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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT
TRUSTS WHICH ARE CURRENTLY ISSUING
SECURITIES PURSUANT TO SECTION 8(b) OF
THE INVESTMENT COMPANY ACT OF 1940
GEN-NET REALTY UNIT INVESTMENT TRUST
CORPORATE-GOVERNMENT SERIES
----------------------------------------------
Name of Unit Investment Trust
/ / Issuer of periodic payment plan certificates
/x/ Not the issuer of periodic payment plan certificates
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I. ORGANIZATION AND GENERAL INFORMATION
1.
(a) FURNISH NAME OF THE TRUST AND THE INTERNAL REVENUE SERVICE
EMPLOYER IDENTIFICATION NUMBER (ACCORDING TO SECURITY
DESIGNATION OR OTHERWISE, IF THE TRUST DOES NOT HAVE OR DOES
NOT TRANSACT BUSINESS UNDER ANY OTHER DESIGNATION.)
GEN-NET REALTY UNIT INVESTMENT TRUST, CORPORATE AND
GOVERNMENT
SERIES, A MICHIGAN TRUST.
IRS EMPLOYER IDENTIFICATION NO. 38-6759416.
(b) FURNISH TITLE OF EACH CLASS OR SERIES OF SECURITIES ISSUED
BY THE RUST.
THE TRUST IS ISSUING ONE CLASS OF SECURITIES CALLED "UNITS."
2. FURNISH NAME AND PRINCIPAL BUSINESS ADDRESS AND ZIP CODE, AND THE
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER OF EACH
DEPOSITOR OF THE TRUST. (NOTE DEFINITION OF "DEPOSITOR" IN GENERAL
INSTRUCTIONS.)
GENESIS FINANCIAL GROUP, INC., ONE OAKLAND TOWNE SQUARE - 14TH
FLOOR, SOUTHFIELD, MICHIGAN 48076.
3. FURNISH NAME AND PRINCIPAL BUSINESS ADDRESS AND ZIP CODE, AND THE
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER OF EACH
CUSTODIAN OR TRUSTEE OF THE TRUST INDICATING FOR WHICH CLASS OR
SERIES OF SECURITIES EACH CUSTODIAN OR TRUSTEE IS ACTING.
CITIZENS FIRST SAVINGS BANK, 525 WATER STREET, PORT HURON,
MICHIGAN 48060.
4. FURNISH NAME AND PRINCIPAL ADDRESS AND ZIP CODE, AND THE INTERNAL
REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER OF EACH PRINCIPAL
UNDERWRITER CURRENTLY DISTRIBUTING SECURITIES OF THE TRUST.
TO BE SUPPLIED BY PRE-EFFECTIVE AMENDMENT. NO PRINCIPAL UNDERWRITER
HAS BEEN IDENTIFIED AT THIS TIME.
5. FURNISH NAME OF STATE OR OTHER SOVEREIGN POWER, THE LAWS OF WHICH
GOVERN WITH RESPECT TO THE ORGANIZATION OF THE TRUST.
MICHIGAN.
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6.
(a) FURNISH THE DATES OF EXECUTION AND TERMINATION OF ANY
INDENTURE OR AGREEMENT CURRENTLY IN EFFECT UNDER THE TERMS
OF WHICH THE TRUST WAS ORGANIZED AND ISSUED OR PROPOSES TO
ISSUE SECURITIES. (IF INDIVIDUAL INDENTURES OR AGREEMENTS
ARE ENTERED INTO WITH SECURITY HOLDERS, SO STATE AND FURNISH
THE DATE OF THE FIRST SUCH INDENTURE OR AGREEMENT.)
TO BE SUPPLIED BY PRE-EFFECTIVE AMENDMENT.
(b) FURNISH THE DATES OF EXECUTION AND TERMINATION OF ANY
INDENTURE OR AGREEMENT CURRENTLY IN EFFECT PURSUANT TO WHICH
THE PROCEEDS OF PAYMENTS ON SECURITIES ISSUED OR TO BE
ISSUED BY THE TRUST ARE HELD BY THE CUSTODIAN OR TRUSTEE.
(IF THIS INDENTURE OR AGREEMENT IS THE SAME AS SET FORTH IN
ITEM 6(a), SO STATE.)
NA.
7. FURNISH IN CHRONOLOGICAL ORDER THE FOLLOWING INFORMATION WITH
RESPECT TO EACH CHANGE OF NAME OF THE TRUST SINCE JANUARY 1, 1930.
IF THE NAME HAS NEVER BEEN CHANGED, SO STATE.
NO CHANGE.
8. STATE THE DATE ON WHICH THE FISCAL YEAR OF THE TRUST ENDS.
DECEMBER 31.
MATERIAL LITIGATION.
9. FURNISH A DESCRIPTION OF ANY PENDING LEGAL PROCEEDINGS, MATERIAL
WITH RESPECT TO THE SECURITY HOLDERS OF THE TRUST BY REASON OF THE
NATURE OF THE CLAIM OR THE AMOUNT THEREOF, TO WHICH THE TRUST, THE
DEPOSITOR, OR THE PRINCIPAL UNDERWRITER IS A PARTY OR OF WHICH THE
ASSETS OF THE TRUST ARE THE SUBJECT, INCLUDING THE SUBSTANCE OF THE
CLAIMS INVOLVED IN SUCH PROCEEDING AND THE TITLE OF THE PROCEEDING.
FURNISH A SIMILAR STATEMENT WITH RESPECT TO ANY PENDING
ADMINISTRATIVE PROCEEDING COMMENCED BY A GOVERNMENTAL AUTHORITY, OR
ANY SUCH PROCEEDING OR LEGAL PROCEEDING KNOWN TO BE CONTEMPLATED BY
A GOVERNMENTAL AUTHORITY. INCLUDE ANY PROCEEDING WHICH, ALTHOUGH
IMMATERIAL ITSELF, IS REPRESENTATIVE OF, OR ONE OF, A GROUP WHICH
IN THE AGGREGATE IS MATERIAL.
NONE.
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II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST.
GENERAL INFORMATION CONCERNING THE SECURITIES OF THE TRUST AND THE RIGHTS
OF HOLDERS.
10. FURNISH A BRIEF STATEMENT WITH RESPECT TO THE FOLLOWING MATTERS FOR
EACH CLASS OR SERIES OF SECURITIES ISSUED BY THE TRUST:
(a) WHETHER THE SECURITIES ARE OF THE REGISTERED OR BEARER TYPE.
REGISTERED.
(b) WHETHER THE SECURITIES ARE OF THE CUMULATIVE OR DISTRIBUTIVE
TYPE.
DISTRIBUTIVE.
(c) THE RIGHTS OF SECURITY HOLDERS WITH RESPECT TO WITHDRAWAL
OR REDEMPTION.
THE UNITHOLDERS ARE NOT GRANTED ANY RIGHTS TO WITHDRAW OR
REDEEM THEIR INVESTMENT IN THE TRUST UNILATERALLY. THEY CAN
MAKE A WRITTEN REQUEST TO THE DEPOSITOR-SPONSOR WHO THEN MAY
CHOOSE TO FORWARD THE REQUEST TO THE TRUSTEE TO REDEEM ALL
OR ANY PORTION OF THEIR UNITS. WHETHER OR NOT THE UNITS WILL
BE REDEEMED IS DISCRETIONARY WITH THE DEPOSITOR-SPONSOR.
(d) THE RIGHTS OF SECURITY HOLDERS WITH RESPECT TO CONVERSION,
TRANSFER, PARTIAL REDEMPTION AND SIMILAR MATTERS.
THE UNITHOLDERS HAVE NO RIGHT TO CONVERT THEIR UNITS INTO
ANOTHER SECURITY. A UNITHOLDER MAY TRANSFER HIS OR HER
UNIT(S) TO ANY OTHER PARTY BY PROVIDING A WRITTEN TRANSFER
INSTRUMENT INCLUDING TRANSFER INSTRUCTIONS SIGNED BY THE
UNITHOLDER AND THE TRANSFEREE TO THE TRUSTEE. UNITHOLDERS
MAY RECEIVE CERTIFICATES EVIDENCING THEIR UNITS OF
BENEFICIAL INTEREST IN THE TRUST. PARTIAL REDEMPTIONS OF A
UNITHOLDER'S INTEREST IN THE TRUST ARE PERMITTED IN THE
DISCRETION OF THE DEPOSITOR-SPONSOR.
(e) IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN
CERTIFICATES, THE SUBSTANCE OF THE PROVISIONS OF ANY
INDENTURE OR AGREEMENT WITH RESPECT TO LAPSES OR DEFAULTS BY
SECURITY HOLDERS IN MAKING PRINCIPAL PAYMENTS, AND WITH
RESPECT TO REINSTATEMENT.
NOT APPLICABLE.
(f) THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WITH RESPECT TO VOTING RIGHTS, TOGETHER WITH THE
NAMES OF ANY PERSONS OTHER THAN SECURITY HOLDERS GIVEN THE
RIGHT TO EXERCISE
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VOTING RIGHTS PERTAINING TO THE TRUST'S SECURITIES OR THE
UNDERLYING SECURITIES, AND THE RELATIONSHIP OF SUCH PERSONS
TO THE TRUST.
UNITHOLDERS DO NOT HAVE ANY VOTING RIGHTS EXCEPT AS TO
AMENDMENTS TO THE TRUST. AMENDMENTS THAT PROPOSE TO CHANGE
THE TYPE OF SECURITIES DEPOSITED IN THE TRUST AS DESCRIBED
IN THE PROSPECTUS GIVEN TO PROSPECTIVE UNITHOLDERS AND
AMENDMENTS THAT PROPOSE TO REDUCE THE PERCENTAGE OF
UNITHOLDER APPROVAL REQUIRED FOR AMENDMENTS TO THE TRUST
REQUIRE THE AFFIRMATIVE VOTE OF ALL UNITHOLDERS. ALL OTHER
PROPOSED AMENDMENTS REQUIRE THE APPROVAL OF UNITHOLDERS WITH
MORE THAN 50 PERCENT OF THE UNITS OUTSTANDING. THE
UNITHOLDERS WITH MORE THAN 50 PERCENT OF THE UNITS
OUTSTANDING MAY VOTE TO APPOINT A SUCCESSOR
DEPOSITOR-SPONSOR AND TO TERMINATE THE TRUST AND LIQUIDATE
THE TRUST FUND. THE DEPOSITOR-SPONSOR HAS THE RIGHT,
DELEGATED TO IT BY THE TRUSTEE, TO EXERCISE ANY VOTING
RIGHTS PERTAINING TO THE TRUST'S SECURITIES.
(g) WHETHER SECURITY HOLDERS MUST BE GIVEN NOTICE OF ANY CHANGE
IN:
(1) THE COMPOSITION OF THE ASSETS OF THE TRUST.
THE UNITHOLDERS ARE NOT REQUIRED TO BE GIVEN NOTICE
OF ANY CHANGE IN COMPOSITION OF THE ASSETS OF THE
TRUST PROVIDED SUCH CHANGE IS STILL WITHIN THE
CATEGORIES OF TRUST SECURITIES AS DESCRIBED IN THE
PROSPECTUS OFFERING THE UNITS FOR SALE.
(2) THE TERMS AND CONDITIONS OF THE SECURITIES ISSUED
BY THE TRUST.
THE UNITHOLDERS ARE REQUIRED TO BE GIVEN NOTICE OF
ANY PROPOSED CHANGE TO THE UNITS IF SUCH CHANGE
REQUIRES AN AMENDMENT TO THE TRUST INDENTURE. FOR
EXAMPLE, IF A PROPOSAL CALLED FOR THE ELIMINATION OF
UNIT CERTIFICATES FOR UNITHOLDERS EVIDENCING THEIR
OWNERSHIP OF UNITS IN THE TRUST, SUCH A CHANGE,
BECAUSE IT WOULD REQUIRE AN AMENDMENT TO THE TRUST
INDENTURE, WOULD CORRESPONDINGLY REQUIRE PRIOR NOTICE
TO THE UNITHOLDERS. ON THE OTHER HAND, A PROPOSAL TO
INCREASE OR DECREASE THE PURCHASE PRICE PER UNIT TO
BE PAID BY PROSPECTIVE UNITHOLDERS WOULD NOT REQUIRE
NOTICE TO THE UNITHOLDERS BECAUSE IT WOULD NOT
INVOLVE AMENDING THE TRUST INDENTURE.
(3) THE PROVISIONS OF ANY INDENTURE OR AGREEMENT OF
THE TRUST.
THE UNITHOLDERS MUST BE GIVEN NOTICE (AND MUST VOTE
ON) ANY PROPOSED CHANGE IN THE TRUST INDENTURE,
EXCEPT WHERE THE CHANGE IS INSTITUTED TO CURE AN
AMBIGUITY, DEFECT OR INCONSISTENCY IN THE
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INDENTURE OR WHERE THE CHANGE WILL NOT ADVERSELY
AFFECT THE INTEREST OF THE UNITHOLDERS.
(4) THE IDENTITY OF THE DEPOSITOR, TRUSTEE OR CUSTODIAN.
THE UNITHOLDERS MUST BE GIVEN NOTICE OF ANY PARTY
NAMED A SUCCESSOR TO THE DEPOSITOR-SPONSOR BY THE
TRUSTEE. THE UNITHOLDERS MUST ALSO BE GIVEN NOTICE OF
A CHANGE IN TRUSTEES BY THE SUCCESSOR TRUSTEE.
(h) WHETHER THE CONSENT OF SECURITY HOLDERS IS REQUIRED IN ORDER
FOR ACTION TO BE TAKEN CONCERNING ANY CHANGE IN:
(1) THE COMPOSITION OF THE ASSETS OF THE TRUST.
THE CONSENT OF THE UNITHOLDERS TO A CHANGE IN THE
COMPOSITION OF THE ASSETS OF THE TRUST IS NOT
REQUIRED UNLESS THE CHANGE IS IN THE CATEGORIES OF
SECURITIES THAT ARE TO BE HELD BY THE TRUSTEE AS
DESCRIBED IN THE PROSPECTUS FOR THE OFFERING OF UNITS
IN THE TRUST.
(2) THE TERMS AND CONDITIONS OF THE SECURITIES ISSUED BY
THE TRUST.
THE CONSENT OF THE UNITHOLDERS TO ANY PROPOSED CHANGE
IN THE TERMS AND CONDITIONS OF THE UNITS ISSUED BY
THE TRUST APPLIES UNDER THE SAME CIRCUMSTANCES AS
DESCRIBED FOR NOTICE TO THE UNITHOLDERS IN RESPONSE
TO ITEM 10(g)(2) ABOVE.
(3) THE PROVISIONS OF ANY INDENTURE OR AGREEMENT OF THE
TRUST.
THE CONSENT OF THE UNITHOLDERS TO ANY CHANGE IN THE
PROVISIONS OF THE INDENTURE APPLIES UNDER THE SAME
CIRCUMSTANCES AS DESCRIBED FOR NOTICE TO THE
UNITHOLDERS IN RESPONSE TO ITEM 10(g)(3) ABOVE.
(4) THE IDENTITY OF THE DEPOSITOR, TRUSTEE OR CUSTODIAN.
THE CONSENT OF MORE THAN 50% IN INTEREST OF THE
UNITHOLDERS IS REQUIRED IN CONNECTION WITH THE NAMING
OF A SUCCESSOR TO THE DEPOSITOR-SPONSOR. THE CONSENT
OF THE UNITHOLDERS IS NOT REQUIRED IN CONNECTION WITH
THE NAMING OF A SUCCESSOR TO THE TRUSTEE.
(i) ANY OTHER PRINCIPAL FEATURE OF THE SECURITIES ISSUED BY THE
TRUST, OR ANY OTHER PRINCIPAL RIGHT, PRIVILEGE OR OBLIGATION
NOT COVERED BY SUBDIVISIONS (a) TO (g) OR BY ANY OTHER ITEM
IN THIS FORM.
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THE HOLDERS OF UNITS ISSUED BY THE TRUST MAY ELECT TO
BE ISSUED UNIT CERTIFICATES EVIDENCING THEIR INTEREST
IN THE TRUST. OTHERWISE, A HOLDER'S INTEREST IN THE
TRUST IS RECORDED ON THE TRUSTEE'S BOOKS AND NO UNIT
CERTIFICATE IS ISSUED. IF A UNIT CERTIFICATE THAT HAS
BEEN ISSUED IS MUTILATED, DESTROYED, STOLEN OR LOST,
THE TRUSTEE WILL ISSUE A REPLACEMENT CERTIFICATE UPON
REQUEST. THE HOLDER IS SUBJECT TO BEING CHARGED A FEE
FOR THE EXPENSES OF THE TRUSTEE IN CONNECTION WITH
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
INFORMATION CONCERNING THE SECURITIES UNDERLYING THE TRUST'S SECURITIES.
11. DESCRIBE BRIEFLY THE KIND OR TYPE OF SECURITIES COMPRISING THE UNIT
OF SPECIFIED SECURITIES IN WHICH SECURITY HOLDERS HAVE AN INTEREST.
(IF THE UNIT CONSISTS OF A SINGLE SECURITY ISSUED BY AN INVESTMENT
COMPANY, NAME SUCH INVESTMENT COMPANY AND FURNISH A DESCRIPTION OF
THE TYPE OF SECURITIES COMPRISING THE PORTFOLIO OF SUCH INVESTMENT
COMPANY.)
IF THE TRUST OWNS OR WILL OWN ANY SECURITIES OF ITS REGULAR
BROKERS OR DEALERS AS DEFINED IN RULE 10b-1 UNDER THE ACT, OR THEIR
PARENTS, IDENTIFY THOSE BROKERS OR DEALERS AND STATE THE VALUE OF
THE REGISTRANT'S AGGREGATE HOLDINGS OF THE SECURITIES OF EACH
SUBJECT ISSUER AS OF THE CLOSE OF THE REGISTRANT'S MOST RECENT
FISCAL YEAR.
THE TRUST'S PORTFOLIO WILL CONSIST PRIMARILY OF ASSIGNMENTS OF
RENTS FROM SELECTED NET LONG TERM LEASES OF GOVERNMENT AND
COMMERCIAL REAL ESTATE PROPERTIES. THE TRUST MAY ALSO PURCHASE AND
HOLD ON A SHORT TERM BASIS US TREASURIES, CORPORATE BONDS RATED
BBB+ OR BETTER, STATE ISSUED BONDS AND MONEY MARKET FUNDS. THE
ASSIGNMENTS OF RENTS REPRESENT THE ASSIGNMENT OF THE RENTAL INCOME
GENERATED FROM LONG TERM LEASES AFTER DEDUCTION FOR PROPERTY
MANAGEMENT FEES AND FOR COSTS AND CHARGES TO BE PAID OR RESERVED BY
THE LESSOR UNDER THE TERMS OF THE LEASE. AN ASSIGNMENT OF RENTS
COVERS A SPECIFIC PERIOD OF TIME WITHIN THE TERM OF THE LEASE. THE
LESSOR IS THE DEPOSITOR-SPONSOR. THE LEASEES ARE EITHER
FEDERAL/STATE GOVERNMENT AGENCIES, THE U.S. POSTAL SERVICE AND/OR
FORTUNE 500 CORPORATIONS. THE LEASES ARE FOR LONG TERMS OF AT LEAST
5 YEARS IN WHICH THE LESSEES ARE OBLIGATED TO PAY OR TO REIMBURSE
THE LESSOR FOR MOST COSTS OF HOLDING AND OPERATING THE LEASED
PROPERTIES. THE PROPERTIES CONSIST OF SINGLE USE COMMERCIAL REAL
ESTATE WHICH IS OWNED BY THE DEPOSITOR-SPONSOR. SUCH REAL ESTATE
WILL BE ACQUIRED USING AS EQUITY FUNDS OBTAINED AS THE NET PROCEEDS
FROM THE ISSUANCE AND SOLE OF UNITS BY THE DEPOSITOR-SPONSOR.
12. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES
AND IF ANY UNDERLYING SECURITIES WERE ISSUED BY ANOTHER INVESTMENT
COMPANY, FURNISH THE FOLLOWING INFORMATION FOR EACH SUCH COMPANY:
(a) NAME OF COMPANY.
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NOT APPLICABLE.
(b) NAME AND PRINCIPAL BUSINESS ADDRESS OF DEPOSITOR.
NOT APPLICABLE.
(c) NAME AND PRINCIPAL BUSINESS ADDRESS OF TRUSTEE OR CUSTODIAN.
NOT APPLICABLE.
(d) NAME AND PRINCIPAL BUSINESS ADDRESS OF PRINCIPAL
UNDERWRITER.
NOT APPLICABLE.
(e) THE PERIOD DURING WHICH THE SECURITIES OF SUCH COMPANY HAVE
BEEN THE UNDERLYING SECURITIES.
NOT APPLICABLE.
INFORMATION CONCERNING LOADS, FEES, CHARGES AND EXPENSES.
13.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO EACH LOAD,
FEE, EXPENSE OR CHARGE TO WHICH: (1) PRINCIPAL PAYMENTS,
(2) UNDERLYING SECURITIES, (3) DISTRIBUTIONS, (4)
CUMULATED OR REINVESTED DISTRIBUTIONS OR INCOME, AND (5)
REDEEMED OR LIQUIDATED ASSETS OF THE TRUST'S SECURITIES ARE
SUBJECT:
(a)(1) NOT APPLICABLE.
(a)(2) SEE BELOW.
(a)(3) NOT APPLICABLE.
(a)(4) NOT APPLICABLE.
(a)(5) SEE THE RESPONSE BELOW UNDER ITEM 13(a)(2).
(a)(2) THE SECURITIES OF THE TRUST ARE SUBJECT TO:
(A) THE NATURE OF SUCH LOAD, FEE, EXPENSE, OR CHARGE;
A BROKERAGE FEE IN CONNECTION WITH THE PURCHASE OR
SALE OF U.S. TREASURIES, CORPORATE BONDS AND STATE
AND LOCAL BONDS.
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FUND MANAGEMENT AND ADMINISTRATIVE COSTS CHARGED THE
MONEY MARKET FUNDS.
A REAL ESTATE BROKERAGE COMMISSION AND ACQUISITION
FEES CHARGED IN CONNECTION WITH THE PURCHASE OR SALE
OF LEASED REAL ESTATE FROM WHICH THE ASSIGNMENT(S)
OF RENTS ARE DERIVED.
A PROPERTY MANAGEMENT FEE CHARGED IN CONNECTION WITH
THE MANAGEMENT OF THE LEASED REAL ESTATE FROM WHICH
THE ASSIGNMENT(S) OF RENTS ARE DERIVED.
(B) THE AMOUNT THEREOF;
THE AMOUNT OF THE BROKERAGE FEE IS NEGOTIABLE
BETWEEN THE BROKERAGE FIRM AND THE
DEPOSITOR-SPONSOR. FEES INCURRED FOR THE PURCHASE OR
SALE OF U.S. TREASURIES, CORPORATE BONDS OR STATE
AND LOCAL BONDS VARY GREATLY BETWEEN BROKERS
DEPENDING ON THE SCOPE OF SERVICES PROVIDED BY THE
FIRM. IN THE EVENT THAT SUCH SECURITIES WILL BE
ACQUIRED ON BEHALF OF THE TRUST, THE
DEPOSITOR-SPONSOR WILL SELECT THE BROKER-DEALER
PROVIDING, IN THE DEPOSITOR-SPONSOR'S JUDGMENT, THE
BEST OVERALL BENEFITS, WHICH MAY NOT BE A DISCOUNT
BROKER OFFERING THE LOWEST TRANSACTIONAL FEES. THE
AMOUNT OF THE MANAGEMENT ADVISORY AND ADMINISTRATIVE
COSTS CHARGED BY MONEY MARKET FUNDS TYPICALLY RANGE
FROM 20 TO 80 BASIS POINTS.
THE REAL ESTATE BROKERAGE COMMISSION CHARGED IN
CONNECTION WITH THE PURCHASE OR SALE OF THE LEASED
REAL ESTATE IS NEGOTIABLE BETWEEN THE REAL ESTATE
BROKERAGE FIRM AND THE DEPOSITOR-SPONSOR. THE
COMMISSION TYPICALLY RANGES FROM ONE TO FOUR PERCENT
OF THE SALE PRICE OF THE REAL ESTATE. AN ACQUISITION
FEE PAID TO THE DEPOSITOR-SPONSOR WILL NOT EXCEED
TWO PERCENT. THE AMOUNT OF SUCH ACQUISITION FEE,
WHICH MAY BE UP TO TWO PERCENT OF THE PURCHASE PRICE
OF THE LEASED PROPERTY, WILL BE DETERMINED BY THE
EFFECT OF THE FEE ON THE YIELD GENERATED TO THE
TRUST FROM THE ASSIGNMENT OF RENTS FROM THE LEASE ON
THE ACQUIRED PROPERTY. THE DEPOSITOR-SPONSOR WILL
REDUCE OR ELIMINATE AN ACQUISITION AS NEEDED IN
ORDER TO MAINTAIN THE TARGET YIELD FOR THE
UNITHOLDERS TO BE ACHIEVED THROUGH THE ASSIGNMENT OF
RENTS ON THE ACQUIRED PROPERTY. THE PROPERTY
MANAGEMENT FEE CHARGED BY THE DEPOSITOR-SPONSOR IN
CONNECTION WITH THE MANAGEMENT OF THE LEASED REAL
ESTATE IS 4.5 PERCENT OF THE GROSS RENTS RECEIVED BY
THE LESSOR.
(C) THE NAME OF THE PERSON TO WHOM SUCH AMOUNTS ARE PAID
AND HIS RELATIONSHIP TO THE TRUST;
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THE RECIPIENTS OF THE BROKERAGE COMMISSIONS ARE
THIRD PARTY UNRELATED SECURITIES BROKERS TO BE
SELECTED BY THE DEPOSITOR-SPONSOR. THE RECIPIENTS OF
THE ADVISORY, MANAGEMENT AND ADMINISTRATIVE FEES AND
OTHER PAYMENTS ARE THIRD PARTY UNRELATED INVESTMENT
ADVISORS AND FUND MANAGERS ASSOCIATED WITH THE MONEY
MARKET FUNDS TO BE SELECTED BY THE
DEPOSITOR-SPONSOR. THE RECEIPTS OF THE REAL ESTATE
BROKERAGE COMMISSION(S) ARE THIRD PARTY UNRELATED
REAL ESTATE BROKERS WHO HAVE ETHER LISTED LEASED
REAL ESTATE FOR SALE OR WHO ARE SELECTED BY THE
DEPOSITOR-SPONSOR TO SELL THE LEASED REAL ESTATE.
THE RECIPIENT OF PROPERTY MANAGEMENT AND ACQUISITION
FEES IN CONNECTION WITH THE LEASED REAL ESTATE IS
GENESIS FINANCIAL GROUP, INC.
(D) THE NATURE OF THE SERVICES PERFORMED BY SUCH PERSON
IN CONSIDERATION FOR SUCH LOAD, FEE, EXPENSE OR
CHARGE.
THE SECURITIES BROKERAGE FIRM CONSUMMATES THE TRADE
INVOLVING THE SECURITY TO BE BOUGHT OR SOLD ON
BEHALF OF THE TRUST FUND. THE ADVISOR AND MANAGER OF
A TYPICAL MONEY MARKET FUND DETERMINES PORTFOLIO
SELECTION AND PROVIDES OR OVERSEES ALL
ADMINISTRATIVE SERVICES AND FUNCTIONS. THE REAL
ESTATE BROKERAGE FIRM IDENTIFIES BUYERS OR SELLERS
AND ASSISTS IN THE NEGOTIATION AND CONSUMMATION OF
THE PURCHASE OR SALE OF THE LEASED REAL ESTATE ON
BEHALF OF THE DEPOSITOR-SPONSOR. THE ACQUISITION
OFFICER EVALUATES THE LEASED REAL ESTATE ALONG WITH
THE DIRECTORS IN THE ABSENCE OF OR IN CONJUNCTION
WITH THE REAL ESTATE BROKERAGE FIRMS. THE PROPERTY
MANAGEMENT FIRM MONITORS PERFORMANCE OF THE LEASE
TERMS BY A LESSEE, PERIODICALLY INSPECTS THE LEASED
PROPERTY, COLLECTS RENT AND PAYS ALL NON-CAPITAL
LESSOR EXPENSES.
(b) FOR EACH INSTALLMENT PAYMENT TYPE OF PERIODIC PAYMENT PLAN
CERTIFICATE OF THE TRUST, FURNISH THE FOLLOWING INFORMATION
WITH RESPECT TO SALES LOAD AND OTHER DEDUCTIONS FROM
PRINCIPAL PAYMENTS. ("SALES LOAD" INCLUDES SALES LOAD OF ANY
UNDERLYING INVESTMENT COMPANY SECURITY. COMPUTATION SHOULD
BE MADE ON THE BASIS OF THE CERTIFICATE CALLING FOR THE
SMALLEST AMOUNT OF PAYMENTS.)
NOT APPLICABLE.
(c) STATE THE AMOUNT OF TOTAL DEDUCTIONS AS A PERCENTAGE OF THE
NET AMOUNT INVESTED FOR EACH TYPE OF SECURITY ISSUED BY THE
TRUST. STATE EACH DIFFERENT SALES CHARGE AVAILABLE AS A
PERCENTAGE OF THE PUBLIC OFFERING PRICE AND AS A PERCENTAGE
OF THE NET AMOUNT INVESTED. LIST ANY SPECIAL PURCHASE PLANS
OR METHODS ESTABLISHED BY RULE OR EXEMPTIVE ORDER THAT
REFLECT SCHEDULED VARIATIONS IN, OR
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ELIMINATION OF, THE SALES LOAD, AND IDENTIFY EACH CLASS OF
INDIVIDUALS OR TRANSACTIONS TO WHICH SUCH PLANS APPLY.
TOTAL DEDUCTIONS AS A PERCENTAGE OF THE NET AMOUNT INVESTED
FOR ONE UNIT IN THE TRUST CANNOT BE DETERMINED. THE SELLING
COMMISSION PAID TO A SECURITIES BROKERAGE FIRM FOR SELLING
THE UNIT TO THE INVESTOR IS 4.5% OF THE PUBLIC OFFERING
PRICE FOR A UNIT IN THE TRUST. THERE IS NO SPECIAL PURCHASE
PLAN OR METHOD THAT REFLECTS SCHEDULED VARIATIONS IN, OR
ELIMINATIONS OF, THE SALES LOAD.
A REAL ESTATE BROKERAGE FEE OF FROM ONE TO FOUR PERCENT OF
THE ACQUISITION PRICE OF THE LEASED REAL ESTATE GENERATING
THE ASSIGNMENT OF RENTS IS PAID BY THE DEPOSITOR-SPONSOR
USING FUNDS PROVIDED BY THE TRUST. THE AMOUNT OF THE FEE IS
NEGOTIABLE WITH THE REAL ESTATE BROKER. IN ADDITION, THE
DEPOSITOR-SPONSOR MAY CHARGE AN ACQUISITION FEE UP TO TWO
PERCENT OF THE ACQUISITION COST FOR ITS SERVICES IN
ACQUIRING THE LEASED PROPERTY.
(d) EXPLAIN FULLY THE REASONS FOR ANY DIFFERENCE IN THE PRICE AT
WHICH SECURITIES ARE OFFERED GENERALLY TO THE PUBLIC, AND
THE PRICE AT WHICH SECURITIES ARE OFFERED FOR ANY CLASS OF
TRANSACTIONS TO ANY CLASS OR GROUP OF INDIVIDUALS, INCLUDING
OFFICERS, DIRECTORS, OR EMPLOYEES OF THE DEPOSITOR, TRUSTEE,
CUSTODIAN OR PRINCIPAL UNDERWRITER.
NOT APPLICABLE.
(e) FURNISH A BRIEF DESCRIPTION OF ANY LOADS, FEES, EXPENSES OR
CHARGES NOT COVERED IN ITEM 13(a) WHICH MAY BE PAID BY
SECURITY HOLDERS IN CONNECTION WITH THE TRUST OR ITS
SECURITIES. (ASSIGNMENT, REINSTATEMENT, REPLACING LOST
CERTIFICATES, ETC.)
A UNITHOLDER WHO RECEIVES A UNIT CERTIFICATE WHICH
THEREAFTER IS LOST, STOLEN, MUTILATED OR DESTROYED MAY
REQUEST THAT THE TRUSTEE PROVIDE A REPLACEMENT CERTIFICATE.
IN THAT CASE, THE TRUSTEE MAY CHARGE THE UNITHOLDER A
REASONABLE FEE FOR ITS SERVICES AND REQUIRE REIMBURSEMENT OF
ANY THIRD PARTY COSTS ASSOCIATED WITH SUPPLYING THE
REPLACEMENT.
