Document:

Exhibit 10.4

 

PROPERTY MANAGEMENT AND ACQUISITION SERVICES AGREEMENT

 

This Property Management and Acquisition Services Agreement (the “Agreement”) is made and entered into as of                     , 2012 (the “Effective Date”), by and between Silver Bay Property Corp., a Delaware corporation (“Manager”) and Silver Bay Operating Partnership, L.P., a Delaware limited partnership (“Parent”) (each sometimes referred to as a “Party” and, collectively, the “Parties”) with reference to the following:

 

RECITALS

 

A.                                    Parent, through certain of its current and future Affiliates (each, an “Owner” and collectively referred to herein as “Owner”), is the indirect owner of the portfolio of single-family residential properties.  Parent and Owner intend to supplement such portfolio by acquiring additional single-family or other residential properties within such metropolitan areas as may be designated from time-to-time by Parent (together, the “Geographic Areas”).

 

B.                                    Manager is engaged in the business of acquiring, leasing and managing single-family and other residences located in the Geographic Areas.

 

C.                                    Manager may enter into third-party acquisition and property management service agreements to carry out its duties and responsibilities set forth below.

 

D.                                    Upon the terms and conditions set forth below, Parent desires to retain the services of Manager to:  (i) identify, evaluate and purchase single-family and other residential properties located in the Geographic Areas on behalf of Parent and Owner; and (ii) operate, maintain, repair, manage and lease the Properties (as defined herein) on behalf of Parent and Owner.

 

E.                                     The properties owned by Parent or Owner as of the Effective Date, together with any properties evaluated or acquired pursuant to this Agreement or made subject to this Agreement pursuant to an Acquisition Notice (as defined below) are collectively referred to as the “Properties” and individually as a “Property.”

 

F.                                      Manager intends to identify properties for potential purchase on behalf of Parent and Owner in the Geographic Areas through multiple channels including: foreclosure auctions (“Auction Properties”); negotiated purchases, including short sale and other public listings (together, “MLS Properties”); and portfolio sales (“Bulk Properties”).

 

G.                                    Unless the context otherwise specifies or requires, the Parties intend that capitalized terms used in this Agreement shall have the meanings set forth herein and on Exhibit A.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent and Manager agree as follows:

 

1.                                      APPOINTMENT; PROFESSIONAL MANAGEMENT STANDARDS.

 

1.1                               Engagement.  Parent hereby engages Manager to be the manager of the Properties, and Manager hereby accepts the engagement, on the terms and conditions set forth herein.  Parent also engages Manager as Parent’s and Owner’s non-exclusive representative to assist Parent and Owner in identifying, evaluating and acquiring single-family and other

 

 

properties located in the Geographic Areas as provided in this Agreement, and Manager accepts the engagement.

 

1.2                               Manager Status.  It is expressly understood and agreed by the Parties that Manager is an independent contractor performing services for Owner or Parent and shall not be deemed to be a joint venturer, partner or employee of Owner or Parent.  In the performance of its duties hereunder, Manager shall act solely as an independent contractor of Parent but only to the extent expressly set forth herein.  Parent and Manager agree that the limited agency expressly granted herein is terminable in accordance with the provisions of this Agreement.  Notwithstanding any such agency, except as may be explicitly contemplated in this Agreement, Manager shall not pledge Owner’s or Parent’s credit or incur any liabilities or obligations in Parent’s or Owner’s name without Parent’s or Owner’s prior written consent, which Parent or Owner may withhold or grant in Parent or Owner’s sole discretion.

 

1.3                               Standards.  Manager will perform the Services required by Manager to be performed under this Agreement (the “Services”) in conformance with the following standards (the “Standards”) (a) in accordance with commercially reasonable professional standards, (b) in compliance with all Legal Requirements; (c) using skill, good judgment, good faith and commercially reasonable efforts; and (d) in accordance with those standards and instructions that Parent may issue from time to time regarding the Properties, except to the extent prohibited by Legal Requirements.  Parent acknowledges and agrees that Manager may subcontract with third parties to perform all or any part of the Services, provided that no such subcontract shall relieve Manager of any of its obligations hereunder.

 

1.4                               REIT Compliance.  Manager acknowledges that Silver Bay Realty Trust Corp. (“Silver Bay Trust”), which owns a majority interest in Parent, intends to qualify as a “real estate investment trust” (a “REIT”) within the meaning of Section 856(a) of the Internal Revenue Code of 1986, as amended (the “Code”).  As such, Silver Bay Trust will be required to derive specified percentages of its gross income from, among other things, “rents from interests in real property” and “charges for services customarily furnished or rendered in connection with the rental of real property, whether or not such charges are separately stated,” in the Geographic Areas (“Customary Services”).  In addition, Silver Bay Trust must not derive more than a de minimis amount of “impermissible tenant service income” (“Impermissible Income”) within the meaning of Section 856(d)(2)(C) and 857(d)(7) of the Code.  Impermissible Income generally includes any amount received or accrued by the REIT for services rendered or to be rendered to the tenants of its real property.  However, for this purpose a REIT is not deemed to be providing services if (i) the services are provided through either an “independent contractor” (within the meaning of Section 856(d)(3) of the Code) from whom the REIT does not derive or receive any income or a “taxable REIT subsidiary” (“TRS”) of the REIT and (ii) the cost of such services are borne by the independent contractor or the TRS rather than the REIT, a separate charge is received and retained by the independent contractor or the TRS and the independent contractor or the TRS is adequately compensated for its services.  It is intended that Manager is an “independent contractor” of Silver Bay Trust and shall provide only Customary Services unless otherwise approved by Parent.  Manager shall consult with Parent as to which services Manager may perform for tenants from time to time.  Any services other than Customary Services may only be performed by Manager in such manner as will not cause Silver Bay Trust to realize Impermissible Income.  In that regard and notwithstanding anything to the contrary herein, Manager shall not be reimbursed for the costs

 

 

incurred in performing any non-Customary Services, but shall charge a separate amount for such services and retain all amounts derived from the performance of such non-Customary Services.

 

2.                                      TERM.

 

2.1                               Initial Term.  The initial term of this Agreement shall commence on the Effective Date and end on the one year anniversary of the Effective Date (the “Term”).

 

2.2                               Renewal.  Following the initial Term and each Renewal Term (as defined below), this Agreement shall automatically and without further action by either Party be extended for an additional one (1) year period (each a “Renewal Term”).

 

2.3                               Early  Termination.  Notwithstanding the foregoing, this Agreement may be terminated as provided in Section 12.

 

3.                                      PROPERTIES.

 

3.1                               Properties Acquired Pursuant to this Agreement.  Properties that Manager assists Owner to acquire pursuant to this Agreement shall automatically become subject to this Agreement on the date when acquired by Owner.

 

3.2                               Other Future Properties Acquired by Owner.  From time to time hereafter, Parent and Owner shall have the right at their sole option to cause additional single-family and other residential properties located within one or more Geographic Areas that are acquired by Owner but not acquired pursuant to this Agreement to become Properties that are subject to the terms of this Agreement by notice to Manager (an “Acquisition Notice”).

 

4.                                      MANAGER’S RESPONSIBILITIES — PROPERTY MANAGEMENT.

 

4.1                               Management and Maintenance.  Manager shall maintain and manage the Properties in conformance with the Standards.

 

4.2                               Leasing.  Manager shall use commercially reasonable efforts to keep the Properties leased.

 

4.2.1                                 Lease and Leasing Forms.  Manager shall lease the Properties using a lease form deemed appropriate by Manager (each, a “Lease Form”), which may include any lease form conforming to the Association of Realtors Residential Real Estate Lease Form for the state in which the Qualified Property is located.

 

4.2.2                                 Lease Parameters.  Manager shall screen prospective tenants and negotiate leases for the Properties in a commercially reasonable manner.

 

4.2.3                                 Authority.  Subject to the terms of this Agreement, Manager is authorized to enter into Leases with Tenants on behalf of Owner or Parent.

 

 

4.3                               Marketing.

 

4.3.1                                 Advertising.  Manager shall use commercially reasonable efforts and advertising to attract, procure and retain Tenants at each of the Properties.  If Manager elects to advertise one or more of the Properties through a multiple listing service, Parent authorizes Manager to install and use a lockbox on the Property containing the key to the Property.

 

4.3.2                                 Cooperation.  Manager shall cooperate with outside brokers and agents in securing Tenants for the Properties.

 

4.4                               Legal Proceedings and Legal Counsel.  Manager may file unlawful detainer actions and actions to recover rent, late charges, insufficient fund charges and other amounts payable by a Tenant.  Manager may file other actions as directed by Parent.

 

4.5                               Government Approvals/Rental Taxes.  Manager shall timely secure such individual tax or business licenses in the name of Owner or Parent as may be required for the rental of the Properties and shall register each Property with appropriate governmental authorities as a rental property to the extent required by Legal Requirements in the applicable Geographic Areas.  Manager will make such filings and timely pay such taxes and fees and submit monthly sales tax forms with the appropriate governmental agency.

 

4.6                               Cooperation With Financing and Sales Efforts.  Manager and its Employees shall cooperate with and provide commercially reasonable transaction support to Owner and Parent in connection with the financing, sale, or any other transfer or disposition of any or all of the Properties.

 

4.7                               Accounts.

 

4.7.1                                 Trust Deposit Account.  Subject to applicable local law, all funds received by Manager as a refundable security deposit (the “Security Deposits”) in connection with Leases shall be placed in trust for Parent’s or Owner’s benefit into an account at a financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”) and in a manner to indicate the custodial nature of such account (the “Trust  Deposit Account”).

 

4.7.2                                 Trust Operating Account.  Subject to applicable local law, except for Security Deposits as provided above in Section 4.7.1, all Gross Collections shall be placed in trust for Parent’s or Owner’s benefit into an account at a financial institution whose deposits are insured by the FDIC and in a manner to indicate the custodial nature of such account (the “Trust Operating Account”).

 

4.7.3                                 Trust Acquisition Account.  Manager shall also establish the Trust Acquisition Account in accordance with Section 5.7.1 b. of this Agreement.

 

4.7.4                                 Access to Accounts.  Parent shall be given read-only access to the Trust Deposit Account and the Trust Operating Account (and the Trust Acquisition Account, as described in Section 5.7.1 b.).  On the Effective Date, Manager will give the account number and access password to Parent.

 

 

4.8                               Disbursements.

 

4.8.1                                 Requests for Funds.  Manager may provide a request to Parent with respect to funding the Trust Operating Account for the ensuing month to the extent reasonably required, based upon the Gross Collections for the preceding month and anticipated expenses.

