Washington Street
Newton, Massachusetts 02458
Attn:  President
Facsimile:  (617) 928-1305

 

21.                                Definitions .  As used in this Agreement, the following terms shall have the following meanings:

 

(a)                                  Business Day ” means a day, other than Saturday, Sunday or other day on which banks located in Boston, Massachusetts or Baltimore, Maryland are authorized or required by Law to close.

 

(b)                                  Exchange Act ” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

(c)                                   Governmental Entity ” means (i) the United States of America, (ii) any other sovereign nation, (iii) any state, province, district, territory or other political subdivision of (i) or (ii) of this definition, including any county, municipal or other local subdivision of the foregoing, or (iv) any entity exercising executive, legislative, judicial, regulatory or administrative functions of government on behalf of (i), (ii) or (iii) of this definition.

 

(d)                                  Law ” means any law, statute, ordinance, rule, regulation, directive, code or Order enacted, issued, promulgated, enforced or entered by any Governmental Entity.

 

(e)                                   Permitted Transferee ” means a Person to which the Manager has transferred Registrable Securities in a transaction exempt from registration and not in violation of any lock-up or similar restrictions to which such Registrable Securities are subject, provided such Person agrees in a writing delivered to the Trust to be subject to and bound by all interests and obligations set forth in this Agreement.

 

(f)                                    Person ” means an individual or any corporation, general or limited partnership, limited liability company, trust, unincorporated organization, association, joint venture, joint stock company or any other organization or entity, whether or not a legal entity.

 

(g)                                   Proceeding ” means any suit, action, proceeding, arbitration, mediation, audit, hearing, inquiry or, to the knowledge of the Person in question, investigation (in each case, whether civil, criminal, administrative, investigative, formal or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity.

 

(h)                                  Prospectus ” means a prospectus relating to a Registration Statement, as amended or supplemented, including all materials incorporated by reference in such Prospectus.

 

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(i)                                      register ,” “ registered ” and “ registration ” refer to a registration effected by preparing and filing a Registration Statement or similar document under the Securities Act and such Registration Statement becoming effective.

 

(j)                                     Registrable Securities ” mean all of the Shares owned by the Manager and its successors and Permitted Transferees (including any shares of beneficial interest issued in respect thereof as a result of any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization); provided , however , that such Shares shall cease to be Registrable Securities hereunder, as of any date, when: (i) a Registration Statement with respect to the sale of such Registrable Securities shall have become effective under the Securities Act and such Registrable Securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (ii) such Registrable Securities shall have been otherwise transferred pursuant to Rule 144 under the Securities Act (or any similar provisions thereunder, but not Rule 144A) and new certificates (or notations in book-entry form) for them not bearing a legend restricting further transfer shall have been delivered by the Trust or its transfer agent and subsequent public distribution of them shall not require registration under the Securities Act; (iii) such Registrable Securities are saleable immediately in their entirety without condition or limitation pursuant to Rule 144 under the Securities Act; or (iv) such Registrable Securities shall have ceased to be outstanding.

 

(k)                                  Registration Period ” means the period, beginning on the earlier of January 1, 2021 and the termination of the Management Agreement, and ending on the date and time at which the Manager (including its successors and permitted assigns) no longer holds any Registrable Securities.

 

(l)                                      Registration Statement ” means any registration statement filed by the Trust with the SEC in compliance with the Securities Act for a public offering and sale of Shares (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity), as amended or supplemented, including all materials incorporated by reference in such registration statement.

 

(m)                              Securities Act ” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

 

(n)                                  Shareholder ” means the Manager for so long as the Manager owns any Registrable Securities, and any Permitted Transferee.

 

(o)                                  Underwriter ” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering.

 

22.                                Construction .  Unless the context otherwise requires, as used in this Agreement:  (a) “or” is not exclusive; (b) “including” and its variants mean “including, without limitation” and its variants; (c) words defined in the singular have the parallel meaning in the plural and vice versa; (d) references to “written,” “in writing” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (e) words of one gender shall be construed to apply to each gender; (f) all pronouns and any variations thereof

 

21



 

refer to the masculine, feminine or neuter as the context may require; (g) “Articles” and “Sections,” refer to Articles and Sections of this Agreement unless otherwise specified; (h) “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (i) “dollars” and “$” mean United States Dollars; and (j) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if.”

 

23.                                Waivers and Amendments .  This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance.  No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver of the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement.  The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at Law or in equity.

 

24.                                Specific Performance .  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that, in addition to any other applicable remedies at Law or equity, the parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.

 

25.                                Further Assurances .  At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

26.                                Entire Agreement .  This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof and they supersede, merge, and render void every other prior written and/or oral understanding or agreement among or between the parties hereto.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

 

TREMONT MORTGAGE TRUST,

 

a Maryland real estate investment trust

 

 

 

 

 

By:

/s/ Jennifer B. Clark

 

 

Name:

Jennifer B. Clark

 

 

Title:

Secretary

 

 

 

 

 

TREMONT REALTY ADVISORS LLC,

 

a Maryland limited liability company

 

 

 

 

 

By:

/s/ Adam D. Portnoy

 

 

Name:

Adam D. Portnoy

 

 

Title:

President and Chief Executive Officer

 

[ Signature Page to Private Placement Purchase Agreement ]

 


Exhibit 10.2

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “ Agreement ”) is entered into effective as of September 18, 2017, by and between Tremont Mortgage Trust, a Maryland real estate investment trust, and Tremont Realty Advisors LLC, a Maryland limited liability company (the “ Manager ”).  Capitalized terms used but not defined in this Agreement shall have the meanings given to them in Exhibit A to this Agreement.

 

WHEREAS , the Company desires to engage the Manager for, and the Manager desires to provide, management and other services to the Company upon the terms and conditions hereinafter set forth;

 

NOW, THEREFORE , in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:

 

1.             Engagement .  Subject to the terms and conditions hereinafter set forth, the Company hereby engages the Manager to provide the management and other services contemplated by this Agreement with respect to the Company’s business and investments and the Manager hereby accepts such engagement.

 

2.             General Duties of the Manager .  The Manager shall use its reasonable best efforts to present to the Company a continuing and suitable investment program consistent with the investment guidelines of the Company.  Subject to the management, direction and oversight of the Board, the Manager shall be responsible for the Company’s day to day operations and shall conduct and perform (or cause to be conducted or performed) all corporate office functions for the Company, including, but not limited to the following:

 

(a)           consulting with the Board periodically regarding the Company’s investment policies, financing activities and operations;

 

(b)           investigating, analyzing and identifying possible investment opportunities and originating, acquiring, financing, selling, restructuring or disposing of investments for the Company;

 

(c)           with respect to prospective loans that the Company may originate, negotiating with borrowers the terms of such loans, conducting diligence regarding such loans, documenting and closing such loans and monitoring the performance of such loans;

 

(d)           with respect to possible purchases, sales or exchanges of investments, conducting negotiations on the Company’s behalf with sellers, purchasers and brokers and, if applicable, their respective agents and representatives;

 

(e)           negotiating and entering into, on the Company’s behalf, debt financing arrangements, including repurchase agreements, loan agreements, interest rate swap agreements and other agreements and instruments appropriate for the Company to conduct its business;

 



 

(f)            collecting or overseeing the collection of amounts due to the Company;

 

(g)           engaging and supervising, on the Company’s behalf and at the Company’s expense, independent contractors that provide investment banking, securities brokerage, mortgage brokerage and other financial services, diligence services, underwriting review services, legal and accounting services and all other services (including transfer agent and registrar services) as may be required relating to the Company’s operations or investments (or potential investments);

 

(h)           providing executive and administrative personnel, office space and office services required in rendering services to the Company;

 

(i)            administering the day to day operations and performing and supervising the performance of such other administrative functions for the Company as may be agreed upon by the Manager and the Company, including the collection of revenues and the payment of the Company’s debts and obligations;

 

(j)            communicating on the Company’s behalf with the holders of any of the Company’s equity or debt securities as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and maintaining effective relations with such holders, including website maintenance, logo design, analyst presentations, investor conferences and annual meeting arrangements;

 

(k)           reviewing with the Board the Company’s qualification for taxation as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and treasury regulations thereunder and using commercially reasonable efforts to cause the Company to qualify for taxation as a REIT;

 

(l)            reviewing with the Board the maintenance of the Company’s exemption from the status of an investment company required to register under the 1940 Act, monitoring compliance with the requirements for maintaining such exemption and using commercially reasonable efforts to cause the Company to maintain such exemption;

 

(m)          monitoring the operating performance of the Company’s investments and providing periodic reports with respect thereto to the Board;

 

(n)           investing and reinvesting any monies and securities of the Company (including investing in interest or dividend paying, short term investments pending investment in other investments, payment of fees, costs and expenses, or payments of dividends or distributions to the Company’s shareholders) and consulting with the Board as to the Company’s capital structure and capital raising;

 

(o)           coordinating and managing operations of any joint venture or co-investment interests held by the Company and conducting all matters with the joint venture or co-investment partners;

 

(p)           assisting the Company in retaining, on the Company’s behalf and at its expense, qualified accountants and legal counsel to assist in developing appropriate accounting

 

2



 

procedures and systems, internal controls and other compliance procedures and testing systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to REITs and, if applicable, taxable REIT subsidiaries, and to conduct periodic compliance reviews thereof;

 

(q)           assisting the Company in qualifying to do business in all applicable jurisdictions and obtaining and maintaining all appropriate licenses;

 

(r)            assisting the Company in complying with all regulatory requirements applicable to the Company in respect of its business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Exchange Act or the Securities Act, or by any securities exchange on which the Company’s securities are listed or traded;

 

(s)            assisting the Company in taking all necessary action to enable it to make required tax filings and reports, including to the extent required by the provisions of the Code applicable to REITs;

 

(t)            managing and assisting with the resolution of all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company may be subject arising out of the Company’s operations, subject to such limitations or parameters as may be imposed from time to time by the Board;

 

(u)           using commercially reasonable efforts to cause expenses incurred by the Company or on the Company’s behalf to be commercially reasonable or commercially customary and within any parameters set by the Board from time to time;

 

(v)           assisting the Company in structuring long term financing for the Company’s portfolio of assets, and with respect to offering and selling securities publicly or privately in connection with any such financing;

 

(w)          consulting with the Board with respect to decisions regarding any financings or borrowings undertaken by the Company, including (i) assisting the Company in developing criteria for debt and equity financing and (ii) assisting the Company with respect to obtaining appropriate financing for its investments;

 

(x)           providing the Company with portfolio management and monitoring services;

 

(y)           arranging marketing materials, advertising, industry group activities (such as conference participations and industry organization memberships) and other promotional efforts designed to promote the Company’s business;

 

(z)           using commercially reasonable efforts to cause the Company to comply with all applicable Laws; and

 

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(aa)         performing such other services as may be required from time to time for management and other activities relating to the Company’s assets and business as the Board shall reasonably request or the Manager shall deem appropriate under the particular circumstances.

