SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 6, 1997
Charter Municipal Mortgage Acceptance Company
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or other Jurisdiction of Incorporation)
1-13237 13-3949418
(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On February 6, 1998, Arthur G. Hatzopoulos resigned from his position of Senior
Vice President of Related Charter LLC, general partner of Related Charter LP
(the "Manager"), Manager of Charter Municipal Mortgage Acceptance Company and
James D. Spound was elected to Mr. Hatzopoulos' position of Senior Vice
President of the general partner of the Manager by unanimous consent of the
Board of Trustees.
Max E. Schlopy was elected to the position of Vice President of the general
partner of the Manager by unanimous consent of the Board of Trustees on February
6, 1998.
Richard A. Palermo was elected to the positions of Vice President and Controller
of the general partner the Manager of by unanimous consent of the Board of
Trustees on February 6, 1998.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a). Financial Statements
Not Applicable
(b). Pro Forma Financial Information
Not Applicable
(c). Exhibits
3.1.A. Certificate of Trust dated as of August 12, 1996(1)
3.1.B. Trust Agreement dated as of August 12, 1996(1)
3.1.C. Amendment No. 1 to Trust Agreement dated as of April 30, 1997(1)
3.1.D. Amended and Restated Trust Agreement dated as of
September 30, 1997
3.2. Bylaws
4.1. Specimen Share Certificate(2)
10.1 Management Agreement dated as of October 1, 1997
10.2 Agreement and Plan of Merger dated as of October 1, 1997
10.3 Incentive Share Option Plan
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(1) Incorporated by reference to Registrant's Form 10 as filed with the SEC
on August 1, 1997.
(2) Incorporated by reference to Registrant's Form 10/A-1 as filed with the
SEC on September 23, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Charter Municipal Mortgage Acceptance
Company
(Registrant)
BY: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
President
March ,1998
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Exhibit 3.1.D.
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CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AMENDED AND RESTATED TRUST AGREEMENT
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This AMENDED AND RESTATED TRUST AGREEMENT is entered into as of September
30, 1997 by and among the undersigned Trustees and those persons who become
Shareholders pursuant to the terms of this Trust Agreement. Capitalized terms
used but not defined shall have the meanings assigned to such terms in Article
2.
W I T N E S S E T H :
WHEREAS, certain of the Trustees have created a business trust in
accordance with applicable provisions of the Trust Act by entering into a Trust
Agreement, dated as of August 12, 1996, as amended by an Amendment No. 1 to
Trust Agreement dated as of April 30, 1997 (jointly, the "Original Trust
Agreement"), and by the filing with the Secretary of State of the State of
Delaware of a Certificate of Trust on August 12, 1996, as heretofore amended;
and
WHEREAS, the Trustees desire to amend and restate the Original Trust
Agreement in its entirety as provided herein to reflect the consummation of the
Consolidation (as defined in the Solicitation Statement (defined herein)); and
WHEREAS, the Trustees desire that the Trust qualify as a partnership for
federal income tax purposes under the Code.
NOW, THEREFORE, the Trustees hereby declare that all money and property
contributed to or otherwise owned or held by or on behalf of the Trust, together
with the proceeds thereof, shall be held and managed in trust for the benefit of
the Shareholders, subject to the provisions hereof.
2. ORGANIZATION
2.1 Name. The trust hereby created shall be known as Charter Municipal
Mortgage Acceptance Company in which name the Board of Trustees may conduct
business or any subsequent name as shall be selected by the Board of Trustees.
2.2 Business Offices. The principal office of the Trust, and such
additional offices as the Board of Trustees may determine to establish, shall be
located at such place or places inside or outside the State of Delaware as the
Board of Trustees may designate from time to time.
2.3 Declaration of Trust. The Board of Trustees hereby declares that they
will hold
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the Trust Property in trust upon and subject to the conditions set forth herein
for the use and benefit of the Shareholders. It is the intention of the parties
hereto that this Trust Agreement and the Bylaws shall constitute the governing
instruments of the Trust.
3. DEFINITIONS AND GLOSSARY OF TERMS
The following terms used in this Trust Agreement shall (unless otherwise
expressly provided herein or unless the context otherwise requires) have the
following respective meanings:
"Adjusted Capital Account Deficit" shall have the meaning ascribed thereto
in Section 9.5.
"Adjusted Contribution" shall mean the capital contributions of any
Shareholder reduced by the total Distributions to such Shareholder from Capital
Events but excluding Distributions to such Shareholder attributable to gains, if
any, from Capital Events.
"Affiliate" of an Entity shall mean (i) any officer, director, partner,
employee or controlling shareholder of such Entity; (ii) any Person controlling,
controlled by or under common control with any Entity or any individual
described in (i) above; (iii) any officer, director, trustee, general partner or
employee of any Person described in (ii) above; and (iv) any Person who is a
member, other than as limited partner, with any individual described in (i) and
(ii) above in a relationship of joint venture, general partnership, or similar
form of unincorporated business association; provided however, that a partner in
a partnership or joint venture with (a) the Trust or (b) an Affiliate of a
Related Manager, shall not by virtue of such relationship be deemed an Affiliate
of a Related Manager. For purposes of this definition, the term "control" shall
also mean the control or ownership of 10% or more of the outstanding Voting
Securities of the Person referred to.
"Available Cash" shall mean, with respect to the applicable period of
measurement (i.e., any period beginning on the first day of the fiscal year,
quarter or other period commencing immediately after the last day of the fiscal
year, quarter or other applicable period for purposes of the prior calculation
of Available Cash for, or with respect to which, a Distribution has been made,
and ending on the last day of the fiscal year, quarter or other applicable
period immediately preceding the date of the calculation), the excess, if any,
as of such date, of
(a) the gross cash receipts of the Trust for such period from all
sources whatsoever, including, without limitation, the following:
(i) all interest and other revenues, income and proceeds
derived by the Trust from its operations, including, without
limitation, distributions received by the Trust from any Entity in
which the Trust has an interest;
(ii) all proceeds and revenues received by the Trust on
account of any sales
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of First Mortgage Bonds, Tax-Exempt Securities or other property or
assets of the Trust or as a refinancing of or payment of principal,
interest, costs, fees, penalties or otherwise on account of any
borrowings made by, or other leverage of, the Trust or financings or
refinancings of any asset of the Trust;
(iii) the amount of any insurance proceeds and condemnation
awards received by the Trust;
(iv) all capital contributions or loans received by the Trust
from its Shareholders;
(v) all Reserves previously set aside by the Trust, to the
extent such amounts are no longer needed for the specific purposes
for which such amounts were reserved; and
(vi) the proceeds of liquidation of the Trust's assets in
accordance with this Agreement;
over
(b) the sum of:
(i) all operating costs and expenses, including taxes and
other expenses of the assets directly and indirectly held by the
Trust and capital expenditures made during such period (without
deduction, however, for any capital expenditures, charges for
depreciation or other expenses not paid in cash or expenditures from
Reserves described in (vii) below);
(ii) all costs and expenses expended or paid during such
period in connection with the sale or other disposition, or
financing or refinancing, of the assets directly or indirectly held
by the Trust or the recovery of insurance or condemnation proceeds;
(iii) all fees and reimbursements provided for under this
Agreement;
(iv) all debt service, including principal and interest, paid
during such period on all indebtedness (including under any line of
credit) of the Trust;
(v) all capital contributions, advances, reimbursements or
similar payments made to any Person in which the Trust has an
interest;
(vi) all loans made by the Trust in accordance with the terms
of this Agreement; and
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(vii) any new Reserves or increases in Reserves reasonably
determined by the Managing Trustees to be necessary for working
capital, capital improvements, payments of periodic expenditures,
debt service or other purposes for the Trust or any Person in which
the Trust has an interest.
"Board of Trustees" shall mean, collectively, the Managing Trustees named
in Section 3.1(b) so long as they continue in office, and all other individuals
who have been duly elected and qualify as Managing Trustees.
"Book Amortization" shall have the meaning ascribed thereto in Section
9.7.
"Book Depreciation" shall have the meaning ascribed thereto in Section
9.7.
"Book Disparity" shall have the meaning ascribed thereto in Section 9.7.
"Book Gain" shall have the meaning ascribed thereto in Section 9.7.
"Book Loss" shall have the meaning ascribed thereto in Section 9.7.
"Bylaws" shall mean the Bylaws of the Trust as adopted, and as amended or
restated from time to time, by the Board of Trustees pursuant to Section
10.2(b), which Bylaws are incorporated herein by reference and shall form a part
of the governing instrument of the Trust.
"Capital Account" shall have the meaning ascribed thereto in
Section 9.4.
"Capital Event" shall mean any Trust transaction not in the ordinary
course of its business including, without limitation, principal payments,
prepayments, the incurrence of prepayment penalties, sales, exchanges,
foreclosures or other dispositions of assets directly or indirectly owned by the
Trust, recoveries of damage awards and insurance proceeds not used to rebuild
(other than the receipt of contributions to the capital of the Trust and
business or rental interruption insurance proceeds not used to rebuild).
"Cause" shall mean gross negligence or willful misconduct.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent revenue laws.
"Common Shares" shall mean any Shares classified or reclassified as such
by the Board of Trustees.
"Common Shareholder" shall mean any Person who holds Common Shares in its
capacity as a beneficial owner of the Trust including the Manager to the extent
it holds Common Shares.
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"Consolidation" shall have the meaning ascribed thereto in the Preamble.
"Consolidation Contribution" shall have the meaning ascribed thereto in
Section 9.4(c).
"control" (and its correlative forms) shall have the meaning ascribed to
such term under the Investment Company Act of 1940, as amended and in effect on
the date of this Agreement.
"Covered Person" shall have the meaning ascribed thereto in Section
10.9.
"Distributions" shall mean any cash distributed to Shareholders of Common
Shares arising from their interest in the Trust, but shall not include the
Special Distribution.
"Entity" shall mean any general partnership, limited partnership,
corporation, joint venture, trust, business trust, real estate investment trust,
limited liability company, cooperative or association.
"Final Ratio" shall have the meaning ascribed thereto in Section 9.6(c).
"First Mortgage Bonds" shall mean tax-exempt participating or
non-participating first mortgage bonds issued by various state or local
governments or their agencies or authorities.
"Fourth Anniversary" shall have the meaning ascribed thereto in Section
12.2(a).
"Incentive Share Option Plan" shall mean any Share option plan which may
be adopted from time to time by the Board of Trustees.
"Indemnified Party(ies)" shall have the meaning ascribed thereto in
Section 14.1.
"Independent Trustees" shall mean those Managing Trustees who are not
officers or employees of the Trust; who are neither related to the Trust's
officers nor represent concentrated or family holdings of the Trust's voting
interests; and who, in the view of the Board of Trustees, are free of any
relationship that would interfere with the exercise of independent judgment with
respect to matters relating or pertaining to the affairs of the Trust.
"Liquidation Fee" shall have the meaning ascribed thereto in Article 8.
"Major Decisions" shall mean (i) the sale, mortgage, pledge or other
Transfer of joint venture assets owned by the Trust; (ii) the merger or
consolidation of any joint venture in which the Trust is a venturer with, or
conversion of such joint venture into, another Person; and (iii) the dissolution
or liquidation of such joint venture.
"Majority Vote" shall mean the affirmative vote of the holders of more
than 50% of the outstanding Common Shares together with any other class or
series of Shares entitled to vote on
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the matter.
"Management Agreement" shall mean the agreement between the Trust and the
Manager, as amended from time to time, pursuant to which the Manager will be
engaged by the Trust to conduct the business and affairs of the Trust upon the
terms and conditions therein.
"Manager" shall mean such Person (including any Related Manager) to which
the Board of Trustees delegates the authority to conduct the business and
affairs of the Trust in all matters as set forth in the Management Agreement
with the Manager.
"Managing Trustees" shall mean the individuals named in Section 3.1(b) so
long as they continue in office, and all other individuals who have been duly
elected and qualify as trustees of the Trust hereunder, including the
Independent Trustees but not including the Registered Trustee.
"Mergers" shall have the meaning ascribed thereto in Section 11.3.
"Minority Position" shall mean a minority portion of a First Mortgage
Bond, which is subordinated to the credit position of the holders of the
remaining portions of such First Mortgage Bond.
"Mortgage Loan" shall mean the first mortgage and related mortgage loan on
an Underlying Property which has been financed with the proceeds of a First
Mortgage Bond.
"Net Income" or "Net Loss" shall mean for each fiscal year or other
applicable period, an amount equal to the Trust's taxable income or loss for
such year or period as determined for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) of the Code shall be included in taxable income or loss), and (a)
by including as an item of gross income any tax-exempt income received by the
Trust and not otherwise taken into account in computing Net Income or Net Loss;
(b) by treating as a deductible expense any expenditure of the Trust described
in Section 705(a)(2)(B) of the Code (or which is treated as a Section
705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations) and not otherwise taken into account in computing Net Income or Net
Loss; and (c) by not taking into account in computing Net Income or Net Loss
items separately allocated to the Shareholders pursuant to the provisions of
Article 10 hereof. "Net Income" or "Net Loss" shall also include the Trust's
share of income or loss of any Entity which owns a particular First Mortgage
Bond or Tax-Exempt Security, as determined for federal income tax purposes.
"Original Trust Agreement" shall have the meaning ascribed thereto in
the Preamble.
"Partnerships" shall have the meaning ascribed thereto in Section 11.3.
"Percentage Interest" shall mean, as to a Common Shareholder, the
fractional part of the Common Shares owned by such Common Shareholder and
expressed as a percentage computed
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by dividing the Common Shares owned by such Common Shareholder by the total
number of issued and outstanding Common Shares.
"Person" shall mean an individual or Entity.
"Preferred Shares" shall mean any Shares classified or reclassified as
such by the Board of Trustees.
"Registered Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as a trustee
hereunder, or any other Person which succeeds it in such capacity pursuant to
Section 15.2 and in compliance with Section 3807 of the Trust Act.
"Registered Trustee Person" shall have the meaning ascribed thereto in
Section 14.2.
"Related Management Agreement" shall have the meaning ascribed thereto in
Section 12.2(a).
"Related Manager" shall mean any Manager which is an Affiliate of Related
Capital Company, a New York general partnership, or any successor thereto.
"Reserves" shall mean the amount set aside by the Board of Trustees or the
Manager as reserves of the Trust for working capital and for repairs,
replacements, contingencies or other purposes.
"Shareholder" shall mean collectively, any Common Shareholder or any other
Person who holds Shares in its capacity as a beneficial owner of the Trust,
including the Manager to the extent it holds Shares.
"Shareholder Minimum Gain" shall mean an amount, with respect to each
Shareholder Nonrecourse Debt, equal to the Trust Minimum Gain (assuming, for
this purpose, that the Trust's only liability was the Shareholder Nonrecourse
Debt), that would result if such Shareholder Nonrecourse Debt were treated as a
nonrecourse liability, determined in accordance with Treas. Reg. ss.
1.704-2(i)(3) and then aggregating the separately computed gains.
"Shareholder Nonrecourse Debt" shall have the meaning ascribed to
"partner nonrecourse debt" set forth in Treas. Reg. ss. 1.704-2(b)(4).
"Shareholder Nonrecourse Deductions" shall have the meaning ascribed to
"partner nonrecourse deductions" set forth in Treas. Reg. ss. 1.704-2(i)(2).
"Shares" shall mean the beneficial interests of a Shareholder in the Trust
representing undivided beneficial interests in the assets of the Trust, which
may be evidenced by Trust
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Certificates, including, without limitation, Common Shares and Preferred Shares.
"SML" shall mean second mortgage loans advanced to obligors under a First
Mortgage Bond.
"Solicitation Statement" shall mean the Solicitation Statement of the
Trust dated June 18, 1997 pursuant to which the initial Common Shares were
issued.
"Special Distribution" shall mean the distribution payable to a Related
Manager pursuant to Section 9.10.
"Substantially All of the Assets" shall mean First Mortgage Bonds and
Tax-Exempt Securities representing 66-2/3% or more of the net book value of all
of the Trust's assets as of the end of the most recently completed calendar
quarter.
"Taxable Tail" shall mean a taxable bond which funds certain costs
associated with the issuance of First Mortgage Bonds that cannot be funded by
the First Mortgage Bonds.
"Tax-Exempt Securities" shall mean securities, the income from which is
exempt from federal income taxation, which are rated not lower than A1 by
Moody's Investors Service, Inc. or A+ by Standard & Poor's Ratings Group, or are
unrated but which the Manager determines are of comparable quality.
"Terminating Capital Transaction" shall mean any sale or other disposition
of assets of the Trust in connection with a liquidation of the Trust.
"Total Invested Assets" shall mean the aggregate original amount invested
from time to time in mortgage investments and Tax-Exempt Securities (including
amounts which the Trust is committed to invest as part of a series or pursuant
to an installment funding obligation) reduced, upon the receipt of sale
proceeds, or insurance or guarantee proceeds or, by the original amount invested
in the mortgage investment or Tax-Exempt Securities which is not reinvested,
except that in the case of a partial prepayment, Total Invested Assets shall be
reduced on a pro rata basis to the extent not reinvested. Total Invested Assets
shall be calculated without regard to whether mortgage investments or Tax-Exempt
Securities are held by the Trust or other Persons (i) to whom the Trust has
Transferred such mortgage investments or Tax-Exempt Securities to facilitate
financing) or (ii) which retain the proceeds resulting from any such financing.
For purposes of the definition of Total Invested Assets, mortgage investments
include, without limitation, First Mortgage Bonds, SMLs and investments similar
to the foregoing.
"Total Market Value" shall mean the greater of (i) the sum of (a) the
aggregate market value of the Trust's outstanding Shares, and (b) the total
leverage of the Trust and (ii) the aggregate value of the Trust's assets as
determined by the Manager based upon third-party or management appraisals and
other criteria as the Board of Trustees shall determine in its sole
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discretion.
"Transfer" shall mean sale, assignment, conveyance, transfer, gift,
pledge, hypothecation, mortgage, exchange or other disposition whether
voluntary, involuntary, by operation of law or otherwise.
"Trust" shall mean Charter Municipal Mortgage Acceptance Company.
"Trust Act" shall mean the Delaware Business Trust Act, 12 Del.C.
ss.ss. 3801 et. seq., as amended from time to time, or the corresponding
provisions of any succeeding law.
"Trust Agreement" shall mean this Amended and Restated Trust Agreement,
dated as of September 30, 1997 among the undersigned Trustees and those Persons
who become Shareholders pursuant to the terms of this Trust Agreement, as
amended or restated from time to time, and shall include the By-laws, as amended
or restated from time to time by the Board of Trustees.
"Trust Certificate" shall mean a certificate signed on behalf of the Trust
by a Trustee or the Manager, evidencing the Shares of a Shareholder in the
Trust.
"Trust Minimum Gain" shall mean the sum of the amounts determined by
computing with respect to each nonrecourse liability of the Trust, the amount of
gain (of whatever character), if any, that would be realized by the Trust if it
disposed (in a taxable transaction) of the Trust Property subject to such
liability for no consideration other than full satisfaction of such liability
and then aggregating the separately computed gains.
"Trust Property" shall mean all right, title and interest of the Trust in
and to any property contributed to the Trust by the Shareholders or otherwise
acquired by the Trust, including, without limitation, all distributions or
payments thereon or proceeds therefrom.
"Trustees" shall mean, collectively, the Managing Trustees and the
Registered Trustee.
"Underlying Properties" shall mean the properties which secure the
obligations under the Mortgage Loans, First Mortgage Bonds and other mortgage
investments.
"Voting Securities" shall have the meaning ascribed to such term under the
Investment Company Act of 1940, as amended and in effect on the date of this
Trust Agreement.
4. TRUSTEES; LEGAL TITLE
4.1 Managing Trustees.
(a) Number. There shall be not less than three nor more than nine
Managing
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Trustees, at least one-third of whom must be Independent Trustees. Initially,
the Trust shall have five Managing Trustees, which number may be increased or
decreased pursuant to the Bylaws, but shall never be less than the minimum
number, if any, required by the Trust Act nor more than nine.
(b) Initial Board of Trustees. The names of the initial Managing
Trustees are:
J. Michael Fried (Class III)
Stuart J. Boesky (Class III)
Alan P. Hirmes (Class II)
Peter T. Allen (Independent Trustee) (Class I)
Arthur T. Fisch (Independent Trustee) (Class I)
(c) Classes; Terms. The Board of Trustees shall be elected by the
Common Shareholders. The Managing Trustees (other than any Managing Trustee
elected solely by holders of one or more classes or series of Shares) shall be
classified, with respect to the terms for which they severally hold office, into
three classes, as nearly equal in number as possible, Class I to hold office
initially for a term expiring at the next succeeding annual meeting of
Shareholders, Class II to hold office initially for a term expiring at the
second succeeding annual meeting of Shareholders and Class III to hold office
initially for a term expiring at the third succeeding annual meeting of
Shareholders, with the members of each class to hold office until their
successors are duly elected and qualify. At each annual meeting of the
Shareholders, the successors to the class of Managing Trustees whose term
expires at such meeting shall be elected to hold office for a term expiring at
the annual meeting of Shareholders held in the third year following the year of
their election. The Managing Trustees may increase the number of Managing
Trustees and may fill any vacancy, whether resulting from an increase in the
number of Managing Trustees or otherwise, on the Board of Trustees occurring
before the first annual meeting of Shareholders in the manner provided in the
Bylaws.
(d) Removal of Managing Trustees. Subject to the rights of holders
of one or more classes or series of Shares to elect one or more Managing
Trustees, any Managing Trustee, or the entire Board of Trustees, may be removed
from office at any time, but only by Majority Vote; provided, however, that
prior to the Fourth Anniversary, such removal may only be for Cause.
(e) Resignation of Managing Trustees. Any Managing Trustee may
resign at any time by delivering his resignation in writing to the Board of
Trustees, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective.
4.2 Registered Trustee.
(a) Initial Registered Trustee; Powers. The Registered Trustee has
been
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appointed as trustee and joined as a party hereunder for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Trust Act. In the
event of the resignation or removal of the Registered Trustee, the Board of
Trustees shall appoint a successor Registered Trustee in accordance with Section
15.2.
The Registered Trustee shall be responsible for performing only the
following duties with respect to the Trust: (i) to execute, deliver, acknowledge
and file any certificates of trust and any amendments thereto required to be
filed pursuant to applicable law, (ii) to execute any Trust Certificates (or
other certificates of the Trust) representing Shares issued to Shareholders if
reasonably requested to do so by written instruction from the Board of Trustees,
(iii) to execute any duly adopted amendments to this Trust Agreement and (iv) to
execute, deliver, acknowledge and file any certificates of cancellation required
to be filed pursuant to applicable law. The Board of Trustees or the Manager
shall keep the Registered Trustee reasonably informed of any actions of the
Board of Trustees or the Manager or other circumstances that could affect the
rights, duties or liabilities of the Registered Trustee. The Registered Trustee
shall have no other authority, duties or liabilities. The Registered Trustee has
no responsibility for monitoring the conduct of the Board of Trustees or the
Manager or causing the Board of Trustees or the Manager, or any other Person to
discharge their respective duties under this Trust Agreement, the Bylaws or the
Management Agreement, and the Registered Trustee shall have no liability for the
acts and omissions of the Trust, the Board of Trustees or the Manager.
(b) Compensation and Expenses of Registered Trustee. The Registered
Trustee shall be entitled to receive from the Trust reasonable compensation for
its services hereunder, as shall be agreed to from time to time by the Board of
Trustees and the Registered Trustee, and the Registered Trustee shall be
entitled to be reimbursed by the Trust for reasonable out-of-pocket expenses
incurred by the Registered Trustee in the performance of its duties hereunder.
(c) The Registered Trustee shall have a lien on the assets of the
Trust for any compensation or expenses and indemnity due to the Registered
Trustee by the Trust, which lien shall be prior to all other liens. The parties
hereto hereby approve and ratify the Trust's execution, delivery and performance
of the Fee Agreement, dated as of July 25, 1997, by and between the Registered
Trustee and the Trust.
4.3 Legal Title. Legal title to all Trust Property shall be vested in the
Trust, except that the Board of Trustees may cause legal title to any Trust
Property to be held by or in the name of any Managing Trustee or any other
Person as nominee. Written evidence of the qualification and acceptance of
election or appointment of successor and additional Managing Trustees may be
filed with the records of the Trust and in such other offices, agencies or
places as the Board of Trustees may deem necessary or desirable. To the fullest
extent permitted by law, no Shareholder shall be deemed to have a severable
ownership interest in any individual asset of the Trust or any right of
partition or possession thereof.
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5. PURPOSES
The purposes of the Trust shall be, as determined from time to time by the
Board of Trustees, to engage in any lawful business or activity for which a
business trust may be created under the Trust Act.
6. TERM
The Trust commenced on August 12, 1996, and shall have perpetual
existence, unless earlier terminated in accordance with the provisions of this
Trust Agreement or the Bylaws.
7. SHAREHOLDERS; SHARES
7.1 Authorization of Shares. The Trust is authorized to issue 50,000,000
Shares. Notwithstanding anything to the contrary set forth in this Trust
Agreement (except for the immediately preceding sentence) and without any
express or implied limitation on the authority of the Trust, and the Board of
Trustees on behalf of the Trust, to issue additional Shares, the Trust is
authorized (i) to issue any or all Shares necessary or desirable to consummate
the Consolidation (as defined in the Solicitation Statement), including, without
limitation, to consummate Mergers, (ii) to issue any or all Shares necessary or
desirable in connection with the settlement of the Litigation (as defined in the
Solicitation Statement), and (iii) to issue any or all Shares upon exercise of
options granted by the Board of Trustees or to be granted pursuant to an
Incentive Share Option Plan upon payment in accordance with the terms of the
Incentive Share Option Plan or other plans. Shareholders have no preemptive or
other similar rights with respect to the issuance of Shares. Without the need
for the consent of any Person, the Trust is hereby authorized to repurchase from
Related Capital Company the 1,000 Shares of the Trust that were issued to
Related Capital Company pursuant to the Original Trust Agreement for a purchase
price of $1.00 per Share. Upon receipt of such Shares, such Shares shall be
deemed to be canceled.
7.2 Common Shares. Each Common Share shall entitle the holder thereof to
one vote. The Board of Trustees may reclassify any unissued Common Shares from
time to time in one or more classes or series of beneficial interests.
7.3 Preferred Shares. Preferred Shares shall not entitle the holder
thereof to vote unless the Board of Trustees, in its sole discretion, determines
to grant voting rights to holders of Preferred Shares. The Board of Trustees may
classify any unissued Preferred Shares and reclassify any previously classified
but unissued Preferred Shares of any series from time to time, in one or more
series of beneficial interests in the Trust.
7.4 Classified or Reclassified Shares. Prior to issuance of classified or
reclassified Shares of any class or series, the Board of Trustees by resolution
shall: (a) designate that class or series to distinguish it from all other
classes and series of Shares of the Trust; (b) specify the
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number of Shares to be included in the class or series; and (c) set or change,
subject to the express terms of any class or series of Shares of the Trust
outstanding at the time, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each class or series.
7.5 Trust Agreement and Bylaws. All Persons who shall acquire Shares in
the Trust shall acquire the same subject to the provisions of this Trust
Agreement and the Bylaws and shall be bound by the terms and provisions of this
Trust Agreement and Bylaws.
7.6 Effective Date of Transfer of Shares. The effective date for the
recognition of transfers of Shares, and the identification of the Person
entitled to be treated as the Shareholder at any given time, shall be determined
as follows:
(a) for purposes of Article 9 and any other provision of this Trust
Agreement which relates to the allocation or apportionment of Net Income, Net
Loss or Distributions, the Person entitled to be recognized as the Shareholder
shall be determined in accordance with the provisions of Section 9.2; and
(b) for all purposes other than those set forth in Section 6.6(a),
the Person entitled to be recognized as the Shareholder shall be the Person who
is then listed as the record owner of the Shares on the books and records of the
Trust.
8. LIABILITY OF THE SHAREHOLDERS; REGISTERED TRUSTEE; MANAGING TRUSTEES;
EMPLOYEES; MANAGER
8.1 Shareholders. The Shareholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. If and to the extent required by Delaware law, a Shareholder may,
under certain circumstances, be required to return to the Trust for the benefit
of Trust creditors, amounts previously distributed to him.
