Exhibit 10.5
SECOND AMENDED AND RESTATED ADVISORY SERVICES AGREEMENT
SECOND AMENDED AND RESTATED ADVISORY SERVICES AGREEMENT (the
"Agreement"), made as of February 1, 2005, by and between BOSTON CAPITAL REAL
ESTATE INVESTMENT TRUST, INC., a Maryland corporation (the "Company"), and
BOSTON CAPITAL REIT ADVISORS, LLC, a Delaware limited liability company (the
"Advisor").
WITNESSETH:
WHEREAS, the Company will file with the Securities and Exchange
Commission a registration statement on Form S-11 (the "Registration Statement"),
to register its shares of common stock, par value $0.001 per share (the
"Shares"), to be offered to the public, the proceeds from which will be invested
by the Company, and the Company may thereafter sell additional securities or
otherwise raise additional capital; and
WHEREAS, the Company intends to qualify as a "real estate investment
trust", as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), and to invest its funds in investments permitted by the terms of the
Registration Statement; and
WHEREAS, the Company desires to avail itself of the experience,
resources, advice, assistance and certain facilities available to the Advisor
and to have the Advisor undertake the duties and responsibilities hereinafter
set forth, on behalf of and subject to the supervision of the Company's Board of
Directors, all as provided herein; and
WHEREAS, pursuant to that certain Advisory Agreement, dated as of
April 1, 2004, and that certain Amended and Restated Advisory Agreement, dated
as of January 1, 2005, the Advisor has provided and pursuant to this Agreement
will continue to render such services, subject to the supervision of the Board
of Directors, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT. The Company hereby appoints the Advisor to serve as
its investment and management advisor on the terms and conditions
set forth in this Agreement, and the Advisor hereby accepts such
appointment.
2. DUTIES OF THE ADVISOR. The Advisor undertakes to use its best
efforts to present to the Company potential investment
opportunities primarily in real property and other real estate
investments as well as provide a continuing and suitable
investment program consistent with the investment policies and
objectives of the Company as determined and adopted from time to
time by the Board of Directors. In performance of this
undertaking, subject to the supervision and direction of the
Board of Directors, and consistent with the Registration
Statement, the Advisor shall, pursuant to delegated authority:
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(a) obtain or provide such services as may be required to
administer the daily operations of the Company;
(b) identify investment opportunities for the Company which are
consistent with its investment objectives and policies;
(c) serve as the Company's investment and financial advisor and
provide reports with respect to the Company's portfolio of
investments, including, but not limited to, the making of
investments in real properties and other real estate
investments, as described in the Registration Statement;
(d) on behalf of the Company, investigate, select, engage and
conduct relations with such persons as the Advisor deems
necessary to the proper performance of its obligations
hereunder, including, but not limited to, consultants,
investors, builders, developers, banks, borrowers, lenders,
fiduciaries, financial service companies, mortgagors,
brokers, accountants, attorneys, appraisers and others,
including its and the Company's affiliates;
(e) consult with the Company's officers and directors and assist
the Company's Board of Directors in the formulation and
implementation of the Company's investment and other
policies, and furnish the officers and directors with advice
and recommendations concerning the making of investments
consistent with the investment policies and objectives of
the Company;
(f) structure and negotiate the terms of investments in real
properties and other real estate investments and obtain the
Board of Directors' approval of investments as provided in
the Registration Statement, but always consistent with the
investment policies and objectives of the Company;
(g) obtain from third parties or its affiliates, property
management services for the Company's investments in real
property;
(h) obtain for or provide to the Company such services as may be
required in acquiring, managing and disposing of
investments, including, but not limited to, the negotiation
of purchase contracts and services related to the
acquisition of real property and other real estate
investments by the Company and its affiliates, disbursing
and collecting the funds of the Company, paying the debts
and fulfilling the obligations of the Company and handling,
prosecuting and settling any claims of the Company and such
other services as the Company may require;
(i) advise the Company concerning its negotiations with
investment banking firms, securities brokers or dealers and
other institutions or investors for public or private sales
of the Company's securities, or in obtaining
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investments for the Company, but in no event in such a way
that the Advisor could be deemed to be acting as a dealer or
underwriter as those terms are defined in the Securities Act
of 1933, as amended;
(j) obtain or perform current appraisals for each potential
investment in real property or other real estate investment;
(k) do all things necessary to assure its ability to render the
services contemplated herein, including providing the office
space, furnishings and personnel necessary for the
performance of the foregoing services as Advisor;
(l) from time to time, or at any time reasonably requested by
the Company's Board of Directors, make reports to the Board
of Directors of its performance of the foregoing services;
and
(m) within 30 days after the end of each fiscal quarter of the
Company, submit to the Company's Board of Directors a
statement of the Company's sources of income during such
fiscal quarter and make recommendations concerning changes,
if any, in the Company's investments to permit the Company
to satisfy the requirements of Sections 856(c)(2), 856(c)(3)
and 856(c)(4) of the Code (such statement of income may be
based upon information supplied by independent contractors
of the Company to the extent applicable).