 

In performing its services under this Agreement, the Manager may retain, for and on behalf of the Company, and at the Company’s sole cost and expense, such services of Persons as the Manager deems necessary or advisable in connection with the Company’s management and operations, which may include Affiliates of the Manager; provided , that any such services may only be provided by Affiliates of the Manager to the extent (i) such services are on arm’s length terms or at competitive market rates in relation to terms or rates that are then customary for agreements regarding the provision of such services to companies that have assets similar in type, quality and value to the Company’s assets or (ii) such services are approved by a majority of the Independent Trustees.  The Manager shall keep the Board reasonably informed on a periodic basis as to any services provided by the Manager and its Affiliates.  Notwithstanding anything herein to the contrary, fees, costs and expenses of any third party which is not an Affiliate of the Manager retained as permitted hereunder are to be paid by the Company. Without limiting the foregoing sentence, any such fees, costs or expenses which may be paid by the Manager or any of its Affiliates shall be reimbursed to the Manager or such Affiliate, as applicable, by the Company promptly following submission to the Company of a statement of any such fees, costs or expenses by the Manager.

 

Notwithstanding anything herein, it is understood and agreed that the duties of, and services to be provided by, the Manager pursuant to this Agreement shall not include (x) any services that would subject the Manager to registration with the Commodity Futures Trading Commission as a “commodity trading advisor” (as such term is defined in Section 1a(12) of the Commodity Exchange Act and in CFTC Regulation 1.3(bb)(1)), or affirmatively require it to make any exemptive certifications or similar filings with respect to “commodity trading advisor” registration status or (y) any services or the taking of any action that would render the Manager a “municipal advisor” as defined in Section 15B(e)(4) of the Exchange Act.

 

3.             Bank Accounts .  The Manager shall establish and maintain one or more bank accounts in its own name or in the name of the Company, and shall collect and deposit into such account or accounts and may disburse therefrom any monies on behalf of the Company; provided , that no funds in any such account shall be commingled with any funds of the Manager or any other Person unless separate records of the Company’s funds are maintained.  The Manager shall from time to time, or at any time requested by the Board, render an appropriate accounting of such collections and payments to the Board and to the auditors of the Company.

 

4.             Records .  The Manager shall maintain appropriate books of account and records relating to this Agreement, which books of account and records shall be available for inspection by representatives of the Company upon reasonable notice during ordinary business hours.

 

5.             Information Furnished to Manager .  The Board shall at all times keep the Manager fully informed with regard to the investment guidelines, operating policies, investment

 

4



 

and financing strategies and leverage and hedging policies of the Company.  The Board shall keep the Manager reasonably informed with regard to the Board’s then current intentions as to the future of the Company.  The Board shall notify the Manager promptly of its intention to sell or otherwise dispose of any of the Company’s investments or to make new investments.  The Company shall furnish the Manager with such information with regard to its affairs as the Manager may from time to time reasonably request.  The Company shall retain legal counsel, accountants and third party consultants to provide such legal and accounting advice, services and opinions as the Manager or the Board shall deem necessary or appropriate to adequately perform the functions of the Company.

 

6.             REIT Qualification; Compliance with Law and Organizational Documents .  Anything else in this Agreement to the contrary notwithstanding, the Manager shall refrain from any activity which, in its good faith judgment, or in the judgment of the Board as transmitted to the Manager in writing, would (a) adversely affect the qualification of the Company for taxation as a real estate investment trust as defined and limited in the Code or which would make the Company subject to the 1940 Act, (b) violate any Law of any governmental body or agency having jurisdiction over the Company or over its securities or (c) not be permitted by the Declaration of Trust or Bylaws, except if such action shall be approved by the Board, in which event the Manager shall promptly notify the Board of the Manager’s judgment that such action would adversely affect such qualification, make the Company subject to the 1940 Act or violate any such Law or the Declaration of Trust or Bylaws and shall refrain from taking such action pending further clarification or instructions from the Board.  In addition, the Manager shall take such affirmative steps which, in its judgment made in good faith, or in the judgment of the Board as transmitted to the Manager in writing, would prevent or cure any action described in (a) , (b)  or (c)  of this Section 6 .

 

7.             Manager Conduct; Business Opportunities .

 

(a)           The Manager shall adhere to, and shall require its officers and employees in the course of providing services to the Company to adhere to, the Company’s Code of Business Conduct and Ethics, as in effect from time to time.

 

(b)           Neither the Manager nor any of its Affiliates shall sell any property or assets to the Company or purchase any assets from the Company, directly or indirectly, except as approved by a majority of the Independent Trustees.  No compensation, commission or remuneration shall be paid to the Manager or any of its Affiliates on account of services provided to the Company, except as contemplated by this Agreement or otherwise approved by a majority of the Independent Trustees.

 

(c)           The Manager and its Affiliates, and their respective directors, trustees, officers, employees and agents, may engage in other activities or businesses, including those that compete with the Company, and provide services to or act as the sponsor or manager to any other Person that may compete with the Company, including, among other things, with respect to the origination, acquisition, making, arranging or managing of first mortgage loans secured by middle market or transitional commercial real estate or other investments like those the Company intends to make. Notwithstanding the foregoing, for so long as the Manager is managing the Company, the Manager agrees, on behalf of itself and its Affiliates,

 

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that neither the Manager nor any of its Affiliates shall sponsor or manage any other Publicly Owned REIT that invests primarily in first mortgage loans secured by middle market and transitional commercial real estate located in the United States, unless such activity is approved by the Independent Trustees. The Company recognizes that it is not entitled to preferential treatment in receiving information, recommendations and other services from the Manager. The Manager shall act in good faith to endeavor to identify to the Independent Trustees any conflicts that may arise among the Company, the Manager and/or any other Person on whose behalf the Manager may be engaged.  The Company hereby acknowledges the conflicts of interest that may exist with regard to the allocation of investment opportunities and for the time and attention of the Manager, RMR and their personnel as set forth herein and agrees that the Manager, RMR and their Affiliates may resolve such conflicts in good faith and in their fair and reasonable discretion. In the case of such a conflict, the Manager, RMR and their Affiliates shall endeavor to allocate investment opportunities in a fair and reasonable manner, taking into account such factors as they deem appropriate.  In doing so, they may allocate investments, including those within the Company’s investment objectives, to RMR and its other clients.

 

(d)           If the Manager, any of its Affiliates or any of their respective directors, trustees, officers, employees or agents acquires knowledge of a potential business opportunity, the Company renounces any potential interest or expectation in, or right to be offered or to participate in, such business opportunity to the maximum extent permitted by Maryland Law.  Accordingly, to the maximum extent permitted by Maryland Law (i) no such Person is required to present, communicate or offer any business opportunity to the Company and (ii) such Person, on his or her own behalf or on behalf of any other Person, shall have the right to hold and exploit any business opportunity, or to direct, recommend, offer, sell, assign or otherwise transfer such business opportunity to any Person other than the Company.  The taking by any such Person for itself, himself or herself, or the offering or other transfer to another Person, of any potential business opportunity whether pursuant to this Agreement or otherwise, shall not constitute or be construed or interpreted as a breach by the Manager of its duties to the Company under this Agreement, or an act or omission of such Person constituting bad faith, fraud, intentional misconduct or knowing disregard of the duties of the Manager under this Agreement.

 

(e)           The Manager shall provide the Company with a management team, along with appropriate support personnel, to provide the management services to be provided by the Manager to the Company hereunder, with the members of such management team devoting such amount of their time to the Company’s management as is reasonably necessary and appropriate for the proper performance of all of the Manager’s duties, commensurate with the Company’s level of activity. The Manager’s management team shall receive no compensation from the Company for their services to the Company in any such capacities, except that the Company may (directly or indirectly) make awards to them pursuant to the Company’s 2017 Equity Compensation Plan or any other equity compensation plan adopted by the Company from time to time, subject to applicable reporting and withholding requirements.  The Manager shall not be obligated to dedicate any of its personnel exclusively to the Company nor shall the Manager or any of its personnel be obligated to dedicate any specific portion of its or their time to the Company or its business, except as

 

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necessary to perform the services provided for herein.

 

(f)            The Manager’s liability under this Agreement shall be as set forth in Section 16 .

 

8.             No Partnership or Joint Venture .  The Company and the Manager are not partners or joint venturers with each other and neither the terms of this Agreement nor the fact that the Company and the Manager have joint interests in any one or more investments, ownership in each other or other interests in any one or more entities or may have common officers or employees or a tenancy relationship shall be construed so as to make them such partners or joint venturers or impose any liability as such on either of them.

 

9.             Fidelity Bond .  The Manager shall not be required to obtain or maintain a fidelity bond in connection with the performance of its services hereunder.

 

10.          Base Management Fee .  The Manager shall be paid, for the services rendered by it to the Company pursuant to this Agreement, a base management fee (the “ Management Fee ”) in an amount equal to 1.5% per year of the Company’s Equity, payable in cash quarterly (0.375% per quarter) in arrears.  The Manager shall compute the Management Fee and deliver a copy thereof to the Board within thirty (30) days following the end of each quarter.  Each installment of the Management Fee shall be paid by the Company within five (5) business days after the Manager’s delivery of the computation of such installment to the Board. The Management Fee, if for a partial quarter, shall be pro-rated based on the number of days during the relevant quarter that this Agreement is in effect.

 

11.          Incentive Fee .  In addition to the Management Fee, starting in the first full calendar quarter following September 18, 2018, the Manager shall be paid quarterly an incentive fee in arrears in cash (the “ Incentive Fee ”) in an amount, which shall not be less than zero, equal to the difference between:

 

(a)           the product of (i) twenty percent (20%) and (ii) the difference between (A) the Core Earnings for the most recent twelve (12) month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the Incentive Fee is being made, and (B) the product of (1) the Equity in the most recent twelve (12) month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the Incentive Fee is being made, and (2) seven percent (7%) per year, and

 

(b)           the sum of any Incentive Fees paid to the Manager with respect to the first three calendar quarters of the most recent twelve (12) month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable);

 

provided , however , that no Incentive Fee shall be payable to the Manager with respect to any calendar quarter unless Core Earnings for the twelve (12) most recently completed calendar quarters (or such lesser number of completed calendar quarters from the IPO Closing Date) in the aggregate is greater than zero.  Shares of beneficial interest of the Company that are entitled to a specific periodic distribution or have other debt characteristics shall not constitute shares of beneficial interest of the Company in clause (i)(B)  of the

 

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definition of “ Equity ” for purposes of calculating any Incentive Fee and instead the aggregate distribution amount that accrues in respect of such shares during the applicable period for such calculation shall be subtracted from Core Earnings for purposes of the calculation of the Incentive Fee, to the extent such distribution is not already otherwise excluded from Core Earnings.

 

The Manager shall compute the Incentive Fee and deliver a copy thereof to the Board within thirty (30) days following the end of each quarter.  Each installment of the Incentive Fee shall be paid by the Company within five (5) business days after the Manager’s delivery of the computation of such installment to the Board.  If the effective termination date of this Agreement does not correspond to the end of a fiscal quarter, the Incentive Fee for the quarter in which the termination occurred shall be calculated for the period beginning on the day after the end of the quarter immediately preceding such effective termination date and ending on such effective termination date, which Incentive Fee shall be calculated using Core Earnings for the 12-month period ending on the effective termination date.

 

12.          Internal Audit Services .

 

(a)           The Manager shall provide to the Company, or arrange to be provided by third parties approved by the Company, an internal audit function meeting applicable requirements of the securities exchange on which the Common Shares are principally traded and the SEC and otherwise in scope approved by the Board’s Audit Committee.

