LEAD MANAGING UNDERWRITERS
ADDITIONAL COMPENSATION AGREEMENT
______________, 2004
RMR Advisors, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Equity Underwriting Agreement dated the date
hereof (the "Underwriting Agreement"), by and among RMR Hospitality and Real
Estate Fund, a Massachusetts business trust (the "Fund"), RMR Advisors, Inc., a
Massachusetts corporation (the "Advisor"), and each of the respective
Underwriters named therein, with respect to the issue and sale of the Fund's
Common Shares of Beneficial Interest, $0.001 par value (the "Common Shares"), as
described therein (the "Offering"). Reference is also made to (i) the Investment
Advisory Agreement dated ______________, 2004 (the "Advisory Agreement") entered
into between the Advisor and the Fund, and (ii) the registration statement on
Form N-2 (File Nos. 333-112389 and 811-21502) regarding the Common Shares of the
Fund (the "Registration Statement"). Capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Underwriting
Agreement.
The Advisor hereby confirms its agreement with the Lead Managing
Underwriters (as defined in Section 1 hereof) with respect to the additional
compensation referred to in the "Underwriting" section of the Registration
Statement, payable by the Advisor to the Lead Managing Underwriters. The Advisor
agrees to pay to each Lead Managing Underwriter additional compensation (the
"Additional Compensation") as provided for in Section 2 hereof; provided,
however, that such payments shall not, in the aggregate, exceed the "Maximum
Additional Compensation Amount" (as defined in Section 3 hereof). The Additional
Compensation shall be payable as set forth in Section 2 hereof.
SECTION 1. LEAD MANAGING UNDERWRITERS. For the purposes of this Lead
Managing Underwriters Additional Compensation Agreement ("Additional
Compensation Agreement"), RBC Capital Markets Corporation ("RBC") and ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), each an
Underwriter of the Common Shares, shall collectively be deemed to be the
"Lead Managing Underwriters."
SECTION 2. PAYMENT OF ADDITIONAL COMPENSATION.
(a) The Advisor shall pay the Additional Compensation, quarterly in
arrears, to each Lead Managing Underwriter in an amount equal to the product of
(i) one-quarter of the "Applicable Percentage Factor" as set forth on Schedule A
hereto times (ii) the sum of the Fund's net asset value attributable to the
Fund's outstanding common shares, plus the liquidation preference of the Fund's
outstanding preferred shares plus the principal amount of any
borrowings evidenced by notes, commercial paper or other similar instruments
issued by the Fund ("Average Daily Managed Assets") for such quarter.
(b) All fees payable hereunder shall be paid to each Lead Managing
Underwriter by wire transfer of immediately available funds within 15 days
following the end of each calendar quarter to a bank account designated by such
Lead Managing Underwriter. At the time of each payment of Additional
Compensation hereunder, the Advisor shall deliver to the Lead Managing
Underwriters a statement indicating the amount of the aggregate Average Daily
Managed Assets on which such payment was based.
(c) The initial payment of Additional Compensation hereunder shall be
paid with respect to the calendar quarter ending ______________, 2004 and shall
be pro-rated for the number of days in such initial period from and including
the day upon which the Fund receives net proceeds from the Offering. In the
event that this Additional Compensation Agreement terminates prior to the end of
a calendar quarter, the Additional Compensation required to be paid hereunder
shall be due and payable within 15 days following the termination hereof and
shall be pro-rated in respect of the period prior to such termination.
Notwithstanding the foregoing, if any payment hereunder would otherwise fall on
a day which is not a business day, it shall be due on the next day which is a
business day. All fees payable hereunder shall be in addition to any fees paid
by the Fund or the Advisor pursuant to the Underwriting Agreement.
