FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Quarter Ended April 30, 1995 Commission File Number 1-6309
HRE PROPERTIES
(Exact Name of Registrant as Specified in Charter)
MASSACHUSETTS 04-2458042
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
321 Railroad Avenue, Greenwich, CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 863-8200
The number of shares of Registrant's common shares outstanding as of the
close of period covered by this report: 5,351,130
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
THE SEC FORM 10-Q, FILED HEREWITH, CONTAINS 12 PAGES, NUMBERED
CONSECUTIVELY FROM 1 TO 12 INCLUSIVE, OF WHICH THIS PAGE IS 1.
INDEX
HRE PROPERTIES
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements (Unaudited)
Consolidated Statements of Income--Three months ended April 30, 1995
and 1994, Six months ended April 30, 1995 and 1994.
Consolidated Balance Sheets--April 30, 1995 and October 31, 1994.
Consolidated Statements of Cash Flows--Six months ended April 30,1995
and 1994.
Consolidated Statements of Shareholders' Equity--Six months ended
April 30, 1995 and 1994.
Notes to Consolidated Financial Statements.
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
Item 6.Exhibits and Reports on Form 8-K
SIGNATURES
Page 2 of 12
HRE PROPERTIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
April 30, October 31,
1995 1994
ASSETS (Unaudited)
Real Estate Investments:
Properties owned -at cost,
net of accumulated depreciation and
recoveries $ 129,314 $ 114,197
Mortgage notes receivable 3,977 7,763
Properties held for sale 4,599 6,434
137,890 128,394
Cash and cash equivalents 4,665 8,738
Deposits held in trust 9,827 --
Interest and rent receivable 2,640 2,343
Deferred charges, net of accumulated amortization 2,305 2,108
Other assets 1,013 976
$158,340 $142,559
LIABILITIES AND SHAREHOLDERS EQUITY
Liabilities:
Bank loan $ 5,000 $ 5,000
Mortgage notes payable 57,435 46,386
Accounts payable and accrued expenses 1,626 1,024
Deferred trustees fees 422 521
Other liabilities 1,494 1,147
65,977 54,078
Shareholders Equity:
Preferred shares, without par value;
2,000,000 shares authorized; none issued -- --
Common shares, without par value; unlimited
shares authorized; 5,529,478 and 5,520,044
issued on April 30, 1995 and
October 31, 1994, respectively 123,636 123,507
Less 178,348 common shares held in
treasury, at cost (2,861) (2,861)
Distributions in excess of accumulated
net income (28,412) (32,165)
92,363 88,481
$158,340 $142,559
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
Page 3 of 12
HRE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Six Months Ended Three Months Ended
April 30 April 30
1995 1994 1995 1994
Revenues:
Operating leases $9,586 $8,014 $5,007 $4,274
Financing leases 644 713 318 353
Interest and other 545 520 281 258
10,775 9,247 5,606 4,885
Operating Expenses:
Property expenses 3,855 3,638 2,000 1,936
Interest 2,512 1,713 1,364 959
Depreciation and amortization 2,329 1,940 1,202 1,013
General and administrative expenses 745 754 340 357
Trustees fees and expenses 90 84 31 48
9,531 8,129 4,937 4,313
Income before Gains on
Sales of Properties 1,244 1,118 669 572
Gains on Sales of Properties 5,502 82 5,502 82
Net Income $6,746 $1,200 $6,171 $654
Net Income Per Common Share:
Income before gains on sales of
properties $ .23 $ .21 $ .12 $ .11
Gains on sales of properties 1.03 .01 1.03 .01
Net Income $ 1.26 $ .22 $1.15 $ .12
Weighted Average Number of Common
Shares Outstanding 5,344 5,323 5,347 5,326
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 4 of 12
HRE PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six Months Ended April 30,
1995 1994
Operating Activities:
Net income $ 6,746 $ 1,200
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,364 1,978
Recovery of investment in properties owned
subject to financing leases 788 722
Minority interest in results of consolidated joint venture -- (7)
Gains on sales of properties (5,502) (82)
Changes in operating assets and liabilities:
Increase in interest and rent receivable (297) (591)
Increase in accounts payable and accrued expenses 503 52
(Increase) decrease in other assets and other
liabilities, net 253 (561)
Net Cash Provided by Operating Activities 4,855 2,711