 

4.8.2                                 Operating Expenses.  Subject to Section 1.4, Manager shall pay all Operating Expenses on a timely basis from the funds in the Trust Operating Account.

 

4.8.3                                 Remittance to Parent.  Subject to Section 1.4, each month, after deducting all authorized Operating Expenses and Performance Expenses from the Gross Collections from the Properties for the immediately preceding calendar month, the net remaining amount of Gross Collections shall be remitted by Manager to Parent.

 

4.9                               Data Room and Reports.

 

4.9.1                     Reports. Manager shall cause such statements, reports and documentation as Parent may reasonably request relating to the Properties to be delivered to Parent at the times and in the forms reasonably requested by Parent.

 

4.9.2                                 Cooperation.  Manager will cooperate with Parent and its agents in reconciling any discrepancies found in statements and providing reasonably requested backup for income and expense items to satisfy Parent’s accountants and administrators.

 

4.10                        Filing of Tax and Other Returns and Reports.  Manager shall timely prepare and file all returns and other documents required under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act, or any similar federal or state legislation, and all withholding tax returns required for Manager and its Employees and for contractors or material suppliers, including 1099s and W-2s.  Manager will timely pay all amounts required to be paid under the Federal Unemployment Tax Act, or any similar federal or state legislation, and all withholding taxes.  Manager shall also timely prepare and file the following:  (a) all payroll forms and reports concerning Employees; (b) workers’ compensation forms; (c) business and property tax forms; and (d) any applicable health, welfare or other forms.

 

4.11                        Records.

 

4.11.1              Records.  Manager shall organize and maintain accurate records of all of the information and data prepared by or utilized by Manager in the performance of its duties, including the following (collectively, the “Records”).

 

4.11.2                          Inspection of Records.  All such Records shall be maintained at Manager’s offices.  The Records at Manager’s office shall be open for inspection by Parent at all reasonable times.  Manager shall keep safe and intact all such Records for a period of three (3) years after their creation.  Parent reserves the right to have an audit made of all Records, wherever located.  The provisions of this Section shall survive any termination of this Agreement.

 

4.11.3                          Compliance With Laws.  Notwithstanding Manager’s obligations to cause each of the Properties to comply with all Legal Requirements, Manager shall not take any

 

 

such action if Parent has notified Manager that Parent is contesting or has affirmed its intention to contest and promptly institute proceedings contesting such Legal Requirements, unless failure to comply promptly with any such Legal Requirements would expose Manager to civil and/or criminal liability.

 

4.11.4                          Other Forms of Compensation Prohibited.  Manager agrees that its compensation as described in Section 6.2 below is to be paid in consideration of all services to be rendered pursuant to the terms of this Agreement by Manager.  All rebates, discounts or commissions collected by Manager, or credited to Manager’s use, that relate to the purchasing of supplies or to the rendering of services for the Properties, shall reduce Reimbursements due from Parent hereunder.  Manager shall not collect or charge any undisclosed fee, rebate or discount in connection with the management or leasing of the Properties.

 

4.11.5                          Inspections of Properties.  Manager shall cooperate with Parent and Parent’s representatives in order to allow them to inspect the Properties at all reasonable times.

 

5.                                      MANAGER’S RESPONSIBILITIES — PROPERTY ACQUISITIONS.

 

5.1                               Identification, Evaluation and Acquisition of Properties.  Manager shall exercise commercially reasonable efforts to identify Properties for acquisition within the Geographic Areas that meet the criteria established by Parent and Owner from time to time (“Qualified Properties”), to evaluate each Property that it identifies, taking into account all customary and commercially reasonable factors that would bear upon its ability to meet such criteria and to acquire such Qualified Properties on Owner’s behalf upon terms that are in accordance with this Agreement.

 

5.2                               Inspections.

 

5.2.1                     For MLS Properties, Manager shall not be required to hire a home, roof or termite inspector to inspect each Property, but will order such inspections if requested by Parent, along with other inspectors for such other Building Systems to the extent that Manager may reasonably conclude such inspectors are necessary or that Parent may request that Manager hire.

 

5.2.2                     Unless otherwise specified by Parent, for Auction Properties and Bulk Properties, Manager shall conduct commercially reasonable due diligence of the Qualified Properties given the parameters of the applicable auction or bulk sale (including time frames).  For example, such commercially reasonable efforts could be satisfied, in certain circumstances, by a visit to the Property to assess external conditions, although commercial reasonableness should be assessed on a case-by-case basis.

 

5.3                               Form of Contract.

 

5.3.1                     For MLS Properties, Manager shall prepare for Owner’s approval and signature offers to be submitted for the purchase of Qualified Properties on an agreement (each, a “Purchase Contract”) in a form approved by Parent.  Alternatively, the parties acknowledge that if Manager is authorized pursuant to a separate power of attorney or other agreement between Owner and Manager, Manager may sign such Purchase Contract as Owner’s attorney-in-fact.  The Parties recognize that the parameters of the applicable sale of MLS Properties may require that Manager use only a purchase contract or addendum thereto other than the approved

 

 

form of Purchase Contract.  In the circumstances contemplated by the preceding sentence, Manager will use its commercially reasonable judgment to determine the suitability of such purchase contract and, to the extent requested by Parent, shall review a sampling of such purchase contracts with Parent to develop with Parent guidelines regarding such suitability.

 

5.3.2                     Parent may provide to Manager any further modifications to form Purchase Contracts that Parent or Owner may desire at any time and if so submitted, Manager will incorporate the changes into Purchase Contracts going forward.

 

5.3.3                     For Auction Properties and Bulk Properties, the parameters of the applicable auction or bulk sale may require that Manager use (a) only an alternative approved form of Purchase Contract or (b) no Purchase Contract and the property transfer may simply be effected by a deed or other similar form of title conveyance documentation.  In the circumstances contemplated by clause (a) of the preceding sentence, Manager will use its commercially reasonable judgment and good faith efforts to conform any alternative approved Purchase Contract as closely as possible to the form Purchase Contracts contemplated by this Section 5.3, and if that is not practicable given the parameters of the applicable auction, then Manager shall seek direction from Parent prior to submission of any Purchase Contract; and in the circumstances contemplated by clause (b) of the preceding sentence, Manager is allowed to proceed by using the deed or other similar form of title conveyance documentation.

 

5.3.4                     Unless otherwise directed by Parent, Manager shall submit all contracts relating to the purchase of Bulk Properties to Parent for review and approval.

 

5.4                               Title Insurance.  Manager shall obtain an American Land Title Association standard owner’s policy of title insurance (or the applicable state-specific equivalent thereof) for a Qualified Property in favor of Owner if and as directed by Parent.

 

5.5                               Reports and Records.

 

5.5.1                     Status Reports.  Manager shall keep Parent informed as to Manager’s progress in identifying and evaluating Qualified Properties by populating the Data Room with such information.

 

5.5.2                     Closing Reports.  Manager shall deliver a copy of the final form of each closing or settlement statement(s) that is prepared in connection with the closing and settlement of each Property acquisition to Parent following the closing of each Property acquisition, together with copies of the deed, title insurance policy and any other appurtenant closing documents.

 

5.5.3                     Original Conveyance Documents.  Following the closing of the acquisition for each Property, Manager shall deliver all original deeds, titles or similar conveyance documents to Parent.

 

5.6                               Limitations on Manager’s Authority.  Except as may be authorized in this Agreement (or in a separate written agreement between Owner and Manager), Manager shall have no authority to make oral or written warranties or representations on behalf of

 

 

Parent or Owner and shall advise all prospective sellers of a Qualified Property to conduct their own independent investigation.

 

5.7                               Special Provisions Regarding Certain Property Acquisitions.

 

5.7.1                     Prior to Manager’s submission of any Purchase Contract for any Auction Property or Bulk Properties, the following terms will also apply:

 

a.              Bearing in mind the expected parameters and procedures typically established for purchases of Auction Properties and Bulk Properties (including time frames), Parent and/or Owner will provide to Manager in writing sufficient delegation of authority (including powers of attorney as appropriate) to permit Manager to effectuate purchases of Auction Properties and Bulk Properties to the extent necessary and in a materially comparable manner to the means by which Manager may effectuate purchases of MLS Properties as contemplated by this Agreement.

 

b.              Manager may provide a request to Parent with respect to anticipated earnest money deposits and/or closing funds for the acquisition of Auction Properties.  Subject to applicable local law, all such funds delivered by Parent or Owner to Manager shall be placed in trust for Parent’s and Owner’s benefit into an account at a financial institution approved in advance by Parent whose deposits are insured by the FDIC and in a manner to indicate the custodial nature of such account (the “Trust Acquisition Account”).  Parent shall be given read-only access to the Trust Acquisition Account.  On the Effective Date, Manager will give the account number and access password to Parent.

 

c.               Following completion of the steps identified in subsections a. and b. above, Manager may effectuate purchases of Auction Properties and Bulk Properties pursuant to this Agreement.

 

6.                                      PARENT’S RESPONSIBILITIES.

 

6.1                               Funding of Accounts.  Parent shall promptly provide the funds requested by Manager pursuant to Section 4.8.1 and shall cause to be maintained sufficient funds in the Trust Operating Account to enable Manager to pay all Operating Expenses and Performance Expenses in a timely manner.  Parent shall also promptly provide the funds requested by Manager pursuant to Section 5.7.1 b.

 

6.2                               Compensation and Reimbursement.

 

6.2.1                     Commencing on the first (1st) day of the first (1st) calendar month following the Effective Date, Parent shall pay Manager a monthly fee equal to five percent (5%) of the difference of (i) total Performance Expenses incurred in the immediately preceding calendar month minus (ii) any Performance Expenses reimbursed or management fee paid to Manager by a Subsidiary of Parent pursuant to a separate agreement (the “Base Management  Fee”).  Partial months shall be prorated.

 

6.2.2                     Commencing on the first (1st) day of the first (1st) calendar month following the Effective Date, Parent shall reimburse Manager for any Operating Expenses and Performance Expenses incurred by Manager in the immediately preceding calendar month less

 

 

any Performance Expenses or Operating Expenses reimbursed or management fees paid by a Subsidiary of Parent or pursuant to a separate agreement (the “Reimbursement”); provided, however, that if such Performance Expenses are incurred as a result of provision of services, in whole or in part, to other clients of Manager, the reimbursement of such costs and expenses shall be allocated between the Parent and Owner and such other clients in a fair and equitable manner as determined by the Manager in good faith.  Partial months shall be prorated.