 

(b)           In addition to the Management Fee, Incentive Fee and the reimbursement of costs and expenses to which the Manager is entitled pursuant to other sections of this Agreement, the Company agrees to reimburse RMR and its Affiliates, as applicable, within thirty (30) days of the receipt of the invoice therefor, the Company’s pro rata share (as reasonably agreed to by a majority of the Independent Trustees from time to time but in any event, at least annually) of the following:

 

(i)            the employment expenses of the director of internal audit and other employees of RMR or its Affiliates engaged in providing internal audit services to the Company, including but not limited to salary, wages, payroll taxes and the cost of employee benefit plans;

 

(ii)           the reasonable travel and other out-of-pocket expenses of RMR and its Affiliates relating to the activities of the director of internal audit and other employees of RMR or its Affiliates engaged in providing internal audit services to the Company; and

 

(iii)          the reasonable third party expenses that RMR and its Affiliates incur in connection with the provision of internal audit services to the Company.

 

In addition, the Manager shall make available (which may be by posting to the Company’s web site) to its and its Affiliates’ officers and employees providing such services to the Company the procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters relating to the Company and for the confidential, anonymous submission by such officers and employees of concerns regarding

 

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questionable accounting or auditing matters relating to the Company, as set forth in the Company’s Procedures for Handling Concerns or Complaints about Accounting, Internal Accounting Controls or Auditing Matters, as in effect from time to time.

 

13.          Additional Services .  If, and to the extent that, the Company shall request the Manager to render services on behalf of the Company other than those required to be rendered by the Manager in accordance with the terms of this Agreement, such additional services shall be compensated separately on terms to be agreed upon by the Manager and the Company (and approved by majority vote of the Independent Trustees) from time to time.

 

14.          Expenses of the Manager .

 

(a)           The Manager shall bear the expenses related to the employees of the Manager who provide services to the Company, including the costs of employees of the Manager who originate loans for the Company; provided , that the Company shall pay or reimburse the Manager and its Affiliates, as applicable, for any such expense that (i) is approved by a majority of the Independent Trustees, (ii) is a shared services cost as described in the last paragraph of Section 15 or (iii) relates to awards made under the Company’s 2017 Equity Compensation Plan or any other equity compensation plan adopted by the Company from time to time.

 

(b)           The Manager (or its Affiliate) shall pay all of the initial organizational costs of the Company’s formation and the expenses of the IPO and concurrent private placement of Common Shares to the Manager, which costs and expenses include the IPO underwriting discounts and commissions, the costs and expenses incurred in connection with the offer and sale of Common Shares in the IPO referenced in Part II, Item 31 of the IPO registration statement, the costs of forming and initially organizing the Company as a Maryland real estate investment trust and the costs of initially establishing the Board and committees thereof.

 

15.          Expenses of the Company .  Except as expressly otherwise provided in Section 14 , the Company shall pay all its costs and expenses and shall reimburse the Manager or its Affiliates, as applicable, for all costs and expenses of the Company’s operations, and, without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses shall be paid by the Company and shall not be paid by the Manager or its Affiliates:

 

(a)           costs associated with establishing and maintaining any of the Company’s repurchase agreements, bank credit facilities (including term loans and revolving facilities), other financing arrangements or other indebtedness (including commitment fees, accounting fees, legal fees, closing and other similar costs);

 

(b)           the Company’s taxes and assessments on real and personal property, if any, and all other taxes and assessments applicable to the Company;

 

(c)           legal, auditing, accounting, tax planning and tax return preparation fees and expenses, and other fees and expenses for professional services;

 

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(d)           underwriting, brokerage, listing, reporting, registration and other fees and expenses and taxes incurred in connection with the issuance, distribution, transfer, trading, registration and listing of the Company’s securities on any securities exchange, including the fees and charges of any printer, engraver, transfer agent, registrar and indenture trustee;

 

(e)           expenses of organizing, restructuring, reorganizing or liquidating the Company or any of its subsidiaries, or of revising, amending, converting or modifying the Company’s or any of its subsidiary’s organizational documents;

 

(f)            fees and travel and other expenses paid or reimbursed to Trustees and officers of the Company in their capacities as such and fees and travel and other expenses paid or reimbursed to advisors, contractors, mortgage servicers, consultants, and other agents and independent contractors employed by or on behalf of the Company;

 

(g)           all costs and expenses relating to the Company’s business operations, including, the costs and expenses of investigating, conducting diligence, acquiring, negotiating, structuring, owning, protecting, maintaining, developing and disposing of investments (whether or not consummated), including the costs of appraisals or other valuation services, foreclosure, insurance premiums, accounting, tax, legal and other professional services, brokerage and sales commissions, maintenance, repair, improvement and local property or investment management;

 

(h)           all insurance costs incurred in connection with the Company, including directors and officers liability insurance, or in connection with any Trustee or officer indemnity agreement to which the Company is a party;

 

(i)            expenses related to payments of dividends or interest or contributions in cash or any other form made or caused to be made by the Board to holders of securities of the Company;

 

(j)            all expenses connected with communications to holders of securities of the Company and other bookkeeping and clerical work necessary to maintain relations with holders of securities of the Company, including the cost of any transfer agent, the cost of preparing, printing, posting, distributing and mailing certificates for securities and proxy solicitation materials and reports to holders of the Company’s securities and other investor relations expenses;

 

(k)           filing and recording fees for regulatory or governmental filings, approvals and notices;

 

(l)            any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) by or before any court or governmental agency against the Company;

 

(m)          any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) by or before any court or governmental agency against any Person in his, her or its capacity as a Trustee, director, partner, member or officer of the Company, except to the extent not permitted pursuant to Maryland Law, the Declaration of Trust or this Agreement;

 

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(n)           expenses relating to any office or office facilities (including disaster backup recovery sites and facilities) for the Company, including but not limited to rent, telephone, utilities, office furniture, equipment, machinery and other overhead type expenses;

 

(o)           the Company’s allocable share of costs and expenses incurred with respect to market information systems and publications, research publications and materials, including news research and quotation equipment and services;

 

(p)           the costs and expenses of all equity award or compensation plans or arrangements established by the Company, including the value of awards made by the Company to any officers or employees of the Manager or any of its Affiliates, if any, and payment of any employment or withholding taxes in connection therewith; and

 

(q)           all other expenses actually incurred by the Manager or any of its Affiliates (except as otherwise specified herein) which are reasonably necessary for the performance by the Manager of its duties and functions under this Agreement.

 

The Company acknowledges and agrees that concurrently with entering into this Agreement, the Manager will enter into a shared services agreement pursuant to which RMR will provide the Manager with certain facilities, technology and services and with access to the full scope of real estate and public company operations services and expertise available within RMR for use by the Manager in conducting the Company’s operations.  The Company agrees to reimburse the Manager for the shared services costs that the Manager pays to RMR and its affiliates under this shared services agreement, as approved by a majority of the Independent Trustees at least annually. The shared services costs paid by the Manager to RMR and its affiliates under this shared services agreement will include an allocation of RMR’s costs of rent, utilities, office furniture, equipment, machinery, facilities, and other overhead type expenses, the costs of legal, accounting, audit, tax planning and tax return preparation, consulting services, diligence related to the Company’s investments, investor relations and other professional services, personnel and support services shared by the Manager.

 

16.          Limits of Manager Responsibility; Indemnification; Company Remedies .

 

(a)           The Manager assumes no responsibility other than to render the services described herein in good faith and shall not be responsible for any action of the Board in following or declining to follow any advice or recommendation of the Manager.  The Manager and its Affiliates, and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel will not be liable to the Company or any of its Trustees, shareholders or subsidiaries, or any of the trustees, directors, shareholders, owners, partners or members of any of the Company’s subsidiaries, for any acts or omissions related to the provision of services to the Company under this Agreement, except by reason of acts or omissions that have been determined in a final, non-appealable decision entered by a court, arbitration panel or other adjudicative body of competent jurisdiction to have constituted bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of the Manager under this Agreement.

 

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(b)                                  The Company shall reimburse, indemnify and hold harmless the Manager and its Affiliates, and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel from and against any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever, including all reasonable attorneys’, accountants’ and experts’ fees and expenses, arising from any acts or omissions related to the provision of services to the Company or the performance of any matter pursuant to an instruction by the Board, except to the extent there is a final, non-appealable decision entered by a court, arbitration panel or other adjudicative body of competent jurisdiction that such acts or omissions constituted bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of the Manager under this Agreement.  Without limiting the foregoing, the Company shall promptly advance expenses incurred by the indemnitees referred to in this Section 16 for matters referred to in this Section 16 , upon request for such advancement.  In addition, and without limitation of the foregoing, the Manager and its Affiliates and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel will not be liable for trade errors that may result from ordinary negligence, including errors in the investment decision making or trade processes.

 

17.                                Term; Renewal; Termination Without Cause .

 

(a)                                  This Agreement shall become effective upon the IPO Closing Date and shall continue in force and effect, unless terminated in accordance with the terms hereof, until December 31, 2020 (the “ Initial Term ”).  On January 1, 2021 and each January 1 thereafter (each, a “ Renewal Date ”), the term of this Agreement shall be deemed automatically renewed for an additional one year term (an “ Automatic Renewal Term ”), unless the Company or the Manager elects not to renew this Agreement in accordance with Section 17(b)  or (d) , respectively.

 

(b)                                  Upon written notice delivered to the Manager not less than one hundred eighty (180) days prior to the expiration of the Initial Term or any Automatic Renewal Term (the “ Termination Notice ”), the Company may, without a Cause Event, decline to renew this Agreement at such expiration (any such nonrenewal, a “ Termination Without Cause ”) upon the affirmative vote of at least two-thirds (2/3) of the Independent Trustees based upon their determination that (i) the Manager’s performance is unsatisfactory and materially detrimental to the Company or (ii) the Management Fee and Incentive Fee, taken as a whole, payable to the Manager are not fair to the Company.  As a condition precedent to the Company’s right to terminate this Agreement pursuant to Section 17(b)(ii) , the Company shall first afford the Manager the opportunity to renegotiate the Management Fee and/or Incentive Fee if the Manager so elects by giving written notice to the Company not less than one hundred twenty (120) days prior to the next Renewal Date of the Manager’s intention to renegotiate the Management Fee and/or the Incentive Fee (a “ Notice of Proposal to Negotiate ”), in which case, the Company and Manager shall proceed in accordance with Section 17(c) .  In the event of a Termination Without Cause, and provided in the case of a termination pursuant to Section 17(b)(ii)  that the Company and Manager have not agreed to a revised Management Fee, Incentive Fee or other compensation structure, the Company shall pay the Manager the Termination Fee on or before the last day of the Initial Term or Automatic Renewal Term, as the case may be (the “ Effective Termination Date ”).

 

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(c)                                   If the Manager gives to the Company a Notice of Proposal to Negotiate, the Company and the Manager shall promptly endeavor to negotiate the Management Fee and/or the Incentive Fee in good faith.  Provided that the Company and the Manager agree to a revised Management Fee, Incentive Fee or other compensation structure within sixty (60) days following the Company’s receipt of the Notice of Proposal to Negotiate, the Termination Notice from the Company shall be deemed of no force and effect, and this Agreement shall continue in full force and effect on the terms stated herein, except that the Management Fee, the Incentive Fee or other compensation structure shall be the revised Management Fee, Incentive Fee or other compensation structure as then agreed upon by the Company and the Manager. The Company and the Manager agree to execute and deliver an amendment to this Agreement setting forth such revised Management Fee, Incentive Fee or other compensation structure promptly upon reaching an agreement regarding same. In the event that the Company and the Manager, after negotiations in good faith, are unable to agree to a revised Management Fee, Incentive Fee or other compensation structure during such sixty (60) day period, this Agreement shall terminate on the Effective Termination Date and the Company shall be obligated to pay the Manager the Termination Fee upon the Effective Termination Date.