(f) STATE WHETHER THE DEPOSITOR, PRINCIPAL UNDERWRITER,
CUSTODIAN OR TRUSTEE, OR ANY AFFILIATED PERSON OF THE
FOREGOING MAY RECEIVE PROFITS OR OTHER BENEFITS NOT INCLUDED
IN ANSWER TO ITEM 13(a) OR 13(d) THROUGH THE SALE OR
PURCHASE OF THE TRUST'S SECURITIES OR INTERESTS IN SUCH
SECURITIES, OR UNDERLYING SECURITIES OR INTERESTS IN
UNDERLYING SECURITIES, AND DESCRIBE FULLY THE NATURE AND
EXTENT OF SUCH PROFITS OR BENEFITS.
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THE DEPOSITOR-SPONSOR IS REQUIRED TO REPURCHASE THE
ASSIGNMENTS OF RENTS HELD BY THE TRUSTEE AT THE TERMINATION
OF THE TRUST AT A PRICE EQUAL TO THE LESSER OF THE NET
AMOUNT THE DEPOSITOR-SPONSOR RECEIVES ON SALE OF THE LEASED
PROPERTIES OR THE AMOUNT THE DEPOSITOR-SPONSOR RECEIVED IN
EXCHANGE FOR THE TRANSFER TO THE TRUST OF THE ASSIGNMENT(S)
OF RENTS. IF THE LEASED PROPERTIES APPRECIATE TO A DOLLAR
VALUE IN EXCESS OF THE AMOUNT THE DEPOSITOR-SPONSOR RECEIVED
IN EXCHANGE FOR THE ASSIGNMENT(S) OF RENTS, THEN THE
DEPOSITOR-SPONSOR IS ENTITLED TO RECOVER THE ORGANIZATIONAL
CAPITAL IT INVESTED IN THE TRUST IN ESTABLISHING THE TRUST
AND ORGANIZING THE OFFERING OF UNITS. THE DEPOSITOR-SPONSOR
IS ALSO ENTITLED TO RETAIN AS PROFIT ANY EXCESS PROCEEDS
FROM THE SALE OF THE LEASED PROPERTIES AFTER IT HAS
RECOVERED ITS ORGANIZATIONAL CAPITAL.
(g) STATE THE PERCENTAGE THAT THE AGGREGATE ANNUAL CHARGES AND
DEDUCTIONS FOR MAINTENANCE AND OTHER EXPENSES OF THE TRUST
BEAR TO THE DIVIDEND AND INTEREST INCOME FROM THE TRUST
PROPERTY DURING THE PERIOD COVERED BY THE FINANCIAL
STATEMENTS FILED HEREWITH.
NOT APPLICABLE.
INFORMATION CONCERNING THE OPERATIONS OF THE TRUST.
14. DESCRIBE THE PROCEDURE WITH RESPECT TO APPLICATIONS (IF ANY) AND
THE ISSUANCE AND AUTHENTICATION OF THE TRUST'S SECURITIES, AND
STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
PERTAINING THERETO.
THE DEPOSITOR-SPONSOR INTENDS TO INITIATE A REGISTERED OFFERING TO
THE PUBLIC OF UNITS IN THE TRUST REPRESENTING UNITS OF BENEFICIAL
INTEREST. PROSPECTIVE PURCHASERS OF UNITS WILL ENTER INTO
SUBSCRIPTIONS TO ACQUIRE SAID UNITS BEING ISSUED BY THE TRUST. A
MINIMUM OF $1,400,000 IN PROCEEDS FROM SUBSCRIBED UNITS MUST BE
HELD IN ESCROW BEFORE THE SAID PROCEEDS CAN BE RELEASED TO THE
DEPOSITOR-SPONSOR. ONCE A PURCHASER IS DETERMINED TO BE QUALIFIED,
THE SUBSCRIPTION ACCEPTED AND THE OFFERING PROCEEDS TRANSFERRED TO
THE ESCROW AGENT OR THE DEPOSITOR-SPONSOR AS THE CASE MAY BE, THE
PURCHASER'S NAME IS ENROLLED IN THE RECORDS OF THE TRUST AS A
UNITHOLDER. THEREAFTER, A UNITHOLDER WILL RECEIVE A UNIT
CERTIFICATE WHICH IS MANUALLY EXECUTED BY THE DESIGNATED
SIGNATORIES FOR THE DEPOSITOR-SPONSOR AND THE TRUSTEE.
SECTIONS 2.3 AND 2.4 OF THE INDENTURE SET FORTH THE PROVISIONS FOR
RECORDING ON THE TRUSTEE'S BOOKS THE OWNERSHIP AND UNITS HELD BY
EACH UNITHOLDER BASED ON INFORMATION SUPPLIED TO THE TRUSTEE BY THE
DEPOSITOR-SPONSOR.
15. DESCRIBE THE PROCEDURE WITH RESPECT TO THE RECEIPT OF PAYMENTS FROM
PURCHASERS OF THE TRUST'S SECURITIES AND THE HANDLING OF THE
PROCEEDS
11
<PAGE>
THEREOF, AND STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE
OR AGREEMENT PERTAINING THERETO.
THE DEPOSITOR-SPONSOR RECEIVES, FOLLOWING ONE OR MORE CLOSINGS OF
THE OFFERING OF UNITS IN THE TRUST, NET OFFERING PROCEEDS FROM
QUALIFIED PURCHASERS. THE NET OFFERING PROCEEDS ARE APPLIED BY THE
DEPOSITOR-SPONSOR TO ACQUIRE THE SECURITIES IDENTIFIED IN THE TRUST
INDENTURE, SCHEDULE A. SECTION 2.1, 2.2 AND 2.3 OF THE TRUST
INDENTURE SETS FORTH THE PROVISIONS WHEREBY THE DEPOSITOR-SPONSOR
APPLIES THE NET PROCEEDS OF THE OFFERING TO THE PURCHASE OF
SECURITIES, DEPOSITS SAID SECURITIES WITH THE TRUSTEE, AND THE
TRUSTEE ACCEPTS THE SECURITIES ACQUIRED BY THE DEPOSITOR-SPONSOR ON
BEHALF OF THE TRUST.
16. DESCRIBE THE PROCEDURE WITH RESPECT TO THE ACQUISITION OF
UNDERLYING SECURITIES AND THE DISPOSITION THEREOF, AND STATE THE
SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
PERTAINING THERETO.
THE DEPOSITOR-SPONSOR MUST FIRST PURCHASE LEASED REAL ESTATE THAT
MEETS THE CRITERIA SET FORTH IN THE PROSPECTUS WITH THE NET
PROCEEDS OF THE OFFERING FROM WHICH LEASES THE DEPOSITOR-TRUSTEE
WILL CREATE AND TRANSFER TO THE TRUSTEE ONE OR MORE ASSIGNMENT OF
RENTS. THE DEPOSITOR-SPONSOR WILL USE ANY REMAINING PROCEEDS TO
PURCHASE OTHER SECURITIES AS DEFINED IN THE INDENTURE. UPON
TERMINATION OF THE TRUST, THE DEPOSITOR -SPONSOR MUST REPURCHASE
THE ASSIGNMENT(S) OF RENTS AND WILL DIRECT THE TRUSTEE TO LIQUIDATE
ANY OTHER SECURITIES. SECTION 2.1 OF THE INDENTURE PROVIDES FOR THE
TRANSFER TO THE TRUST IN CONNECTION WITH THE DEPOSITOR-SPONSOR'S
APPLICATION OF THE NET PROCEEDS OF THE OFFERING, THE ASSIGNMENT(S)
OF RENTS AND THE OTHER SECURITIES, IF APPLICABLE. SECTION 10.2 OF
THE INDENTURE PROVIDES FOR THE DEPOSITOR-SPONSOR'S REPURCHASE OF
THE ASSIGNMENT(S) OF RENTS FROM THE TRUST AND THE LIQUIDATION OF
ANY OTHER SECURITIES HELD IN THE TRUST.
17.
(a) DESCRIBE THE PROCEDURE WITH RESPECT TO WITHDRAWAL OR
REDEMPTION BY SECURITY HOLDERS.
PRIOR TO TERMINATION OF THE TRUST, THERE IS NO RIGHT OF A
UNITHOLDER TO RECEIVE FUNDS FROM THE TRUST IN EXCHANGE FOR
HIS/OR HER UNIT(S) OR TO REQUIRE ANY PARTY TO ACQUIRE HIS OR
HER UNIT(S).
A UNITHOLDER MAY REQUEST A REDEMPTION OF HIS OR HER UNIT(S)
BY THE TRUST UPON MAKING THE REQUEST IN WRITING TO THE
DEPOSITOR-SPONSOR WHICH MAY, IN ITS SOLE DISCRETION,
AUTHORIZE THE TRUSTEE TO REDEEM THE UNIT(S) PER THE
UNITHOLDER'S REQUEST.
(b) FURNISH THE NAMES OF ANY PERSONS WHO MAY REDEEM OR
REPURCHASE, OR ARE REQUIRED TO REDEEM OR REPURCHASE, THE
TRUST'S
12
<PAGE>
SECURITIES OR UNDERLYING SECURITIES FROM SECURITY HOLDERS,
AND THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT PERTAINING THERETO.
THE TRUSTEE, CITIZENS FIRST SAVINGS BANK, SHALL UPON
AUTHORIZATION FROM THE DEPOSITOR-SPONSOR, GENESIS FINANCIAL
GROUP, INC. REDEEM UNITS. NO PERSON IS REQUIRED TO REDEEM OR
REPURCHASE THE TRUST'S UNITS. THE DEPOSITOR-SPONSOR IS
REQUIRED TO REPURCHASE THE ASSIGNMENT(S) OF RENTS HELD BY
THE TRUST UPON THE TERMINATION OF THE TRUST. SECTION 10.2 OF
THE INDENTURE REQUIRES THE DEPOSITOR-SPONSOR TO REPURCHASE
THE ASSIGNMENT(S) OF RENTS AT A PRICE WHICH IS THE LOWER OF
THE NET AMOUNT THE DEPOSITOR-SPONSOR RECEIVED FROM THE SALE
OF THE LEASED REAL ESTATE FROM WHICH THE ASSIGNMENT(S) OF
RENTS WERE CREATED OR THE AMOUNT OF NET PROCEEDS FROM THE
OFFERING RECEIVED BY THE DEPOSITOR-SPONSOR AS CONSIDERATION
FOR THE ASSIGNMENT(S) OF RENTS.
(c) INDICATE WHETHER REPURCHASED OR REDEEMED SECURITIES WILL BE
CANCELLED OR MAY BE RESOLD.
THE ACTUAL UNITS THAT ARE REDEEMED WILL BE CANCELLED BY THE
TRUSTEE. HOWEVER, THE INDENTURE (SECTION 5.3) GRANTS THE
DEPOSITOR-SPONSOR THE RIGHT TO SELL ADDITIONAL UNITS TO
REPLACE THOSE THAT WERE REDEEMED.
18.
(a) DESCRIBE THE PROCEDURE WITH RESPECT TO THE RECEIPT, CUSTODY
AND DISPOSITION OF THE INCOME AND OTHER DISTRIBUTABLE FUNDS
OF THE TRUST, AND STATE THE SUBSTANCE OF THE PROVISIONS OF
ANY INDENTURE OR AGREEMENT PERTAINING THERETO.
THE TRUSTEE RECEIVES MONTHLY FROM THE DEPOSITOR-SPONSOR
RENTS COLLECTED BY AN AFFILIATE OF THE DEPOSITOR-SPONSOR
PURSUANT TO THE ASSIGNMENT(S) OF RENTS. THE TRUSTEE SHALL
COLLECT IN AGGREGATE MONTHLY ALL EARNINGS PAID FOR THAT
MONTH WITH RESPECT TO THE OTHER SECURITIES NOT COUNTING ANY
MONIES RECEIVED FROM THE SALE OF SECURITIES. THE TRUSTEE
WILL HOLD SAID RENTS AND EARNINGS IN AN INCOME ACCOUNT
ESTABLISHED BY THE TRUSTEE. THE TRUSTEE, ON INSTRUCTIONS
FROM THE DEPOSITOR-SPONSOR, WILL WITHDRAW FROM THE INCOME
ACCOUNT SUCH FUNDS AS ARE INSTRUCTED TO BE PLACED INTO A
RESERVE ACCOUNT.
NET INCOME FROM THE SALE OF SECURITIES IS DEPOSITED INTO A
CAPITAL ACCOUNT MAINTAINED BY THE TRUSTEE.
THE TRUSTEE, ON A QUARTERLY BASIS, WILL WITHDRAW FROM THE
INCOME ACCOUNT OR, IF NECESSARY, THE CAPITAL ACCOUNT, FUNDS
REQUIRED TO PAY ITS FEE AND THE
13
<PAGE>
FEES FOR COUNSEL. THE TRUSTEE SHALL ALSO, UPON WRITTEN
NOTICE FROM THE DEPOSITOR-SPONSOR, DISTRIBUTE FUNDS TO THE
UNITHOLDERS.
SECURITIES 3.2 AND 3.5 OF THE INDENTURE PROVIDE FOR THE
COLLECTION OF RENTS AND EARNINGS INTO AN INCOME ACCOUNT AND
FOR THE DISTRIBUTIONS OF FUNDS ON A PERIODIC BASIS TO THE
UNITHOLDERS ACCORDING TO THE INSTRUCTIONS OF THE
DEPOSITOR-SPONSOR.
(b) DESCRIBE THE PROCEDURE, IF ANY, WITH RESPECT TO THE
REINVESTMENT OF DISTRIBUTIONS TO SECURITY HOLDERS AND STATE
THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT PERTAINING THERETO.
THE INDENTURE HAS NO PROCEDURE ESTABLISHED FOR THE
REINVESTMENT INTO THE TRUST FUND OF ANY DISTRIBUTIONS TO THE
UNITHOLDERS.
(c) IF ANY RESERVES OR SPECIAL FUNDS ARE CREATED OUT OF INCOME
OR PRINCIPAL, STATE WITH RESPECT TO EACH SUCH RESERVE OR
FUND THE PURPOSE AND ULTIMATE DISPOSITION THEREOF, AND
DESCRIBE THE MANNER OF HANDLING OF SAME.
RESERVES SHALL BE ESTABLISHED BY TRUSTEE UPON WRITTEN
INSTRUCTIONS OF THE DEPOSITOR-SPONSOR, WITH THE FUNDS COMING
FROM EITHER THE INCOME FUND OR THE CAPITAL FUND IN
ACCORDANCE WITH SAID INSTRUCTIONS. IF IT IS LATER DETERMINED
THAT CERTAIN FUNDS IN THE RESERVE ACCOUNT ARE NO LONGER
NEEDED FOR THE PURPOSE ORIGINALLY INTENDED, THE
DEPOSITOR-SPONSOR WILL THEN INSTRUCT THE TRUSTEE TO RETURN
THOSE FUNDS TO THE SAME ACCOUNT FROM WHICH THEY WERE
WITHDRAWN OR TO DISTRIBUTE THEM TO THE UNITHOLDERS IF THE
TRUST IS TERMINATED.
(d) SUBMIT A SCHEDULE SHOWING THE PERIODIC AND SPECIAL
DISTRIBUTIONS WHICH HAVE BEEN MADE TO SECURITY HOLDERS
DURING THE THREE YEARS COVERED BY THE FINANCIAL STATEMENTS
FILED HEREWITH. STATE FOR EACH SUCH DISTRIBUTION THE
AGGREGATE AMOUNT AND AMOUNT PER SHARE. IF DISTRIBUTIONS FROM
SOURCES OTHER THAN CURRENT INCOME HAVE BEEN MADE, IDENTIFY
EACH SUCH OTHER SOURCE AND INDICATE WHETHER SUCH
DISTRIBUTION REPRESENTS THE RETURN OF PRINCIPAL PAYMENTS TO
SECURITY HOLDERS. IF PAYMENTS OTHER THAN CASH WERE MADE,
DESCRIBE THE NATURE THEREOF THE ACCOUNT CHARGED, AND THE
BASIS OF DETERMINING THE AMOUNT OF SUCH CHARGE.
NOT APPLICABLE. THE TRUST WAS NOT PREVIOUSLY IN EXISTENCE.
19. DESCRIBE THE PROCEDURE WITH RESPECT TO THE KEEPING OF RECORDS AND
ACCOUNTS OF THE TRUST, THE MAKING OF REPORTS AND THE FURNISHING OF
INFORMATION TO SECURITY HOLDERS, AND THE SUBSTANCE OF THE
PROVISIONS OF ANY INDENTURE OR AGREEMENT PERTAINING THERETO.
14
<PAGE>
THE TRUSTEE MUST ESTABLISH AT LEAST TWO ACCOUNTS -- AN INCOME
ACCOUNT TO HOLD NET RENTS AND EARNINGS GENERATED BY SECURITIES AND
A CAPITAL ACCOUNT TO HOLD FUNDS RECEIVED FROM THE SALE OF
SECURITIES OR OTHER CAPITAL TRANSACTIONS. UPON INSTRUCTIONS FROM
THE DEPOSITOR-SPONSOR, THE TRUSTEE SHALL ALSO ESTABLISH A RESERVE
ACCOUNT TO BE FUNDED WITH MONIES FROM ONE OR BOTH OF THE OTHER
ACCOUNTS. THE TRUSTEE IS RESPONSIBLE FOR KEEPING RECORDS OF ALL
FUNDS DEPOSITED INTO AND WITHDRAWN FROM THESE ACCOUNTS WITH
DISTRIBUTIONS TO UNITHOLDERS FROM THE INCOME, CAPITAL OR RESERVE
ACCOUNTS, THE TRUSTEE MUST PREPARE AND DISTRIBUTE TO THE RESPECTIVE
UNITHOLDERS A STATEMENT EXPRESSING THE DISTRIBUTION AS A DOLLAR
AMOUNT PER UNIT. ANNUALLY, THE TRUSTEE MUST PREPARE A STATEMENT
BROKEN DOWN BY INCOME AND CAPITAL ACCOUNT SETTING FORTH ALL
ACCOUNTS RECEIVED AND DISTRIBUTED AS WELL AS THE REMAINING ACCOUNT
BALANCE. THE STATEMENT ALSO SETS FORTH A LIST OF THE SECURITIES
HELD AT THE END OF THE YEAR, THE UNITS OUTSTANDING AND THE TOTAL
AMOUNT DISTRIBUTED TO UNITHOLDERS. SECTIONS 3.2, 3.3, 3.4 AND 3.6
OF THE INDENTURE PROVIDE FOR THE PROCEDURE FOR ESTABLISHING
ACCOUNTS BY THE TRUSTEE, THE MAKING OF REPORTS AND THE FURNISHING
OF INFORMATION BY THE TRUSTEE TO THE UNITHOLDERS.
20. STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
CONCERNING THE TRUST WITH RESPECT TO THE FOLLOWING:
(a) AMENDMENTS TO SUCH INDENTURE OR AGREEMENT.
SECTION 10.1 OF THE INDENTURE PROVIDES THAT AMENDMENTS CAN
BE MADE TO THE INDENTURE (1) WITHOUT THE CONSENT OF
UNITHOLDERS TO CURE AMBIGUITIES OR MAKE CORRECTIONS; OR (2)
WITH THE CONSENT OF MORE THAN 50% OF THE UNITS TO MAKE OTHER
CHANGES, EXCEPT CHANGES ALTERING THE RIGHTS BETWEEN
UNITHOLDERS CHANGING THE TRUST'S BUSINESS INVESTMENT
ACTIVITIES OR ADVERSELY AFFECTING THE TRUST'S STATUS FOR
FEDERAL INCOME TAX PURPOSES WHICH REQUIRE THE CONSENT OF ALL
UNITHOLDERS.
(b) THE EXTENSION OR TERMINATION OF SUCH INDENTURE OR AGREEMENT.
SECTION 10.2 OF THE INDENTURE SETS FORTH THE CIRCUMSTANCES
UNDER WHICH THE TRUST SHALL TERMINATE AND THE ACTIONS TO BE
TAKEN BY THE DEPOSITOR-SPONSOR AND THE TRUSTEE IN THE EVENT
OF TERMINATION. THE TRUST WILL TERMINATE ON THE MANDATORY
TERMINATION DATE OR BY A VOTE OF ALL THE UNITHOLDERS TO
TERMINATE IT OR BY COURT ORDER OR BY INVOLUNTARY BANKRUPTCY.
THEREAFTER, THE SECURITIES OF THE TRUST MUST BE SOLD, EITHER
TO THE DEPOSITOR-SPONSOR IN THE CASE OF THE ASSIGNMENT(S) OF
RENTS OR ON THE MARKET IN HE CASE OF OTHER SECURITIES.
THERE IS NO PROVISION IN THE INDENTURE FOR THE EXTENSION OF
THE TRUST BEYOND THE MANDATORY TERMINATION DATE.
15
<PAGE>
(c) THE REMOVAL OR RESIGNATION OF THE TRUSTEE OR CUSTODIAN, OR
THE FAILURE OF THE TRUSTEE OR CUSTODIAN TO PERFORM ITS
DUTIES, OBLIGATIONS AND FUNCTIONS.
THE TRUSTEE MAY BE REMOVED, WITH OR WITHOUT CAUSE AT ANY
TIME BY THE DEPOSITOR-SPONSOR WITH NOTICE TO ALL
UNITHOLDERS. THE TRUSTEE MAY RESIGN AT ANY TIME ON 60-DAYS
PRIOR WRITTEN NOTICE TO ALL UNITHOLDERS. A TRUSTEE WHICH
FAILS TO PERFORM ITS DUTIES, OBLIGATIONS OR FUNCTIONS IS
EXCUSED FROM LIABILITY EXCEPT IN THE CASE OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) THE APPOINTMENT OF A SUCCESSOR TRUSTEE AND THE PROCEDURE IF
A SUCCESSOR TRUSTEE IS NOT APPOINTED.
IN THE EVENT OF THE REMOVAL OR RESIGNATION OF A TRUSTEE, THE
SUCCESSOR IS APPOINTED BY THE DEPOSITOR-SPONSOR. HOWEVER, IF
NO SUCCESSOR IS APPOINTED AFTER 30 DAYS, THE RETIRING
TRUSTEE MAY APPLY TO A COURT FOR THE APPOINTMENT OF A
SUCCESSOR TRUSTEE. IF NO SUCCESSOR IS APPOINTED THROUGH THIS
MECHANISM, THE UNITHOLDERS MAY VOTE TO TERMINATE THE TRUST.
(e) THE REMOVAL OR RESIGNATION OF THE DEPOSITOR, OR THE FAILURE
OF THE DEPOSITOR TO PERFORM ITS DUTIES, OBLIGATIONS AND
FUNCTIONS.
IN THE EVENT THAT THE DEPOSITOR-SPONSOR FAILS TO PERFORM ITS
DUTIES, OBLIGATIONS AND FUNCTIONS UNDER THE INDENTURE DUE TO
NEGLIGENCE, WILLFUL MISFEASANCE OR BAD FAITH OR BECOMES
BANKRUPT OR INSOLVENT, IT CAN BE REMOVED BY A VOTE OF MORE
THAN 50% OF THE UNITS. THE DEPOSITOR-SPONSOR IS NOT LIABLE
FOR DETERMINATIONS MADE IN GOOD FAITH OR ERRORS IN JUDGMENT.
(f) THE APPOINTMENT OF A SUCCESSOR DEPOSITOR AND THE PROCEDURE
IF A SUCCESSOR DEPOSITOR IS NOT APPOINTED.
HOLDERS OF MORE THAN 50% OF THE UNITS MAY VOTE TO APPOINT A
SUCCESSOR DEPOSITOR-SPONSOR. THE SAID HOLDERS MAY VOTE TO
TERMINATE THE TRUST IN LIEU OF SELECTING A SUCCESSOR
DEPOSITOR-SPONSOR.
21.
(a) STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WITH RESPECT TO LOANS TO SECURITY HOLDERS.
NO PROVISION FOR LOANS TO UNITHOLDERS IS PROVIDED IN THE
INDENTURE.
(b) FURNISH A BRIEF DESCRIPTION OF ANY PROCEDURE OR ARRANGEMENT
BY WHICH LOANS ARE MADE AVAILABLE TO SECURITY HOLDERS BY THE
DEPOSITOR, PRINCIPAL UNDERWRITER, TRUSTEE OR CUSTODIAN, OR
ANY
16
<PAGE>
AFFILIATED PERSON OF THE FOREGOING. THE FOLLOWING ITEMS
SHOULD BE COVERED:
(1) THE NAME OF EACH PERSON WHO MAKES SUCH AGREEMENTS OR
ARRANGEMENTS WITH SECURITY HOLDERS.
(2) THE RATE OF INTEREST PAYABLE ON SUCH LOANS.
(3) THE PERIOD FOR WHICH LOANS MAY BE MADE.
(4) COSTS OR CHARGES FOR DEFAULT IN REPAYMENT AT
MATURITY.
(5) OTHER MATERIAL PROVISIONS OF THE AGREEMENTS OR
ARRANGEMENT.
NOT APPLICABLE.
(c) IF SUCH LOANS ARE MADE, FURNISH THE AGGREGATE AMOUNT OF
LOANS OUTSTANDING AT THE END OF THE LAST FISCAL YEAR, THE
AMOUNT OF INTEREST COLLECTED DURING THE LAST FISCAL YEAR
ALLOCATED TO THE DEPOSITOR, PRINCIPAL UNDERWRITER, TRUSTEE
OR CUSTODIAN, OR AFFILIATED PERSON OF THE FOREGOING, AND THE
AGGREGATE AMOUNT OF LOANS IN DEFAULT AT THE END OF THE LAST
FISCAL YEAR COVERED BY FINANCIAL STATEMENTS FILED HEREWITH.
NOT APPLICABLE.
22. STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
WITH RESPECT TO LIMITATIONS ON THE LIABILITIES OF THE DEPOSITOR,
TRUSTEE OR CUSTODIAN, OR ANY OTHER PARTY TO SUCH INDENTURE OR
AGREEMENT.
THE DEPOSITOR-SPONSOR IS NOT LIABLE TO UNITHOLDERS FOR TAKING ANY
ACTION IN GOOD FAITH PURSUANT TO THE INDENTURE OR FOR ERRORS IN
JUDGMENT EXCEPT IN THE CASE OF WILLFUL MISFEASANCE, BAD FAITH,
NEGLIGENCE OR DISREGARD OF ITS DUTIES UNDER THE INDENTURE. THE
DEPOSITOR-SPONSOR MAY RELY IN GOOD FAITH ON THE GENUINENESS AND
VALIDITY OF ANY DOCUMENT SUBMITTED TO IT BY THE TRUSTEE OR ANY
OTHER PARTY PURSUANT TO THE INDENTURE AND ITS DUTIES.
THE TRUSTEE IS NOT LIABLE FOR RELYING ON ANY DOCUMENT OR TAKING ANY
ACTION IN GOOD FAITH, AS LONG AS THERE IS NO GROSS NEGLIGENCE OR
WILLFUL MISFEASANCE BY THE TRUSTEE.
NO OTHER PARTIES HAVE THEIR LIABILITY LIMITED BY THE INDENTURE.
23. DESCRIBE ANY BONDING ARRANGEMENT FOR OFFICERS, DIRECTORS, PARTNERS
OR EMPLOYEES OF THE DEPOSITOR OR PRINCIPAL UNDERWRITER OF THE
TRUST, INCLUDING THE AMOUNT OF COVERAGE AND THE TYPE OF BOND.
17
<PAGE>
THE INDENTURE DOES NOT PROVIDE FOR ANY BONDING ARRANGEMENTS FOR ANY
PARTIES.
24. STATE THE SUBSTANCE OF ANY OTHER MATERIAL PROVISIONS OF ANY
INDENTURE OR AGREEMENT CONCERNING THE TRUST OR ITS SECURITIES AND A
DESCRIPTION OF ANY OTHER MATERIAL FUNCTIONS OR DUTIES OF THE
DEPOSITOR, TRUSTEE OR CUSTODIAN NOT STATED IN ITEM 10, OR ITEMS 14
TO 23 INCLUSIVE.
THE INDENTURE PROVIDES THAT THE SECURITIES HELD BY THE TRUSTEE MUST
BE EVALUATED BY THE DEPOSITOR-SPONSOR WHEN THEY ARE DEPOSITED WITH
THE TRUSTEE AND THEREAFTER AT THE END OF EACH CALENDAR YEAR. IF THE
SECURITIES CARRY A PUBLIC MARKET PRICE, VALUATION IS THE CURRENT
ASKED PRICE. OTHER SECURITIES WITH NO PUBLIC MARKET PRICE,
SPECIFICALLY THE ASSIGNMENT(S) OF RENTS, ARE VALUED AT THE
UNITHOLDERS' TOTAL INVESTMENT IN THE PURCHASE COST OF SAID
ASSIGNMENT(S) OF RENTS LESS ANY TRANSACTION EXPENSES. THE
DEPOSITOR-SPONSOR WILL USE THIS VALUE UNTIL SUCH TIME AS IT
DETERMINES THAT A NEW VALUE SHOULD BE USED BASED ON CHANGED MARKET
OR ECONOMIC CONDITIONS, BREACHED LEASE TERMS OR THE LIKE, IN WHICH
CASE THE DEPOSITOR-SPONSOR SHALL OBTAIN THE ASSIGNMENT OF RENTS TO
BE PAID FOR BY DEPOSITOR-SPONSOR WITHOUT REIMBURSEMENT FROM THE
TRUST.
III. ORGANIZATION, PERSONNEL, AND AFFILIATED PERSONS OF DEPOSITOR.
ORGANIZATION AND OPERATIONS OF DEPOSITOR.
25. STATE THE FORM OF ORGANIZATION OF THE DEPOSITOR OF THE TRUST, THE
NAME OF THE STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF WHICH
THE DEPOSITOR WAS ORGANIZED, AND THE DATE OF ORGANIZATION.
THE DEPOSITOR-SPONSOR IS A MICHIGAN CORPORATION WHICH WAS
INCORPORATED ON JUNE 23, 1994.
26.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ALL FEES
RECEIVED BY THE DEPOSITOR OF THE TRUST IN CONNECTION WITH
THE EXERCISE OF ANY FUNCTIONS OR DUTIES CONCERNING
SECURITIES OF THE TRUST DURING THE PERIOD COVERED BY THE
FINANCIAL STATEMENTS FILED HEREWITH:
NOT APPLICABLE.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ANY FEE OR
ANY PARTICIPATION IN FEES RECEIVED BY THE DEPOSITOR FROM ANY
UNDERLYING INVESTMENT COMPANY, OR ANY AFFILIATED PERSON OR
INVESTMENT ADVISER OF SUCH COMPANY:
18
<PAGE>
(1) THE NATURE OF SUCH FEE OR PARTICIPATION.
(2) THE NAME OF THE PERSON MAKING PAYMENT.
(3) THE NATURE OF THE SERVICES RENDERED IN CONSIDERATION
FOR SUCH FEE OR PARTICIPATION.
(4) THE AGGREGATE AMOUNT RECEIVED DURING THE LAST FISCAL
YEAR COVERED BY THE FINANCIAL STATEMENTS FILED
HEREWITH.
NOT APPLICABLE.
27. DESCRIBE THE GENERAL CHARACTER OF THE BUSINESS ENGAGED IN BY THE
DEPOSITOR INCLUDING A STATEMENT AS TO ANY BUSINESS OTHER THAN THAT
OF DEPOSITOR OF THE TRUST. IF THE DEPOSITOR ACTS OR HAS ACTED IN
ANY CAPACITY WITH RESPECT TO ANY INVESTMENT COMPANY OR COMPANIES
OTHER THAN THE TRUST, STATE THE NAME OR NAMES OF SUCH COMPANY OR
COMPANIES, THEIR RELATIONSHIP, IF ANY, TO THE TRUST, AND THE NATURE
OF THE DEPOSITOR'S ACTIVITIES THEREWITH. IF THE DEPOSITOR HAS
CEASED TO ACT IN SUCH NAMED CAPACITY, STATE THE DATE OF A
CIRCUMSTANCE SURROUNDING SUCH CESSATION.
THE DEPOSITOR-SPONSOR, GENESIS FINANCIAL GROUP, INC. ("GENESIS")
HAS BEEN ENGAGED IN THE BUSINESS OF ORGANIZING PRIVATELY PLACED
UNIT INVESTMENT TRUSTS IN WHICH THE UNDERLYING INVESTMENT IS ONE OR
MORE ASSIGNMENTS OF RENTS OF TRIPLE-NET LEASES FOR PROPERTIES
PURCHASED BY GENESIS FINANCIAL GROUP USING FUNDS SUPPLIED BY THE
INVESTORS IN THE RESPECTIVE UNIT TRUSTS. THE BUSINESS OF GENESIS
INVOLVES IDENTIFYING SUITABLE SINGLE USER PROPERTIES AND ACQUIRING
THOSE PROPERTIES SUBJECT TO TRIPLE-NET LEASES FROM LARGE CORPORATE
OR GOVERNMENT TENANTS. IN CONNECTION WITH ACQUIRING THE PROPERTY,
GENESIS MAKES AN ASSIGNMENT OF THE RENTS FROM THE LEASED PROPERTY
TO A UNIT TRUST WHICH IN EXCHANGE TRANSFERS TO GENESIS THE NET
PROCEEDS FROM THE SALE OF UNITS IN THE UNIT TRUST (ALL SALES
PREVIOUS WERE PRIVATE PLACEMENTS). THE DEPOSITOR-SPONSOR HAS NOT AT
ANY TIME ACTED IN ANY CAPACITY WITH RESPECT TO ANY INVESTMENT
COMPANY OTHER THAN THE TRUST.