 

6.2.3                     Manager shall be entitled to deduct the Base Management Fee and the Reimbursement for the immediately preceding calendar month from the Trust Operating Account.  If Parent determines that Parent has paid fees to Manager in excess of the amounts required under this Agreement, Manager shall reimburse any such excess amounts to Parent within five (5) business days after receipt of Parent’s written request for such excess amounts, which written request shall be accompanied by reasonable proof of such excess amounts.

 

6.3                               Income Tax Returns.  Each of Parent and Owner shall be responsible for preparing its own income tax returns.

 

7.                                      NO DISCRIMINATION.

 

Parent and Manager acknowledge it is unlawful to discriminate in the leasing of any of the Properties based upon any discrimination that is prohibited by applicable law.  Manager and its Employees and Affiliates shall not permit any discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Properties, the selection or location of the Properties, the number of residents or the use of any services or amenities offered by Manager or its Affiliates; nor shall Manager allow any such discrimination in its employment practices.

 

8.                                      INSURANCE AND INDEMNITY.

 

8.1                               Carried by Manager.  Manager shall at all times obtain and keep in force the following types of policies of insurance with such limits and other terms as Manager deems commercially reasonable:

 

8.1.1                                 a commercial general liability policy of insurance;

 

8.1.2                                 statutory workers’ compensation and employers’ liability insurance;

 

8.1.3                                 umbrella liability insurance;

 

8.1.4                                 a fidelity bond or crime insurance including employee dishonesty coverage; and

 

8.1.5                                 professional liability or errors and omissions insurance.

 

The limits of the foregoing insurance shall not limit the liability of Manager nor relieve Manager of any obligation hereunder.  All insurance carried by Manager shall be primary to and not contributory with any similar insurance carried by Parent or Owner, whose insurance shall be considered excess insurance only.  Manager shall name Parent and Owner and their respective directors, officers, members, managers, employees, and agents as named or additional insureds

 

 

on the commercial general liability and umbrella liability policies; and name Parent and Owner as Loss Payee on the crime insurance policy.  Manager shall not do or permit to be done anything that invalidates the required insurance policies.

 

8.2                   Carried by Parent.  Parent shall at all times obtain and keep in force, at no expense to Manager, the following types policies of insurance with respect to the Properties:

 

8.2.1                                 a commercial general liability policy of insurance; and

 

8.2.2                                 umbrella liability insurance.

 

Parent and Owner shall name Manager and its respective directors, officers, members, managers, employees, and agents as named or additional insureds on the commercial general liability and umbrella liability policies.

 

8.3                               Insurance Policies.  The policies shall not contain any intra-insured exclusions as between insured persons or organizations.  The policies required herein shall be issued by companies duly licensed or admitted to transact business in the state where the Properties are located, and maintaining during the policy term a “General Policyholders Rating”, as set forth in the most current issue of AM Best’s Insurance Guide, of A/VII or higher.  In the event of a rating downgrade below the required minimum level, Manager shall immediately replace the policy with a carrier that has the agreed-upon minimum rating.

 

8.4                               Waiver of Subrogation.  Each Party shall request its respective insurance carriers to waive any right to subrogation that such companies may have against Owner, Parent or Manager, as the case may be, so long as the insurance is not invalidated thereby.

 

8.5                               Indemnity by Manager.  Manager shall, to the fullest extent permitted by applicable law, indemnify, defend (with counsel reasonably acceptable to Parent) and hold harmless Parent, Owner and their respective Affiliates, managers, members, certificate holders, partners, shareholders, directors, officers, employees and agents for, from and against any and all claims, liabilities, losses, damages, costs and expenses (including all costs and reasonable attorneys’ fees, late fees, interest and penalties) (collectively, “Liabilities”) arising from the bad faith, gross negligence, intentional misconduct or fraud of Manager (but not third parties who are not Affiliates of Manager engaged by Manager to perform portions of the Services) or any of its Employees in connection with the management and leasing of the Properties.  The provisions of this Section 8.5 shall survive the expiration or termination of this Agreement.

 

8.6                               Indemnity by Parent.  Parent shall, to the fullest extent permitted by applicable law, indemnify, defend (with counsel reasonably acceptable to Manager) and hold harmless Manager and its Affiliates, managers, members, certificate holders, partners, shareholders, directors, officers, employees and agents for, from and against any and all Liabilities arising as a direct result of Manager’s management of the Properties and performance of Manager’s duties under this Agreement, except to the extent arising as a result of:  (a) any material breach by Manager of this Agreement or the terms of any Lease; (b) the failure of Manager or any of its Employees to comply with Legal Requirements; (c) the bad faith, gross negligence, intentional misconduct or fraud of Manager or any of its Employees in connection with the management and leasing of the Properties or (d) any Liabilities incurred by or asserted by Manager’s Employees that are solely related to their employment by Manager.

 

 

The provisions of this Section 8.6 shall survive the expiration or termination of this Agreement.

 

8.7                               Limitation of Liability.  Except with respect to claims for indemnity under Sections 8.5, 8.6 or 17.2.3 of this Agreement, in no event shall either Party’s liability for any Liabilities (other than a claim by Owner for amounts that should have been properly remitted under Section 4.8.3 or a claim by manager for any Base Management Fees or Reimbursement (each, an “Excluded Claim”))  arising out of or in connection with this Agreement (when aggregated with such Party’s liability for all other Liabilities, other than Excluded Claims, arising out of or in connection with this Agreement) exceed an amount equal to 12 times the average monthly Fees paid to Manager in the 12 months preceding the date of such Liabilities plus amounts recoverable and actually recovered from any third party.

 

8.8                               Consequential Damages.      Notwithstanding anything to the contrary in this Agreement or at law or in equity, neither party shall be liable to the other Party or its subsidiaries or affiliates for punitive, special, indirect, incidental or consequential damages (including damages for loss of business profits, loss of data, loss of use, business interruption or any other loss), however caused, under any theory of liability, arising from or relating to any claim made under this Agreement or regarding the provision of or the failure to provide the Services or any other services.  The foregoing limitation will not limit either Party’s obligations with respect to payment of damages of any kind included in an award or settlement of a third party claim under any indemnity provisions specified herein.

 

9.                                      REPRESENTATIONS AND WARRANTIES.

 

9.1                               Representations, Warranties and Covenants of Manager.  Manager covenants, represents and warrants to Parent as of the Effective Date and any date a Property becomes subject to this Agreement:

 

9.1.1                                 Due Organization and Authorization.  Manager is a corporation organized, validly existing and in good standing under the laws of the State of Delaware.  Manager has full power to enter into this Agreement; the execution, delivery and performance of this Agreement have been duly and validly authorized by all necessary corporate action on the part of Manager; and this Agreement, when executed and delivered by the Parties, shall be the valid and binding obligation of Manager.

 

9.1.2                                 No Conflicts.  Manager has delivered to Parent a certified copy of its certificate of incorporation and bylaws together with a resolution authorizing Manager to enter into this Agreement.  The execution, delivery and performance of this Agreement by Manager shall not: (a) conflict with or result in a breach of any provision of its certificate of incorporation or bylaws; (b) cause a default under any agreement to which Manager is a party or by which any of its assets may be bound; or (c) require any consent or approval that has not been obtained or at the appropriate time shall not have been obtained.

 

9.1.3                                 Litigation.  There is no pending, or, to the knowledge of Manager, threatened, claim or litigation, arbitration proceeding, or action of any kind against Manager, the outcome of which could have a material adverse effect on the financial position, results of

 

 

operations, or business of Manager, taken as a whole, or which could question the validity of this Agreement.

 

9.1.4                                 Licenses.  Manager and its Employees possess all licenses and permits under the laws of the state in which the Properties are located as are necessary for them to perform their respective duties set forth in this Agreement, and all such licenses and permits are in good standing.

 

9.1.5                                 Financial Success.  Manager has not relied on any historical financial statement of the Properties, or any projection of earnings or any statements as to the possibility of future success or other similar matter that may have been delivered or made available to Manager, and Manager understands that neither Parent nor Owner makes or has made any guarantee as to the future financial success of the Properties.

 

9.2                               No Parent or Owner Warranties or Representations as to the Properties.  Manager acknowledges and agrees that neither Parent nor Owner has made, nor shall Parent nor Owner be deemed to have made, any warranty or representation, express or implied, with respect to any of the Properties, including any warranty or representation as to: (a) its fitness, design or condition for any particular use or purpose; (b) the quality of the material or workmanship therein; (c) the existence of any defect, latent or patent; (d) compliance with specifications; (e) quality; (f) durability; (g) operation; or (h) compliance of the Properties with any law.

 

9.3                               Representations and Warranties of Parent.  Parent represents and warrants to Manager as follows:

 

9.3.1                                 Authorization.  Parent is a limited partnership organized, validly existing and in good standing under the laws of the State of Delaware.  Parent has full power to enter into this Agreement, the execution, delivery and performance of this Agreement have been duly and validly authorized by all necessary limited partnership action on the part of Parent, and this Agreement, when executed and delivered by the Parties, shall be the valid and binding obligation of Parent.

 

9.3.2                                 No Conflicts.  The execution, delivery and performance of, this Agreement by Parent shall not: (a) conflict with or result in a breach of any provision of its formation or constituent documents; or (b) cause a default under any agreement to which Parent is a party or by which any of its assets may be bound or (c) require any consent or approval that has not been obtained or at the appropriate time shall not have been obtained.

 

9.3.3                                 Litigation.  There is no pending, or, to the knowledge of Parent, threatened, claim or litigation, arbitration proceeding, or action of any kind against Parent, the outcome of which could have a material adverse effect on the financial position, results of operations, or business of Parent or the Properties taken as a whole, or which could question the validity of this Agreement.

 

10.                               CONFIDENTIALITY.

 

Manager acknowledges that in connection with performing services for Parent under this Agreement, Manager will have access to Confidential Information, which is the proprietary and

 

 

non-public information of Parent, Silver Bay Trust, or both Parent and Silver Bay Trust. Manager will shall exercise reasonable commercial efforts to protect the confidentiality of all of the Confidential Information and agrees to restrict access to the Confidential Information to those Employees, agents, advisors or representatives who have a need to know the Confidential Information in order for Manager to fulfill its obligations under this Agreement and who have been advised of the confidential and proprietary nature of the Confidential Information (the “Authorized Professionals”).  Manager shall use reasonable commercial efforts to prevent unauthorized disclosure or use of the Confidential Information and acknowledges and agrees that it shall be responsible for its failure or the failure by any of its Authorized Professionals to adhere to the provisions of this Article 10.  Manager understands and acknowledges and will inform its Authorized Professionals that Silver Bay Trust is a public company, and that the securities laws of the United States (as well as applicable stock exchange regulations) prohibit any Person who has material, non-public information concerning Silver Bay Trust from purchasing or selling Silver Bay Trust’s securities when in possession of such information and from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities in reliance upon such information. The provisions of this Article 10 shall survive any termination of this Agreement.