Investing Activities:
Acquisitions of properties owned (19,366) (25,158)
Improvements to existing properties owned and
deferred charges (1,338) (1,134)
Proceeds from sale of properties, mortgage note receivable
and investment in unconsolidated joint venture 3,533 705
Payments received on mortgage notes receivable 36 34
Miscellaneous 22 25
Net Cash Used in Investing Activities (17,113) (25,528)
Financing Activities:
Proceeds from bank loan -- 5,000
Proceeds from mortgage notes 11,250 18,000
Dividends paid (2,993) (2,876)
Proceeds from sales of additional common shares 129 167
Payments on mortgage notes payable (201) (150)
Net Cash Provided by Financing Activities 8,185 20,141
Net (Decrease) In Cash and Cash Equivalents (4,073 )(2,676)
Cash and Cash Equivalents at Beginning of Period 8,738 7,061
Cash and Cash Equivalents at End of Period $ 4,665 $ 4,385
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 5 of 12
HRE PROPERTIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED)
(In thousands, except shares and per share data)
Common Shares
(Distributions
TreasuryIn Excess of
Outstanding IssuedShares,Accumulated
Number Amount at Cost Net Income) Total
Balances - October 31, 1993 5,320,106 $123,205 $(2,861) $(27,648) $92,696
Net Income 1,200 1,200
Cash dividends declared ($.54 per share) (2,876) (2,876)
Sale of additional common shares under
dividend reinvestment plan
and stock option plan 11,789 167 167
Balances - April 30, 1994 5,331,895 $123,372 $(2,861) $(29,324) $91,187
Balances - October 31,1994 5,341,696 $123,507 $(2,861) $(32,165) $88,481
Net income 6,746 6,746
Cash dividends declared ($.56 per share) (2,993) (2,993)
Sale of additional common shares under
dividend reinvestment plan 9,434 129 129
Balances - April 30, 1995 5,351,130 $123,636 $(2,861) $(28,412) $92,363
The accompanying notes to consolidated financial statements are an integral
part of these statements.
Page 6 of 12
HRE PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The accompanying unaudited consolidated financial statements include
the accounts of HRE Properties ("the Trust"), its wholly-owned
subsidiary, and a joint venture in which the Trust has the ability to
control the affairs of the venture. All significant
intercompany transactions and balances have been eliminated.
The financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Results of operations for the
three-month and six-month periods ended April 30, 1995 are not
necessarily indicative of the results that may be expected for the
year ending October 31, 1995. It is suggested that these financial
statements be read in conjunction with the financial
statements and notes thereto included in the Trust's annual report for
the fiscal year ended October 31, 1994.
2. The Trust accounts for its leases of real property in accordance with
the provisions of Financial Accounting Standards Board Statement
No. 13, "Accounting for Leases." This statement sets forth specific
criteria for determining whether a lease should be
accounted for as an operating lease or a financing lease.
In general, the financing lease method applies where property is under
long-term lease to a credit worthy tenant and the present value of
the minimum required lease payments is at least 90%
of the value of the property. Other leases are accounted for as
operating leases.
3. In January 1995, the Trust acquired a 193,000 square foot retail
shopping center located in Danbury, Connecticut for a purchase price
of $19.25 million. The property was acquired subject to a nonrecourse
first mortgage loan of $11.25 million. The mortgage loan bears interest
at an annual rate of 9.5% for a five-year term with interest only due
monthly.
4. In December 1994, the Trust sold a participating mortgage note
receivable which was collateralized by an office property for net
proceeds of $3,750,000 which amount approximated the Trust's net
carrying value of the asset at the time of sale. In fiscal
1994, the Trust determined that the long-term outlook for the property
had declined due, among other things, to significant
tenant turnover. As a result, the Trust changed its investment strategy
with respect to this asset and decided to offer the
mortgage loan for sale.