8.2 Registered Trustee. The Registered Trustee shall not be liable to the
Trust, Shareholders, the Trustees or any other Person or third parties for any
act, omission or obligation of the Trust, the Board of Trustees, any
Shareholder, the Registered Trustee or the Manager, under any circumstance,
except for any loss directly attributable to its own gross negligence or willful
misconduct. In particular, but not by way of limitation:
(a) The Registered Trustee shall not be liable for any error of
judgment made which did not constitute gross negligence or willful
misconduct by it;
(b) No provision of this Trust Agreement shall require the
Registered Trustee to take any action, to expend or risk its personal
funds or otherwise incur any financial liability in the performance of its
rights, powers or obligations hereunder, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
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against such action, risk or liability is not reasonably assured or
provided to it;
(c) Under no circumstance shall the Registered Trustee be
personally liable for any representation, warranty, covenant or other
obligation or indebtedness of the Trust;
(d) The Registered Trustee shall not be personally responsible for
or in respect of the validity or sufficiency of this Trust Agreement, or
the form, validity, value or sufficiency of the Trust Property;
(e) The Registered Trustee shall not be personally liable for its
good faith reliance on the provisions of this Trust Agreement;
(f) Under no circumstances shall the Registered Trustee be
personally liable for (i) any action it takes or omits to take in good
faith in accordance with the instruction of the Board of Trustees or the
Manager, (ii) the acts or omissions of the Board of Trustees or the
Manager or (iii) the supervision of or the failure of the Board of
Trustees or the Manager to discharge their respective duties hereunder or
pursuant to the Management Agreement; and
(g) The Registered Trustee shall not incur any liability to anyone
in acting upon any document believed in good faith by it to be genuine and
believed in good faith by it to be signed by the proper party or parties
and need not investigate any fact or matter pertaining to or in any such
document. The Registered Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any Person
as conclusive evidence that such resolution has been duly adopted by such
Person and that the same is in full force and effect. As to any fact or
matter, the method of the determination of which is not specifically
prescribed herein, the Registered Trustee may for all purposes hereof rely
on a certificate, signed by any officer of the relevant Person, as to such
fact or matter, and such certificate shall constitute full protection to
the Registered Trustee for any action taken or omitted to be taken by it
in good faith in reliance thereon.
8.3 Managing Trustees; Employees. A Managing Trustee or employee of the
Trust, when acting in such respective capacities, shall not be personally liable
to any Person other than the Trust or a Shareholder for any act, omission or
obligation of the Trust, the Registered Trustee, the Manager or any Managing
Trustee. To the maximum extent that Delaware law in effect from time to time
permits limitation of the liability of trustees of a business trust, no Managing
Trustee shall be liable to the Trust or to any Shareholder for monetary damages
for breach of any duty (including, without limitation, fiduciary duty) as a
Managing Trustee, except (i) for acts or omissions of such Managing Trustee that
involve actual fraud or willful misconduct, or (ii) for any transaction from
which such Managing Trustee derived improper personal benefit. Neither the
amendment nor repeal of this Section 7.3 nor the adoption or
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amendment of any other provision of this Trust Agreement inconsistent with this
Section 7.3 shall apply to or affect in any respect the applicability of the
immediately preceding sentence with respect to any act or failure to act that
occurred prior to such amendment, repeal or adoption.
8.4 Reliance on Agents, Attorneys, Etc. In the exercise of their rights
and obligations hereunder, the Registered Trustee and the Managing Trustees (i)
may act directly, or at the expense of the Trust, through agents (including,
without limitation, a Related Manager) or attorneys pursuant to agreements
entered into with any of them, and they shall not be liable for the default or
misconduct of such agents or attorneys if such agent or attorney shall have been
selected in good faith and (ii) may, at the expense of the Trust, consult with
counsel to be selected in good faith, and employed by them, and shall not be
liable for anything done, suffered or omitted in good faith in accordance with
the advice or opinion of any such counsel.
8.5 Manager. In the event that, immediately prior to the dissolution of
the Trust referred to in Section 12.3, the Manager, in its capacity as
Shareholder, shall have a deficiency in its Capital Account as determined in
accordance with tax accounting principles, then the Manager shall contribute in
cash to the capital of the Trust an amount equal to whichever is the lesser of
(a) the deficiency in the Manager's Capital Account or (b) the excess of 1.01%
of the total Consolidation Contributions over the total capital contribution of
the Manager.
9. COMPENSATION TO A RELATED MANAGER AND ITS AFFILIATES
If the Trust retains a Manager pursuant to Section 10.2(h) to manage the
day-to-day affairs of the Trust which is a Related Manager, the fees payable by
the Trust (except as otherwise provided) to such Related Manager or its
designees shall not exceed the following:
Fee/Compensation Amount
Bond Selection Fee: 2.0% of the principal amount of each First
Mortgage Bond and other tax-exempt
instrument originated or acquired by the
Trust, its subsidiaries or other Persons
which holds, or to whom the Trust or its
subsidiaries has Transferred, such First
Mortgage Bond or other tax-exempt instrument
to facilitate financing.
Bond Placement Fee: 2.0% of the principal amount of each First
Mortgage Bond and other tax-exempt
instrument originated or acquired by the
Trust, its subsidiaries or other Persons
which holds, or to whom the Trust or its
subsidiaries has Transferred, such First
Mortgage Bond or other tax-exempt instrument
to facilitate financing (payable by the
borrower, and not the Trust or its
subsidiaries).
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Special Distributions: .375% per annum of Total Invested Assets of
the Trust and its subsidiaries.
Shareholder Distributions: Related Manager shall be entitled to receive
distributions from the Trust or its
subsidiaries in respect of any Shares it
holds.
Loan Servicing Fees: .25% per annum of the outstanding principal
amount of First Mortgage Bonds and other
mortgage investments held by the Trust, its
subsidiaries or other Persons which holds,
or to whom the Trust or its subsidiaries has
Transferred, such First Mortgage Bonds or
other mortgage investments to facilitate
financing.
Operating Expense For direct expenses incurred by the Related
Reimbursement: Manager in an amount not to exceed $200,000
per annum subject to (i) annual increases
after the Trust's first 12 months of
operations and each year thereafter based
upon increases in the Consumer Price Index
for All Urban Consumers, N.Y., N.Y. -
Northeastern N.J. (Base Year 1982-1984 =
100) specified for "All Items" as issued by
the Bureau of Labor Statistics, U.S.
Department of Labor (or comparable
substitute index) and (ii) proportionately
as the Trust's assets increase based upon
the amount of Total Invested Assets of the
Trust from time to time.
Incentive Share Options: Related Manager may receive options to
acquire additional Shares pursuant to the
Trust's share option plan only on the
following basis:
Commencement: No options may be granted until six months
after the Trust's Shares have begun to
trade.
Administration: Compensation Committee comprised only of two
or more Independent Trustees.
Number of Options: Maximum over life of plan - 2,058,638
options for Common Shares (as such amount
may be adjusted to reflect the elimination
of fractional Common Shares pursuant to the
Solicitation Statement such that the maximum
number of options does not exceed 10% of
Common Shares outstanding on the date the
Consolidation becomes effective).
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Maximum each calendar year - 3% of Shares
outstanding as of the end of the prior year
(617,591 options for the Trust's first
calendar year (as such amount may be
adjusted to reflect the elimination of
fractional Common Shares pursuant to the
Solicitation Statement such that the maximum
number of options does not exceed 3% of the
Shares outstanding on the date the
Consolidation becomes effective)). Any
Common Shares available for grant of
options, but for which options are not
granted, in previous years, may be carried
over for grant in a subsequent year.
Exercise Price: Equal to or greater than fair market value
on date of grant.
Conditions to Compensation Committee may only grant
Issuance: options in a given year if the dividend per
Common Share for the year prior to the grant
year exceeds $0.9517 per Share.
Maximum Option 10 years.
Term:
Liquidation Fee: 1.50% of the gross sales price of the assets
sold by the Trust, its subsidiaries or other
Persons which holds, or to whom the Trust
has Transferred, such assets in connection
with a liquidation of the Trust's directly
or indirectly owned assets.
Miscellaneous: Related Manager may also earn miscellaneous
compensation which may include, without
limitation, construction fees, escrow
interest, property management fees, leasing
commissions and insurance brokerage fees.
The payment of any such compensation by the
Trust shall be limited to the competitive
rate for the services being performed.
10. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS
10.1 Allocations. That portion of Net Income, Net Loss and Available Cash
shall be allocated in the manner hereinafter provided.
10.2 Apportionment Among Shareholders of Net Income, Net Loss and
Distributions Generally.
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(a) Non-Capital Events. Net Income, Net Loss and Distributions,
other than Net Income, Net Loss and Distributions attributable to a
Capital Event, allocated to the Shareholders shall be apportioned each
calendar quarter among the Persons who were Shareholders of record on the
last day of each calendar quarter in accordance with their Percentage
Interests based upon the number of Shares owned by each such Shareholder
on the last day of such calendar quarter without regard to Capital
Accounts or the number of days during such calendar quarter in which a
Person was a Shareholder.
(b) Capital Events. That portion of Distributions attributable to a
Capital Event and allocations of Net Income and Net Loss from a Capital
Event which is allocated to the Shareholders shall be apportioned among
the Persons who were Shareholders of record on the date on which the Trust
received the proceeds of such Capital Event in accordance with their
Percentage Interests based upon the number of Shares owned by each such
Shareholder on that date.
10.3 Consent to Methods. The methods set forth in this Article 9 by which
Distributions and allocations of Net Income and Net Loss are made and
apportioned are hereby expressly consented to by each Shareholder as an express
condition to becoming an Shareholder.
10.4 Capital Accounts.
(a) General. A separate capital account ("Capital Account") shall be
maintained for each Shareholder in accordance with this Section 9.4. Each
Shareholder's Capital Account shall be increased by (1) the amount of
money contributed, or deemed contributed, by such Shareholder to the
capital of the Trust; and (2) such Shareholder's share of Trust Net
Income. Each Shareholder's Capital Account shall be decreased by (i) the
amount of Distributions to such Shareholder and (ii) such Shareholder's
share of Net Loss for federal income tax purposes.
(b) Multiple Class or Series of Interests. A Shareholder who has
Shares which represent more than one class or series of interests in the
Trust shall have a single Capital Account that reflects all such
interests, regardless of the class of interests owned by such Shareholder
and regardless of the time or manner in which such interests were
acquired.
(c) Contributions of Property. In the event that property (other
than cash) is contributed (or deemed contributed pursuant to the
provisions of Code Section 708) by a Shareholder to the Trust, including
the contribution of a Shareholder's interest in Summit Tax Exempt Bond
Fund, L.P., Summit Tax Exempt L.P. II, and/or Summit Tax Exempt L.P. III
to the Trust pursuant to the Solicitation Statement (the "Consolidation
Contribution"), the computation of Capital Accounts, as set forth in this
Section 9.4, shall be adjusted as follows:
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(i) the contributing Shareholder's Capital Account shall be
increased by the fair market value of the property contributed to
the Trust by such Shareholder (net of liabilities securing such
contributed property that the Trust is considered to assume or take
subject to under Code Section 752); and
(ii) as required by Treas. Reg. ss.ss. 1.704-1(b)(2)(iv)(g)
and 1.704-1(b)(4)(i), if any Shareholder's Capital Account reflects
a fair market value for property which differs from such property's
adjusted basis, each Shareholder's Capital Account shall be adjusted
to take account of the amount of Book Gain and Book Loss, as defined
below, allocated to such Shareholder pursuant to Section 9.7 hereof
and shall not take into account the Net Income and Net Loss for tax
purposes allocated to such Shareholder pursuant to this Article 9.
(d) Distributions of Property. In the event that property is
distributed (or deemed distributed pursuant to the provisions of Code
Section 708) by the Trust to a Shareholder, the following special rules
shall apply:
(iii) the Capital Account of the Shareholder receiving the
distribution first shall be adjusted (as provided in Treas. Reg. ss.
1.704-1(b)(2)(iv)(e)) to reflect the manner in which the unrealized
income, gain, loss and deduction inherent in such property (that has
not already been reflected in such Shareholder's Capital Account)
would be allocated to such Shareholder if there were a taxable
disposition of such Shareholder for its fair market value on the
date of distribution; and
(iv) the Capital Account of the Shareholder who is receiving
the distribution of property from the Trust shall be charged with
the fair market value of the property at the time of distribution
(net of liabilities secured by such property that such Shareholder
is considered to assume or take subject to under Code Section 752).
(e) Intention. The foregoing provisions are intended to
satisfy the capital account maintenance requirements of Treas. Reg.
ss.ss. 1.704-1(b) and 1.704-2 and such provisions shall be modified to the
extent required by such section or any successor provision thereto.
10.5 Allocations Causing Negative Capital Accounts. Notwithstanding
Section 9.2, to the extent that any allocation of Net Loss to a Shareholder
would reduce such Shareholder's capital account balance (determined after taking
into account all prior distributions and all prior allocations of Net Income and
Net Loss) below zero or would increase the negative balance in such
Shareholder's capital account at a time when another Shareholder has a positive
capital account balance, such Net Loss shall instead be allocated pro rata to
Shareholders having positive capital account balances in proportion to their
respective positive capital account balances until such capital account balances
are reduced to zero, provided, however, that in no event shall there
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be a reallocation of any item of income, gain, loss or deduction allocated among
the Shareholders pursuant to this Trust Agreement for prior years.
If the provisions of this Section 9.5 prohibit the allocation of any
portion of Net Loss to every Shareholder, such portion of the Net Loss shall
instead be allocated to the Manager.
For purposes of determining a Shareholder's Capital Account balance under
this Section 9.5, Distributions made prior to or contemporaneous with any
allocation to a Shareholder shall be reflected in such Shareholder's capital
account prior to making such allocation to such Shareholder. For purposes of
this Section 9.5, a Shareholder's Capital Account shall be reduced for:
(x) allocations of Net Loss (or items thereof) which, as of the
end of each Trust year, are reasonably expected to be allocated to such
Shareholder pursuant to Code Section 704(e)(2), Code Section 706(d) and
Treas. Reg. ss. 1.751-1(b)(2)(ii); and
(y) Distributions that, as of the end of such year, reasonably are
expected to be made to such Shareholder to the extent they exceed
offsetting increases to such Shareholder's Capital Account that reasonably
are expected to occur during (or prior to) the Trust taxable years in
which such Distributions reasonably are expected to be made.
For purposes of determining the amount of expected Distributions and
expected Capital Account increases described in (y) above: (A) the rule set
forth in Treas. Reg. ss. 1.704-1(b)(2)(iii)(c) concerning the presumed value of
property shall apply, and (B) gross income or Net Income allocated to a
Shareholder pursuant to Section 9.9 hereof shall be taken into account. For
purposes of this Section 9.5 and Section 9.9, a Shareholder's Capital Account
shall be increased (i) to the extent that such Shareholder is obligated to fund
deficits in such Shareholder's Capital Account upon liquidation of the Trust (or
is treated as obligated to so restore such deficits pursuant to Treas. Reg. ss.
1.704-1(b)(2)(ii)(c)), and (ii) to the extent of such Shareholder's share of any
Trust Minimum Gain and Shareholder Minimum Gain remaining at the close of the
fiscal period in respect of which such allocations are being made. A Capital
Account which has a negative balance after adjustment in accordance with clauses
(i) and (ii) shall be referred to as an "Adjusted Capital Account Deficit."
10.6 Allocation of Net Income and Net Loss.
(a) General.
(i) First, Net Income (and, if necessary gross income), other
than Net Income arising in connection with a Terminating Capital
Transaction), shall be allocated to the Manager in an amount equal
to the amount distributed to the Manager pursuant to Section 9.10.
hereof; and
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(ii) Second, except as otherwise provided in Sections 9.5,
9.8, and 9.9 in each year Net Income and Net Loss remaining after
the allocations made pursuant to the provisions of Section 9.6.(a),
other than Net Income and Net Loss arising in connection with a
Terminating Capital Transaction, shall be allocated to the
Shareholders in accordance with their Percentage Interests;
provided, however, that if the Manager's Percentage Interest is less
than 1%, the Manager, after taking into account the allocations
required by Section 9.5, 9.6(a)(i), 9.8 and 9.9, shall be allocated
1% of such Net Income and Net Loss.
(b) Terminating Capital Transaction. Allocations of Net Income or
Net Loss (or items thereof) in connection with a Terminating Capital
Transaction or liquidation of the Trust shall first be made so that, to
the extent possible, each Shareholder's Capital Account balance is equal
to such Shareholder's Adjusted Contribution, and the remainder of such Net
Income or Net Loss (or items thereof) shall, subject to the provisions of
Section 9.5, be allocated to the Shareholders in accordance with their
Percentage Interests.
(c) Final Ratio. It is intended that the allocation provisions of
this Article 9 shall result in final positive Capital Account balances of
the Shareholders under Section 12.3 hereof which are initially equal to
each Shareholder's Adjusted Contribution and are then in proportion to the
Shareholders' respective Percentage Interests (the "Final Ratio"). To the
extent that such final positive Capital Account balances are not in the
Final Ratio, income and loss of the Partnership for the current year and
future years, as computed for book purposes, shall be allocated among the
Shareholders so as to result in final positive Capital Account balances
which are in the Final Ratio. This Section 9.6.(c) shall control
notwithstanding any reallocation of income, loss, or items thereof, as
computed for book purposes, by the Internal Revenue Service or any other
taxing authority.
10.7 Allocation of Book Items. In cases where property of the Trust is,
under Treas. Reg. ss. 1.704-1(b)(2)(iv)(g), properly reflected in the capital
accounts of the Shareholders at a fair market value that differs from the
adjusted tax basis of such property (such difference is hereinafter referred to
as the "Book Disparity"), then depreciation, amortization and gain or loss as
computed for book purposes with respect to such property ("Book Depreciation,"
"Book Amortization," and "Book Gain," and "Book Loss," respectively) will be
greater or less than the depreciation, amortization or gain or loss as computed
for tax purposes. The Manager shall adopt, pursuant to Treas. Reg. ss.
1.704-1(b)(2)(iv)(g), a reasonable method of computing Book Depreciation and
Book Amortization. Such Book Depreciation and Book Amortization shall be
allocated among the Shareholders and reflected in the Shareholders' capital
accounts under Section 9.4 hereof, in a manner so as to eliminate to the extent
possible, the Book Disparity.
10.8 Mandatory Allocations. Any allocation of Net Income or Net Loss for
tax purposes which is required to be allocated among the Shareholders to take
into account the
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disparity between the fair market value of a Trust asset and its adjusted basis
(e.g., allocations under Code Section 704(c) for contributed property) shall be
allocated among the Shareholders in accordance with the requirements of the Code
and the regulations promulgated thereunder.
10.9 Minimum Gain Chargeback and Qualified Income Offset.
(a) Minimum Gain Chargeback. Notwithstanding any other provision of
this Agreement to the contrary, in the event there is a net decrease in a
Shareholder's share of Trust Minimum Gain and/or Shareholder Minimum Gain
during a Trust taxable year, such Shareholder shall be allocated items of
income and gain for that year (and if necessary, other years) as required
by and in accordance with Regulations Sections 1.704-2(f)(1) and
1.704-2(i)(4) before any other allocation is made. This subsection 9.9(a)
is intended to constitute a "minimum gain chargeback" under Treas. Reg.
ss. 1.704-2(f)(1) and 1.704-2(i)(4).
(b) Qualified Income Offset. In the event a Shareholder unexpectedly
receives any adjustments, allocations or distributions described in Treas.
Reg. ss.ss. 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such Shareholder has
an Adjusted Capital Account Deficit, items of Trust income (including
gross income) and gain shall be specially allocated to such Shareholder in
an amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit as quickly as possible. This subsection 9.9.(b) is intended to
constitute a "qualified income offset" under Treas. Reg. ss.
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) Other Chargeback of Impermissible Negative Capital Account. To
the extent any Shareholder has an Adjusted Capital Account Deficit at the
end of any Trust fiscal year, each such Shareholder shall be specially
allocated items of Trust income (including gross income) and gain in the
amount of such excess as quickly as possible, provided that an allocation
pursuant to this subsection 9.9.(c) shall be made if and only to the
extent that such Shareholder would have an Adjusted Capital Account
Deficit in excess of such sum after all other allocations provided for in
this Article 9 have been tentatively made as if this subsection 9.9.(c)
were not in the Agreement.
10.10 Distributions. The Manager shall be entitled to receive a Special
Distribution equal to .375% per annum of Total Invested Assets from the date of
investment, payable quarterly. After payment of the Special Distribution,
Distributions shall be made to the Shareholders in accordance with their
Percentage Interests.
10.11 Manager's Interest. Except as otherwise provided in Sections 9.5,
9.8 and 9.9, the Manager shall be allocated no less than an aggregate of 1% of
Net Income or Net Loss for federal and state income tax purposes or such lesser
amount as shall permit the Trust to be treated as a partnership for federal and
state income tax purposes.
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10.12 Deductions of Manager. Except as otherwise provided in this Section
9.12, to the extent that the Trust shall be entitled to any deduction for
federal income tax purposes as a result of any amounts paid as Distributions to
the Manager, such deduction shall be allocated for federal income tax purposes
to the Manager. The preceding sentence shall not apply to the extent the Trust
is entitled to a deduction by reason of any distribution made to the Manager
pursuant to Section 9.10, which deduction shall be allocated to the
Shareholders, subject only to the other limitations on allocations of Net Loss
or deduction contained in this Article 9.
10.13 Restrictions.
(a) General. The Trust may be restricted under Delaware law from
making Distributions under certain circumstances, as well as under the
terms of notes, mortgages or other types of financing obligations which it
may issue or assume in conjunction with borrowed funds, if any. In
addition, Distributions are subject to the payment of Trust expenses and
to the maintenance of sufficient Reserves. Distributions may also be
restricted or suspended in circumstances when the Manager determines, in
its absolute discretion, that such action is in the best interest of the
Trust.
(b) Withholding Tax. As security for any withholding tax or other
liability or obligation (or reduced deduction for federal income tax
purposes) to which the Trust may be subject as a result of any act or
status of any Shareholder or to which the Trust becomes subject with
respect to any Shares, the Trust shall have, and there is hereby granted
to the Trust, a security interest in all Available Cash distributable to
such Shareholder or with respect to such Shares, to the extent of the
amount of such withholding tax or other liability or obligation or the
cost to the other Shareholders of any reduced deduction of the Trust (as
reasonably determined by the Manager). The Trust shall have a right of
set-off against any such Distributions of Available Cash in the amount of
such withholding tax or other liability or obligation or the cost of such
reduced deduction. For purposes of this Trust Agreement, any amount of
federal, state or local tax required to be withheld by the Trust with
respect to any amount distributable by the Trust to any Shareholder shall
be deemed to be a Distribution to such Shareholder and shall reduce the
amount otherwise distributable to such Shareholder under this Agreement.
11. BOARD OF TRUSTEES
11.1 General. Subject to the express limitations herein or in the Bylaws,
(a) the business and affairs of the Trust shall be managed by or under the
direction of the Board of Trustees, and (b) the Board of Trustees shall have
full, exclusive and absolute power, control and authority over the Trust
Property and over the business of the Trust. The Board of Trustees may take any
actions as in its sole judgment and discretion are necessary or desirable to
conduct the business of the Trust. This Trust Agreement shall be construed with
a presumption in favor of the grant of power and authority to the Board of
Trustees. To the fullest extent permitted by law, any construction of this Trust
Agreement or determination made in good faith by the Board of
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Trustees concerning its powers and authority hereunder shall be conclusive. The
enumeration and definition of particular powers of the Board of Trustees
included in this Article 10 shall in no way be limited or restricted by
reference to or inference from the terms of this or any other provision of this
Trust Agreement or construed or deemed by inference or otherwise in any manner
to exclude or limit the powers conferred upon the Board of Trustees under the
general laws of the State of Delaware as now or hereafter in force.
11.2 Powers of the Board of Trustees. The conduct of the Trust's business
shall be controlled solely by the Board of Trustees in accordance with this
Trust Agreement and the Bylaws. The Board of Trustees shall have all authority,
rights and powers conferred by law and those required or appropriate to the
management of the Trust's business which, by way of illustration but not by way
of limitation, shall, subject only to the provisions of Section 10.3, include
the right, authority and power, without the vote of Shareholders, or any other
Person to:
(a) make all filings as may be necessary or proper in order to
create the Trust or to provide that this Trust Agreement shall constitute,
for all purposes, an agreement of trust under the laws of the State of
Delaware as in effect from time to time;
(b) adopt, implement and from time to time amend Bylaws of the Trust
relating to the business and organization of the Trust that are not
inconsistent with the provisions of this Trust Agreement;
(c) alter the Trust's investment objectives and policies if, in its
sole discretion, it determines that such a change is in the best interests
of the Trust and its Shareholders;
(d) raise capital for the Trust by offering and selling, or causing
to be offered and sold, additional beneficial interests in the Trust
(subject to Section 6.1), to classify or reclassify any unissued
beneficial interests (as Common Shares, Preferred Shares or any other
classification or series it may determine in its sole discretion), to
provide for the issuance of beneficial interests in other classes or
series of securities, to establish the number of beneficial interests in
each class or series and to fix the preferences, conversion and other
rights, voting powers (if any), restrictions (including transfer
restrictions, if any), limitations as to Distributions, qualifications or
terms or conditions of redemption of such class or series;
(e) cause the Trust to repurchase Shares from time to time out of
surplus funds of the Trust, if any, to further the business of the Trust;
(f) cause the Trust to acquire, hold, sell, dispose of and otherwise
act with respect to First Mortgage Bonds, Tax Exempt Securities, Taxable
Tails, SMLs or other mortgage investment, any portion of a First Mortgage
Bond, Tax-Exempt Securities, Taxable Tails, SMLs or other mortgage
investment in such principal amounts and upon such terms and conditions as
the Board of Trustees deems, in its sole discretion, to be in
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the best interests of the Trust; provided, however, that no First Mortgage
Bond will be acquired, unless:
(i) the Trust has received an opinion of appropriate legal
counsel (which may be more than one) which may be qualified in
certain respects to the effect that substantially all interest
payments will be excluded from gross income for purposes of federal
income taxation under current law, that the First Mortgage Bond
shall be characterized as debt for federal income tax purposes and
the Trust shall not be a "substantial user" of the Underlying
Property or a "related person" of a substantial user as those terms
are used in the Code solely by virtue of the terms of the First
Mortgage Bonds;
(ii) the Trust has received an opinion of counsel (which may
be qualified in certain respects and which may be based upon a
requirement that interest be reduced in certain events) to the
effect that the interest rate payable on the First Mortgage Bond is
not usurious under applicable state law;
(iii) mortgagee title insurance will be obtained in connection
with each First Mortgage Bond in substantially the outstanding
principal amount thereof (subject to certain exceptions, including
pending disbursement provisions); provided that where such insurance
is not customarily available, there may be obtained the assurance of
title that is customarily available, which may not include
insurance; and
(iv) an appraisal is obtained from an independent appraiser;
(g) cause the Trust or permit the Manager to purchase or otherwise
acquire First Mortgage Bonds or other investments in its own name or in
the name of a nominee, a trust or a corporate "nominee" or otherwise and
hold title thereto for the purpose of facilitating the acquisition of such
First Mortgage Bonds or other investments or any other purpose related to
the business of the Trust; provided that in the event of the acquisition
of such First Mortgage Bonds or other investments by the Trust from the
Manager or its Affiliates, (i) the purchase price paid by the Trust may
not exceed the cost of the First Mortgage Bonds or other investment to the
seller thereof plus Bond Selection Fees paid by the Trust and (ii) no
compensation or other benefit may accrue to the Manager or its Affiliates
except as otherwise permitted herein and except that they may be
reimbursed for the costs incurred to carry the First Mortgage Bonds or
other investment;
(h) subject to the provisions of Article 8, cause the Trust to enter
into one or more agreements with any Person, whereby, subject to the
supervision and control of the Board of Trustees, any such Person shall
render or make available to the Trust managerial, investment, advisory
and/or related services, office space and other services
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and facilities (including, if deemed advisable by the Board of Trustees,
the management or supervision of the investments of the Trust) upon such
terms and conditions, including the right to indemnification, as may be
provided in such agreement or agreements (including, if deemed fair and
equitable by the Board of Trustees, the compensation payable thereunder by
the Trust); provided, however, that so long as the Trust is treated as a
partnership for federal income tax purposes, the Board of Trustees shall
cause the Trust to retain a Manager or other Person to serve as the
general partner of the Trust for tax purposes which Manager or other
Person shall at all times own at least 10 Common Shares;
(i) cause the Trust to place record title to or the right to use
Trust assets in the name or names of a nominee or nominees, trustee or
trustees (other than the Registered Trustee) for any purpose convenient or
beneficial to the Trust;
(j) cause the Trust to acquire by purchase, lease, or otherwise, and
dispose of, any real or personal property to be used in connection with
the business of the Trust;
(k) sign a check or Trust Certificate on behalf of the Trust;
(l) open accounts and deposit and maintain funds in the name of the
Trust in banks or savings and loan associations, provided, however, that
the Trust's funds shall not be commingled with the funds of any other
Person;
(m) change the Trust's accounting year from a calendar year to such
fiscal year as approved by the Internal Revenue Service;
(n) cause the Trust to borrow money or otherwise leverage, finance
or refinance its assets or obtain credit in such amounts, at such rates of
interest and upon such other terms and conditions as the Board of Trustees
deems appropriate, on a recourse or nonrecourse basis, and to secure
payment of the principal of any such indebtedness and the interest thereon
by mortgage, pledge, conveyance, assignment in trust of, or grant of a
security interest in, the whole or any part of any or all of the property
and assets of the Trust; provided that the Trust may not incur aggregate
financing or leverage (whether secured or unsecured) in excess of 50% of
Total Market Value (calculated at the time any additional financing or
leverage is incurred); and provided further that any loans from the
Manager or its Affiliates shall be on a short-term basis (up to 24 months)
with interest and other financing charges or fees being the lesser of
interest and other financing charges or fees which would be charged by a
financial institution or bank for a comparable loan, or the actual cost of
such funds to the Affiliate.