 

11.                               EXCLUSIVITY.

 

11.1            Manager agrees that Parent and Owner shall be entitled to engage other Persons to operate, repair, maintain, manage and lease other single-family and other residential properties, including properties within the Geographic Areas; provided, however that Parent or Owner, as applicable, shall notify Manager of any such activities within the Geographic Areas.

 

11.2            For the first thirty-six (36) months following the Effective Date (the “Exclusivity Period”), Manager shall provide the Services exclusively to Parent, Owner and their respective Affiliates.  Following the Exclusivity Period, Manager shall be entitled from time to time to operate, repair, maintain, manage and lease single-family and other residential properties within the Geographic Areas on behalf of Persons other than Parent and Owner; provided that Manager shall comply with all of its duties and obligations set forth in this Agreement.  If Manager shall at any time have reason to believe that there is a conflict between its duties and obligations to Parent and its duties and obligations to any other Person, Manager shall notify Parent immediately.

 

12.                               TERMINATION.

 

12.1                        Termination.

 

12.1.1              Voluntary Termination.  Manager may terminate this Agreement at any time during the Term or any Renewal Term upon ninety (90) days written notice to Parent if suitable replacement services have been identified by Manager or its parent.

 

12.1.2              Termination of Management Agreement.  If there is a termination or expiration for any reason of that certain Management Agreement dated as of                 , 2012, by and among PRCM Real Estate Advisers LLC, a Delaware limited liability company, Silver Bay Trust and Parent, either Party may elect to terminate this Agreement simultaneously therewith by providing written notice to the other Party.

 

 

12.2                        Effect of Dispositions.  Notwithstanding anything to the contrary in this Agreement, at the option of Parent, this Agreement shall automatically and immediately terminate with respect to any Property upon the sale or other disposition of that Property.

 

12.3                        Termination for Cause Without Prior Notice.  In addition to all other rights, remedies and recourses available by law, the occurrence of any of the following items shall permit, at Parent’s option, termination of this Agreement by 30 days written notice with (the occurrence of any of which shall constitute “Cause”):  (a) dissolution or termination of the corporate existence of Manager (other than by reason of merger, consolidation, reorganization, reconstitution or otherwise, in which case the Manager shall assign its rights and obligations under this agreement to the successor organization, which shall be bound under this Agreement and by the terms of such assignment in the same manner as the Manager is bound under this Agreement); (b) termination or suspension of any of Manager’s licenses required to perform the Services pursuant to Legal Requirements unless remedied within 30 days of receipt of the notice of termination; (c) cessation on Manager’s part to continue to do business; (d) bankruptcy, insolvency, or assignment for the benefit of creditors of Manager; (e) appointment of a receiver, liquidator or trustee of Manager by court order; (f) bad faith, gross negligence, intentional misconduct or fraud in the performance of Manager’s duties and obligations under this Agreement that results in material and uncompensated harm to Owner or Parent; (g) any breach of any material representation, warranty or covenant of Manager if such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30 day period (or 90 days after written notice of such breach if the Manager takes steps to cure such breach within 30 days of the written notice); (h) Manager engages in any act of fraud, misappropriation of funds, or embezzlement against Parent or any Owner that results in direct, uncompensated harm to the Parent or any Owner; or (i) a final non-appealable determination against Manager or any of its Employees of any civil action or investigation by any licensing board or other governmental or quasi-governmental entity which would materially impair Manager’s ability to provide Services hereunder.

 

12.4                        Effect of Termination.  On termination or expiration of this Agreement, Parent and Manager agree as follows:

 

12.4.1                          Manager shall deliver to Parent as quickly as reasonably practical but in any event within ten (10) days following the termination date of this Agreement all original Records relating to the Properties (including all electronic or digital records and all of the content of the website that relates to the Properties).  Manager must (a) make such delivery via one or more electronic formats utilizing technology that is then available to Manager at no additional cost to Manager (unless such cost is borne in full by Owner or Parent) and that will allow Parent to continue to use the materials to the same degree of functionality as Manager using comparable technology, and (b) provide each original record in hard copy format as Parent may request at Parent’s expense.  Manager may retain copies of any transferred records at its own expense which will remain subject to the confidentiality provisions of Article 10 of this Agreement.

 

12.4.2                          Manager shall deliver to Parent all keys to the Properties and all other items of personal property owned by Owner or Parent and in Manager’s possession.

 

 

12.4.3                          Manager shall have no further access to the Data Room, nor the right to withdraw any amount from the Trust Deposit Account, Trust Operating Account or Trust Acquisition Account.

 

12.4.4                          Manager shall cooperate in transferring the Trust Deposit Account, Trust Operating Account and Trust Acquisition Account, as directed by Parent, except as otherwise required under the applicable landlord/tenant or similar laws of the Geographic Areas.

 

12.4.5                          Any payments for Parent or Owner’s account received by Manager following expiration of this Agreement shall forthwith be forwarded to Parent.

 

12.4.6                          Manager shall immediately transfer control of any pending litigation against Tenants or former Tenants to Parent or its designee.

 

12.4.7                          Manager shall, within thirty (30) days of such termination (and, in the event of a disposition of the Properties, on or before the deadline set forth in the applicable sale contract), deliver a final accounting reflecting the balance of income and expenses for the Properties as of the date of termination.

 

12.4.8                          Manager’s right to compensation shall immediately cease upon the effective date of the termination and shall be prorated through that date.

 

12.4.9                          The limited agency relationship created under this Agreement shall cease, and thereafter Manager shall have no further right or authority to act for or on behalf of Owner or Parent.

 

12.4.10                   Each Party shall, after the expiration or termination hereof, make any information pertaining to this Agreement reasonably available to the requesting Party if needed for any bona fide accounting or tax-related purpose.

 

13.                               NOTICES.

 

13.1                        Notice of Legal Proceedings.  If either Party becomes aware of any action, suit, investigation or other proceeding (at law or in equity or before any governmental authority) that may affect either Party, the Owner or any of the Properties or this Agreement, then such Party shall promptly provide the other Party with notice thereof.

 

13.2                        Notice of Certain Defaults.  If either Party becomes aware of any breach of, or default under, any contract, agreement or other instrument, which breach or default adversely affects or could reasonably be expected to adversely affect the Properties or this Agreement, then such Party shall promptly provide the other Party with notice thereof.

 

14.                               LIMITATION ON RECOURSE.

 

14.1                        Limits of Recourse by Manager.  Manager agrees to look solely to Parent for the satisfaction of any liability or obligation arising under this Agreement or the transactions contemplated hereby, or for the performance of any of the covenants, warranties, obligations or other agreements contained herein, and further agrees not to sue or otherwise seek to enforce any personal obligation against Owner, Parent’s Affiliates or any of Owner’s Affiliates with

 

 

respect to any matters arising out of or in connection with this Agreement or the duties and obligations contemplated hereby.

 

14.2                        Limits of Recourse by Parent.  Parent agrees to look solely to Manager for the satisfaction of any liability or obligation arising under this Agreement or the transactions contemplated hereby, or for the performance of any of the covenants, warranties, obligations or other agreements contained herein, and further agrees not to sue or otherwise seek to enforce any personal obligation against any of Manager’s stockholders or Affiliates thereof with respect to any matters arising out of or in connection with this Agreement or the duties and obligations contemplated hereby.

 

15.                               POWER OF ATTORNEY.

 

To the extent herein specified, for the term of this Agreement, Parent grants a Special Power of Attorney to Manager with limited powers as provided below and authorizes Manager to act as Parent’s Attorney in Fact in relation to the Properties, in each case in compliance with the Standards: (a) to make contracts for any and all utilities including electricity, gas, water, waste management, etc.; (b) to put these services in place in the Parent’s name (until a Tenant takes occupancy of the pertinent Property) with billing delivered to Manager; (c) to obtain utility account information for the Properties; (d) to communicate and act on Parent’s behalf with respect to all HOA matters; (e) to obtain any and all required sales tax licenses relative to the rents to be collected from the Properties; (f) to engage tenancies using the Lease Form and to terminate tenancies; (g) to deliver to Tenants all notices required by all landlord/tenant laws in the applicable Geographic Areas; and (h) to prosecute, release, settle and otherwise pursue all legal actions in strict accordance with Section 4.4 hereof.

 

16.                               INTELLECTUAL PROPERTY.

 

16.1                        Generally.  All Intellectual Property (other than the trademark SILVER BAY and any future trademark using the words SILVER BAY with a design and/or tagline (the “Trademark”)) made in connection with the Manager’s performance of this Agreement or otherwise and the Intellectual Property Rights associated therewith shall be the sole and exclusive property of the Manager.  Parent, on behalf of itself and each direct or indirect subsidiary (its “Subsidiaries”), shall assign and does hereby assign to the Manager all Intellectual Property Rights in such Intellectual Property (other than the Trademark).  For the term of this Agreement, the Manager hereby grants Parent and its Subsidiaries a non-exclusive, worldwide, fully paid up, royalty-free, non-sub-licensable, non-transferable license and right to use the Intellectual Property made in connection with the Manager’s performance of this Agreement for their business purposes.  Parent will, or will cause its Subsidiaries to, upon request of the Manager, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably requested by the Manager to carry out the intent of this Agreement or to otherwise perfect, record, confirm, or enforce the Manager’s rights in and to the Intellectual Property.

 

16.2                        Definitions.

 

 

16.2.1                          “Intellectual Property” means all work product, documents, code, works of authorship, programs, manuals, developments, processes, formulae, data, specifications, fixtures, tooling, equipment, supplies, processes, inventions, discoveries, improvements, trade secrets, and know-how or similar rights.

 

16.2.2                          “Intellectual Property Rights” means the worldwide right, title, and interest in any Intellectual Property and any goodwill appurtenant thereto, including, without limitation, all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, inventions, priority rights, patent rights, patents, and any other rights or protections in connection therewith or related thereto.

 

17.                               MISCELLANEOUS.

 

17.1                        Construction/Interpretation.  The titles of Articles, Sections, paragraphs and  Exhibits in this Agreement are so used only for convenience in locating various provisions of this Agreement and shall not be deemed to affect the interpretation or construction of such provisions.  References to Articles, Sections, paragraphs and Exhibits are, unless specified otherwise, references to articles, sections, paragraphs and exhibits of this Agreement.  Words of any gender shall include each other gender.  Words in the singular shall include the plural and words in the plural shall include the singular.  The words “include” and “including” shall be interpreted as if followed by the words “without limitation.”  Exhibits to this Agreement are hereby incorporated by this references as though fully set forth in this Agreement.