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR.
28.
(a) FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING
INFORMATION WITH RESPECT TO THE DEPOSITOR OF THE TRUST, WITH RESPECT TO
EACH OFFICER, DIRECTOR, OR PARTNER OF THE DEPOSITOR, AND WITH RESPECT
TO EACH NATURAL PERSON DIRECTLY OR INDIRECTLY OWNING, CONTROLLING OR
HOLDING WITH POWER TO VOTE FIVE PERCENT OR MORE OF THE OUTSTANDING
VOTING SECURITIES OF THE DEPOSITOR:
AS AT FEBRUARY 1, 2000
(Date)
19
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
NAME AND PRINCIPAL NATURE OF RELATIONSHIP OR AFFILIATION
BUSINESS ADDRESS WITH DEPOSITOR OF THE TRUST
-----------------------------------------------------------------------------------------
<S> <C>
D. JAMES BARTON PRESIDENT, TREASURER, AND
ONE OAKLAND TOWNE SQUARE DIRECTOR
14TH FLOOR, SOUTHFIELD,
MICHIGAN 48076
GREGORY S. BARTON VICE PRESIDENT, SECRETARY
ONE OAKLAND TOWNE SQUARE AND DIRECTOR
14TH FLOOR, SOUTHFIELD,
MICHIGAN 48076
-----------------------------------------------------------------------------------------
<CAPTION>
OWNERSHIP OF ALL SECURITIES OF THE DEPOSITOR-SPONSOR.
-----------------------------------------------------------------------------------------
SECURITIES OWNED OF SECURITIES OWNED OF SECURITIES OWNED
RECORD WHICH ARE RECORD WHICH ARE BENEFICIALLY WHICH
ALSO OWNED NOT OWNED ARE NOT OWNED OF
BENEFICIALLY BENEFICIALLY RECORD
TITLE
OF PERCENT PERCENT PERCENT
CLASS AMOUNT OF CLASS AMOUNT OF CLASS AMOUNT OF CLASS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON - - 550 55% 550 55%
STOCK - - 450 45% 450 45%
-----------------------------------------------------------------------------------------
<CAPTION>
OWNERSHIP OF ALL SECURITIES OF THE TRUST
-----------------------------------------------------------------------------------------
GENESIS FINANCIAL GROUP, INC.
SECURITIES OWNED OF SECURITIES OWNED OF SECURITIES OWNED
RECORD WHICH ARE RECORD WHICH ARE BENEFICIALLY WHICH
ALSO OWNED NOT OWNED ARE NOT OWNED OF
BENEFICIALLY BENEFICIALLY RECORD
-----------------------------------------------------------------------------------------
TITLE
OF PERCENT PERCENT PERCENT
CLASS AMOUNT OF CLASS AMOUNT OF CLASS AMOUNT OF CLASS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UNIT 20 100% - NONE - NONE
20
<PAGE>
<CAPTION>
-----------------------------------------------------------------------------------------
OTHER COMPANIES OF WHICH EACH OF THE PERSONS(1) NAMES ABOVE
IS PRESENTLY AN OFFICER, DIRECTOR OR PARTNER
-----------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS
ADDRESS OF SUCH OTHER NATURE OF BUSINESS OF NATURE OF AFFILIATION WITH
COMPANY SUCH OTHER COMPANY SUCH OTHER COMPANY
-----------------------------------------------------------------------------------------
<S> <C> <C>
KEYSTONE INVESTMENT CORP. REAL ESTATE OWNED 100% BY D.
AND ALPHA SERVICES CORP. INVESTMENTS JAMES BARTON
ONE OAKLAND TOWNE SQUARE REAL ESTATE
- 14TH FLOOR, SOUTHFIELD, MANAGEMENT
MICHIGAN 48076
</TABLE>
(b) FURNISH A BRIEF STATEMENT OF THE BUSINESS EXPERIENCE DURING
THE LAST FIVE YEARS OF EACH OFFICER, DIRECTOR OR PARTNER OF
THE DEPOSITOR.
D. JAMES BARTON AND HIS SON GREGG S. BARTON FORMED GENESIS
FINANCIAL GROUP, INC. ON JUNE 23, 1994. THE BARTONS
CO-MANAGE THE COMPANY. GENESIS'S MAIN LINE OF BUSINESS IS
ORIGINATING, SYNDICATING, AND DEALING IN SINGLE TENANT
INCOME PRODUCING REAL ESTATE THROUGHOUT THE COUNTRY. TENANTS
RANGE FROM FEDERAL/STATE GOVERNMENT AGENCIES TO FORTUNE 500
CORPORATIONS. GENESIS FINANCIAL GROUP, INC. OWNS OVER
400,000 SQ. FT OF LEASE-ABLE SPACE WITH AN ASSET VALUE OF
$30 MILLION.
COMPANIES OWNING SECURITIES OF DEPOSITOR.
29. FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION
WITH RESPECT TO EACH COMPANY WHICH DIRECTLY OR INDIRECTLY OWNS,
CONTROLS OR HOLDS WITH POWER TO VOTE FIVE PERCENT OR MORE OF THE
OUTSTANDING VOTING SECURITIES OF THE DEPOSITOR:
NOT APPLICABLE.
CONTROLLING PERSONS.
30. FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION
WITH RESPECT TO ANY PERSON, OTHER THAN THOSE COVERED BY ITEMS 28,
29 AND 42 WHO DIRECTLY OR INDIRECTLY CONTROLS THE DEPOSITOR.
("CONTROL" FOR THE PURPOSES OF THIS ITEM MEANS "CONTROL" AS DEFINED
IN SECTION 2(a)(9) OF THE ACT, BUT WITHOUT REFERENCE TO THE
PRESUMPTION CREATED THEREIN.) (IF NO SUCH OTHER PERSON CONTROLS THE
DEPOSITOR, INDICATE "NONE."):
AS AT FEBRUARY 1, 2000
(Date)
- --------------------------
(1) Exclude persons whose affiliation with the depositor arises solely by virtue
of stock ownership (Section 2(a)(3)(A) of the Act).
21
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
NAME AND PRINCIPAL NATURE OF PRINCIPAL BRIEF DESCRIPTION OF
BUSINESS ADDRESS BUSINESS OF SUCH PERSON BASIS OF CONTROL
-----------------------------------------------------------------------------------------
<S> <C> <C>
NONE.
</TABLE>
COMPENSATION OF OFFICERS AND DIRECTORS OF DEPOSITOR.
COMPENSATION OF OFFICERS OF DEPOSITOR.
31. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE REMUNERATION
FOR SERVICES PAID BY THE DEPOSITOR DURING THE LAST FISCAL YEAR
COVERED BY FINANCIAL STATEMENTS FILED HEREWITH:
(a) DIRECTLY TO EACH OF THE OFFICERS OR PARTNERS OF THE
DEPOSITOR DIRECTLY RECEIVING THE THREE HIGHEST AMOUNTS OF
REMUNERATION:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
CAPACITY IN WHICH AMOUNT OF
RECEIVED AND NATURE OF REMUNERATION PAID
NAME OF PERSON SERVICES
-----------------------------------------------------------------------------------
<S> <C> <C>
D. JAMES BARTON PRESIDENT NONE
GREGG S. BARTON ACQUISITIONS $80,400.99
</TABLE>
(b) DIRECTLY TO ALL OFFICERS OR PARTNERS OF THE DEPOSITOR AS A
GROUP EXCLUSIVE OF PERSONS WHOSE REMUNERATION IS INCLUDED
UNDER ITEM 31(a), STATING SEPARATELY THE AGGREGATE AMOUNT
PAID BY THE DEPOSITOR ITSELF AND THE AGGREGATE AMOUNT PAID
BY ALL THE SUBSIDIARIES;
NONE.
(c) INDIRECTLY OR THROUGH SUBSIDIARIES TO EACH OF THE OFFICERS
OR PARTNERS OF THE DEPOSITOR:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
NAME OF RELATIONSHIP OF NAME OF COMPANY RELATIONSHIP OF
PERSON PERSON TO RECEIVING PERSON TO
DEPOSITOR REMUNERATION COMPANY
RECEIVING
REMUNERATION
<S> <C> <C> <C>
D. JAMES BARTON PRESIDENT D. JAMES BARTON, P.C. PRESIDENT
D. JAMES BARTON PRESIDENT ALPHA SERVICES CORP. PRESIDENT
D. JAMES BARTON PRESIDENT KEYSTONE INVESTMENT CORP. PRINCIPAL
-----------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
NATURE OF SERVICES NAME OF EACH AMOUNT PAID BY EACH
PAYING COMPANY SUCH COMPANY
<S> <C> <C>
LEGAL FEES DEPOSITOR-SPONSOR $40,000
PROPERTY MANAGEMENT ALPHA SERVICES CORP. $11,800
LEGAL FEES KEYSTONE INVESTMENT CORP. $10,000
-----------------------------------------------------------------------------------
</TABLE>
COMPENSATION OF DIRECTORS.
32. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE REMUNERATION
FOR SERVICES, EXCLUSIVE OF REMUNERATION REPORTED UNDER ITEM 31,
PAID BY THE DEPOSITOR DURING THE LAST FISCAL YEAR COVERED BY
FINANCIAL STATEMENTS FILED HEREWITH:
(a) THE AGGREGATE DIRECT REMUNERATION TO DIRECTORS: NONE.
(b) INDIRECTLY OR THROUGH SUBSIDIARIES TO DIRECTORS: NONE.
COMPENSATION TO EMPLOYEES.
33.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE
AGGREGATE AMOUNT OF REMUNERATION FOR SERVICES OF ALL
EMPLOYEES OF THE DEPOSITOR (EXCLUSIVE OF PERSONS WHOSE
REMUNERATION IS REPORTED IN ITEMS 31 AND 32) WHO RECEIVED
REMUNERATION IN EXCESS OF $10,000 DURING THE LAST FISCAL
YEAR COVERED BY FINANCIAL STATEMENTS FILED HEREWITH FROM THE
DEPOSITOR AND ANY OF ITS SUBSIDIARIES:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
AMOUNT OF
CAPACITY IN WHICH NAME OF EACH REMUNERATION
NAME OF REMUNERATION COMPANY PAYING PAID BY EACH
PERSON WAS RECEIVED REMUNERATION SUCH COMPANY
<S> <C> <C> <C>
WILLIAM THOMAS FINANCIAL ANALYST DEPOSITOR-SPONSOR $37,683.60
VALERIE POPOFSKI OFFICE MANAGER DEPOSITOR-SPONSOR $23,920.00
-----------------------------------------------------------------------------------
</TABLE>
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE
REMUNERATION FOR SERVICES PAID DIRECTLY DURING THE LAST
FISCAL YEAR COVERED BY FINANCIAL STATEMENTS FILED HEREWITH
TO THE FOLLOWING CLASSES OF PERSONS (EXCLUSIVE OF THOSE
PERSONS COVERED BY ITEM 33(a)): (1) SALES MANAGERS, BRANCH
MANAGERS, DISTRICT MANAGERS, AND OTHER PERSONS SUPERVISING
THE SALE OF REGISTRANT'S SECURITIES; (2) SALESMEN, SALES
AGENTS, CANVASSERS, AND OTHER PERSONS MAKING SOLICITATIONS
BUT NOT IN A SUPERVISORY CAPACITY; (3) ADMINISTRATIVE AND
CLERICAL EMPLOYEES; AND (4) OTHERS (SPECIFY). IF A PERSON IS
23
<PAGE>
EMPLOYED IN MORE THAN ONE CAPACITY, CLASSIFY ACCORDING TO
PREDOMINANT TYPE OF WORK:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
CLASS OF PERSONS NUMBER AGGREGATE REMUNERATION
-----------------------------------------------------------------------------------
<S> <C> <C>
(2) TO BE SUPPLIED $318,845.
</TABLE>
COMPENSATION TO OTHER PERSONS.
34. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE AGGREGATE
AMOUNT OF COMPENSATION FOR SERVICES PAID ANY PERSON (EXCLUSIVE OF
PERSONS WHOSE REMUNERATION IS REPORTED IN ITEMS 31, 32 AND 33),
WHOSE AGGREGATE COMPENSATION IN CONNECTION WITH SERVICES RENDERED
WITH RESPECT TO THE TRUST IN ALL CAPACITIES EXCEEDED $10,000 DURING
THE LAST FISCAL YEAR COVERED BY FINANCIAL STATEMENTS FILED HEREWITH
FROM THE DEPOSITOR AND ANY OF ITS SUBSIDIARIES:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
AMOUNT OF
CAPACITY IN WHICH NAME OF EACH COMPENSATION
NAME OF COMPENSATION COMPANY PAYING PAID BY EACH
PERSON WAS RECEIVED COMPENSATION SUCH COMPANY
<S> <C> <C> <C>
LIEBEN, WHITTED LAW FIRM ATTORNEYS DEPOSITOR-SPONSOR $28,450
MESSINGER PRINTING PRINTING DEPOSITOR-SPONSOR $31,097
ZWICK AND SOLOMON ACCOUNTING DEPOSITOR-SPONSOR $42,859
------------------------------------------------------------------------------------------
</TABLE>
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES.
DISTRIBUTION OF SECURITIES.
35. FURNISH THE NAMES OF THE STATES IN WHICH SALES OF THE TRUST'S
SECURITIES: (A) ARE CURRENTLY BEING MADE, (B) ARE PRESENTLY
PROPOSED TO BE MADE, AND (C) HAVE BEEN DISCONTINUED, INDICATING BY
APPROPRIATE LETTER THE STATUS WITH RESPECT TO EACH STATE.
(A) NONE.
(B) TO BE SUPPLIED.
(C) NOT APPLICABLE.
36. IF SALES OF THE TRUST'S SECURITIES HAVE AT ANY TIME SINCE
JANUARY 1, 1936 BEEN SUSPENDED FOR MORE THAN A MONTH, DESCRIBE
BRIEFLY THE REASONS FOR SUCH SUSPENSION.
NOT APPLICABLE.
24
<PAGE>
37.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO EACH
INSTANCE WHERE, SUBSEQUENT TO JANUARY 1, 1937, ANY FEDERAL
OR STATE GOVERNMENTAL OFFICER, AGENCY, OR REGULATORY BODY
DENIED AUTHORITY TO DISTRIBUTE SECURITIES OF THE TRUST,
EXCLUDING A DENIAL WHICH WAS MERELY A PROCEDURAL STEP PRIOR
TO ANY DETERMINATION BY SUCH OFFICER, ETC. AND WHICH DENIAL
WAS SUBSEQUENTLY RESCINDED:
(1) NAME OF OFFICER, AGENCY OR BODY.
(2) DATE OF DENIAL.
(3) BRIEF STATEMENT OF REASON GIVEN FOR DENIAL.
NOT APPLICABLE.
(b) FURNISH THE FOLLOWING INFORMATION WITH REGARD TO EACH
INSTANCE WHERE, SUBSEQUENT TO JANUARY 1, 1937, THE AUTHORITY
TO DISTRIBUTE SECURITIES OF THE TRUST HAS BEEN REVOKED BY
ANY FEDERAL OR STATE GOVERNMENTAL OFFICER, AGENCY OR
REGULATORY BODY:
(1) NAME OF OFFICER, AGENCY OR BODY.
(2) DATE OF REVOCATION.
(3) BRIEF STATEMENT OF REASON GIVEN FOR REVOCATION.
NOT APPLICABLE.
38.
(a) FURNISH A GENERAL DESCRIPTION OF THE METHOD OF DISTRIBUTION
OF SECURITIES OF THE TRUST.
THE DEPOSITOR-SPONSOR WILL ENTER INTO ONE OR MORE
DISTRIBUTION AGREEMENTS WITH REGISTERED BROKER-DEALERS TO
OFFER AND SELL THE TRUST'S UNITS ON A BEST EFFORTS BASIS.
THE BROKER-DEALER WHO ENTERS INTO A DISTRIBUTION AGREEMENT
ARE ALLOWED TO ENTER INTO SELLING AGREEMENTS WITH OTHER
REGISTERED BROKER-DEALERS WHO WILL RECEIVE SELLING
CONCESSIONS FROM THE DISTRIBUTING BROKER-DEALER. THE
DISTRIBUTOR(S) WILL RECEIVE A COMMISSION REPRESENTING A
PERCENTAGE OF THE TOTAL SALES PRICE OF A UNIT FOR EACH
PURCHASED UNIT FOR WHICH A CLOSING OCCURS.
25
<PAGE>
(b) STATE THE SUBSTANCE OF ANY CURRENT SELLING AGREEMENT BETWEEN
EACH PRINCIPAL UNDERWRITER AND THE TRUST OR THE DEPOSITOR,
INCLUDING A STATEMENT AS TO THE INCEPTION AND TERMINATION
DATES OF THE AGREEMENT, ANY RENEWAL AND TERMINATION
PROVISIONS, AND ANY ASSIGNMENT PROVISIONS.
THE SELLING AGREEMENT, ALSO KNOWN AS THE DISTRIBUTION
AGREEMENT, PROVIDES FOR THE ENGAGEMENT OF A REGISTERED
BROKER-DEALER WHO, TOGETHER WITH OTHER REGISTERED
BROKER-DEALERS WHO ENTER INTO AGREEMENTS WITH THE
DISTRIBUTING BROKER-DEALER, WILL OFFER AND SELL UNITS IN THE
TRUST ON A BEST EFFORTS BASIS. FOR UNITS SOLD PURSUANT TO
THE OFFERING, THE DISTRIBUTING BROKER-DEALER WILL RECEIVE A
COMMISSION IN AN AMOUNT OF MONEY EQUAL TO A PERCENTAGE OF
THE SALES PRICE OF THE UNIT. OTHER BROKER-DEALERS INVOLVED
IN SELLING UNITS WILL RECEIVE A PORTION OF THE DISTRIBUTING
BROKER'S SALES COMMISSION.
THE DISTRIBUTION AGREEMENT WILL BE EXECUTED BY THE PARTIES
THERETO AS SOON AS THE TRUST'S '33 ACT REGISTRATION IS
DECLARED EFFECTIVE. IT WILL CONTINUE FOR AS LONG AS THE
TRUST'S OFFERING CONTINUES PURSUANT TO THE TERMS OF ITS
PROSPECTUS, UNLESS SOONER TERMINATED BY ITS TERMS OR BY
AGREEMENT OF THE PARTIES. THE DISTRIBUTION AGREEMENT WILL
TERMINATE UPON THE COMPLETION OF THE OFFERING ACCORDING TO
ITS TERMS OR THE TERMINATION OF THE OFFERING PERIOD,
WHICHEVER IS SOONER. THE DISTRIBUTION AGREEMENT MAY ALSO BE
TERMINATED BY EITHER PARTY ON TEN DAYS' PRIOR NOTICE TO THE
OTHER PARTY. THE DISTRIBUTION AGREEMENT IS NOT ASSIGNABLE BY
EITHER PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER
PARTY.
(c) STATE THE SUBSTANCE OF ANY CURRENT AGREEMENTS OR
ARRANGEMENTS OF EACH PRINCIPAL UNDERWRITER WITH DEALERS,
AGENTS, SALESMEN, ETC. WITH RESPECT TO COMMISSIONS AND
OVERRIDING COMMISSIONS, TERRITORIES, FRANCHISES,
QUALIFICATIONS AND REVOCATIONS. IF THE TRUST IS THE ISSUER
OF PERIODIC PAYMENT PLAN CERTIFICATES, FURNISH SCHEDULES OF
COMMISSIONS AND THE BASES THEREOF. IN LIEU OF A STATEMENT
CONCERNING SCHEDULES OF COMMISSIONS, SUCH SCHEDULES OF
COMMISSIONS MAY BE FILED AS EXHIBIT A(3)(c).
NO AGREEMENTS OR ARRANGEMENTS EXIST AT THIS POINT BETWEEN
THE PRINCIPAL UNDERWRITER AND OTHER DEALERS, AGENTS,
SALESMEN, ETC. WITH RESPECT TO COMMISSIONS AND OVERRIDING
COMMISSIONS, TERRITORIES, FRANCHISES, QUALIFICATIONS AND
REVOCATIONS. IF AND WHEN SUCH AGREEMENTS OR ARRANGEMENTS ARE
ENTERED INTO, THEY WILL BE PROMPTLY DISCLOSED BY AMENDMENT.
26
<PAGE>
INFORMATION CONCERNING PRINCIPAL UNDERWRITER.
39.
(a) STATE THE FORM OF ORGANIZATION OF EACH PRINCIPAL UNDERWRITER
OF SECURITIES OF THE TRUST, THE NAME OF THE STATE OR OTHER
SOVEREIGN POWER UNDER THE LAWS OF WHICH EACH UNDERWRITER WAS
ORGANIZED, AND THE DATE OF ORGANIZATION.
NO PRINCIPAL UNDERWRITER HAS BEEN IDENTIFIED AT THIS TIME.
IT IS EXPECTED THAT THE DEPOSITOR-SPONSOR WILL RELY ON TWO
OR THREE UNDERWRITING FIRMS TO DISTRIBUTE THE UNITS ON A
BEST EFFORTS, NON-EXCLUSIVE BASIS. IF AND WHEN A PRINCIPAL
UNDERWRITER IS IDENTIFIED, THE INFORMATION REQUESTED
PURSUANT TO THIS ITEM WILL BE SUPPLIED BY AN AMENDMENT.
(b) STATE WHETHER ANY PRINCIPAL UNDERWRITER CURRENTLY
DISTRIBUTING SECURITIES OF THE TRUST IS A MEMBER OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
IT IS A REQUIREMENT OF THE DISTRIBUTION AGREEMENT WITH THE
PRINCIPAL BROKER-DEALER THAT IT BE A MEMBER IN GOOD STANDING
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
40.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ALL FEES
RECEIVED BY EACH PRINCIPAL UNDERWRITER OF THE TRUST FROM THE
SALE OF SECURITIES OF THE TRUST AND ANY OTHER FUNCTIONS IN
CONNECTION THEREWITH EXERCISED BY SUCH UNDERWRITER IN SUCH
CAPACITY OR OTHERWISE DURING THE PERIOD COVERED BY THE
FINANCIAL STATEMENTS FILED HEREWITH:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
NAME OF PRINCIPAL UNDERWRITER
------------------------------------------------------------------------------------------
AMOUNT
AMOUNT OF AGGREGATE
TOTAL AMOUNT OF MANAGEM AMOUNT GROSS
PAYMENTS OF SALES ADMINISTR ENT FEES OF OTHER AMOUNT
BY LOAD ATION FEES RECEIVED FEES OF LOAD,
YEAR SECURITY RECEIVED RECEIVED RECEIVED FEES, ETC.
HOLDERS RECEIVED
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
NOT APPLICABLE.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ANY FEE OR
ANY PARTICIPATION IN FEES RECEIVED BY EACH PRINCIPAL
UNDERWRITER FROM ANY UNDERLYING INVESTMENT COMPANY OR ANY
AFFILIATED PERSON OR INVESTMENT ADVISER OF SUCH COMPANY:
27
<PAGE>
(1) THE NATURE OF SUCH FEE OR PARTICIPATION.
THE FEES RECEIVED WERE IN THE FORM OF COMMISSIONS.
(2) THE NAME OF THE PERSON MAKING PAYMENT.
THE PAYMENTS WERE MADE BY GENESIS FINANCIAL GROUP,
INC.
(3) THE NATURE OF THE SERVICES RENDERED IN CONSIDERATION
FOR SUCH FEE OR PARTICIPATION.
THE SERVICES RENDERED WERE AS A PLACEMENT AGENT IN
CONNECTION WITH VARIOUS PRIVATE PLACEMENTS OF UNITS
IN UNIT TRUSTS SPONSORED BY GENESIS FINANCIAL GROUP,
INC.
(4) THE AGGREGATE AMOUNT RECEIVED DURING THE LAST FISCAL
YEAR COVERED BY THE FINANCIAL STATEMENTS FILED
HEREWITH.
THE AGGREGATE AMOUNT RECEIVED BY NASD BROKER-DEALERS
FOR THE YEAR 2000 IS ZERO; THE AGGREGATE AMOUNT
RECEIVED IN 1999 WAS 318,845.
41.
(a) DESCRIBE THE GENERAL CHARACTER OF THE BUSINESS ENGAGED IN BY
EACH PRINCIPAL UNDERWRITER, INCLUDING A STATEMENT AS TO ANY
BUSINESS OTHER THAN THE DISTRIBUTION OF SECURITIES OF THE
TRUST. IF A PRINCIPAL UNDERWRITER ACTS OR HAS ACTED IN ANY
CAPACITY WITH RESPECT TO ANY INVESTMENT COMPANY OR COMPANIES
OTHER THAN THE TRUST, STATE THE NAME OR NAMES OF SUCH
COMPANY OR COMPANIES, THEIR RELATIONSHIP, IF ANY, TO THE
TRUST, AND THE NATURE OF SUCH ACTIVITIES. IF A PRINCIPAL
UNDERWRITER HAS CEASED TO ACT IN SUCH NAMED CAPACITY, STATE
THE DATE OF AND THE CIRCUMSTANCES SURROUNDING SUCH
CESSATION.
TO BE SUPPLIED BY AMENDMENT.
(b) FURNISH AS AT LATEST PRACTICABLE DATE THE ADDRESS OF EACH
BRANCH OFFICE OF EACH PRINCIPAL UNDERWRITER CURRENTLY
SELLING SECURITIES OF TRUST AND FURNISH THE NAME AND
RESIDENCE ADDRESS OF THE PERSON IN CHARGE OF SUCH OFFICE.
NOT APPLICABLE.
(c) FURNISH THE NUMBER OF INDIVIDUAL SALESMEN OF EACH PRINCIPAL
UNDERWRITER THROUGH WHOM ANY OF THE SECURITIES OF THE TRUST
WERE DISTRIBUTED FOR THE LAST FISCAL YEAR OF THE TRUST
COVERED BY THE FINANCIAL STATEMENTS FILED HEREWITH AND
FURNISH THE AGGREGATE
28
<PAGE>
AMOUNT OF COMPENSATION RECEIVED BY SUCH SALESMEN IN SUCH
YEAR. (SEGREGATE FULL-TIME AND PART-TIME SALESMEN.)
NOT APPLICABLE.
42. FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION
WITH RESPECT TO EACH PRINCIPAL UNDERWRITER CURRENTLY DISTRIBUTING
SECURITIES OF THE TRUST AND WITH RESPECT TO EACH PRINCIPAL
UNDERWRITER CURRENTLY DISTRIBUTING SECURITIES OF THE TRUST AND WITH
RESPECT TO EACH OF THE OFFICERS, DIRECTORS OR PARTNERS OF SUCH
UNDERWRITER:
NOT APPLICABLE.
43. FURNISH, FOR THE LAST FISCAL YEAR COVERED BY THE FINANCIAL
STATEMENTS FILED HEREWITH, THE AMOUNT OF BROKERAGE COMMISSIONS
RECEIVED BY ANY PRINCIPAL UNDERWRITER WHO IS A MEMBER OF A NATIONAL
SECURITIES EXCHANGE AND WHO IS CURRENTLY DISTRIBUTING THE
SECURITIES OF THE TRUST OR EFFECTING TRANSACTIONS FOR THE TRUST IN
THE PORTFOLIO SECURITIES OF THE TRUST.
NOT APPLICABLE.
OFFERING PRICE OR ACQUISITION VALUATION OF SECURITIES OF THE TRUST.
44.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE METHOD
OF VALUATION USED BY THE TRUST FOR PURPOSES OF DETERMINING
THE OFFERING PRICE TO THE PUBLIC OF SECURITIES ISSUED BY THE
TRUST, OR THE VALUATION OF SHARES OR INTERESTS IN THE
UNDERLYING SECURITIES ACQUIRED BY THE HOLDER OF A PERIODIC
PAYMENT PLAN CERTIFICATE:
(1) THE SOURCE OF QUOTATIONS USED TO DETERMINE THE VALUE
OF PORTFOLIO SECURITIES.
THE OFFERING PRICE OF THE UNITS IS ESTABLISHED
ARBITRARILY BY THE DEPOSITOR-SPONSOR AND IS UNRELATED
TO ANY MARKET DETERMINATION OR NET ASSET VALUE
CALCULATION. THE VALUES OF THE SECURITIES HELD BY THE
TRUST ARE DETERMINED BY THE CLOSING ASKED PRICE IF
THE PARTICULAR SECURITY'S PRICE IS REPORTED PUBLICLY.
IN THE CASE OF THE ASSIGNMENT(S) OF RENTS, THE VALUE
EQUALS THE AMOUNT PAID BY THE TRUST FOR EACH
ASSIGNMENT OF RENT, UNLESS THE DEPOSITOR-SPONSOR
DETERMINES THAT DUE TO EXTRAORDINARY ECONOMIC
CONDITIONS, INTEREST RATES, A MAJOR CASUALTY AT THE
PROPERTY BEING LEASED OR SOME OTHER SIGNIFICANT
FACTOR THE APPLICABLE ASSIGNMENT OF RENT NEEDS TO BE
RE-VALUED. IN THAT CASE, THE DEPOSITOR-SPONSOR WILL
ENGAGE AT ITS EXPENSE A THIRD PARTY APPRAISER TO
VALUE THE ASSIGNMENT OF RENT.
29
<PAGE>
NOTE THAT THE UNITS OF THE TRUST ARE UNLIKELY TO EVER
HAVE A PUBLIC TRADING MARKET AND DURING THE OFFERING
PERIOD THE PURCHASE PRICE OF A UNIT WILL NOT VARY.
ACCORDINGLY, THERE IS NO REAL NEED FOR OR REFERENCE
OF A CONTINUOUSLY UPDATED NET ASSET VALUE OF THE
UNITS.
(2) WHETHER OPENING, CLOSING, BID, ASKED OR ANY OTHER
PRICE IS USED.
WITH RESPECT TO THE SECURITIES HELD IN THE TRUST FOR
WHICH THERE ARE PUBLISHED MARKET PRICES, THOSE
SECURITIES ARE VALUED ON THE BASIS OF THE PUBLISHED
CLOSING ASKED PRICES CLOSEST TO THE VALUATION DATE.
(3) WHETHER PRICE IS AS OF THE DAY OF SALE OR AS OF ANY
OTHER TIME.
THE PRICE OF A UNIT WILL REMAIN CONSTANT THROUGHOUT
THE OFFERING PERIOD.
(4) A BRIEF DESCRIPTION OF THE METHODS USED BY REGISTRANT
FOR DETERMINING OTHER ASSETS AND LIABILITIES,
INCLUDING ACCRUAL FOR EXPENSES AND TAXES (INCLUDING
TAXES ON UNREALIZED APPRECIATION).
THE TRUST HAS NO OTHER ASSETS TO VALUE BESIDES THE
SECURITIES IT HOLDS. ANY LIABILITIES OF THE TRUST
WHICH WILL CONSIST PRIMARILY OF FEES TO THE TRUSTEE
AND TO ATTORNEYS AND ACCOUNTANTS AS WELL AS
ADMINISTRATIVE COSTS, ARE DETERMINED ON AN ACCRUAL
BASIS. AS A GRANTOR TRUST, THE TRUST ITSELF DOES NOT
EXPECT TO INCUR ANY FEDERAL OR STATE INCOME TAXES,
NOR DOES IT EXPECT TO INCUR OTHER STATE OR LOCAL
INTANGIBLE ASSETS OR SIMILAR TYPE OF PROPERTY TAX.
(5) OTHER ITEMS WHICH REGISTRANT ADDS TO THE NET ASSET
VALUE IN COMPUTING OFFERING PRICE OF ITS SECURITIES:
NOT APPLICABLE AS THE TRUST WILL NOT UTILIZE THE NET
ASSET VALUE OF ITS SECURITIES PORTFOLIO IN
DETERMINING THE OFFERING PRICE FOR THE UNITS.
(6) WHETHER ADJUSTMENTS ARE MADE FOR FRACTIONS:
(i) BEFORE ADDING DISTRIBUTOR'S COMPENSATION
(LOAD); AND
(ii) AFTER ADDING DISTRIBUTOR'S COMPENSATION
(LOAD).
NOT APPLICABLE FOR THE REASON STATED IN
ITEM 44(a)(5).