(o) cause the Trust to provide forward loan commitments to
prospective borrowers;
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(p) require in all Trust obligations that the Board of Trustees or
the Manager shall not have any personal liability thereon and that the
Person contracting with the Trust is to look solely to the Trust and its
assets for satisfaction; provided, however, that the Board of Trustees'
failure to so require such limitation on personal liability of the Manager
shall not be construed to imply that the Manager has personal liability
for any such Trust obligations;
(q) prepare or cause to be prepared reports, statements and other
relevant information for distribution to Shareholders including annual and
quarterly reports;
(r) cause the Trust to make or revoke any of the elections permitted
by the Code;
(s) determine the appropriate accounting method or methods to be
used by the Trust in maintaining its books and records;
(t) assure any Person dealing with the Trust or the Manager that he
may rely upon a certificate signed by the Manager as authority with
respect to: (i) the identity of the Registered Trustee, the Managing
Trustees, the Manager or any Shareholder; (ii) the existence or
nonexistence of any fact or facts which constitute a condition precedent
to acts by the Manager or in any other manner germane to the affairs of
the Trust; (iii) the Persons who are authorized to execute and deliver any
instrument or document of the Trust; or (iv) any act or failure to act by
the Trust or as to any other matter whatsoever involving the Trust, the
Managing Trustees, the Manager, or any Shareholder;
(u) remove the Registered Trustee at any time with or without Cause
in its sole discretion and in the event of such removal or the resignation
of the Registered Trustee, to appoint a successor Registered Trustee in
accordance with Section 15.2;
(v) establish Reserves or increase or decrease Reserves as it deems
necessary, appropriate, convenient or advisable for the proper operation
of the business of the Trust;
(w) cause the Trust to acquire assets in joint venture investments;
provided that, in connection with such investments, the Trust owns more
than 50% of the Voting Securities of the joint venture or otherwise has
the right to veto or control any Major Decisions;
(x) cause the Trust to issue Shares in exchange for First Mortgage
Bonds, Tax Exempt Securities and other assets;
(y) pay, collect, compromise, litigate, arbitrate, or otherwise
adjust or settle any and all other claims or demands of or against the
Trust or to hold such proceeds against the payment of contingent
liabilities;
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(z) qualify the Trust to do business in any state, territory,
dependency or foreign country;
(aa) list the Shares on the American Stock Exchange or any other
exchange or market;
(bb) cause the Trust to issue options (including, without
limitation, options pursuant to an Incentive Share Option Plan), rights or
warrants to purchase any class or series of beneficial interests in the
Trust (subject to Section 6.1) (including options, rights or warrants to
purchase Common Shares, Preferred Shares or any other Shares);
(cc) in connection with the leveraging of the Trust's assets, cause
the Trust to form and invest in subsidiaries and other investment vehicles
and transfer any or all of the Trust's assets to such entities; provided,
however, that such entities shall be operated in a manner which is
consistent with the provisions of this Trust Agreement; and
(dd) execute, acknowledge and deliver any and all instruments to
effectuate all of the foregoing, and to take all such action in connection
therewith as the Board of Trustees shall deem necessary, appropriate,
convenient or advisable.
11.3 Limitations. The Board of Trustees shall not have the authority
without a Majority Vote (in which case the Board of Trustees shall have such
authority) to:
(a) cause the Trust to originate or acquire First Mortgage Bonds
secured by Mortgage Loans secured by Underlying Properties owned by
Affiliates of a Related Manager or in which such Affiliates have a
controlling interest, unless conditions (i) through (vii) below are met.
In addition, the Board of Trustees shall not have the authority to cause
the Trust to acquire such First Mortgage Bonds, in an amount in excess of
15% of Total Market Value (measured at the time of investment) regardless
of whether the conditions below are met. This 15% limit shall not be
applicable to properties which the Related Manager or its Affiliates have
taken title to for the benefit of the Trust, and shall only apply to newly
acquired First Mortgage Bonds which are acquired by the Trust after the
date of this Trust Agreement.
(i) an independent and qualified adviser must issue a letter
of opinion to the effect that any First Mortgage Bond secured by
such an Underlying Property is fair and at least as favorable to the
Trust as a First Mortgage Bond secured by an Underlying Property
owned by an unaffiliated borrower in similar circumstances;
(ii) the Board of Trustees or the Manager must obtain a letter
of opinion from the independent adviser in connection with any
Disposition,
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renegotiation or other subsequent transaction involving First
Mortgage Bonds secured by Underlying Properties owned by Affiliates
of the Related Manager;
(iii) the independent adviser's compensation for any such
services must be paid by the Related Manager or its Affiliates and
not be reimbursable by the Trust;
(iv) the independent adviser must be a long established,
nationally recognized investment banking firm, accounting firm,
mortgage banking firm, real estate financial consulting firm or
advisory firm;
(v) the independent adviser must have a staff of real estate
professionals;
(vi) the compensation of the independent adviser must be
predetermined; and
(vii) the adviser, directly or indirectly, must have no
interest in, nor any material business or professional relationship
with, the Trust, the Manager, the borrower, or any Affiliates
thereof (independence will be considered to be impaired if, for
example, during the period of the independent adviser's engagement,
or at the time of expressing his opinion, he or his firm: (a) had,
or was committed to acquire any direct or indirect ownership
interest in the Trust, the Manager, the borrower or Affiliates
thereof, (b) had any joint closely held business investment with the
Trust, the Manager, the borrower or any Affiliates thereof, which
was material in relation to the independent adviser's net worth or
(c) had any loan to or from the Trust, the Manager, the borrower, or
Affiliates thereof;
(b) cause the Trust to acquire Minority Positions which, in the
aggregate, are in excess of 15% of Total Market Value (measured at the
time of such investment);
(c) cause the Trust to invest in a First Mortgage Bond secured by a
Mortgage Loan on any one Underlying Property if the principal of such
First Mortgage Bond would exceed, in the aggregate, an amount equal to 20%
of Total Market Value (measured at the time of such investment);
(d) cause the Trust to invest in First Mortgage Bonds secured by
Mortgage Loans to any one borrower if the principal of such First Mortgage
Bonds would exceed, in the aggregate, an amount greater than 20% of Total
Market Value (measured at the time of such investment);
(e) cause the Trust to invest in First Mortgage Bonds secured by
Mortgage
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Loans on unimproved real property or Tax-Exempt Securities relating to
unimproved real property in an amount in excess of 10% of Total Market
Value (measured at the time of such investment);
(f) cause the Trust to invest in a First Mortgage Bond secured by a
Mortgage Loan on any one Underlying Property if the aggregate amount of
all mortgage loans outstanding on the Underlying Property, including the
principal amount of the Mortgage Loan, would exceed an amount equal to 85%
of the appraised fair market value of the Underlying Property, as
determined by an independent appraiser, unless the Board of Trustees or
the Manager determines that substantial justification exists for investing
in such a First Mortgage Bond because of other aspects of the loans, such
as the net worth of the borrower, the credit rating of the borrower based
on historical financial performance, additional collateral (such as a
pledge or assignment of other real estate or another real estate mortgage)
or an assignment of rents under a lease or where the Trust has purchased a
First Mortgage Bond at a price that is no more than 85% of the value of
the Underlying Property (notwithstanding that the face amount of the
outstanding mortgage loans with respect to the Underlying Property exceeds
85% of the appraised fair market value of the Underlying Property),
provided that any loans relating to the Underlying Property which are
advanced by third parties (and which cause the aggregate amount of all
mortgage loans outstanding on the Underlying Property to exceed 85% of the
appraised fair market value of the Underlying Property) are subordinated
to the Trust's investment and do not entitle such third party lender to
any material rights upon default without the Trust's consent until after
the Trust's First Mortgage Bond and related Mortgage Loan with respect to
such Underlying Property have been repaid;
(g) except as permitted in Section 10.2(g) (which Section is hereby
deemed applicable to Affiliates of the Related Manager) and by Section
10.3(a) and (c), permit a Related Manager to purchase First Mortgage Bonds
or Tax-Exempt Securities from the Trust or sell First Mortgage Bonds or
Tax-Exempt Securities to the Trust or purchase real property from the
Trust;
(h) do any act in contravention of this Trust Agreement or which
would make it impossible to carry on the ordinary business of the Trust;
(i) confess a judgment against the Trust in connection with any
threatened or pending legal action;
(j) possess any Trust asset or assign the rights of the Trust in
specific Trust assets for other than a Trust purpose;
(k) perform any act (other than an act required by this Trust
Agreement or any act taken in good faith reliance upon counsel's opinion)
which would, at the time such act occurred, subject any Shareholders to
liability in any jurisdiction;
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(l) commingle the Trust funds with those of any other Person;
(m) operate the Trust in such a manner as to have the Trust
classified as (1) an "investment company" for purposes of the Investment
Company Act of 1940, as amended, or (2) other than as a partnership for
purposes of the Code;
(n) grant a Related Manager or any of its Affiliates an exclusive
right to sell or exclusive employment to sell the Trust's investments for
the Trust; and
(o) cause the Trust to invest in real estate contracts of sale,
otherwise known as land sale contracts, unless such contracts of sale are
in recordable form and are appropriately recorded in the chain of title.
11.4 Amendments Without Consent. In addition to any amendments otherwise
authorized herein, this Trust Agreement may be amended from time to time by the
Board of Trustees without the consent of the Shareholders or the Registered
Trustee (subject to the provisions in this Section 10.4):
(a) to add to the representations, duties or obligations of the
Board of Trustees or the Registered Trustee or their respective Affiliates
or surrender any right or power granted to the Board of Trustees or its
Affiliates or the Registered Trustee herein, for the benefit of the
Shareholders; provided, that no representations, duties or obligations of
the Registered Trustee shall be added or right or power granted to the
Registered Trustee or its Affiliates surrendered without the Registered
Trustee's consent;
(b) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with law applicable to the Trust as in
effect at the time the amendment is adopted, or judicial or administrative
interpretations thereof, or with any other provision herein, as long as
any such change will not adversely affect the rights of the Shareholders
or the Registered Trustee;
(c) to delete or add any provision of this Trust Agreement required
to be so deleted or added by the staff of the Securities and Exchange
Commission or by a State "Blue Sky" Commissioner or similar such official,
which addition or deletion is deemed by such Commission or state official
to be for the benefit or protection of the Shareholders;
(d) to reflect the addition or substitution of Shareholders or the
reduction of Capital Accounts upon the return of capital to Shareholders;
(e) upon notice to all Shareholders, to amend the provisions of
Article 9 of this Trust Agreement (a) so as to revise the date upon which
each Shareholder's distributive share of Net Income, Net Loss and
Distributions is determined and the period
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of time over which such distributive share relates, provided that in the
opinion of the accountants or counsel to the Trust, such amended
provisions are not impermissible under applicable federal and/or state
income tax legislation, rules or regulations enacted or promulgated
thereunder, or administrative pronouncements or interpretations thereof;
and (b) to the minimum extent necessary to take account of any amendments
to Section 704 of the Code or the regulations thereunder or any judicial
or administrative interpretations thereof;
(f) to change the name of the Trust to any lawful name which it may
select (in which case the Trust shall notify the Registered Trustee of
such change in name);
(g) to take such steps as the Board of Trustees or the Manager
determines are advisable or necessary in order to preserve the tax status
of the Trust as an Entity which is not taxable as a corporation for
federal income tax purposes. The Board of Trustees are each empowered to
amend such provisions to the minimum extent necessary or desirable in
accordance with the advice of the accountants and/or counsel to comply
with any applicable federal or state legislation, rules or regulations
enacted or promulgated, administrative pronouncements or interpretations
and/or judicial interpretations thereof after the date of this Trust
Agreement. Subject to Article 14, the Board of Trustees shall be entitled
to rely upon the advice of the accountants or counsel as described above
in making such amendment or amendments; and
(h) to reflect any rights, preferences or privileges granted in
connection with the issuance of a class or series of Shares not
outstanding as of the date of this Trust Agreement.
Written notice of any amendments to the Trust Agreement shall be
provided to the Registered Trustee within ten days of their adoption.
11.5 Notice of Limitation of Liability. The Board of Trustees or the
Manager shall use its best efforts, in the conduct of the Trust's business, to
put all suppliers and other Persons with whom the Trust does business on notice
that the Shareholders, the Trustees, and the Manager are not liable for the
Trust's obligations and that such suppliers and other Persons shall look solely
to the assets of the Trust for payment, and all agreements to which the Trust is
a party shall include a statement to the effect that the Trust is a business
trust organized under the Trust Act; but the Board of Trustees or the Manager
shall not be liable for any failure to give such notice to such suppliers or
other Persons and any failure in giving such notice shall not imply that the
Shareholders, the Managing Trustees, the Manager and the Registered Trustee are
liable for the Trust's obligations.
11.6 Accounting Matters. The Board of Trustees or the Manager shall make
all decisions as to accounting matters in accordance with the accounting methods
adopted by the Trust in accordance with generally accepted accounting principles
and procedures applied on a
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consistent basis. Such party may rely on the Trust's independent certified
public accountants to determine whether such decisions are in accordance with
generally accepted accounting principles.
11.7 Tax-Matters Partner. The Manager is hereby designated as the "Tax
Matters Partner" in accordance with Section 6231(a)(7) of the Code and, in
connection therewith and in addition to all other powers given thereunder, shall
have all other powers needed to fully perform hereunder including, without
limitation, the power to retain all attorneys and accountants of its choice and
the right to settle any audits without the consent of the Shareholders. The
designation made in this Section 10.7 is hereby expressly consented to by each
Shareholder as an express condition to becoming a Shareholder.
11.8 Funds and Assets. The Board of Trustees and the Manager shall have a
fiduciary responsibility for the safekeeping and use of all funds and assets of
the Trust, whether or not in its immediate possession or control, and shall not
employ, or permit another to employ, such funds or assets in any manner except
for the exclusive benefit of the Trust.
11.9 Duties of Board of Trustees and Manager and Registered Trustee. To
the extent that, at law or in equity, the Board of Trustees or the Manager or
the Registered Trustee, or any Affiliate thereof (each, a "Covered Person") has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to the Shareholders, the Covered Person acting in connection with the
Trust's business or affairs shall not be liable to the Trust or to any
Shareholder for its good faith reliance on the provisions of this Trust
Agreement. The provisions of this Trust Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, are agreed by the Trust and the Shareholders to replace such
other duties and liabilities of such Covered Person.
11.10 Discretion. Whenever in this Trust Agreement the Board of Trustees
or the Manager is permitted or required to make a decisions (i) in its
"discretion" or under a grant of similar authority, the Board of Trustees and
the Manager shall be entitled to consider such interests and factors as it
desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other person; or (ii) in its "good faith" or under another express standard, the
Board of Trustees and the Manager shall act under such express standard and
shall not be subject to any other or different standard imposed by this Trust
Agreement or by applicable law.
12. RIGHTS AND POWERS OF SHAREHOLDERS
12.1 Control. Other than as expressly set forth in this Trust Agreement,
Shareholders shall have no voting rights and Shareholders shall take no part in
any manner in the control, conduct or operation of the Trust and shall have no
right or authority to act for or bind the Trust.
12.2 Voting Rights. The Shareholders (except Shareholders who by the terms
of their
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Shares have no voting rights) considered together as a single class, have the
right by Majority Vote (voting in the manner set forth in the Bylaws), to vote
upon:
(a) without the consent and recommendation of the Board of
Trustees:
(i) subject to the provisions of Section 3.1(d),
the removal of Managing Trustees; and
(ii) the election of Managing Trustees; and
(b) with the prior consent and recommendation of the Board of
Trustees:
(i) the merger, consolidation or conversion of the
Trust with or into another Entity;
(ii) the determination to dissolve the Trust,
subject to the provisions of Article 12;
(iii) amendment of the Trust Agreement, provided such
amendment is not otherwise permissible without
Shareholder vote under Section 10.4; and
(iv) subject to the provisions of Article 12, the
disposition of Substantially All of the Assets of
the Trust in a single disposition, or in multiple
dispositions in the same 12-month period (other
than in connection with leveraging or other
financing permitted pursuant to Section 10.2).
12.3 Consolidation. Notwithstanding any other provision in this Trust
Agreement or the By Laws to the contrary, including, without limitation, Section
11.2, the Trust is hereby authorized (without the need for the consent of any
Person) to merge with and into Summit Tax Exempt Bond Fund, L.P., a Delaware
limited partnership, Summit Tax Exempt L.P. II, a Delaware limited partnership,
and Summit Tax Exempt L.P. III, a Delaware limited partnership (collectively,
the "Partnerships"), with the Trust being the surviving entity (the "Mergers").
In furtherance of the foregoing, notwithstanding any other provision in this
Trust Agreement to the contrary, the Trust (and each Managing Trustee on behalf
of the Trust, acting singly or jointly) is hereby authorized (without the need
for the consent of any Person), (a) to execute, deliver and perform (including,
without limitation, by the issuance of all Shares contemplated therein) any
agreement and plan of merger by and among the Trust and the Partnerships (the
"Merger Agreement"), (b) to execute and file with all appropriate governmental
or other authorities one or more Certificates of Merger reflecting the Mergers,
and (c) to execute, deliver and perform any or all amendments to the limited
partnership agreements of the Partnerships entered into to facilitate the
consummation of the Consolidation (as defined in the Solicitation Statement),
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including, without limitation, to consummate the Mergers.
Each Managing Trustee, acting singly or jointly, is hereby authorized
(without the need for the consent of any Person), at such time in his sole
discretion as he deems necessary or appropriate, to execute, acknowledge,
verify, deliver, file and record, for and in the name of the Trust and, to the
extent necessary or appropriate, the Shareholders, any and all documents and
instruments, including, without limitation, those required or contemplated by
applicable law that the Managing Trustees or any one of them deem necessary or
appropriate to effectuate the Mergers.
13. TERMINATION AND DISSOLUTION OF THE TRUST
13.1 Duration. The Trust shall continue perpetually unless dissolved
pursuant to Section 12.2 or pursuant to any applicable provision of the Trust
Act.
13.2 Dissolution. The Trust may be dissolved as follows:
(a) If a Management Agreement between the Trust and a Related
Manager, as the same may be amended from time to time (a "Related Management
Agreement"), is still in effect and it is prior to the fourth anniversary of the
date on which such Related Management Agreement was originally executed (the
"Fourth Anniversary"), subject to the provisions of any class or series of
Shares at the time outstanding, the Trust may be dissolved if:
(i) the Related Manager recommends dissolution of the Trust in
writing to the Board of Trustees;
(ii) the Board of Trustees concurs in such recommendation; and
(iii) the dissolution of the Trust is approved by a Majority
Vote; or
(b) If a Related Management Agreement is still in effect and it is
after the Fourth Anniversary, the Trust may be dissolved if:
(i) (A) the Related Manager recommends dissolution of the
Trust in writing to the Board of Trustees;
(B) the Board of Trustees concurs in such
recommendation; and
(C) the dissolution of the Trust is approved by a
Majority Vote; or
(ii) (A) the Board of Trustees recommends dissolution of the
Trust; and
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(B) the dissolution of the Trust is approved by the
affirmative vote of two-thirds of the votes of the Shareholders
entitled to vote on the matter; or
(c) If at any time, whether prior to or after the Fourth
Anniversary, a Related Management Agreement is no longer in effect, the Trust
may be dissolved upon the recommendation of the Board of Trustees and the
approval of Shareholders by Majority Vote; or
(d) The Trust may be dissolved by order of a court of competent
jurisdiction to judicially dissolve the Trust if it is no longer reasonably
practicable to continue the business and affairs of the Trust as contemplated by
this Trust Agreement.
13.3 Liquidation and Distribution of Assets. Upon a dissolution and
termination of the Trust for any reason, the Board of Trustees or the Manager
shall take full account of the Trust's assets and liabilities, shall liquidate
the assets as promptly as is consistent with obtaining the fair value thereof,
and shall apply and distribute the proceeds therefrom in the following order:
(a) first, to the satisfaction to the extent permitted by law
(whether by payment or reasonable provision for payment thereof) of
obligations of the Trust to creditors of the Trust (other than as set
forth in paragraphs (b), (c) and (d) below);
(b) second, to the repayment of any outstanding loans made by the
Manager or its Affiliates to the Trust;
(c) third, to the payment of expenses of liquidation (including the
payment of the Liquidation Fee to the Related Manager) and the
establishment of any Reserves for contingencies; and
(d) fourth, to the Common Shareholders, in accordance with, and to
the extent of, the positive balances in their capital accounts after the
Net Income or Net Loss (or items thereof) from any Terminating Capital
Transaction has been allocated pursuant to the provisions of Section
9.6(b) hereof.
13.4 Termination of the Trust. Upon dissolution and the completion of the
winding up of the affairs of the Trust, the Trust shall be terminated by the
executing and filing with the Secretary of State of the State of Delaware by one
or more Managing Trustees of a certificate of cancellation of the certificate of
trust of the Trust.
14. SPECIAL POWER OF ATTORNEY
14.1 Grant of Power of Attorney. By subscribing and paying for Shares,
each Shareholder is hereby granting to the Board of Trustees and the Manager a
special power of
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attorney irrevocably making, constituting and appointing the Board of Trustees
and the Manager, acting singly or collectively, as the attorney-in-fact for such
Shareholder, with power and authority to act in his name and on his behalf to
execute, acknowledge and swear to the execution, acknowledgment and filing of
documents, which shall include, by way of illustration but not of limitation,
the following:
(a) this Trust Agreement, any separate certificates of trust of the
Trust, as well as any amendments to or restatements of the foregoing
which, under the laws of the State of Delaware or the laws of any other
state, are required to be filed or which the Board of Trustees or the
Manager deems to be advisable to file;
(b) any duly adopted amendments or restatements of this Trust
Agreement;
(c) any other instrument or document which may be required to be
filed by the Trust under the laws of any state or by any governmental
agency, or which the Board of Trustees or Manager deems advisable to file;
and
(d) any instrument or document which may be required to effect the
continuation of the Trust, the admission of an additional or substituted
Shareholder, or the dissolution and termination of the Trust (provided
such continuation, admission or dissolution and termination are in
accordance with the terms of this Trust Agreement), or to reflect any
reductions in amount of contributions of Shareholders.
14.2 Character of Power of Attorney. The special power of attorney being
hereby granted by each Shareholder:
(a) is a special power of attorney coupled with an interest, is
irrevocable, shall survive the death, legal incapacity, disability,
dissolution, bankruptcy or termination of the granting Shareholder, and is
limited to those matters herein set forth;
(b) may be exercised by the Board of Trustees or the Manager acting
for each Shareholder by a facsimile signature of the Managing Trustee,
Manager or by one of its officers, or by listing all of the Shareholders
executing any instrument with a signature of a Managing Trustee, the
Manager or one of its officers acting as its attorney-in-fact; and
(c) shall survive a Transfer by a Shareholder of all or any portion
of his Shares for the sole purpose of enabling the Board of Trustees or
the Manager to execute, acknowledge and file any instrument or document
necessary to effect such Transfer.
14.3 Reliance. Each Shareholder has executed this special power of
attorney, and each Shareholder will rely on the effectiveness of such powers
with a view to the orderly administration of the Trust's affairs.
15. INDEMNIFICATION
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15.1 Managing Trustees; Employees. To the fullest extent permitted by law,
the Trust shall indemnify its present and former Managing Trustees, the Manager
and its officers, directors, members, partners and employees and agents (the
"Indemnified Part(y)(ies)") against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the
Indemnified Party was material to the matter giving rise to the proceeding and
(i) was committed in bad faith or (ii) was the result of active and deliberate
dishonesty, (b) the Indemnified Party actually received an improper personal
benefit in money, property or services, or (c) in the case of any criminal
proceeding, the Indemnified Party had reasonable cause to believe that the act
or omission was unlawful. In addition, the Trust shall pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to any
present or former Indemnified Party, provided that the Trust first obtains (i) a
written affirmation by the Indemnified Party of his or its good-faith belief
that he or it has met the standard of conduct necessary for indemnification by
the Trust as authorized by the Trust Agreement and (ii) a written statement by
him or it or on his or its behalf to repay the amount paid or reimbursed by the
Trust if it shall ultimately be determined that the standard of conduct was not
met. The Trust shall also provide indemnification and advance expenses to any
present or former Indemnified Party who served a predecessor of the Trust in
such capacity.
15.2 The Registered Trustee. To the fullest extent permitted by law, the
Trust shall indemnify and hold harmless the Registered Trustee and its
Affiliates, and their respective officers, directors, employees, agents and
representatives, (collectively, the "Registered Trustee Persons") from and
against any and all claims or liabilities (including any environmental
liabilities) for which any such Person may become liable by reason of the
Registered Trustee's acting in such capacity under the Trust Agreement or
arising out of or connected with (i) the Trust, (ii) the Trust Agreement, (iii)
any breach of duty owed to the Trust or the Shareholders by a third party or
(iv) any violation or alleged violation of federal or state securities laws. The
Trust shall not indemnify such Persons for liabilities resulting from such
Persons' own fraud, gross negligence or willful misconduct. In addition, the
Trust shall pay or reimburse reasonable expenses in advance of final disposition
of a proceeding to any present or former Registered Trustee Person, provided
that the Trust first obtains (i) a written affirmation by the Registered Trustee
Person of his or its good-faith belief that he or it has met the standard of
conduct necessary for indemnification by the Trust as authorized by this Trust
Agreement and (ii) a written statement by him or it or on his or its behalf to
repay the amount paid or reimbursed by the Trust if it shall ultimately be
determined that the standard of conduct was not met. The Trust shall also
provide indemnification and advance expenses to any present or former Registered
Trustee Person who served a predecessor of the Trust in such capacity.
16. CONCERNING THE REGISTERED TRUSTEE
16.1 Authority and Duties of the Registered Trustee.
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(a) General. The Registered Trustee shall have only those rights,
authority, powers, responsibilities and duties as set forth in Section
3.2(a).
(b) Limitations. Without limiting the generality of Section 15.1,
the Registered Trustee shall have no duty or liability (i) as to any document
contemplated by this Trust Agreement, (ii) to see to any recording or filing of
this Trust Agreement, the Bylaws or any document contemplated hereby or any
security interest or lien or to see to the maintenance of any such
documentation, recording or filing, (iii) to see to any maintenance of or
insurance on the Trust Property, (iv) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien assessed or levied
against the Trust or any part of the Trust Property or to make or prepare any
reports or returns related thereto, (v) to confirm, verify or inquire into the
failure of the Board of Trustees or the Manager to exercise or perform any of
their respective rights or duties under this Trust Agreement, or (vi) to approve
as satisfactory to it or consent to any matter contemplated by this Trust
Agreement or any document contemplated hereby.