Page 7 of 12
5. Properties held for sale are carried at the lower of cost or fair
value less estimated costs of disposal. A property is classified
as held for sale upon determination by the Trustees that the property
is to be sold. As of April 30, 1995, properties held for sale includes
three additional industrial properties having a net carrying value of
$3,730,000 and one retail property having a net carrying value of
$869,000. At April 30, 1995 the Trust has entered
into contracts to sell one of the industrial properties for a sale
price of $3,220,000 and the retail property for a sale price of
$7,500,000.
During the second quarter of fiscal 1995, the Trust sold three industrial
properties net leased to a single tenant for net proceeds of
$9,827,000 resulting in recognition for financial reporting of
gains on sales of the properties of $5,502,000.
The sales were structured as tax-deferred exchanges under
Section 1031 of the Internal Revenue Code and as a result, the proceeds
from the sales are being held on deposit by an intermediary. Such deposits
are reflected in the accompanying balance sheet at April 30,1995 as
"Deposits held in Trust". The proceeds are expected to
be used to complete the purchase of one or more replacement
properties within six months of the sale transaction closing
dates. In the event that the Trust does not complete the exchange of
properties within the prescribed period the proceeds will be paid to the
Trust and the gains on sales will be included in the Trust's taxable
income for fiscal year 1995.
Page 8 of 12
PART I - FINANCIAL INFORMATION (continued)
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources:
The Trust meets its liquidity requirements primarily by generating cash
from the operations of its properties, sale of real estate investments
and collection of principal and interest on its mortgage notes receivable.
Payments of expenses related to real estate operations, capital improvement
programs, debt service, management and professional fees
and dividend requirements place demands on the Trust's liquidity.
The Trust believes that the financial resources currently available to
it are sufficient to meet all of its known obligations and
commitments and to make additional real estate investments when
appropriate opportunities arise. At April 30, 1995, the Trust had
$4.7 million in cash and cash equivalents. The Trust also has available
$17 million in unsecured lines of credit with two major commercial banks.
Long-term debt consisted of nine mortgage notes payable totalling
$57.4 million, of which $210,000 in principal payments are due
during the balance of fiscal 1995. Current liabilities, including current
installments of principal due on mortgage notes payable and short-term
borrowings under credit lines, were approximately $6.6 million.
The credit lines are available to finance the acquisition, management
or development of commercial real estate and a portion of such
credit lines is available for working capital purposes.
The credit lines expire at various periods in 1995 and outstanding
borrowings, if any, may be repaid from proceeds of additional debt
financings or sales of properties. The Trust may also request that the time
for repayment be extended by the banks. It is the Trust's intent to renew
these credit lines as they expire in 1995.
In fiscal 1994, the Trust determined that the long term economic
prospects for an office building collateralized by a participating mortgage
note receivable held by the Trust in the outstanding principal
amount of $4,836,000 had declined. As a result, the Trust decided
to offer the mortgage note for sale. In this connection, the Trust recorded
a charge in the fourth quarter of fiscal 1994 of $1,086,000 to reflect the
mortgage note at its net realizable value and in the Trust's first quarter of
fiscal 1995, the mortgage note was sold for net proceeds of $3,750,000.
The Trust has entered into contracts to sell one of its distribution
and service properties with a net carrying amount at April 30, 1995
of $1.2 million for a sale price of approximately $3.22 million and a net
leased retail property with a net carrying amount of $869,000 for a sale price
of $7.5 million. The transactions are expected to close in fiscal
1995. The proceeds from such sales may be used to make additional real
estate investments and/or reduce outstanding mortgage loan indebtedness or
meet dividend distribution requirements.
During the second quarter of fiscal 1995, the Trust sold three
industrial properties net leased to a single tenant for net proceeds of
$9,827,000 resulting in the recognition for financial reporting of gains
on sales of the properties of $5,502,000. The sales were structured as
tax-deferred exchanges under Section 1031 of the Internal Revenue Code and
as a result, the proceeds from the sales are being held on deposit by an
intermediary. Such deposits are reflected in the accompanying consolidated
balance sheets at April 30,1995 as "Deposits held in Trust".
The proceeds are expected to be used to complete the purchase of one or more
replacement properties within six months of the sale transaction
closing dates. In the event that the Trust does not complete the
exchange of properties within the prescribed period the proceeds will
be paid to the Trust and the gains on sales will be included in the Trust's
taxable income for fiscal year 1995.