30
<PAGE>
(b) FURNISH A SPECIMEN SCHEDULE SHOWING THE COMPONENTS OF THE
OFFERING PRICE OF THE TRUST'S SECURITIES AS AT THE LATEST
PRACTICABLE DATE. SUCH SCHEDULE SHALL BE IN SUBSTANTIALLY
THE FOLLOWING FORM:
NOT APPLICABLE AS THE OFFERING PRICE FOR THE UNITS IS
ESTABLISHED AS AN ARBITRARY DOLLAR AMOUNT BY THE
DEPOSITOR-SPONSOR IN CONSULTATION WITH THE DISTRIBUTOR,
WHICH PURCHASE PRICE WILL REMAIN CONSTANT THROUGHOUT THE
TERM OF THE OFFERING.
(1) VALUE OF PORTFOLIO SECURITIES.
(2) VALUE OF OTHER ASSETS.
(3) TOTAL (1 PLUS 2).
(4) LIABILITIES (INCLUDE ACCRUED EXPENSES AND TAXES).
(5) VALUE OF NET ASSETS (3 MINUS 4).
(6) OTHER CHARGES:
(i) OFF LOT PREMIUMS,
(ii) BROKERAGE COMMISSIONS,
(iii) FEES FOR ADMINISTRATION,
(iv) FEES FOR CUSTODIAN OR TRUSTEE,
(v) FEES FOR REGISTRAR OR TRANSFER AGENT,
(vi) TRANSFER TAXES,
(vii) RESERVES,
(viii) OTHERS,
(ix) TOTAL, 6(i) THROUGH 6(h), INCLUSIVE.
(7) ADJUSTED VALUE OF NET ASSETS (5 PLUS 6(ix)).
(8) NUMBER OF UNITS OUTSTANDING.
(9) NET ASSET VALUE PER UNIT (FOUR DECIMALS);
(i) EXCLUDING OTHER CHARGES (5 DIVIDED BY 8),
31
<PAGE>
(ii) INCLUDING OTHER CHARGES (7 DIVIDED BY 8).
(10) ADJUSTMENT OF 9(b) FOR FRACTIONS.
(11) ADJUSTED NET ASSET VALUE PER UNIT.
(12) OFFERING PRICE (SHOW FOUR DECIMALS).
(IF ANY SALES LOAD IS CHARGED, INDICATE AMOUNT, AND
APPLY PERCENTAGE LOAD TO 11 OR OTHER APPLICABLE BASE,
INDICATING BASE.)
(13) ADJUSTMENT OF 12 FOR FRACTIONS.
(14) OFFERING PRICE.
(15) ACCUMULATED UNDISTRIBUTED INCOME PER UNIT (IF NOT
INCLUDED IN 3 AND 9).
(16) ADJUSTED PRICE (14 PLUS 15).
(17) EFFECTIVE LOAD PER UNIT:
(i) IN DOLLARS (16-(9(a)+15)),
(ii) IN PERCENTAGE (17(a) OF (9(a)+15)).
(c) IF THERE IS ANY VARIATION IN THE OFFERING PRICE OF THE
TRUST'S SECURITIES TO ANY PERSON OR CLASSES OF PERSONS OTHER
THAN UNDERWRITERS, STATE THE NATURE AND AMOUNT OF SUCH
VARIATION AND INDICATE THE PERSON OR CLASSES OF PERSONS TO
WHOM SUCH OFFERING IS MADE.
THERE IS NO VARIATION IN THE OFFERING PRICE OF THE UNITS TO
ANY PERSONS OR CLASSES OF PERSONS.
45. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ANY SUSPENSION OF
THE REDEMPTION RIGHTS OF THE SECURITIES ISSUED BY THE TRUST DURING
THE THREE FISCAL YEARS COVERED BY THE FINANCIAL STATEMENTS FILED
HEREWITH:
(a) BY WHOSE ACTION REDEMPTION RIGHTS WERE SUSPENDED.
32
<PAGE>
(b) THE NUMBER OF DAY'S NOTICE GIVEN TO SECURITY HOLDERS PRIOR
TO SUSPENSION OF REDEMPTION RIGHTS.
(c) REASON FOR SUSPENSION.
(d) PERIOD DURING WHICH SUSPENSION WAS IN EFFECT.
NOT APPLICABLE.
REDEMPTION VALUATION OF SECURITIES OF THE TRUST.
46.
(a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE METHOD
OF DETERMINING THE REDEMPTION OR WITHDRAWAL VALUATION OF
SECURITIES ISSUED BY THE TRUST:
(1) THE SOURCE OF QUOTATIONS USED TO DETERMINE THE VALUE
OF PORTFOLIO SECURITIES.
THE REDEMPTION PRICE FOR UNITS OF THE TRUST IS
CALCULATED BY USING THE EXCHANGE OR OVER THE COUNTER
QUOTATIONS FOR TRUST'S TRADED SECURITIES AND THE
ORIGINAL PURCHASE COST OR AN UPDATED INDEPENDENT
APPRAISER VALUATION, IF APPLICABLE, FOR THE
ASSIGNMENT(S) OF RENTS.
(2) WHETHER OPENING, CLOSING, BID, ASKED OR ANY OTHER
PRICE IS USED.
THE ASKED PRICES ARE USED FOR THE TRUST'S TRADED
SECURITIES.
(3) WHETHER PRICE IS AS OF THE DAY OF SALE OR AS OF ANY
OTHER TIME.
THE PRICE OF THE UNITS BEING REDEEMED IS DETERMINED
BY THE MOST RECENT QUARTERLY EVALUATION OF THE TRUST
PORTFOLIO. THIS EVALUATION IS REQUIRED TO BE MADE BY
THE DEPOSITOR-SPONSOR AND THEN PRESENTED TO THE
TRUSTEE.
(4) A BRIEF DESCRIPTION OF THE METHODS USED BY REGISTRANT
FOR DETERMINING OTHER ASSETS AND LIABILITIES,
INCLUDING ACCRUAL FOR EXPENSES AND TAXES (INCLUDING
TAXES ON UNREALIZED APPRECIATION).
33
<PAGE>
THERE ARE NO OTHER ASSETS IN THE TRUST BESIDES THE
SECURITIES. THE LIABILITIES ARE DETERMINED ON THE
ACCRUAL BASIS. THE TRUST DOES NOT ANTICIPATE
INCURRING INCOME, PROPERTY OR INTANGIBLE ASSETS
TAXES.
(5) OTHER ITEMS WHICH REGISTRANT DEDUCTS FROM THE NET
ASSET VALUE IN COMPUTING REDEMPTION VALUE OF ITS
SECURITIES:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
FEES FOR
------------------------------------------
REGISTRAR OTHER
ODD LOT BROKERAGE TRANSFER ADMINISTRATION CUSTODIAN OR TRANSFER CHARGES
PREMIUMS COMMISSIONS TAXES OR TRUSTEE AGENT (DESCRIBE
BRIEFLY)
<S> <C> <C> <C> <C> <C> <C>
NO NO NO NO NO NO (1)
----------------------------------------------------------------------------------------
</TABLE>
(1) THE VALUE DETERMINED FOR AN ASSIGNMENT OF RENTS IS,
INITIALLY, THE PRICE PAID FOR THE ASSIGNMENT LESS ANY
TRANSACTION COSTS (E.G., LEGAL FEES, REAL ESTATE
BROKERAGE, RECORDING COSTS, ETC.) ASSOCIATED WITH THE
CREATION AND TRANSFER TO THE TRUST OF THE ASSIGNMENT.
(6) WHETHER ADJUSTMENTS ARE MADE FOR FRACTIONS.
NO.
(b) FURNISH A SPECIMEN SCHEDULE SHOWING THE COMPONENTS OF THE
REDEMPTION PRICE TO THE HOLDERS OF THE TRUST'S SECURITIES AS
AT THE LATEST PRACTICABLE DATE. SUCH SCHEDULE SHALL BE IN
SUBSTANTIALLY THE FOLLOWING FORM:
(1) VALUE OF PORTFOLIO SECURITIES.
$1,000,000.
(2) VALUE OF OTHER ASSETS.
NONE.
(3) TOTAL (1 PLUS 2).
$1,000,000.
(4) LIABILITIES (INCLUDE ACCRUED EXPENSES AND TAXES).
NONE.
(5) VALUE OF NET ASSETS (3 MINUS 4).
$1,000,000.
34
<PAGE>
(6) OTHER CHARGES:
(i) ODD LOT PREMIUMS,
NONE.
(ii) BROKERAGE COMMISSIONS,
NONE.
(iii) FEES FOR ADMINISTRATION,
NONE.
(iv) FEES FOR CUSTODIAN OR TRUSTEE,
NONE.
(v) FEES FOR REGISTRAR OR TRANSFER AGENT,
NONE.
(vi) TRANSFER TAXES,
NONE.
(vii) RESERVES,
10,000.00
(viii) OTHERS,
40,000
(ix) TOTAL, 6(i) THROUGH 6(viii), INCLUSIVE.
50,000
(7) ADJUSTED VALUE OF NET ASSETS (5 MINUS 6(ix)).
750,000
(8) NUMBER OF UNITS OUTSTANDING.
7,000
35
<PAGE>
(9) NET ASSET VALUE PER UNIT (FOUR DECIMALS):
(i) EXCLUDING OTHER CHARGES (5 DIVIDED BY 8),
1,000.0000
(ii) INCLUDING OTHER CHARGES (7 DIVIDED BY 8).
950.0000
(10) ADJUSTMENT OF 9(b) FOR FRACTIONS.
NONE.
(11) ADJUSTED NET ASSET VALUE PER UNIT.
950.000
(12) EARLY REDEMPTION CHARGE.
500.00 FIRST YEAR
300.00 SECOND YEAR
100.00 THIRD YEAR
(13) ADJUSTED REDEMPTION PRICE.
900.0000
(14) ACCUMULATED UNDISTRIBUTED INCOME PER UNIT (IF NOT
INCLUDED IN 3 AND 9).
NONE.
(15) ACTUAL REDEMPTION PRICE (13 PLUS 14).
900.0000
(16) EFFECTIVE REDEMPTION FEE PER UNIT:
(i) IN DOLLARS ((9(a)+14)-15),
$50.00
36
<PAGE>
(ii) IN PERCENTAGE (16(a) OF (9(a)+14)).
5.26%
PURCHASE AND SALE OF INTERESTS IN UNDERLYING SECURITIES FROM AND TO
SECURITY HOLDERS.
47. FURNISH A STATEMENT AS TO THE PROCEDURE WITH RESPECT TO THE
MAINTENANCE OF A POSITION IN THE UNDERLYING SECURITIES OR INTERESTS
IN THE UNDERLYING SECURITIES, THE EXTENT AND NATURE THEREOF, AND
THE PERSON WHO MAINTAINS SUCH A POSITION. INCLUDE A DESCRIPTION OF
THE PROCEDURE WITH RESPECT TO THE PURCHASE OF UNDERLYING SECURITIES
OR INTERESTS IN THE UNDERLYING SECURITIES FROM SECURITY HOLDERS WHO
EXERCISE REDEMPTION OR WITHDRAWAL RIGHTS AND THE SALE OF SUCH
UNDERLYING SECURITIES AND INTERESTS IN THE UNDERLYING SECURITIES TO
OTHER SECURITY HOLDERS. STATE WHETHER THE METHOD OF VALUATION OF
SUCH UNDERLYING SECURITIES OR INTERESTS IN UNDERLYING SECURITIES
DIFFERS FROM THAT SET FORTH IN ITEMS 44 AND 46. IF ANY ITEM OF
EXPENDITURE INCLUDED IN THE DETERMINATION OF THE VALUATION IS NOT
OR MAY NOT ACTUALLY BE INCURRED OR EXPENDED, EXPLAIN THE NATURE OF
SUCH ITEM AND WHO MAY BENEFIT FROM THE TRANSACTION.
NOT APPLICABLE.
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN.
48. FURNISH THE FOLLOWING INFORMATION AS TO EACH TRUSTEE OR CUSTODIAN
OF THE TRUST:
(a) NAME AND PRINCIPAL BUSINESS ADDRESS.
CITIZENS FIRST SAVINGS BANK, 525 WATER STREET, PORT HURON,
MICHIGAN 48060.
(b) FORM OF ORGANIZATION.
MUTUAL STATE-CHARTERED SAVINGS BANK.
(c) STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF WHICH THE
TRUSTEE OR CUSTODIAN WAS ORGANIZED.
MICHIGAN.
(d) NAME OF GOVERNMENTAL SUPERVISING OR EXAMINING AUTHORITY.
FINANCIAL INSTITUTIONS BUREAU STATE OF MICHIGAN.
37
<PAGE>
49. STATE THE BASIS FOR PAYMENT OF FEES OR EXPENSES OF THE TRUSTEE OR
CUSTODIAN FOR SERVICES RENDERED WITH RESPECT TO THE TRUST AND ITS
SECURITIES, AND THE AGGREGATE AMOUNT THEREOF FOR THE LAST FISCAL
YEAR. INDICATE THE PERSON PAYING SUCH FEES OR EXPENSES. IF ANY FEES
OR EXPENSES ARE PREPAID, STATE THE UNEARNED AMOUNT.
THE BASIS FOR THE PAYMENT OF FEES AND EXPENSES OF THE TRUSTEE IS
THE TRUST AGREEMENT BETWEEN THE DEPOSITOR-SPONSOR AND THE TRUSTEE,
SPECIFICALLY EXHIBIT "A" AND REIMBURSEMENT OF TRUSTEE EXPENSES
INCURRED IN CONNECTION WITH THE PERFORMANCE OF ITS DUTIES, WHICH IT
IS ENTITLED TO RECOVER PURSUANT TO SECTION 7.4 OF THE TRUST
INDENTURE. THERE WAS NO AGGREGATE AMOUNT OF FEES AND EXPENSES PAID
TO THE TRUSTEE IN THE LAST FISCAL YEAR. NO FEES OR EXPENSES WILL BE
PREPAID.
50. STATE WHETHER THE TRUSTEE OR CUSTODIAN OR ANY OTHER PERSON HAS OR
MAY CREATE A LIEN ON THE ASSETS OF THE TRUST, AND IF SO, GIVE FULL
PARTICULARS, OUTLINING THE SUBSTANCE OF THE PROVISIONS OF ANY
INDENTURE OR AGREEMENT WITH RESPECT THEREOF.
UNDER THE INDENTURE, THE TRUSTEE IS GRANTED A LIEN ON THE FUNDS IN
THE INCOME AND CAPITAL ACCOUNTS OF THE TRUST, WHICH IS AHEAD OF ANY
CLAIMS OF THE UNITHOLDERS, FOR ANY AMOUNTS DUE THE TRUSTEE IN FEES
OR EXPENSE REIMBURSEMENTS.
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES.
51. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO INSURANCE OF
HOLDERS OF SECURITIES:
NOT APPLICABLE.
(a) THE NAME AND ADDRESS OF THE INSURANCE COMPANY.
(b) THE TYPES OF POLICIES AND WHETHER INDIVIDUAL OR GROUP
POLICIES.
(c) THE TYPES OF RISKS INSURED AND EXCLUDED.
(d) THE COVERAGE OF THE POLICIES.
(e) THE BENEFICIARIES OF SUCH POLICIES AND THE USES TO WHICH THE
PROCEEDS OF POLICIES MUST BE PUT.
(f) THE TERMS AND MANNER OF CANCELLATION AND OF REINSTATEMENT.
(g) THE METHOD OF DETERMINING THE AMOUNT OF PREMIUMS TO BE PAID
BY HOLDERS OF SECURITIES.
38
<PAGE>
(h) THE AMOUNT OF AGGREGATE PREMIUMS PAID TO THE INSURANCE
COMPANY DURING THE LAST FISCAL YEAR.
(i) WHETHER ANY PERSON OTHER THAN THE INSURANCE COMPANY RECEIVES
ANY PART OF SUCH PREMIUMS, THE NAME OF EACH SUCH PERSON AND
THE AMOUNTS INVOLVED, AND THE NATURE OF THE SERVICES
RENDERED THEREFOR.
(j) THE SUBSTANCE OF ANY OTHER MATERIAL PROVISIONS OF ANY
INDENTURE OR AGREEMENT OF THE TRUST RELATING TO INSURANCE.
VII. POLICY OF REGISTRANT.
52.
(a) FURNISH THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WITH RESPECT TO THE CONDITIONS UPON WHICH AND THE
METHOD OF SELECTION BY WHICH PARTICULAR PORTFOLIO SECURITIES
MUST OR MAY BE ELIMINATED FROM ASSETS OF THE TRUST, OR MUST
OR MAY BE REPLACED BY OTHER PORTFOLIO SECURITIES. IF AN
INVESTMENT ADVISER OR OTHER PERSON IS TO BE EMPLOYED IN
CONNECTION WITH SUCH SELECTION, ELIMINATION OR SUBSTITUTION,
STATE THE NAME OF SUCH PERSON, THE NATURE OF ANY AFFILIATION
TO THE DEPOSITOR, TRUSTEE OR CUSTODIAN, AND ANY PRINCIPAL
UNDERWRITER, AND THE AMOUNT OF REMUNERATION TO BE RECEIVED
FOR SUCH SERVICES. IF ANY PARTICULAR PERSON IS NOT
DESIGNATED IN THE INDENTURE OR AGREEMENT, DESCRIBE BRIEFLY
THE METHOD OF SELECTION OF SUCH PERSON.
THE INDENTURE PROVIDES THAT THE SECURITIES FOR THE TRUST'S
PORTFOLIO, WHICH WILL CONSIST PRIMARILY OF ASSIGNMENT(S) OF
RENTS, WILL BE SELECTED SOLELY BY THE DEPOSITOR-SPONSOR. ITS
SELECTION CRITERIA FOR ASSIGNMENT(S) OF RENTS ARE SET FORTH
IN THE PROSPECTUS BY WHICH THE UNITS ARE OFFERED TO
INVESTORS. OTHER SECURITIES, CONSISTING OF SHORT TERM US
TREASURIES, CONTAIN SHORT TERM CORPORATE BONDS AND STATE
ISSUED BONDS AND MONEY MARKET FUNDS, ARE SELECTED BY THE
DEPOSITOR-SPONSOR IN ITS DISCRETION AND WITHOUT NECESSARILY
THE USE OF AN INVESTMENT ADVISER. IF AN ADVISER WERE ENGAGED
BY THE DEPOSITOR-SPONSOR WITH REGARD TO THE SELECTION OF
SHORT TERM DEBT INSTRUMENTS AND MONEY MARKET FUNDS, THE
INDENTURE PROVIDES FOR NO REIMBURSEMENT TO THE
DEPOSITOR-SPONSOR FOR THE ADVISER'S FEES. THE
DEPOSITOR-SPONSOR DOES NOT INTEND TO ENGAGE AN INVESTMENT
ADVISER IN THIS REGARD.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO EACH
TRANSACTION INVOLVING THE ELIMINATION OF ANY UNDERLYING
SECURITY DURING THE PERIOD COVERED BY THE FINANCIAL
STATEMENTS FILED HEREWITH:
39
<PAGE>
NOT APPLICABLE.
(1) TITLE OF SECURITY.
(2) DATE OF ELIMINATION.
(3) REASONS FOR ELIMINATION.
(4) THE USE OF THE PROCEEDS FROM THE SALE OF THE
ELIMINATED SECURITY.
(5) TITLE OF SECURITY SUBSTITUTED, IF ANY.
(6) WHETHER DEPOSITOR, PRINCIPAL UNDERWRITER, TRUSTEE OR
CUSTODIAN, OR ANY AFFILIATED PERSON OF THE FOREGOING
WERE INVOLVED IN THE TRANSACTION.
(7) COMPENSATION OR REMUNERATION RECEIVED BY EACH SUCH
PERSON DIRECTLY OR INDIRECTLY AS A RESULT OF THE
TRANSACTION.
(c) DESCRIBE THE POLICY OF THE TRUST WITH RESPECT TO THE
SUBSTITUTION AND ELIMINATION OF THE UNDERLYING SECURITIES OF
THE TRUST WITH RESPECT TO:
THE TRUST HAS NO POLICY WITH RESPECT TO THE SUBSTITUTION AND
ELIMINATION OF THE SECURITIES OF THE TRUST. SUCH DECISIONS
ARE DISCRETIONARY WITH THE DEPOSITOR-SPONSOR.
(1) THE GROUNDS FOR ELIMINATION AND SUBSTITUTION;
THE DEPOSITOR-SPONSOR MAY INSTRUCT THE TRUSTEE TO
SELL SECURITIES IN ORDER TO MAINTAIN THE SOUND
INVESTMENT CHARACTER OF THE TRUST OR IF THERE IS A
DEFAULT IN A DEBT SECURITY HELD BY THE TRUST OR IN AN
ASSIGNMENT OF RENTS.
(2) THE TYPE OF SECURITIES WHICH MAY BE SUBSTITUTED FOR
ANY UNDERLYING SECURITY;
NOT PROVIDED FOR IN THE INDENTURE.
(3) WHETHER THE ACQUISITION OF SUCH SUBSTITUTED SECURITY
OR SECURITIES WOULD CONSTITUTE THE CONCENTRATION OF
INVESTMENT IN A PARTICULAR INDUSTRY OR GROUP OF
INDUSTRIES, OR WOULD CONFORM TO A POLICY OF
CONCENTRATION OF INVESTMENT IN A PARTICULAR INDUSTRY
OR GROUP OF INDUSTRIES;
40
<PAGE>
NOT PROVIDED FOR IN THE INDENTURE.
(4) WHETHER SUCH SUBSTITUTED SECURITIES MAY BE THE
SECURITIES OF ANOTHER INVESTMENT COMPANY; AND
TO THE EXTENT THAT THE DEPOSITOR-SPONSOR CHOOSES TO
ACQUIRE OR SUBSTITUTE A MONEY MARKET FUND, THERE IS
NOTHING IN THE INDENTURE TO PREVENT THE
DEPOSITOR-SPONSOR FROM ACQUIRING OR DIRECTING THE
TRUSTEE TO ACQUIRE A MONEY MARKET FUND WHICH IS
REGISTERED AS AN INVESTMENT COMPANY.
(5) THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WHICH AUTHORIZE OR RESTRICT THE POLICY OF
THE REGISTRANT IN THIS REGARD.
SECTION 2.2 OF THE INDENTURE AUTHORIZES THE
DEPOSITOR-SPONSOR TO ACQUIRE SECURITIES FOR THE TRUST
AND THEREFORE SUBSTITUTE A NEW SECURITY FOR A FORMER
SECURITY. SECTION 31.7 OF THE INDENTURE PROVIDES THAT
THE DEPOSITOR-SPONSOR MAY, UNDER CERTAIN
CIRCUMSTANCES, ELECT TO INSTRUCT THE TRUSTEE TO SELL
SECURITIES OF THE TRUST. THESE CIRCUMSTANCES INVOLVE
DEFAULTS IN DEBT SECURITIES OR IN THE ASSIGNMENT(S)
OF RENTS, LOSS OF VALUE IN THE PROPERTY BEING LEASED,
TERMINATION OF THE TRUST OR A NEED FOR LIQUIDITY DUE
TO REDEMPTIONS OF UNITS.
(If this subject has been entirely covered in
Item 52(b), state "not applicable.")
(d) FURNISH A DESCRIPTION OF ANY POLICY (EXCLUSIVE OF POLICIES
COVERED BY PARAGRAPHS (a) AND (b) HEREIN) OF THE TRUST WHICH
IS DEEMED A MATTER OF FUNDAMENTAL POLICY AND WHICH IS
ELECTED TO BE TREATED AS SUCH.
IT IS A FUNDAMENTAL POLICY OF THE TRUST THAT ITS PROCEEDS
WILL BE INVESTED PRIMARILY IN PURCHASE OF ASSIGNMENT(S) OF
RENTS FROM LEASES OF PROPERTIES IN WHICH THE PROPERTIES AND
THE TENANTS MEET CONDITIONS SET FORTH IN THE PROSPECTUS
OFFERING THE UNITS TO INVESTORS.
(e) PROVIDE A BRIEF STATEMENT DISCLOSING WHETHER THE TRUST AND
ITS PRINCIPAL UNDERWRITER HAVE ADOPTED CODES OF ETHICS UNDER
RULE 17j-l OF THE INVESTMENT COMPANY ACT AND WHETHER THESE
CODES OF ETHICS PERMIT PERSONNEL SUBJECT TO THE CODES TO
INVEST IN SECURITIES, INCLUDING SECURITIES THAT MAY BE
PURCHASED OR HELD BY THE TRUST. ALSO EXPLAIN THAT THESE
CODES OF ETHICS CAN BE REVIEWED AND COPIED AT THE
COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, D.C., THAT
INFORMATION ON THE OPERATION OF THE PUBLIC
41
<PAGE>
REFERENCE ROOM MAY BE OBTAINED BY CALLING THE COMMISSION AT
1-202-942-8090, THAT THESE CODES OF ETHICS ARE AVAILABLE ON
THE EDGAR DATABASE ON THE COMMISSION'S INTERNET SITE AT
http://www.sec.gov, AND THAT COPIES OF THESE CODES OF ETHICS
MAY BE OBTAINED, AFTER PAYING A DUPLICATING FEE, BY
ELECTRONIC REQUEST AT THE FOLLOWING E-MAIL ADDRESS:
[email protected], OR BY WRITING THE COMMISSION'S PUBLIC
REFERENCE SECTION, WASHINGTON, D.C. 20549-0102.
THE TRUST HAS NOT ADOPTED A CODE OF ETHICS UNDER RULE 17j-1
OF THE INVESTMENT COMPANY ACT.
REGULATED INVESTMENT COMPANY.
53.
(a) STATE THE TAXABLE STATUS OF THE TRUST.
THE INTENDED TAXABLE STATUS OF THE TRUST UNDER THE FEDERAL
TAX CODE IS THAT OF A GRANTOR TRUST.
(b) STATE WHETHER THE TRUST QUALIFIED FOR THE LAST TAXABLE YEAR
AS A REGULATED INVESTMENT COMPANY AS DEFINED IN SECTION 851
OF THE INTERNAL REVENUE CODE OF 1954, AND STATE ITS PRESENT
INTENTION WITH RESPECT TO SUCH QUALIFICATIONS DURING THE
CURRENT TAXABLE YEAR.
THE TRUST DOES NOT PRESENTLY INTEND TO QUALIFY AS A
REGULATED INVESTMENT COMPANY AS DEFINED IN THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED FOR THE YEAR 2000, ITS
FIRST YEAR OF OPERATION.
VIII. FINANCIAL AND STATISTICAL INFORMATION.
54. IF THE TRUST IS NOT THE ISSUER OF PERIODIC PAYMENT PLAN
CERTIFICATES, FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO
EACH CLASS OR SERIES OF ITS SECURITIES:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
AS AT THE END OF REGISTRANT'S PAST 10 FISCAL YEARS
--------------------------------------------------------------------------------------------------
DIVIDENDS PAID PER SHARE
YEAR TOTAL NUMBER OF SHARES ASSET VALUE PER SHARE (IF OTHER THAN CASH, EXPLAIN)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
NOT APPLICABLE. THE TRUST HAS NO PRIOR HISTORY.
55. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES, A
TRANSCRIPT OF A HYPOTHETICAL ACCOUNT SHALL BE FILED IN
APPROXIMATELY THE FOLLOWING FORM ON THE BASIS OF THE CERTIFICATE
CALLING FOR THE SMALLEST AMOUNT OF PAYMENTS. THE SCHEDULE SHALL
COVER A CERTIFICATE OF THE TYPE
42
<PAGE>
CURRENTLY BEING SOLD, ASSUMING THAT SUCH CERTIFICATE HAD BEEN SOLD
AT A DATE APPROXIMATELY 10 YEARS PRIOR TO THE DATE OF REGISTRATION
OR AT THE APPROXIMATE DATE OF ORGANIZATION OF THE TRUST.
NOT APPLICABLE.
56. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES,
FURNISH BY YEARS FOR THE PERIOD COVERED BY THE FINANCIAL STATEMENTS
FILED HEREWITH IN RESPECT OF CERTIFICATES SOLD DURING SUCH PERIOD,
THE FOLLOWING INFORMATION FOR EACH FULLY PAID TYPE AND EACH
INSTALLMENT PAYMENT TYPE OF PERIODIC PAYMENT PLAN CERTIFICATE
CURRENTLY BEING ISSUED BY THE TRUST:
NOT APPLICABLE.
57. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES,
FURNISH BY YEARS FOR THE PERIOD COVERED BY THE FINANCIAL STATEMENTS
FILED HEREWITH THE FOLLOWING INFORMATION FOR EACH INSTALLMENT
PAYMENT TYPE OF PERIOD PAYMENT PLAN CERTIFICATE CURRENTLY BEING
ISSUED BY THE TRUST.
NOT APPLICABLE.
58. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES,
FURNISH THE FOLLOWING INFORMATION FOR EACH INSTALLMENT PAYMENT TYPE
OF PERIOD PAYMENT PLAN CERTIFICATE OUTSTANDING AS AT THE LATEST
PRACTICABLE DATE.
NOT APPLICABLE.
59. FINANCIAL STATEMENTS SHALL BE FILED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN BELOW:
TO BE SUPPLIED BY AMENDMENT.
IX. EXHIBITS.
Exhibit A (1) Gen-Net Realty Unit Investment Trust Trust Agreement dated
April 2000.
Exhibit A (2) Form of Amended and Restated Trust Agreement between Genesis
Financial Group, Inc. and Citizens First Savings Bank as
Trustee (executed copy to be filed by pre-effective
amendment).
Exhibit A (3) Form of Distribution Agreement (executed copy to be filed by
pre-effective amendment).
43
<PAGE>
Exhibit A (4) Form of Escrow Agreement (to be filed by pre-effective
amendment).
Exhibit A (5) Form of Assignment of Rents and Security Agreement by and
between Genesis Financial Group, Inc., Gen-Net Realty Unit
Investment Trust, Corporate-Government Series and Citizens
First Savings Bank as Trustee (executed copy to be filed by
pre-effective amendment).
Exhibit A (6) Form of Security (to be filed by pre-effective amendment).
Exhibit A (7) Certificate of Incorporation and by-laws of Genesis Financial
Group, Inc.
Exhibit A (8) Code of Ethics adopted under Rule 17j-1 (to be filed by
pre-effective amendment).
44
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940 Genesis
Financial Group, Inc., the Depositor-Sponsor of the registrant, has caused this
registration statement to be duly signed on behalf of the registrant in the city
of Southfield and state of Michigan on the 10th day of May, 2000.
[Seal]
Gen-Net Realty Unit Investment Trust,
Corporate and Government Series
By: Genesis Financial Group, Inc.
Depositor-Sponsor
By: /s/ D. James Barton
-----------------------------------
D. James Barton, President
Attest /s/ Gregory S. Barton
-----------------------------------
Gregory S. Barton, Secretary
45
<PAGE>
EXHIBIT A (1)
GEN-NET REALTY UNIT INVESTMENT TRUST
TRUST AGREEMENT
<PAGE>
GEN-NET REALTY UNIT INVESTMENT TRUST
TRUST AGREEMENT
APRIL - 2000
This Trust Agreement (this "Agreement") between GENESIS FINANCIAL GROUP, INC., a
Michigan corporation, as settlor and sponsor ("Sponsor"), and GREGORY S. BARTON
as initial trustee ("Initial Trustee"), sets forth certain provisions and
provides certain powers to the Initial Trustee.
WITNESSETH THAT:
WHEREAS, the Sponsor is preparing to file a public registration of the GEN-NET
REALTY UNIT INVESTMENT TRUST, (the "Trust");
WHEREAS, the Initial Trustee shall execute the pre-registration procedures and
obligations of the Trust and shall resign before registration filing and shall
be succeeded by Citizens First Savings Bank; and
WHEREAS, Citizens First Savings Bank shall serve as successor trustee
("Trustee") of the restated trust commencing at resignation of the Initial
Trustee;
THEREFORE, in consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee agree to hold the trust estate for the
following uses and purposes and subject to the terms and conditions hereinafter
set forth:
PART I
GENERAL PROVISIONS
The following terms and conditions are hereby agreed to:
1. The Sponsor or any other person with the consent of the Trustee may add to
the principal of the Trust. Such additions shall be covered by the provisions
hereof, the same as if originally included herein.
2. This Agreement shall be construed and regulated in all aspects by the laws of
the State of Michigan.
3. This Trust shall for convenience be known as GEN-NET REALTY UNIT INVESTMENT
TRUST, and it shall be sufficient that it be referred to as such in any deed,
assignment, bequest or devise.
4. The paragraph headings used are for convenience only and shall not be
utilized for interpretation of this Trust Agreement. Wherever the context so
requires, the masculine shall include the feminine and neuter and the singular
shall include the plural. If any portion of this Trust Agreement is held to be
void or unenforceable, the balance of the Trust Agreement shall nevertheless be
carried into effect.
1
<PAGE>
PART II
DUTIES AND RIGHTS OF TRUSTEE
The Trustee shall manage, invest and reinvest the Trust Estate, shall collect
the income thereof, and pay necessary expenses, claims and debts.
The Trustee shall be entitled to receive a fair and just compensation for
services rendered hereunder and shall also be reimbursed for all reasonable
expenses incurred in the management and protection of the Trust Estate.