16.2 Resignation and Removal of the Registered Trustee.
(a) General. The Registered Trustee may resign as of the last
business day of any month by giving 60 days' prior notice to the Board of
Trustees or the Manager, and the Board of Trustees or the Manager may
remove the Registered Trustee as of the last business day of any month on
60 days' prior notice to the Registered Trustee. In the case of the
resignation or removal of the Registered Trustee, the Board of Trustees or
the Manager shall, without the consent of any Shareholder, appoint a
successor Registered Trustee, provided that such successor Registered
Trustee shall in all respects satisfy the requirements of Section 3807 of
the Trust Act, or any successor provision. The appointment of the
successor Registered Trustee shall take effect concurrently with the
resignation or removal of the former Registered Trustee, and, thereupon,
the Registered Trustee so resigned or removed shall be fully discharged of
its duties and liabilities hereunder, if any. The Registered Trustee shall
not be liable for the acts or omissions to act of any successor Registered
Trustee.
(b) Failure to Appoint Successor. If a successor Registered Trustee
shall not have been appointed within 60 days after such notice of
resignation or removal, the Registered Trustee, the Board of Trustees, the
Manager or any Shareholder may apply to any court of competent
jurisdiction to appoint a successor Registered Trustee to act until such
time, if any, as a successor shall have been appointed as above provided.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a successor Registered Trustee.
(c) Successor by Merger. Any Person into which the Registered
Trustee may be merged or converted or with which it may be consolidated,
or any Person resulting
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from any merger, conversion or consolidation to which the Registered
Trustee shall be a party, or any corporation to which substantially all
the corporate trust business of the Registered Trustee may be Transferred,
shall, subject to such Person satisfying in all respects the requirements
of Section 3807 of the Trust Act, be the Registered Trustee hereunder
without further act.
(d) Amendment of Certificate of Trust. Upon the substitution of the
successor Registered Trustee, the Board of Trustees or the Manager shall
file an amendment along with the successor Registered Trustee to the
certificate of trust with the Secretary of State of the State of Delaware
in accordance with the provisions of Section 3810 of the Trust Act,
indicating the change in the Registered Trustee.
Except as expressly provided above, all Persons having any claim against
the Registered Trustee by reason of the transactions contemplated by this Trust
Agreement shall look only to the property and assets of the Trust for payment or
satisfaction thereof.
17. CERTAIN TRANSACTIONS
The Trustees, any Shareholder, the Manager and any Affiliate thereof, and
any shareholder, officer, director, partner or employee thereof, or any Person
owning a legal or beneficial interest therein, may engage in or possess an
interest in any other business or venture of every nature and description,
independently or with or for the account of others including, but not limited
to, investments in revenue bonds or mortgages of any type or instruments backed
by or representing a participation interest in revenue bonds or mortgages, and
the ownership, financing, leasing, operation, management, brokerage and
development of real property; provided, however, that the Related Manager shall
be obligated to present to the Trust any suitable investment opportunity before
acquiring it for its own account. Except for the foregoing proviso, neither the
Trustees, any Shareholder, the Manager nor their Affiliates shall be obligated
to present to the Trust any particular investment opportunity, regardless of
whether such opportunity might be suitable for investment by the Trust, and each
Trustee, the Shareholders, the Manager and each Affiliate shall have the right
to take for its own account (individually or otherwise) or to recommend to
others any such investment opportunity.
18. MISCELLANEOUS
18.1 Counterparts. This Trust Agreement may be executed in several
counterparts and all so executed shall constitute one Trust Agreement, binding
on all of the parties hereto, notwithstanding that all of the parties are not
signatory to the original or the same counterpart.
18.2 Binding Provisions. The terms and provisions of this Trust Agreement
shall be binding upon and shall inure to the benefit of the successors and
assigns of the respective parties.
18.3 Severability. In the event any sentence or section of this Trust
Agreement is
40
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declared by a court of competent jurisdiction to be void, such sentence or
section shall be deemed severed from the remainder of the Trust Agreement and
the balance of the Trust Agreement shall remain in effect.
18.4 Notices. All notices under this Trust Agreement shall be in writing
and shall be given to the party entitled thereto, by personal service or by
mail, posted to the address maintained by the Trust for such Person or at such
other address as he may specify in writing.
18.5 Headings. Paragraph titles or captions contained in this Trust
Agreement are inserted only as a matter of convenience and for reference. Such
titles and captions in no way define, limit, extend or describe the scope of
this Trust Agreement or the intent of any provision hereof.
18.6 Meanings. Whenever required by the context hereof, the singular shall
include the plural, and vice-versa; and the masculine gender shall include the
feminine and neuter genders, and vice-versa.
18.7 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware (including the
Trust Act) applicable to agreements to be made and performed entirely in said
State, and the Shares shall be construed in accordance with the laws of the
State of Delaware, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws; provided, however,
that nothing herein shall affect the obligations of the Trust to comply with
federal or state securities laws; and provided further, however, that there
shall not be applicable to the Trust, the Board of Trustees, the Registered
Trustee or this Trust Agreement any provisions of the laws (statutory or common)
of the State of Delaware pertaining to trusts (other than the Trust Act) that
relate to or regulate, in a manner inconsistent with the terms hereof (i) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding or investing trust assets, or (vii) the establishment of
fiduciary or other standards or responsibilities or limitations on the acts or
powers of trustees, which are inconsistent with the limitations or liabilities
or authorities and powers of trustees as set forth or referenced in this Trust
Agreement. Section 3540 of Title 12 of the Trust Act shall not apply to the
Trust.
18.8 Other Jurisdictions. In the event the business of the Trust is
carried on or conducted in states in addition to the State of Delaware, then the
Board of Trustees and the Shareholders agree that this Trust shall be qualified
under the laws of each state in which business is actually conducted by the
Trust, and they severally agree to execute such other and
41
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further documents as may be required or requested in order that the Board of
Trustees or the Manager legally may qualify this Trust to do business in such
states. The power of attorney granted to the Board of Trustees and the Manager
by each Shareholder in Article 15 shall constitute the authority of the Board of
Trustees and the Manager to perform the ministerial duty of qualifying this
Trust under the laws of any state in which it is necessary to file documents or
instruments of qualification. A Trust office or principal place of business in
any jurisdiction (within or without the State of Delaware) may be designated
from time to time by the Board of Trustees.
18.9 Power to Reconstitute. In the event that the State of Delaware amends
the Trust Act in any manner which precludes the Trust, at any time, from
obtaining an opinion of tax counsel to the effect that the Trust will be treated
as a partnership for federal income tax purposes and not as an association
taxable as a corporation, then the Board of Trustees or the Manager may, in its
sole discretion, reconstitute the Trust under the laws of another state.
18.10 Agreement to be Bound. EVERY PERSON, BY VIRTUE OF HAVING BECOME A
SHAREHOLDER IN ACCORDANCE WITH THE TERMS OF THIS TRUST AGREEMENT, SHALL BE
DEEMED TO HAVE EXPRESSLY ASSENTED AND AGREED TO THE TERMS OF, AND SHALL BE BOUND
BY, THIS TRUST AGREEMENT.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
MANAGING TRUSTEES:
--------------------------------------------
Name:
--------------------------------------------
Name:
--------------------------------------------
Name:
--------------------------------------------
Name:
--------------------------------------------
Name:
REGISTERED TRUSTEE:
WILMINGTON TRUST COMPANY
By:
----------------------------------------
Name:
Title:
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ACKNOWLEDGED AND CONSENTED TO:
RELATED CAPITAL COMPANY
By: SJB Associates, L.P. as
general partner
By: SJB Associates, Inc. as
general partner
By:
------------------------
Name: Stuart J. Boesky
Title: President
44
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CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
Amended and Restated Trust Agreement
Dated: September 30, 1997
<PAGE>
TABLE OF CONTENTS
Page
1. ORGANIZATION...........................................................1
2. DEFINITIONS AND GLOSSARY OF TERMS......................................2
3. TRUSTEES; LEGAL TITLE.................................................10
4. PURPOSES..............................................................12
5. TERM..................................................................12
6. SHAREHOLDERS; SHARES..................................................12
7. LIABILITY OF THE SHAREHOLDERS; REGISTERED TRUSTEE;
MANAGING TRUSTEES; EMPLOYEES; MANAGER ................................13
8. COMPENSATION TO A RELATED MANAGER AND ITS AFFILIATES..................15
9. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS..........................18
10. BOARD OF TRUSTEES.....................................................24
11. RIGHTS AND POWERS OF SHAREHOLDERS.....................................34
12. TERMINATION AND DISSOLUTION OF THE TRUST..............................35
13. SPECIAL POWER OF ATTORNEY.............................................37
14. INDEMNIFICATION.......................................................38
15. CONCERNING THE REGISTERED TRUSTEE.....................................39
16. CERTAIN TRANSACTIONS..................................................40
17. MISCELLANEOUS.........................................................41
Exhibit 3.2
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Trust shall be
located at such place as the Board of Trustees may designate in its sole
discretion.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices at
such places as the Board of Trustees may from time to time determine in its sole
discretion or the business of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of Shareholders shall be held at the
principal office of the Trust or at such other place within the United States as
shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the Shareholders for
the election of Managing Trustees whose terms have expired and the transaction
of any business within the powers of the Trust shall be held on a date and at
the time set by the Board of Trustees during the month of June in each year.
Section 3. SPECIAL MEETINGS. The Board of Trustees may call special
meetings of the Shareholders. Special meetings of Shareholders shall also be
called by the Board of Trustees upon the written request of the holders of
Shares entitled to cast not less than 10% of all the votes entitled to be cast
at such meeting. Such request shall briefly state the purpose of such meeting
and the matters proposed to be acted on at such meeting.
<PAGE>
Section 4. NOTICE. Not less than 10 nor more than 90 days before each
meeting of Shareholders, the Board of Trustees shall give to each Shareholder
entitled to vote at such meeting and to each Shareholder not entitled to vote
who is entitled to notice of the meeting written or printed notice stating the
time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by any statute, stating briefly the purpose for which
the meeting is called, either by mail or by presenting it to such Shareholder
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the Shareholder at his post office address as it
appears on the records of the Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be transacted
at an annual meeting of Shareholders without being specifically designated in
the notice, except such business as is required by any statute to be stated in
such notice. No business shall be transacted at a special meeting of
Shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of Shareholders, the chairman
of the Board of Trustees, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the chairman of the Board of Trustees,
(ii) the following officers of the Manager, if there be one: the president, the
vice presidents in their order of rank and seniority, or (iii) if there is no
Manager, a chairman chosen by the Shareholders entitled to cast a majority of
the votes which all Shareholders present in person or by proxy are entitled to
cast, shall act as chairman, and a person appointed by the chairman shall act as
secretary.
Section 7. QUORUM. At any meeting of Shareholders, the presence in
person or by proxy of Shareholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute, the Trust Agreement or these
Bylaws for the vote necessary for the adoption of any measure. If, however, such
quorum shall not be present at any meeting of the Shareholders, the Shareholders
entitled to vote at such meeting, present in person or by proxy, shall have the
power to
<PAGE>
adjourn the meeting from time to time to a date not more than 120 days after the
original record date without notice other than announcement at the meeting. At
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than 120 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given to each Shareholder of record entitled to vote
at the meeting.
The Shareholders present at a meeting which has been
duly called and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Shareholders to leave less than a
quorum.
Section 8. VOTING. A plurality of all the votes entitled to be cast at
a meeting of Shareholders duly called and at which a quorum is present shall be
sufficient to elect a Managing Trustee. Each Share may be voted for as many
individuals as there are Managing Trustees to be elected and for whose election
the Share is entitled to be voted. A majority of the votes cast at a meeting of
Shareholders duly called and at which a quorum is present shall be sufficient to
approve any other matter which may properly come before the meeting, unless a
different vote is required by statute, the Trust Agreement or these Bylaws.
Unless otherwise provided in the Trust Agreement, each outstanding Share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of Shareholders.
Section 9. PROXIES. A Shareholder may cast the votes entitled to be
cast by the Shares owned of record by him either in person or by proxy executed
in writing by the Shareholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the Board of Trustees before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy. A proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
Shareholder may revoke any proxy that is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by delivering a proxy in accordance with applicable law bearing a later
date to the Board of
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Trustees.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the Trust
registered in the name of a corporation, partnership, trust or other entity, if
entitled to be voted, may be voted by the president or a vice president, a
general partner or trustee thereof, as the case may be, or a proxy appointed by
any of the foregoing individuals, unless some other person who has been
appointed to vote such stock pursuant to a bylaw or a resolution of the
governing body of such corporation, partnership, trust or other entity or
agreement governing the organization of such other entity presents a certified
copy of such bylaw, resolution or agreement, in which case such person may vote
such stock. Any director or other fiduciary may vote stock registered in his
name as such fiduciary, either in person or by proxy.
Shares of the Trust directly or indirectly owned by
it shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding Shares entitled to be voted at any given time,
unless they are held by it in a fiduciary capacity, in which case they may be
voted and shall be counted in determining the total number of outstanding Shares
at any given time.
The Board of Trustees may adopt by resolution a
procedure by which a Shareholder may certify in writing to the Trust that any
Shares registered in the name of the Shareholder are held for the account of a
specified Person other than the Shareholder. The resolution shall set forth the
class of Shareholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the Share transfer books, the time after the record date or closing
of the Share transfer books within which the certification must be received by
the Trust; and any other provisions with respect to the procedure which the
Board of Trustees considers necessary or desirable. On receipt of such
certification, the Person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the Shareholder of record of
the specified Shares in place of the Shareholder who makes the certification.
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<PAGE>
Section 11. INSPECTORS. At any meeting of Shareholders, the chairman of
the meeting may appoint one or more Persons as inspectors for such meeting. Such
inspectors shall ascertain and report the number of Shares represented at the
meeting based upon their determination of the validity and effect of proxies,
count all votes, report the results and perform such other acts as are proper to
conduct the election and voting with impartiality and fairness to all the
Shareholders.
Each report of an inspector shall be in writing and
signed by him or by a majority of them if there is more than one inspector
acting at such meeting. If there is more than one inspector, the report of a
majority shall be the report of the inspectors. The report of the inspector or
inspectors on the number of Shares represented at the meeting and the results of
the voting shall be prima facie evidence thereof.
Section 12. NOMINATIONS AND SHAREHOLDER BUSINESS
(a) Annual Meetings of Shareholders. (1) Nominations of persons for
election as a Managing Trustee to the Board of Trustees and the proposal of
business to be considered by the Shareholders may be made at an annual meeting
of Shareholders (i) pursuant to the Trust's notice of meeting, (ii) by or at the
direction of the Board of Trustees or (iii) by any Shareholder of the Trust who
was a Shareholder of record both at the time of giving of notice provided for in
this Section 12(a) and at the time of the annual meeting, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
this Section 12(a).
(2) For nominations or other business to be properly brought
before an annual meeting of Shareholders by a Shareholder pursuant to clause
(iii) of paragraph (a)(1) of this Section 12, the Shareholder must have given
timely notice thereof in writing to the Board of Trustees. To be timely, a
Shareholder's notice shall be delivered to the Board of Trustees at the
principal executive offices of the Trust not less than 60 days nor more than 90
days prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date or if the Trust has not previously held an annual meeting,
notice by the Shareholder to be timely must be so delivered not earlier
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<PAGE>
than the 90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the tenth
day following the day on which public announcement of the date of such meeting
is first made. Such Shareholder's notice shall set forth (i) as to each person
whom the Shareholder proposes to nominate for election or reelection as a
Managing Trustee all information relating to such person that is required to be
disclosed in solicitations of proxies for election of Managing Trustees, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a Managing Trustee if elected); (ii) as to any other business that
the Shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
Shareholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the Shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such Shareholder, as they appear on the Trust's books, and of
such beneficial owner and (y) the number of Shares of each class of beneficial
interests of the Trust which are owned beneficially and of record by such
Shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(a)(2) of this Section 12 to the contrary, in the event that the number of
Managing Trustees to be elected to the Board of Trustees is increased and there
is no public announcement naming all of the nominees for Managing Trustee or
specifying the size of the increased Board of Trustees made by the Trust at
least 70 days prior to the first anniversary of the preceding year's annual
meeting, a Shareholder's notice required by this Section 12(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Board of Trustees at
the principal office of the Trust not later than the close of business on the
tenth day following the day on which such public announcement is first made by
the Trust.
(b) Special Meetings of Shareholders. Only such business
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shall be conducted at a special meeting of Shareholders as shall have been
brought before the meeting pursuant to the Trust's notice of meeting.
Nominations of persons for election to the Board of Trustees may be made at a
special meeting of Shareholders at which Managing Trustees are to be elected (i)
pursuant to the Trust's notice of meeting, (ii) by or at the direction of the
Board of Trustees or (iii) provided that the Board of Trustees has determined
that Managing Trustees shall be elected at such special meeting, by any
Shareholder of the Trust who is a Shareholder of record both at the time of
giving of notice provided for in this Section 12(b) and at the time of the
special meeting, who is entitled to vote at the meeting and who complied with
the notice procedures set forth in this Section 12(b). In the event the Trust
calls a special meeting of Shareholders for the purpose of electing one or more
Managing Trustees to the Board of Trustees, any such Shareholder may nominate a
person or persons (as the case may be) for election to such position as
specified in the Trust's notice of meeting, if the Shareholder's notice
containing the information required by paragraph (a)(2) of this Section 12 shall
be delivered to the Board of Trustees at the principal office of the Trust not
earlier than the 90th day prior to such special meeting and not later than the
close of business on the later of the 60th day prior to such special meeting or
the tenth day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board of
Trustees to be elected at such meeting.
(c) General. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 12 shall be eligible to serve as
Managing Trustees and only such business shall be conducted at a meeting of
Shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 12. The chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in this Section 12 and, if any proposed nomination or
business is not in compliance with this Section 12, to declare that such
defective nomination or proposal be disregarded.
(2) For purposes of this Section 12, "public announcement" shall
mean disclosure in a press release reported
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<PAGE>
by the Dow Jones News Service, Associated Press or comparable news service or in
a document publicly filed by the Trust with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 12,
a Shareholder shall also comply with all applicable requirements of state law
and of the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this Section 12. Nothing in this Section 12 shall be
deemed to affect any rights of Shareholders to request inclusion of proposals in
the Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 13. VOTING BY BALLOT. Voting on any question or in any
election may be viva voce unless the chairman of the meeting shall order or
any Shareholder shall demand that voting be by ballot.
Section 14. CONDUCT OF MEETINGS. The Board of Trustees may adopt by
resolution such rules and regulations for the conduct of meeting of Shareholders
as it shall deem appropriate. Except to the extent inconsistent with such rules
and regulations as adopted by the Board of Trustees, the chairman of any meeting
of Shareholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the Board of Trustees or
prescribed by the chairman of the meeting, may include, without limitation, the
following:
(a) The establishment of an agenda or order of business for the
meeting;
(b) Rules and procedures for maintaining order at the meeting and the
safety of those present;
(c) Limitations on attendance at or participation in the meeting of
Shareholders of record, their duly authorized and constituted proxies or such
other persons as the chairman of the meeting shall determine;
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(d) Restrictions on entry to the meeting after the time fixed for the
commencement thereof; and
(e) Limitations on the time allotted to questions or comments by
participants. Unless and to the extent determined by the Board of Trustees or
the chairman of the meeting, meetings of Shareholders shall not be required to
be held in accordance with the rules of parliamentary procedure.
Section 15. ACTION BY CONSENT OF SHAREHOLDERS. Any action required or
permitted to be taken at any annual or special meeting of the Shareholders may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding Shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Shares entitled to vote thereon were present and voted and
shall be delivered (by hand or by certified or registered mail, return receipt
requested) to the Trust by delivery to its principal place of business, or an
agent of the Trust having custody of the book in which proceedings of minutes of
Shareholders are recorded. Notice of the taking of the action without a meeting
by less than unanimous written consent shall be given to those Shareholders who
have not consented in writing.
ARTICLE III
MANAGING TRUSTEES
Section 1. GENERAL POWERS. The business and affairs of the Trust
shall be managed under the direction of its Board of Trustees.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or
at any special meeting called for that purpose, a majority of the entire Board
of Trustees may establish, increase or decrease the number of Managing Trustees,
provided that the number thereof shall never be less than three nor more than 9,
and that at least one-third are Independent Trustees and further provided that
the tenure of office of a Managing Trustee shall not be affected by any decrease
in the number of Managing Trustees.
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Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board
of Trustees shall be held immediately after and at the same place as the annual
meeting of Shareholders, no notice other than this Bylaw being necessary. The
Board of Trustees may provide, by resolution, the time and place, either within
or without the State of Delaware, for the holding of regular meetings of the
Board of Trustees without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Trustees
may be called by or at the request of the chairman of the board, or by a
majority of the Managing Trustees then in office. The person or persons
authorized to call special meetings of the Board of Trustees may fix any place,
either within or without the State of Delaware, as the place for holding any
special meeting of the Board of Trustees called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of
Trustees shall be delivered personally or by telephone, facsimile transmission,
United States mail or courier to each Managing Trustee at his business or
residence address. Notice by personal delivery, by telephone or a facsimile
transmission shall be given at least two days prior to the meeting. Notice by
mail shall be given at least five days prior to the meeting and shall be deemed
to be given when deposited in the United States mail properly addressed, with
postage thereon prepaid. Telephone notice shall be deemed to be given when the
Managing Trustee is personally given such notice in a telephone call to which he
is a party. Facsimile transmission notice shall be deemed to be given upon
completion of the transmission of the message to the number given to the Trust
by the Managing Trustee and receipt of a completed answer-back indicating
receipt. Neither the business to be transacted at, nor the purpose of, any
annual, regular or special meeting of the Board of Trustees need be stated in
the notice, unless specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the Managing Trustees shall constitute
a quorum for transaction of business at any meeting of the Board of Trustees,
provided that, if less than a majority of such Managing Trustees are present at
said meeting, a majority of the Managing Trustees present may adjourn the
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meeting from time to time without further notice, and provided further that if,
pursuant to the Trust Agreement or these Bylaws, the vote of a majority of a
particular group of Managing Trustees is required for action, a quorum must also
include a majority of such group, but only with respect to a vote on such
action.
The Managing Trustees present at a meeting which
has been duly called and convened may continue to transact business until
adjournment, notwithstanding the withdrawal of enough Managing Trustees to leave
less than a quorum.
Section 7. VOTING. The action of the majority of the Managing Trustees
present at a meeting at which a quorum is present shall be the action of the
Board of Trustees (including with respect to actions to merge, consolidate or
convert the Trust), unless the concurrence of a greater proportion is required
for such action by applicable law.
Section 8. TELEPHONE MEETINGS. Managing Trustees may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.
Section 9. INFORMAL ACTION BY MANAGING TRUSTEES. Any action required or
permitted to be taken at any meeting of the Board of Trustees may be taken
without a meeting, if a consent in writing to such action is signed by each
Managing Trustee and such written consent is filed with the minutes of
proceedings of the Board of Trustees.
Section 10. VACANCIES. If for any reason any or all the Managing
Trustees cease to be Managing Trustees, such event shall not annul, dissolve
terminate the Trust or affect these Bylaws or the powers of the remaining
Managing Trustees hereunder (even if fewer than three Managing Trustees remain).
Any vacancy on the Board of Trustees for any cause other than an increase in the
number of Managing Trustees shall be filled by a majority of the remaining
Managing Trustees, although such majority is less than a quorum. If such vacancy
must be filled with an Independent Trustee to comply with the terms of Section
3.1 of the Trust Agreement, and there are any remaining Independent Trustees, a
majority of, or the sole, such remaining Independent
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Trustees or Managing Trustees, as the case may be, shall nominate a replacement.
If there is no remaining Independent Trustee, such vacancies shall be filled by
a majority of the remaining Managing Trustees. Any vacancy in the number of
Managing Trustees created by an increase in the number of Managing Trustees may
be filled by a majority vote of the entire Board of Trustees. Any individual so
elected as Managing Trustee shall hold office until the next annual meeting of
Shareholders at which such Managing Trustee's class is to be elected and until
his successor is elected and qualifies.
Section 11. COMPENSATION. Managing Trustees other than Independent
Trustees shall not receive any salary or other compensation for their services
as Managing Trustees. By resolution of the Board of Trustees, Independent
Trustees may receive fixed sums, Shares in the Trust or other compensation per
year and/or per meeting and/or per visit to real property or other facilities
owned or leased by the Trust and for any service or activity they performed or
engaged in as Managing Trustees. Managing Trustees may be reimbursed for
expenses of attendance, if any, at each annual, regular or special meeting of
the Board of Trustees or of any committee thereof and for their expenses, if
any, in connection with each property visit and any other service or activity
they performed or engaged in as Managing Trustees; but nothing herein contained
shall be construed to preclude any Managing Trustees from serving the Trust in
any other capacity and receiving compensation therefor.
Section 12. LOSS OF DEPOSITS. No Trustee shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or property have been
deposited.
Section 13. SURETY BONDS. Unless required by law, no Trustee shall
be obligated to give any bond or surety or other security for the performance
of any of his duties.
Section 14. RELIANCE. Each Trustee, officer (if any), employee and
agent of the Trust shall, in the performance of his duties with respect to the
Trust, be fully justified and protected with regard to any act or failure to act
in reliance in good faith upon the books of account or other records of the
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Trust, upon an opinion of counsel or upon reports made to the Trust by any of
its officers (if any) or employees or by the adviser, accountants, appraisers or
other experts or consultants selected by the Board of Trustees or officers (if
any) of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
Section 15. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS.
The Trustees shall have no responsibility to devote their full time to the
affairs of the Trust. Any Trustee or officer (if any), employee or agent of the
Trust, in his personal capacity or in a capacity as an affiliate, employee, or
agent of any other person, or otherwise, may have business interests and engage
in business activities similar to or in addition to or in competition with those
of or relating to the Trust.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Trustees may
appoint from among its members an Executive Committee, an Audit Committee, a
Compensation Committee and other committees, composed of one or more Managing
Trustees, to serve at the pleasure of the Board of Trustees.
Section 2. POWERS. The Board of Trustees may delegate to
committees appointed under Section 1 of this Article any of the powers of the
Board of Trustees, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Trustees. A majority
of the members of the committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority of the committee
members present at a meeting shall be the act of such committee. The Board of
Trustees may designate a chairman of any committee, and such chairman or any two
members of any committee may fix the time and place of its meeting unless the
Board of Trustees shall otherwise provide. In the absence of any member of any
such committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint
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another Managing Trustee to act in the place of such absent member. Each
committee shall keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of
Trustees may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Board of Trustees may
be taken without a meeting, if a consent in writing to such action is signed by
each member of the committee and such written consent is filed with the minutes
of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Trustees shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
The Trust shall not have any officers. Notwithstanding the foregoing,
the Board of Trustees may from time to time in its sole discretion appoint
agents or employees of the Trust as "officers" of the Trust with such titles,
powers and duties as they shall deem necessary or desirable.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. Subject to the terms of the Trust Agreement, the
Board of Trustees may authorize the Manager or other agent to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the Trust and such authority may be general or confined to specific
instances. Any agreement, deed, mortgage, lease or other
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document executed by one or more of the Managing Trustees or by an authorized
person shall be valid and binding upon the Trust when authorized or ratified by
action of the Board of Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Trust shall be signed by such officer of the Manager or other agent
of the Trust in such manner as shall from time to time be determined by the
Board of Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed
shall be deposited from time to time to the credit of the Trust in such banks,
trust companies or other depositories as the Board of Trustees may designate.
ARTICLE VII
SHARES OF BENEFICIAL INTEREST
Section 1. CERTIFICATES. Each Shareholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
Shares of each class or series of beneficial interest held by him in the Trust.