 

17.2                        Relationship of the Parties.  The relationship of Manager to Parent is that of an agent with limited authority as described herein and otherwise, as an independent contractor, and it is not that of an employee, partner or joint venturer.

 

17.3                        Force Majeure.  If either Party is delayed or prevented from fulfilling any obligations (other than an obligation to pay money) under this Agreement by any Force Majeure Event, then such Party shall not be liable under this Agreement for such delay or failure, provided that such Party shall use reasonable efforts to mitigate the effect of such event.

 

17.4                        No Assignment; Successors.  Except in connection with a merger, consolidation, sale of substantially all of its assets or other similar transaction, Manager may not assign its rights or obligations hereunder with the prior written consent of Parent, by operation of law or otherwise.  Except with the prior written consent of Manager, which shall not be unreasonably withheld or delayed, Parent may not assign its rights or obligations hereunder, by operation of law or otherwise; provided, however, that Parent may, without Manager’s prior consent, assign its rights or obligations hereunder to any entity which controls, is controlled by or is under common control with Parent.  This Agreement shall be for the benefit of and binding upon the permitted heirs, successors and assigns of the Parties.

 

17.5                        Waiver of Trial by Jury.  PARENT AND MANAGER, WITH ADVICE OF LEGAL COUNSEL OF THEIR CHOICE, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CAUSE OF ACTION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE PROPERTIES OR ANY COURSE OF 

 

 

CONDUCT, COURSE OF DEALING, STATEMENTS OR ACCOUNTS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF PARENT AND MANAGER ENTERING INTO THIS AGREEMENT.

 

17.6                        Counterparts; Electronic Signatures.  This Agreement may be executed by original or facsimile signature in any number of counterparts, each of which shall be an original, but such counterparts together shall constitute one and the same instrument.  Signatures delivered by facsimile or by portable document format via electronic email shall be acceptable as original signatures.

 

17.7                        Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without reference to the choice of laws and conflicts of law rules and principles of such state.

 

17.8                        Venue.  Manager hereby agrees that all actions or proceedings initiated by Manager and arising directly or indirectly out of this Agreement shall be litigated in the Hennepin County District Court, Minneapolis, Minnesota, or at Parent’s election in the Federal District Court for the District of Minnesota.  Manager hereby expressly submits and consents in advance to such jurisdiction in any action or proceeding commenced by Parent in such court.  The exclusive choice of forum set forth in this Section 17.8 shall not be deemed to preclude the enforcement, by Parent, of any judgment obtained in any other forum or the taking, by Parent, of any action to enforce the same in any other appropriate jurisdiction, and Manager hereby waives the right, if any, to collaterally attack any such judgment or action.

 

17.9                        Recitals.  The Recitals on page 1 of this Agreement are incorporated herein as part of this Agreement, and the Parties agree that they are true and correct.

 

17.10                 Modification.  This Agreement may not be modified or amended except by a written agreement executed by both Parties and only to the extent set forth therein.

 

17.11                 Severability.  If any Article, Section, paragraph, sentence, clause or phrase contained in this Agreement becomes or is held by any court of competent jurisdiction to be illegal, null or void or against public policy, the remaining Articles, Sections, paragraphs, sentences, clauses or phrases contained in this Agreement shall not thereby be construed to also be illegal, null and void or against public policy.

 

17.12                 No Third Party Beneficiaries.  This Agreement creates rights in favor of Parent, Owner, Manager and Silver Bay Trust only, and shall not be construed as creating any rights enforceable by any other Person.

 

17.13                 Subordination and Attornment.  Manager agrees that the lien, operation and effect of any mortgage, deed of trust or other security device in place on the Properties, including any financing arrangements secured by equity pledges of Owner, and the beneficiary’s right to payment under the loan documents in connection therewith shall be superior to and shall have priority over this Agreement as well as any claim, security interest or right to payment of Manager arising out of or in any way connected with the Services.  In furtherance of the foregoing, Manager hereby fully and completely subordinates to the lien, operation and effect of, such beneficiary’s right to payment under such loan documents the following:  (a) its rights under this Agreement; (b) any claim or security interest Manager may 

 

 

now or hereafter have against the Properties and/or the rents, issues, profits and income therefrom; and (c) any right to payment of Manager arising out of or in any way connected with its services performed under this Agreement.

 

17.14                 Further Assurances.  Each Party shall take all such actions, and execute all such documents, as the other Party shall reasonably request to give effect to this Agreement.

 

17.15                 Entire Agreement.  It is agreed that there are no prior or contemporaneous oral agreements between the Parties with respect to the subject matter of this Agreement other than powers of attorney contemplated by this Agreement and this Agreement supersedes and cancels any and all prior discussions, negotiations and writings between the Parties which may have occurred with respect to the subject matter of this Agreement.

 

18.                               SPECIAL TRUSTEE PROVISIONS.

 

Manager acknowledges and agrees that:

 

18.1                        Without the express prior written consent of the Trustee in its individual capacity (which may be withheld or conditioned by such Trustee in its individual capacity for any reason in good faith), no real property of the Owner (including any residential property) shall be taken or titled in the name of a Trustee, and no mortgage or other lien of the Owner on any real property shall be taken or recorded in the name of a Trustee (except when the Parent or Manager determines in its reasonable discretion that a court of competent jurisdiction or the related county recorder requires, or Legal Requirements in the particular case require, that such real property must be taken or titled, or such mortgage or other lien must be taken or recorded, in the name of the Certificate Trustee, in which case such consent of such Trustee shall not be required but written notice shall be given to such Trustee); and

 

18.2                        Unless Trustee in its individual capacity grants its express prior written consent to the contrary (which may be withheld or conditioned by the Trustee in its individual capacity for any reason in good faith):

 

18.2.1                          Any real property (including any residential property) shall be taken and titled, and any mortgage or other lien on any real property shall be taken and recorded, only in the name of the Owner, in the name of the Parent or Manager as nominee of the Owner, or in the name of another nominee of the Owner (other than a Trustee) pursuant to a nominee agreement (except when the Parent or Manager determines in its reasonable discretion that a court of competent jurisdiction or the related county recorder requires, or Legal Requirements in the particular case require, that such real property must be taken or titled, or such mortgage or other lien must be taken or recorded, in the name of the Certificate Trustee, in which case such consent of such Trustee shall not be required but written notice shall be given to such Trustee); and

 

18.2.2                          The Certificateholders, Parent or Manager as the case may be shall cause the deed or certificate of sale of any real property (including any residential property) to be taken and such real property to be titled, only in the name of the Owner, in the name of the Parent or applicable Manager as nominee of the Owner, or in the name of another nominee of the Owner (other than a Trustee) pursuant to a nominee agreement, and the Certificateholders, Parent or Manager as the case may be shall cause any mortgage or other lien on any real property to be taken and recorded only in the name of the Owner, in the name of the Parent or Manager as 

 

 

nominee of the Owner, or in the name of another nominee of the Owner (other than a Trustee) pursuant to a nominee agreement (except when the Parent or Manager determines in its reasonable discretion that a court of competent jurisdiction or the related county recorder requires, or Legal Requirements in the particular case require, that such real property must be taken or titled, or such mortgage or other lien must be taken or recorded, in the name of the Certificate Trustee, in which case such consent of such Trustee shall not be required but written notice shall be given to such Trustee).

 

18.2.3                          Manager agrees to indemnify, defend, and hold harmless the Trustee (as such and in its individual capacity) from and against any and all Liabilities which may be imposed on, incurred by or asserted at any time against such Trustee (as such or in its individual capacity) in any way relating to or arising out of any act or omission by the Manager inconsistent with the provisions of this Article 18.

 

18.2.4                          Trustee (as such and in its individual capacity) is an intended third party beneficiary of this Agreement and Manager’s obligations thereunder.

 

18.2.5                          Capitalized terms used in this Article 18 but not otherwise defined herein shall have the following meanings:

 

a.                          “Trustee” means the trustee of an Owner trust appointed to serve as trustee pursuant to a master trust agreement or other similar agreement;

 

b.                          “Certificate Trustee” means the Trustee that issues the Trust Certificate;

 

c.                           “Trust Certificate” means the certificate issued to evidence the beneficial ownership interest in the trust; and

 

d.                          “Certificateholder” means the holder of the Trust Certificate(s).

 

*                                         *                                         *

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties have executed this Property Management and Acquisition Services Agreement as of the Effective Date.

 

 

	
MANAGER:
    	
 
    	
PARENT:
    
	
 
    	
 
    	
 
    
	
SILVER BAY PROPERTY CORP., a Delaware   corporation
    	
 
    	
SILVER BAY OPERATING PARTNERSHIP L.P.,
    
	
 
    	
 
    	
a Delaware limited partnership
    
	
 
    	
 
    	
By Silver Bay   Management LLC, its General Partner
    
	
By:
    	
 
    	
 
    	
By Silver Bay   Realty Trust Corp., its Sole Member
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
									

 

 

EXHIBIT A

 

CERTAIN DEFINITIONS

 

 “Affiliate” of a Person means a Person who, directly or indirectly through one or more intermediaries, owns or controls, is owned or controlled by or is under common control or ownership with the Person in question.  For purposes of this definition, “own” or “ownership” means ownership by one Person of fifty percent (50%) or more of the voting stock of the controlled Person, in the case of a corporation or, in the case of Persons other than corporations, entitlement of the controlling Person, directly or indirectly, to receive fifty percent (50%) or more of the dividends, profits or similar economic benefit from the controlled Person; and “control” means the possession, directly, or indirectly, of the power to direct or cause the direction of the management and policies of the controlled Person.

 

 “Building Systems” means the electrical, mechanical, plumbing, heating, ventilating, and air conditioning, hot water, landscape irrigation, swimming pool, spa fountain or other circulation or filtration systems at a Property.

 

“Compensation Expenses” means all salary, bonus, benefit and other compensation costs of the personnel of Manager but excluding such amounts related to PRCM REA’s Chief Executive Officer or data analytics professionals, PRCM Shared Expenses and Manager Shared Expenses.

