Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change
in Fiscal Year.
At the Effective Time, (i) Seven Hills Realty
Trust, then operating as a Maryland statutory trust, was converted to Seven Hills Realty Trust, a Maryland REIT, pursuant to the Plan
of Conversion and the Articles of Conversion; and (ii) the Post-Conversion Declaration and Post-Conversion Bylaws became effective.
The following is a brief summary of the material
differences between the rights of the Company’s shareholders prior to the Conversion and the rights of the Company’s shareholders
as shareholders of the Maryland REIT.
Maryland REIT Law (“MRL”)
The Post-Conversion Governing Documents reflect
the Company’s organization as a Maryland REIT under the MRL. The rights of the Company’s shareholders are governed by the
MRL, the Post-Conversion Declaration and the Post-Conversion Bylaws.
Authorized Shares
The Prior Declaration authorized the Company to
issue an unlimited number of common shares, $0.001 par value per share, and an unlimited number of preferred shares. The Post-Conversion
Declaration authorizes the Company to issue up to 25,000,000 common shares of beneficial interest, $0.001 par value per share.
Amendment to the Declaration of Trust
The Prior Declaration provided that any amendment
to the Prior Declaration (excluding certain amendments that may be approved by the trustees without any action by the shareholders) required
the affirmative vote of a majority of trustees then in office and holders of at least 75% of the shares outstanding and entitled to vote.
If an amendment to the Prior Declaration of Trust was approved by 75% of the trustees then in office, no shareholder approval was required
for that amendment to be effective, except to the extent shareholder approval was required by applicable law, and, if applicable law requires
shareholder approval, the vote required was the lesser of a majority of shares voted or the least amount legally required.
Under the MRL, a Maryland REIT generally cannot
amend its declaration of trust unless the amendment is approved by at least two-thirds of all shares. The MRL allows a Maryland REIT’s
declaration of trust to set a lower percentage, so long as the percentage is not less than a majority of the votes entitled to be cast
on the matter. Under the Post-Conversion Declaration, amendments to the Post-Conversion Declaration may be made if first approved by at
least two-thirds of the trustees then in office and, to the extent a shareholder vote is required under the MRL, then approved by the
affirmative vote of a majority of the votes entitled to be cast by the shareholders entitled to vote thereon (in the case of the provisions
of the Post-Conversion Declaration relating to the classification of the Company’s board of trustees, the removal of the trustees
and the vote required to amend those provisions, the approval of the shareholders entitled to cast at least two-thirds of all the votes
entitled to be cast on the matter will be required).
Trustee Elections
The prior Amended and Restated Bylaws of the Company
(the “Prior Bylaws”) provided that (1) trustees shall be elected by a plurality of the votes cast in an uncontested election;
and (2) trustees shall be elected by a majority of all the votes entitled to be cast in a contested election. Under the Post-Conversion
Declaration of Trust, trustees shall be elected by a plurality of the votes cast in any election at which a quorum is present.
Termination
The Prior Declaration provided that the liquidation
or termination of the Company required the affirmative vote of a majority of trustees then in office and, except where a different voting
standard was required by applicable law, the affirmative vote of at least a majority of all the votes cast at a meeting of shareholders.
If liquidation or termination of the Company was approved by 75% of the trustees then in office, then no shareholder approval was required
for such actions except to the extent shareholder approval was required by applicable law. If approval by shareholders was required by
applicable law, the vote required was a majority (or the lowest proportion permitted if higher than a simple majority) of votes cast or,
if applicable law does not permit approval by a percentage of votes cast, the vote required shall be a majority (or the lowest proportion
permitted if higher than a simple majority) of shares outstanding and entitled to vote.
The Post-Conversion Declaration provides that
the Company may be terminated and its business and affairs wound up and remaining assets distributed to shareholders of the Company upon
the approval by two-thirds of the trustees then in office and shareholder approval by the affirmative vote of a majority of the votes
cast on the matter.
Inspection Rights
Shareholders of the Company had no right under
the Maryland Statutory Trust Act (the “MSTA”) to inspect the records of the Company, including, without limitation, shareholder
lists, documents, accounts and books of the Company.