 

(d)                                  No later than one hundred eighty (180) days prior to the expiration of the Initial Term or the then current Automatic Renewal Term, the Manager may deliver written notice to the Company informing it of the Manager’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice. The Company is not required to pay to the Manager the Termination Fee if the Manager terminates this Agreement pursuant to this Section 17(d) .

 

(e)                                   Except as set forth in this Section 17 , a nonrenewal of this Agreement pursuant to this Section 17 shall be without any further liability or obligation of any party to the other, except as provided in Sections 4 , 7(d) , 7(e) , 12 , 15 16 19 and 20 of this Agreement.

 

(f)                                    In addition to other actions on termination of this Agreement, for up to one hundred twenty (120) days following the expiration of this Agreement in accordance with the terms hereof, the Manager shall, at the Company’s expense, cooperate with the Company and use commercially reasonable efforts to facilitate the orderly transfer of management and other services provided under this Agreement to employees of the Company or to its designee, including the transfer of bookkeeping and accounting functions and legal and regulatory compliance and reporting.  In connection therewith, the Manager shall assign to the Company, and the Company shall assume, any authorized agreements the Manager executed in its name on behalf of the Company and the Manager shall assign to the Company all proprietary information with respect to the Company.

 

(g)                                   The provisions of this Section 17 shall not apply as a limitation on the amount which may be paid by agreement of the Company and the Manager in connection with a transaction pursuant to which any assets or going business values of the Manager are acquired by the Company in association with termination of this Agreement and the Termination Fee is owed in addition to any amounts otherwise payable to the Manager under this Agreement as compensation for services and for expenses of or reimbursement due to the Manager through the date of termination.  Also, payment of the Termination Fee shall not affect other rights and

 

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obligations under Sections 2 , 13 , 16 , 17 , 19 and 20 of this Agreement or otherwise between the Company and the Manager.

 

18.                                Termination for a Cause Event or Material Breach .

 

(a)                                  The Company may terminate this Agreement, without payment of the Termination Fee, effective upon thirty (30) days’ prior written notice of termination from the Company to the Manager, upon the occurrence of a Cause Event.

 

(b)                                  The Manager may terminate this Agreement, effective upon sixty (60) days’ prior written notice of termination to the Company for a Material Breach, in which case the Company is required to pay the Manager the Termination Fee upon the effective date of such termination.

 

(c)                                   The Manager may terminate this Agreement if the Company becomes required to register as an investment company under the 1940 Act, with such termination deemed to occur immediately before such event, in which case the Company is not required to pay the Manager the Termination Fee.

 

19.                                Action Upon Termination .  From and after the effective date of termination of this Agreement pursuant to Section 17 or 18 , the Manager shall not be entitled to compensation for further services pursuant to Section 10 or 11 , but the Manager shall be paid all compensation due for services performed prior to the effective date of such termination and, if this Agreement is terminated pursuant to Section 18(b)  or not renewed pursuant to Section 17(b) , the Termination Fee.  Upon such termination, the Manager shall, as promptly as practicable:

 

(a)                                  pay over to the Company all monies collected and held for the account of the Company by the Manager pursuant to this Agreement, after deducting therefrom any accrued Management Fee, Incentive Fee, Termination Fee and any reimbursement for costs or expenses to which it or any of its Affiliates is then entitled;

 

(b)                                  deliver to the Board a full and complete accounting, including a statement showing all payments collected by it and a statement of all monies held by it for the Company for the period commencing with the date following the date of its last accounting to the Board; and

 

(c)                                   deliver to the Board all property and documents of the Company then in its custody or possession; provided , that the Manager shall be permitted to retain copies of such documents for its records.

 

The Manager shall compute the accrued and unpaid Management Fee and Incentive Fee and, to the extent applicable, the Termination Fee and deliver to the Board within thirty (30) days following the effective date of termination. The accrued and unpaid Management Fee and Incentive Fee and, to the extent applicable, Termination Fee shall be paid by the Company within five (5) business days after the Manager’s delivery of such computation to the Board.

 

20.                                Release of Money or Other Property Upon Written Request . Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company

 

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requesting the Manager to release to the Company any money or other property then held by the Manager for the account of the Company under this Agreement, the Manager shall release such money or other property to the Company within a reasonable period of time, but in no event later than thirty (30) days following such request. Upon delivery of such money or other property to the Company, the Manager shall not be liable to the Company, the Board, or the Company’s shareholders for any acts or omissions by the Company in connection with the money or other property released to the Company in accordance with this Section 20 . The Company shall indemnify the Manager and its Affiliates, and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel from and against any and all losses, damages, liabilities, demands, charges and claims of any nature whatsoever, including all reasonable attorneys’, accountants’ and experts’ fees and expenses, which arise in connection with the Manager’s proper release of such money or other property to the Company in accordance with the terms of this Section 20 .  Indemnification pursuant to this Section 20 shall be in addition to any right of the Manager to indemnification under Section 16 of this Agreement.

 

21.                                Board Action .  Wherever action on the part of the Board is contemplated by this Agreement, action by a majority of the Board, including a majority of the Independent Trustees, shall constitute the action provided for herein.

 

22.                                TRUSTEES AND SHAREHOLDERS NOT LIABLE .  THE DECLARATION OF TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS OR SUPPLEMENTS THERETO, IS DULY FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME TREMONT MORTGAGE TRUST REFERS TO THE TRUSTEES COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY.  NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY.  ALL PERSONS OR ENTITIES DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

23.                                Notices .  Any notice, report or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, (a) upon confirmation of receipt when transmitted by facsimile transmission, (b) on the next business day if transmitted by a nationally recognized overnight courier or (c) on the third (3rd) business day following mailing by first class mail, postage prepaid, in each case as follows (or at such other United States address or facsimile number for a party as shall be specified by like notice):

 

If to the Company:

 

Tremont Mortgage Trust
Two Newton Place
255 Washington Street
Newton, Massachusetts 02458

 

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Attn:  Secretary and Board of Trustees
Facsimile:  (617) 454-3645

 

If to the Manager:

 

Tremont Realty Advisors LLC
Two Newton Place
255 Washington Street
Newton, Massachusetts 02458
Attn:  President and Chief Executive Officer
Facsimile:  (617) 928-1305

 

24.                                Amendments .  This Agreement shall not be amended, changed, modified, terminated or discharged, in whole or in part, except by an instrument in writing signed by each of the parties hereto, or by their respective successors or assigns, or otherwise as provided herein.

 

25.                                Assignment .  Neither party may assign this Agreement or its rights hereunder or delegate its duties hereunder without the written consent of the other party, except that the Manager may assign this Agreement or delegate any of its duties hereunder to any subsidiary of RMR so long as such subsidiary is then Controlled by RMR. Nothing herein shall preclude any pledge, hypothecation or other transfer of any amounts payable to the Manager under this Agreement.

 

26.                                Successors and Assigns .  This Agreement shall be binding upon, and inure to the benefit of, any successors or permitted assigns of the parties hereto as provided herein.

 

27.                                No Third Party Beneficiary .  Except as otherwise provided in Sections 12 , 15 , 16 , 20 and 29 , no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

 

28.                                Governing Law .  The provisions of this Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the Laws of the State of Maryland without regard to principles of conflicts of law.

 

29.                                Arbitration .

 

(a)                                  Procedures for Arbitration of Disputes .  Any disputes, claims or controversies arising out of or relating to this Agreement, the provision of services by the Manager or its Affiliates pursuant to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of the Company, the Manager or RMR or any holder of equity interests (which, for purposes of this Section 29 , shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of the Company, the Manager or RMR, either on his, her or its own behalf, on behalf of the Company, the Manager or RMR or on behalf of any series or class of equity interests of the Company, the Manager or RMR or holders of equity interests of the Company, the Manager or RMR against the Company, the Manager or RMR or any of their respective trustees, directors, members, officers, managers (including the Manager or its successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity,

 

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performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of the Company, the Manager or RMR (all of which are referred to as “ Disputes ”) or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “ Rules ”) of the American Arbitration Association (the “ AAA ”) then in effect, except as those Rules may be modified in this Section 29 .  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of the Company, the Manager or RMR and class actions by a holder of equity interests against those individuals or entities and the Company, the Manager or RMR.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.  For purposes of this Section 29 , the term “ equity interest ” shall mean (i) in respect of the Company, shares of beneficial interest of the Company, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.

 

(b)                                  Arbitrators .  There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration.  If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration.  The arbitrators may be Affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA.  If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

(c)                                   Place of Arbitration .  The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

 

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(d)                                  Discovery .  There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(e)                                   Awards .  In rendering an award or decision (an “ Award ”), the arbitrators shall be required to follow the Laws of the State of Maryland without regard to principles of conflicts of law.  Any arbitration proceedings or Award and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based.  Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Subject to Section 29(g) , each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

 

(f)                                    Costs and Expenses .  Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of the Trustee’s, Company’s, RMR’s or the Manager’s, as applicable, Award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

 

(g)                                   Appeals .  Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to, any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “ Appellate Rules ”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office.  Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 29(f)  shall apply to any appeal pursuant to this Section 29(g) and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

 

(h)                                  Final and Binding .  Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 29(g) , an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the maximum extent permitted by Law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any Award made except for actions relating to

 

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enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(i)                                      Beneficiaries .  This Section 29 is intended to benefit and be enforceable by the Company, the Manager, RMR and their respective holders of equity interests, trustees, directors, officers, managers (including the Manager or its successor), agents or employees, and their respective successors and assigns and shall be binding upon the Company, the Manager, RMR and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

30.                                Consent to Jurisdiction and Forum .  The exclusive jurisdiction and venue in any action brought by any party hereto pursuant to this Agreement shall lie in the Circuit Court for Baltimore City, Maryland (or, if no state court located within the State of Maryland has subject matter jurisdiction, the U.S. District Court for Maryland).  Each of the parties hereby irrevocably and unconditionally agree to request or consent to the assignment of any such proceeding to the Business and Technology Case Management Program of the Circuit Court for Baltimore City, Maryland.  By execution and delivery of this Agreement, each party hereto irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action.  The parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action.  The parties further agree and consent to the service of any process required by any such court by delivery of a copy thereof in accordance with Section 23 and that any such delivery shall constitute valid and lawful service of process against it, without necessity for service by any other means provided by statute or rule of court.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROVISION OF SERVICES BY THE MANAGER PURSUANT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 29 , this Section 30 shall not preempt resolution of the Dispute pursuant to Section 29 .

 

31.                                Captions; Interpretation .  The captions included herein have been inserted for ease of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. In this Agreement, unless the context otherwise requires, (i) words used in the singular or in the plural include both the plural and singular, (ii) references to this Agreement and all expressions like “herein”, “hereof” and “hereunder” shall be deemed to refer to this Agreement and all exhibits as amended from time to time, including as affected by any such amendment, (iii) “or”, “either” and “any” are not exclusive, (iv) “including” and its variants mean “including, without limitation,” and its variants, (v) references to “written,” “in writing” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form, (vi) all pronouns and any variations thereof refer to the masculine, feminine or neuter as the context may require, (vii) “Sections” refer to Sections of this Agreement unless otherwise specified, and (viii) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if.”  The agreements of the Company set forth herein are on behalf of itself and its subsidiaries.