The Trustee shall render to the Sponsor, statements of assets in the Trust and
of receipts and disbursements as Trustee hereunder at least quarter-annually.
Such statements shall reflect the net earnings and the net losses of the Trust
and the increase or decrease in the value of the Trust Estate in accordance with
the then market value.
4. The Trustee shall be exempt from registering this Trust Agreement and any of
the trusts created hereunder as may be required by the Revised Probate Code for
the State of Michigan or any other applicable statute.
The Trustee may, at any time, record, file or deliver a Certificate of Trust
Existence and Authority with or to any clerk, register of deeds, transfer agent
or other similar agency or office or to any person dealing with the Trustee.
Such Certificate shall contain a verbatim recital of pertinent provisions of
this Agreement and shall be signed and acknowledged by Settlor or by the
Trustee. Any purchaser or persons dealing with the Trustee shall be entitled to
rely on such a Certificate as a full statement of the provisions of this
Agreement which are pertinent to the particular transaction. Machine copies of
the executed Certificate shall have the same effect and authority as the
executed Certificate.
Any Trustee or Successor Trustee may resign by instrument in writing.
PART III
POWERS AND OTHER DUTIES OF TRUSTEE
The Trustee shall, except as otherwise provided in this Trust Agreement, have
the following general powers, in addition to and not by way of limitation, the
powers provided by law, said powers to be exercised in the Trustee's absolute
discretion:
I . The Trustee is hereby granted the power to buy, sell, mortgage or lease any
property, real or personal, at any time forming a part of the said Trust Estate.
The Trustee shall also have all powers conferred upon Trustees by the statutes
of the State of Michigan. The Trustee shall not be limited to the type and
character of investments in which the Trustee may invest the funds of this
Trust, so long as the Trustee used reasonable prudence and judgment in the
selection of investments.
2. To make any payment or distribution herein with any item or items of property
without regard to the tax or other effect thereof on any beneficiary. The
Trustee shall not be required to make any equitable adjustment between and among
beneficiaries or with respect to the income and principal accounts of any trust
fund hereunder because of the tax or other effect of the Trustee's allocation.
The decision of the Trustee not to make any such adjustment shall be binding on
all interested parties.
2
<PAGE>
To retain such property for any period, whether or not the same be of the
character permissible for investments by fiduciaries under any applicable law,
and without diversification of the investments.
4. To render liquid the Trust Estate or any trust created hereunder, in whole or
in part at any time or from time to time, and hold cash or readily marketable
securities of little or no yield for such period as the Trustee may deem
advisable.
5. To borrow money for any purpose from any source including the Trustee or any
other fiduciary at any time acting hereunder, and to secure the repayment of any
and all amounts so borrowed by mortgage or pledge of any property.
6. To execute and deliver any and all investments in writing which it may deem
advisable to carry out any of the foregoing powers. No party to any such
instrument in writing signed by the Trustee shall be obliged to inquire into its
validity.
To invest any part or all of the principal of the Trust Estate in any common
trust fund, legal or discretionary, which may be established and operated by and
under the control of the Trustee.
8. To allocate in the Trustee's sole discretion, in whole or in part, to
principal and income, all receipts and disbursements for which no express
provision is made hereunder, which allocation shall fully protect the Trustee
with respect to any action taken or payment made in reliance thereon.
IN WITNESS WHEREOF, the parties hereto have duly executed this Trust Agreement
as of the date first above written.
GENESIS FINANCIAL GROUP, INC. GREGORY S. BARTON
Sponsor Trustee
/s/ D. James Barton /s/ Gregory S. Barton
- -------------------------- ------------------------------
D. James Barton, President GREGORY S. BARTON, Trustee
3
<PAGE>
EXHIBIT A (2)
GEN-NET REALTY UNIT INVESTMENT TRUST
CORPORATE-GOVERNMENT SERIES
AMENDED AND RESTATED TRUST AGREEMENT
<PAGE>
4/28/00
GEN-NET REALTY UNIT INVESTMENT TRUST
CORPORATE-GOVERNMENT SERIES
AMENDED AND RESTATED
TRUST AGREEMENT
Dated as of ___________, 2000
This Amended and Restated Trust Agreement (this "Agreement") between Genesis
Financial Group, Inc., a Michigan corporation ("Depositor-Sponsor"), and
Citizens First Savings Bank as trustee (Trustee"), sets forth certain provisions
in full and incorporates other provisions by reference to the document entitled
"Gen-Net Realty Unit Investment Trust, Corporate-Government Series, Standard
Terms and Conditions of Trust, Effective: ___________, 2000" (hereinafter
called the "Standard Terms and Conditions of Trust") and such provisions as
are set forth in full and such provisions as are incorporated by reference
constitute a single instrument, all of which amends and restates in full the
Trust Agreement for the Gen-Net Realty Unit Investment Trust entered into as
of April 1, 2000 between the Depositor-Sponsor as settlor and Gregory S.
Barton as initial trustee. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein contained,
the Depositor-Sponsor and the Trustee agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained in the
Standard Terms and Conditions of Trust are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully and
to the same extent as though such provisions had been set forth in full in this
instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.1(x), listed in Schedule A hereto,
shall be deposited in trust under this Trust Agreement, by the
Depositor-Sponsor.
2. The fractional undivided interest in and ownership of the Trust Fund
represented by each Unit shall fluctuate in accordance with the number of
Units
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<PAGE>
issued and outstanding. As Units are issued or redeemed, the denominator
will increase or decrease respectively.
3. The Initial Date of Deposit shall mean the date upon which Securities are
first deposited with the Trustee pursuant to this Agreement by the
Depositor-Sponsor.
4. The Mandatory Termination Date for this Agreement shall be June 30, 2005.
5. The compensation of the Trustee pursuant to Section 7.4 shall be as set
forth in the Exhibit A, attached hereto and incorporated herein by
reference.
6. Depositor-Sponsor shall grant to Trustee a an assignment of rents from the
Depositor-Sponsor to the Trustee, said assignment of rents being included
among the Securities, together with a properly filed UCC Assignment of
Rents.
IN WITNESS WHEREOF, the parties hereto have duly executed this Trust
Agreement as of the date first written above.
GENESIS FINANCIAL GROUP, INC. CITIZENS FIRST SAVINGS BANK
Depositor-Sponsor Trustee
By: By:
------------------------------ -----------------------------
Its: Its:
------------------------------ -----------------------------
<PAGE>
SCHEDULE A TO TRUST AGREEMENT
GEN-NET REALTY UNIT INVESTMENT TRUST
CORPORATE-GOVERNMENT SERIES
The following securities are qualified for depositing into the Trust.
1. Assignments of Rents which comply with the terms and conditions applicable
to qualifying assignments of rents as set forth in the Gen-Net Realty Unit
Investment Prospectus dated ___________, 2000.
2. The Trust may invest short-term Treasury securities, short-term corporate
bonds rated B+ or better, short term state-issued obligations, and
uninsured money market funds.
EXHIBIT A TO TRUST AGREEMENT
TRUSTEE'S FEES
Initial Set-up Fee $
Mailings per Unitholder, excluding postage
Account Annual Fee
Trustee Fee BP
<PAGE>
GEN-NET REALTY UNIT INVESTMENT TRUST
CORPORATE-GOVERNMENT SERIES
STANDARD TERMS AND CONDITIONS OF TRUST
EFFECTIVE: ___________, 2000
BETWEEN
GENESIS FINANCIAL GROUP, INC.
DEPOSITOR-SPONSOR
AND
CITIZENS FIRST SAVINGS BANK
TRUSTEE
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
STANDARD TERMS AND CONDITIONS OF TRUST
Page
----
<S> <C>
ARTICLE I ....................................................................3
SECTION 1.1 DEFINITIONS ....................................................3
ARTICLE II ...................................................................7
Section 2.1 Application of Offering Proceds ................................
Section 2.1 Deposit of Securities ..........................................7
Section 2.2 Acceptance of Trust ............................................8
Section 2.3 Recording of Units .............................................8
Section 2.4 Form of Unit Certificates ......................................9
Section 2.5 Separate Trust .................................................9
ARTICLE III .................................................................10
Section 3.1 Initial Cost ..................................................10
Section 3.2 Income Account ................................................10
Section 3.3 Capital Account ...............................................10
Section 3.4 Reserve Account ...............................................10
SECTION 3.5 DEDUCTIONS AND DISTRIBUTIONS ..................................11
Section 3.6 Distribution Statements .......................................12
Section 3.7 Sale of Securities ............................................14
Section 3.8 Counsel .......................................................15
Section 3.9 Liability of Depositor-Sponsor ................................15
Section 3.10 Notice to Depositor-Sponsor ..................................16
ARTICLE IV ..................................................................16
Section 4.1 Evaluation of Securities ......................................16
Section 4.2 Information for Unitholders ...................................16
Section 4.3 Liability of Depositor-Sponsor in Making Evaluation ...........17
ARTICLE V ...................................................................17
Section 5.1 Trust Evaluation ..............................................17
Section 5.2 Liability of Depositor-Sponsor Regarding Trust Fund Evaluatn...17
Section 5.3 Redemption of Units............................................18
Section 5.4 Transfer or Interchange of Units...............................19
Section 5.5 Unit Certificates Mutilated, Destroyed, Stolen or Lost ........20
ARTICLE VI ..................................................................20
Section 6.1 Representations of Depositor-Sponsor ..........................20
ARTICLE VII .................................................................21
Section 7.1 General Definition of Trustee's Liabilities, Rights and Duts...21
Section 7.2 Books, Records and Reports ....................................24
Section 7.3 Indenture and List of Securities on File ......................24
Section 7.4 Compensation ..................................................25
Section 7.5 Removal and Resignation of Trustee; Successor .................25
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<PAGE>
ARTICLE VIII .................................................................27
Section 8.1 Beneficiaries of Trust .........................................27
Section 8.2 Rights, Terms and Conditions ...................................27
ARTICLE IX ...................................................................28
Section 9.1 Events of Default ..............................................28
ARTICLE X ....................................................................29
Section 10.1 Amendments ....................................................29
Section 10.2 Termination; Repurchase of Securities; Failure to Repurchas....30
Section 10.3 Construction ..................................................32
Section 10.4 Written Notice ................................................32
Section 10.5 Severability ..................................................33
Section 10.6 Dissolution of Sponsor Not to Terminate .......................33
</TABLE>
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<PAGE>
GEN-NET REALTY UNIT INVESTMENT TRUST
CORPORATE-GOVERNMENT SERIES
STANDARD TERMS AND CONDITIONS OF TRUST
These Standard Terms and Conditions of Trust, effective __________, 2000,
are executed by GENESIS FINANCIAL GROUP, INC., a Michigan corporation, as
Depositor-Sponsor ("Depositor-Sponsor"), and CITIZENS FIRST SAVINGS BANK as
trustee ("Trustee"), and shall be applicable to the Gen-Net Realty Unit
Investment Trust, Corporate-Government Series.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor-Sponsor and the Trustee agree as follows:
INTRODUCTION
Standard Terms and Conditions of Trust.
WHEREAS, the form of the Unit Certificate(s) in the Trust shall be
substantially as follows:
THE SECURITIES REPRESENTED BY THIS UNIT CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAW OF ANY STATE.
NEITHER THESE SECURITIES NOR ANY INTEREST IN THEM MAY BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY ARE SO REGISTERED OR ANY
EXEMPTION FROM SUCH REGISTRATION IS OBTAINED BY THE UNITHOLDER.
UNIT CERTIFICATE OF OWNERSHIP
Evidencing an Undivided Interest In
GEN-NET REALTY UNIT INVESTMENT TRUST,
CORPORATE-GOVERNMENT SERIES
THIS IS TO CERTIFY THAT ____________________, is the owner and holder of
this Unit Certificate evidencing the ownership of a fractional undivided
interest in the above-named Trust created pursuant to the Indenture, a copy of
which is available at the office of the Trustee. This Unit Certificate is issued
under and is subject
<PAGE>
to the terms, provisions and conditions of the Indenture to which the holder of
this Unit Certificate by virtue of the acceptance hereof assents and is bound, a
summary of which Indenture is contained in the Prospectus dated _______________,
2000, related to the Trust. Subject to the restrictions on transfer contained in
the Indenture, this Unit Certificate is transferable and interchangeable by the
owner in person or by his duly authorized attorney at the Trustee's office upon
surrender of this Unit Certificate properly endorsed or accompanied by a written
instrument of transfer and any other documents that the Trustee may require for
transfer, in form satisfactory to the Trustee, and payments of the fees and
expenses provided in the Indenture.
Witness the facsimile signature of the Depositor-Sponsor and the manual
signature of an authorized signatory of the Trustee.
DATED:
________________________
Depositor-Sponsor Trustee
GENESIS FINANCIAL GROUP, INC. CITIZENS FIRST SAVINGS BANK
By: By:
------------------------------ -----------------------------
Its: Its:
------------------------------ -----------------------------
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, CITIZENS FIRST SAVINGS BANK OR ANY OTHER BANK AND ARE NOT FEDERALLY INSURED
OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY AGENCY.
(FORM OF ASSIGNMENT AS PROVIDED
ON BACK OF UNIT CERTIFICATE)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
UNIF GIFT MIN ACT _______ Custodian __________
(Cust) (Minor)
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<PAGE>
Under Uniform Gifts to Minors Act
- -----------------------------------------------
State
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
For Value Received, I ________________, ____ Units represented
_______________ "Assignee") whose social security or other identifying number
further hereby irrevocably constitute and appoint lawful attorney-in-fact, to
transfer said Units on the and substitution in the premises.
- -----------------------------------------------
Name of Assignor
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate in every particular, without alteration
or enlargement or any change whatever.
SIGNATURES GUARANTEED BY:
- -----------------------------------------------
Firm or Bank
- -----------------------------------------------
Authorized Signature
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor-Sponsor and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Whenever used in this Indenture the following
words and phrases, unless the context clearly indicates otherwise, shall have
the following meanings:
(a) "Affiliate" means (i) any entity which, directly or indirectly, is
controlled by the Depositor-Sponsor or in which the Depositor-Sponsor has an
interest; (ii) any individual related by blood or marriage to the
Depositor-Sponsor, (iii) any trust created for the benefit of any person named
in clauses (i) or (ii) hereof; and (iv) any officer,
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director, trustee, or employee of any corporation, trust, partnership of other
entity controlling, controlled by or under common control with the
Depositor-Sponsor.
(b) "Aggregate Number of Units" shall mean the number of Units to be
issued pursuant to the Trust Agreement with respect to Securities or additional
Securities deposited with the Trustee. As of the Initial Date of Deposit, the
Aggregate Number of Units shall be 165.
(c) "Assignment of Rents" shall mean an assignment to the Trust of all
or a portion of the net income due to the Depositor-Sponsor acting as the lessor
under the lease between the Depositor-Sponsor, and a qualifying lessee of real
property, said assignment, lease, real property and lessee each having satisfied
applicable conditions and requirements set forth in a Prospectus dated
____________, 2000, filed in connection with the offering of Units to the public
by the Depositor-Sponsor.
(d) "Business Day" shall mean any day that is not a Saturday, Sunday or
a public holiday under the laws of the State of Michigan.
(e) "Capital Account" shall have the meaning given to it in Section 3.3.
(f) "Capital Account Distribution Date" shall have the meaning assigned
to it in the Prospectus.
(g) "Capital Account Record Date" shall have the meaning assigned to it
in the Prospectus.
(h) "Depositor-Sponsor" shall mean Genesis Financial Group, Inc., a
Michigan corporation, and its successors in interest and any substitute
appointed pursuant to the terms of the Indenture.
(i) "Evaluation" shall have the meaning given to it in Section 4.1 (b).
(j) "Evaluation Time" shall have the meaning given to it in Section
4.1(a).
(k) "Fund" shall have the meaning stated under "Trust Fund" below.
(l) "Income Account" shall have the meaning given to it in Section 3.2.
(m) "Income Distribution" shall have the meaning given to it in Section
3.5(b)(ii).
(n) "Income Distribution Date" shall have the meaning assigned to it in
the Prospectus.
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<PAGE>
(o) "Income Distribution Record Date" shall have the meaning assigned to
it in the Prospectus.
(p) "Indenture" shall mean these Standard Terms and Conditions of Trust
as originally executed or, if amended as hereinafter provided, as so amended,
together with the Trust Agreement.
(q) "Initial Date of Deposit" shall have the meaning assigned to it in
the Trust Agreement.
(r) "Mandatory Termination Date" shall be the date so specified in Part
II item 4 of the Trust Agreement.
(s) "Offering Price" shall have the meaning assigned to it in the
Prospectus.
(t) "Offering" shall mean that offer of Units by the Prospectus
commencing not sooner than the effective date of the registration statement
accompanying said Prospectus for the jurisdiction in which the offer is to be
made.
(u) "Prospectus" shall mean the Prospectus and any amendments or
supplements thereto as filed as part of a registration statement for the
offering of the Units as declared effective by the Securities and Exchange
Commission on __________, 2000, relating to the Trust Fund, as it may be amended
hereafter.
(v) "Redemption Value" shall be the amount computed in Section 5.3.
(w) "Reserve Account" shall have the meaning given to it in Section 3.4.
(x) "Securities" shall mean the Assignments of Rents short-term and
Treasury securities, short-term corporate bonds rated B+ or better, short-term
state issued obligations, and uninsured money-market funds. The Securities, when
deposited in the Trust, shall be listed in Schedule A to the Trust Agreement.
(y) "Supplemental Indenture" shall mean an amendment or supplement to
the Indenture pursuant to Section 2.3(a) for the purpose of depositing
additional Securities in the Trust Fund and issuing additional Units.
(z) "Termination Price" shall equal the amount computed pursuant to
Section 10.2.
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<PAGE>
(aa) "Trustee" shall mean the entity designated in the Trust Agreement or
any successor trustee appointed as hereinafter provided.
(bb) "Trust" shall mean the separate trust created by this Indenture,
together with the fund of the Securities constituting the portfolio which is
listed in the Schedule attached to the Trust Agreement.
(cc) "Trust Agreement" shall mean the Trust Agreement for the particular
series of the Fund into which these Standard Terms and Conditions are
incorporated.
(dd) "Trust Evaluation" shall have the meaning given to it in Section
5.1.
(ee) "Trust Evaluation Time" shall have the meaning given to it in
Section 5.1.
(ff) "Trust Fund" or "Fund" shall mean the enterprise created by the
Trust Agreement, which shall consist of the Securities held pursuant and subject
to the Indenture, together with all undistributed income or other amounts
received or accrued thereon, any undistributed cash held in the Income and
Capital Accounts or otherwise realized from the sale, redemption, liquidation or
maturity of any of the Securities. Such amounts as may be on deposit in the
Reserve Account as hereinafter established shall be excluded from the Trust
Fund.
(gg) "Trust Fund Evaluation" shall equal the amount computed under
Section 5.1.
(hh) "Unit" shall mean the fractional undivided interest in and ownership
of the Trust which shall be priced at an amount as set forth in the Prospectus,
said undivided interest being a fraction, the numerator of which is one and the
denominator of which is (1) the number of Units distributed pursuant to the
offering described in the Prospectus increased by (2) the number of any
additional Units issued pursuant to Section 2.3 hereof and decreased by (3) the
number of any Units redeemed as provided in Section 5.3 hereof. Whenever
reference is made herein to the "interest" of a Unitholder in the Trust or in
the Income and Capital Accounts, it shall mean the total fractional undivided
interest represented by the number of Units held of record by such Unitholder.
(ii) "Unitholder" shall mean the registered holder of any Unit, whether
or not in certificated form, as recorded on the registration books of the
Depositor-Sponsor.
(jj) "Unit Certificate" shall mean a certificate executed by the Trustee
and the Depositor-Sponsor evidencing ownership of an undivided fractional
interest in the Trust.
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<PAGE>
Words importing singular number shall include the plural number in each
case and vice versa, and words importing persons shall include corporations and
associations, as well as natural persons. The words "herein," "hereby,"
"herewith," "hereof," "hereinafter," "hereunder," "hereinabove," "hereafter,"
"heretofore," and similar words or phrases of reference and association shall
refer to this Indenture in its entirety.
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST;
FORM AND ISSUANCE OF UNIT CERTIFICATES
SECTION 2.1 DEPOSITOR-SPONSORS CAPITAL; APPLICATION OF OFFERING PROCEEDS.
(a) The Depositor-Sponsor shall either (1) contribute to the Trust the
funds required to pay for the organizational costs of the Trust and for the
preparation and registration of the offering of the Units in the Trust or (2)
the Depositor-Sponsor shall pay said costs directly or on behalf of the Trust
without reimbursement by the Trust. In either event, the aggregate amount either
contributed by the Trust or paid directly by the Trust shall not be less than
One Hundred Thousand Dollars ($100,000.00). This amount is the
Depositor-Sponsor's capital in the Trust. The Depositor-Sponsor's capital shall
not receive distributions from the Trust and, upon termination and liquidation
of the Trust, the recovery of the Depositor-Sponsor's capital, if any, shall be
subordinated to the payments due the Unitholders pursuant to Section 10.2(c)
herein.
(b) The Depositor-Sponsor shall receive and apply the net proceeds from
the Offering, first, to the acquisition of leased real property meeting the
characteristics described in the Prospectus from which Assignment(s) of Rents
can be made by the Depositor-Sponsor to the Trustee, and thereafter any
remaining net proceeds will be applied by the Depositor-Sponsor to the
acquisition of other Securities for deposit with the Trustee.
Notwithstanding anything herein to the contrary, the Depositor-Sponsor
shall not acquire said leased property or Securities for deposit with the
Trustee using the net proceeds from the Offering if, after doing so, a specific
Assignment of Rent or other Securities will represent more than twenty-five
percent (25%) of the Trust assets or represents an interest in leased property
owned by an affiliate of the Depositor-Sponsor as by the Depositor-Sponsor
itself for the benefit of an affiliate.
SECTION 2.2 DEPOSIT OF SECURITIES.
(a) The Depositor-Sponsor, commencing with the Initial Date of Deposit
shall deposit with the Trustee in trust the Assignment(s) of Rents and/or, if
held by the Depositor-Sponsor, one or more of the Securities listed in Schedule
A to the Trust
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<PAGE>
Agreement, by delivering in bearer form or duly endorsed in blank or accompanied
by all necessary instruments of assignment and transfer in proper form the
Assignment(s) of Rents and the Securities, if applicable, to be held and applied
by the Trustee as herein provided.
(b) From time to time after the Initial Date of Deposit, the
Depositor-Sponsor is hereby authorized, in its discretion, to assign, convey to
and deposit with the Trustee additional Securities duly endorsed in blank or
accompanied by all necessary instruments of assignment and transfer in proper
form, to be held and applied by the Trustee as herein provided.
(c) In connection with the deposit with the Trustee (pursuant to Section
2.1(a) or additional deposit (pursuant to Section 2.1(b)) of Securities,
Depositor-Sponsor shall provide to Trustee evidence satisfactory to Trustee of
Depositor-Sponsor's ownership and/or rights in the Securities (including
unbroken chain of title, where applicable), and shall grant to Trustee a lien
against each real property to which an Assignment of Rents applies. Trustee
hereby delegates to the Depositor-Sponsor the right to exercise voting rights
pertaining to the Securities and Depositor-Sponsor assumes all liabilities
associated with the exercise or non-exercise of said voting rights.
SECTION 2.3 ACCEPTANCE OF TRUST. The Trustee hereby declares that it
shall perform the duties herein for the use and benefit of the Unitholders,
subject to the terms and conditions of this Indenture.
SECTION 2.4 RECORDING OF UNITS.
(a) The Trustee shall accept the deposit by the Depositor-Sponsor of the
Securities listed in Schedule A to the Trust Agreement and referred to in
Section 2.1 hereof. Simultaneously with the receipt of said deposit, the Trustee
shall record on its books the ownership and number of Units of the Trust of each
Unitholder from which the net proceeds of the Offering were used to purchase the
Securities so deposited in Trust from information provided to the Trustee from
the Depositor-Sponsor in conjunction with the deposit of the Securities. The
recording in its books by the Trustee of the ownership and number of Units held
based on information supplied to it by the Depositor-Sponsor shall constitute
authentication of the Unitholder's interest in the Trust and the Unitholder's
rights hereunder. The Trustee hereby agrees that on the date of any Supplemental
Indenture and deposit of additional Securities it shall acknowledge that the
additional Securities identified therein have been deposited with it by
recording on its books the ownership, by the person or persons as may be
indicated by the Depositor-Sponsor, of the aggregate number of Units to be
issued in respect of such additional Securities so deposited, and shall, if so
requested, execute a Unit Certificate or Unit Certificates substantially in the
form set forth below representing the ownership of an aggregate number of those
Units.
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<PAGE>
(b) Delivery of Unit Certificates requested is normally made three
(3) business days following receipt of a written request provided the minimum
number of Units have been subscribed and the proceeds from the Offering have
been released to the Depositor-Sponsor. Unit Certificates are transferable by
presentation and surrender to the Trustee properly endorsed or accompanied by
a written instrument or instruments of transfer. A Unit Certificate holder
must sign exactly as his or her name appears on the face of the Unit
Certificate with the guaranteed as is acceptable to the Trustee. Unit
Certificates will be issued in fully registered form, transferable only on
the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially.
(c) Under the terms and conditions of the Indenture and at such times
as are permitted by the Depositor-Sponsor, Units may also be held in
uncertificated form. Units will be held in uncertificated form unless a
Unitholder informs the Depositor-Sponsor that is desires a Unit Certificate.
Upon such notice, Depositor-Sponsor shall notify the Trustee in writing of
such Unitholder's request for a Unit Certificate. The Trustee, upon such
notice from the Depositor-Sponsor, shall execute and issue a Unit Certificate
in the name of the Unitholder as set forth in the Trustee's registration
books to evidence such Units and shall make an appropriate notation in its
registration books. Unit Certificates can be issued in denominations of one
Unit, or any whole multiple thereof, subject to the Trust Fund's minimum
investment requirements. Units may again be held in uncertificated form by
surrendering such Unit Certificate to the Trustee for cancellation. At such
time, an appropriate notation will be made in the registration book of the
Trustee to indicate that the Units formerly evidenced by such canceled Unit
Certificates are Units held in uncertificated from. The rights set forth in
this Indenture of any holder of Units whether held in uncertificated form or
of Units represented by a Unit Certificate shall be the same of those of any
other Unitholder.
SECTION 2.5 FORM OF UNIT CERTIFICATES. Each Unit Certificate referred to in
Section 2.3 is, and each Unit Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, transferable only on the books of the Trustee as herein
provided, executed in facsimile by the Chairman, President or one of the Vice
Presidents of the Depositor-Sponsor and manually by an authorized officer of the
Trustee dated the date of execution and delivery by the Trustee.
SECTION 2.6 SEPARATE TRUSTS. The Trust created by this Indenture is a
separate and distinct trust for all purposes and the assets of one trust may not
be co-mingled with the assets of any other nor shall the expenses of any trust
be charged against any other. Units representing the ownership of an undivided
fractional interest in this Trust shall not be exchangeable for units
representing the ownership of an undivided fractional interest in any other
trust.
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<PAGE>
ARTICLE III
ADMINISTRATION OF FUND
SECTION 3.1 INITIAL COST. The Trustee shall, where applicable, either pay
directly or reimburse the cost of organizing the Trust and all costs incurred in
connection with the offer and sale of Units from withdrawals from the Capital
Account. If the cash balance in the Capital Account is insufficient to make such
withdrawal, the Trustee shall promptly remit the invoice or bill to be paid to
the Depositor-Sponsor who may elect to (1) pay the said cost directly without
reimbursement or (2) acquire Units on the terms and conditions offered in the
Prospectus, provided Units are available for purchase, in such a number as is
sufficient to produce net proceeds to satisfy the said expenses to be paid.
The cost of the initial preparation, printing and execution of the Unit
Certificates, the initial fees of the Trustee, and other reasonable expenses in
connection therewith shall be paid by the Depositor-Sponsor and be reimbursed to
the Depositor-Sponsor out of the Income Account; provided, however, that the
liability on the part of the Depositor-Sponsor for such initial costs, fees and
expenses shall not include any fees, costs or other expenses incurred in
connection herewith after the execution of the Indenture and the deposit
referred to in Section 2.1.
SECTION 3.2 INCOME ACCOUNT. On or about the 15th day of each month until
this Indenture shall terminate as provided herein, the Depositor-Sponsor shall
deliver to the Trustee the collected rents due from the Assignment(s) of Rents
net of any property management fee which is due the property manager (including
all monies representing liquidated damages for default or breach of any
condition or term of the Assignment(s) of Rents). The Trustee shall collect
monthly such earnings, distributions, cash dividends or interest which may have
been paid with respect to the Securities of the Trust other than the Assignment
of Rents. The Trustee shall credit such income from all Securities to a separate
account for the Trust to be known as the "Income Account."
Any distributions received by the Trustee in a form other than cash shall
be sold in the manner directed by the Depositor-Sponsor and the proceeds of sale
credited to the Income Account of the Trust. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any such
sale.
SECTION 3.3 CAPITAL ACCOUNT. Any monies received from the Depositor-Sponsor
as proceeds from the sale of Units and all monies received by the Trustee in
respect of the Securities, other than amounts credited to the Income Account,
shall be credited to a separate account to be known as the "Capital Account."
SECTION 3.4 RESERVE ACCOUNT. Upon receipt of written instructions from the
Depositor-Sponsor containing the amount the Depositor-Sponsor deems necessary to
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establish a reserve for any applicable taxes or other charges that may be
payable out of the appropriate Trust, the Trustee shall withdraw from the Income
Account or the Capital Account of the Trust the amount indicated in such
instructions. Such amounts so withdrawn shall be credited to a separate account
which shall be known as the "Reserve Account." The Trustee shall not be required
to distribute to the Unitholders any of the amounts in the Reserve Account;
provided, however, that if the Depositor-Sponsor shall, in its sole discretion,
determine that such amounts are no longer necessary for the payment of any
applicable taxes or other charges, then the Trustee shall, upon the
Depositor-Sponsor's written instructions, promptly re-deposit such amounts,
together with any earnings on such amounts while in the Reserve Fund, into the
account from which they were withdrawn, or if such Trust shall have terminated
or shall be in the process of termination, the Trustee shall distribute such
amounts in accordance with Section 10.2(b)iv(B) to each Unitholder in accordance
with such holder's interest in the Reserve Account.
SECTION 3.5 DEDUCTIONS AND DISTRIBUTIONS
(a) On or immediately after the fifth (5th) day of each March, June,
October, and December, the Depositor-Sponsor shall satisfy itself as to the
adequacy of the Reserve Account, and shall provide instructions to the Trustee,
if Depositor-Sponsor deems it necessary, to make further credits thereto as may
appear appropriate in accordance with Section 3.4. The Trustee then shall, with
respect to the Trust:
(i) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account, and pay to itself the
amount that it is at the time entitled to receive pursuant to Section 7.4;
(ii) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account, and pay to counsel, as
hereinafter provided for, an amount equal to unpaid fees and expenses, if
any, of such counsel pursuant to Section 3.8, as certified to by the
Depositor-Sponsor; and
(iii) deduct from the Income Account or, to the extent funds are not
available in such Account, from the Capital Account, and pay to counsel, as
hereinafter provided for, an amount equal to unpaid fees and expenses, if
any, of such counsel pursuant to Section 7.1(e), as certified to by the
Trustee.
(b)(i) The Depositor-Sponsor shall provide the Trustee monthly with a
written notice of the Unitholders' Income Distribution (as defined below). Upon
receipt of such notice, the Trustee shall, on each Income Distribution Date,
distribute an amount per Unit equal to each Unitholder's Income Distribution
computed by the Depositor-Sponsor as of the close of business on the Income
Distribution Record Date immediately
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preceding such Income Distribution Date to each Unitholder of record at the
close of business on the Income Distribution Record Date. The Trust shall
provide the following distribution elections: (1) distributions to be made by
mail addressed to the post office address of the Unitholder as it appears on
the registration books of the Depositor-Sponsor or (2) distributions to be
made to the designated agent for any reinvestment program when, as and if
available to the Unitholder through the Depositor-Sponsor. If no election is
specified by the Unitholder at the time of purchase of any Unit, distribution
of principal and income and capital gains, if any, shall be distributed as
provided in (1) above. Any election other than a deemed election as described
in the preceding sentence shall be by written notice to, and in form
satisfactory to, the Trustee. Once a distribution election has been chosen by
the Unitholder, such election shall remain in effect until changed by the
Unitholder. Such change of election may be made by notification thereof to
the Trustee at any time in form satisfactory to the Trustee. A transfer of
any Unit may make his distribution election in the manner as set forth above.
Until notified otherwise in writing of a change or correction, the Trustee
shall be entitled to treat as correct the post office address of the
Unitholder as it appears on its registration books.