Each certificate shall be signed by the chairman of the Board of Trustees, if
any, or any Managing Trustee if no chairman has been elected, and may be sealed
with the seal, if any, of the Trust. The signatures of the Managing Trustees may
be either manual or facsimile. Certificates are not valid until manually
countersigned and registered by the Trust's transfer agent and/or registrar.
Certificates shall be consecutively numbered; and if the Trust shall, from time
to time, issue several classes or series of Shares, each class may have its own
number series. A certificate is valid and may be issued whether or not a
Managing Trustee who signed it is still a Managing Trustee when it is issued.
Each certificate representing Shares which are restricted as to their
transferability or voting powers, which are preferred or limited as to their
distributions or as to their allocable portion of the assets upon dissolution
and liquidation or which are redeemable at the option of the Trust, shall have a
statement of such restriction, limitation, preference or redemption provision,
or a summary thereof, plainly stated on the certificate. If the Trust intends to
issue Shares of more than one class, the certificate
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representing such Shares shall contain on the face or back a full statement or
summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to distributions and other
qualifications and terms and conditions of redemption of such class of
beneficial interest and the differences in the relative rights and preferences
between the Shares of each series of such class to the extent they have been set
and the authority of the Board of Trustees to set the relative rights and
preferences of subsequent series of such class. In lieu of such statement or
summary, the certificate may state that the Trust will furnish a full statement
of such information to any Shareholder upon written request and without charge.
If any class or series of Shares is restricted by the Trust as to
transferability, the certificate representing such Shares shall contain a full
statement of the restrictions.
Section 2. TRANSFERS. Upon surrender to the Trust or the transfer agent
of the Trust of a Share certificate duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, the Trust shall
issue a new certificate to the Person entitled thereto, cancel the old
certificate and record the transaction upon its books.
The Trust shall be entitled to treat the holder of
record of any Shares as the holder in fact thereof and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such Share
or on the part of any other Person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Notwithstanding the foregoing, transfers of Shares
shall be subject in all respects to the Trust Agreement and all of the terms and
conditions contained therein, and to the terms of such Shares determined by the
Board of Trustees in accordance with Section 10.2 of the Trust Agreement.
Section 3. REPLACEMENT CERTIFICATE. The Manager or any other Person
designated by the Board of Trustees may direct a new certificate to be issued in
place of any certificate previously issued by the Trust alleged to have been
lost, stolen or destroyed upon the making of an affidavit of that fact by the
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Person claiming the certificate to be lost, stolen or destroyed. When
authorizing the issuance of a new certificate, the Manager or such other Person
designated by the Board of Trustees may, in his or its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or the owner's legal representative to advertise
the same in such manner as the Manager or such other Person shall require and/or
to give bond, with sufficient surety, to the Trust and the Trustees of the Trust
to indemnify them against any loss or claim which may arise as a result of the
issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Board of Trustees may set, in advance, a record date for the purpose of
determining Shareholders entitled to notice of or to vote at any meeting of
Shareholders or determining Shareholders entitled to receive payment of any
distribution or the allotment of any other rights, or in order to make a
determination of Shareholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date is
fixed and shall be not more than 90 days and, in the case of a meeting of
Shareholders, not less than ten days, before the date on which the meeting or
particular action requiring such determination of Shareholders of record is to
be held or taken.
In lieu of fixing a record date, the Board of
Trustees may provide that the Share transfer books shall be closed for a stated
period but not longer than 20 days. If the Share transfer books are closed for
the purpose of determining Shareholders entitled to notice of or to vote at a
meeting of Shareholders, such books shall be closed for at least ten days before
the date of such meeting.
If no record date is fixed and the Share transfer
books are not closed for the determination of Shareholders, (a) the record date
for the determination of Shareholders entitled to notice of or to vote at a
meeting of Shareholders shall be at the close of business on the day on which
the notice of meeting is mailed or the 30th day before the meeting, whichever is
the closer date to the meeting; and (b) the record date for the determination of
Shareholders entitled to
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receive payment of a distribution or an allotment of any other rights shall be
the close of business on the day on which the resolution of the directors,
declaring the distribution or allotment of rights, is adopted.
When a determination of Shareholders entitled to
vote at any meeting of Shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof, except when (i) the
determination has been made through the closing of the transfer books and the
stated period of closing has expired or (ii) the meeting is adjourned to a date
more than 120 days after the record date fixed for the original meeting, in
either of which case a new record date shall be determined as set forth herein.
Section 5. SHARE LEDGER. The Trust shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate Share ledger containing the name and address of each
Shareholder and the number of Shares of each class or series held by such
Shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Board of Trustees
may issue fractional Shares or provide for the issuance of scrip, all on such
terms and under such conditions as they may determine. Notwithstanding any other
provision of the Trust Agreement or these Bylaws, the Board of Trustees may
issue units consisting of different securities of the Trust. Any such security
issued in a unit shall have the same characteristics as any identical securities
issued by the Trust, except that the Board of Trustees may provide that for a
specified period securities of the Trust issued in such unit may be transferred
on the books of the Trust only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Trustees shall have the power, from time to time, to fix
the fiscal year of the Trust by a duly adopted resolution.
ARTICLE IX
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DISTRIBUTIONS
Section 1. AUTHORIZATION. Distributions upon the Shares of the
Trust may be authorized and declared by the Board of Trustees, subject to
the provisions of law and the Trust Agreement. Distributions may be paid in
cash, property or Shares of the Trust, subject to the provisions of law and
the Trust Agreement.
Section 2. CONTINGENCIES. Before payment of any distributions, there
may be set aside out of any assets of the Trust available for distributions such
sum or sums as the Board of Trustees may from time to time, in its absolute
discretion, think proper as a reserve fund for contingencies, for equalizing
distributions, for repairing or maintaining any property of the Trust or for
such other purpose as the Board of Trustees shall determine to be in the best
interest of the Trust, and the Board of Trustees may, in its sole discretion,
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Trust Agreement, the Board of Trustees
may from time to time adopt, amend, revise or terminate any policy or policies
with respect to investments by the Trust as it shall deem appropriate in its
sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Trustees may authorize the adoption of a
seal by the Trust. The seal shall contain the name of the Trust and the year of
its creation and the words "Delaware Business Trust." The Board of Trustees may
authorize one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or required
to affix its seal to a document, it shall be sufficient to meet the requirements
of any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent
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to the signature of the person authorized to execute the document on behalf of
the Trust.
ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Delaware law in effect from time to
time and in addition to any rights set forth in the Trust Agreement, the Trust
shall indemnify and, without requiring a preliminary determination of the
ultimate entitlement to indemnification, shall pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any individual
who is a present or former Trustee, Manager, officer (if any), employee or agent
of the Trust and who is made a party to the proceeding by reason of his service
in that capacity or (b) any individual who, while a Trustee, Manager, officer
(if any), employee or agent of the Trust and at the request of the Trust, serves
or has served another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise as a director, officer, partner or trustee
of such corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise and who is made a party to the proceeding by reason of his
service in that capacity. The Trust may, with the approval of its Board of
Trustees, provide such indemnification and advance for expenses to a Person who
served a predecessor of the Trust in any of the capacities described in (a) or
(b) above and to any officer (if any), employee or agent of the Trust or a
predecessor of the Trust.
Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or Trust Agreement inconsistent
with this Article, shall apply to or affect in any respect the applicability of
the preceding paragraph with respect to any act or failure to act which occurred
prior to such amendment, repeal, adoption or amendment.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Trust
Agreement or these Bylaws or pursuant to applicable
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law, a waiver thereof in writing, signed by the Person or Persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at nor the purpose of any meeting need be set forth in the waiver of notice,
unless specifically required by statute. The attendance of any Person at any
meeting shall constitute a waiver of notice of such meeting, except where such
Person attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully called or
convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Trustees shall have the exclusive power to adopt, alter or
repeal any provision of these Bylaws and to make new Bylaws.
ARTICLE XV
DEFINITIONS
All terms not otherwise defined in these Bylaws shall have the meanings
ascribed to them in the Amended and Restated Trust Agreement of the Trust, as
amended from time to time (the "Trust Agreement").
EXHIBIT 10.1
MANAGEMENT AGREEMENT BETWEEN
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
AND
RELATED CHARTER LP
This MANAGEMENT AGREEMENT (this "Agreement") dated as of October 1,
1997, between CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY (the "Company"), a
Delaware business trust, and RELATED CHARTER LP (the "Manager"), a Delaware
limited partnership.
W I T N E S S E T H:
WHEREAS, the Company is a Delaware business trust created in
accordance with applicable provisions of the Delaware Trust Act, 12 Del.
C.ss.ss. 3801 et. seq., as amended from time to time (the "Trust Act"); and
WHEREAS, the purposes of the Company are, as determined from time to
time by the board of trustees (the "Board of Trustees") of the Company, to
engage in any lawful business or activity for which a business trust may be
created under the Trust Act; and
WHEREAS, the Company desires to avail itself of the experience,
sources of information, advice and assistance of the Manager and to have the
Manager undertake the duties and responsibilities hereinafter set forth, on
behalf of and subject to the supervision of the Board of Trustees, all as
provided herein; and
WHEREAS, all capitalized terms used herein, and not otherwise
defined in Article 10, shall have the meanings ascribed to them in the Trust
Agreement; and
<PAGE>
WHEREAS, the Manager is willing to render such services, subject to
the supervision of the Board of Trustees, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, IT IS AGREED as follows:
1. Duties of Manager. The Company hereby retains the Manager as the manager of
the Company to perform the services hereinafter set forth, and the Manager
hereby accepts such appointment, subject to the terms and conditions hereinafter
set forth. In the performance of this undertaking, subject to the supervision of
the Board of Trustees and consistent with the provisions of the Company's
Amended and Restated Trust Agreement (the "Trust Agreement"), the Manager shall:
(1) obtain for the Company, furnish and/or supervise the services necessary to
perform any ministerial functions in connection with the management of the
day-to-day operations of the Company;
(2)
(3) seek out, present and recommend to the Company, whether through its own
efforts or those of third parties retained by it, suitable investment
opportunities which are consistent with the Company's investment objectives and
policies as adopted by the Board of Trustees from time to time, and negotiate on
behalf of the Company with respect to potential investments or the disposition
thereof;
(4)
(5) exercise absolute discretion, subject to the Board of Trustees' review, in
decisions to originate, acquire, retain, sell or negotiate for the prepayment or
restructuring of the Company's First Mortgage Bonds, SMLs, Tax Exempt Securities
and other mortgage and mortgage securities investments;
(6)
(7) recommend investment opportunities consistent with the Company's investment
objectives and policies and negotiate on behalf of the Company with respect to
potential investments or the disposition thereof;
(8)
(9) perform the duties set forth on Exhibit A in connection with servicing the
Company's loan portfolio;
(10)
<PAGE>
(11) obtain for the Company such other services as may be required in acquiring
or disposing of investments, disbursing and collecting the funds of the Company,
paying the debts and fulfilling the obligations of the Company, and handling,
prosecuting and settling any claims of the Company, including foreclosing and
otherwise enforcing mortgages and other liens securing investments;
(12)
(13) obtain for the Company such services as may be required for property
management, mortgage brokerage and servicing, and other activities relating to
the investment portfolio of the Company;
(14)
(15) prepare, or cause to be prepared, statements and other relevant information
for distribution to Shareholders including annual and quarterly reports and any
filings required by regulatory authorities;
(16)
(17) monitor operations and expenses of the Company;
(18)
(19) from time to time, or as requested by the Board of Trustees, make reports
to the Company as to its performance of the foregoing services;
(20)
(21) perform any other powers of the Board of Trustees which are set forth in
the Trust Agreement which may be delegated to it by the Board of Trustees from
time to time; and
(22)
(23) do all things necessary to assure its ability to render the services
contemplated herein.
(24)
2. Fiduciary Relationship. The Manager, as a result of its relationship with the
Company pursuant to this Agreement, stands in a fiduciary relationship with the
Shareholders of the Company.
3.
4. No Partnership or Joint Venture. The Company and the Manager are not partners
or joint venturers with each other and nothing herein shall be construed to make
them partners or joint venturers or impose any liability as such on either of
them.
5.
6. Records. At all times, the Manager shall keep books of account and records
relating to services performed hereunder, which books of account and records
shall be accessible for
<PAGE>
inspection by the Company at any time during the ordinary business hours of the
Manager.
7.
8. Limitations. Anything else in this Agreement to the contrary notwithstanding,
the Manager shall refrain from any action which, in its sole judgment made in
good faith, or, in the judgment of the Board of Trustees, provided that the
Board of Trustees give the Manager written notice to such effect, would (a)
cause the Company to be classified as (i) an "investment company" for purposes
of the Investment Company Act of 1940, as amended, or (ii) other than a
partnership for purposes of the Code; (b) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company or over its securities, or (c) be prohibited by the Company's Trust
Agreement.
9.
10. Bank Accounts. The Manager may establish and maintain one or more bank
accounts in the name of the Company or in its own name as agent for the Company
and may collect and deposit in and disburse from any such account, any money on
behalf of the Company, under such terms and conditions as the Board of Trustees
may approve, provided that no funds in such account shall be commingled with
funds of the Manager. From time to time and upon appropriate request, the
Manager shall render appropriate accounting of such collections and payments to
the Board of Trustees and the auditors of the Company.
11.
12. Bond. If required by the Board of Trustees, the Manager will maintain a
fidelity bond with a responsible surety company in such amounts as may be
required by the Board of Trustees, covering all partners thereof together with
employees and agents of the Manager handling funds of the Company and investment
documents or records pertaining to investments of the Company. Such bonds shall
inure to the benefit of the Company in respect of losses from acts of such
partners, employees and agents through theft, embezzlement, fraud, negligence,
error or omission or otherwise. The premiums on such bonds shall be paid by the
Company.
13.
14. Information Furnished Manager. The Board of Trustees shall, at all times,
keep the Manager fully informed with regard to the investment policy of the
Company, including any specific types of mortgage investments and mortgage
securities desired,
<PAGE>
and any criteria or conditions established by the Board of Trustees as to
whether the Company will make a particular investment, the capitalization policy
of the Company (including the policy with regard to the incurrence of
indebtedness by the Company) and their intentions as to the future operations of
the Company. In particular, the Board of Trustees shall notify the Manager
promptly of their intention to either sell or otherwise dispose of any of the
Company's investments, to make any new investment, to incur any indebtedness or
to issue any additional Shares.
15.
16. Consultation and Advice. In addition to the services described above, the
Manager shall consult with the Board of Trustees and shall, at the request of
the Board of Trustees of the Company, furnish advice and recommendations with
respect to other aspects of the business and affairs of the Company.
17.
18. Definitions. As used herein, the following terms shall have the meanings set
forth below:
19.
a. "Acquisition Expenses" shall mean expenses related to the Company's
selection of, and investment in, First Mortgage Bonds, Tax-Exempt Securities and
other investments, whether or not acquired or made, including but not limited to
advertising costs, brokerage fees, environmental, engineering and other due
diligence expenses, legal fees and expenses, travel and communications expenses,
cost of appraisals, accounting fees and expenses, title insurance and
miscellaneous other expenses.
b.
c. "Affiliated Programs" shall mean any publicly offered Entity which is
sponsored by an Affiliate of Related.
d.
e. "Initial Term" shall have the meaning set forth in Article 18.
f.
g. "Related" shall mean Related Capital Company, a New York general partnership.
h.
i. "Trust Agreement" shall mean the Amended and Restated Trust Agreement of the
Company dated as of September 30, 1997, as amended and/or restated from time to
time.
<PAGE>
1. Fees and Other Compensation of the Manager. The Manager or its designees
shall be entitled to receive from the Company (except those payable by others as
noted below) the following fees and other compensation:
a. Sales Fees. If the Company forecloses on, or otherwise obtains direct or
indirect title to, an Underlying Property and sells such property, the Manager
or its Affiliates shall be entitled to a real estate commission equal to the
lesser of (i) 3% of the gross sales price of such property received by the
Company or (ii) one-half of the normal and competitive rate customarily charged
by unaffiliated parties rendering similar services, but such fees shall be paid
only if the Manager or its Affiliate provides a substantial amount of services
in the sales effort.
b.
c. Property Management Fees. In the event the Company forecloses on, or
otherwise obtains title to, an Underlying Property, the Company may be required
to take over the management of such property. In such cases, the Manager or its
Affiliates may provide property management services at rates and on terms no
less favorable to the Company than those customary for similar services, if they
have such knowledge of and experience in managing properties in the area. With
respect to residential properties, such fee (including all rent-up, leasing, and
re-leasing fees and bonuses paid to any person) shall not exceed 5% of the gross
revenues from such properties and with respect to all other properties, such fee
shall not exceed 6% of the gross revenues where the Manager of its Affiliates
provide leasing, re-leasing and leasing related services, and 3% of gross
revenues where the Manager or its Affiliates do not provide such services.
Notwithstanding the foregoing, the Manager may be entitled to receive higher
fees in the event the Manager can demonstrate to the satisfaction of the Board
of Trustees through empirical data that a higher competitive fee is justified
for the services rendered and the type of property. Where the Manager or its
Affiliates provide property management services, property management fees
payable to unaffiliated parties will be paid out of the fees paid to the Manager
or its Affiliate. Property management fees shall be payable monthly.
d.
e. Insurance Brokerage Fees. The Manager or its Affiliates may receive an
insurance brokerage fee for providing
<PAGE>
insurance brokerage services with respect to Underlying Properties if such
services are required by the Company in the event of a default on a mortgage
investment. With respect to any insurance brokerage fee to be paid to the
Manager or its Affiliates by the Company, such insurance brokerage fee will be
no greater than the lowest quote obtained from two unaffiliated insurance
agencies and the coverage and terms likewise will be comparable.
f.
g. Bond Placement Fees. The Manager or its Affiliates may receive from
borrowers, but not from the Company or its subsidiaries, bond placement fees
equal to up to 2.0% of the principal amount of each First Mortgage Bond,
Tax-Exempt Securities or other tax-exempt instrument acquired or originated by
the Company, its subsidiaries or other Entities to which the Company or its
subsidiaries has transferred such First Mortgage Bonds, Tax-Exempt Securities or
other tax-exempt instruments to facilitate financing.
h.
i. Bond Selection Fees. The Manager or its Affiliates shall receive bond
selection fees equal to 2.00% of the principal amount of each First Mortgage
Bond, Tax-Exempt Securities or other tax-exempt instrument acquired or
originated by the Company, its subsidiaries or other Entities to which the
Company or its subsidiaries has transferred such First Mortgage Bonds,
Tax-Exempt Securities or other tax-exempt instruments to facilitate financing.
Bond Selection Fees shall be payable upon the consummation of the investment.
j.
k. Special Distributions. The Manager, in its capacity as a general partner of
the Company pursuant to Article 17, shall receive a special distribution equal
to 0.375% per annum of the Total Invested Assets of the Company and its
subsidiaries. Special Distributions shall be payable whenever Distributions are
made to Shareholders pursuant to the Trust Agreement.
l.
m. Loan Servicing Fees. The Manager shall receive loan servicing fees equal to
0.25% per annum based on the outstanding principal amount of First Mortgage
Bonds or other mortgage investments which are held by the Company or other
entities to whom the Company has transferred such First Mortgage
<PAGE>
Bonds or other mortgage investments to facilitate financing. Loan servicing fees
shall be payable quarterly.
n.
o. Liquidation Fees. If the Company is dissolved, the Manager shall receive a
liquidation fee equal to 1.50% of the gross sales price of the assets sold in
connection with the liquidation of the Company's directly or indirectly owned
assets.
p.
q. Money Market Fees. If funds of the Company are temporarily invested in money
market funds sponsored by the Manager or its Affiliates they shall be entitled
to receive the fees customarily charged by such money market funds to
unaffiliated third parties making similar investments therein.
r.
s. Other Compensation. The Manager or its Affiliates may provide financial
guarantees (i) to the Company to facilitate leveraging by the Company, for which
they shall be entitled to receive market rate fees from the Company and (ii) to
the owners (or partners of the owners) of the Underlying Properties for which
they shall be entitled to receive market rate fees from such Entities.
t.
u. Services to Third Parties. Except as set forth in Section 11(d), nothing in
this Agreement shall limit the Manager or its Affiliates' right to provide
services to borrowers or owners of Underlying Properties provided the fee
charged for such services is not in excess of the competitive rate in the
market.
v.
2. Statements. Prior to the payment of any fees hereunder, the Manager shall
furnish to the Company a statement showing the computation of the fees, if any,
payable under Section 11 hereof.
3.
4. Incentive Share Options. Subject to the provisions of the Trust Agreement,
the Manager and its partners, officers and employees may receive options to
acquire Shares pursuant to the Company's Incentive Share Option Plan only if the
Company's distributions in any year exceed $0.9517 per Share, and the
Compensation Committee of the Board of Trustees determines to grant such
options.
5.
a. Expenses of the Company. The Company shall pay all of its expenses. Without
limiting the foregoing, it is
<PAGE>
specifically agreed that the following expenses of the Company shall be paid by
the Company and shall not be borne by the Manager unless such expense is a fee
or other service for which the Manager is otherwise receiving a fee from the
Company:
b.
(1) the cost of money borrowed by the Company;
(2)
(3) all taxes applicable to the Company including, without limitation, taxes on
income and on assessments of real property;
(4)
(5) fees and expenses paid to independent contractors, unaffiliated mortgage
servicers, consultants, managers and other agents employed by or on behalf of
the Company;
(6)
(7) Acquisition Expenses and expenses directly connected with the ownership and
disposition of investments or other property, and with the origination or
purchase of First Mortgage Bonds or other tax-exempt instruments (including the
costs of foreclosure, insurance premiums, legal services, brokerage and sales
commissions, maintenance, repair and improvement of property);
(8) expenses of maintaining and managing real estate equity interests,
processing and servicing mortgage and other loans and managing the Company's
other investments;
(9)
(10) insurance coverage in connection with the business of the Company
(including officers' and trustees' liability insurance);
(11)
(12) the expenses of dissolving and liquidating the Company or revising,
amending or modifying its organizational documents;
(13)
(14) expenses connected with payments of dividends or interest or distribution
in cash or any other form made or caused to be made by the Board of Trustees to
Shareholders;
(15)
(16) all expenses connected with communications to Shareholders and other
bookkeeping and clerical work necessary in maintaining relations with the
Shareholders, including the cost of printing and mailing certificates for
securities, proxy solicitation materials and reports to holders of the Company's
securities;
(17)
<PAGE>
(18) the cost of any accounting, statistical or bookkeeping equipment necessary
for the maintenance of the books and records of the Company;
(19)
(20) transfer agent's and registrar's fees and charges; and
(21)
(22) other legal, accounting and auditing fees and expenses as well as any
costs incurred in connection with any litigation in which the Company is
involved and in the examination, investigation or other proceedings conducted by
any regulatory agency with respect to the Company.
(23)
c. Subject to Article 15, the Company shall reimburse the Manager and its
Affiliates for (i) the actual costs to the Manager or its Affiliates of goods,
materials and services used for and by the Company obtained from unaffiliated
parties; (ii) administrative services necessary to the operation of the Company;
(iii) the costs of personnel employed by the Manager and directly involved in
the organization and business of the Company (including persons who may be
employees or officers of the Manager and its Affiliates) and for legal,
accounting, transfer agent, reinvestment and redemption plan administration,
data processing, duplicating and investor communications services performed by
employees or officers of the Manager and its Affiliates which could be performed
directly for the Company by independent parties and (iv) any travel expenses
incurred in connection with the services provided hereunder and for advertising
expenses incurred by the Manager in seeking any investments or seeking the
disposition of any investments held by the Company. The amounts charged to the
Company for services performed shall not exceed the lesser of (a) the actual
cost of such services, or (b) the amount which the Company would be required to
pay to independent parties for comparable services.
d.
6. Limitations on Reimbursements. The amounts reimbursed to the Manager pursuant
to Section 14(b) above shall not exceed $200,000 per annum, subject to (i)
annual increases following the first anniversary of the date hereof and each
year thereafter based upon increases in the Consumer Price Index for All Urban
Consumers, N.Y., N.Y. -Northeastern N.J. (Base Year 1982-1984 = 100) specified
for "All Items" as issued by the Bureau of Labor Statistics, U.S. Department of
Labor (or comparable substitute index) and (ii) proportionately as the Company's
assets increase
<PAGE>
based upon the amount of the Company's Total Invested Assets from time
to time.
7.
a. Other Activities of Manager. Nothing in this Agreement shall prevent the
Manager or any of its Affiliates from engaging in other business activities
related to real estate, mortgage investments or other investments whether
similar or dissimilar to those made by the Company or from acting as manager to
any other person or entity having investment policies whether similar or
dissimilar to those of the Company. However, before the Manager, the officers
and directors of the Manager and all persons controlled by the Manager and its
officers and directors may take advantage of an opportunity for their own
account or present or recommend it to others (except as set forth in Section
16(b)), they are obligated to present an investment opportunity to the Company
if (i) such opportunity is compatible with the Company's investment objectives
and policies, (ii) such opportunity is of a character which could be taken by
the Company, and (iii) the Company has the financial resources to take advantage
of such opportunity.
b.
c. (i) To the extent that an Affiliated Program with similar investment
objectives to those of the Company have funds available for investment at the
same time as the Company, and/or an investment is potentially suitable for more
than one such Entity the Manager and its Affiliates shall review the investment
portfolio of each such Entity and shall make the decision as to which such
Entity will acquire the investment on the basis of such factors as it deems
reasonable in light of each Entity's then current situation, including, without
limitation, the effect of the acquisition on each such Entity's portfolio and
objectives, the amount of funds available and the then length of time such funds
have been available for investment, and the cash requirements of each such
Entity. If funds should be available to two or more Affiliated Programs to
purchase a given investment and the other factors enumerated above have been
evaluated and deemed equally applicable to each Entity, then the Manager or its
Affiliates will acquire such investment for the Affiliated Programs on a basis
of rotation with the initial order of priority determined by the dates of
formation of the Entities.
d.
e. (ii) Notwithstanding the foregoing, nothing herein shall be construed to
require CentRe Mortgage Capital, L.L.C.
<PAGE>
which is an Affiliate of the Manager, to present any investment opportunity to
the Company.
f.
8. Tax Matters Partner; General Partner for Tax Purposes. The Manager shall be
designated the "Tax Matters Partner" to manage administrative tax proceedings
conducted at the Company level by the Internal Revenue Service with respect to
Company matters. The Manager shall also be deemed the general partner of the
Company for tax purposes and by execution of this Agreement consents to such
appointments and agrees to be bound by all the obligations set forth in the
Trust Agreement with respect to its role as Tax Matters Partner and general
partner for tax purposes. Pursuant to the Trust Agreement, the Manager agrees to
maintain ownership of at least 10 Shares of the Company during the term of this
Agreement.
9.
10. Term; Termination of Agreement. This Agreement shall continue in force and
shall not be terminable by the Company for a period of four years from the date
hereof (the "Initial Term") and thereafter it may be renewed by the Company from
year to year, subject to the approval of a majority of the Board of Trustees.
Notice of renewal shall be given in writing by the Company to the Manager not
less than 60 days before the expiration of this Agreement or of any extension
thereof.
11.
12. Notwithstanding any other provision to the contrary, this Agreement shall be
terminable (i) with or without Cause by the Manager at any time (ii) without
Cause by a majority of the Independent Trustees after the expiration of the
Initial Term; or (iii) for Cause by a majority of the Independent Trustees at
any time, each without penalty, and each upon 60 days' prior written notice
prior to the non-terminating party.
13.
14. In the event of the termination of this Agreement, the Manager will
cooperate with the Company and take all reasonable steps requested to assist the
Board of Trustees in making an orderly transition of the management function.
15.
16. Restrictions on Company's Right to Dissolve. The Company shall not dissolve
and liquidate prior to the expiration of the Initial Term except upon a
recommendation of the Manager and the Majority Vote of the Shareholders. After
the expiration of the Initial Term, the vote of the holders of 66b% of the
<PAGE>
Company's then outstanding Shares shall be required to approve a dissolution and
liquidation of the Company that is not recommended by the Manager and the
Majority Vote of Shareholders shall be required to approve a liquidation of the
Company recommended by the Manager. If for any reason, whether prior to or after
the expiration of the Initial Term, this Agreement is terminated in accordance
with its terms, the restrictions on the Company's right to dissolve and
liquidate set forth in this Article 19 shall terminate.