 

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32.                                Entire Agreement .  This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes any pre-existing agreements with respect to such subject matter.

 

33.                                Severability .  If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

 

34.                                Survival .  The provisions of Section 2 (limited to the obligation of the Company to indemnify the Manager and its Affiliates for matters provided thereunder), Section 12(b)  and Section 15 through and including Section 35 of this Agreement shall survive the termination hereof.  Any termination of this Agreement shall be without prejudice to the rights of the parties hereto accrued prior to the termination or upon termination.

 

35.                                Equal Employment Opportunity Employer .  The Manager is an equal employment opportunity employer and complies with all applicable state and federal Laws to provide a work environment free from discrimination and without regard to race, color, sex, sexual orientation, national origin, ancestry, religion, creed, physical or mental disability, age, marital status, veteran’s status or any other basis protected by applicable Laws.

 

[Signature Page To Follow]

 

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IN WITNESS WHEREOF , the parties have executed this Management Agreement as of the date first above written.

 

 

 

 

TREMONT MORTGAGE TRUST

 

 

 

 

 

 

 

 

By:

/s/ David M. Blackman

 

 

 

Name:

David M. Blackman

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

 

TREMONT REALTY ADVISORS LLC

 

 

 

 

 

 

 

 

By:

/s/ Adam D. Portnoy

 

 

 

Name:

Adam D. Portnoy

 

 

 

Title:

President and Chief Executive Officer

 

 

 

 

 

 

SOLELY IN RESPECT OF SECTION 29 :

 

 

 

 

 

 

 

 

 

 

THE RMR GROUP INC.,

 

 

on behalf of itself and each of its consolidated subsidiaries

 

 

 

 

 

 

 

 

By:

/s/ Adam D. Portnoy

 

 

 

Name:

Adam D. Portnoy

 

 

 

Title:

President and Chief Executive Officer

 

[ Signature Page to Management Agreement ]

 



 

Exhibit A

 

Definitions

 

The following definitions shall be applied to the terms used in this Agreement for all purposes, unless otherwise clearly indicated to the contrary.  All capitalized terms used in this Exhibit A , but not defined in this Exhibit A , shall have the respective meanings given to those terms elsewhere in this Agreement.  Unless otherwise noted, all section references in this Exhibit A refer to sections in the Agreement.

 

(a)                                  1940 Act ” shall mean the Investment Company Act of 1940, as amended.

 

(b)                                  AAA ” shall have the meaning set forth in Section 29(b) .

 

(c)                                   Affiliate ” shall mean, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with, the first Person.

 

(d)                                  Agreement ” shall have the meaning set forth in the preamble.

 

(e)                                   Appellate Rules ” shall have the meaning set forth in Section 29(g) .

 

(f)                                    Automatic Renewal Term ” shall have the meaning set forth in Section 17(a) .

 

(g)                                   Award ” shall have the meaning set forth in Section 29(e) .

 

(h)                                  Board ” shall mean the board of trustees of the Company as constituted from time to time.

 

(i)                                      Cause Event ” shall mean:  (i) a final judgment by any court or governmental body of competent jurisdiction not stayed or vacated within thirty (30) days that the Manager, its agents or its assignees has committed a felony or a material violation of applicable securities laws that has a material adverse effect on the business of the Company and its subsidiaries, taken as a whole, or the ability of the Manager to perform its duties under the terms of this Agreement; (ii) an order for relief in an involuntary bankruptcy case relating to the Manager or the Manager authorizing or filing a voluntary bankruptcy petition; (iii) the dissolution of the Manager, or (iv) a determination that the Manager has (A) committed; fraud against the Company, (B) misappropriated or embezzled funds of the Company, or (C) acted, or failed to act, in a manner constituting bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of the Manager under this Agreement; provided , however , that if any of the actions or omissions described in this clause (iv)  are caused by an employee and/or officer of the Manager or one of its Affiliates and the Manager takes all necessary action against such Person and cures the damage caused by such actions or omissions within thirty (30) days of such determination, then such event shall not constitute a Cause Event.

 

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(j)                                     Code ” shall mean the Internal Revenue Code of 1986, as amended, and any regulations and rulings thereunder.

 

(k)                                  Common Shares ” shall mean the common shares of beneficial interest of the Company, $0.01 par value per share.

 

(l)                                      Company ” means Tremont Mortgage Trust, a Maryland real estate investment trust, and, unless the context otherwise requires, includes its subsidiaries.

 

(m)                              Control ” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise and the participles “Controls” and “Controlled” have parallel meanings.

 

(n)                                  Core Earnings ” shall mean net income (or loss) attributable to holders of Common Shares, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss), and excluding:  (i) the Incentive Fees (if any) earned by the Manager pursuant to this Agreement; (ii) depreciation and amortization (if any); (iii) non-cash equity compensation expense (if any); (iv) unrealized gains, losses and other similar non-cash items that are included in or deducted from net income or in other comprehensive income or loss under GAAP; and (v) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussions between the Manager and the Independent Trustees and approved by a majority of the Independent Trustees.  For the avoidance of doubt, the exclusion of depreciation and amortization from the calculation of “ Core Earnings ” shall only apply with respect to real property owned by the Company.

 

(o)                                  Declaration of Trust ” shall mean the Company’s Declaration of Trust, as defined in Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.

 

(p)                                  Disputes ” shall have the meaning set forth in Section 29(a) .

 

(q)                                  Effective Termination Date ” shall have the meaning set forth in Section 17(b) .

 

(r)                                     Equity ” shall mean (i) the sum of (A) the proceeds received by the Company from the IPO and the concurrent private placement of its Common Shares, plus (B) the net proceeds received by the Company from any future sale or issuance of any class or series of the Company’s shares of beneficial interest, plus (C) the Company’s cumulative Core Earnings for the period commencing on the IPO Closing Date to the end of the most recent calendar quarter, less (ii) (A) any distributions previously paid to the holders of Common Shares, (B) any Incentive Fee previously paid by the Company to the Manager and (C) any amount paid by the Company to repurchase its Common Shares.  All items in the foregoing sentence (other than clause (i)(C) ) shall be calculated on a daily weighted average basis.

 

(s)                                    equity interest ” shall have the meaning set forth in Section 29(a) .

 

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(t)                                     Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

 

(u)                                  GAAP ” shall mean generally accepted accounting principles in effect in the United States on the date such principles are applied.

 

(v)                                  Incentive Fee ” shall have the meaning set forth in Section 11 .

 

(w)                                Independent Trustees ” shall have the meaning ascribed to it in the Declaration of Trust.

 

(x)                                  Initial Term ” shall have the meaning set forth in Section 17(a) .

 

(y)                                  IPO ” means the initial public offering of Common Shares pursuant to the Company’s registration statement on Form S-11 (File No. 333-219205), as amended.

 

(z)                                   IPO Closing Date ” means the date of the closing of the Company’s sale of Common Shares to the underwriters in the IPO.

 

(aa)                           Law ” shall mean any law, statute, ordinance, rule, regulation, directive, code or order enacted, issued, promulgated, enforced or entered by any governmental entity.

 

(bb)                           Management Fee ” shall have the meaning set forth in Section 10 .

 

(cc)                             Manager ” shall have the meaning set forth in the preamble.

 

(dd)                           Material Breach ” shall mean: (i) a default by the Company in the performance or observance of any material term, condition or covenant contained in this Agreement to be performed by the Company, the consequence of which was materially adverse to the Manager and which did not result from and was not attributable to any action, or failure to act, of the Manager, and such default shall continue for a period of thirty (30) days after written notice thereof by the Manager specifying such default and requesting that the same be remedied in such thirty (30) day period; (ii) the Company materially reduces the duties and responsibilities historically performed by the Manager or materially reduces the scope of the authority of the Manager as historically exercised by the Manager under this Agreement; or (iii) the Company ceases or takes steps to cease to conduct the business of originating or investing in commercial real estate loans.

 

(ee)                             Notice of Proposal to Negotiate ” shall have the meaning set forth in Section 17(b) .

 

(ff)                               Person ” shall mean an individual or any corporation, partnership, limited liability company, trust, unincorporated organization, association, joint venture or any other organization or entity, whether or not a legal entity.

 

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(gg)                             Publicly Owned REIT ” means a REIT which has a class of equity securities registered under the Exchange Act or listed or quoted for trading on a securities exchange that is registered as a national securities exchange under the Exchange Act.

 

(hh)                           REIT ” shall mean a real estate investment trust, as defined by the Code.

 

(ii)                                   Renewal Date ” shall have the meaning set forth in Section 17(a) .

 

(jj)                                 RMR ” shall mean The RMR Group Inc., a Maryland corporation, its consolidated subsidiaries and its successors and assigns together and each individually.

 

(kk)                           Rules ” shall have the meaning set forth in Section 29(a) .

 

(ll)                                   SEC ” shall mean the United States Securities and Exchange Commission.

 

(mm)                   Securities Act ” shall mean the Securities Act of 1933, as amended.

 

(nn)                           Termination Fee ” means a termination fee equal to (i) three times the sum of (A) the average annual Management Fee and (B) the average annual Incentive Fee, in each case paid or payable to the Manager during the twenty-four (24) month period immediately preceding the most recently completed calendar quarter prior to the Effective Termination Date or, if such termination occurs prior to September 18, 2019, the Management Fee and the Incentive Fee will be annualized for such twenty-four (24) month period based on such fees earned by the Manager during the period from the IPO Closing Date through the most recently completed calendar quarter prior to the Effective Termination Date, plus (ii) an amount equal to the Manager’s expenditures paid pursuant to Section 14(b) .

 

(oo)                           Termination Notice ” shall have the meaning set forth in Section 17(b) .

 

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Exhibit 10.3

 

TREMONT MORTGAGE TRUST

 

2017 EQUITY COMPENSATION PLAN

 

Tremont Mortgage Trust hereby adopts the Tremont Mortgage Trust 2017 Equity Compensation Plan, effective as of the Effective Date.

 

I.                                         PURPOSE

 

The Plan is intended to advance the interests of the Company and its subsidiaries, if any, by providing a means of rewarding selected officers and Trustees of the Company, employees of the Company or the Manager, and others rendering valuable services to the Company, its subsidiaries or to the Manager, through grants of the Company’s Shares.

 

II.                                    DEFINITIONS

 

Terms that are capitalized in the text of the Plan have the meanings set forth below:

 

(a)                                  “Board” means the Board of Trustees of the Company.

 

(b)                                  “Company” means Tremont Mortgage Trust, a Maryland real estate investment trust.

 

(c)                                   “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(d)                                  “Key Person” means an employee, consultant, advisor, Trustee, officer or other person providing services to the Company, to a subsidiary of the Company, or to the Manager or an affiliate of the Manager.

 

(e)                                   “Manager” means a person or entity providing management or administrative services to the Company.

 

(f)                                    “Participant” means a person to whom Shares have been granted, or any other person who becomes owner of the Shares by reason of such person’s death or incapacity.

 

(g)                                   “Plan” means this Tremont Mortgage Trust 2017 Equity Compensation Plan, as it may be amended from time to time.

 

(h)                                  “Securities Act” means the Securities Act of 1933, as amended.

 

(i)                                      “Share Agreement” means an agreement between the Company and a Participant regarding Shares issued to the Participant pursuant to the Plan.