(ii) For the purpose of this Section 3.5, the Unitholder's "Income
Distribution" shall be equal to the Unitholder's number of Units multiplied
by the income per Unit as projected by the Depositor-Sponsor. The payment of
the projected income may be subsequently adjusted in later Income
Distribution Payments in the event of breach of a lease or default or any
other cause or condition which the Depositor-Sponsor, in its discretion,
determines could reasonably affect the projected income from the Assignment
of Rents or other Securities. The "Income Distribution" shall be computed by
the Depositor-Sponsor.
(iii) For the purpose of distributions as herein provided, the Unitholders
of record on the registration books of the Depositor-Sponsor at the close of
business on each Income Distribution Record Date shall be conclusively entitled
to such distribution, and no liability shall attach to the Trustee by reason of
payment to any Unitholder of record. Nothing herein shall be construed to
prevent the payment of amounts from the Income Account and the Capital Account
to individual Unitholders by means of one check, draft or other instrument or
device provided that the appropriate statement of such distribution shall be
furnished therewith as provided in Section 3.6 hereof.
SECTION 3.6 DISTRIBUTION STATEMENTS. With each distribution from the Income
or Capital Accounts of the Trust, the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in an
accompanying statement, the amount being distributed from each such account,
expressed as a dollar amount per Unit.
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Within a reasonable period of time after the last business day of each
calendar year, the Trustee shall furnish to each person who at any time during
such calendar year was a Unitholder of the Trust a statement setting forth, with
respect to such calendar year and with respect to the Trust:
(a) as to the Income Account:
i. the amount of income received (including amounts received as a
portion of the proceeds of any disposition of Securities),
ii. the amount paid for redemptions pursuant to Section 5.3,
iii. the deductions from the Income Account for payment into the
Reserve Account,
iv. the deductions for applicable taxes and fees and expenses of the
Trustee, counsel, auditors and any expenses paid by the Trust
pursuant to Section 3.5, and
v. the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount
per Unit outstanding on the last Business Day of such calendar
year;
(b) as to the Capital Account:
i. the date of principal payments and prepayments due to sale,
maturity, redemption, liquidation or disposition of any of the
Securities and the net proceeds received therefrom, excluding any
portion thereof credited to the Income account,
ii. any additions to the Capital Account by the Depositor-Sponsor in
order to meet costs incurred in connection with the offer and
sale of Units and the formation of the Trust,
iii. the amount paid for redemptions pursuant to Section 5.3,
iv. the deductions from the Capital Account, if any, for payment of
applicable taxes and fees and expenses of the Trust, counsel,
auditors and any expenses paid by the Trust under Section 3.5
v. the amount paid for redemptions pursuant to Section 5.3,
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vi. the deductions from the Capital Account for payments into the
Reserve Account,
vii. the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount
per Unit outstanding on the last Business Day of such calendar
year; and
(c) the following information:
i. a list of Securities as of the last Business Day of such calendar
year, and a list which identifies all Securities sold or other
Securities acquired during such calendar year, if any,
ii. the number of Units outstanding on the last Business Day of such
calendar year, and
iii. the amounts actually distributed or which are otherwise attributable
to Unitholders during such calendar year from the Income and Capital
Accounts, expressed as total dollar amounts for such distributions and
the status of such distributions for federal income tax purposes.
SECTION 3.7 SALE OF SECURITIES. If necessary, in order to maintain the
sound investment character of the Trust, the Depositor-Sponsor may notify the
Trustee in writing of its desire to sell or liquidate Securities in the Trust at
such price and time and in such manner as shall be determined that any one or
more of the following conditions exist:
(a) there has been an uncured default under an Assignment of Rents with
respect to the payment of rents;
(b) there has occurred a material breach of covenant or warranty in any
document relating to one or more leases underlying the Assignment(s) of Rents by
a tenant which would, in the opinion of the Depositor-Sponsor, adversely affect
either immediately or contingently the payment of rents the Assignment of Rents;
(c) the value of the underlying property pursuant to which the
Assignment of Rents has been issued has declined to such an extent or other such
credit factors exist so that in the opinion of the Depositor-Sponsor, as
evidenced in writing to the Trustee, the retention of such Assignment of Rents
would be detrimental to the Trust and to the interest of the Unitholders;
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(d) the issuer of a debt security included as one of the Securities
defaults on the payment of its outstanding obligations;
(e) that all of the Securities in the Trust Fund will be sold pursuant
to termination of the Trust pursuant to Section 10.2 hereof; or
(f) that such sale is necessary due to one or more Units tendered for
redemption and accepted for redemption by the Depositor-Sponsor pursuant to
Section 5.3.
Upon receipt of such notice, the Trustee shall deliver to the
Depositor-Sponsor the Securities identified by the Depositor-Sponsor to be sold
or liquidated. The Depositor-Sponsor shall then sell or liquidate the identified
Securities. Upon receipt of the proceeds from the Depositor-Sponsor of any such
sale or liquidation, after deduction therefrom any fees and expenses of the
Depositor-Sponsor connected with such sale or liquidation, and any brokerage
charges, taxes or other governmental charges, the Trustee shall deposit and
credit to the Capital Account such proceeds to meet redemptions of Units and to
pay expenses of the Trust. Proceeds not needed to meet redemption of Units or
pay expenses of the Trust shall be reinvested in the Securities selected by the
Depositor-Sponsor.
The Trustee shall not be liable in any way for depreciation or loss
incurred by reason of any sale made pursuant to this Section 3.7.
SECTION 3.8 COUNSEL. The Depositor-Sponsor may employ from time to time, as
it deems necessary or desirable, a firm of attorneys for any legal services
which may be required in connection with the Securities, including any legal
matters relating to the possible disposition or acquisition or any Securities
pursuant to any provisions hereof or for any other reasons deemed advisable by
the Depositor-Sponsor or the Trustee, in their discretion. The fees and expenses
of such counsel may, at the discretion of the Depositor-Sponsor, be paid by the
Trustee from the Income Account and Capital Account as provided for in Section
3.5(a)(ii) hereof.
SECTION 3.9 LIABILITY OF DEPOSITOR-SPONSOR. The Depositor-Sponsor shall be
under no liability to the Unitholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this Indenture or for
errors in judgment, but shall be liable only for its own willful misfeasance,
bad faith or negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder, The
Depositor-Sponsor may rely in good faith on any paper, order, notice, list,
affidavit, receipt, opinion, endorsement, assignment, draft or any other
document of any kind prima facie properly executed and submitted to it by the
Trustee, or any other persons pursuant to this Indenture and in furtherance of
its duties.
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SECTION 3.10 NOTICE TO DEPOSITOR-SPONSOR. In the event that the Trustee
shall have been notified at any time of any action to be taken or proposed to be
taken with respect to the Securities, the Trustee shall promptly notify the
Depositor-Sponsor and shall thereupon take such action or refrain from taking
any action as the Depositor-Sponsor shall in writing direct.
Neither the Depositor-Sponsor nor the Trustee shall be liable to any person
for any action or failure to take action pursuant to the terms of this Section
3.10.
ARTICLE IV
EVALUATION OF SECURITIES
SECTION 4.1 EVALUATION OF SECURITIES.
(a) The Depositor-Sponsor shall determine the value of all Securities in
the Trust as of the date a Security is deposited with the Trustee and thereafter
at the end of each calendar quarter. Each Evaluation shall be promptly provided
to the Trustee by the Depositor-Sponsor (the "Evaluation Time"). The Evaluation
on the Date of Deposit shall be included in Schedule A attached to the Trust
Agreement.
(b) The Evaluation is determined in the following manner: if the
Securities are listed on a national securities exchange, the Evaluation is
generally based on the closing sales prices on that exchange (unless it is
determined that these prices are inappropriate as a basis for evaluation) or, if
there is no closing sale price on that exchange, at the closing asked prices. If
the Securities are not so listed or, if so listed and the principal market
therefore is other than on the exchange, the Evaluation shall generally be based
on the current asked prices on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). An
Assignment of Rents shall initially be valued at the Unitholders' total
investment in the purchase of said Assignment of Rents, less any associated
transaction costs. Such valuation shall be relied upon until the
Depositor-Sponsor determines that market or other economic conditions (i.e.,
higher interest rates, breach of lease terms, owner's default in payment or
mortgage) require that an independent appraisal be made (such appraisal to be at
the expense of the Depositor-Sponsor without reimbursement by the Trust) to
determine an appropriate valuation.
(c) For purposes of the Trust Fund Evaluations required by Section 5.1,
the Redemption Value may be based in part on the Evaluation of the Securities
made in the manner described in Section 4.1 above.
SECTION 4.2 INFORMATION FOR UNITHOLDERS. For the purpose of permitting
Unitholders to satisfy any reporting requirements of applicable federal or state
tax law,
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the Trustee shall transmit to any Unitholder upon request any determinations
made pursuant to Section 4.1.
SECTION 4.3 LIABILITY OF DEPOSITOR-SPONSOR IN MAKING EVALUATION. The
Trustee and the Unitholders may rely on any Evaluation furnished by the
Depositor-Sponsor and shall have no responsibility for the accuracy thereof. The
determinations made by the Depositor-Sponsor hereunder shall be made in good
faith upon the basis of the best information reasonably available to it. The
Depositor-Sponsor shall be under no liability to the Trustee or the Unitholders
for errors in judgment; provided, however, that this provision shall not protect
the Depositor-Sponsor against any liability to which it would otherwise be
subject by reason of willful misfeasance, bad faith or negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder.
ARTICLE V
EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF UNITS
SECTION 5.1 TRUST EVALUATION. As requested by the Depositor-Sponsor, on the
last business day of each year, and on any other day as required herein ("Trust
Evaluation Time"), the Trustee shall: add (i) all monies on deposit in the
Trust (excluding monies credited to the Reserve Account pursuant to Section 3.4
hereof), plus (ii) the aggregate Evaluation of all Securities on deposit in the
Trust as is determined by the Depositor-Sponsor plus (iii) all other income from
the Securities as of the Trust Evaluation Time on the date of such evaluation
together with all other assets of such trust ("Trust Evaluation"). For each such
Trust Evaluation, there shall be deducted from the sum of the above (i) amounts
representing any applicable taxes or governmental charges payable out of the
Trust, as determined by the Depositor-Sponsor, and for which no deductions shall
have previously been made for the purpose of addition to the Reserve Account,
(ii) amounts representing estimated accrued expenses of the Trust including but
not limited to unpaid fees and expenses of the Trustee, the Depositor-Sponsor,
counsel of either, in each case as reported by the party who incurred such
expense on or prior to the Trust Evaluation Time, and (iii) any monies
identified by the Trustee, as of the Trust Evaluation Time, as held for
distribution to Unitholders of record as of an Income or Capital Distribution
Record Date or for payment of the Redemption Value of Units tendered prior to
such date. The resulting figure is herein called a "Trust Fund Evaluation."
SECTION 5.2 LIABILITY OF DEPOSITOR-SPONSOR REGARDING TRUST FUND EVALUATION.
The Trustee may rely on any instrument or document furnished by the
Depositor-Sponsor in connection with the calculation of the Trust Fund
Evaluation. The Trustee shall have no responsibility for the accuracy thereof.
The determinations made by the
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Depositor-Sponsor hereunder shall be made in good faith upon the basis of the
best information reasonably available to it. The Depositor-Sponsor shall be
under no liability to the Trustee or the Unitholders for errors in judgment;
provided, however, that this provision shall not protect the Depositor-Sponsor
against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith or negligence in the performance of its duties or
by reason of its negligent or intentional disregard of its obligations and
duties hereunder.
SECTION 5.3 REDEMPTION OF UNITS. A Unitholder shall not have the right
to tender any Unit(s) owned by him or her to the Trustee until the Mandatory
Termination Date. However, Depositor-Sponsor, in its sole discretion, may
authorize the Trustee to redeem Unit(s). A Unitholder shall inform the
Trustee in writing of the Unitholder's desire to have the Trustee redeem
Unit(s) owned by the Unitholder. The Trustee shall inform the
Depositor-Sponsor in writing of any Unitholder's desire to have his or her
Unit(s) redeemed ("Redemption Notice"). The Depositor-Sponsor shall notify
the Trustee in writing of its decision to redeem such Unit(s) no later than
30 days after receipt of the Redemption Notice. The Depositor-Sponsor
reserves the right to charge a reasonable redemption fee to any Unitholder
who is permitted to redeem his or her Unit(s) at the discretion of the
Depositor-Sponsor and to deduct any taxes or changes incurred by the Trustee
in connection with the redemption from the Unitholder's redemption funds.
The determination of the Unit Value shall be based solely upon the most
recent Evaluation outstanding as of on the date of the Redemption Notice. The
Trustee and Depositor-Sponsor shall not be liable in any way for any loss which
may result from reduction of the value of the Unit. EXCEPT AS SPECIFICALLY
DIRECTED BY THE DEPOSITOR-SPONSOR, THE TRUSTEE IS NOT EMPOWERED TO SELL THE
SECURITIES OF THE TRUST IN ORDER TO MAKE FUNDS AVAILABLE FOR REDEMPTION IF FUNDS
ARE NOT OTHERWISE AVAILABLE IN THE CAPITAL ACCOUNT TO MEET REDEMPTIONS.
In the event any Unit(s) are tendered by a Unitholder and accepted by
the Depositor-Sponsor pursuant to this Section, the Trustee shall, no later
than 60 days after the date the Depositor-Sponsor notifies the Trustee of its
decision to authorize the Trustee to redeem the Unit(s), (1) liquidate
Securities, other than the Assignment of Rents, in order to receive upon such
liquidation an amount expected to equal the Redemption Value due and owing to
such redeeming Unitholder, and (2) deliver funds equal to the Redemption
Value to the Depositor-Sponsor who shall promptly remit the same to the
redeeming Unitholder and (3) debit the amount of such Redemption Value from
the Capital Account.
Unit Certificates evidencing Units redeemed pursuant to this Section 5.3
shall be cancelled by the Trustee and the Unit or Units evidenced by such Unit
Certificates shall
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be terminated by such redemption. In the event that a Unit Certificate shall be
tendered representing a number of Units greater than those requested to be
redeemed by the Unitholder, the Trustee shall issue to such Unitholder, provided
such Unitholder requests such Units be certificated, upon payment of any tax or
charges of the character referred to in this Section 5.3, a new Unit Certificate
evidencing the Units representing the balance of the Unit Certificate so
tendered and not redeemed.
Upon the redemption of any Unit(s), the Depositor-Sponsor, through NASD
broker-dealers, may sell additional Units in the Trust to other qualified
purchaser(s) in accordance with all applicable securities laws. In such an
event, the Depositor-Sponsor shall deposit either the net proceeds or additional
Securities in the Trust so that no Unitholder's ownership interest in the Trust
shall be diluted as a result of the issuance of the new Units.
SECTION 5.4 TRANSFER OR INTERCHANGE OF UNITS. Units will be held in
uncertificated form unless the Unitholder requests in writing to have a Unit
Certificate or Unit Certificates represent such Units be issued. If a Unitholder
wishes to transfer any Unit(s), the Units may be transferred by the registered
holder thereof by a written presentation and surrender of such Units or the Unit
Certificates, if issued, at the corporate trust office of the Trustee, properly
endorsed or accompanied by a written instrument or instruments of transfer in
form satisfactory to the Trustee and executed by the Unitholder or his
authorized attorney, together with transfer instructions signed and dated by the
Unitholder and the transferee, whereupon Units or, if requested, a new
registered Unit Certificates for the same aggregate number of Units of the Trust
executed by the Trustee and the Depositor-Sponsor will be issued in exchange and
substitution therefor and delivered by the Trustee to the transferee. The Units
surrendered shall be cancelled by the Trustee. Subject to the foregoing, the
Trustee shall make proper notation of such transfer on the registration books of
the Trust. Unitholders holding their Units in uncertificated form may at any
time inform the Depositor-Sponsor that they wish to hold their Units in
certificated form. The Depositor-Sponsor shall notify the Trustee of such
request and the Trustee shall execute and issue Unit Certificates for such
Units. Unitholders holding Unit Certificates may at any time request that their
Units be converted into uncertificated form. The Trustee shall make appropriate
notations on its books reflecting action taken pursuant to such requests by
Unitholders, provided that the Trustee is entitled to specify the minimum
denomination of any Certificate issued. Unit Certificates issued pursuant to
this Indenture are interchangeable for one or more other Unit Certificates in an
equal aggregate number of Units of the same Trust and all Unit Certificates
issued shall be issued in denominations of one Unit or any whole multiple
thereof as may be requested by the Unitholder. The Trustee may deem and treat
the registered Unitholder as the owner of the Units whether or not held in
certificated form for all purposes hereunder and in either case the Trustee
shall not be affected by any notice to the contrary, nor be
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liable to any person or in any way for so deeming and treating the person in
whose name any Unit Certificate shall be so registered.
A sum sufficient to pay any tax or other governmental charge that may be
imposed in connection with any such transfer or interchange shall be paid by the
Unitholder to the Trustee. The Trustee may require a Unitholder to pay a
reasonable fee for each new Unit Certificate issued on any such transfer or
interchange.
All Unit Certificates cancelled pursuant to this Indenture shall be
disposed of by the Trustee without liability on its part.
SECTION 5.5 UNIT CERTIFICATES MUTILATED, DESTROYED, STOLEN OR LOST. In case
any Unit Certificate shall become mutilated, destroyed, stolen or lost, the
Trustee shall execute and deliver a new Unit Certificate, if requested by the
Unitholder, in exchange and substitution therefor upon the Unitholder's
furnishing the Trustee with proper identification and satisfactory indemnity,
complying with such other reasonable regulations and conditions as the
Depositor-Sponsor or Trustee may prescribe and paying such expenses as the
Trustee may incur. Any mutilated Unit Certificate shall be duly surrendered to
the Trustee and cancelled before any new Unit Certificate shall be issued in
exchange and substitution therefor. Upon the issuance of any new Unit
Certificate, a reasonable sum sufficient to pay any expenses of the Trustee or
otherwise associated with the reissuance may be imposed. Any such new Unit
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the related Trust, as if originally
issued, whether or not the lost, stolen or destroyed Unit Certificate shall be
found at any time.
In the event the Trust has terminated or is in the process of termination,
the Trustee may make the distributions in respect to such mutilated, destroyed,
stolen or lost Unit Certificate (without surrender thereof except in the case of
a mutilated Unit Certificate) as provided in Section 10.2 hereof if the Trustee
is furnished with such security or indemnity as it may require to save it
harmless, and in the case of destruction, loss or theft of a Unit Certificate,
evidence to the satisfaction of the Trustee of the destruction, loss or theft of
such Unit Certificate and of the ownership thereof.
ARTICLE VI
DEPOSITOR-SPONSOR
SECTION 6.1 REPRESENTATIONS OF DEPOSITOR-SPONSOR. Depositor-Sponsor hereby
represents to the Trustee the following:
(a) Depositor-Sponsor is a corporation duly incorporated, validly
existing, and in good standing under the laws of the state of Michigan, and
Depositor-Sponsor
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has full power, authority, and legal right to own its properties and assets and
to conduct its business as conducted as of the date of this Indenture.
(b) Depositor-Sponsor has full power and authority to execute, deliver
and perform its obligations under this Indenture.
(c) Depositor-Sponsor has full power and authority to assign its right,
title and interest in and to the Securities to the Trustee for the benefit of
the Unitholders.
(d) Prior to the time that the Securities are deposited in trust with
the Trustee, the Depositor-Sponsor will be the owner of the Securities free and
clear of all liens and encumbrances, except for Assignment(s) of Rents
subordinated to lender encumbrances or the real property that is leased from
which the Assignment(s) of Rents are derived.
(e) Prior to the time that any Securities are deposited in trust with
the Trustee, the Depositor-Sponsor shall have in its possession, and shall
provide copies to the Trustee the documents evidencing the Securities and
showing Depositor-Sponsor's ownership interest.
(f) At the time an Assignment of Rents is deposited in trust with the
Trustee, no default shall have occurred with respect to the payment of rents
which remains uncured under the lease of the real property underlying the
Assignment of Rents contained in the Trust, except as may be disclosed in the
Schedule 6.1(f) attached hereto and incorporated herein by reference.
(g) To the best of Depositor-Sponsor's knowledge, the tenant of the
obligor on each lease of the real property underlying the Assignment of Rents to
make payment of rents under the terms of said lease as and when due are not
subject to any defense, setoff, or counterclaim by any person obligated to pay
any indentures or perform any obligation pursuant to such lease at the time the
Assignment of Rents is deposited with the Trustee.
ARTICLE VII
TRUSTEE
SECTION 7.1 GENERAL DEFINITION OF TRUSTEE'S LIABILITIES, RIGHTS AND DUTIES.
The Trustee shall be obligated to perform only such duties as are specifically
set forth in this Indenture. The expenses and costs of allocations, undertakings
or proceedings shall be reimbursable to the Trustee from the Income and Capital
Accounts of the Trust, and the payment of such costs and expenses shall be
secured by a lien on the Trust in status prior to the interest of Unitholders.
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In addition to and notwithstanding the other duties, rights, privileges and
liabilities of the Trustee as otherwise set forth, the liabilities of the
Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee hereunder
related to the Trust shall be held by it in an interest bearing account in
trust, as part of the Trust Income Account, Capital Account or Reserve Account
until required to be disbursed in accordance with the provisions of this
Indenture, and such moneys will be segregated by separate recordation on the
trust ledger of the Trustee in such other manner as shall constitute the
segregation and holding thereof in trust. All Securities deposited with the
Trustee shall be held in trust by the Trustee or in the custody of a designated
agent and sold, transferred or distributed only pursuant to the terms and
conditions of this Indenture.
(b) The Trustee shall be under no liability for any action taken in good
faith on any appraisal, paper, order list, demand, request, consent, affidavit,
notice, opinion, direction, evaluation, endorsement, assignment, resolution,
draft or other document, whether or not of the same kind, prima facie properly
executed, or for the disposition of moneys, Securities, Units, or Unit
Certificates pursuant to this Indenture, or in respect of any evaluation which
it is required to make or is required or permitted to have made by others under
this Indenture or otherwise, except by reason of its own gross negligence or
willful misfeasance, provided that the Trustee shall not in any event be liable
or responsible for any evaluation made by the Depositor-Sponsor. The Trustee may
construe any of the provisions of this Indenture, insofar as the same may appear
to be ambiguous or inconsistent with any other provisions hereof, and any
construction of any such provision hereof by the Trustee in good faith shall be
binding upon the parties hereto.
(c) The Trustee shall not be responsible for or in respect of the
recitals herein, the validity or sufficiently of this Indenture or for the due
execution hereof by the Depositor-Sponsor, or the form, character, genuineness,
sufficiency, value or validity of any of the Securities or for or in respect of
the validity or sufficiency of the Units or of the Unit Certificates (except for
the due execution thereof by the Trustee) or for the due execution thereof by
the Depositor-Sponsor, and the Trustee shall in no event assume or incur any
liability, duty, or obligation to any Unitholder or the Depositor-Sponsor other
than as expressly provided for herein. The Trustee shall not be responsible for
or in respect of the validity of any signature by or on behalf of the
Depositor-Sponsor.
(d) The Trustee shall be under no obligation to appear in, prosecute or
defend any action which in its opinion may involve it in expense or liability,
unless (1) more than 50% of the Unitholders direct the Trustee to so intervene
and (2) the Trustee shall be furnished with reasonable security and indemnity
against such expense or liability. Any pecuniary cost of the Trustee from such
actions shall be deductible from and a
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charge against the Income and Capital Accounts of the affected Trust or Trusts.
The Trustee may, in its discretion, undertake such action as it may deem
necessary at any and all times to protect the Fund and the rights and interests
of the Unitholders pursuant to the terms of this Indenture; provided, however,
that the expenses and costs of such actions, undertakings or proceedings shall
be reimbursable to the Trustee from the Income and Capital Accounts and the
payment of such amounts shall be secured by a prior lien on such Trust.
(e) The Trustee may employ attorneys, accountants and auditors or other
professionals (collectively "Agents") and shall not be answerable for the
negligence, default or misconduct of any such Agents if they shall have been
selected with reasonable care. The Trustee shall have no liability for any act
or omission under this Indenture taken or suffered in good faith by the Trustee,
in accordance with the opinion of counsel which may be counsel to the
Depositor-Sponsor acceptable to the Trustee. The fees and expenses charged by
such Agents shall constitute an expense of the Trust reimbursable from the
Income and Capital Accounts of the affected Trust as set forth in Section 7.4
hereof and the payment of such amounts shall be secured by a prior lien on such
Trust.
(f) If at any time the Depositor-Sponsor shall fail to undertake or
perform any of the duties which by the terms of this Indenture are required
by it to be undertaken or performed, or such Depositor-Sponsor shall become
incapable of acting or shall be adjudged a bankrupt or insolvent, or a
receiver of such Depositor-Sponsor or of its property shall be appointed, or
any public officer shall take charge or control of such Depositor-Sponsor or
of its affairs for the purpose of rehabilitation, conservation of
liquidation, then in any such case, the Trustee shall at the direction of
more than 50% of the Unitholders: (1) appoint a successor Depositor-Sponsor,
which may be the Trustee or an affiliate, (provided, however, that the
Trustee shall have no obligation to accept such appointment) who shall act
hereunder in all respects in place of such Depositor-Sponsor, which successor
shall be satisfactory to the Trustee, and which may be compensated at rates
deemed by the Trustee to be reasonable under the circumstances, by deduction
ratably from the Income Account of the affected trusts or, to the extent
funds are not available in such Account, from the Capital Account of the
affected Trusts, with written notice of such successor to the
Depositor-Sponsor given to all Unitholders by the Trustee, or (2) terminate
this Indenture and the trust created hereby and liquidate the Trust Fund in
the manner provided in Section 10.2.
(g) In no event shall the Trustee be liable for any taxes or other
governmental charges imposed upon or in respect of the Securities or upon the
income or interest thereon or upon it as Trustee hereunder or upon or in respect
of any Trust which it may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction in the premises. For all such taxes and charges and for any
expenses, including counsel fees, which the Trustee may sustain or
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incur with respect to such taxes or charges, the Trustee shall be reimbursed and
indemnified out of the Income and Capital Accounts of the affected Trust, and
the payment of such amounts so paid by the Trustee shall be secured by a prior
lien on such Trust.
(h) Except as provided for specifically herein, no payment to a
Depositor-Sponsor, its Affiliates or agents for any Trust shall be
characterized and claimed as an expense by the Trustee against the Trust
except for payment of such reasonable amounts as determined by the
Depositor-Sponsor which constitute compensation for performing bookkeeping
and other administrative services.
(i) The Trustee, except by reason of its own gross negligence or willful
misconduct, shall not be liable for any act or omission taken or suffered to be
taken by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture.
(j) The Trustee is authorized to appoint as co-trustee a trust company
affiliated with the Trustee to perform the functions of custodian and receiving
and paying agent.
7.2 BOOKS, RECORDS AND REPORTS. The Trustee shall keep proper books of
record and account of all the transactions of each Trust under this Indenture at
its corporate trust office, including a record of the name and address of, and
the Units issued by each Trust and held by, every Unitholder. A Unitholder of
the Trust, upon written request, shall have the right to inspect such books and
records of the Trust which shall be open to inspection by any Unitholder of such
Trust at all reasonable times during the usual business hours of Trustee. The
Trustee which shall make such annual or other reports as may from time to time
be required under any applicable state or federal statute or rule or regulation
thereunder.
Unless the Depositor-Sponsor determines that such a compilation is not
required, the accounts of each Trust shall be compiled not less than annually by
independent public accountants designated from time to time by the
Depositor-Sponsor and reports of such accountants shall be furnished by the
Trustee, upon request, to Unitholders. The Trustee, however, in connection with
any such independent public accountant-prepared financial statements, shall not
be obligated to use Trust assets to pay for such audits in excess of the amounts
indicated in the Prospectus relating to such Trust.
7.3 INDENTURE AND LIST OF SECURITIES ON FILE. The Trustee shall keep a
certified copy or duplicate original of this Indenture on file at its corporate
trust office available for inspection. Any Unitholder may, upon prior written
request, inspect the Indenture, together with a current list of the Securities
in the Trust and the most recent Evaluation, at all reasonable times during the
usual business hours of Trustee.
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7.4 COMPENSATION. The Trustee shall receive at the times set forth in
Section 3.5 and in the amounts set forth in the Trust Agreement, compensation
for performing ordinary normal recurring services under this Indenture. Such
compensation shall be charged by the Trustee against the Income and Capital
Accounts of each Trust; provided, however, that such compensation shall be
deemed to provide only for the usual, normal and proper functions undertaken as
Trustee pursuant to this Indenture.
The Trustee shall charge the Income and Capital Accounts for any and all
expenses and disbursements incurred hereunder, including legal and accounting
expenses, and for any extraordinary services performed hereunder, which
extraordinary services shall include but not be limited to all costs and
expenses incurred by the Trustee in making any annual or other reports or
other documents referred to in Sections 7.1 and 7.2 and actions taken
pursuant to Sections 7.1(d) or 7.1(f) provided; however, that the amount of
any such charge which has not been finally determined as of any calculation
time may be estimated and any necessary adjustment shall be made. Provided,
further, that if the balances in the Income and Capital Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 7.4, the
Trustee shall have a lien on the Income and Capital Accounts, superior to the
rights of the Unitholders, for the amount due under this Section 7.4.
The Trustee shall be indemnified by the Trust and held harmless against any
loss or liability accruing to it (except to the extent such as loss or liability
is due to the negligence, bad faith or willful misconduct on its part), arising
out of or in connection with the acceptance or administration of the Trust(s),
including the costs and expenses (including counsel fees) of defending itself
against any claim of liability in the premises, including any loss, liability or
expense incurred in acting pursuant to written directions to the Trustee given
by the Depositor-Sponsor or Unitholders from time to time in accordance with the
provisions of this Indenture or in undertaking actions from time to time which
the Trustee deems necessary in its discretion to protect the Fund and the rights
and interests of the Unitholders pursuant to the terms of this Indenture.
7.5 REMOVAL AND RESIGNATION OF TRUSTEE; SUCCESSOR. The following
provisions shall provide for the removal and resignation of the Trustee and the
appointment of any successor trustee:
(a) The Trustee or any trustee or trustees hereafter appointed may
resign and be discharged of the Trusts created by this Indenture, by executing
an instrument in writing resigning as Trustee of such Trusts and filing same
with the Depositor-Sponsor and mailing a copy of a notice of resignation to all
Unitholders, then of record, not less than 60 days before the date specified in
such instrument when, subject to Section 7.5(e), such resignation is to take
effect. Upon receiving such notice of resignation, the Depositor-Sponsor shall
promptly appoint a successor trustee as hereinafter provided,
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by written instrument, in duplicate, one copy of which shall be delivered to the
resigning Trustee and one copy to the successor trustee. The Depositor-Sponsor
may at any time remove the Trustee, with or without cause, and appoint a
successor trustee by written instrument, in duplicate, one copy of which shall
be delivered to the Trustee so removed and one copy to the successor trustee.
Notice of such resignation or removal of a trustee and appointment of a
successor trustee shall be mailed by the successor trustee, promptly after its
acceptance of such appointment, to each Unitholder then of record.
(b) Any successor trustee appointed herein shall execute, acknowledge
and deliver to the Depositor-Sponsor and to the resigning or removed Trustee an
instrument accepting such appointment hereunder, and such successor trustee
without any further act, deed or conveyance shall become vested with all the
rights, powers and duties and obligations of its predecessor hereunder with like
effect as if originally named Trustee herein and shall be bound by all the terms
and conditions of this Indenture. Upon the request of such successor trustee,
the Depositor-Sponsor and the resigning or removed Trustee shall, upon payment
of any amounts due the resigning or removed Trustee, or provision therefor to
the satisfaction of such resigning or removed Trustee, execute and deliver an
instrument acknowledged by it transferring to such successor trustee all the
rights and powers of the resigning or removed Trustee; and the resigning or
removed Trustee shall transfer, deliver and pay over to the successor trustee
all Securities and moneys at the time held by it hereunder, together with all
necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the records or copies
thereof maintained by the resigning or removed Trustee in the administration
hereof as may be requested by the successor Trustee, and shall thereupon be
discharged from all duties and responsibilities under this Indenture.
(c) In case at any time the Trustee shall resign and no successor
trustee shall have been appointed and have accepted appointment within 30 days
after notice of resignation has been received by the Depositor-Sponsor, the
retiring Trustee may forthwith apply to a court of competent jurisdiction for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem prior and prescribe, appoint a successor trustee.
(d) Any corporation into which any trustee hereunder may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which any trustee hereunder shall be a party, shall be the
successor trustee under this Indenture without execution or filing of any paper,
instrument for further act to be done on the part of the parties hereto,
anything herein, or in any agreement relating to such merger or consolidation,
by which any such trustee may seek to retain certain powers, rights and
privileges thereto obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
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(e) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section shall become effective upon
acceptance of appointment by the successor trustee as provided in subsection
(b) hereof.