SECTION 3. MAXIMUM ADDITIONAL COMPENSATION AMOUNT. The "Maximum Additional
Compensation Amount" payable by the Advisor hereunder shall be such amount as,
when taken together with the amount of all underwriting compensation, other than
the Additional Compensation, received by the Lead Managing Underwriters in
connection with the offering of the Common Shares of the Fund, equals the
maximum compensation allowed under the conduct rules of the National Association
of Securities Dealers, Inc., as such rules are then in effect; provided, that,
notwithstanding the foregoing, the sum of (a) the Maximum Additional
Compensation Amount plus (b) the aggregate amount of Underwriters' expenses
reimbursed to the Underwriters by the Fund and the Advisor pursuant to the
Underwriting Agreement will not exceed 4.5% of the total proceeds of the
Offering.
SECTION 4. TERM. This Additional Compensation Agreement shall continue in
effect until terminated upon the earliest to occur of (a) the liquidation of the
Fund, (b) the payment by the Advisor to the Lead Managing Underwriters of the
Maximum Additional Compensation Amount and (c) the termination of the investment
advisory relationship the Fund and the Advisor and their respective successors
in interest. For purposes of the foregoing sentence, the Advisor's successors in
interest shall include only those entities which are either affiliated with the
Advisor or which, if unaffiliated, have provided material consideration to the
Adviser in connection with the transfer of investment advisory responsibilities.
SECTION 5. CERTAIN UNDERSTANDINGS. The Advisor acknowledges that the
Underwriters are not providing any advice hereunder as to the value of
securities or regarding the advisability of purchasing or selling any securities
for the Fund. No provision of this Additional Compensation Agreement shall be
considered as creating, nor shall any provision create, any obligation on the
part of any Underwriter, and the Underwriters are not hereby agreeing, to: (a)
furnish any advice or make any recommendations regarding the purchase or sale of
portfolio
2
securities, or (b) render any opinions, valuations or recommendations of any
kind or to perform any such similar services. The Advisor represents and
warrants that the profits derived from the Advisory Agreement will not result in
a breach of the Advisor's fiduciary duties under Section 36 of the Investment
Company Act of 1940, as amended, and accordingly, that the Additional
Compensation payable hereunder does not involve an indirect use of the Fund's
assets for distribution.
SECTION 6. NOT EXCLUSIVE. Nothing herein shall be construed as prohibiting
any Underwriter or its respective affiliates from acting as such for any other
clients (including other registered investment companies or other investment
advisors).
SECTION 7. NO LIABILITY. The Advisor agrees that no Lead Managing
Underwriter shall have liability to the Advisor or the Fund for any act or
omission to act by such Lead Managing Underwriter in connection with this
Additional Compensation Agreement, in the absence of gross negligence or willful
misconduct on the part of such Lead Managing Underwriter. The Advisor agrees to
indemnify and hold harmless each Lead Managing Underwriter and its respective
officers, directors, agents and employees against any loss or expense arising
out of or in connection with such Lead Managing Underwriter's performance under
this Additional Compensation Agreement. This provision shall survive the
termination, expiration or superseding of this Additional Compensation
Agreement.
SECTION 8. ASSIGNMENT. This Additional Compensation Agreement may not be
assigned by any party without the prior written consent of each other party.
SECTION 9. AMENDMENT; WAIVER. No provision of this Additional Compensation
Agreement may be amended or waived except by an instrument in writing signed by
the parties hereto.
SECTION 10. GOVERNING LAW. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 11. COUNTERPARTS. This Additional Compensation Agreement may be
executed in any number of counterparts, each of which shall be an original, and
all of which, when taken together, shall constitute one agreement. Delivery of
an executed signature page of this Additional Compensation Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
3
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement between the Advisor
and the Lead Managing Underwriters in accordance with its terms.
Very truly yours,
RBC CAPITAL MARKETS CORPORATION
By:
---------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By:
---------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
RMR Advisors, Inc.
By:
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
4
SCHEDULE A
The "Applicable Percentage Factor" for each Lead Managing Underwriter is set
forth below:
LEAD MANAGING UNDERWRITER APPLICABLE PERCENTAGE FACTOR
RBC Capital Markets Corporation......................... ______%
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated....................... ______
Total.............................. 0.15%
5