3. NO PARTNERSHIP OR JOINT VENTURE. The Company and the Advisor are
not partners or joint venturers with each other and nothing
herein shall be construed so as to make them such partners or
joint venturers or impose any liability as such on either of them
or their affiliates.
4. CERTAIN GUIDELINES. The Advisor shall endeavor to ensure, with
respect to the Company's investments, that: (a) an appropriate
policy of title insurance is obtained with respect to any real
property investment (singly, a "Property," and collectively, the
"Properties") acquired by the Company, or an opinion of counsel
as to such title is obtained; (b) any Property acquired by the
Company is duly insured against loss or damage by fire, with
extended coverage, and against such other insurable hazards and
risks as are customary and appropriate in the circumstances; (c)
a majority of the Company's Board of Directors (including a
majority of the Independent Directors, as defined below)
approves, in advance, any investment (other than with respect to
the initial Properties (as described in the Registration
Statement) by the Company, on the one hand, with the Advisor or
any of its affiliates, on the other hand; (d) the Company does
not make any loans to the Advisor or any of its affiliates; (e)
the Company's ratio of debt-to-total-assets, at the time of the
incurrence of any indebtedness, does not exceed 75%; and (f)
investments in any one Property acquired after the acquisition of
the initial Properties described in the Registration Statement do
not exceed 25% of the value of the Company's total assets at the
time of its acquisition, provided,
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however, that this limitation shall not preclude the acquisition
of multiple-building Properties or a group of Properties in a
purchase from a single seller in transactions that exceed this
limit. An Independent Director is a Director who is not and
within the last two years has not been directly or indirectly
associated with the Advisor by virtue of (i) ownership of an
interest in the Advisor or its affiliates, (ii) employment by the
Advisor or its affiliates, (iii) service as an officer or
director of the Advisor or its affiliates, (iv) performance of
services, other than as a Director, for the Company, (v) service
as a director or trustee of more than three real estate
investment trusts advised by the Advisor, or (vi) maintenance of
a material business or professional relationship with the Advisor
or any of its affiliates. A business or professional relationship
is considered material if the gross revenue derived by the
Director from the Advisor and affiliates exceeds 5% of either the
Director's annual gross revenue during either of the last two
years or the Director's net worth on a fair market value basis.
An indirect relationship shall include circumstances in which a
Director's spouse, parents, children, siblings, mothers- or
fathers-in-law, sons- or daughters-in-law, or brothers- or
sisters-in-law are or have been associated with the Advisor, any
of its affiliates, or the Company.
5. REIT QUALIFICATION. Notwithstanding anything to the contrary in
this Agreement, the Advisor shall use its best efforts to refrain
from taking any action (including, without limitation, the
furnishing or rendering of services to tenants of a Property or
managing or operating a Property) which, in its judgment, made in
good faith and with the exercise of reasonable care, would: (a)
adversely affect the status of the Company as a "real estate
investment trust" under the Code and all rules and regulations
promulgated thereunder; (b) violate any law, rule, regulation or
statement of policy of any governmental body or agency having
jurisdiction over the Company or over its securities, of which
the Advisor should reasonably be aware; or (c) otherwise not be
permitted by the Registration Statement or the Company's Articles
of Incorporation or Bylaws, each as they may be amended from time
to time, except if such action shall be ordered by the Company's
Board of Directors, in which event the Advisor shall promptly
notify the Board of Directors of the Advisor's judgment that such
action would adversely affect the status of the Company as a
"real estate investment trust" under the Code and shall refrain
from taking such action, unless, but only to the extent that, the
Advisor receives specific written instructions from the Board of
Directors expressly ordering that the action be taken,
notwithstanding such notification by it to the Board of
Directors. In such event the Advisor shall have no liability for
acting in accordance with the specific written instructions of
the Directors so given.