17. Amendments. This Agreement shall not be changed, modified, terminated or
discharged in whole or in part except by an instrument in writing signed by both
parties hereto, or their respective successors or permitted assigns, or
otherwise as provided herein.
18.
19. Assignment. This Agreement may not be assigned by the Manager without the
written consent of the Company, except to an Affiliate of the Manager. Any
assignee of the Manager shall be bound hereunder to the same extent as the
Manager. This Agreement shall not be assigned by the Company without the written
consent of the Manager, except to a corporation, association, trust or other
organization which is a successor to the Company. Such successor shall be bound
hereunder to the same extent as the Company. Notwithstanding anything to the
contrary contained herein, the economic rights of the Manager hereunder,
including the right to receive all compensation hereunder, may be sold,
transferred or assigned by the Manager without the consent of the Company.
20.
21. Action Upon Termination. From and after the effective date of termination of
this Agreement, pursuant to Section 18 hereof, the Manager shall not be entitled
to compensation for further service rendered hereunder but shall be paid all
compensation and reimbursed for all expenses accrued through the date of
termination. The Manager shall forthwith upon such termination:
22.
a. pay over to the Company all moneys collected and held for the account of the
Company pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;
b.
<PAGE>
c. deliver to the Company a full accounting, including a statement showing all
payments collected by it and a statement of all moneys held by it, covering the
period following the date of the last accounting furnished to the Company; and
d.
e. deliver to the Company all property and documents of the Company then in the
custody of the Manager.
f.
23. Incorporation of the Trust Agreement. To the extent the Trust Agreement
imposes obligations or restrictions on the Manager or grants the Manager certain
rights which are not set forth in this Agreement, the Manager shall abide by
such obligations or restrictions and such rights shall inure to the benefit of
the Manager with the same force and effect as if they were set forth herein.
24.
25. Standard of Care. The Manager assumes no responsibility under this Agreement
other than to render the services called for hereunder in good faith, and shall
not be responsible for any action of the Company in following or declining to
follow any advice or recommendations of the Manager. Neither the Manager nor its
directors, officers, partners, members, and employees shall be liable to the
Company, the Shareholders, the Trustees or to any successor or assignee of the
Company, except by reason of acts constituting bad faith, gross negligence or
reckless disregard of their duties. This shall in no way affect the standard for
indemnification but shall only constitute a standard of liability. The duties to
be performed by the Manager pursuant to this Agreement may be performed by it or
by officers, directors or by Affiliates of the foregoing under the direction of
the Manager or delegated to unaffiliated third parties under its direction.
26.
27. (b) The Manager shall look solely to the assets of the Company for
satisfaction of all claims against the Company, and in no event shall any
Shareholder or Trustee of the Company have any personal liability for the
obligations of the Company under this Agreement.
28.
a. Indemnification of Manager. The Company shall indemnify the Manager and its
Affiliates for any loss arising out of any of their acts or omissions in
connection with this Agreement; provided that (i) the Board of Trustees must
have
<PAGE>
determined, in good faith, that such course of conduct was in the best
interests of the Company and did not constitute negligence or misconduct by the
Manager or its Affiliates; (ii) such conduct was within the scope of authority
of the Manager; and (iii) any such indemnification shall be recoverable only
from the assets of the Company and not from the assets of the Shareholders or
the Trustees. Notwithstanding the foregoing, the Manager or its Affiliates shall
not be indemnified for any liability, loss or damage incurred by the Manager or
its Affiliates in connection with any claim or settlement involving allegations
that federal or state securities laws were violated by the Manager or its
Affiliates unless: (a) the Manager or its Affiliates seeking indemnification are
successful in defending such action on the merits of each count involving
securities law violations; or (b) such claims have been dismissed with prejudice
on the merits by a court of competent jurisdiction; or (c) a court of competent
jurisdiction approves a settlement of the claims against the Manager or its
Affiliates seeking indemnification involving securities law violations and finds
that indemnification of the settlement and related costs should be made; or (d)
indemnification is specifically approved by a court of competent jurisdiction in
each such case.
b.
29. Notices. Any notice, report or other communication required or permitted to
be given hereunder shall be in writing, and shall be given by delivering such
notice by hand or by certified mail, return receipt requested, postage pre-paid,
at the following addresses of the parties hereto:
Company:
Charter Municipal Mortgage Acceptance Company
625 Madison Avenue
New York, New York 10022
Attention: Stuart J. Boesky
Managing Trustee
with a copy to:
Michael Orbison, Esq.
625 Madison Avenue
New York, New York 10022
<PAGE>
Manager:
Related Charter LP
625 Madison Avenue
New York, New York 10022
Attention: Stuart J. Boesky
Executive Vice President
with a copy to:
Michael Orbison, Esq.
625 Madison Avenue
New York, New York 10022
Either party may at any time change its address for the purpose of
this Section 26 by like notice.
1. Headings. The section headings herein have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
2.
3. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New
York as at the time in effect.
4.
5.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this agreement to be
signed as of the day and year first above written.
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE
COMPANY
By:
----------------------------------------
J. Michael Fried
Managing Trustee
RELATED CHARTER LP
By: Related Charter LLC, its general
partner
By:
--------------------------------------
Stuart J. Boesky
Member
<PAGE>
1
EXHIBIT A
Loan Servicing Duties
Manager shall perform the following services and duties with respect to
servicing of Mortgage Loans:
(a) Manager shall maintain with accuracy such records and books of account
as are customarily maintained by services in connection with mortgage loans
similar to the Mortgage Loans.
(b) Manager shall use its best efforts to make collections on all payments
due and to monitor the payment of amounts payable on the First Mortgage Bonds
issued to finance each Mortgage Loan (including the payment of base interest,
contingent interest and deferred interest). Manager shall make regular reports
to the Company on such collections and payments and shall upon request of the
Company advise as to the status of each Mortgage Loan or any matter relating
thereto.
(c) Manager shall make remittance to the Company of payments and
collections received under the Mortgage Loans in accordance with instructions of
the Company or as otherwise agreed by the parties.
(d) Manager shall maintain for each Mortgage Loan appropriate real estate
tax and insurance impound accounts as well as replacement reserve accounts
pursuant to the terms of the building loan agreements or loan agreements ("Loan
Agreements") or as otherwise authorized and directed by the Company.
(e) Manager shall report with reasonable promptness to the Company with
respect to each Mortgage Loan (i) any fact or circumstance that may impair the
first lien priority of the Mortgage Loan, (ii) any sale, refinancing, casualty
(in excess of $10,000) or abandonment with respect to the related Underlying
Property and (iii) any event of default under the related Loan Agreement or any
event which, upon the passage of time, would become an event of default under
the related Loan Agreement.
(f) Promptly after any officer, employee or representative of Manager who
would normally be aware of this Agreement in the ordinary course of his or her
duties shall have received knowledge
<PAGE>
2
of the occurrence of an event of default under the Loan Agreement relating to a
Mortgage Loan or an event which, upon the passage of time would become an event
of default under the Loan Agreement relating to a Mortgage Loan, Manager shall
evaluate the status of the Mortgage Loan and the related Underlying Property,
including, without limitation, alternative measures for the exercise of rights
and remedies. Manager shall communicate promptly such evaluation to the Company.
Manager shall not be obligated to take any action under the related Loan
Agreement and other loan documents relating to the Mortgage Loan ("Loan
Documents") until and unless it shall have received prior authorization and
instruction to do so from the Company.
(g) Other duties of Manager with respect to the servicing of Mortgage
Loans are generally as follows:
<PAGE>
1
! Maintain accurate books and records of account as are customarily
maintained by a loan servicer in connection with similar mortgage
loans.
! Prepare monthly bills to borrowers in accordance with loan documents
for payment of principal, interest, and deposits into the tax,
insurance and replacement reserves.
! Process monthly collections and deposit into appropriate accounts.
! Review tax and insurance escrows as necessary and cause to be
adjusted monthly escrow payments in accordance with terms of Loan
Documents.
! Cause tax and insurance payments to be made promptly when due or
otherwise as agreed by the parties.
! Review and process requests of borrowers for withdrawals from
replacement reserve accounts in accordance with terms of Loan
Documents.
! Maintain monthly, quarterly and annual loan history schedules for
each Mortgage Loan.
! Prepare quarterly reports for the Company, or otherwise as
reasonably requested, which outline the status of each Mortgage Loan
including outstanding loan balances and escrow balances.
! Prepare year-end reports for each borrower outlining total interest
and total principal paid for the year as well as escrow account
transaction activity and escrow balances.
! Prepare and deliver year-end IRS Form 1099's to borrowers.
! Notify and report to the Company promptly, as may come to Manager's
attention, generally and specifically, any circumstances that may
impair lien priority of the
<PAGE>
2
Company, sale/refinancing/casualty and/or event of default under
Loan Documents.
! Advise the Company promptly of delinquency or default under Loan
Documents as such comes to the attention of Manager.
! Prepare and forward delinquency and default notices and follow-up as
necessary.
! Ensure adequate insurance coverage at closing and determine the
appropriate initial deposits into tax and insurance escrows.
! Coordinate all modifications, work-outs and restructurings,
interfacing with third parties including attorneys, engineers,
accountants, asset managers and borrowers, as required and as
directed by the Company.
! Use best efforts to obtain monthly quarterly and year end audited
financial statements from the borrowers as required under the Loan
Documents.
! Review and approve annual operating budgets for each Underlying
Property as delivered by borrowers.
! Track and review monthly, quarterly, and annual financial
performance of each property utilizing financing statements
submitted by the Underlying Property, comparing the Underlying
Property's actual operations to approved budgeted expectations,
prior years operations and local market trends.
! Track monthly occupancy and unit rent levels of each Underlying
Property.
! Maintain Loan Documents and document custody.
! Oversee loan compliance for each Mortgage Loan.
! Cause periodic physical and management review of each Underlying
Property.
<PAGE>
3
! Interface and coordinate with inspecting engineers for periodic
physical reviews as necessary of each underlying property.
! Monitor and maintain security and escrows for guarantees, as
applicable.
! Handle disbursements and release of security in conformance with
Loan Documents.
! Cause to be delivered updated title reports, as required from time
to time under Loan Documents.
! Prepare pay-off letters, as required.
(h) Manager may perform additional duties with respect to Mortgage Loans
as the Company and the Manager may mutually agree.
Exhibit 10.2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of October 1, 1997, by and among Charter Municipal Mortgage Acceptance
Company, a Delaware business trust (the "Trust"), Summit Tax Exempt Bond Fund,
L.P., a Delaware limited partnership ("Tax Exempt I"), Summit Tax Exempt L.P.
II, a Delaware limited partnership ("Tax Exempt II") and Summit Tax Exempt L.P.
III, a Delaware limited partnership ("Tax Exempt III"). Tax Exempt I, Tax Exempt
II and Tax Exempt III are sometimes hereinafter referred to individually as a
"Partnership" and collectively as the "Partnerships."
W I T N E S S E T H
WHEREAS, the Trust, Tax Exempt I, Tax Exempt II and Tax Exempt III desire
to engage in a consolidation transaction whereby, among other things (i) (A) Tax
Exempt I will be merged with and into the Trust, with the Trust being the
surviving entity (the "Tax Exempt I Merger"), (B) Tax Exempt II will be merged
with and into the Trust, with the Trust being the surviving entity (the "Tax
Exempt II Merger"), and (C) Tax Exempt III will be merged with and into the
Trust, with the Trust being the surviving entity (the "Tax Exempt III Merger")
(the Tax Exempt I Merger, Tax Exempt II Merger, and Tax Exempt III Merger being
hereinafter collectively referred to as the "Mergers"), and (ii) all limited and
general partner interests and BUC$ (defined below) of the Partnerships
outstanding at the Effective Time (defined herein) will be converted into the
right to receive common beneficial interests ("Shares") in the Trust, as more
specifically provided herein;
WHEREAS, Prudential Bache Properties, Inc. ("P-B Properties"), P.B. Tax
Credit S.L.P., a Delaware limited partnership, Prudential Bache Investor
Services II, Inc., a Delaware corporation, and Related Capital Company, a New
York general partnership ("RCC"), have entered into a Purchase Agreement dated
December 19, 1996 (the "Purchase Agreement") whereby, among other things, and
subject to the terms and conditions contained therein, P-B Properties has agreed
to assign and transfer all of its general partner interests in the Partnerships
to RCC or its affiliate Related Charter LP, a Delaware limited partnership (the
"Manager"), and to withdraw from the Partnerships (the "Withdrawal
Transactions");
WHEREAS, the United States District Court for the Southern District of New
York issued on August 28, 1997 a final order (the "Final Order"), which among
other things, (i) approved a Stipulation of Settlement (the "Settlement")
entered into in connection with the litigation entitled In Re: Prudential
Securities Incorporated Limited Partnerships Litigation ("Litigation"), (ii)
approved the Withdrawal Transactions and the proposed Mergers, and (iii) granted
each of the Partnerships the right to amend their respective agreements of
limited partnership, as amended, to authorize, inter alia, such Partnerships to
engage in the Withdrawal Transactions and the Mergers (the "Partnership
Agreement Amendments");
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WHEREAS, the Partnership Agreement Amendments have been duly adopted in
accordance with the Final Order;
WHEREAS, under the Amended and Restated Trust Agreement of the Trust (the
"Trust Agreement"), the Trust is authorized to and may consummate the Mergers
without any additional consent or other act of any person; and
WHEREAS, under the agreements of limited partnership, as amended, of the
Partnerships, as amended by the Partnership Agreement Amendments, the
Partnerships are authorized to and may consummate the Mergers without any
additional consent or other act of any person.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
THE MERGERS
1.1 The Mergers. Subject to the terms and conditions of this Agreement, at
the Effective Time (as such term is defined in Section 1.3 hereof), each of the
Partnerships shall be merged with and into the Trust (the "Mergers") in
accordance with the Delaware Business Trust Act (the "DBTA") and the Delaware
Revised Uniform Limited Partnership Act ("DRULPA"), and the separate existence
of each Partnership shall cease and the Trust shall continue as the surviving
entity under the laws of the State of Delaware (the "Surviving Entity") with all
the rights, privileges, immunities and powers, and subject to all the duties and
liabilities, of a business trust created under the DBTA.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 hereof and subject to the satisfaction or waiver of the conditions set forth
in Article VI, the closing of the Mergers (the "Closing") will take place on the
later of the second business day following the date on which the last to be
fulfilled or waived condition set forth in Article VI shall be fulfilled in
accordance with this Agreement, or October 1, 1997 (the "Closing Date"), at the
offices of Battle Fowler, LLP, New York, New York, unless another date, time or
place is agreed to in writing by the parties hereto.
1.3 Effective Time. The parties hereto will file with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") on the
Closing Date (or on such other date as the parties hereto may agree)
certificates of merger executed in accordance with the relevant provisions of
the DBTA and DRULPA and make all other filings or recordings required under the
DBTA and DRULPA in connection with the Mergers. The Mergers shall become
effective upon the filings of the certificates of merger with the Delaware
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Secretary of State, or at such later time as is specified in the certificates of
merger (the "Effective Time"), which time may be changed by the parties
executing such certificates in their discretion, without amendment to this
Agreement or any other consent, by filing certificates of amendment to such
certificates of merger with the Delaware Secretary of State.
1.4 Certificate of Trust. The Certificate of Trust of the Trust, as
amended, as in effect immediately prior to the Effective Time, shall be the
Certificate of Trust of the Surviving Entity.
1.5 Trust Agreement. The Trust Agreement, as in effect immediately prior
to the Effective Time, shall be the trust agreement of the Surviving Entity.
1.6 By-Laws. The By-Laws of the Trust, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Entity (the
"By-laws").
1.7 Trustees. The managing trustees and registered trustee of the Trust at
the Effective Time as designated in the Trust Agreement shall be the trustees of
the Surviving Entity.
1.8 Conversion of Interests in Tax Exempt I.
(1) Conversion of General Partner Interests held by Related Tax
Exempt Bond Associates, Inc. The general partner interests of Tax Exempt I held
by Related Tax Exempt Bond Associates, Inc. shall, by virtue of the Tax Exempt I
Merger and without any action on the part of any person, be converted into the
right to receive 76,731 Shares in the Trust, subject to adjustment pursuant to
Section 1.14.
(2) Conversion of General Partner Interests Held by the Manager. The
general partner interests of Tax Exempt I held by the Manager shall, by virtue
of the Tax Exempt I Merger and without any action on the part of any person, be
converted into the right to receive 38,366 Shares in the Trust, subject to
adjustment pursuant to Section 1.15.
(3) Conversion of Tax Exempt I BUC$. Each BUC (as defined in the
agreement of limited partnership of Tax Exempt I, as amended) of Tax Exempt I
outstanding immediately before the Effective Time ("Tax Exempt I BUC" or "Tax
Exempt I BUC$"), along with the underlying limited partner interest previously
held by Related BUC$ Associates, Inc., the assignor limited partner of Tax
Exempt I ("Assignor LP I"), relating to each such BUC, shall, by virtue of the
Tax Exempt I Merger and without any action on the part of any person, be
converted into the right for the person holding such Tax Exempt I BUC (and such
underlying limited partner interest) to receive in the aggregate 0.9560 Shares
in the Trust for each Tax Exempt I BUC and underlying limited partner interest
held. At the Effective Time, the persons holding Tax Exempt I BUC$ (and the
underlying limited partner interests) will, as a group, be entitled to receive
7,558,032 Shares in the Trust, subject to adjustment pursuant to Sections
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1.8(d)and 1.11 hereof. Assignor LP I shall not be entitled to any rights or
other property in connection with the Tax Exempt I Merger.
(4) Conversion of Limited Partner Interests Held by Converting
BUC$holders. To the extent that, on or prior to the Closing Date, any person who
is or was a person holding Tax Exempt I BUC$ has exercised its right to convert
its Tax Exempt I BUC$ into limited partner interests in Tax Exempt I (a "Tax
Exempt I Converting BUC$holder"), pursuant to Section 12.3 of the agreement of
limited partnership of Tax Exempt I, as amended, such limited partner interests
shall, by virtue of the Tax Exempt I Merger and without any action on the part
of any person, in each instance, be converted into the right for the Tax Exempt
I Converting BUC$holder or permitted assignee or transferee of any such
BUC$holder, as the case may be, to receive such number of Shares in the Trust,
in respect of such limited partner interests, as such Tax Exempt I Converting
BUC$holder would have been entitled to under this Section 1.8 in respect of such
converted Tax Exempt I BUC$ (and underlying limited partner interests), if such
Tax Exempt I Converting BUC$holder had not converted such Tax Exempt I BUC$. The
aggregate number of Shares to be issued to the persons holding Tax Exempt I BUC$
(and the underlying limited partner interests) as a group, pursuant to Section
1.8(c), shall be reduced by the number of Shares issued pursuant to this Section
1.8(d), if any.
1.9 Conversion of Interests in Tax Exempt II.
(5) Conversion of General Partner Interests held by Related Tax
Exempt Associates II, Inc. The general partner interests of Tax Exempt II held
by Related Tax Exempt Associates II, Inc. shall, by virtue of the Tax Exempt II
Merger and without any action on the part of any person, be converted into a
right to receive 100,445 Shares in the Trust, subject to adjustment pursuant to
Section 1.14.
(6) Conversion of General Partner Interests Held by the Manager. The
general partner interests of Tax Exempt II held by the Manager shall, by virtue
of the Tax Exempt II Merger and without any action on the part of any person, be
converted into a right to receive 50,222 Shares in the Trust, subject to
adjustment pursuant to Section 1.15.
(7) Conversion of Tax Exempt II BUC$. Each BUC (as defined in the
agreement of limited partnership of Tax Exempt II, as amended) of Tax Exempt II
outstanding immediately before the Effective Time ("Tax Exempt II BUC" or "Tax
Exempt II BUC$"), along with the underlying limited partner interest previously
held by Related BUC$ Associates II, Inc., the assignor limited partner of Tax
Exempt II ("Assignor LP II"), relating to each such BUC, shall, by virtue of the
Tax Exempt II Merger and without any action on the part of any person, be
converted into the right for the person holding such Tax Exempt II BUC (and such
underlying limited partner interest) to receive in the aggregate 1.0811 Shares
in the Trust for each Tax Exempt II BUC and underlying limited partner interest
held. At the Effective Time, persons holding Tax Exempt II BUC$ (and the
underlying limited partner interest) will, as a group, be entitled to receive
9,893,798 Shares in the Trust, subject to adjustment pursuant to Sections
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1.9(d) and 1.11 hereof. Assignor LP II shall not be entitled to any rights or
other property in connection with the Tax Exempt II merger.
(8) Conversion of Limited Partner Interests Held by Converting
BUC$holders. To the extent that, on or prior to the Closing Date, any person who
is or was a person holding Tax Exempt II BUC$ has exercised its right to convert
its Tax Exempt II BUC$ into limited partner interests in Tax Exempt II (a "Tax
Exempt II Converting BUC$holder"), pursuant to Section 12.6 of the agreement of
limited partnership of Tax Exempt II, such limited partner interests shall, by
virtue of the Tax Exempt II Merger and without any action on the part of any
person, in each instance, be converted into the right for the Tax Exempt II
Converting BUC$holder or permitted assignee or transferee of any such
BUC$holder, as the case may be, to receive such number of Shares in the Trust,
in respect of such limited partner interests, as such Tax Exempt II Converting
BUC$holder would have been entitled to under this Section 1.9 in respect of such
converted Tax Exempt II BUC$ (and underlying limited partner interests), if such
Tax Exempt II Converting BUC$holder had not converted such Tax Exempt II BUC$.
The aggregate number of Shares to be issued to the persons holding Tax Exempt II
BUC$ (and the underlying limited partner interests) as a group, pursuant to
Section 1.9(c), shall be reduced by the number of Shares issued pursuant to this
Section 1.9(d), if any.
1.10 Conversion of Interests in Tax Exempt III.
(9) Conversion of General Partner Interests held by Related Tax
Exempt Associates III, Inc. The general partner interests of Tax Exempt III held
by Related Tax Exempt Associates III, Inc., shall, by virtue of the Tax Exempt
III Merger and without any action on the part of any person, be converted into a
right to receive 28,688 Shares in the Trust, subject to adjustment pursuant to
Section 1.14.
(10) Conversion of General Partner Interests Held by the Manager.
The general partner interests of Tax Exempt III held by the Manager shall, by
virtue of the Tax Exempt III Merger and without any action on the part of any
person, be converted into a right to receive 14,344 Shares in the Trust, subject
to adjustment pursuant to Section 1.15.
(11) Conversion of Tax Exempt III BUC$. Each BUC (as defined in the
agreement of limited partnership of Tax Exempt III, as amended) of Tax Exempt
III outstanding immediately before the Effective Time ("Tax Exempt III BUC" or
"Tax Exempt III BUC$") along with the underlying limited partner interest
previously held by Related BUC$ Associates III, Inc., the assignor limited
partner of Tax Exempt III ("Assignor LP III"), relating to each such BUC shall,
by virtue of the Tax Exempt III Merger and without any action on the part of any
person, be converted into the right for the person holding such Tax Exempt III
BUC (and such underlying limited partner interest) to receive in the aggregate
0.9170 Shares for each Tax Exempt III BUC and underlying limited partner
interest held. At the Effective Time, persons holding Tax Exempt III BUC$ (and
the underlying limited partner interest) will, as a group, be entitled to
receive 2,825,757 Shares in the Trust, subject to adjustment pursuant to
Sections
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1.10(d) and 1.11 hereof. The Assignor LP III shall not be entitled to
any rights or other property in connection with the Tax Exempt III Merger.
(12) Conversion of Limited Partner Interests Held by Converting
BUC$holders. To the extent that, on or prior to the Closing Date, any person who
is or was a person holding Tax Exempt III BUC$ has exercised its right to
convert its Tax Exempt III BUC$ into limited partner interests in Tax Exempt
III, (a "Tax Exempt III Converting BUC$holder"), pursuant to Section 12.6 of the
agreement of limited partnership of Tax Exempt III, as amended, such limited
partner interests shall, by virtue of the Tax Exempt III Merger and without any
action on the part of any person, in each instance be converted into the right
for the Tax Exempt III Converting BUC$holder or permitted assignee or transferee
of any such BUC$holder, as the case may be, to receive such number of Shares in
the Trust, in respect of such limited partner interests, as such Tax Exempt III
Converting BUC$holder would have been entitled to under this Section 1.10 in
respect of such converted Tax Exempt III BUC$ (and underlying limited partner
interests), if such Tax Exempt III Converting BUC$holder had not converted such
Tax Exempt III BUC$. The aggregate number of Shares to be issued to the persons
holding Tax Exempt III BUC$ (and the underlying limited partner interests) as a
group, pursuant to Section 1.10(c), shall be reduced by the number of Shares
issued pursuant to this Section 1.10(d), if any.
1.11 No Fractional Shares. Fractional Shares in the Trust will not be
issued to any holder of partnership interests in the Partnerships or Tax Exempt
I BUC$, Tax Exempt II BUC$ or Tax Exempt III BUC$ (collectively, "BUC$") in
connection with the Mergers. Each holder of partnership interests in the
Partnerships, or BUC$ (along with the underlying limited partner interests)
(collectively, "BUC$holders") who would otherwise be entitled to a fractional
Share under Sections 1.8, 1.9 or 1.10 hereof (which entitlement will be
determined by combining all such holder's allocation of Shares in the Trust from
each Partnership as to which such holder is receiving Shares) will receive one
Share in the Trust for each fractional share of .5 or greater otherwise due to
such holder. No Shares will be issued for fractional shares of less than .5.
1.12 Delivery of Share Certificates; Exchange of BUC$ for Share
Certificates.
(13) Exchange Agent. As of the Effective Time, the Trust shall
deposit with its transfer agent and registrar (the "Exchange Agent"), for the
benefit of each holder of partnership interests in the Partnerships and
BUC$holders, certificates representing the Shares to be issued to such holders
pursuant to Sections 1.8, 1.9, 1.10 and 1.11 hereof.
(14) Delivery of Share Certificates to Holders of Partnership
Interests not Represented by BUC$. Promptly after the Effective Time, the Trust
shall require the Exchange Agent to deliver to each holder of partnership
interests in the Partnerships not represented by BUC$, a certificate
representing that number of whole Shares in the Trust due such holder,
determined in accordance with Sections 1.8, 1.9, 1.10 and 1.11 of this
Agreement. Neither
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Assignor LP I, nor Assignor LP II, nor Assignor LP III shall receive any Shares
or other consideration in the Mergers.
(15) Exchange Procedures for BUC$holders. Subject to the provisions
of Section 1.13 hereof, promptly after the Effective Time, the Trust shall
require the Exchange Agent to mail to each BUC$holder a form of letter of
transmittal, advising such BUC$holder of the effectiveness of the Mergers and
including the instructions for surrendering the BUC$ to the Exchange Agent in
order to receive the Shares to which such BUC$holder is entitled pursuant to
this Agreement. Such instructions shall also specify that delivery shall be
effected, and risk of loss and title to the BUC$ shall pass only upon, delivery
of the BUC$ to the Exchange Agent, and such instructions shall otherwise be in
such form and have such other provisions as the Trust shall reasonably specify.
Upon surrender to the Exchange Agent of such BUC$ for cancellation
in accordance with the instructions in the letter of transmittal, the Exchange
Agent shall mail to such BUC$holder a certificate representing that number of
whole Shares in the Trust due such BUC$holder determined in accordance with
Sections 1.8, 1.9, 1.10 and 1.11 of this Agreement. The Exchange Agent shall
accept such BUC$ upon compliance with such reasonable terms and conditions as
the Trust and the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. If the Shares to be issued
to BUC$holders in connection with the Mergers (the "BUC$holder Merger
Consideration") (or any portion thereof) are to be delivered to any person other
than the person in whose name the certificate representing BUC$ surrendered in
exchange therefor is registered, it shall be a condition to such exchange that
the certificate so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
payment of such consideration to a person other than the registered holder of
the certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. After the
Effective Time, there shall be no further transfer on the records of the
Partnerships or its transfer agent of certificates representing partnership
interests or BUC$ and if such certificates are presented to any of the
Partnerships for transfer, they shall be canceled against delivery of the
BUC$holder Merger Consideration as herein above provided. Until surrendered as
contemplated by this Section 1.12, each certificate representing BUC$ shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the BUC$holder Merger Consideration payable with
respect to such BUC$ as contemplated by Sections 1.8, 1.9, 1.10 and 1.11 of this
Agreement.
