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
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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 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.
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(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
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:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, President
BOSTON CAPITAL REIT ADVISORS, LLC
By: Boston Capital Corporation, its manager
By:
---------------------------------------
Xxxx X. Xxxxxxx, President