6. INVESTMENT COMPANY STATUS. Notwithstanding anything to the
contrary in this Agreement, the Advisor shall use its best
efforts to refrain from any action which, in its judgment, made
in good faith and in the exercise of reasonable care, would cause
the Company to be required to register as an investment company
under the Investment Company Act of 1940, as amended, except
where such action has been ordered by the Company's Board of
Directors, in which event
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the Advisor shall promptly notify the Board of Directors of the
Advisor's judgment that such action might require such
registration and shall refrain from taking such action, unless,
but only to the extent that, the Advisor receives specific
written instructions from the Board of Directors expressly
ordering that the actions be taken, notwithstanding such
notification by it to the Board of Directors. In such event, the
Advisor shall have no liability for acting in accordance with the
specific written instructions of the Board of Directors so given.
7. BANK ACCOUNTS. The Advisor may establish and maintain one or more
bank accounts in its own name or in the name of the Company and
may collect and deposit into any such account or accounts, and
disburse from any such account or accounts, any money on behalf
of the Company, under such terms and conditions as the Company's
Board of Directors may approve. However, the Advisor shall not
commingle any of the funds in such account with those of the
Advisor or of other entities managed by the Advisor. Further, the
Advisor shall, from time to time, render to the Board of
Directors and to the auditors of the Company a complete
accounting of such collections and disbursements.
8. INFORMATION FURNISHED TO THE ADVISOR. The Company's Board of
Directors shall at all times keep the Advisor fully informed
concerning the investment and capitalization policies of the
Company and the intentions of the Board of Directors concerning
the future activities and investments of the Company. The Company
shall furnish the Advisor with a certified copy of all financial
statements, a signed copy of each report prepared by independent
certified public accountants and such other information with
regard to the Company's affairs as the Advisor may from time to
time reasonably request.
9. CONSULTATION AND ADVICE. In addition to the services described
above, the Advisor shall consult with the Company's Board of
Directors and shall, at the request of the Board, furnish advice
and recommendations with respect to other aspects of the business
and affairs of the Company.
10. COMPENSATION. For rendering the services described herein, the
Company shall pay to the Advisor the following (with the approval
of the Company's Independent Directors and the concurrence of the
Advisor, the fees referred to in this Section 10 paid by the
Company to the Advisor in Shares at net asset value or by Company
debt instruments):
(a) ORGANIZATION AND OFFERING EXPENSES. The Company shall
reimburse the Advisor for all organization and offering
expenses advanced by the Advisor up to a maximum of 2.25% of
Gross Offering Proceeds (as defined below).
(b) ASSET MANAGEMENT FEE. The Company shall pay to the Advisor
as compensation for the advisory services rendered to the
Company under Paragraph 2 above a monthly asset management
fee in an amount equal
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to 1/12th of 0.75% of the Company's Real Estate Asset Value
(as defined below) (the "Asset Management Fee") as of the
end of the preceding month. Real Estate Asset Value equals
the amount actually paid or allocated to the purchase,
development, construction or improvement of the Properties
wholly-owned by the Company, including the outstanding
principal amount of any mortgage indebtedness on the
Properties assumed upon the purchase of the properties, and,
in the case of Properties owned by any joint venture or
partnership in which the Company is a co-venturer or
partner, the Company's portion of such amount actually paid
or allocated with respect to such Properties, exclusive of
Acquisition Fees and Acquisition Expenses (each as defined
below). The Asset Management Fee shall be payable monthly on
the last day of such month, or the first business day
following the last day of such month, and will be based on
the Real Estate Asset Value determined on the last day of
the prior month. The Asset Management Fee, which will not
exceed fees which are competitive for similar services in
the same geographic area, may or may not be taken, in whole
or in part as to any year, in the sole discretion of the
Advisor. All or any portion of the Asset Management Fee not
taken as to any fiscal year shall be deferred without
interest and may be taken in such other fiscal year as the
Advisor shall determine.