 

(j)                                     “Shares” means the Company’s Common Shares of Beneficial Interest, $0.01 par value per share.

 



 

(k)                                  “Trustee” means a member of the Board.

 

III.                               SHARES SUBJECT TO THE PLAN

 

Subject to the provisions of Article VII, the maximum number of Shares which may be granted under the Plan following the Effective Date shall equal 7.5% of the sum of (1) the aggregate number of Shares which are issued and outstanding as a result of the consummation of the Company’s initial public offering of Shares (not including Shares described in clause (2)), (2) the number of Shares issued pursuant to the underwriters’ exercise of their overallotment option in connection with the initial public offering and (3) the number of Shares issued in the private placement of Shares to Tremont Realty Advisors LLC concurrent with the initial public offering, with such sum being subject to adjustment as set forth herein.   If any Shares subject to an award under the Plan are forfeited, cancelled, repurchased or surrendered (including in satisfaction of tax obligations), the Shares with respect to such award shall, to the extent of any such forfeiture, cancellation, repurchase or surrender, again be available for awards under the Plan.

 

Subject to the terms of any Share Agreement, a holder of Shares granted under the Plan, whether or not vested, shall have all of the rights of a shareholder of the Company, including the right to vote the Shares and the right to receive any distributions, unless the Board shall otherwise determine.  Certificates representing Shares or statements representing Shares in book entry form may be imprinted with a legend to the effect that the Shares represented may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of the Securities Act and the applicable Share Agreement, if any.  In addition, the Company may hold the certificates representing Shares pending lapse of any applicable vesting, forfeiture, repurchase, transfer or similar restrictions.

 

IV.                                METHOD OF GRANTING SHARES

 

Grants of Shares to any Key Person shall be made by action of the Board, which shall have the sole discretion (subject to the terms of the Plan) to select persons to whom Shares are to be granted, the amount and timing of each such grant, the extent, if any, to which vesting restrictions or other conditions (which may include repurchase rights) shall apply to the award and all other terms and conditions of any award (which terms and conditions need not be the same as between recipients or awards).  If a person to whom such a grant of Shares has been made fails to execute and deliver to the Company a Share Agreement within ten (10) days after it is submitted to him or her, the grant of Shares related to such Share Agreement may be cancelled by the Company, acting by the Board, at its option and in its discretion without further notice to the Participant.  Nothing in this Section IV shall prevent the Board from delegating its authority to make grants to a committee pursuant to Section V.

 

V.                                     ADMINISTRATION OF THE PLAN

 

The Plan shall be administered by the Board or, in the discretion of the Board, a committee of the Board designated by the Board and composed of at least two (2) members of the Board.  All references in the Plan to the Board shall be understood to refer to such committee or the Board, whichever shall be administering the Plan from time to time.  All questions of interpretation and application of the Plan and of grants of Shares shall be determined by the Board in its sole discretion and the Board shall have the authority to do all things necessary to carry out the purposes of the Plan, and its determinations shall be final and binding upon all persons, including the Company and all Participants.  Without limiting the generality of the foregoing, the Board is authorized to: (i) adopt and approve from time to time the forms and,

 

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subject to the terms of the Plan, the terms and conditions of any Share Agreement; (ii) make adjustments to awards in response to changes in applicable laws, regulations or accounting principles; and (iii) prescribe, amend and rescind rules and regulations relating to the Plan.  If it determines to do so, the Board may grant Shares under this Plan that are not subject to vesting, forfeiture, repurchase and transfer restrictions.

 

For so long as Section 16 of the Exchange Act is applicable to the Company, each member of any committee designated to administer the Plan shall qualify as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and its composition shall comply with all other applicable legal requirements.

 

With respect to persons subject to Section 16 of the Exchange Act with respect to the Company, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act.

 

VI.                                ELIGIBLE PERSONS

 

The persons eligible to receive grants of Shares shall be those persons selected by the Board in its discretion from among Key Persons who contribute to the business of the Company and its subsidiaries, if any.

 

VII.                           CHANGES IN CAPITAL STRUCTURE

 

In the event of any stock dividend or other similar distribution (whether in the form of stock or other securities), stock split or combination of shares (including a reverse stock split), conversion, reorganization, consolidation, split-up, spin-off, combination, merger, exchange of stock, extraordinary cash dividend or other similar transaction or event, the Board shall make adjustments to the maximum number of Shares that may be issued under the Plan under Article III and Article IV and shall also make appropriate adjustments to the number and kind of shares of stock, securities or other property (including cash) subject to awards then outstanding under the Plan affected by such change and to the other terms and conditions of such awards. No fractional Shares shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole Share.

 

VIII.                      EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN

 

The Plan shall be effective at the close of business on [..] (the “Effective Date”), subject to its approval by the Company’s shareholders.  Shares may be granted under the Plan from time to time until the close of business on the tenth (10 th ) anniversary of the Effective Date.  Awards outstanding at Plan termination shall remain in effect according to their terms and the provisions of the Plan.  The Board hereafter may at any time amend or terminate the terms of an award or the Plan in any respect, provided that (without limiting Article VII hereof) the Board may not, without the affected Participant’s consent, amend or terminate the terms of an award or the Plan so as to affect adversely the Participant’s rights under an outstanding award.  Any amendments to the Plan shall be conditioned upon shareholder approval only to the extent, if any, such approval is required by applicable law or listing requirements.

 

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IX.                                MISCELLANEOUS

 

A.                                     Nonassignability of Shares.  Shares subject to a Share Agreement shall not be assignable or transferable by a Participant except in accordance with the terms of the applicable Share Agreement or as may be permitted by the Board.

 

B.                                     No Guarantee of Employment.  Neither the award of Shares nor a Share Agreement shall give any person the right to continue in the employment or service of, or to continue to act as an officer or Trustee of, or to serve in any other capacity with, the Company, any subsidiary or the Manager or any affiliate of the Manager.

 

C.                                     Tax Withholding; Section 409A.  To the extent required by law, the Company shall withhold or cause to be withheld income and other taxes incurred by a Participant by reason of a grant of Shares, and, as a condition to the receipt of any grant of Shares, a Participant agrees that if the amount payable to him or her by the Company in the ordinary course is insufficient to pay such taxes, he or she shall, upon request of the Company, pay the Company an amount sufficient to satisfy its tax withholding obligations. Without limiting the foregoing, the Board may in its discretion permit any Participant’s withholding obligation to be paid in whole or in part in the form of Shares, by withholding from the Shares to be issued to such Participant or by accepting delivery of Shares already owned by him or her.  The fair market value of the Shares for this purpose shall be the closing price of the Shares on the principal securities exchange on which the Shares are listed on the date such Shares are repurchased by the Company, unless otherwise determined by the Board in its discretion. If payment of withholding taxes is made in whole or in part in Shares, the Participant shall deliver to the Company share certificates registered in his name or other evidence of legal and beneficial ownership of Shares owned by him or her, fully vested and free of all liens, claims and encumbrances of every kind, duly endorsed or accompanied by stock powers duly endorsed by the record holder of the Shares represented by such share certificates.  If the Participant is subject to Section 16(a) of the Exchange Act, his ability to pay the withholding obligation in the form of Shares shall be subject to such additional restrictions as may be necessary to avoid any transaction that might give rise to liability under Section 16(b) of the Exchange Act. It is intended that awards granted under the Plan be exempt from the application of Section 409A of the Code, and the Plan and such awards shall be construed in accordance with that intention.

 

D.                                     Conditions to Issuance.  The issuance of Shares under the Plan is subject to compliance with (1) the laws, rules and regulations of all public agencies and authorities applicable to the issuance and distribution of Shares and (2) the listing rules of any stock exchange or national market system on which the Shares are listed.

 

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E.                                      No Fractional Shares.  No fractional Shares shall be issued or delivered pursuant to the Plan.  The Board shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

 

F.                                       Governing Law.  The Plan shall be governed by and construed and enforced in accordance with the laws of the State of Maryland applicable to contracts made and to be performed therein, without reference to the conflicts of law principles thereof.

 

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Exhibit 10.4

 

FORM OF

 

TREMONT MORTGAGE TRUST

 

Share Award Agreement

 

This Share Award Agreement (this “Agreement”) is made as of «DATE», 2017, between «NAME» (the “Recipient”) and Tremont Mortgage Trust (the “Company”).

 

In consideration of the mutual promises and covenants contained in this Agreement, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Grant of Shares .  Subject to the terms and conditions hereinafter set forth and the terms and conditions of the Tremont Mortgage Trust 2017 Equity Compensation Plan, as it may be amended from time to time (the “Plan”), the Company hereby grants to the Recipient, effective as of the date of this Agreement, «NUMBER» of its common shares of beneficial interest, par value $0.01 per share (the “Common Shares”).  The shares so granted are hereinafter referred to as the “Shares,” which term shall also include any shares of the Company issued to the Recipient by virtue of his or her ownership of the Shares, by share dividend, share split or combination, recapitalization or otherwise.

 

2.                                       Vesting; Forfeiture of Shares .

 

(a)                                  Subject to Sections 2(b) and 2(c) hereof, the Shares shall vest one-fifth of the total number of Shares as of the date hereof and as to a further one-fifth of such total number of Shares on each anniversary of the date hereof for the next four calendar years.  Any Shares not vested as of any date are herein referred to as “Unvested Shares.”

 

(b)                                  Subject to Section 2(c) hereof, at the option of the Company, in the event the Recipient ceases to render significant services, whether as an employee or otherwise, to (i) the Company, (ii) the entity which is the manager or shared services provider to the Company or an entity controlled by, under common control with or controlling such entity (collectively, the “Manager”), or (iii) an affiliate of the Company (which shall be deemed for such purpose to include any other entity to which the Manager is the manager or shared services provider), all or any portion of the Unvested Shares shall be forfeited by the Recipient as of the date the Recipient ceases to render all such services.  The Company may exercise such option by delivering or mailing to the Recipient (or his or her estate), at any time after the Recipient has ceased to render such services, a written notice of exercise of such option.  Such notice shall specify the number of Unvested Shares to be forfeited.

 

(c)                                   Notwithstanding anything in this Agreement to the contrary, immediately upon the occurrence of an Acceleration Event (as defined below), all of the Unvested Shares shall vest and any forfeiture or other rights of the Company described in Section 2(b) shall lapse in their entirety, and such vesting and lapse of forfeiture or other Company rights shall also immediately apply to each other Common Share previously granted to the Recipient which then remains subject to comparable restrictions and rights.  For purposes of this Section 2(c), an Acceleration Event shall be deemed to occur immediately upon the occurrence of any of the following events: a Change in Control, a

 



 

Termination Event (as each such term is defined in Exhibit A hereto) or the death of the Recipient.

 

3.                                       Legends .  Vested and Unvested Shares granted under this Agreement may bear or contain, as applicable, such legends and notations as may be required by the Plan or the Company’s declaration of trust, any applicable supplement thereto or bylaws, each as in effect from time to time, or as the Company may otherwise determine appropriate.