 

“Confidential Information” means all confidential and proprietary information Parent discloses to Manager, including non-public financial information, strategic business plans or initiatives of the Parent, any Owner, Silver Bay Trust or any of their respective Affiliates, and includes the terms and conditions of this Agreement, the Records and any other information that derives independent economic value, actual or potential, from not being generally known to the public or to other Persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (and includes information developed internally or received from a third party subject to a continuing obligation to maintain its confidentiality).  Confidential Information may be in written, oral or electronic form, and, and includes those portions of written memoranda, notes, analyses, reports, compilations, or studies prepared by the Manager or its Authorized Professionals that contain or are derived from such information.  The term “Confidential Information” does not include information which: (a) is now or is in the future in the public domain through no fault of Manager or its Authorized Professionals; (b) prior to disclosure pursuant to this Agreement, is properly within the legitimate possession of Manager; (c) subsequent to disclosure pursuant to this Agreement, is lawfully received from a third party having rights in the information and to the knowledge of Manager, is not restricted from disclosing the information; (d) is independently developed by Manager without use of or benefit from access to Confidential Information; or (e) is obligated to be produced by law, under order of a court of competent jurisdiction or other similar requirement of a governmental agency, so long as Manager provides Parent with prior written notice, if permitted by law, of any required disclosure pursuant to such law, order, rule, regulation, or requirement.

 

 

“CCRs” means, collectively, the declarations of covenants, conditions, easements and restrictions of any HOA plus the applicable bylaws of the HOA and its rules and regulations.

 

“Data Room” means an electronic data room, database or other centralized depository or electronic information related to the Properties.

 

 “Employees” means those Persons employed by the Manager to provide the services described in this Agreement to or for the benefit of the Properties.

 

“Environmental Laws” means and includes all federal, state and local laws including statutes, regulations, ordinances and other governmental restrictions and requirements and common law relating to the presence, discharge or remediation of air pollutants, water pollutants or process wastewater or otherwise relating to the protection of human health, the environment, toxic or hazardous substances, pesticides, herbicides, fertilizer, mold, asbestos or radon, including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), the Federal Water Pollution Control Act, the Federal Occupational Safety and Health Act (“OSHA”), the Federal Emergency Planning and Community Right to Know Act, the Federal Mine Safety Act, the Federal Safe Drinking Water Act, regulations of the Environmental Protection Agency, Nuclear Regulatory Agency and any other federal agency, and regulations of any state department of natural resources or state environmental protection agency now or at any time hereafter in effect.

 

“Force Majeure Event” means any act occasioned by a cause beyond the reasonable control of Parent or Manager including casualties, war, insurrection, strikes, lockouts, civil unrest and governmental actions, travel advisories issued by governmental authorities, revolution, insurgency, terrorism, sabotage, hurricanes, earthquakes or other natural catastrophes or extreme weather conditions and any other causes that threaten public safety generally or that create a substantial disruption in commercial activities in the area in which the Properties are located.

 

“Gross Collections” means all amounts actually collected in respect of all the Properties, including, rents, utility payments and deposit forfeitures, fees received for applications or credit checks, interest earned on the Trust Operating Account, interest earned on the Trust Deposit Account in excess of related banking charges, and other collected revenues.

 

 “HOA” means any homeowners or condominium association that includes one or more of the Properties.

 

“Lease” means a lease agreement for one of the Properties entered into in accordance with this Agreement.

 

 “Leasing Incentives” means referral fees, gift cards, vouchers, coupons or other inducements given by Manager as an inducement for the execution of any Tenant lease for one of the Properties in accordance with the Leasing Plan.

 

 

“Leasing Plan” means the plan developed by Manager and approved by Parent, as amended from time to time with the approval of both Parties.

 

“Legal Requirements” means governmental statutes, laws, constitutions, codes, ordinances, regulations or rules of governmental entities having jurisdiction over the Manager or the Properties, orders of any insurance company, and the CCRs, rules and regulations and bylaws of any HOAs.

 

“Manager Shared Expenses” means those compensation and other costs and expenses of PRCM REA paid by Manager pursuant to the Mutual Shared Services Agreement except to the extent related to compensation of PRCM REA’s Chief Executive Officer or data analytics professionals.

 

“Mutual Shared Services Agreement” means that certain Mutual Shared Services Agreement dated as of               , by and between Manager and PRCM REA.

 

 “Operating Expenses” means all expenses incurred by Manager on behalf of Parent or any Owner and all other expenses incurred by Manager that are reasonably and necessarily incurred in connection with the acquisition, operation, maintenance, repair, management and leasing of the Properties during the Term, including Manager Shared Expenses, capital expenditures, rental taxes, utilities, casualty and liability insurance premiums, real and personal property taxes, costs and expenses of Operating Supplies, Leasing Incentives, advertising, costs of debt service, fees paid to third party property managers, acquisition agents or contractors, broker commissions and HOA fees, but excluding Compensation Expenses.

 

 “Operating Supplies” means consumables used by Manager or its Employees in the operation of the Properties, including light bulbs, cleaning supplies, batteries, furnace filters, pool chemicals, and other items of a similar nature.

 

“Overhead Expenses” means all costs and expenses incurred by the Manager in the conduct of its business, but excluding Operating Expenses, Compensation Expenses, PRCM Shared Expenses and Manager Shared Expenses.

 

“Performance Expenses” means the Compensation Expenses and Overhead Expenses.

 

“Person” means any natural person, or any partnership, joint venture, limited liability company, limited partnership, corporation, association, trust or trustee, or any other legal entity.

 

“PRCM Shared Expenses” means those compensation and other costs and expenses of Manager paid by PRCM REA pursuant to the Mutual Shared Services Agreement.

 

“Tenant” means, collectively, any person leasing or otherwise entitled to occupy any one of the Properties pursuant to a Lease.Exhibit 10.5

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT is entered into as of                           , 2012 by and among Silver Bay Realty Trust Corp., a Maryland corporation (the “Company”), and the holders listed on Schedule I hereto (each an “Initial REIT Stockholder” and, collectively, the “Initial REIT Stockholders”).

 

RECITALS

 

WHEREAS, in connection with the initial public offering of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), the Company and Silver Bay Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership”), have engaged in certain formation transactions (the “Formation Transactions”), pursuant to which the Initial REIT Stockholders have received shares of Common Stock for their respective interests in the entities participating in the Formation Transactions; and

 

WHEREAS, as a condition to receiving the consent of the Initial REIT Stockholders to the Formation Transactions, the Company has agreed to grant the Initial REIT Stockholders and their permitted assignees and transferees the registration rights set forth in Article II hereof.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.1            Definitions.     In addition to the definitions set forth above, the following terms, as used herein, have the following meanings:

 

“Affiliate” means, with respect to any Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the specified Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

 

“Agreement” means this Registration Rights Agreement, as it may be amended, supplemented or restated from time to time.

 

“Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of Minnesota.

 

“Charter” means the Articles of Amendment and Restatement of the Company as filed with the Secretary of State of the State of Maryland on                           , 2012 as the same may be amended, modified or restated from time to time.

 

“Commission” means the Securities and Exchange Commission.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.

 

“Holder” means any Initial REIT Stockholder who is the record or beneficial owner of any Registrable Security or any assignee or transferee of such Initial REIT Stockholder (including assignments or transfers of Registrable Securities to such assignees or transferees as a result of the foreclosure on any loans secured by such Registrable Securities) (x) to the extent permitted under the Charter and (y) provided such assignee or transferee agrees in writing to be bound by all the provisions hereof, unless such owner, assignee or transferee acquires such Registrable Security in a public distribution pursuant to a registration statement under the Securities Act or pursuant to transactions exempt from registration under the Securities Act where securities sold in such transaction may be resold without subsequent registration under the Securities Act.

 

“Notice and Questionnaire” means a written notice, substantially in the form attached as Exhibit A, delivered by a Holder to the Company (i) notifying the Company of such Holder’s desire to include Registrable Securities held by it in a Shelf Registration Statement, (ii) containing all information about such Holder required to be included in such registration statement in accordance with applicable law, including Item 507 of Regulation S-K promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto, and (iii) pursuant to which such Holder agrees to bound by the terms and conditions hereof.

 

“Ownership Limit Provisions” mean the various provisions of the Company’s Charter set forth in Article VII thereof restricting the ownership of Common Stock by Persons to specified percentages of the outstanding Common Stock.

 

“Person” means an individual or a corporation, partnership, limited liability company, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“Registrable Securities” means with respect to any Holder shares of Common Stock at any time owned, either of record or beneficially, by such Holder and received in the Formation Transactions and any additional shares of Common Stock issued as a dividend, distribution or exchange for, or in respect of such shares (including as a result of combinations, recapitalizations, mergers, consolidations, reorganizations or otherwise) until (i) a registration statement (including a Shelf Registration Statement) covering such shares has been declared effective by the Commission and such shares have been disposed of pursuant to such effective registration statement or unless such shares were issued pursuant to an effective registration statement), (ii) such shares have been publicly sold under Rule 144, (iii) all such shares may be sold in one transaction pursuant to Rule 144 or (iv) such shares have been otherwise transferred in a transaction that constitutes a sale thereof under the Securities Act, the Company has delivered a new certificate or other evidence of ownership for such shares not bearing the Securities Act restricted stock legend and such shares may be resold or otherwise transferred by such transferee without subsequent registration under the Securities Act.

 

“Rule 144” means Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.

 

“Securities Act” means the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder.

 

“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a Shelf Registration Statement under the Securities Act.

 

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“Shelf Registration” shall have the meaning set forth in Section 2.1(a).

 

“Shelf Registration Statement” shall have the meaning set forth in Section 2.1(a).

 

“Suspension Notice” means any written notice delivered by the Company pursuant to Section 2.11 with respect to the suspension of rights under a Shelf Registration Statement or any prospectus contained therein.

 

“Two Harbors” means Two Harbors Investment Corp., a Maryland corporation.

 

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal and not as part of such dealer’s market-making activities.

 

ARTICLE II
 REGISTRATION RIGHTS

 

Section 2.1            Shelf Registration.

 

(a)           Subject to Section 2.11, the Company shall prepare and file not later than 30 days after the consummation date of the Company’s initial public offering (the “Closing Date”), a “shelf” registration statement with respect to the resale of the Registrable Securities (“Shelf Registration”) by the Holders thereof on an appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act (the “Shelf Registration Statement”) and permitting registration of such Registrable Securities for resale by such Holders in accordance with the methods of distribution elected by the Holders and set forth in the Shelf Registration Statement, and in the case of Two Harbors shall include the sale of Common Stock the proceeds of which are used to pay cash for fractional share resulting from any distribution of Registrable Securities to Two Harbors shareholders.  The Company shall use its commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective by the Commission as promptly as reasonably practicable after the filing thereof and no later than 90 days after the Closing Date, and, subject to Section 2.11, to keep such Shelf Registration Statement continuously effective for a period beginning on the date the Shelf Registration is declared effective and ending on the first anniversary of such date.  In addition, if the Shelf Registration Statement is not on Form S-3 (or any similar or successor form) and during the period that the Shelf Registration Statement is effective the Company becomes eligible to use Form S-3 (or any similar or successor form), the Company shall be entitled to amend the Shelf Registration Statement so that it becomes a registration statement on Form S-3 (or any similar or successor form); provided, however, that the Company shall use its best efforts to have such amendment declared effective as soon as practicable after filing.