(c) ACQUISITION FEE. The Advisor may receive, as compensation
payable by the Company for services rendered in connection
with the investigation, selection and acquisition (by
purchase, investment or exchange) of Properties, acquisition
fees in an amount equal to up to 2.7% of Gross Offering
Proceeds ("Acquisition Fees") and acquisition expenses in an
amount equal to up to 0.5% of Gross Offering Proceeds
("Acquisition Expenses"). In no event shall Acquisition
Expenses exceed the lesser of the actual cost of such
expenses or 90% of competitive rates charged by unaffiliated
persons providing similar services. Gross Offering Proceeds
shall mean the aggregate purchase price of all Shares sold
for the account of the Company through the offering
contemplated by the Registration Statement, without
deduction for selling commissions, volume discounts,
dealer-manager fees or organization and offering expenses.
In no event shall the Advisor receive Acquisition Fees with
respect to the acquisition of Properties for which it did
not render such services and for which acquisition fees have
been previously paid or are owed to another affiliate of the
Company. For the purpose of computing Gross Offering
Proceeds, the purchase price of any Share sold pursuant to
the Registration Statement for which reduced selling
commissions are paid to the dealer-manager or any other
broker-dealer (where net proceeds as to the Company are not
reduced) shall be deemed to be $10.00. In connection with
the purchase of a Property, the total of all Acquisition
Fees and Acquisition Expenses shall not exceed an amount
equal to 6.0% of the contract price of the Property.
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(d) SUBORDINATED DISPOSITION FEE. If the Advisor or an affiliate
provides a substantial amount of the services (as determined
by a majority of the Company's Independent Directors) in
connection with the sale of one or more Properties, the
Advisor or an affiliate shall receive a subordinated
disposition fee equal to the lesser of (i) one-half of a
competitive real estate commission, or (ii) 3.0% of the
sales price of such Property or Properties ("Subordinated
Disposition Fee"). The Subordinated Disposition Fee will be
paid only if stockholders have received total dividends in
an amount equal to 100% of their aggregate invested capital
plus a 6.0% annual cumulative non-compounded return on their
net invested capital (the "Stockholders' 6.0% Return"). To
the extent that Subordinated Disposition Fees are not paid
by the Company on a current basis due to the foregoing
limitation, the unpaid fees will be accrued and paid at such
time as the subordination conditions have been satisfied.
The Subordinated Disposition Fee may be paid in addition to
real estate commissions paid to non-affiliates, provided
that the total real estate commissions paid to all persons
by the Company shall not exceed an amount equal to the
lesser of (i) 6.0% of the contract sales price of a
Property, or (ii) the competitive real estate commission. In
the event this Agreement is terminated prior to such time as
the stockholders have received total distributions in an
amount equal to 100% of invested capital plus the
Stockholders' 6.0% Return, an appraisal of the Properties
then owned by the Company shall be made and the Subordinated
Disposition Fee on Properties previously sold will be deemed
earned if the appraised value of the Properties then owned
by the Company plus total distributions received prior to
the date of the termination of this Agreement equals 100% of
invested capital plus the Stockholders' 6.0% Return. Upon
Listing (as defined below), if the Advisor has accrued but
not been paid such Subordinated Disposition Fee, then for
purposes of determining whether the subordinated conditions
have been satisfied, stockholders will be deemed to have
received distributions in the amount equal to the product of
the total number of Shares outstanding and the average
closing price of the Shares over a period of 30 consecutive
days during which the Shares are traded, with such period
beginning 180 days after Listing.
(e) SUBORDINATED SHARE OF NET SALE PROCEEDS. A subordinated
share of net sale proceeds shall be payable to the Advisor
in an amount equal to 15.0% of net sales proceeds remaining
after the stockholders have received distributions equal to
the sum of the Stockholders' 6.0% Return and 100% of
invested capital ("Subordinated Share of Net Sale
Proceeds"). Following Listing, no Subordinated Share of Net
Sale Proceeds will be paid to the Advisor.