 

Promptly following the request of the Recipient with respect to any Shares (or any other Common Shares previously granted to the Recipient), the Company shall take, at its sole cost and expense, all such actions as may be required to permit the Recipient to sell such shares including, as applicable and without limitation, providing to the Company’s transfer agent certificates of officers of the Company, and opinions of counsel and/or filing an appropriate registration statement, and taking all such other actions as may be required to remove the legends set forth above with respect to transfer and vesting restrictions from the certificates evidencing such shares and, if applicable, from the share books and records of the Company.  The Company shall reimburse the Recipient, promptly upon the receipt of a request for payment, for all expenses (including legal expenses) reasonably incurred by the Recipient in connection with the enforcement of the Recipient’s rights under this paragraph.

 

4.                                       Tax Withholding .  To the extent required by law, the Company or the Manager shall withhold or cause to be withheld income and other taxes incurred by the Recipient by reason of a grant of Shares, and the Recipient agrees that he or she shall, upon the request of the Company or the Manager, pay to the Company or to the Manager an amount sufficient to satisfy his or her tax withholding obligations from time to time (including as Shares become vested).

 

5.                                       Miscellaneous .

 

(a)                                  Amendments .  Neither this Agreement nor any provision hereof may be changed or modified except by an agreement in writing executed by the Recipient and the Company; provided, however, that any change or modification that does not adversely affect the rights hereunder of the Recipient, as they may exist immediately prior to the effective date of such change or modification, may be adopted by the Company without an agreement in writing executed by the Recipient, and the Company shall give the Recipient written notice of such change or modification reasonably promptly following the adoption of such change or modification.

 

(b)                                  Binding Effect of the Agreement .  This Agreement shall inure to the benefit of, and be binding upon, the Company, the Recipient and their respective estates, heirs, executors, transferees, successors, assigns and legal representatives.

 

(c)                                   Provisions Separable .  In the event that any of the terms of this Agreement shall be or become or is declared to be illegal or unenforceable by any court or other authority of competent jurisdiction, such terms shall be null and void and shall be deemed deleted from this Agreement, and all the remaining terms of this Agreement shall remain in full force and effect.

 

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(d)                                  Notices .  Any notice in connection with this Agreement shall be deemed to have been properly delivered if it is in writing and is delivered by hand or by facsimile or sent by registered certified mail, postage prepaid, to the party addressed as follows, unless another address has been substituted by notice so given:

 

To the Recipient:

To the Recipient’s address as set forth on the signature page hereof.

 

 

To the Company:

Tremont Mortgage Trust

 

Two Newton Place

 

255 Washington Street, Suite 300

 

Newton, MA 02458

 

Attn: Secretary

 

(e)                                   Construction .  The headings and subheadings of this Agreement have been inserted for convenience only, and shall not affect the construction of the provisions hereof.  All references to sections of this Agreement shall be deemed to refer as well to all subsections which form a part of such section.

 

(f)                                    Employment Agreement .  This Agreement shall not be construed as an agreement by the Company, the Manager or any affiliate of the Company or the Manager to employ the Recipient, nor is the Company, the Manager or any affiliate of the Company or the Manager obligated to continue employing the Recipient by reason of this Agreement or the grant of the Shares to the Recipient hereunder.

 

(g)                                   Applicable Law .  This Agreement shall be construed and enforced in accordance with the laws of the State of Maryland, without giving effect to the principles of conflicts of law of such state.

 

(h)                                  Binding Arbitration .  Any disputes regarding this Agreement, the granting or vesting of any shares of the Company and/or any related matters shall be settled by binding arbitration in accordance with any Mutual Agreement to Resolve Disputes and Arbitrate Claims between the Recipient and the Manager.  In the absence of such an agreement, any such claims or disputes shall be resolved through binding arbitration before one arbitrator conducted under the rules of JAMS in Boston, Massachusetts.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or caused this Agreement to be executed under seal, as of the date first above written.

 

 

 

 

TREMONT MORTGAGE TRUST

 

 

 

 

 

 

 

 

By:

 

 

 

Title: Chief Financial Officer and Treasurer

 

 

 

 

 

RECIPIENT:

 

 

 

 

 

 

 

 

 

 

 

«NAME»

 

 

«ADDRESS»

 

 

«CITY», «ST» «ZIP»

 

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Exhibit A

 

A “Change in Control” shall be deemed to have occurred if any of the events set forth in any one of the following paragraphs shall have occurred:

 

(a)                                  any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of either the then outstanding common shares of beneficial interest of the Company or the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in paragraph (c)(i) below;

 

(b)                                  the following individuals cease for any reason to constitute a majority of the number of Trustees then serving: individuals who, on the date of the Agreement, constitute the Board and any new Trustee (other than a Trustee whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Trustees) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the Trustees then in office who either were Trustees on the date of the Agreement or whose appointment, election or nomination for election was previously so approved or recommended;

 

(c)                                   there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other entity, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

 

(d)                                  the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

A “Termination Event” shall occur if Tremont Realty Advisors LLC (or any entity controlled by, under common control with or controlling Tremont Realty Advisors LLC) ceases to be the manager or shared services provider to the Company.

 

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For purposes of the definitions set forth on this Exhibit A, the following definitions shall apply, with capitalized terms used but not defined in this Exhibit A having the meaning set forth in the Plan:

 

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

 

“Agreement” shall mean the Share Award Agreement to which this Exhibit A is attached.

 

“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities and (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.

 

“Trustee” is a member of the Board of Trustees of the Company.

 

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Exhibit 10.5

 

TREMONT MORTGAGE TRUST
FORM OF INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “ Agreement ”), effective as of [ DATE ] (the “ Effective Date ”), by and between Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Company ”), and [ TRUSTEE/OFFICER ] (“ Indemnitee ”).

 

WHEREAS, Indemnitee currently serves as a [trustee and/or executive officer] of the Company and may, in connection therewith, be subjected to claims, suits or proceedings arising from such service; and

 

WHEREAS, as an inducement to Indemnitee to serve as a [title(s)] of the Company, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law as hereinafter provided; and

 

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.                                            Definitions .  For purposes of this Agreement:

 

(a)                      Board ” means the board of trustees of the Company.

 

(b)                      Bylaws ” means the bylaws of the Company, as they may be amended from time to time.

 

(c)                       Change in Control ” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “ Act ”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date:

 

(i)              any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of all the Company’s then-outstanding securities entitled to vote generally in the election of trustees without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest;

 

(ii)           there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or

 

(iii)        during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1 , individuals who at the beginning of such period constituted the Board (including for this purpose any new trustee whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period) cease for any reason

 



 

to constitute at least a majority of the Board.

 

(d)                      Company Status ” means the status of a Person who is or was a trustee, director, officer, employee, agent or fiduciary of the Company or any of its majority owned subsidiaries and the status of a Person who, while a trustee, director, officer, employee, agent or fiduciary of the Company or any of its majority owned subsidiaries, is or was serving at the request of the Company as a director, trustee, officer, partner, manager or fiduciary of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or any other Enterprise.

 

(e)                       control ” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise.

 

(f)                        Declaration of Trust ” means the declaration of trust (as defined in the Maryland REIT Law) of the Company, as it may be in effect from time to time.

 

(g)                       Disinterested Trustee ” means a trustee of the Company who is not and was not a party to the Proceeding in respect of which indemnification or advance of Expenses is sought by Indemnitee.

 

(h)                      Enterprise ” shall mean the Company and any other corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, trustee, officer, partner, manager or fiduciary.

 

(i)                          Expenses ”  means all expenses, including, but not limited to, all attorneys’ fees and costs, retainers, court or arbitration costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond or other appeal bond or its equivalent.

 

(j)                         Independent Counsel ” means a law firm, or a member of a law firm, selected by the Company and acceptable to the Indemnitee, that is experienced in matters of business law.  If, within twenty (20) days after submission by Indemnitee of a written demand for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and agreed to by Indemnitee, either the Company or Indemnitee may petition a Chosen Court for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person so appointed shall act as Independent Counsel hereunder.

 

(k)                      MGCL ” means the Maryland General Corporation Law.

 

(l)                          Maryland REIT Law ” means Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.

 

(m)                  Person ” means an individual, a corporation, a general or limited partnership, an association, a limited liability company, a governmental entity, a trust, a joint venture, a joint stock company or another entity or organization.

 

(n)                      Proceeding ” means any threatened, pending or completed claim, demand, action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), whether or not by or in the right of the Company, except one initiated by an Indemnitee pursuant to Section 9 .

 

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Section 2.                                            Indemnification - General .  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however , that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  The rights of Indemnitee provided in this Section 2 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the MGCL, as applicable to a Maryland real estate investment trust by virtue of Section 8-301(15) of the Maryland REIT Law.

 

Section 3.                                            Proceedings Other Than Derivative Proceedings by or in the Right of the Company .  Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, other than a derivative Proceeding by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company).  Pursuant to this Section 3 , Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding by reason of Indemnitee’s Company Status unless it is finally determined that such indemnification is not permitted by the MGCL.

 

Section 4.                                            Derivative Proceedings by or in the Right of the Company .  Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any derivative Proceeding brought by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company).  Pursuant to this Section 4 , Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding unless it is finally determined that such indemnification is not permitted by the MGCL.

 

Section 5.                                            Indemnification for Expenses of a Party Who is Partly Successful .  Without limitation on Section 3 or Section 4 , if Indemnitee is not wholly successful in any Proceeding covered by this Agreement, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 5 for all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

Section 6.                                            Advance of Expenses .  The Company, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding in which Indemnitee may be involved, or is threatened to be involved, including as a party, a witness or otherwise, by reason of Indemnitee’s Company Status, within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by the MGCL has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form of Exhibit A hereto or in such other form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall be finally determined that the standard of conduct has not been met and which have not been successfully resolved as described in Section 5 .  For the avoidance of doubt, the Company shall advance Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such a Proceeding pursuant to this Section 6 until it is finally determined that the Indemnitee is not entitled to indemnification under law in respect of such Proceeding.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 6 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.  At Indemnitee’s request, advancement of any such Expense shall be made by the Company’s

 

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direct payment of such Expense instead of reimbursement of Indemnitee’s payment of such Expense.

 

Section 7.                                            Procedure for Determination of Entitlement to Indemnification .

 

(a)                      To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written demand therefor.  The Secretary of the Company shall, promptly upon receipt of such a demand for indemnification, provide copies of the demand to the Board.

 

(b)                      Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a) , a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred or if, after a Change in Control, Indemnitee shall so request, (A) by the Board (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Trustees, or (B) if a quorum of the Board consisting of Disinterested Trustees is not obtainable or, even if obtainable, such quorum of Disinterested Trustees so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board, by the shareholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Any Independent Counsel, member of the Board or shareholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.

 

(c)                       The Company shall pay the fees and expenses of Independent Counsel, if one is appointed, and shall agree to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or the Independent Counsel’s engagement as such pursuant hereto.

 

Section 8.                                            Presumptions and Effect of Certain Proceedings .

 

(a)                      In making a determination with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(b)                      It shall be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Without limitation of the foregoing, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge or actions, or failure to act, of any trustee, director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

(c)                       Neither the failure to make a determination pursuant to Section 7(b) as to whether indemnification is proper in the circumstances because Indemnitee has met any particular standard of conduct, nor an actual determination by the Company (including by its trustees or Independent Counsel) pursuant to Section 7(b) that Indemnitee has not met such standard of conduct, shall be a defense to Indemnitee’s claim that indemnification is proper in the circumstances or create a presumption that Indemnitee has not met any particular standard of conduct.

 

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(d)                      The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, shall not in and of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet the standard of conduct required for indemnification.  The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

Section 9.                                            Remedies of Indemnitee .