Under the MRL, any shareholder or his, her or
their agent upon written request may inspect and copy the following trust documents: (1) the bylaws; (2) minutes of the proceedings
of shareholders; (3) the Maryland REIT’s annual statement of affairs; (4) any voting trust agreements deposited with the
Maryland REIT and (5) a statement showing all shares and securities issued by the trust during a specified period of not more than
12 months before the date of the request. In addition, one or more persons who together are and for at least six months have been shareholders
of record of at least 5% of the outstanding shares of any class of shares of a Maryland REIT may inspect and copy the Maryland REIT’s
books of account and share ledger and may present a written request for a statement of the Maryland REIT’s affairs.
Control Share Acquisitions
The Maryland General Corporation Law (“MGCL”)
contains a provision that regulates control share acquisitions and applies to REITs formed under Maryland law. This provision was not
applicable to the Company prior to the Conversion, but is applicable to the Company following the Conversion. The Post-Conversion Bylaws
contain a provision providing that notwithstanding any other provision contained in the Post-Conversion Governing Documents, Title 3,
Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of beneficial interest of
the Company. The Post-Conversion Declaration of Trust contains a provision pursuant to which, notwithstanding any other provision contained
in the Post-Conversion Governing Documents, the Company elects to be subject to Section 3-804(b) and (c) of Title 3, Subtitle
8 of the MGCL, as further detailed in the Description of Shares set forth in Exhibit 99.1 to this to this Current Report on Form 8-K,
which is incorporated herein by reference.
Shareholder Liability; Indemnification by Shareholders
Under the MSTA, the Company’s shareholders
were entitled to the same limitation of personal liability as is extended to stockholders of a corporation organized under the MGCL. The
Prior Declaration disclaimed shareholder liability for acts or obligations of the Company. The Prior Declaration provided that shareholders
will be liable to and indemnify the Company from and against, all costs and expenses, including reasonable attorneys’ and other
professional fees, arising from a shareholder’s breach of or failure to fully comply with any covenant, condition or provision of
the Prior Declaration or the Prior Bylaws or any action against the Company in which the shareholder is not the prevailing party.
Under the MRL, a shareholder is generally not
personally liable for the obligations of a Maryland REIT solely as a result of his or her status as a shareholder. Under the Post-Conversion
Declaration, to the maximum extent permitted by Maryland law in effect from time to time, each shareholder is liable to the Company for,
and shall indemnify and hold harmless the Company and its affiliates from and against, all costs, expenses, penalties, fines or other
amounts, including without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising
from a shareholder’s breach of or failure to fully comply with any covenant, condition or provision of the Post-Conversion Declaration
or Post-Conversion Bylaws or any action by or against the Company in which the shareholder is not the prevailing party, and shall pay
such amounts on demand, together with interest on such amounts, which interest will accrue at the lesser of 18% per annum or the maximum
amount permitted by law, from the date such costs or other amounts are incurred until the receipt of payment.
Shareholder Voting Rights
The Prior Declaration provided that so long as
at least 75% of the trustees then in office approve, no shareholder approval is required for any of the following: (i) the merger
or consolidation or share exchange of the Company with or into any other person or company (including, without limitation, a partnership,
corporation, joint venture, business trust, common law trust or any other business organization) or of any such person or company with
or into the Company; (ii) the conversion of the Company into a corporation, limited liability company, partnership, REIT or any
other entity into which the Company can be converted under the laws of the state of Maryland; or (iii) the sale, lease or transfer
of all or substantially all of the Company’s assets.
Under the Post-Conversion Declaration, the following
actions require the approval of at least two-thirds of the trustees then in office and shareholder approval by the affirmative vote of
a majority of the votes entitled to be cast on the matter to the extent shareholder approval is required to be obtained under the MRL:
(i) the merger or consolidation or share exchange of the Company with or into any other person or company (including, without limitation,
a partnership, corporation, joint venture, business trust, common law trust or any other business organization) or of any such person
or company with or into the Company; (ii) the conversion of the Company into a corporation, limited liability company, partnership,
REIT or any other entity into which the Company can be converted under the laws of the state of Maryland; or (iii) the sale, lease
or transfer of all or substantially all of the Company’s assets.
The foregoing description of the Plan of Conversion,
the Articles of Conversion, the Post-Conversion Declaration and the Post-Conversion Bylaws does not purport to be complete and is qualified
in its entirety by reference to Exhibits 2.1, 2.2, 3.1 and 3.2 to this Current Report on Form 8-K, respectively, which are incorporated
herein by reference.