7.6 QUALIFICATION OF TRUSTEE. The Trustee shall be a corporation
organized and doing business under the laws of the United States or any state
thereof, which is authorized under such laws to exercise corporate trust
powers.
ARTICLE VIII
RIGHTS OF UNITHOLDERS
8.1 BENEFICIARIES OF TRUST. By the purchase and acceptance or other
lawful delivery and acceptance of any Unit, whether certificated or not, the
Unitholder shall be deemed to be a beneficiary of such Trust created by this
Indenture and vested with all right, title and interest in such Trust to the
extent of the Unit or Units set forth, subject to the terms and conditions of
this Indenture.
8.2 RIGHTS, TERMS AND CONDITIONS. In addition to the other
rights and powers set forth in the other provisions and conditions of this
Indenture, the Unitholders shall have the following rights and powers and shall
be subject to the following terms and conditions:
(a) Subject to and in accordance with Section 5.3, a Unitholder may
tender any Unit or a Unit Certificate(s) if held in certificated form
(including any temporary Unit Certificate or other evidence or ownership of
Units of such Trust issued by the Trustee or the Depositor-Sponsor) to the
Trustee for discretionary redemption as determined by the Depositor-Sponsor.
(b) The death or incapacity of any Unitholder shall not operate to
terminate this Indenture or a related Trust, nor entitle his legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court of competent jurisdiction for a partition or winding
up of the Trust Fund or a related Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Each
Unitholder expressly waives any right he may have under any rule of law, of
the provisions of any statute, or otherwise, to require the Trustee at any
time to account, in any manner other than as expressly provided in this
Indenture, in respect of the Securities or moneys from time to time received,
held and applied by the Trustee hereunder.
(c) Except as specifically provided for herein, no Unitholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust or the Securities or the obligations and management
of the Trustee or Depositor-Sponsor, nor shall anything herein set forth, or
contained in the terms of the Unit
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Certificates which may have been issued, be construed so as to constitute the
Unitholders from time to time as partners or members of an association; nor
shall any Unitholder ever be under any liability to any third persons by reason
of any action taken by the parties to this Indenture or any other cause
whatsoever.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT. One or more of the following events shall
constitute an Event of Default by the Depositor-Sponsor under this Indenture:
(a) The Depositor-Sponsor's failure to remit to the Trustee any
Securities or monies required to be deposited with the Trustee under the terms
of this Indenture which continues unremedied for a period of 10 days after the
date upon which written notice of such failure shall have been given to the
Depositor-Sponsor by the Trustee or 75 days from any due date set forth in the
provisions of this Indenture, whichever is sooner; or
(b) The Depositor-Sponsor's failure to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Depositor-Sponsor set forth in this Indenture which continues unremedied for
a period of 30 days after the date on which written notice of such failure
shall have been given to the Depositor-Sponsor by the Trustee; or
(c) A decree or order of the court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding up or liquidation of
its affairs, shall have been entered against the Depositor-Sponsor, and such
decree or order shall have remained in force undischarged or unstayed for a
period of 60 days; or then, and in each and every such case, so long as an
Event of Default shall not have been remedied, the Trustee may, and at the
written direction of Unitholders holding more than 50% of the aggregate
amount of Units held in the Trust must by notice in writing to the
Depositor-Sponsor and all the Unitholders of the Trust, in addition to
whatever rights the Unitholders may have at law or equity to damages,
terminate all the rights and obligations of the Depositor-Sponsor under this
Indenture and in and to the Securities held in such Trust and the proceeds
thereof.
On or after the receipt by the Depositor-Sponsor of such written notice,
all authority and power of the Depositor-Sponsor under this Indenture with
respect to the Securities held in such Trust, shall pass to and be vested in the
successor Depositor-Sponsor appointed pursuant to Section 7.1(f). Upon written
request from the Trustee, the Depositor-Sponsor shall prepare, execute and
deliver any and all documents and
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other instruments and place in such successor's possession all files relating
to the Securities held in such trust and do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment
of the Securities and related documents, or otherwise, at the
Depositor-Sponsor's sole expense. The Depositor-Sponsor agrees to cooperate
with the Trustee and such successor Depositor-Sponsor in effecting the
termination of the Depositor-Sponsor's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor
Depositor-Sponsor for administration by it of all cash amounts which shall at
the time be credited by the Trustee to the Income Account or Capital Account
or thereafter received with respect to the Securities held in such Trust.
Unitholders with respect to such Trust holding more than 50% in face amount
of all Units not redeemed by Depositor-Sponsor pursuant to Section 5.3, may,
on behalf of all Unitholders, waive any default by the Depositor-Sponsor in
the performance of its obligations hereunder and its consequences, except
that a default under (c) or (d) of this Section 9.1 may only be waived by all
Unitholders. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived.
ARTICLE X
ADDITIONAL COVENANTS; GENERAL PROVISIONS
SECTION 10.1 AMENDMENTS.
(a) This Indenture may be amended from time to time by the
Depositor-Sponsor and Trustee hereto or their respective successors, without
the consent of any of the Unitholders (i) to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein or (ii) to make such other
provision regarding matters or questions arising hereunder as shall not
adversely affect the interests of the Unitholders; provided, however, that in
no event may any amendment be made which would adversely affect the
characterization of a Trust as a grantor trust for federal income tax
purposes. This Indenture may not be amended, however, without the consent of
all Unitholders then outstanding, so as (1) to permit, except in accordance
with the terms and conditions hereof, the acquisition hereunder of any
Securities other than those described in the Prospectus, or (2) to reduce the
aforesaid percentage of Units the holders of which are required to consent to
certain of such amendments. This Indenture may not be amended so as to reduce
an interest in the Trust represented by Units (whether evidenced by Unit
Certificates or held in uncertificated from) without the consent of all
affected Unitholders.
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(b) Except for the amendments, changes or modification as provided in
Section 10.1(a) hereof, neither the parties hereto nor their respective
successors shall consent to any other amendment, change or modification of
this Indenture without the giving of notice and the obtaining of the approval
or consent of Unitholders representing more than 50% of the Units then
outstanding of the affected Trust. Nothing contained in this Section 10.1(b)
shall permit, or be construed as permitting, a reduction of the aggregate
percentage of Units the holders of which are required to consent to any
amendment, change or modification of this Indenture without the consent of
the Unitholders of all of the Units then outstanding of the affected Trust
and in no event may any amendment be made which would (1) alter the rights to
the Unitholders as against each other, (2) provide the Trustee with the power
to engage in business or investment activities other than as specifically
provided in this Indenture, or (3) adversely affect the characterization of
the Trust as a grantor trust for federal income tax purposes.
(c) Promptly after the execution of any such amendment the Trustee shall
furnish written notification to all then outstanding Unitholders of the
substance of such amendment.
SECTION 10.2 TERMINATION; TERMINATION PRICE OF SECURITIES; DISTRIBUTION OF
PROCEEDS UPON TERMINATION.
(a) This Indenture and the Trust created hereby shall terminate on the
Mandatory Termination Date. Upon the Mandatory Termination Date, the
registration books of the Trustee shall be closed. The Trust shall sooner
terminate if all of the Unitholders vote to terminate it, if it is terminated by
a court having lawful jurisdiction over the Trust or if the Trust is placed into
involuntary bankruptcy.
(b) In the event of a termination of the Trust, the Depositor-Sponsor
shall repurchase the Assignment(s) of Rents held by the Trustee and shall direct
the Trustee to sell, as of the Mandatory Termination Date or such other date
determined by the Depositor-Sponsor if the termination is prior to the Mandatory
Termination Date, all other Securities held by the Trustee in the Trust Fund.
The aggregate Termination Price of all Securities sold by the Trustee at the
direction of the Depositor-Sponsor shall be the net proceeds received by the
Trustee following said sale.
The Termination Price for the Assignment(s) of Rents which must be
repurchased by the Depositor-Sponsor from the Trustee shall be the lesser of (i)
the net amount received by the Depositor-Sponsor from the sale of the leased
real estate to which the Assignment(s) of Rents relate, or (ii) the amount of
proceeds from the sale of Units received by the Depositor-Sponsor as
consideration for transferring the Assignment(s) of Rents to the Trust. Full
payment of the Termination Price for the repurchase of the Assignment(s) of
Rents shall be due not later than 180 days after the
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date Depositor-Sponsor directs the Trustee to sell Securities in connection with
the termination of the Trust.
(c) The Termination Price for the repurchased Securities so determined
shall be communicated to the Trustee in writing and the Depositor-Sponsor shall
deliver the repurchase price in cash to the Trustee within a reasonable time
following the Mandatory Termination Date. The Trustee shall then proceed to make
the payments and distributions provided for hereinafter in this Section 10.2
based on such Unitholder's pro rata interest in the Termination Price and the
balance of the Capital and Income Accounts after the deductions herein provided.
Thirty (30) days prior written notice shall be given by the Trustee in
connection with the termination of this Indenture and the Trust created hereby
to each Unitholder at the address appearing on the registration books of the
Depositor-Sponsor.
On the fifth Business Day following receipt of funds in the amount of the
Termination Price for all the Securities held by the Trustee, the Trustee shall:
i. deduct from the Income Account of the Trust or, to the extent that
funds are not available in such Account of the Trust, from the Capital
Account of the Trust, and pay to itself individually an amount equal
to the sum of (A) its accrued compensation for its ordinary recurring
services, (B) any compensation due it for its extraordinary services
in connection with the Trust, and (C) any costs, expenses or
indemnities in connection with the Trust as provided herein;
ii. deduct from the Income Account of the Trust or, to the extent that
funds are not available in such Account, from the Capital Account of
the Trust and pay accrued and unpaid fees of counsel in connection
with the Trust, if any;
iii. deduct from the Income Account of the Trust or the Capital Account of
the Trust any amounts which may be required to be deposited in the
Reserve Account to provide for payment of any applicable taxes or
other governmental charges and any other amounts which may be required
to meet expenses incurred under this Indenture in connection with the
Trust;
iv. make final distributions from the Trust, against surrender for
cancellation for all of each Unitholder's Unit Certificate or Unit
Certificates, if issued, as follows:
(A) the Unitholder's pro rata share of the cash balance of the Income
Account; and
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(B) on the conditions set forth in Section 3.4 hereof, to all
Unitholders, their pro rata share of the balance of the Reserve
Account;
(C) the balance in the Capital Account up to the aggregate of the
Unitholder's investment. The Depositor-Sponsor, at its sole
discretion, may also distribute all or a portion of any excess
balance in the Capital Account to the Unitholders or may
distribute said excess to itself as a recovery of the
Depositor-Sponsor's capital contributed or paid on behalf of the
Trust in accordance with Section 3.6(b)(ii).
v. within 60 days after the distribution to each Unitholder as
provided for in Section 10.2(b)iv furnish to each such Unitholder
a final distribution statement, setting forth the data and
information in substantially for the form and manner provided for
in Section 3.6 hereof.
(c) The Trustee shall be under no liability with respect to moneys held
by it in the Income, Reserve and Capital Accounts of the Trust upon
termination except to hold the same in trust without interest until
disposed of in accordance with the terms of this Indenture.
SECTION 10.3 CONSTRUCTION. This Indenture shall be governed by and
construed in accordance with the laws of the State of Michigan without regard to
its conflict of laws rules.
SECTION 10.4 WRITTEN NOTICE. Any notice, demand, direction or instruction
required to be given hereunder, shall be in writing and shall be duly given if
mailed by first class mail with postage prepaid, delivered, or sent via
overnight courier at the address listed below:
Depositor-Sponsor: Genesis Financial Group, Inc.
One Oakland Towne Square
Suite 1450
Southfield, Michigan 48076
ATTN: D. James Barton
Trustee: Citizens First Savings Bank
555 Water Street
Port Huron, Michigan 48061
Unitholders: at the address of such holder
appearing on the registration
books of the Depositor-Sponsor
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or at such other address as the parties shall specify in writing.
SECTION 10.5 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary to
any express provision of law or contrary to policy of express law, though not
expressly prohibited, or against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or of the Unit
Certificates or the rights of the holders thereof.
SECTION 10.6 DISSOLUTION OF DEPOSITOR-SPONSOR NOT TO TERMINATE. The
dissolution of the Depositor-Sponsor for any cause whatsoever shall not operate
to terminate this Indenture or the Trust Fund or terminate as the duties and
obligations of the Trustee.
IN WITNESS WHEREOF, Genesis Financial Group, Inc. and Citizens First
Savings Bank, have each caused these Standard Terms and Conditions of Trust to
be executed by their duly authorized officers, all as of the day, month and year
first written above.
GENESIS FINANCIAL GROUP, INC.,
Depositor-Sponsor
BY:
-----------------------------
D. James Barton, President
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STATE OF MICHIGAN )
)ss.
COUNTY OF OAKLAND )
I, ______________, a Notary Public in and for the said County and State
aforesaid, do hereby certify that D. James Barton, President of Genesis
Financial Group, Inc., a Michigan corporation, appeared before me this day in
person, and acknowledged that he signed and delivered the said instrument as
his free and voluntary act as such President.
GIVEN under my hand and notarial seal this _______ day of _________,1999.
--------------------------------
Notary Public
CITIZENS FIRST SAVINGS BANK,
Trustee
By:
-----------------------------------
Its:
-----------------------------------
STATE OF _______________)
)ss.
COUNTY OF_______________)
I,_____________ , a Notary Public in and for the said County and State
aforesaid, do hereby certify that _______________, Vice President or President
of Citizens First Savings Bank, a Michigan corporation, appeared before me this
day in person, and acknowledged that he signed and delivered the said instrument
as his free and voluntary act as such President.
GIVEN under my hand and notarial seal this__________ day of ______________,1999.
---------------------------------
Notary Public
SCHEDULE 6.1(F)
DEFAULTS UNDER LEASE - NONE
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EXHIBIT A (3)
FORM OF DISTRIBUTION AGREEMENT
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT, made this___day of____________, ______ by and between Genesis
Financial Group, Inc. (the "Sponsor") on behalf of and for the benefit of Gen
Net Realty (the "Trust") a grantor trust organized by the Sponsor and
existing under the laws of the State of Michigan, and _______________
("Distributor"), a __________ corporation.
WHEREAS, the Distributor is a broker-dealer registered with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934 ("1934 Act") and is a member of the National Association of
Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Trust is a unit investment trust registered with the
Securities and Exchange Commission under the Investment Company Act of 1940
("1940 Act"); and
WHEREAS, the Trust proposes to offer for public sale units of direct
beneficial interest ("Units"), and
WHEREAS, the Trust desires the Distributor to act as the soliciting and
distribution party, on an agency basis, in connection with the offer of the
Units of the Trust for sale to the public, and the Distributor desires to so
act in these capacities;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein and for other good and valuable
consideration, receipt of which is acknowledged, the Sponsor and Distributor
mutually agree that Distributor will provide distribution services for the
Trust as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Sponsor hereby appoints Distributor
and Distributor hereby accepts the appointment as the distributor, on a
non-exclusive, agency basis, of Units issued by the Trust and registered with
the SEC in accordance with the Trust's registration statement together with
its final prospectus as filed and declared subsequently effective pursuant to
the Securities Act of 1933, as amended ("1933 Act") together with any
amendments or supplements to the Trust's registration statement which are
contained in the prospectus ("Prospectus").
2. ACCEPTANCE OF APPOINTMENT. Distributor hereby accepts the
appointment and agrees to use its best efforts to promote, offer for sale and
sell the Units of the Trust to the public pursuant to the terms and
conditions governing the offering of Units as provided by the Prospectus. In
so doing, Distributor shall conduct its affairs in accordance with the
Conduct Rules of the NASD and all other applicable laws and regulations.
<PAGE>
3. PRICE OF UNITS. The price at which the Units of the Trust shall be
sold to the public shall be the price as set forth in the Trust's Prospectus.
4. DISTRIBUTOR NOT AGENT IN CERTAIN CIRCUMSTANCES. Distributor is
authorized, upon receipt of the prior written consent of the Sponsor, to enter
into dealer agreements for the sale of Trust Units with registered
broker-dealers who are members of NASD. Distributor may also distribute Trust
Units directly through its own registered representatives. In either event,
Distributor shall be responsible for the payment of any and all fees or
conmmissions to such broker-dealers or representatives as set forth in
paragraph 6. In making agreements with its salesmen, broker-dealers, financial
institutions, and other institutions, organizations, and associations, the
Distributor shall act only in its own behalf as principal and not as agent for
the Trust or the Sponsor. The Distributor shall be agent for the Trust only in
respect to its offer and sale of the Trust's Units.
5. DISTRIBUTOR'S COMPENSATION. As compensation for all of its services
provided and its costs assumed under this Agreement, Distributor shall receive
on sales of Units of the Trust effected by or on behalf of the Distributor
pursuant to this Agreement or any dealer sales agreement entered into by the
Distributor for the distribution of the Units, the Sales Charge according to the
schedule which is mutually agreed upon and designated from time to time in an
effective registration statement or amendment thereto for the Trust under the
1933 Act.
6. ALLOCATION OF EXPENSES.
(a) Distributor shall be responsible for all costs and expenses incurred
in its distribution of Trust Units consisting of the following: (i)
compensation and expenses of sales and marketing personnel of the
Distributor; (ii) compensation (in addition to Sales Charges, if any) paid
to registered representatives of Distributor and other broker-dealers that
have entered into written dealer sales agreements with the Distributor; and
(iii) compensation to financial institutions and other institutions,
organizations and associations which have rendered assistance in the
distribution of the Units. The Trust shall pay for or cause to be paid all
expenses, costs and fees incurred by or on behalf of the Trust which are
not specifically assumed by the Distributor pursuant to this Distribution
Agreement except that any expenses and compensation paid to persons
associated with NASD member firms who arrange for other broker-dealers to
be distributors of Units on behalf of the Trust shall be paid for by the
Sponsor without reimbursement from the Trust.
(b) Except as specifically noted in paragraph 6(a) above, the Trust shall
be directly responsible for all costs associated with filing and
registration fees, printing expenses, costs of preparing sales literature,
blue sky expenses and miscellaneous expenses associated with the offering.
2
<PAGE>
7. ISSUANCE OF UNITS. The Trust shall not issue certificates representing
Trust Units unless requested by a Unitholder. If such request is transmitted
through Distributor, the Trust will cause certificates evidencing the Units
owned to be issued in the names and denominations as Distributor shall from time
to time direct. Nothing herein shall prevent the Trust from issuing directly,
without payment of any sales charge to Distributor, Trust Units as a dividend or
distribution to its Unitholders or in a reorganization.
8. MODIFICATION OF AGREEMENT. The terms and provisions of this Agreement,
shall be modified automatically to conform with the requirements imposed by the
1933 Act, the 1940 Act and the 1934 Act and the rules and regulations
promulgated thereunder. Otherwise, this Agreement may be modified only if the
modification is approved either: (a) by action of a majority of the Sponsor's
Directors who are not interested or affiliated persons of the Distributor or of
the Trust or of the trustee for the Trust.
9. TERM AND RENEWAL. This Agreement shall take effect upon its execution.
Thereafter, this Agreement shall continue in effect, unless sooner terminated as
hereinafter provided, for one year periods so long as its continuance is
approved by the Trust's Board of Directors including the vote of a majority of
the Sponsor's Board of Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval in accordance with the procedures and
requirements of the 1940 Act. Notwithstanding the foregoing, this Distribution
Agreement may be terminated at any time by the Sponsor as provided in paragraph
11 below.
10. ASSIGNMENT TERMINATES AGREEMENT. This Agreement shall automatically
terminate in the event of its assignment, as defined in the 1940 Act.
11. TERMINATION UPON NOTICE. Either party hereto shall have the right to
terminate this Agreement without payment of a penalty upon ten (10) days'
written notice to the other party, which notice may be waived by such other
party. Termination by the Trust shall be effectuated by notice from the Sponsor.
In the event of a material breach of this Agreement by the Distributor,
notwithstanding anything herein to the contrary, the Sponsor shall have the
right to terminate this Agreement immediately upon transmitting written notice
to the Distributor which shall include an explanation of the grounds for
termination.
12. INDEPENDENT CONTRACTOR. Distributor shall be deemed to be an
independent contractor and shall be free to render to other similar or
dissimilar services as those rendered under this Agreement.
3
<PAGE>
13. INFORMATION FURNISHED BY TRUST TO UNDERWRITER. The Trust shall furnish
the Distributor from time to time for use in connection with the registration of
the Trust and its securities under the Federal securities laws and with the sale
of its Units, such information with the respect to the Trust and its Units as
the Distributor may reasonably request, all of which shall be signed by one or
more of the Trust's duly authorized officers. The Trust warrants that the
statements containing any such information when so signed by its officers shall
be true and correct in all material respects. The Trust shall also furnish the
Distributor with any audits of its books and accounts made by independent public
accountants; with a monthly itemized list of the securities in its portfolio;
with monthly balance sheets as soon as practical after the end of each month;
and from time to time with such additional information regarding its financial
condition as the Distributor may reasonably request. The Trust shall cooperate
fully in the efforts of the Distributor to perform its duties under this
Agreement, and the Trust shall execute all documents reasonably necessary to
enable registration of the Trust and its Units under the Federal and State
securities laws and to maintain such registration as current.
14. REGISTRATION AND QUALIFICATION. In connection with the organization of
the Trust and the offering of its Units the Trust shall assume all expenses of
preparation, registration and qualification of Units of the Trust under Federal
and State laws and the filing of registration statements and copies of corporate
documents, agreements and any other related documents; specifically the Trust
shall pay all legal, county, registration and filing fees incident to such
registrations and filings. During such organizational and initial offering, the
Trust will also pay for the preparation and printing of Registration Statements
and Prospectuses when such documents are distributed to persons who are not
already shareholders of the Trust.
15. INDEMNITIES.
(a) The Trust agrees to indemnify, defend and hold Distributor, its
officers and directors and any person who controls Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the costs
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which Distributor, its
officers and directors or any such controlling person may incur under the
1933 Act, or under the common law or otherwise, arising out of or based
upon any alleged untrue statements of a material fact contained in the
Trust's Registration Statement and Exhibits and Prospectuses, or arising
out of or based upon any alleged omission to state a material fact required
to be stated in such documents or necessary to make the statements in them
not misleading, provided, however, that this indemnity, to the extent that
it might require indemnity of a person who is an officer or director or
controlling person of Distributor and who is also a director or officer of
the Trust, shall not inure to the benefit of such officer or director or
controlling person unless a court of competent
4
<PAGE>
jurisdiction shall determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy as expressed
in the 1933 Act; and further provided that in no event shall anything herein
contained be so construed as to protect Distributor (or its officers and
directors or any controlling persons) against any liability to the Trust or
its stockholders to which Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or negligence, in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement. The Trust's agreement to indemnify Distributor, its
officers and directors and any such controlling person as aforesaid is
expressly conditioned upon its being notified of any action brought against
Distributor, its officers and directors or any such controlling person, such
notification to be given by letter or telegram address to the Trust at its
principal office in______________, Michigan, and sent to it by the person
against whom such action is brought, within ten (10) days after the summons
or legal process shall have been serviced. The failure to so notify the Trust
of any such action shall not relieve it from any liability which it may have
to the person against whom such action is brought by reason of any such
alleged untrue statement or omission otherwise than on the account of the
indemnity contained in this paragraph. The Trust will be entitled at its
election, to assume the defense of any suit brought to enforce any such
claim, demand or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the Trust and approved by the
Distributor. In the event that the Trust does elect to assume the defense of
any such suit and retain counsel of good standing approved by the
Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor does not approve of counsel chosen the Trust will reimburse
Distributor, its officers and directors, or the controlling person named as
defendant or defendants in such suit, for the reasonable fees and expenses of
any counsel retained by Distributor or them. The indemnification contained in
this paragraph and the representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Distributor, its officers and directors, or any
controlling person, and shall survive the delivery of any Units of the Trust
hereunder. This indemnity will inure exclusively to Distributor's benefit, to
the benefit of its successors, to the benefit of its officers and directors
and their respective estates, and to the benefit of any controlling person
and its successors. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of its Units.
(b) The Distributor agrees to indemnify, defend and hold the Trust, its several
officers and directors, and any person who controls the Trust within the meaning
of the Section 15 of the 1933 Act, free and harmless from and against any and
all claims, demands, liabilities and expenses (including the costs of
investigating or
5
<PAGE>
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which Trust, its officers or directors, or any such
controlling person may incur under the 1933 Act or under the common law or
otherwise; but only to the extent that such liability or expense incurred by the
Trust, its officers or directors or such controlling person resulting from such
claims or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained information furnished in writing by
Distributor to the Trust for use in the Trust's Registration Statements and
Exhibits or Prospectuses or shall arise out of or be based upon any alleged
omission to stating material fact in connection with such information required
to be stated in such document and necessary to make the statements in them not
misleading. Distributor's agreement to indemnify the Trust, its officers and
directors, and any such controlling person as aforesaid is expressly conditioned
upon Distributor being notified of any action brought against Trust, its
officers or directors, or any such controlling person, such notification to be
given by letter or telegram addressed to the Distributor at its principal office
in ______________________________, Michigan, and sent to it by the person
against whom such action is brought, within ten (10) days after the summons or
other first legal process shall have been served. Distributor shall have a right
to control the defense of such action, with counsel of its own choosing,
satisfactory to the Trust, if such action is based solely upon such alleged
misstatement or omission on its part, and in any other event the Distributor or
such controlling person shall each have the right to participate in the defense
or preparation of the defense of any such action. Failure to so notify
Distributor of any such action shall not relieve Distributor from any liability
which Distributor may have to the Trust, it officers or directors, or to such
controlling person by reason of such untrue statement or omission on
Distributor's part otherwise than on account of its indemnity contained in this
paragraph.
16. LIMITATION OF LIABILITY. The Sponsor's Board of Directors, the Trustee
of the Trust, and the Unitholders of the Trust shall not be liable for any
obligations of the Trust under this agreement, and Distributor agrees that, in
asserting any rights of claims under this agreement, it shall look only to the
assets and property of the Trust in settlement of such right or claim, and not
to such Directors, Trustee or Unitholders.
17. REGISTRATION AND QUALIFICATION OF DISTRIBUTOR. Distributor is
registered and qualified as a broker-dealer with the U.S. Securities and
Exchange Commission and the Securities Commission of the States where the Units
of the Trust will be offered, and is a member of the NASD. Distributor will
comply with all Federal and State Securities laws applicable to the offer and
sale of the securities into the operation and conduct of the business of a
broker-dealer.
18. INTERESTED PERSONS. Absent law or regulation to the contrary, neither
this Agreement nor any transaction entered into pursuant hereto, shall be
invalidated or
6
<PAGE>
in any way affected by the fact that the Sponsor's Board of Directors, officers
or stockholders of the Trust are or may be interested persons of Distributor as
directors, officer or stockholders or otherwise; or that directors, officers or
stockholders of Distributor may be interested persons of the Sponsor as
directors, officers, shareholders, or otherwise.
19. NOTICES. Any notice under this Agreement shall be in writing and shall
be addressed and delivered, telecopied, electronically mailed or mailed, postage
prepaid, to the other party's principal place of business, or to such other
address as shall have been previously specified by written notice given to the
other party.
For notice purposes the address of the Trust and the Sponsor is c/o Genesis
Financial Group, Inc., One Oakland Towne Square, Suite 1450, Southfield,
Michigan 48076.
20. GOVERNING LAW. This Agreement is executed and delivered in the State
of Michigan and shall be governed by the laws of Michigan without regard to
Michigan's conflicts of laws principles and the 1933 Act, the 1934 Act, and 1940
Act.
21. DEFINITIONS. For the purpose of this Agreement, the terms "vote of the
majority of the outstanding securities", "assignment", "affiliated person" and
"interested person" shall have the respective meanings specified in the 1940
Act, as amended.
22. This writing constitutes the entire Distribution Agreement between the
parties and no conditions or warranties shall be implied herefrom unless
expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day first above written.
(Name of Distributor)
Attest: By:
-------------------------------- -----------------------------
Title:
-------------------------
Address:
-----------------------
--------------------------------
--------------------------------
Genesis Financial Group, Inc.
Attest: By:
-------------------------------- ----------------------------
7
<PAGE>
EXHIBIT A (5)
FORM OF ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
<PAGE>
ASSIGNMENT OF RENTS
AND
SECURITY AGREEMENT
THIS ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (hereinafter,
"Assignment") is made as of the ___ day of ___________, _____, by and between
Genesis Financial Group, Inc., a Michigan corporation (hereinafter,
"Sponsor") and Gen Net Realty Unit Investment Trust, Corporate and Government
Series, a Michigan grantor trust (hereinafter, "Fund") and Citizens First
Savings Bank, the trustee of the Fund (hereinafter, "Trustee").
Whereas, the Sponsor has the knowledge and expertise to identify and
negotiate the purchase of stand alone, single use, leased commercial real estate
properties in which the tenant is credit worthy to the extent of having a B+ or
better Standard and Poor's or equivalent credit rating or is a federal or state
agency or is the US Postal Service;
Whereas, the Sponsor can acquire and own one or more leased properties
which conform to the foregoing criteria and have a remaining lease term of ten
(10) years or more the ("Leased Property"); and
Whereas, the Sponsor, upon acquiring said Leased Property, intends to sell
the rental income generated from the lease to the Fund on terms and conditions
as set forth herein and to grant the Fund a subordinated security interest in
the lease as collateral to secure the Fund's payments due pursuant to this
Agreement.
Now, therefore, in consideration of their mutual covenants and other good
and valuable consideration, the parties agree as follows:
1. ASSIGNMENT. The Sponsor hereby irrevocably assigns and transfers to
the Trustee, for and on behalf of the Fund, all right, title and interest to
all rents due to the Assignor pursuant to that certain lease agreement
between ________________ and _________________ dated _____________, _____,
attached hereto as Exhibit A and incorporated by reference (hereinafter,
"Lease").
2. PRESENT ASSIGNMENT. This Assignment shall constitute a present,
absolute and unconditional assignment of all the rents due and owing under
the Lease on or after __________________, _____, until the termination of
this Assignment (hereinafter, "Assigned Rents"). The Trustee hereby names the
Sponsor, as its agent, to collect the Assigned Rents and promptly to remit
the Net Amount, as defined below, to the Trustee.
1
<PAGE>
The Sponsor shall, in addition to collecting the Assigned Rents, apply that
portion of the collected amount to the timely payment of the landlord's
obligations under the Lease, to the timely payment of any mortgages or deeds of
trust to which the Leased property is subject, and to the enforcement of the
Lease terms, if deemed by the Sponsor to be necessary and appropriate, and to
provide a monthly accounting to the Trustee of the funds so collected, applied
and remitted (the "Net Amount"). The Sponsor shall have the right to discount,
compromise or settle any rent payment or claim arising under the Lease without
obtaining the consent of the Trustee, but any such action shall require a
written report from the Sponsor to the Trustee setting forth the specific
reasons and justification for said action including the advice of legal counsel
to the Sponsor. The Trustee shall have no right or obligation whatsoever to take
action to enforce any Lease provision or any determination by the Sponsor
regarding any Lease provision.
3. PURCHASE PRICE. The Fund has acquired its rights to the Assigned
Rents pursuant to this Assignment by advancing to the Sponsor the sum of
__________________ Dollars ($__________), (hereinafter the "Purchase Amount").
4. SPONSOR'S REPRESENTATIONS. The Sponsor represents and warrants to
the following:
a) It is the fee title absolute owner of the real estate leased pursuant
to the Lease.
b) The Lease is a valid, binding and enforceable obligation between the
parties and there are no outstanding suits, claims, defaults, or
actions arising or existing under the Lease.
c) The Lease and the property rented pursuant to the Lease are in
compliance with all local building code, zoning and other applicable
local laws, regulations and ordinances.
d) The Sponsor has full authority to acquire the Leased property and to
assign the Assigned Rents pursuant to this Assignment.
e) There are no encumbrances or restrictions of any kind that could
adversely affect this Assignment and the transfer of the Assigned
Rents except those disclosed to the Sponsor in a title report as
existing on the record as of the date the Sponsor acquires title to
the Leased property.
f) Sponsor shall cause the recording of a mortgage or deed of trust
securing the Fund's Purchase Amount paid to the Sponsor and this
Assignment and said encumbrances shall have priority over all claims
except those referenced in subpart (e) above.
2
<PAGE>
5. SECURITY INTEREST. The Sponsor hereby conveys, transfers, delivers
and grants a security interest in the Lease and in the Lease property
(collectively, the "Collateral") to the Trustee. Said security interest shall
be subordinate to any encumbrance existing on the Lease property or placed on
the Lease property by a third party lender as part of the Sponsor's
acquisition of the Lease property. The security interest is given to the
Trustee to secure the prompt payment of the Net Amount due under paragraph 2
above, to secure the Purchase Amount and to reimburse any costs of collection
incurred by or on behalf of the Fund.