(16) Distributions with Respect to Unexchanged BUC$. Subject to the
provisions of Section 1.13 hereof, no distributions with respect to Shares in
the Trust with a record date after the Effective Time shall be paid to any
BUC$holder until the surrender for exchange of the certificates representing
such BUC$ in accordance with this Section 1.12. Following surrender for exchange
of any such certificate in accordance with this Section 1.12, the Trust shall
pay to the holder of such certificate, without interest, (i) at the time of such
surrender, the amount of distributions from the Trust with a record date after
the Effective Time
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theretofore paid with respect to the number of whole Shares of the Trust into
which the BUC$ represented by such certificate immediately prior to the
Effective Time (and related underlying limited partner interests) were converted
pursuant to Sections 1.8, 1.9, 1.10 and 1.11, and (ii) at the appropriate
payment date, the amount of distributions from the Trust with a record date
after the Effective Time, but prior to such surrender, and with a payment date
subsequent to such surrender, payable with respect to such whole Shares of the
Trust.
(1)
(17) No Further Ownership Rights in BUC$ (and Related Underlying
Partnership Interests). The BUC$holder Merger Consideration paid upon the
surrender for exchange of the BUC$ in accordance with the terms of this Article
I shall be deemed to have been issued and paid in full satisfaction of all
rights pertaining to the BUC$ (and related underlying partnership interests)
owing to BUC$holders and holders of related underlying partnership interests
under this Agreement.
(18) Termination of Fund. Any Shares in the Trust that remain
undistributed to BUC$holders for 120 days after the Effective Time shall be
delivered to the Trust, upon demand, and any BUC$ who have not theretofore
complied with this Article 1 shall thereafter look only to the Trust and only as
general creditors thereof for payment of their claim for the BUC$holder Merger
Consideration and any distributions with respect to the Shares.
(19) No Liability. Neither the Trust nor the Exchange Agent shall be
liable to any person in respect of any Shares owing under this Agreement, or
distributions payable in respect of such Shares, to the extent the same are
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing BUC$ shall not have
been surrendered prior to five years after the Effective Time (or immediately
prior to such earlier date on which any BUC$holder Merger Consideration in
respect of such certificate would otherwise escheat to or become the property of
any applicable governmental entity), any Shares owed under this Agreement with
respect to such BUC$ (and related underlying limited partner interests), or
distributions payable in respect of such Shares shall, to the extent permitted
by applicable law, become the property of the Trust, free and clear of all
claims or interest of any person previously entitled thereto.
(20) Lost BUC$. If any certificates representing BUC$ shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such certificate to be lost, stolen or destroyed and, if
required by the Trust, the posting by such person of a bond, in such reasonable
amount as the Trust may direct, as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed certificate the applicable
BUC$holder Merger Consideration, to which the holder thereof is entitled
pursuant to this Article I and any distributions with respect to Shares to which
the holder thereof is entitled pursuant to this Article I.
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(21) Transfer Books. Upon assignment to the respective BUC$holders
of the underlying limited partner interests relating to the BUC$ held by the
Assignor LPs, pursuant to the Partnership Agreement Amendments, the transfer
books of the Partnerships shall be closed and there shall be no further
registration of transfers of partnership interests or BUC$ thereafter on the
records of the Partnerships.
1.13 Trust's Option Not to Require Delivery of BUC$ by BUC$holders in
Order to Receive Shares. Anything in this Agreement to the contrary
notwithstanding, the Trust shall have the right, in its sole and absolute
discretion, but not the obligation (implied or otherwise), to waive the
requirements in Sections 1.12(c) and (d) above relating to the delivery of BUC$
and other items by the BUC$holders to the Exchange Agent, by written notice to
the Exchange Agent of the same (the "Notice"). In the event of such Notice the
Exchange Agent shall promptly fulfill its obligations and duties under Section
1.12 hereof, as if all BUC$holders had fulfilled their obligations under Section
1.12(c), and fulfilled all obligations necessary for such BUC$holders to receive
the BUC$holder Merger Consideration, at the time of receipt of the Notice by the
Exchange Agent.
1.14 Shares to be Issued to Related General Partners to Equal 1% of all
Shares Outstanding After the Mergers. Anything in this Agreement to the contrary
notwithstanding, the aggregate number of Shares to be issued to (i) Related Tax
Exempt Bond Associates, Inc. ("Related GP I") pursuant to Section 1.8(a), (ii)
Related Tax Exempt Associates II, Inc. ("Related GP II") pursuant to Section
1.9(a), and (iii) Related Tax Exempt Associates III, Inc. ("Related GP III", and
together with Related GP I and Related GP II, the "Related GPs") pursuant to
Section 1.10(a), shall be adjusted to equal 1% of the aggregate number of Shares
to be issued pursuant to this Article I (the "Article I Shares"), or if not
mechanically possible, such number of whole Shares as is closest to equaling
such 1%. The Trust shall adjust downward or upward the number of Shares to be
issued pursuant to Sections 1.8(a), 1.9(a) and 1.10(a) by the least number of
Shares as is necessary to satisfy the 1% requirement such that the Related GPs
share as equally as possible (based upon their respective proposed percentages
of ownership in the Trust) in any such adjustment.
1.15 Shares to be Issued to Manager to Equal .5% of all Shares Outstanding
After the Mergers. Anything in this Agreement to the contrary notwithstanding,
the aggregate number of Shares to be issued to the Manager pursuant to Sections
1.8(b), 1.9(b) and 1.10(b) shall be equal to .5% of the Article I Shares, or if
not mechanically possible, such number of whole Shares as is closest to equaling
such .5%. The Trust shall adjust upward or downward the number of Shares to be
issued to the Manager by the least number of Shares as is necessary to satisfy
the .5% requirement.
1.16 Repurchase of Shares of the Trust Outstanding Prior to the Effective
Time. Promptly
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after the Effective Time, the Trust shall repurchase from RCC,
and RCC shall sell to the Trust, the 1,000 Shares of the Trust held by RCC,
constituting all the issued and outstanding Shares of the Trust outstanding
prior to the Effective Time, for a purchase price of $1.00 per Share, the
original consideration paid for such Shares. Promptly upon such repurchase, the
Trust shall cause such Shares to be cancelled.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIPS
2.1 Representations and Warranties of Tax Exempt I. Tax Exempt I hereby
represents and warrants to the Trust as follows:
(1) Organization and Good Standing. Tax Exempt I is a limited
partnership, duly formed and validly existing as a limited partnership in good
standing under the laws of the State of Delaware. Tax Exempt I has the requisite
partnership power and authority to conduct its business in the manner and in the
jurisdictions where it is now conducted. Tax Exempt I is qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified would have a Material Adverse Effect.
(2) Authority; Power. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary partnership action on the part of Tax Exempt
I. Tax Exempt I has the requisite partnership power and authority to enter into,
deliver and, perform this Agreement and any other agreements and instruments
contemplated hereby. This Agreement constitutes a legal, valid and binding
obligation of Tax Exempt I enforceable against it in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditor's rights
generally, (ii) the power of a court to grant specific performance or any other
remedy, and (iii) the application of general principles of equity.
(3) Consents and Approvals; No Violation.
(1) To the knowledge of Tax Exempt I, other than the Final Order, no
consent, waiver, approval or authorization of, or filing, registration or
qualification with, any governmental or regulatory authority, which if not made
or obtained would have a Material Adverse Effect or would materially adversely
affect Tax Exempt I's ability to perform its obligations under this Agreement,
is required to be made or obtained by Tax Exempt I in connection with the
execution, delivery and performance of this Agreement; and
(2) None of the execution, delivery or, except as contemplated by this
Agreement, performance of this Agreement by Tax Exempt I does or will, with or
without the giving of notice, lapse of time or both, result in any violation of
or conflict with or constitute a default
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under any term or provision of the certificate of limited partnership or
agreement of limited partnership, as amended, of Tax Exempt I or, to the
knowledge of Tax Exempt I, any judgment, decree, order, law, statute,
injunction, rule, regulation or governmental license or permit applicable to Tax
Exempt I; result in the creation of any lien upon the partnership interests of
Tax Exempt I or Tax Exempt I BUC$; or constitute a default under, or result in
the termination, acceleration, amendment or modification of, any material
contract, agreement, arrangement, commitment or plan to which Tax Exempt I is a
party, or by which Tax Exempt I may be subject or bound, which, in any such
case, would have a Material Adverse Effect.
(4) No Options. Tax Exempt I is not a party to any rights, options,
subscriptions or other agreements of any kind, to purchase or to acquire,
receive or be issued any interest in any partnership interest in Tax Exempt I or
Tax Exempt I BUC$.
(5) Litigation. Except as set forth in the Solicitation Statement
dated June 18, 1997 or the 1996 Form 10-K or Form 10-Q of Tax Exempt I for the
quarter ended June 30, 1997:
(1) there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Tax Exempt I, threatened, in any court or before
any governmental agency or instrumentality, or before any arbitrator, by or
against or affecting or relating to Tax Exempt I, which, if adversely
determined, would have a Material Adverse Effect or which would (i) restrain or
enjoin the consummation of the transactions contemplated by this Agreement, (ii)
declare unlawful the transactions or events contemplated by this Agreement, or
(iii) cause any of such transactions to be rescinded; and
(2) there are no judgments, injunctions, orders or other judicial or
administrative mandates outstanding against or affecting Tax Exempt I which
would materially hinder or delay the consummation of the transactions
contemplated by this Agreement or which would have a Material Adverse Effect.
(6) Compliance with Laws. To the knowledge of Tax Exempt I, it is in
compliance in all material respects with all laws, governmental rules and
ordinances of the federal, state and local authorities having jurisdiction over
and except where the failure to so comply would not have a Material Adverse
Effect.
(7) Tax Exempt I has not, since June 18, 1997, suffered a Material
Adverse Effect.
(8) As used in this Section 2.1 "Material Adverse Effect" shall mean
any material adverse change in the business, assets or financial condition of
Tax Exempt I which has a material adverse effect on the income reasonably
expected to be generated by Tax Exempt I from and after the Closing Date or the
economic value thereof.
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2.2 Representations and Warranties of Tax Exempt II. Tax Exempt II hereby
represents and warrants to the Trust as follows:
(9) Organization and Good Standing. Tax Exempt II is a limited
partnership, duly formed and validly existing as a limited partnership in good
standing under the laws of the State of Delaware. Tax Exempt II has the
requisite partnership power and authority to conduct its business in the manner
and in the jurisdictions where it is now conducted. Tax Exempt II is qualified
to do business and is in good standing in each jurisdiction in which the failure
to be so qualified would have a Material Adverse Effect.
(10) Authority; Power. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary partnership action on the part of Tax Exempt
II. Tax Exempt II has the requisite partnership power and authority to enter
into, deliver and, perform this Agreement and any other agreements and
instruments contemplated hereby. This Agreement constitutes a legal, valid and
binding obligation of Tax Exempt II enforceable against it in accordance with
its terms, except as such enforceability may be limited by (i) bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditor's rights generally, (ii) the power of a court to grant specific
performance or any other remedy, and (iii) the application of general principles
of equity.
(11) Consents and Approvals; No Violation.
(1) To the knowledge of Tax Exempt II, other than the Final Order, no
consent, waiver, approval or authorization of, or filing, registration or
qualification with, any governmental or regulatory authority, which if not made
or obtained would have a Material Adverse Effect or would materially adversely
affect Tax Exempt II's ability to perform its obligations under this Agreement,
is required to be made or obtained by Tax Exempt II in connection with the
execution, delivery and performance of this Agreement; and
(2) None of the execution, delivery or, except as contemplated by this
Agreement, performance of this Agreement by Tax Exempt II does or will, with or
without the giving of notice, lapse of time or both, result in any violation of
or conflict with or constitute a default under any term or provision of the
certificate of limited partnership or agreement of limited partnership, as
amended, of Tax Exempt II or, to the knowledge of Tax Exempt II, any judgment,
decree, order, law, statute, injunction, rule, regulation or governmental
license or permit applicable to Tax Exempt II; result in the creation of any
lien upon the partnership interests of Tax Exempt II or Tax Exempt II BUC$; or
constitute a default under, or result in the termination, acceleration,
amendment or modification of, any material contract, agreement, arrangement,
commitment or plan to which Tax Exempt II is a party, or by which Tax Exempt II
may be subject or bound, which, in any such case, would have a Material Adverse
Effect.
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(12) No Options. Tax Exempt II is not a party to any rights,
options, subscriptions or other agreements of any kind, to purchase or to
acquire, receive or be issued any interest in any partnership interest in Tax
Exempt II or Tax Exempt II BUC$.
(13) Litigation. Except as set forth in the Solicitation Statement
dated June 18, 1997 or the 1996 Form 10-K or Form 10-Q of Tax Exempt II for the
quarter ended June 30, 1997:
(1) there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Tax Exempt II, threatened, in any court or
before any governmental agency or instrumentality, or before any arbitrator, by
or against or affecting or relating to Tax Exempt II, which, if adversely
determined, would have a Material Adverse Effect or which would (i) restrain or
enjoin the consummation of the transactions contemplated by this Agreement, (ii)
declare unlawful the transactions or events contemplated by this Agreement, or
(iii) cause any of such transactions to be rescinded; and
(2) there are no judgments, injunctions, orders or other judicial or
administrative mandates outstanding against or affecting Tax Exempt II which
would materially hinder or delay the consummation of the transactions
contemplated by this Agreement or which would have a Material Adverse Effect.
(14) Compliance with Laws. To the knowledge of Tax Exempt II, it is
in compliance in all material respects with all laws, governmental rules and
ordinances of the federal, state and local authorities having jurisdiction over
and except where the failure to so comply would not have a Material Adverse
Effect.
(15) Tax Exempt II has not, since June 18, 1997, suffered a Material
Adverse Effect.
(16) As used in this Section 2.2 "Material Adverse Effect" shall
mean any material adverse change in the business, assets or financial condition
of Tax Exempt II which has a material adverse effect on the income reasonably
expected to be generated by Tax Exempt II from and after the Closing Date or the
economic value thereof.
2.3 Representations and Warranties of Tax Exempt III. Tax Exempt III
hereby represents and warrants to the Trust as follows:
(17) Organization and Good Standing. Tax Exempt III is a limited
partnership, duly formed and validly existing as a limited partnership in good
standing under the laws of the State of Delaware. Tax Exempt III has the
requisite partnership power and authority to conduct its business in the manner
and in the jurisdictions where it is now conducted. Tax Exempt III is qualified
to do business and is in good standing in each jurisdiction in which the failure
to be so qualified would have a Material Adverse Effect.
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<PAGE>
(18) Authority; Power. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary partnership action on the part of Tax Exempt
III. Tax Exempt III has the requisite partnership power and authority to enter
into, deliver and, perform this Agreement and any other agreements and
instruments contemplated hereby. This Agreement constitutes a legal, valid and
binding obligation of Tax Exempt III enforceable against it in accordance with
its terms, except as such enforceability may be limited by (i) bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditor's rights generally, (ii) the power of a court to grant specific
performance or any other remedy, and (iii) the application of general principles
of equity.
(19) Consents and Approvals; No Violation.
(1) To the knowledge of Tax Exempt II, other than the Final Order, no
consent, waiver, approval or authorization of, or filing, registration or
qualification with, any governmental or regulatory authority, which if not made
or obtained would have a Material Adverse Effect or would materially adversely
affect Tax Exempt III's ability to perform its obligations under this Agreement,
is required to be made or obtained by Tax Exempt III in connection with the
execution, delivery and performance of this Agreement; and
(2) None of the execution, delivery or, except as contemplated by this
Agreement, performance of this Agreement by Tax Exempt III does or will, with or
without the giving of notice, lapse of time or both, result in any violation of
or conflict with or constitute a default under any term or provision of the
certificate of limited partnership or agreement of limited partnership, as
amended, of Tax Exempt III or, to the knowledge of Tax Exempt III, any judgment,
decree, order, law, statute, injunction, rule, regulation or governmental
license or permit applicable to Tax Exempt III; result in the creation of any
lien upon the partnership interests of Tax Exempt III or Tax Exempt III BUC$; or
constitute a default under, or result in the termination, acceleration,
amendment or modification of, any material contract, agreement, arrangement,
commitment or plan to which Tax Exempt III is a party, or by which Tax Exempt
III may be subject or bound, which, in any such case, would have a Material
Adverse Effect.
(20) No Options. Tax Exempt III is not a party to any rights,
options, subscriptions or other agreements of any kind, to purchase or to
acquire, receive or be issued any interest in any partnership interest in Tax
Exempt III or Tax Exempt III BUC$.
(21) Litigation. Except as set forth in the Solicitation Statement
dated June 18, 1997 or the 1996 Form 10-K or Form 10-Q of Tax Exempt III for the
quarter ended June 30, 1997:
(1) there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Tax Exempt III, threatened, in any court or
before any governmental agency or instrumentality, or before any arbitrator, by
or against or affecting or relating to Tax Exempt III, which, if adversely
determined, would have a Material Adverse Effect or which would (i) restrain
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<PAGE>
or enjoin the consummation of the transactions contemplated by this Agreement,
(ii) declare unlawful the transactions or events contemplated by this Agreement,
or (iii) cause any of such transactions to be rescinded; and
(2) there are no judgments, injunctions, orders or other judicial or
administrative mandates outstanding against or affecting Tax Exempt III which
would materially hinder or delay the consummation of the transactions
contemplated by this Agreement or which would have a Material Adverse Effect.
(22) Compliance with Laws. To the knowledge of Tax Exempt III, it is
in compliance in all material respects with all laws, governmental rules and
ordinances of the federal, state and local authorities having jurisdiction over
and except where the failure to so comply would not have a Material Adverse
Effect.
(23) Tax Exempt III has not, since June 18, 1997, suffered a
Material Adverse Effect.
(24) As used in this Section 2.3 "Material Adverse Effect" shall
mean any material adverse change in the business, assets or financial condition
of Tax Exempt III which has a material adverse effect on the income reasonably
expected to be generated by Tax Exempt III from and after the Closing Date or
the economic value thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust hereby represents and warrants to the Partnerships, as follows:
3.1 Organization, Standing and Trust Power. The Trust is a business trust
duly created, validly existing and in good standing under the laws of Delaware
and has the requisite trust power and authority to own, lease and operate its
properties and to carry on its business as being conducted. The Trust is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the character, or location
of the properties owned by it makes such qualification or licensing necessary,
except where the failure to be so qualified or licensed would not have a
material adverse effect on the condition of the Trust. The Trust has delivered
to the Partnerships complete and correct copies of the Trust Agreement and
By-laws, as amended to the date of this Agreement. The Trust is not in default
under or in violation of any provisions of the Trust Agreement or By-laws.
3.2 The Trust Capital Structure. The authorized capital securities of the
Trust consists of 50,000,000 shares of beneficial interest. At the close of
business on September 30, 1997, (i) 1,000 Shares were issued and outstanding and
will be
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repurchased by the Trust pursuant to Section 1.16 hereof, (ii) 20,586,383 Shares
have been reserved for issuance pursuant to the Mergers, (iii) 2,058,638 Shares
have been reserved for issuance pursuant to the exercise of options granted or
to be granted pursuant to the Trust's Incentive Share Option Plan, and (iv)
800,965 Shares have been reserved for issuance in connection with the Settlement
of the Litigation. Except as set forth above, at the close of business on
September 30, 1997, no beneficial interests or other voting securities of the
Trust were issued, reserved for issuance or outstanding. All outstanding Shares
of the Trust are, and all Shares which may be issued pursuant to this Agreement
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. As of the date of this
Agreement, no bonds, debentures, notes or other indebtedness of the Trust having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which the holders of Shares may vote are
issued and outstanding.
3.3 Authority; Noncontravention. The Trust has all requisite trust power
and authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Trust and the consummation by the Trust of the transactions contemplated by
this Agreement have been duly authorized by all necessary trust action on the
part of the Trust and the Managing Trustees and no other action on the part of
the Trust or the Managing Trustees is necessary to authorize the execution,
delivery and performance of this Agreement by the Trust or the Managing
Trustees. This Agreement has been duly executed and delivered by and, assuming
this Agreement constitutes the valid and binding agreement of the Partnerships,
constitutes a valid and binding obligation of the Trust, enforceable against
such party in accordance with its terms except that the enforcement thereof may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditor's rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity). The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement will not (i)
conflict with any of the provisions of the Trust Agreement or By-laws of the
Trust, (ii) conflict with, result in a breach of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which the Trust is a party or by which the Trust any of its
assets is bound or affected, or (iii) contravene any law, rule or regulation of
any state or of the United States or any political subdivision thereof or
therein, or any order, writ, judgment, injunction, decree, determination or
award currently in effect. No consent, approval or authorization of, or
declaration or filing with, or notice to, any governmental entity which has not
been received or made, is required to be made by the Trust in connection with
the execution and delivery of this Agreement by the Trust or the consummation by
the Trust of any of the transactions contemplated by this Agreement.
ARTICLE 4
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SURVIVAL OF PROVISIONS
4.1 Survival. The representations and warranties respectively
required to be made by the Trust and the Partnerships in this Agreement, or in
any certificate, respectively, delivered by the Trust or the Partnerships
pursuant to this Agreement will not survive the Closing.
ARTICLE 5
NOTICES
5.1 Notices. All notices and other communications under this Agreement
must be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first class
postage prepaid, to the parties at the following addresses:
If to the Trust, to:
Charter Municipal Mortgage
Acceptance Company
625 Madison Avenue
New York, New York 10022
Attention: Stuart J. Boesky, Managing Trustee
With a Copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter Fass, Esq.
If to Tax Exempt I, to:
Summit Tax Exempt Bond Fund, L.P.
625 Madison Avenue
New York, New York 10022
Attention: Alan P. Hirmes
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With a Copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter Fass, Esq.
If to Tax Exempt II, to:
Summit Tax Exempt L.P. II
625 Madison Avenue
New York, New York 10022
Attention: Alan P. Hirmes
With a Copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter Fass, Esq.
If to Tax Exempt III, to:
Summit Tax Exempt L.P. III
625 Madison Avenue
New York, New York 10022
Attention: Alan P. Hirmes
With a Copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter Fass, Esq.
All notices and other communications required or permitted under this
Agreement that are addressed as provided in this Article 5 will, if delivered
personally, be deemed given upon delivery, will, if delivered by telecopy, be
deemed delivered when confirmed and will, if delivered by mail in the manner
described above, be deemed given on the third business day after the day it is
deposited in a regular depository of the United States mail. Any party from time
to time may change its address for the purpose of notices to that party by
giving a similar notice specifying a new address, but no such notice will be
deemed to have been given until it is actually received by the party sought to
be charged with the contents thereof.
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ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Mergers. The
respective obligation of each party to effect the Mergers is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(1) the Final Order continues to be viable:
(2) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Mergers;
(3) all actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of the
Mergers shall have been obtained or completed;
(4) the Withdrawal Transactions shall have been consummated pursuant
to the Purchase Agreement;
(5) pursuant to the Partnership Agreement Amendments, the respective
Assignor LPs shall have assigned to the respective BUC$holders, the respective
underlying limited partner interests relating to the BUC$;
(6) the Shares of the Trust shall have been approved for listing on
the American Stock Exchange, subject to notice of issuance; and
(7) pursuant to the Partnership Agreement Amendments, the Manager
has contributed back to each respective Partnership one-half of the general
partner interests of each such Partnership received by it in the Withdrawal
Transactions.
6.2 Conditions to Obligations of Trust. The obligation of the Trust to
effect the Mergers is further subject to the following conditions:
(8) Accuracy of Representations and Warranties. The representations
and warranties of the Partnerships contained in this Agreement shall have been
true and correct on the date of this Agreement and as of the Closing Date
(except to the extent that they expressly relate only to an earlier time, in
which case they shall have been true and correct as of such earlier time) other
than such breaches of representations and warranties which in the aggregate
would not reasonably be expected to have a Material Adverse Effect on the
condition of any Partnership, provided, however, that the representations and
warranties of any Partnership
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<PAGE>
contained in this Agreement to the extent qualified by "material", "material
adverse effect" or "material adverse change" shall be true and correct in all
respects at and as of the Closing Date.
(9) Performance of Obligations of Partnerships. The Partnerships
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date and shall
not have willfully or intentionally (i) breached any of their respective
representations or warranties herein or (ii) failed to perform or satisfy any of
their respective obligations or covenants hereunder.
6.3 Conditions to Obligation of the Partnerships. The obligation of each
Partnership to effect the Mergers is further subject to the following
conditions:
(10) Accuracy of Representations and Warranties. The representations
and warranties of the other parties hereto contained in this Agreement shall
have been true and correct on the date of this Agreement and as of the Closing
Date (except to the extent that they expressly relate only to an earlier time,
in which case they shall have been true and correct as of such earlier time),
other than such breaches of representations and warranties which in the
aggregate would not reasonably be expected to have a material adverse effect on
the condition of such other parties; provided, however, that the representations
and warranties of the other parties contained in this Agreement to the extent
qualified by "material", "material adverse effect" or "material adverse change"
shall be true and correct in all respects at and as of the Closing.
(11) Performance of Obligations of Other Parties. Each of the other
parties hereto shall have performed in all material respects all obligations
required to be performed by such party under this Agreement at or prior to the
Closing Date and shall not have willfully or intentionally (i) breached any of
their representations or warranties herein or (ii) failed to perform or satisfy
any of its obligations or covenants hereunder.
(12) Opinion of Counsel. The Partnerships shall have received the
opinion dated the Closing Date of counsel to the Trust as set forth in the
Solicitation Statement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time:
(1) by mutual written consent of the parties hereto or
(2) by either the Trust on the one hand or the Partnerships on the
other:
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(1) at any time after March 31, 1998 if the Mergers shall not
have been consummated by such date, unless the failure to consummate
the Mergers is the result of a failure to fulfill any obligation
under this Agreement by any party seeking to terminate this
Agreement or the failure of the representations and warranties of
any party seeking to terminate this Agreement to be true and correct
in all material respects; and
(2) at any time prior to the Effective Time by the Trust on
the one hand or the Partnerships on the other in the event of either
(A) a material breach by the other party or parties of any
representation or warranty contained in this Agreement, which breach
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (B) a
material breach by the other party or parties of any of the
covenants or agreements contained in this Agreement, which breach
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach.
7.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 7.1, this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of the parties
hereto. Nothing contained in this Section 7.2 shall relieve any party from any
liability resulting from any material breach of the representations, warranties,
covenants or agreements set forth in this Agreement.
7.3 Amendment. At any time prior to the Effective Time, the parties hereto
may modify or amend this Agreement, by written agreement executed and delivered
by duly authorized signatories of the respective parties. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, each party
may (a) extend the time for the performance of any of the obligations or other
acts of any other party, (b) waive any inaccuracies in the representations and
warranties of any other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to Section 7.3, waive
compliance with any of the agreements or conditions of any other party contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party, and only with respect to such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of any Partnership,
action by a general partner of such Partnership, and in the case of the Trust,
action by any trustee of the Trust.
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ARTICLE 8
MISCELLANEOUS
8.1 Entire Agreement. Except for the Purchase Agreement and the documents
executed by the Partnerships and the Trust pursuant hereto, this Agreement
supersedes all prior discussions and agreements between the parties with respect
to the subject matter of this Agreement, and this Agreement (including the
exhibits and schedules hereto, and other documents delivered in connection
herewith) and the Purchase Agreement contain the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.