(f) SUBORDINATED INCENTIVE LISTING FEE. Upon listing on a
national securities exchange registered under Section 6 of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or a national market system
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registered under Section 11A of the Exchange Act
("Listing"), the Advisor shall be entitled to a subordinated
incentive listing fee in an amount equal to 10.0% of the
amount by which (i) the market value of the outstanding
stock of the Company, measured by taking the average closing
price or average of bid and asked price, as the case may be,
over a period of 30 consecutive days during which the stock
is traded, with such period beginning 180 days after Listing
("Market Value"), plus the total of all distributions paid
to stockholders from the Company's inception until the date
of Listing, exceeds (ii) the sum of (A) 100% of invested
capital and (B) the total distributions required to be paid
to the stockholders in order to pay the Stockholders' 6.0%
Return from inception through the date of Listing
("Subordinated Incentive Listing Fee"). The Company shall
have the option to pay such fee in the form of cash, Shares,
a promissory note or any combination of the foregoing. The
Subordinated Incentive Fee will be reduced by the amount of
any prior payment to the Advisor of any Subordinated Share
of Net Sale Proceeds from a sale or sales of a Property. In
the event the Subordinated Incentive Fee is paid to the
Advisor following Listing, no other performance fee will be
paid to the Advisor.
(g) CHANGES TO FEE STRUCTURE. In the event of Listing, or,
notwithstanding the absence of Listing, in the event the
stockholders elect to continue the Company's existence after
December 31, 2015, the Company and the Advisor may negotiate
in good faith to establish another fee structure appropriate
for a perpetual life entity. A majority of the Company's
Independent Directors must approve any new fee structure
negotiated with the Advisor. In negotiating a new fee
structure, the Independent Directors shall consider all of
the factors they deem relevant, including, but not limited
to: (i) the amount of the advisory fee in relation to the
asset value, composition and profitability of the Company's
portfolio; (ii) the success of the Advisor in generating
opportunities that meet the investment objectives of the
Company; (iii) the rates charged to other REITs and to
investors other than REITs by advisors performing the same
or similar services; (iv) additional revenues realized by
the Advisor and its affiliates through their relationship
with the Company, including underwriting or broker
commissions, servicing, engineering, inspection and other
fees, whether paid by the Company or by others with whom the
Company does business; (v) the quality and extent of service
and advice furnished by the Advisor; (vi) the performance of
the investment portfolio of the Company, including income,
conversion or appreciation of capital, and number and
frequency of problem investments; and (vii) the quality of
the Property portfolio of the Company in relationship to the
investments generated by the Advisor for its own account.
The new fee structure can be no more favorable to the
Advisor than the current fee structure.
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(h) SPECIAL TERMINATION PAYMENT. The Advisor shall receive a
Special Termination Payment (as defined below) if the
Company terminates or does not renew this Agreement without
cause. The Special Termination Payment shall be an amount
equal to the projected Asset Management Fee for the one-year
period following the date of the termination of this
Agreement.
(i) REIMBURSEMENT OF EXPENSES. Except as otherwise expressly
limited by the terms of this Agreement, the Company shall
reimburse the Advisor or its affiliates for (1) the actual
cost to the Advisor or its affiliates of goods, materials
and services used for or by the Company and obtained from
persons unaffiliated with the Advisor and its affiliates,
(2) the cost of administrative services rendered to the
Company which are necessary to the prudent operation of the
Company, such as legal, accounting, computer, transfer agent
and other services which could be performed directly for the
Company by independent parties, provided however, that no
reimbursement shall be made for personnel costs to the
extent that such personnel are used in transactions for
which the Advisor receives a separate fee, and (3) the
actual cost to the Advisor or its affiliates of any letter
of credit or credit enhancement that may be required of any
lender or seller in connection with the financing of the
acquisition of Properties. Absent the vote of a majority of
the Company's Independent Directors, the Advisor shall
reimburse the Company for reimbursements paid to the Advisor
to the extent that such reimbursements exceed, for any given
year, the greater of (i) 2% of the Company's average
invested assets (which consists, as defined in the Company's
Articles of Incorporation, as amended, of the average book
value of the assets of the Company, before reserves for
appreciation or bad debts) or (ii) 25% of the Company's net
income (which consists, as defined in the Company's Articles
of Incorporation, as amended, of the total revenues less
total expenses, excluding reserves for depreciation, bad
debt and certain other similar non-cash reserves).