6. DEFAULT. An event of default under any mortgage or deed of trust
referenced in paragraph 4(e) above shall constitute an event of default under
this Assignment and under the mortgage or deed of trust securing the Purchase
Amount. Failure to comply with any provision of this Assignment, unless cured
within five (5) days of Sponsor's receipt of notice of said failure from the
Trustee, shall constitute an event of default hereunder and under the
mortgage or deed of trust securing the Purchase Amount.
7. REMEDIES.
a) In addition to all rights afforded the Fund at law or in equity, in
the event of a default the Fund shall, on written notice to the
Sponsor, replace the Sponsor as its agent for the purpose of
collecting the Assigned Rents and making disbursements as provided
under the terms of the Lease. The Trustee shall appoint the
replacement agent which may be an affiliate of the Trustee.
b) In the event of a default, the Purchase Amount shall be immediately
due and payable by the Sponsor. Time is of the essence.
8. NO LIABILITY FOR TRUSTEE. The Trustee shall not be obligated to
perform or discharge any duties or obligation of the Sponsor as owner of the
Lease property or the parties to the Lease.
9. FURTHER ASSURANCES. The Sponsor shall execute, acknowledge and
deliver such additional documents or information in its possession or under
its control as may be reasonably required from time to time to effectuate the
terms of this Assignment.
10. TERMINATION. This Assignment shall terminate on the earlier of (a)
the termination of the Lease, (b) the date given by the Sponsor to the
Trustee with sixty (60) days prior written notice or (c) __________________,
_____. Any accrued but unpaid Assigned Rents, net of outstanding obligations
of the landlord under the Lease, shall also be due and payable.
Notwithstanding anything herein to the contrary, in the event of a
3
<PAGE>
default which is uncured or upon termination of this Assignment, the Sponsor
shall sell the Leased Property and, within 180 days after the termination of the
Net Amount payments, the Sponsor shall remit to the Fund an amount equal to the
lesser of the Purchase Amount or all of the net proceeds from the sale of the
Leased Property. The payment of said remittance shall satisfy the Sponsor's
obligations to the Fund as set forth herein.
11. SUCCESSORS. This Assignment shall be binding upon the parties
hereto, their successors, legal representatives assigns. The Sponsor shall
not assign any of its obligations hereunder.
12. GOVERNING LAW. This Assignment is made pursuant to and shall be
governed by the laws of the State of Michigan.
13. NOTICES. Any notice which a party may be required or may elect to
give shall be in writing and mailed by certified mail or its equivalent or by
facsimile reproduction with a copy sent by first class mail, and shall be
effective and shall be effective upon mailing or completion of the facsimile
transmission. Notices shall be addressed as follows unless otherwise directed
in writing.
If to Sponsor:
Genesis Financial Group, Inc.
One Oakland Towne Sq.
Suite 1450
Southfield, MI 48076
Attn: Gregg Barton
Bus Fax: (248) 948-9166
If to Trustee and Fund:
Citizens First Savings Bank
Bus Fax:
Entered into as of the day and year set forth above.
Genesis Financial Group, Inc.
Attest: By:
------------------------- ----------------------------------------
President
4
<PAGE>
Gen Net Realty Unit Investment Trust,
Government and Corporate Series
By: Citizens First Savings Bank, Trustee
By:
----------------------------------------
5
<PAGE>
EXHIBIT A(7)
CERTIFICATE OF INCORPORATION AND BY-LAWS
<PAGE>
[LOGO]
MICHIGAN DEPARTMENT OF COMMERCE
LANSING, MICHIGAN
THIS IS TO CERTIFY THAT ARTICLES OF INCORPORATION OF
GENESIS FINANCIAL GROUP, INC.
WERE DULY FILED IN THIS OFFICE ON THE 23RD DAY OF JUNE, 1994, IN CONFORMITY WITH
ACT 284, PUBLIC ACTS OF 1972, AS AMENDED.
[LOGO] IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY
HAND AND AFFIXED THE SEAL OF THE DEPARTMENT,
IN THE CITY OF LANSING, THIS 23RD DAY
OF JUNE, 1994.
/s/ ILLEGIBLE, DIRECTOR
CORPORATION & SECURITIES BUREAU
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE -- CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
(FOR BUREAU USE ONLY) Date Received
FILED JUN 17, 1994
JUN 23, 1994 ----------------------
ADMINISTRATOR
MICHIGAN DEPARTMENT OF COMMERCE ----------------------
EFFECTIVE DATE: CORPORATION & SECURITIES BUREAU
- --------------------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER 133-569
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(Please read information and instructions on last page)
PURSUANT TO THE PROVISIONS OF ACT 284, PUBLIC ACTS OF 1972, THE UNDERSIGNED
CORPORATION EXECUTES THE FOLLOWING ARTICLES:
ARTICLE I
- --------------------------------------------------------------------------------
The namne of the corporation is:
Genesis Financial Group, Inc.
- --------------------------------------------------------------------------------
ARTICLE II
- --------------------------------------------------------------------------------
The purpose or purposes for which the corporation is formed is to engage in any
activity within the purposes for which corporations may be formed under the
Business Corporation Act of Michigan.
- --------------------------------------------------------------------------------
ARTICLE III
- --------------------------------------------------------------------------------
The total authorized shares:
1. Common Shares 60,000
--------------------------------------------------------------
Preferred Shares
-----------------------------------------------------------
2. A statement of all or any of the relative rights, preferences and
limitations of the shares of each class is as follows:
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE -- CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
Date Recieved (FOR BUREAU USE ONLY)
JUL 19 1995 FILED
- ------------------------------------------- JUL 21 1995
Name ADMINISTRATOR
Genesis Financial Group, Inc. MICHIGAN DEPARTMENT OF COMMERCE
- ------------------------------------------- CORPORATION & SECURITIES BUREAU
Address
One Oakland Towne Square, 14th Floor
- -------------------------------------------
City State Zip Code EFFECTIVE DATE:
Southfield MI 48076
- --------------------------------------------------------------------------------
DOCUMENT WILL BE RETURNED TO NAME AND ADDRESS INDICATED ABOVE
CERTIFICATE OF CHANGE OF REGISTERED OFFICE AND/OR CHANGE OF RESIDENT AGENT
FOR USE BY DOMESTIC AND FOREIGN CORPORATIONS
(Please read information and instructions on reverse side)
PURSUANT TO THE PROVISIONS OF ACT 284, PUBLIC ACTS OF 1972 (PROFIT
CORPORATIONS), OR ACT 162, PUBLIC ACTS OF 1982 (NONPROFIT CORPORATIONS), THE
UNDERSIGNED CORPORATION EXECUTES THE FOLLOWING CERTIFICATE:
- --------------------------------------------------------------------------------
1. The name of the corporation is: Genesis Financial Group, Inc.
2. The corporation identification number (CID) assigned by the Bureau
is: 133-569
3. a. The name of the resident agent on file with the Bureau is:
D. James Barton
----------------------------------------------------------------------
b. The address of the registered office on file with the Bureau is:
3466 Penobscot Building Detroit , Michigan 48226
----------------------------------------------------------------------
(STREET ADDRESS) (CITY) (ZIP CODE)
c. The mailing address of the above registered office on file with the
Bureau is:
, Michigan
----------------------------------------------------------------------
(P.O. BOX) (CITY) (ZIP CODE)
- --------------------------------------------------------------------------------
ENTER IN ITEM 4 THE INFORMATION AS IT SHOULD NOW APPEAR ON OUR RECORDS
- --------------------------------------------------------------------------------
4. a. The name of the resident agent is: D. James Barton
------------------------------------
b. The address of the registered office is:
One Oakland Towne Square, 14th Floor Southfield , Michigan 48076
----------------------------------------------------------------------
(STREET ADDRESS) (CITY) (ZIP CODE)
c. The mailing address of the registered office IF DIFFERENT THAN 4B IS:
, Michigan
----------------------------------------------------------------------
(P.O. BOX) (CITY) (ZIP CODE)
- --------------------------------------------------------------------------------
5. The above changes were authorized by resolution duly adopted by its board
of directors or trustees, or by the resident agent of a profit corporation
to change the address of the registered office in which case a copy of this
statement has been mailed to the corporation. The Corporation further
states that the address of its registered office and the address of its
resident agent, as changed, are identical.
- --------------------------------------------------------------------------------
Date signed: June 29, 1995 Signed by: /s/ D. James Barton
------------------ -------------------------------------
(SIGNATURE)
D. James Barton, President
-----------------------------------------------
(TYPE OR PRINT NAME) (TYPE OR PRINT TITLE)
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE -- CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
Date Recieved (FOR BUREAU USE ONLY)
JUL 19 1995 FILED
- ------------------------------------------- JUL 21 1995
Name ADMINISTRATOR
Genesis Financial Group, Inc. MICHIGAN DEPARTMENT OF COMMERCE
- ------------------------------------------- CORPORATION & SECURITIES BUREAU
Address
One Oakland Towne Square, 14th Floor
- -------------------------------------------
City State Zip Code EFFECTIVE DATE:
Southfield MI 48076
- --------------------------------------------------------------------------------
DOCUMENT WILL BE RETURNED TO NAME AND ADDRESS INDICATED ABOVE
CERTIFICATE OF CHANGE OF REGISTERED OFFICE AND/OR CHANGE OF RESIDENT AGENT
FOR USE BY DOMESTIC AND FOREIGN CORPORATIONS
(Please read information and instructions on reverse side)
PURSUANT TO THE PROVISIONS OF ACT 284, PUBLIC ACTS OF 1972 (PROFIT
CORPORATIONS), OR ACT 162, PUBLIC ACTS OF 1982 (NONPROFIT CORPORATIONS), THE
UNDERSIGNED CORPORATION EXECUTES THE FOLLOWING CERTIFICATE:
- --------------------------------------------------------------------------------
1. The name of the corporation is: Genesis Financial Group, Inc.
2. The corporation identification number (CID) assigned by the Bureau
is: 133-569
3. a. The name of the resident agent on file with the Bureau is:
D. James Barton
----------------------------------------------------------------------
b. The address of the registered office on file with the Bureau is:
3466 Penobscot Building Detroit , Michigan 48226
----------------------------------------------------------------------
(STREET ADDRESS) (CITY) (ZIP CODE)
c. The mailing address of the above registered office on file with the
Bureau is:
, Michigan
----------------------------------------------------------------------
(P.O. BOX) (CITY) (ZIP CODE)
- --------------------------------------------------------------------------------
ENTER IN ITEM 4 THE INFORMATION AS IT SHOULD NOW APPEAR ON OUR RECORDS
- --------------------------------------------------------------------------------
4. a. The name of the resident agent is: D. James Barton
------------------------------------
b. The address of the registered office is:
One Oakland Towne Square, 14th Floor Southfield , Michigan 48076
----------------------------------------------------------------------
(STREET ADDRESS) (CITY) (ZIP CODE)
c. The mailing address of the registered office IF DIFFERENT THAN 4B IS:
, Michigan
----------------------------------------------------------------------
(P.O. BOX) (CITY) (ZIP CODE)
- --------------------------------------------------------------------------------
5. The above changes were authorized by resolution duly adopted by its board
of directors or trustees, or by the resident agent of a profit corporation
to change the address of the registered office in which case a copy of this
statement has been mailed to the corporation. The Corporation further
states that the address of its registered office and the address of its
resident agent, as changed, are identical.
- --------------------------------------------------------------------------------
Date signed: June 29, 1995 Signed by: /s/ D. James Barton
------------------ -------------------------------------
(SIGNATURE)
D. James Barton, President
-----------------------------------------------
(TYPE OR PRINT NAME) (TYPE OR PRINT TITLE)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Form SS-4 APPLICATION FOR EMPLOYER IDENTIFICATION NUMBER
(Rev. December 1993) EIN 38-3212908/TT
(For use by employers, corporations, partnerships, trusts, estates, churches, ---------------------
Department of the Treasury government agencies, certain individuals, and others. See instructions.) OMB No. 1545-0003
Internal Revenue Service Expires 12-31-96
- ------------------------------------------------------------------------------------------------------------------------------------
[SIDENOTE]
Please type or print clearly.
1 Name of applicant (Legal name) (See instructions.)
Genesis Financial Group
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2 Trade name of business, if different from name in line 1 3 Executor, trustee, "care of" name
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4a Mailing address (street address) (room, apt., or suite no.) 5a Business address, if different from address in lines 4a and 4b
1515-D Penobscot Building
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4b City, state, and ZIP code 5b City, state, and ZIP code
Detroit, MI 48226
- ------------------------------------------------------------------------------------------------------------------------------------
6 County and state where principal business is located
Wayne Michigan
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7 Name of principal officer, general partner, grantor, owner, or trustor -- SSN required (See instructions.) - ###-##-####
D. James Barton, President
- ------------------------------------------------------------------------------------------------------------------------------------
8a Type of entity (Check only one box.) (See instructions.)
/ / Estate (SSN of decedent)________________ / / Trust
/ / Sole Proprietor (SSN) ___________________________ / / Plan administrator-SSN _________________ / / Partnership
/ / REMIC / / Personal service corp. /X/ Other corporation (specify)_____________ / / Farmers' cooperative
/ / State/local government / / National guard / / Federal government/military / / Church or church controlled organization
/ / Other nonprofit organization (specify) __________________________ (enter GEN if applicable)___________________________________
/ / Other (specify) - ____________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
8b If a corporation, name the state or foreign country State Foreign country
(if applicable) where incorporated - Michigan
- ------------------------------------------------------------------------------------------------------------------------------------
9 Reason for applying (Check only one box.) / / Changed type of organization (specify) - __________________
/X/ Started new business (specify) - ____________________________ / / Purchased going business
/ / Hired employees / / Created a trust (specify) - _______________________________
/ / Created a pension plan (specify type) - ______________________________________________________________________________________
/ / Banking purpose (specify) - / / Other (specify) -
- ------------------------------------------------------------------------------------------------------------------------------------
10 Date business started or acquired (Mo., day, year) 11 Enter closing month of accounting year.
(See instructions.) (See instructions.)
January 1, 1995 December
- ------------------------------------------------------------------------------------------------------------------------------------
12 First date wages or annuities were paid or will be paid (Mo., day, year). NOTE: IF APPLICANT IS A WITHHOLDING AGENT, ENTER DATE
INCOME WILL FIRST BE PAID TO NONRESIDENT ALIEN. (MO., DAY, YEAR). . . . . . . . . . . . . . . . . . - Unknown
- ------------------------------------------------------------------------------------------------------------------------------------
13 Enter highest number of employees expected in the next 12 months. NOTE: IF THE Nonagricultural Agricultural Household
APPLICANT DOES NOT EXPECT TO HAVE ANY EMPLOYEES DURING THE PERIOD, ENTER "0." . . . - 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
14 Principal activity (See instructions.) - Investment
- ------------------------------------------------------------------------------------------------------------------------------------
15 Is the principal business activity manuafacturing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . / / Yes /X/ No
If "Yes." principal product and raw material used -
- ------------------------------------------------------------------------------------------------------------------------------------
16 To whom are most of the products or services sold? Please check the appropriate box. / / Business (wholesale)
/X/ Public (retail) / / Other (specify) - / / N/A
- ------------------------------------------------------------------------------------------------------------------------------------
17a Has the applicant ever applied for an identification number for this or any other business? . . . . . . . . . / / Yes /X/ No
NOTE: IF "YES," PLEASE COMPLETE LINES 17b AND 17c.
- ------------------------------------------------------------------------------------------------------------------------------------
17b If you checked the "Yes" box in line 17a, give applicant's legal name and trade name, if different than name shown on prior
application.
Legal name - Trade name -
- ------------------------------------------------------------------------------------------------------------------------------------
17c Enter approximate date, city, and state where the application was filed and the previous employer identification number if
known.
Approximate date when filed (Mo., day, year) City and state where filed Previous EIN
- ------------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I declare that I have examined this application and Business telephone number (include area code)
to the best of my knowledge and belief, it is true, correct, and complete.
Name and title (Please type or print clearly.) - D. James Barton, President 313-962-2630
- ------------------------------------------------------------------------------------------------------------------------------------
Signature - /s/ D. James Barton Date - Dec 29, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: DO NOT WRITE BELOW THIS LINE. FOR OFFICIAL USE ONLY.
- ------------------------------------------------------------------------------------------------------------------------------------
Please leave Geo. Ind. Class Size Reason for applying
blank
- ------------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see attached instructions. Cat. No. 16055N Form SS-4 (Rev.)
</TABLE>
<PAGE>
BY-LAWS
OF
GENESIS FINANCIAL GROUP, INC.
ARTICLE I
OFFICES
Section 1. The principal business office and registered office of the
Corporation shall be at One Oakland Towne Square, 14th Floor, Southfield,
Michigan 48076.
Section 2. The Corporation may also have offices at such other places as
the Board of Directors may from time to time appoint or the business of the
Corporation may require, but in any event, the registered office must be in the
State of Michigan.
ARTICLE II
STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at the place
established for such meeting by the President of the Corporation. The President
shall preside at all meetings of the Stockholders.
Section 2. An annual meeting of stockholders shall be held each year within
seventy-five (75) days following the close of the fiscal year of the
Corporation, at such date and time as shall be determined and designated by the
President and stated in the notice of the meeting. At the annual meeting, the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting.
Section 3. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders necessary for the
transaction of business except as otherwise provided by law, by the Articles of
Incorporation or by these By-Laws. If, however, such majority shall not
initially be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or by proxy, shall have
power by majority vote of those present or represented to adjourn the meeting
from time to time without notice other than announcement at the meeting until
the requisite amount of voting stock shall be present. At such adjourned meeting
at which the requisite amount of voting stock shall be represented, any business
may be transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than sixty (60) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
Section 4. At any meeting of the stockholders, each stockholder shall be
entitled to one (1) vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, except as may otherwise be
expressly provided in the Articles of Incorporation. A vote may be cast either
orally or in writing. Each proxy shall be in writing and signed by the
stockholder or his authorized agent or representative. A proxy shall not be
valid after the expiration of one hundred twenty (120) days from its date unless
otherwise provided in the proxy. All questions regarding the qualifications of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by the presiding officer of the meeting.
Section 5. Except as may be provided by law, at least ten (10) days but
not more than forty-five (45) days prior to the date of holding the annual or
any special meeting of stockholders, written or printed notice stating the
place, day and hour of the meeting shall be delivered, either personally or by
mail, to each stockholder of record entitled to vote at such meeting.
Section 6. A complete list of the stockholders entitled to vote at any
stockholder meeting, arranged in alphabetical order, with the residence of each,
and the number of voting shares held by each, shall be prepared by the Secretary
at least ten (10) days before every stockholder meeting, and shall during the
usual hours for business be open to the examination of any stockholder entitled
to vote at such election.
Section 7. Unless otherwise prescribed by statute, special meetings of the
stockholders may be called for any purpose by the President or Vice-President
and shall be called by the President or Secretary at the request in writing of a
majority of the Board of Directors or at the request in writing of not less than
twenty-five (25%) percent of all the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at such a meeting.
Section 8. When an action other than the election of Directors is to be
taken by a vote of the stockholders, it shall be authorized by a majority of the
votes cast by the holders of shares entitled to vote thereon, whether in person
or by proxy, unless a greater plurality is expressly required by statute or the
Articles of Incorporation, in which case such express provision shall govern and
control the decision of such question. Except as may otherwise be expressly
required by the Articles of Incorporation, Directors shall be elected by a
plurality of the votes cast at an election.
Section 9. Whenever any notice is required to be given to any stockholder
of the Corporation under the provisions of these By-Laws or under provisions of
the Articles of Incorporation or under any provision of law, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the holding of the meeting, shall be deemed equivalent to the giving of
such notice. Attendance of a person at a meeting of stockholders in person or by
proxy constitutes a waiver of notice of the meeting except when the stockholder
attends a meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting was not lawfully
called or convened.
Section 10. Stockholders may participate in a stockholders meeting by means
of conference telephone call or similar communications equipment by means of
which all persons participating in the meeting can hear each other, provided
that all participants in the meeting are advised of the use of such equipment
and that the names of all participants in the conference are disclosed to all
participants. Participation in a meeting pursuant to this Section shall
constitute presence in person at a stockholders meeting.
Section 11. As authorized pursuant to Section 407 of the Michigan Business
Corporation Act and as provided in the Articles of Incorporation, any action
required or permitted to be taken at
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
any meeting of the stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action
so taken, is signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take the
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to stockholders
who have not consented in writing.
Section 12. As authorized by Section 402 of the Michigan Business
Corporation Act, the annual meeting of the stockholders for election of
Directors and for such other business as may come before the meeting shall be
held as provided in Article II, Section 2 of these By-Laws unless such action
is taken by written consent as provided in Article II, Section 11 of these
By-Laws.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the Corporation shall be managed
by its Board of Directors which may exercise all such powers of the
Corporation and do such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.
Section 2. The number of Directors which shall constitute the whole Board
shall be one. The initial number of Directors shall be one. The number of
Directors may be increased or decreased at the annual meeting, at a special
meeting, or otherwise, by the action or consent of the holders of a majority of
shares entitled to vote at an election of Directors. The Directors shall be
elected at the annual meeting of the stockholders, except as provided in the
preceding sentence, or in Section 3 or 5 of this Article, and each Director
elected shall hold office until his successor is elected and qualified or until
his resignation or removal. Directors need not be stockholders or officers of
the Corporation.
Section 3. A Director may be removed from office at any time by the action
or consent of the holders of a majority of shares entitled to vote at an
election of Directors. Vacancies and newly created directorships resulting from
any increase in the authorized number of Directors or by the resignation or
removal of a Director may be filled by the affirmative vote of a majority of the
Directors then in office, though less than a quorum, or by a sole remaining
Director, and the Directors so chosen shall hold office until the next annual
election of Directors by the stockholders and until their successors are duly
elected and qualified, or until their resignation or removal.
Section 4. The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or without the State of Michigan. Unless
otherwise restricted by the Articles of Incorporation, members of the Board of
Directors may participate in a meeting of the Board by means of conference
telephone call or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section shall constitute presence in person at such meeting. If
the Board shall have selected a Chair, the Chair shall preside at all meetings
of the Board; otherwise, the President shall preside at all meetings of the
Board of Directors.
Section 5. The first Board of Directors shall hold office until the first
annual meeting of stockholders. Thereafter, the first meeting of each newly
elected Board of Directors shall be held promptly following the annual meeting
of stockholders on the date thereof. No notice of such meeting shall be
necessary to the newly elected Directors in order legally to constitute the
meeting,
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
provided a quorum shall be present. In the event such meeting is not so held,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.
Section 6. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board or by the Chair or President. Any notice given of a regular meeting
need not specify the business to be transacted or the purpose of the meeting.
Section 7. Special meetings of the Board may be called by the Chair or by
the President on two (2) days notice to each Director by mail or twenty-four
(24) hours notice delivered either personally, by telephone or by telegram;
special meetings shall be called by the Chair or President in a like manner and
on like notice of the written request of one (1) Director. The notice need not
specify the business to be transacted or the purpose of the special meeting. The
notice shall specify the place of the special meeting.
Section 8. At all meetings of the Board, a majority of the Directors then
in office, but not less than two (2) (if there are at least two members of the
Board) shall constitute a quorum for the transaction of business. The act of a
majority of the members present at any meeting at which there is a quorum shall
be the act of the Board of Directors unless the vote of a larger number is
specifically required by Statute, by the Articles of Incorporation, or by these
By-Laws. If a quorum shall not be present at any meeting of the Board of
Directors, the members present thereat may adjourn the meeting from time to time
and to another place without notice other than announcement at the meeting,
until a quorum shall be present.
Section 9. Unless otherwise provided by the Articles of Incorporation, any
action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting, if, before or after the action, all
members of the Board consent thereto in writing. The written consents shall have
the same effect as a vote of the Board for all purposes.
Section 10. The Board by affirmative vote of a majority of Directors in
office and irrespective of any personal interest of any of them, may establish
reasonable compensation of Directors for services to the Corporation as
Directors, officers or employees. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor.
Section 11. A Director may resign by written notice to the Corporation. The
resignation is effective upon its receipt by the Corporation or a subsequent
time as set forth in the notice of resignation. A Director may be removed during
his term of office pursuant to action or consent of the stockholders, as
provided in Article III, Section 3 of these By-Laws.
Section 12. Attendance of a Director at a meeting constitutes a waiver of
notice of the meeting except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these By-Laws, written notice is required to be
given to any Director or
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
stockholder, such notice may be either personally served to such Director, or
stockholder, or given in writing by mail (registered, certified or other first
class mail) addressed to such Director or stockholder at his address as it
appears on the records of the Corporation, with postage thereon prepaid. Such
notice shall be deemed to be given at the time when the same shall be deposited
in a post office or official depository under the exclusive care and custody of
the United States postal service.
Section 2. Whenever any notice is required to be given under the provisions
of the Statutes or of the Articles of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders or Directors need be
specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the Corporation shall be a President, a
Vice-President, a Secretary and a Treasurer, each of whom shall be selected by
unanimous consent or plurality vote of the Board of Directors. The Board of
Directors may, but shall not be required to, elect a Chair by unanimous consent
or plurality vote of the Directors. The Board of Directors may also appoint such
other officers and agents as they may deem necessary for the transaction of the
business of the Corporation. Any number of offices may be held by the same
person.
Section 2. Except as provided below, the officers of the Corporation to be
elected by the Board of Directors shall be elected by the Board of Directors at
a regular meeting of the Board of Directors. Each officer shall hold office
until a successor shall have been duly elected and shall have qualified or until
death, resignation or removal in the manner hereinafter provided. In the case of
the death, resignation or removal of an officer which occurs between regular
meetings of the Board, the Board of Directors may fill such office by unanimous
consent, or by election at a special meeting of the Board.
Section 3. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interest of the Corporation would be served thereby.
Section 4. The Chair of the Board of Directors, if such position is filled
by the Board, shall preside at all meetings of the Directors and shall, along
with the President, serve as co-principal executive officer of the Corporation.
The Chair shall possess executive and operational authority equal to that of the
President.
Section 5. The President shall be the principal (or, if the Directors have
filled the position of Chair, co-principal) executive officer of the Corporation
and, subject to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the Corporation. The
President shall have authority, subject to such rules as may be prescribed by
the Board of Directors, to appoint such agents and employees of the Corporation
as the President shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents and employees shall
hold office at the discretion of the President. The President shall have
authority to sign, execute and acknowledge, on behalf of the Corporation, all
stock certificates, contracts, leases, reports and all other documents or
instruments necessary or
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
proper to be executed in the course of the Corporation's regular business which
shall be authorized by resolution of the Board of Directors.
Unless otherwise designated by those present at any such meeting, the
President shall preside at all meetings of the stockholders and (in the
absence of a Chair of the Board) at all meetings of the Directors at which
the President is present. Except as otherwise expressly delegated by the
Board of Directors or by these By-Laws to other officers, the President shall
sign, swear to, execute, file, certify or acknowledge, any corporate
documents, instruments, agreements, Articles, statements, certificates, or
reports, required or permitted to be signed, sworn to, executed, filed,
certified, or acknowledged. The President shall have such other powers and
duties as may from time to time be prescribed by the By-Laws or by
resolutions of the Board of Directors.
Section 6. The Vice-Presidents, if any, shall act under the direction of
the President and in the absence or disability of the President shall perform
the duties and exercise the powers of the President. They shall perform such
other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe. The Board of Directors may
designate one (1) or more Executive Vice-Presidents or may otherwise specify
the order of seniority of the Vice-Presidents. The duties and powers of the
President shall descend to the Vice-Presidents in such specified order of
seniority.
Section 7. The Secretary shall: (a) be custodian of the minutes of the
stockholders' and of the Board of Directors' meetings in one (1) or more books
provided for that purpose; (b) be custodian of the corporate records; (c) keep a
register of the post office address of each stockholder which shall be furnished
to the Secretary by such stockholder; (d) have general charge of the stock
transfer books of the Corporation; and (e) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
Section 8. The Treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the Corporation; receive and give
receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in
such banks or depositories as shall be selected by the Board of Directors;
and (b) in general, perform all of the duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 9. The salaries of the officers shall be fixed from time to time by
the Board of Directors and no officer shall be prevented from receiving such
salary by reason of the fact that the officer is also a Director of the
Corporation.
ARTICLE VI
SPECIAL CORPORATE ACTS
Section 1. The Board of Directors may authorize any officer to enter into
any contract, to execute and deliver any instrument required by law to be
acknowledged in the name of and on behalf of the Corporation. Such authority may
be general or confined to specific instances. When the Board of Directors
authorizes the execution of a contract or of any other instrument in the name of
and on behalf of the Corporation without specifying the executing officers, the
President shall execute the same for and on behalf of the Corporation.
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
Section 2. No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness shall be issued in its name unless authorized by an
action of the Board of Directors. Such authority may be general or confined to
specific instances.
ARTICLE VII
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 1. The certificates of stock of the Corporation shall be numbered
and shall be entered in the books of the Corporation as they are issued. They
shall exhibit the holder's name and number of shares and shall be signed by the
President and the Secretary. The designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full and summarized on the back of the
certificate which the Corporation shall issue to represent such class or series
of stock.
Section 2. Prior to due presentment of a certificate of shares for
registration of transfer, the Corporation may treat the registered owner of such
share as the person exclusively entitled to vote, to receive notifications and
otherwise to exercise all the rights and powers of an owner. Where a certificate
for shares is presented to the Corporation with a request to register for
transfer, the Corporation shall not be liable to the owner or any other person
suffering loss as a result of such registration of transfer if there were on or
with the certificate the necessary endorsements. The Corporation shall have no
duty to inquire into adverse claims with respect to such stock certification.
Section 3. The reverse side of each certificate representing shares shall
bear a conspicuous notation of any restriction imposed by the Corporation upon
the transfer of such shares.
Section 4. Any person claiming a certificate of stock to be lost or
destroyed shall make an affidavit or affirmation of that fact, and the Board of
Directors may in its discretion require the owner of the lost or destroyed
certificate or his legal representative to give the Corporation a bond, in such
sum as it may direct, not exceeding double the value of the stock, to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate; a new certificate of the same tenor and
for the same number of shares as the one alleged to be lost or destroyed, may be
issued without requiring any bond when, in the judgment of the Directors, it is
proper to do so.
Section 5. The Board of Directors shall have the power and authority to
make all such further rules and regulations not inconsistent with the statutes
of the State of Michigan as it may deem expedient concerning the issue, transfer
and registration of certificates representing shares of the Corporation.
Section 6. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to or to dissent from a proposal
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
<PAGE>
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice of or
to vote at any meeting of stockholders shall be at the close of
business on the day on which notice is given, or, if no notice is
given, at the close of business on the day immediately preceding the
day on which the meeting is held; and
(b) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date of the
adjourned meeting.
Section 7. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares for all
purposes, including voting and dividends, and shall not be bound to recognize
any equitable or other claim to interest in such share or shares 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 Michigan.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify any Director or officer, or former Director
or officer of the Corporation or any person who may have served at its request
as a Director against reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him in connection with the defense of any civil,
criminal or administrative action, suit or proceeding in which the person is
made a party or with which the person is threatened by reason of being or having
been or because of any act as such Director or officer within the course of his
duties or employment, except in relation to matters as to which the person shall
be adjudged in such action, suit or proceeding to be liable for negligence or
misconduct in the performance of his duties. The Corporation may also reimburse
any Director or officer for the reasonable costs of settlement of any such
action, suit or proceeding, if it shall be found by a majority of the Directors
not involved in the matter in controversy (whether or not a quorum) that it was
to the interests of the Corporation that such settlement be made and that such
Director or officer was not guilty of negligence or misconduct. The right of
indemnification herein provided shall extend to the estate, executor,
administrator, guardian and conservator of any deceased or former Director or
officer or person who himself would have been entitled to indemnification. Such
rights of indemnification and reimbursement shall not be deemed exclusive of any
other rights to which such Director or officer may be entitled under any
statute, agreement, vote of shareholders, or otherwise.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare dividends upon the
outstanding stock of the Corporation, subject to the provisions of the Articles
of Incorporation, if any, and pursuant to the Michigan Business Corporation Act,
as amended.
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<PAGE>
ARTICLE X
SEAL
The Board of Directors has a corporate seal which is circular in form and
has inscribed thereon the name of the Corporation and the state of incorporation
and the words, "Corporate Seal."
ARTICLE XI
AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may be
adopted only by the affirmative vote or consent of the stockholders representing
a majority of all of the shares issued and outstanding. Any By-Laws adopted and
made by the stockholders shall not be altered or repealed by the Board.
ARTICLE XII
FISCAL YEAR
The fiscal year of the Corporation shall be as established by the Board of
Directors.
These By-Laws are adopted as and for the By-Laws of GENESIS FINANCIAL
GROUP, INC., a Michigan Business Corporation, by its incorporator on the 23rd
day of June 1994.
/s/ D. James Barton
--------------------------------
D. James Barton, Incorporator
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BY-LAWS/GENESIS FINANCIAL GROUP, INC.