 

At the time the Shelf Registration Statement is declared effective, each Holder that has delivered a duly completed and executed Notice and Questionnaire to the Company on or prior to the date ten Business Days prior to such time of effectiveness shall be named as a selling securityholder in the Shelf Registration Statement and the related prospectus in such a manner as to permit such Holder to deliver such prospectus to purchasers of Registrable Securities in accordance with applicable law.  If required by applicable law, subject to the terms and conditions hereof, after effectiveness of the Shelf Registration Statement, the Company shall file a supplement to such prospectus or amendment to the Shelf Registration Statement not less than once a quarter as necessary to name as selling securityholders therein any Holders that provide to the Company a duly completed and executed Notice and Questionnaire and shall use commercially reasonable efforts to cause any post-effective amendment to such Shelf Registration Statement filed for such purpose to be declared effective by the Commission as promptly as reasonably practicable after the filing thereof.

 

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(b)           Any offering under a Shelf Registration Statement shall be underwritten at the written request of Holders of Registrable Securities under such registration statement that hold in the aggregate at least 10% of the Registrable Securities; provided that the Company shall not be obligated to effect more than two underwritten offerings hereunder; provided  further, that the Company shall not be obligated to effect, or take any action to effect, an underwritten offering (i) within 120 days following the last date on which an underwritten offering was effected pursuant to this Section 2.1(b) or if longer, the length of any lock-up required by the underwriters in the prior underwritten offering, or (ii) during the period commencing with the date 30 days prior to the Company’s good faith estimate of the date of filing of (provided the Company is actively employed in good faith commercially reasonable efforts to file such registration statement), and ending on a date 90 days after the effective date of, a registration statement with respect to an offering by the Company.  Any request for an underwritten offering hereunder shall be made to the Company in accordance with the notice provisions of this Agreement.

 

(c)           Each Holder acknowledges that by participating in its registration rights pursuant to this Agreement, such Holder will be deemed a party to this Agreement and will be bound by its terms, notwithstanding such Holder’s failure to deliver a Notice and Questionnaire; provided, that any Holder that has not delivered a duly completed and executed Notice and Questionnaire shall not be entitled to be named as a Selling Holder in, or have the Registrable Securities held by it covered by, a Shelf Registration Statement.

 

Section 2.2            Reduction of Offering.      Notwithstanding anything contained herein, if the managing Underwriter or Underwriters of an offering described in Section 2.1(b) advise in writing the Company and the Holder(s) of the Registrable Securities included in such offering that the size of the intended offering is such that the success of the offering would be materially and adversely affected by inclusion of all the Registrable Securities requested to be included, then the amount of securities to be offered for the accounts of Holders shall be reduced pro rata (according to the Registrable Securities requested for inclusion) to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such managing Underwriter or Underwriters, but in priority to any securities proposed to be sold by the Company for its own account or any other holders of securities of the Company with registration rights to participate therein.

 

Section 2.3            Registration Procedures; Filings; Information.      Subject to Section 2.11 hereof, in connection with any Shelf Registration Statement under Section 2.1(a), the Company will use its commercially reasonable efforts to effect the registration of the Registrable Securities covered thereby in accordance with the intended method of disposition thereof as quickly as practicable.  In connection with any Shelf Registration Statement:

 

(a)           The Company will, if requested, prior to filing a Shelf Registration Statement or prospectus or any amendment or supplement thereto, furnish to each Selling Holder and each Underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed (and the Company shall consider Two Harbors comments on the Registration Statement), and thereafter furnish to such Selling Holder and Underwriter, if any, such number of conformed copies of such registration statement, each amendment and supplement thereto (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 Selling Holder or Underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Selling Holder.

 

(b)           After the filing of a Shelf Registration Statement, the Company will promptly notify each Selling Holder of Registrable Securities covered by such registration statement of any stop

 

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order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.

 

(c)           The Company will use its commercially reasonable efforts to (i) register or qualify the Registrable Securities under such other securities or “blue sky” laws of such jurisdictions in the United States (where an exemption does not apply) as any Selling Holder or managing Underwriter(s), if any, reasonably (in light of such Selling Holder’s intended plan of distribution) requests, (ii) assist Two Harbors in obtaining exemptions in provinces of Canada for the distribution of its Registrable Securities to its shareholders and (iii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Selling Holder to consummate the disposition of the Registrable Securities owned by such Selling Holder; provided that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (c), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction.

 

(d)           The Company will immediately notify each Selling Holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the Company’s receipt of any notification of the suspension of the qualification of any Registrable Securities covered by a Shelf Registration Statement for sale in any jurisdiction; or (ii) 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 such Registrable Securities, 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, in light of the circumstances under which they were made, not misleading and promptly make available to each Selling Holder any such supplement or amendment.

 

(e)           The Company will otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder (or any successor rule or regulation hereafter adopted by the Commission).

 

(f)            In the case of an underwritten offering pursuant to a Shelf Registration Statement, the Company will enter into and perform its obligations under customary agreements (including an underwriting agreement, if any, in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities (including, to the extent reasonably requested by the lead or managing underwriters, sending appropriate officers of the Company to attend “road shows” scheduled in reasonable number and at reasonable times in connection with any such underwritten offering with all out-of-pocket costs and expenses incurred by the Company or such officers in connection with such attendance to be paid by the Company) subject to such underwritten offering.

 

(g)           In the case of an underwritten offering pursuant to a Shelf Registration Statement, the Company will make available for inspection by any Selling Holder of Registrable Securities subject to such underwritten offering, any Underwriter participating in any disposition of such Registrable Securities and any attorney, accountant or other professional retained by any such Selling Holder or Underwriter, all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise

 

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their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement, subject to entry by each such customary confidentiality agreement in a form reasonably acceptable to the Company.

 

(h)           The Company will use its commercially reasonable efforts to cause all Registrable Securities covered by such Shelf Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed.

 

(i)            In addition to the Notice and Questionnaire, the Company may require each Selling Holder of Registrable Securities to promptly furnish in writing to the Company such information regarding such selling Holder, the Registrable Securities held by it and the intended method of distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration.  No Holder may include Registrable Securities in any registration statement pursuant to this Agreement unless and until such Holder has furnished to the Company such information.  Each Holder further agrees to furnish as soon as reasonably practicable to the Company all information required to be disclosed in order to make information previously furnished to the Company by such Holder not materially misleading.

 

(j)            Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.3(b) or 2.3(d) or upon receipt of a Suspension Notice, such Selling Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Selling Holder’s receipt of written notice from the Company that such disposition may be made and, in the case of clause (ii) of Section 2.3(d) or, if applicable, Section 2.11, copies of any supplemented or amended prospectus contemplated by clause (ii) of Section 2.3(d) or, if applicable, prepared under Section 2.11, and, if so directed by the Company, such Selling Holder will deliver to the Company all copies, other than permanent file copies then in such Selling Holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.  Each Selling Holder of Registrable Securities agrees that it will immediately notify the Company at any time when a prospectus relating to the registration of such Registrable Securities is required to be delivered under the Securities Act of the happening of an event as a result of which information previously furnished by such Selling Holder to the Company in writing for inclusion in such prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made.

 

Section 2.4            Registration Expenses.     In connection with any registration statement required to be filed hereunder, the Company shall pay the following registration expenses incurred in connection with the registration hereunder (the “Registration Expenses”): (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) the fees and expenses incurred in connection with the listing of the Registrable Securities, (vi) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company, and (vii) the reasonable fees and expenses of any special experts retained by the Company in connection with such registration.  The Company shall have no obligation to pay any fees, discounts or commissions attributable to the sale of Registrable Securities, or any out-of-pocket expenses of the Holders (or the agents who manage their accounts) or any transfer taxes relating to the registration or sale of the Registrable Securities.

 

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Section 2.5            Indemnification by the Company.     The Company agrees to indemnify and hold harmless each Selling Holder of Registrable Securities, its officers, directors and agents, and each Person, if any, who controls such Selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities that arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or that arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission included in reliance upon and in conformity with information furnished in writing to the Company by such Selling Holder or on such Selling Holder’s behalf expressly for inclusion therein.

 

Section 2.6            Indemnification by Holders of Registrable Securities.     Each Selling Holder agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Selling Holder, but only with respect to information relating to such Selling Holder included in reliance upon and in conformity with information furnished in writing by such Selling Holder or on such Selling Holder’s behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus.  In case any action or proceeding shall be brought against the Company or its officers, directors or agents or any such controlling person, in respect of which indemnity may be sought against such Selling Holder, such Selling Holder shall have the rights and duties given to the Company, and the Company or its officers, directors or agents or such controlling person shall have the rights and duties given to such Selling Holder, by Section 2.7; provided, however, that the obligations of such Selling Holder hereunder will be limited to an amount equal to the net proceeds to such Selling Holder (after deducting any discounts and commissions) from the disposition of Registrable Securities pursuant to such registration.

 

Section 2.7            Conduct of Indemnification Proceedings.     In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 2.5 or 2.6, such person (an “Indemnified Party”) shall promptly notify the person against whom such indemnity may be sought (an “Indemnifying Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Party to give such notice will not relieve such Indemnified Party of any obligations under this Article II, except to the extent such Indemnified Party is materially prejudiced by such failure.  In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) representation of the Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and the Indemnified Party.  It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred.  In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by (i) in the case of Persons indemnified pursuant to Section 2.5 hereof, the Selling Holders which owned a majority of the Registrable Securities sold under the applicable registration statement and (ii) in the case

 

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of Persons indemnified pursuant to Section 2.6, the Company.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, 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 arising out of such proceeding.

 

Section 2.8            Contribution.     If the indemnification provided for in Section 2.5 or 2.6 hereof is unavailable to an Indemnified Party or insufficient in respect of any losses, claims, damages or liabilities referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the Company and of each Selling Holder in connection with such statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and of each Selling Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Company and the Selling Holders agree that it would not be just and equitable if contribution pursuant to this Section 2.8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 2.8, no Selling Holder shall be required to contribute any amount in excess of the amount by which the total price at which the securities of such Selling Holder were sold to the public exceeds the amount of any damages which such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  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.  The Selling Holder’s obligations to contribute pursuant to this Section 2.8 are several in proportion to the proceeds of the offering received by such Selling Holder bears to the total proceeds of the offering received by all the Selling Holders and not joint.