Page 9 of 12
The Trust also expects to make additional real estate investments
periodically. The funds for such investments may come from existing
liquid assets, line of credit arrangements, proceeds from property sales,
financing of acquired or existing properties or the sale of
mortgage notes receivable. In January 1995, the Trust acquired a 193,000
square foot shopping center located in Danbury, Connecticut.
The property was acquired at a purchase price of $19.25 million and funded
through a first mortgage loan of $11.25 million and available cash. The first
mortgage bears interest at 9.5% per annum and matures in five
years. The Trust also invests in its existing properties and, during the
first six months of fiscal 1995, spent approximately $1.3 million on
its properties for capital improvements and leasing costs.
Funds from Operations
The Trust defines "Funds from Operations" as net income (computed in
accordance with generally accepted accounting principles),
excluding gains (or losses) from debt restructurings and sales of properties,
plus depreciation and amortization, and after adjustments for unconsolidated
joint ventures. The Trust believes the level of funds from
operations to be an appropriate supplemental financial measure of its
operating performance. Funds from Operations does not represent cash flows
from operations as defined by generally accepted principles, is not
indicative that cash flows are adequate to fund all cash needs and
is not considered to be an alternative to net income. The Trust considers
recoveries of investment in properties owned subject to financing
leases to be analogous to amortization for purposes of calculating
Funds from Operations. Funds from Operations for the three-month
and six-month periods ended April 30, 1995 increased to $2,190,000 and
$4,296,000 from $1,962,000 and $3,811,000, respectively,
in the comparable periods in fiscal 1994. The improvement in Funds from
Operations is primarily the result of the positive effect of the
Trust's property acquisitions in fiscal 1995 and 1994, and additional leasing
of previously vacant space at certain of the Trust's properties.
Results of Operations
Revenues
Total revenues for the three-month and six-month periods ended
April 30, 1995 were $5,606,000 and $10,775,000 compared to $4,885,000
and $9,247,000 for the similar periods in fiscal 1994.
Operating lease revenues increased by $1,572,000 or 19.6% in the first
six-months of fiscal 1995 compared to the prior year's period
primarily from the additional rents of the Trust's retail properties
located in Danbury, Connecticut and Meriden, Connecticut. The
Danbury, Connecticut property known as Danbury Square Shopping Center was
acquired by the Trust in January, 1995 and the Meriden, Connecticut property
known as Townline Shopping Center was acquired in December, 1993.
Rents from all retail properties increased 23.8% to $6,893,000 in the first
six-months of fiscal 1995. Gross rents from office properties increased by
$258,000 or 11% in the first six months of fiscal 1995 from the year
ago period reflecting higher occupancy at the Trust's Denver Colorado office
building where the Trust signed leases with new tenants totaling more than
60,000 square feet of space last year. All such tenants have taken
occupancy of their leased space.
Page 10 of 12
Expenses
Total operating expenses were $9,531,000 in the first six-months of
fiscal 1995 compared to $8,129,000 for the same period last year.
The largest operating expense category is property expenses of
the Trust's properties. Property expenses totalled $3,855,000 for the
first six months of fiscal 1995, compared to $3,638,000 for the same period
in 1994. Expenses for properties owned in both fiscal 1995 and 1994
decreased by 1.7% while expenses for properties acquired in fiscal 1995 and
1994 contributed additional expenses of $578,000 for the first six months
of fiscal 1995.
Interest expense rose to $2,512,000 for the first six-months of fiscal 1995
from the addition of three mortgage notes payable totaling $33.7 million
obtained in fiscal 1994 and early fiscal 1995. The mortgage notes are at
annual fixed interest rates ranging from 7.5% to 9.75%.
Interest on outstanding borrowings under the Trust's lines of credit are
tied to the prime rate or LIBOR and increased to 8.4375% at April 30, 1995
from 6 3/8% the year ago period. At April 30, 1995 and 1994, the Trust had
outstanding borrowings of $5,000,000 under such lines of credit.
Depreciation and amortization increased to $2,329,000 in the first
six-months of fiscal 1995 from $1,940,000 for the same period in fiscal 1994
principally from the acquisition of three properties at an
aggregate cost of $45.2 million in fiscal 1994 and 1995, and capital
expenditures for tenant improvements and deferred charges of $3.1 million
during the same periods.