11. OTHER ACTIVITIES OF THE ADVISOR. Nothing contained herein shall
prevent the Advisor from engaging in other activities, including,
without limitation, the rendering of advice to other investors
(including other REITs) and the management of other programs
advised, sponsored or organized by the Advisor or its affiliates;
nor shall this Agreement limit or restrict the right of any
director, officer, employee or shareholder of the Advisor or its
affiliates to engage in any other business or to render services
of any kind to any other partnership, corporation, firm,
individual, trust or association. Notwithstanding the foregoing,
however, the Advisor shall devote sufficient resources to the
administration of the Company to discharge its obligations
hereunder. The Advisor may, with respect to any investment in
which the Company is a participant, subject to its contractual
duties to the Company under this Agreement, also render advice
and service to each and every other participant therein.
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12. ALLOCATION OF INVESTMENT OPPORTUNITIES. Neither the Advisor nor
any of its affiliates shall be obligated to present to the
Company investment opportunities that come to their attention,
even if any of those opportunities may be suitable to the
Company. In addition, if the Advisor shall have an investment
opportunity which satisfies the investment criteria of the
Company, the Advisor shall make that investment opportunity
available to the Company before such opportunity is invested in
by the Advisor.
13. TERM/TERMINATION OF AGREEMENT. Initially, this Agreement shall
have a term of one (1) year commencing on the closing date of the
initial minimum offering under the Registration Statement.
Following the initial term, subsequent renewals for one (1) year
terms will be subject to an evaluation of the performance of the
Advisor by the audit committee of the Company's Board of
Directors. This Agreement may be terminated by a majority of the
Independent Directors of the Company or by the Advisor, in all
cases by giving not less than 60 days' advance notice in writing
to the other party.
14. ACTION UPON TERMINATION. The Advisor shall not be entitled to
compensation for services performed after the effective date of
the termination of this Agreement. The Advisor shall, forthwith
upon such termination:
(a) promptly pay over to the Company all monies collected and
held for the account of the Company pursuant to this
Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled
under this Agreement;
(b) promptly deliver to the Company a full accounting, including
a statement showing all amounts collected, disbursed and
held by the Advisor, for the period following the date of
the last accounting furnished to the Company; and
(c) promptly deliver to the Company all property and documents
of the Company then in the custody of the Advisor.
15. AMENDMENTS. The Agreement shall not be modified except by an
instrument in writing signed by both parties hereto, or their
respective successors or assigns, or otherwise as provided
herein.
16. ASSIGNMENT. This Agreement may be assigned upon the consent of
both parties hereto: (i) upon approval of a majority of the
Independent Directors of the Company, by the Advisor to a person
which is an affiliate of the Advisor; or (ii) by either the
Advisor or the Company to its successor-in-interest. The Advisor
may delegate some or all of its duties under this Agreement to an
affiliate. Notwithstanding the foregoing, so long as the Company
intends to qualify as a real estate investment trust under the
Code, this Agreement may not
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be assigned to any entity that serves as a property manager with
respect to the Properties of the Company.
17. GOVERNING LAW. The provisions of this Agreement shall be
construed and interpreted in accordance with the internal laws of
The Commonwealth of Massachusetts without giving effect to
conflicts of laws principles or rules.
18. DIRECTORS AND STOCKHOLDERS NOT LIABLE. This Agreement is made on
behalf of the Company by an officer of the Company, not
individually, but solely as such officer, and the obligations
under this Agreement are not binding upon, nor shall resort be
had to, the private property of any of the directors, officers,
stockholders, employees or agents of the Company personally, but
shall bind only the Company.
19. INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and
hold harmless the Advisor (the "Indemnitee") against any or all
losses or liabilities reasonably incurred by the Indemnitee in
connection with or by reason of any act or omission performed or
omitted to be performed on behalf of the Company in such
capacity, provided, that the Indemnitee has determined, in good
faith, that the course of conduct which caused the loss or
liability was in the best interests of the Company. The Company
shall not indemnify or hold harmless the Indemnitee if: (i) in
the case that the Indemnitee is not an Independent Director of
the Company, the loss or liability was the result of negligence
or misconduct by the Indemnitee, or (ii) in the case that the
Indemnitee is such an Independent Director, the loss or liability
was the result of gross negligence or willful misconduct by the
Indemnitee. Any indemnification of expenses or agreement to hold
harmless shall be approved by a majority of the Independent
Directors and may be paid only out of the Net Assets of the
Company, and no portion may be recoverable from the Company's
shareholders.
The Company shall not provide indemnification for any loss,
liability or expense arising from or out of an alleged violation
of federal or state securities laws by such party unless one or
more of the following conditions are met: (a) there has been a
successful adjudication on the merits of each count involving
alleged securities law violations as to the Indemnitee, (b) such
claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the Indemnitee; or (c) a
court of competent jurisdiction approves a settlement of the
claims against the Indemnitee and finds that indemnification of
the settlement and the related costs should be made, and the
court considering the request for indemnification has been
advised of the position of the Securities and Exchange Commission
and of the published position of any state securities regulatory
authority in which securities of the Company were offered or sold
as to indemnification for violations of securities laws.
20. INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold
harmless the Company from contract or other liability, claims,
damages, taxes or losses
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and related expenses, including attorneys' fees, to the extent
that such liability, claims, damages, taxes, losses and related
expenses are not fully reimbursed by insurance and are incurred
by reason of the Advisor's bad faith, fraud, willful misfeasance,
misconduct, negligence or reckless disregard of its duties, but
the Advisor shall not be held responsible for any action of the
Company's Board of Directors in following or declining to follow
any advice or recommendation given by the Advisor.
21. HEADINGS. The section headings hereof have been inserted for
reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
22. NOTICES. All notices, demands and other communication to be given
or delivered under or by reason of the provisions of this
Agreement must be in writing and will be deemed to have been
given on the day established by sender as having been delivered
personally; on the day delivered by private courier as such day
is established by evidence obtained by the sender from the
courier; on the day and at the time established by evidence
obtained by the sender from a telegraph company if telegraphic
means of communication are used; or on the day established by a
return receipt with respect to notices, demands and other
communications intended to be delivered by U.S. mail. Such
notices, demands and other communications to be valid, must be
addressed:
(a) If to the Company, to:
Boston Capital Real Estate Investment Trust, Inc.
c/o Boston Capital Corporation
Xxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, President
with a copy to:
Xxxxx Peabody LLP
000 Xxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
(b) If to the Advisor, to:
Boston Capital REIT Advisors, LLC
c/o Boston Capital Corporation
Xxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, President
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with a copy to:
Xxxxx Xxxxxxx LLP
000 Xxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
or to such other address or to the attention of such other person
as recipient party has specified by prior written notice to the
sending party (or in the case of counsel, to such other readily
ascertainable business address as such counsel may hereafter
maintain).
23. INITIAL INVESTMENT. Boston Capital Companion Limited Partnership
("Companion"), an affiliate of the Advisor, has contributed to
the Company $200,000 in exchange for 20,000 Shares (the "Initial
Investment"). Companion may not sell these Shares while the
Advisory Agreement is in effect, although Companion may transfer
them to its affiliates. The Advisor and its affiliates may buy
and sell Shares, and this restriction shall not apply to any
Shares, other than the Shares acquired through the Initial
Investment, acquired by the Advisor or its affiliates. The
Advisor shall not vote any Shares it hereafter acquires in any
vote for the removal of any of the Company's directors or any
vote regarding the approval or termination of any contract with
the Advisor or any of its affiliates. The restrictions contained
in this Section 23 shall not go into effect until the initial
closing described in the Registration Statement has occurred.
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IN WITNESS WHEREOF, we have executed this Agreement as of the date
first above written.
BOSTON CAPITAL REAL ESTATE
INVESTMENT TRUST, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxx, President
BOSTON CAPITAL REIT ADVISORS, LLC
By: Boston Capital Corporation, its manager
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, President