 

Section 2.9            Rule 144.     The Company covenants that it will (a) make and keep public information regarding the Company available as those terms are defined in Rule 144, (b) file in a timely manner any reports and documents required to be filed by it under the Securities Act and the Exchange Act , (c) furnish to any Holder forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time more than 90 days after the effective date of the registration statement for the Company’s initial public offering), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), and (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (d) take such further action as any Holder may reasonably request, all to the extent

 

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required from time to time to enable Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

 

Section 2.10         Participation in Underwritten Offerings.     No Person may participate in any underwritten offerings hereunder unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and these registration rights provided for in this Article II.

 

Section 2.11         Suspension of Use of Registration Statement.

 

(a)           If the Board of Directors of the Company determines in its good faith judgment that the filing of a Shelf Registration Statement under Section 2.1(a) or the use of any related prospectus would be materially detrimental to the Company because such action would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential or the disclosure of which would materially impede the Company’s ability to consummate a significant transaction, and that the Company is not otherwise required by applicable securities laws or regulations to disclose, upon written notice of such determination by the Company to the Holders which shall be signed by the Chief Executive Officer, President or any Executive Vice President of the Company certifying thereto, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to a Shelf Registration or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to a Shelf Registration Statement shall be suspended until the earliest of (i) the date upon which the Company notifies the Holders in writing that suspension of such rights for the grounds set forth in this Section 2.11(a) is no longer necessary and they may resume use of the applicable prospectus, (ii) the date upon which copies of the applicable supplemented or amended prospectus is distributed to the Holders, and (iii) 30 consecutive days after the notice to the Holders that the Company shall not be entitled to exercise any such right more than two times during the period the Shelf Registration is effective or less than 30 days from the termination of the prior such suspension period.  The Company agrees to give the notice under (i) above as promptly as practicable following the date that such suspension of rights is no longer necessary.

 

(b)           If all reports required to be filed by the Company pursuant to the Exchange Act have not been filed by the required date without regard to any extension, or if the consummation of any business combination by the Company has occurred or is probable for purposes of Rule 3-05 or Article 11 of Regulation S-X promulgated under the Securities Act or any similar successor rule, upon written notice thereof by the Company to the Holders, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to a Shelf Registration Statement or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to a Shelf Registration Statement shall be suspended until the date on which the Company has filed such reports or obtained and filed the financial information required by Rule 3-05 or Article 11 of Regulation S-X to be included or incorporated by reference, as applicable, in a Shelf Registration Statement, and the Company shall notify the Holders as promptly as practicable when such suspension is no longer required.

 

Section 2.12         Additional Shares.     The Company, at its option, may register under a Shelf Registration Statement and any filings with any state securities commissions filed pursuant to this Agreement, any number of unissued shares of Common Stock or any shares of Common Stock owned by any other stockholder or stockholders of the Company.

 

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ARTICLE III
 MISCELLANEOUS

 

Section 3.1            Remedies.     In addition to being entitled to exercise all rights provided herein and granted by law, including recovery of damages, the Holders shall be entitled to specific performance of the rights under this Agreement.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

Section 3.2            Amendments and Waivers.     The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, in each case without the written consent of the Company and the Holders of a majority of the Registrable Securities; provided, however, that the effect of any such amendment will be that the consenting Holders will not be treated more favorably than all other Holders (without regard to any differences in effect that such amendment or waiver may have on the Holders due to the differing amounts of Registrable Shares held by such Holders).  No failure or delay by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon any breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

 

Section 3.3            Notices.     All notices and other communications in connection with this Agreement shall be made in writing by hand delivery, registered first-class mail, telecopier, or air courier guaranteeing overnight delivery:

 

(1)           if to any Holder, initially to the address indicated in such Holder’s Notice and Questionnaire or, if no Notice and Questionnaire has been delivered, c/o Silver Bay Realty Trust Corp., 601 Carlson Parkway, Suite 250, Minnetonka, Minnesota 55305 Attention: Chief Executive Officer, or to such other address and to such other Persons as any Holder may hereafter specify in writing; and

 

(2)           if to the Company, initially at 601 Carlson Parkway, Suite 250, Minnetonka, Minnesota 55305, Attention: Chief Executive Officer, or to such other address as the Company may hereafter specify in writing.

 

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when received if deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

 

Section 3.4            Successors and Assigns; Assignment of Registration Rights.    This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties.  Any Holder may assign its rights under this Agreement without the consent of the Company in connection with a transfer of such Holder’s Registrable Securities; provided, that the Holder notifies the Company of such proposed transfer and assignment and the transferee or assignee of such rights assumes in writing the obligations of such Holder under this Agreement.

 

Section 3.5            Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in separate 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 agreement.  Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

 

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Section 3.6            Governing Law.     This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware.

 

Section 3.7            Severability.     In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

Section 3.8            Entire Agreement.     This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Registrable Securities.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

Section 3.9            Headings.     The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 3.10         Termination.     The obligations of the parties hereunder shall terminate with respect to a Holder when it no longer holds Registerable Securities and with respect to the Company when there are no longer Registrable Securities with respect to a Shelf Registration Statement, except, in each case, for any obligations under Sections 2.4, 2.5, 2.6, 2.7, 2.8 and Article III.

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

	
 
    	
SILVER BAY REALTY TRUST CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Registration Rights Agreement — REIT Shares]

 

 

	
 
    	
HOLDER
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Registration Rights Agreement — REIT Shares]

 

 

Schedule I

 

[LIST OF HOLDERS]

 

Exhibit A

 

Form of Notice and Questionnaire

 

The undersigned beneficial holder of shares of common stock, par value $.01 per share (“Common Stock”), of Silver Bay Realty Trust Corp. (the “Company”) (the “Registrable Securities”) of Silver Bay Operating Partnership, L.P. (the “Operating Partnership”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “SEC”) one or more registration statements (collectively, the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”), dated                           , 2012, among the Company and the holders listed on Schedule I thereto. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling security holder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions as described below). To be included in the Shelf Registration Statement, this Notice and Questionnaire must be completed, executed and delivered to the Company at the address set forth herein on or prior to the tenth business day before the effectiveness of the Shelf Registration Statement. We will give notice of the filing and effectiveness of the initial Shelf Registration Statement by issuing a press release and by mailing a notice to the holders at their addresses set forth in the register of the registrar.

 

Beneficial owners that do not complete this Notice and Questionnaire and deliver it to the Company as provided below will not be named as selling security holders in the prospectus and therefore will not be permitted to sell any Registrable Securities pursuant to the Shelf Registration Statement. Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire prior to the effectiveness of the initial Shelf Registration Statement so that such beneficial owners may be named as selling security holders in the related prospectus at the time of effectiveness. Upon receipt of a completed Notice and Questionnaire from a beneficial owner following the effectiveness of the initial Shelf Registration Statement, in accordance with the Registration Rights Agreement, the Company will file such amendments to the initial Shelf Registration Statement or additional shelf registration statements or supplements to the related prospectus as are necessary to permit such holder to deliver such prospectus to purchasers of Registrable Securities.

 

Certain legal consequences arise from being named as selling security holders in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling security holder in the Shelf Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Security Holder”) of Registrable Securities hereby elects to include in the prospectus forming a part of the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified

 

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under Item 3). The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement.

 

Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company and its directors, officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against certain losses arising in connection with statements concerning the undersigned made in the Shelf Registration Statement or the related prospectus in reliance upon the information provided in this Notice and Questionnaire.

 

The undersigned hereby provides the following information to the Company and represents and warrants to the Company that such information is accurate and complete:

 

QUESTIONNAIRE

 

1.         (a)     Full Legal Name of Selling Security Holder:

 

(b)              Full Legal Name of registered holder (if not the same as (a) above) through which Registrable Securities listed in Item (3) below are held:

 

(c)               Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in Item (3) below are held:

 

(d)              List below the individual or individuals who exercise voting and/or dispositive powers with respect to the Registrable Securities listed in Item (3) below:

 

2.         Address for Notices to Selling Security Holder:

 

 

Telephone:

Fax:

E-mail address:

Contact Person:

 

3.         Beneficial Ownership of Registrable Securities:

 

Type of Registrable Securities beneficially owned, and number of shares of Common Stock and/or OP Units, as the case may be, beneficially owned:

 

4.         Beneficial Ownership of Securities of the Company Owned by the Selling Security Holder:

 

Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of the Company, other than the Registrable Securities listed above in Item (3).

 

Type and amount of other securities beneficially owned by the Selling Security Holder:

 

5.         Relationship with the Company

 

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Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

 

6.         Plan of Distribution

 

Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows and will not be offering any of such Registrable Securities pursuant to an agreement, arrangement or understanding entered into with a broker or dealer prior to the effective date of the Shelf Registration Statement. Such Registrable Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters or broker-dealers or agents. If the Registrable Securities are sold through underwriters or broker-dealers, the Selling Security Holder will be responsible for underwriting discounts or commissions or agent’s commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions)

 

(i)  on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale;

 

(ii)  in the over-the-counter market;

 

(iii)  in transactions otherwise than on such exchanges or services or in the over-the-counter market; or

 

(iv)  through the writing of options.

 

In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.

 

Two Harbors may distribute its Registrable Securities to its stockholders and sell, or cause an agent to sell, any shares not so distributed on the open market in connection with the payment of cash for fractional shares resulting from such distribution.

 

State any exceptions here:

 

 

Note:  In no event may such method(s) of distribution take the form of an underwritten offering of the Registrable Securities except as provided in the Registration Rights Agreement.

 

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ACKNOWLEDGEMENTS

 

The undersigned acknowledges that it understands its obligation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Registration Rights Agreement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

 

The Selling Security Holder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons set forth therein. Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the Selling Security Holders against certain liabilities.

 

In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below.

 

In the event that the undersigned transfers all or any portion of the Registrable Securities listed in Item 3 above after the date on which such information is provided to the Company, the undersigned agrees to notify the transferee(s) at the time of transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

 

By signing this Notice and Questionnaire, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus.

 

Once this Notice and Questionnaire is executed by the Selling Security Holder and received by the Company, the terms of this Notice and Questionnaire and the representations and warranties contained herein shall be binding on, shall insure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the Selling Security Holder with respect to the Registrable Securities beneficially owned by such Selling Security Holder and listed in Item 3 above.

 

This Notice and Questionnaire shall be governed by, and construed in accordance with, the laws of the State of Delaware.

 

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

	
 
    	
Beneficial Owner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
					

 

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Please return the completed and executed Notice and Questionnaire to:

 

Silver Bay Realty Trust Corp.
 601 Carlson Parkway, Suite 250
 Minnetonka, Minnesota 55305
 Tel: (952) 358-4400
 Attention:  Chief Executive Officer

 

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