8.2 Expenses. All costs and expenses incurred by the parties hereto
incident to preparing for, entering into, carrying out and performing this
Agreement and the transactions contemplated hereby (the "Consolidation
Expenses") shall be borne and paid for as follows:
(1) All Consolidation Expenses incurred by the Trust shall be
borne and paid for by the Trust;
(2) If the Mergers are consummated, the Trust shall be
responsible for all Consolidation Expenses incurred by the Partnerships and
shall reimburse the Partnerships for the same;
(3) If none of the Mergers are consummated, each of the
respective Related GPs shall be responsible for Consolidation Expenses of their
respective Partnerships and shall reimburse each of their respective
Partnerships for the same; and
(4) If some but not all of the Mergers are consummated, (i)
the Trust shall be responsible for all Consolidation Expenses incurred by the
Partnerships that consummate their respective Mergers, and (ii) the respective
Related GPs shall be responsible for the Consolidation Expenses incurred by each
of their respective Partnerships that fail to consummate their respective
Mergers. Each of the Trust, and the Related GPs, as the case may be, shall
reimburse each of the Partnerships for their respective Consolidation Expenses
for which they are responsible under this Section 8.2(d).
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
8.4 No Third Party Beneficiary. Except as otherwise expressly provided
herein, the terms and provisions of this Agreement are intended solely for the
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benefit of the parties hereto, and their respective successors or assigns, and
it is not the intention of the parties to confer third party beneficiary rights
upon any other person.
8.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.6 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment that is
not consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns.
8.7 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
8.8 Headings, Gender, etc. The headings used in this Agreement have been
inserted for convenience and do not constitute matters to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include each
other gender, (b) words using the singular or plural number also include the
plural or singular number, respectively, (c) the terms "hereof," "herein, "
"hereby, " "hereto," and derivative or similar words refer to this entire
Agreement, (d) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement, (e) all references to "dollars" refer to currency
of the United States of America, and (f) the term "person" shall include any
natural person, corporation, limited liability company, general partnership,
limited partnership, trust or other entity, enterprise, authority or business
organization.
[SIGNATURE PAGES FOLLOW]
23
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the Trust and the Partnerships, effective as of the date first written above.
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE
COMPANY
By:
----------------------------------------
J. Michael Fried
Managing Trustee
SUMMIT TAX EXEMPT BOND FUND, L.P.
By: RELATED TAX EXEMPT BOND ASSOCIATES,
INC., its General Partner
By:
----------------------------------
Stuart J. Boesky
Vice President
SUMMIT TAX EXEMPT L.P. II
By: RELATED TAX EXEMPT ASSOCIATES II,
INC., its General Partner
By:
----------------------------------
Stuart J. Boesky
Vice President
SUMMIT TAX EXEMPT L.P. III
By: RELATED TAX EXEMPT ASSOCIATES III,
INC., its General Partner
By:
----------------------------------
Stuart J. Boesky
Vice President
24
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 1, 1997
By and Among
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
SUMMIT TAX EXEMPT BOND FUND, L.P.
SUMMIT TAX EXEMPT L.P. II
AND
SUMMIT TAX EXEMPT L.P. III
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGERS......................................................2
1.1 The Mergers......................................................2
1.2 Closing..........................................................2
1.3 Effective Time...................................................2
1.4 Certificate of Trust.............................................3
1.5 Trust Agreement..................................................3
1.6 By-Laws..........................................................3
1.7 Trustees.........................................................3
1.8 Conversion of Interests in Tax Exempt I..........................3
1.9 Conversion of Interests in Tax Exempt II.........................4
1.10 Conversion of Interests in Tax Exempt III........................5
1.11 No Fractional Shares.............................................6
1.12 Delivery of Share Certificates; Exchange of BUC$ for Share
Certificates.....................................................6
1.13 Trust's Option Not to Require Delivery of BUC$ by BUC$holders in
Order to Receive Shares..........................................8
1.14 Shares to be Issued to Related General Partners to Equal 1% of
all Shares Outstanding After the Mergers.........................9
1.15 Shares to be Issued to Manager to Equal .5% of all Shares
Outstanding After the Mergers....................................9
1.16 Repurchase of Shares of the Trust Outstanding Prior to the
Effective Time...................................................9
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIPS...............9
2.1 Representations and Warranties of Tax Exempt I...................9
2.2 Representations and Warranties of Tax Exempt II.................11
2.3 Representations and Warranties of Tax Exempt III................13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRUST.....................15
3.1 Organization, Standing and Trust Power..........................15
3.2 The Trust Capital Structure.....................................15
3.3 Authority; Noncontravention.....................................15
ARTICLE 4 SURVIVAL OF PROVISIONS..........................................16
4.1 Survival........................................................16
ARTICLE 5 NOTICES.........................................................16
5.1 Notices.........................................................16
ARTICLE 6 CONDITIONS PRECEDENT............................................18
6.1 Conditions to Each Party's Obligation To Effect the Mergers.....18
6.2 Conditions to Obligations of Trust..............................19
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6.3 Conditions to Obligation of the Partnerships....................19
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER...............................20
7.1 Termination.....................................................20
7.2 Effect of Termination...........................................20
7.3 Amendment.......................................................20
7.4 Extension; Waiver...............................................21
7.5 Procedure for Termination, Amendment, Extension or Waiver.......21
ARTICLE 8 MISCELLANEOUS...................................................21
8.1 Entire Agreement................................................21
8.2 Expenses........................................................21
8.3 Counterparts....................................................22
8.4 No Third Party Beneficiary......................................22
8.5 Governing Law...................................................22
8.6 Assignment; Binding Effect......................................22
8.7 Enforcement.....................................................22
8.8 Headings, Gender, etc...........................................22
ii
EXHIBIT 10.3
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
INCENTIVE SHARE OPTION PLAN
2. Purpose
The purpose of this plan (the "Plan") is to permit Charter Municipal
Mortgage Acceptance Company (the "Company") and its subsidiaries and its
manager, Related Charter, LP, and any successor manager (the "Manager") to
attract and retain qualified persons as trustees, officers and employees and to
incentivize and more closely align the financial interests of the Manager with
the interests of the Company's shareholders by providing the Manager with a
substantial financial interest in the Company's success.
Reference is made to the solicitation statement (the "Solicitation
Statement") dated June 18, 1997, with respect to the consolidation (the
"Consolidation") of the limited partnerships named in the Solicitation Statement
with and into the Company. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Solicitation Statement.
3. Types of Plan Benefits and Administration
(a) Types of Awards. Under the Plan, the Company may in its sole
discretion (subject to the terms of the Company's Amended and Restated Trust
Agreement, as amended from time to time), grant with respect to the Company's
shares of beneficial interest ("Shares") options ("Options") to the trustees,
officers, and employees of the Company or any of its subsidiaries (a
"Subsidiary") and officers and employees of the Manager (the "Participants"), as
authorized by action of the Board of Trustees of the Company (or a committee
designated by the Board of Trustees). As used in the Plan, an "Award" shall mean
an Option and an "Award Owner" shall mean the owner of an Option. Options
granted pursuant to the Plan to Participants who are employees of the Company
(or a Subsidiary) may be either incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), or non-statutory options ("Non-Statutory Stock
Options"), which are not intended to or do not meet the requirements of Code
Section 422. Options granted to Participants who are not employees of the
Company or a Subsidiary shall be only Non-Statutory Stock Options.
(b) Administration. The Plan will be administered by a committee of the
Board of Trustees of the Company which shall be comprised solely of two or more
independent trustees and, if required for compliance with Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act"), each of whom is a
"non-employee trustee" and, if required for compliance with Section 162(m) of
the Code, each of whom is an "outside director" within the meaning of such
section (the "Committee"). For purposes of the Plan, a person shall be deemed to
be a "non-employee trustee" only if such person would qualify as a "non-employee
director" within the meaning of Rule 16b-3 of the Securities and Exchange
Commission (the "SEC"). The Committee's construction and
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interpretation of the terms and provisions of the Plan shall be final and
conclusive. Subject to Section 6(a), the Committee may in its sole discretion
grant Options to purchase Shares to Participants and authorize the issuance of
Shares upon exercise of such Options, as provided in the Plan. The Committee
shall have authority, subject to the express provisions of the Plan, to construe
the respective Award and Award Agreements (as hereinafter defined) and the Plan;
to prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective Award Agreements, which
need not be identical; to advance the lapse of any waiting or installment
periods and exercise dates and to make all other determinations in the sole
judgment of the Committee necessary or desirable for the administration of the
Plan. The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Award or Award Agreement in the manner
and to the extent it shall deem expedient to carry the Plan into effect, and
such determination shall be in the sole and final judgement of the Committee. No
trustee, including any trustee who is a Committee member, shall be liable for
any action or determination taken or made under or with respect to the Plan or
any Award in good faith.
4. Eligibility
(a) Generally. Except as provided in paragraph (b) of this Section 3 and
Section 6(a) hereof, Awards shall be granted only to the Participants selected
by the Committee who are, at the time of grant, trustees, officers or employees
of the Company or a Subsidiary or officers or employees of the Manager. A
Participant who has been granted an Award may, if he or she is otherwise
eligible, be granted one or more additional Awards if the Committee shall so
determine.
(b) Incentive Stock Options. No person shall be granted any Incentive
Stock Option under the Plan unless, at the time such Option is granted, such
person is an employee of the Company or any Subsidiary, and such person does not
own, directly or indirectly, Shares of the Company possessing more than 10% of
the total combined voting power of all classes of equity securities of the
Company or of any Subsidiary (unless the requirements of Section 6(g)(i) are
satisfied).
5. Stock Subject to Plan
Subject to adjustment as provided in Sections 13 and 14 below, the maximum
number of Shares that may be issued and sold pursuant to Options granted under
the Plan is ten (10%) percent of the number of Shares to be issued on or about
the Effective Date pursuant to the Consolidation.
The Company shall reserve for issuance, for the purposes of the Plan, out
of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined,
from time to time, by the Committee. If Options granted under the Plan shall
expire or terminate for any reason without having been exercised in full, the
Shares subject to the unexercised portions of such Options shall again be
available for subsequent Award grants under the Plan. Shares issuable upon
exercise of Options shall be subject to such restrictions on transfer,
repurchase rights or other restrictions as may be determined by the
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Committee.
6. Form of Award Agreements
As a condition to the grant of an Option under the Plan, each recipient of
an Option shall execute an Award agreement ("Award Agreement"), substantially in
the form authorized by the Board of Trustees of the Company or in such other
form not inconsistent with the Plan as shall be specified by the Committee at
the time such Option is granted.
7. Discretionary Grants of Awards to Participants
(a) Initial Restriction on Grant. The Compensation Committee may not grant
any options until six months after the Shares have been listed on the American
Stock Exchange.
(b) Share Limitation. Subject to the limitation set forth in Section 4, if
the Company's distributions per Share in the immediately preceding calendar year
exceed $0.9517 per Share, the Committee will have the authority to issue Options
to purchase, in the aggregate, that number of Shares which is equal to three
(3%) percent of the Shares outstanding as of December 31 of the immediately
preceding calendar year. If the Committee does not grant the maximum number of
Options in any year, the excess of the number of authorized Options which the
Committee could have granted over the number of Options actually granted in such
year will be added to the number of Options which the Committee is authorized to
grant in the next succeeding year and will be available for grant to
Participants by the Committee in such succeeding year.
(c) Purchase Price. The purchase price per Share issuable upon the
exercise of an Option granted pursuant to this Section 6 shall be the Fair Value
(as defined in Section 16 hereof) on the date that such Option is granted.
Notwithstanding anything to the contrary contained herein, in the case of an
Incentive Stock Option, the exercise price shall not be less than 100% of the
Fair Value of such stock at the date of grant of such Option, nor less than 110%
of the Fair Value in the case of Options described in Section 6(g)(i).
(d) Exercise Period. Each discretionary Award to a Participant shall
expire on such date as the Committee shall determine, but in no event after the
expiration of ten (10) years from the date on which such Award is granted, and
in all cases each Award shall be subject to earlier termination as provided in
the Plan or in any Award Agreement.
(e) Vesting of Awards. An Award granted to a Participant may be exercised,
and payment shall be made upon exercise of such Award, only to the extent that
such Award has vested. Awards shall vest in accordance with the schedule or
terms set forth in the Award Agreement executed by the Award Owner and a duly
authorized Trustee or officer of the Company. The Committee may accelerate the
vesting of any Option granted pursuant to this Section 6.
(f) Effect of Termination of Service. Upon termination of service of a
Participant, all Awards to such Participant to the extent not vested shall be
forfeited. No Award may be exercised unless, at the time of such exercise, the
Participant is, and continuously since the date of grant of his
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or her Award has been, engaged by the Company, a Subsidiary or the Manager, as
the case may be, except that if and to the extent the Award agreement or
instrument so provides:
(i) if the Participant ceases to be engaged by the Company, a
Subsidiary or the Manager, as the case may be, for any reason other than death
or disability or a discharge for "cause" (as defined in (iv) below), the right
to exercise the Award, to the extent vested, shall terminate three (3) months
after such cessation (or within such other period as may be specified in the
Award Agreement or instrument);
(ii) if the Participant dies while engaged by the Company or
Subsidiary or the Manager or within three (3) months after the Participant
ceases to be so engaged, the Awards may be exercised by the administrator of the
Participant's estate, or by the person to whom the Options are transferred by
will or the laws of descent and distribution, to the extent vested, within the
period of one (1) year after the date of death (or within such other period as
may be specified in the Award Agreement or instrument);
(iii) if the Participant becomes disabled (within the meaning of
Section 22(e)(3) of the Code) while engaged by the Company or Subsidiary or the
Manager, the Awards may be exercised, to the extent vested, within the period of
one (1) year after the date the Participant ceases to be engaged by the Company
or Subsidiary or the Manager because of such disability, or within such other
period as may be specified in the Award Agreement; and
(iv) if the Participant, prior to the expiration date of an Award
ceases his or her services with the Company or Subsidiary or the Manager, as the
case may be, because he or she is discharged for "cause" (as defined below), the
right to exercise an Option shall terminate immediately upon such cessation of
such services. "Cause" shall mean: willful misconduct in connection with the
Participant's performance of services for the Company or Subsidiary or the
Manager willful failure to perform his or her services in the best interest of
the Company or Subsidiary or the Manager, as the case may be, as determined by
the Committee, which determination shall be conclusive;
provided, however, that in no event may any Award be exercised after the
expiration date of the Award. Any Award or portion thereof that is not exercised
during the applicable time period specified above (or any shorter period
specified in the Award Agreement or instrument) shall be deemed terminated at
the end of the applicable time period for purposes of Section 4 hereof.
(g) Incentive Stock Options. Options granted under the Plan that are
intended to be Incentive Stock Options shall be specifically designated as
intending to be Incentive Stock Options and shall be subject to the following
additional terms and conditions:
(i) 10% Shareholder. If any Participant to whom an Incentive Stock
Option is to be granted under the Plan is, at the time of the grant of such
Option, the owner of equity securities possessing more than 10% of the total
combined voting power of all classes of equity securities of the Company or any
Subsidiary, then the following special provisions shall be applicable to the
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Incentive Stock Option granted to such individual: (x) the exercise price per
Share subject to such Incentive Stock Option shall not be less than 110% of the
Fair Value (as defined in Section 16) of one Share at the time of grant; and (y)
the option exercise period shall not exceed five years from the date of grant.
(ii) Dollar Limitation. Shares of the Company that are acquired
pursuant to the exercise of an Incentive Stock Option granted to a Participant
under the Plan shall be deemed to be acquired pursuant to the exercise of an
Incentive Stock Option under Code Section 422, only to the extent that the
aggregate Fair Value (determined as of the respective date or dates of grant) of
the Shares with respect to which such Incentive Stock Option, and all other
Incentive Stock Options that are granted to such Participant under the Plan (and
under any other incentive stock option plans of the Company or any Subsidiary),
are exercisable for the first time by such Participant in any one calendar year,
does not exceed $100,000. To effectuate the provisions of this Section 6(g), the
Committee may designate the Shares that are treated as acquired pursuant to the
exercise of an Incentive Stock Option by issuing a separate certificate for such
Shares and identifying such certificates as Incentive Stock Option stock in its
stock transfer records.
(iii) If a Participant makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Participant pursuant to the exercise of an Incentive
Stock Option within the two-year period commencing on the day after the date of
the grant or within the one-year period commencing on the day after the date of
transfer of such share or shares to the Participant pursuant to such exercise,
the Participant shall, within ten (10) days of such disposition, notify the
Company thereof, by delivery of written notice to the Company at its principal
executive office.
Except as modified by the preceding provisions of this Section 6(g),
all the provisions of the Plan applicable to Options shall be applicable to
Incentive Stock Options granted hereunder.
8. Method of Exercise
An Award Owner may exercise an Option granted pursuant to the Plan by
delivering to the Company at its main office written notice of exercise, which
notice shall specify the number of Shares with respect to which the Option is
being exercised, together with payment of the purchase price in exchange for the
Company's issuance and delivery of certificates therefor. The purchase price for
any Shares pursuant to the exercise of an Option shall be paid in full upon such
exercise by any one or a combination of the following: (i) cash (by check), (ii)
transferring fully paid Shares to the Company with a Fair Value equal to the
aggregate purchase price, or (iii) by cash payments in installments or pursuant
to a full recourse promissory note, in either case, upon such terms as the
Committee deems appropriate. Notwithstanding the foregoing, the Committee shall
have discretion to determine at the time of grant of each Option or at any later
date (up to and including the date of exercise) the form of payment acceptable
in respect of the exercise of such Option. The written notice pursuant to this
Section 7 may also provide instructions to the Company that upon receipt of the
purchase price in cash from the Award Owner's broker or dealer, designated as
such on the
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written notice, in payment for any Shares purchased pursuant to the exercise of
an Option, the Company shall issue such Shares directly to the designated broker
or dealer. Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Value on the day preceding
the date of exercise of such Option. If requested by the Committee, the Award
Owner shall deliver the related Award Agreement to the designated representative
of the Company who shall endorse thereon a notation of such exercise and return
such agreement to the Award Owner. No fractional Shares (or cash in lieu
thereof) shall be issued upon exercise of an Option and the number of Shares
that may be purchased upon exercise shall be rounded to the nearest number of
whole Shares.
9. Transferability of Awards
No Award granted under the Plan shall be assignable or transferable by the
Participant to whom it is granted, either voluntarily or by operation of law,
except by will or the laws of descent and distribution. During the life of the
Participant, the Award shall be exercisable only by or on behalf of such person.
Notwithstanding the foregoing and provided the Award Owner receives no
consideration, the Committee may permit Awards (other than Incentive Stock
Options) to be transferable to a member of the Award Owner's "immediate family,"
a trust established by an Award Owner for the benefit of one or more members of
such Award Owner's "immediate family" or a partnership in which such "immediate
family" members are the only partners. The term "immediate family" shall have
the meaning of such term in Rule 16a-1 of the SEC.
10. General Restrictions
(a) Award Owner Representations. The Company may require a person to whom
an Award is granted, as a condition of exercising such Award, to:
(i) give such written assurances, in substance and form
satisfactory to the Company, as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws, including,
without limitation, that such person is acquiring the Share subject to the Award
for his or her own account for investment and not with any present intention of
selling or otherwise distributing the same; and
(ii) grant to the Company the right, which shall be for a price
equal to the Fair Value for such Shares and upon such other terms as the
Committee, in its sole discretion, prescribes, to repurchase from the Award
Owner any or all Shares acquired by such Award Owner through the exercise of an
Award which such Award Owner may at any time desire to sell, transfer or
otherwise dispose of.
Certificates representing Shares issued upon exercise of the Award shall bear
such legends as are deemed appropriate by legal counsel to the Company, unless
the Award Owner provides a written opinion of legal counsel, satisfactory to the
Company, that any such legend is not required.
(b) Compliance With Securities Laws.
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(i) Each Award shall be subject to the requirement that, if at any
time counsel to the Company shall determine that the listing, registration or
qualification of such Award or the Shares subject to such Award upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with the grant or exercise of such Award or the issuance or
purchase of Shares thereunder, such Award shall not be effective or may not be
accepted or exercised in whole or in part (as applicable) unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Committee. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration, qualification, consent or approval.
(ii) The Company shall provide each Award Owner with such
information, statements, discussions and analyses with respect to the Company in
such manner and at such times as may be required under state or federal
securities laws.
11. Rights as a Shareholder
The Award Owner shall have no rights as a shareholder with respect to any
Shares covered by the Award until the date upon which the share certificates are
issued to him or her for such Shares. Except as otherwise expressly provided in
the Plan, no adjustment shall be made for cash dividends or other distributions
or rights for which the record date is prior to the date on which such share
certificate is issued.
12. Recapitalization
In the event that the outstanding Shares of the Company are changed into
or exchanged for a different number or kind of shares or other securities of the
Company by reason of any recapitalization, reclassification, stock split, stock
dividend, combination or subdivision, an appropriate and proportionate
adjustment shall be made in the number and kind of shares subject to the Plan
and in the number, kind, and per share exercise price, of shares subject to
unexercised Options or portions thereof granted prior to such adjustment. Any
such adjustment to an outstanding Option shall be made without change in the
total price applicable to the unexercised portion of such Option as of the date
of the adjustment. No such adjustment shall be made with respect to an Incentive
Stock Option that would, within the meaning of any applicable provisions of the
Code, constitute a modification, extension or renewal of any Option or a grant
of additional benefits to the holder of an Option.
13. Reorganization
In the event that:
(i) the Company is merged or consolidated with another entity or
person other than an Affiliate, and the Company is not a surviving entity, or
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(ii) all or substantially all of the assets or more than 20% of the
outstanding equity securities of the Company entitled to vote for trustees is
acquired by any other entity or person other than an Affiliate or an entity or
person or any Affiliate thereof owning 5% or more of the outstanding voting
stock of the Company or
(iii) there is a reorganization or liquidation of the Company,
the Committee, or the board of directors of any corporation assuming the
obligations of the Company, shall, as to outstanding Awards, either (x) in the
case of a merger, consolidation or reorganization of the Company, make
appropriate provision for the protection of any such outstanding Awards by the
substitution on an equivalent basis of appropriate shares or other securities of
the Company, or of the merged, consolidated or otherwise reorganized corporation
that will be issuable in respect of the Shares (provided that no additional
benefits shall be conferred upon Award Owners as a result of such substitution),
or (y) upon written notice to the Award Owners, provide that all unexercised
Awards must be exercised within a specified number of days of the date of such
notice or the unexercised Awards will be terminated, or (z) upon written notice
to the Award Owners, provide that all unexercised Awards shall be purchased by
the Company or its successor within a specified number of days of the date of
such notice at a price equal to the value the Award Owners would have received
if they then exercised all their Awards and immediately received full payment in
respect of such exercise, as determined in good faith by the Committee.
Notwithstanding anything contained in the Plan or any Award Agreement to
the contrary, in the event of a reorganization or other event described above
which is also intended to constitute a Pooling Transaction (as defined herein),
the Committee shall take such actions, if any, which are specifically
recommended by an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the Pooling Transaction will
qualify as such, including but not limited to (i) deferring the vesting,
exercise, payment or settlement with respect to any Option, (ii) providing that
the payment or settlement in respect of any Option be made in the form of cash,
Shares or securities of a successor or acquirer of the Company, or a combination
of the foregoing and (iii) providing for the extension of the term of any Option
to the extent necessary to accommodate the foregoing, but not beyond the maximum
term permitted for any Option. For purposes of this Plan, "Pooling Transaction"
means an acquisition of the Company in a transaction which is intended to be
treated as a "pooling of interests" under generally accepted accounting
principles.
14. No Special Rights
Nothing contained in the Plan or in any Award granted under the Plan shall
confer upon any Award Owner any right with respect to the continuation of his or
her service with the Company or Subsidiary or Manager, or interfere in any way
with the right of the Company, (or any Subsidiary), or the Manager, as the case
may be, subject to the terms of any separate agreement to the contrary, at any
time to terminate such service or to increase or decrease the compensation of
the Award Owner from the rate in existence at the time of the grant of an Award.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination or cessation of
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services for purposes of this Plan shall be determined by the Committee.
15. No Special Trustee Rights
Nothing contained in the Plan or in any Award granted under the Plan shall
constitute evidence of any agreement or understanding, express or implied, that
a trustee has a right to continue as a trustee for any period of time.
16. Other Employee Benefits
The amount of any income deemed to be received by an Award Owner as a
result of the exercise of an Award or the sale of Shares received upon such
exercise will not constitute "compensation" or "earnings" with respect to which
any other benefits of such person are determined by the Company, including
without limitation benefits under any pension, profit sharing, life insurance or
salary continuation plan.
17. Definitions
(a) Affiliate. The term "Affiliate" shall mean a corporation or other
entity or person which, at the time of reference, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
(b) Consolidation Effective Date. The term "Consolidation Effective Date"
shall mean October 1, 1997.
(c) Fair Value. The term "Fair Value" of a Share shall mean (i) if the
Shares are traded on a national securities exchange, the closing price for such
Shares on the day immediately preceding the date of determination or if there is
no closing price on such date, the last preceding closing price, (ii) if the
Shares are not traded on a national securities exchange, the mean of the high
bid and ask quotes of such Shares as reported in the NASDAQ/NMS reports or the
National Quotation Bureau Inc.'s pink sheets or in the NASD Bulletin Board on
the day immediately preceding the date of determination or if there were no high
bid and ask quotes on such date, the last preceding day that there were, and
(iii) if neither (i) or (ii) are applicable, as determined in good faith by the
Committee.
(d) Rule 16b-3. The term "Rule 16b-3" shall mean Rule 16b-3 of the SEC (or
any successor rule).
(e) Subsidiary. The term "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if, at the time of the
grant of the Award, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
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18. Amendment of the Plan
(a) The Board of Trustees may at any time and from time to time modify or
amend the Plan in any respect, provided that, the Board of Trustees shall not
modify or amend the Plan without the approval of the shareholders of the Company
if such approval were required or desired for compliance with (i) an exemption
afforded by Rule 16b-3 or (ii) Section 422 of the Code. The termination or any
modification or amendment of the Plan shall not, without the consent of an Award
Owner, affect his or her rights under an Award previously granted to him or her.
With the consent of the Award Owners affected, the Committee may amend
outstanding Award agreements in a manner not inconsistent with the Plan.
(b) Notwithstanding the provisions of Section 17(a), the Board of Trustees
shall have the right, but not the obligation, without the consent of the
Company's shareholders, to (i) amend or modify the terms and provisions of the
Plan and of any outstanding Incentive Stock Options granted under the Plan to
the extent necessary to qualify any or all such options for such favorable
federal income tax treatment (including deferral of taxation upon exercise), as
may be afforded incentive stock options under Section 422 of the Code; and (ii)
amend or modify the terms and provisions of the Plan and of any outstanding
Award granted under the Plan to the extent necessary to comply with any
securities law to which, in the opinion of counsel to the Company, the Plan or
Award is subject.
19. Withholding
At such times as an Award Owner recognizes taxable income in
connection with the receipt of Shares hereunder (a "Taxable Event"), the Award
Owner shall pay to the Company an amount equal to the federal, state and local
income taxes and other amounts as may be required by law to be withheld by the
Company in connection with the Taxable Event (the "Withholding Taxes") prior to
the issuance, or release from escrow, of such Shares. In satisfaction of the
obligation to pay Withholding Taxes to the Company, the Committee may, in its
discretion and subject to compliance with applicable securities laws and
regulations, withhold Shares having an aggregate Fair Value on the date
preceding the date of such issuance equal to the Withholding Taxes.
20. Effective Date and Duration of the Plan
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Trustees, but no award granted under the Plan shall become exercisable
unless and until the Plan shall have been approved by the Company's shareholders
within twelve months before or after the date of such adoption. If such
shareholder approval is not obtained within such period, any Award previously
granted under the Plan shall terminate and no further Awards shall be granted.
Subject to this limitation, Awards may be granted under the Plan at any time
after the effective date and before the date fixed for termination of the Plan.
(b) Termination. The Plan shall terminate upon the earlier of (i)
September 30, 2007, or
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(ii) the date on which all Shares available for issuance under the Plan shall
have been issued pursuant to the exercise of Awards granted under the Plan. If
the date of termination is determined under (i) above, then Awards outstanding
on such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such Awards.
21. Governing Law
The Plan and all Award agreements issued hereunder shall be governed by
the laws of the State of Delaware.
22. Expenses of Administration
All costs and expenses incurred in the operation and administration of
this Plan shall be borne by the Company.
**********
The Plan was adopted by the Board of Trustees on September 30, 1997 and
approved by the sole shareholder of Shares of Beneficial Interest on
September 30, 1997.