 

(a)                      If (i) a determination is made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 6 , (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(b) within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall (A) unless the Company demands arbitration as provided by Section 17 , be entitled to an adjudication in a Chosen Court or (B) be entitled to seek an award in arbitration as provided by Section 17 , in each case of Indemnitee’s entitlement to such indemnification or advance of Expenses.

 

(b)                      In any judicial proceeding or arbitration commenced pursuant to this Section 9 , the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  In the event that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects as a de novo trial on the merits, and the Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b) .

 

(c)                       If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9 , absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the demand for indemnification.

 

(d)                      In the event that Indemnitee, pursuant to this Section 9 , seeks a judicial adjudication of or an award in arbitration as provided by Section 17 to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement by the Company, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall indemnify Indemnitee against any and all Expenses incurred by Indemnitee in such judicial adjudication or arbitration and, if requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written demand therefore) advance, to the extent not prohibited by law, any and all such Expenses.

 

(e)                       The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such judicial proceeding or arbitration that the Company is bound by all the provisions of this Agreement.

 

(f)                        To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

(g)                       Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland

 

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for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth (10) day after the date on which the Company was requested to advance Expenses in accordance with Section 6 of this Agreement or the thirtieth (30 th ) day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 7(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

 

Section 10.                                     Defense of the Underlying Proceeding .

 

(a)                      Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided , however , that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

 

(b)                      Subject to the provisions of the last sentence of this Section 10(b) and of Section 10(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided , however , that the Company shall notify Indemnitee of any such decision to defend within fifteen (15) days following receipt of notice of any such Proceeding under Section 10(a) above, and the counsel selected by the Company shall be reasonably satisfactory to Indemnitee.  The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder.  This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 15 .

 

(c)                       Notwithstanding the provisions of Section 10(b) , if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Company Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other Person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company (subject to Section 9(d) ), to represent Indemnitee in connection with any such matter.

 

Section 11.                                     Liability Insurance .

 

(a)                      To the extent the Company maintains an insurance policy or policies providing liability insurance for any of its trustees or officers, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company trustee or officer during the Indemnitee’s tenure as a trustee or officer and, following a termination of Indemnitee’s service in connection with a Change in Control, for a period of six (6) years thereafter.

 

(b)                      If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or

 

6



 

desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c)                       In the event of any payment by the Company under this Agreement the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to any insurance policy.  Indemnitee shall take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights in accordance with the terms of such insurance policy. The Company shall pay or reimburse all expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.

 

Section 12.                                     Non-Exclusivity; Survival of Rights .

 

(a)                      The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Declaration of Trust or the Bylaws, any agreement or a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal.  To the extent that a change in the Maryland REIT Law or the MGCL permits greater indemnification than would be afforded currently under the Declaration of Trust, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)                      The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

Section 13.                                     Binding Effect .

 

(a)                      The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a trustee or executive officer of the Company or a director, officer, partner, member, manager or trustee of another Enterprise which such Person is or was serving at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(b)                      Any successor of the Company (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business or assets of the Company shall be automatically deemed to have assumed and agreed to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place, provided that no such assumption shall relieve the Company of its obligations hereunder.  To the extent required by applicable law to give effect to the foregoing sentence and to the extent requested by Indemnitee, the Company shall require and cause any such successor to expressly assume and agree to perform this Agreement by written agreement in form and substance satisfactory to Indemnitee.

 

Section 14.                                     Severability .  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement

 

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containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

Section 15.                                     Limitation and Exception to Right of Indemnification or Advance of Expenses .  Notwithstanding any other provision of this Agreement, (a) any indemnification or advance of Expenses to which Indemnitee is otherwise entitled under the terms of this Agreement shall be made only to the extent such indemnification or advance of Expenses does not conflict with applicable Maryland law and (b) Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding is brought to enforce rights under this Agreement, the Declaration of Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise or (ii) the Declaration of Trust, the Bylaws, a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board or an agreement approved by the Board to which the Company is a party expressly provides otherwise.  Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:  (a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or (b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standard of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

 

Section 16.                                     Specific Performance, Etc .  The parties hereto recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law.  Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.

 

Section 17.                                     Arbitration .

 

(a)                      Any disputes, claims or controversies regarding the Indemnitee’s entitlement to indemnification or advancement of Expenses hereunder or otherwise arising out of or relating to this Agreement, including any disputes, claims or controversies brought by or on behalf of a party hereto or any holder of equity interests (which, for purposes of this Section 17 , shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of a party, either on his, her or its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of a party, (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 17 .  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those individuals or entities and a party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.  For purposes of this Section 17 , the term “equity interest” shall mean, in respect of (i) the Company, shares of beneficial interest of the Company, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.

 

(b)                      There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration.  The arbitrators may be affiliated or interested persons of the parties.  If there are more than two (2) parties to the Dispute, all claimants, on the one

 

8



 

hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA.  If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

(c)                       The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

 

(d)                      There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(e)                       In rendering an award or decision (an “ Award ”), the arbitrators shall be required to follow the laws of the State of Maryland without regard to principles of conflicts of law.  Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based.  Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Subject to Section 17(g) , each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as the Award may provide.

 

(f)                        Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party and each Person acting or seeking to act in a representative capacity (such Person, a “ Named Representative ”) involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to its attorneys, a Named Representative or any attorney of a Named Representative.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

 

(g)                       Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “ Appellate Rules ”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 17(f) shall apply to any appeal pursuant to this Section 17 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’

 

9



 

fees) of any party or Named Representative or the payment of such costs and expenses, and all costs and expenses of a party or Named Representative shall be its sole responsibility.

 

(h)                      Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 17(g) , an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(i)                          This Section 17 is intended to benefit and be enforceable by the parties hereto and their respective holders of equity interests, trustees, directors, officers, managers, agents or employees, and their respective successors and assigns, and shall be binding upon all such parties and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

Section 18.                                     Venue .  Each party hereto agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “ Chosen Courts ”).  Solely in connection with claims arising under this Agreement, each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such Proceeding, (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 17 and (vi) agrees to request and/or consent to the assignment of any dispute arising out of this Agreement or the transactions contemplated by this Agreement to the Chosen Courts’ Business and Technology Case Management Program, or similar program.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law.  A final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 17 , this Section 18 shall not preempt resolution of the Dispute pursuant to Section 17 .

 

Section 19.                                     Adverse Settlement .  The Company shall not seek, nor shall it agree to or support, or agree not to contest any settlement or other resolution of any matter that has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder, including without limitation the entry of any bar order or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law.

 

Section 20.                                     Period of Limitations .  To the fullest extent permitted by law, no legal action shall be brought, and no cause of action shall be asserted, by or on behalf of the Company or any controlled affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its controlled affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however , if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

 

Section 21.                                     Counterparts .  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party hereto need not sign the same counterpart.

 

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Section 22.                                     Delivery by Electronic Transmission .  This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to the other parties.  No party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

 

Section 23.                                     Modification and Waiver .  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed to, or shall, constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

Section 24.                                     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 to the parties hereto:

 

(a)                      If to Indemnitee, to:  The address set forth on the signature page hereto.

 

(b)                      If to the Company to:

 

Tremont Mortgage Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458-1634

Attn: Secretary

 

or to such other address as may have been furnished to the Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

Section 25.                                     Governing Law .  The provisions of this Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to principles of conflicts of law.

 

Section 26.                                     Interpretation .

 

(a)                      Generally .  Unless the context otherwise requires, as used in this Agreement: (a) words defined in the singular have the parallel meaning in the plural and vice versa; (b)”Articles,” “Sections,” and “Exhibits” refer to Articles, Sections and Exhibits of this Agreement unless otherwise specified; and (c) “hereto” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

(b)                      Additional Interpretive Provisions .  The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.  Any capitalized term used in any Exhibit to this Agreement, but not otherwise defined therein, shall have the meaning as defined in this Agreement.  References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder and any successor statute or statutory provision.  References to any agreement are to that agreement as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of that Person.  Reference to any agreement, document or instrument means the agreement, document or

 

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instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

 

 

 

TREMONT MORTGAGE TRUST

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[INDEMNITEE]

 

 

 

 

 

 

 

Indemnitee’s Address:

 

 

 

[ADDRESS]

 

[Signature Page to Indemnification Agreement]

 



 

EXHIBIT A

 

FORM OF AFFIRMATION AND

UNDERTAKING TO REPAY EXPENSES ADVANCED

 

To the Board of Trustees of Tremont Mortgage Trust:

 

This affirmation and undertaking is being provided pursuant to that certain Indemnification Agreement dated                                 , 20   (the “Indemnification Agreement”), by and between Tremont Mortgage Trust, a Maryland real estate investment trust (the “ Company ”), and the undersigned Indemnitee, pursuant to which I am entitled to advancement of expenses in connection with [Description of Claims/Proceeding] (together, the “ Claims ”).  Terms used, and not otherwise defined, herein shall have the meanings specified in the Indemnification Agreement.

 

I am subject to the Claims by reason of my Company Status or by reason of alleged actions or omissions by me in such capacity.

 

I hereby affirm my good faith belief that the standard of conduct necessary for my indemnification has been met.

 

In consideration of the advancement of Expenses by the Company for attorneys’ fees and related expenses incurred by me in connection with the Claims (the “ Advanced Expenses ”), I hereby agree that if, in connection with a proceeding regarding the Claim, it is ultimately determined that I am not entitled to indemnification under law with respect to an act or omission by me, then I shall promptly reimburse the portion of the Advanced Expenses relating to the Claim(s) as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 5 of the Indemnification Agreement.  To the extent that Advanced Expenses do not relate to specific Claims, I agree that such Advanced Expenses may be allocated on a reasonable and proportionate basis.

 

IN WITNESS WHEREOF, I have executed this affirmation and undertaking on                      ,      .

 

WITNESS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Print name of witness

 

Print name of Indemnitee

 



 

Schedule to Exhibit 10.5

 

The following individuals are parties to Indemnification Agreements with the Company which are substantially identical in all material respects to the representative Indemnification Agreement filed herewith and are dated as of the respective dates listed below.

 

David M. Blackman

 

September 14, 2017

Jennifer B. Clark

 

September 14, 2017

Richard C. Gallitto

 

September 14, 2017

John L. Harrington

 

September 14, 2017

Matthew P. Jordan

 

September 14, 2017

G. Douglas Lanois

 

September 14, 2017

Vern D. Larkin

 

September 14, 2017

Daniel O. Mee

 

September 14, 2017

Joseph L. Morea

 

September 14, 2017

Adam D. Portnoy

 

September 14, 2017

Barry M. Portnoy

 

September 14, 2017

Jeffrey P. Somers

 

September 14, 2017

 


Exhibit 10.6

 

Summary of Trustee Compensation

 

The following is a summary of the currently effective compensation of the Trustees of Tremont Mortgage Trust (the “Company”) for services as Trustees, which is subject to modification at any time by the Board of Trustees (the “Board”) or the Compensation Committee of the Board, as applicable.

 

Annual Retainer for Independent Trustees

 

$20,000

Meeting Fees for Independent Trustees

 

$500 per Board or Committee meeting, with a maximum fee of $1,000 for any one day with multiple Board and Committee meetings

Chair of the Audit Committee

 

$7,500 per year

Chair of the Compensation Committee

 

$5,000 per year

Chair of the Nominating and Governance Committee

 

$5,000 per year

Share Grants for all Trustees

 

As determined by the Compensation Committee