Page 11 of 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a)
The date of the Annual Meeting was March 15, 1995 (which meeting was
recessed until April 5, 1995)
(b)
Shareholders voted on the following proposal:
"To approve amendments to the Registrant's Declaration of Trust to provide
for an increase in the shareholder vote required in connection with the
removal of a Trustee".
2,774,151 common shares were voted in the affirmative; 1,359,497 common
shares were voted against and; 98,639 common shares abstained in vote.
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the three-month
period ended April 30, 1995.
Exhibits
Articles of Incorporation
Fourth Amended and Restated Declaration of Trust of the Trust, as amended,
to date.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HRE PROPERTIES
(Registrant)
By: /s/
James R. Moore
Senior Vice President/
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
By: /s/
Charles J. Urstadt
Chairman, President and
Chief Executive Officer
Dated : June 14, 1995
Page 12 of 12
<TABLE>
<S>
<C>
Hubbard Real Estate Investments
Fourth Amended and Restated
Declaration of Trust
Dated April 9, 1974
(Amending and Restating the Declaration of Trust dated July 7, 1969,
as Amended and Restated as of July 29, 1969, October 2, 1969 and
October 31, 1969 and as further amended as of March 30, 1971)
<PAGE>
HUBBARD REAL ESTATE INVESTMENTS
Index to Fourth Amended and Restated Declaration of Trust
PAGE(S)
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PREAMBLE
ARTICLE 1--Name, etc.
SECTION 1.1. Name 2
SECTION 1.2. Title to Property 2
SECTION 1.3. Trust Only 2
SECTION 1.4. Location of Offices 2
ARTICLE 2--Trustees and Officers.
SECTION 2.1. Number of Trustees 2
SECTION 2.2 Term of Office; Election and Qualification 3
SECTION 2.3. Resignation and Removal 3
SECTION 2.4. Vacancies 3
SECTION 2.5. Officers and Agents 3
SECTION 2.6. By-Laws 4
SECTION 2.7. Meetings of Trustees; Action by Trustees 4
SECTION 2.8. Notice of Meeting; Waiver of Notice 4
SECTION 2.9. Quorum; Action by Trustees at Meetings 4
SECTION 2.10. Action by Unanimous Written Consent 4
SECTION 2.11. Delegation of Powers of One or More Trustees; Execution of Instruments 5
SECTION 2.12. Committees 5
SECTION 2.13. Reports 5
SECTION 2.14. Board of Consultants 5
SECTION 2.15. Ownership by Trustees, etc. of Securities of the Trust 5
ARTICLE 3--Powers of the Trustees.
SECTION 3.1. Absolute and Exclusive Power 6
SECTION 3.2. Investments, etc. 6
SECTION 3.3. Powers With Respect to Real Property 6
SECTION 3.4. Powers With Respect to Other Property 7
SECTION 3.5. Title to Trust Property 7
SECTION 3.6. Borrowings 7
SECTION 3.7. Issuance of Securities of the Trust 7
SECTION 3.8. Exercise Powers of Ownership, etc. 8
SECTION 3.9. Delegation of Powers 8
SECTION 3.10. Miscellaneous Administrative Powers 8
SECTION 3.11. Payment of Debts and Expenses; Power to Employ or Contract 8
SECTION 3.12. Endorsements and Guaranties, etc. 9
SECTION 3.13. Depositaries 9
SECTION 3.14. Discretion in Classification and in Accounting Treatment 9
SECTION 3.15. Valuation, etc. 9
SECTION 3.16. Fiscal Year and Method of Accounting 9
SECTION 3.17. Dividends 9
SECTION 3.18. Payment of Taxes, etc. 9
SECTION 3.19. Seal 9
SECTION 3.20. Conditions of Being FHA Approved Mortgagee 10
SECTION 3.21. Loans 10
SECTION 3.22. Insurance 10
SECTION 3.23. Transactions with Trustees, etc. 10
SECTION 3.24. Acting as Principal or Agent; Participations with Others 11
SECTION 3.25. Charitable Contributions 11
SECTION 3.26. Indemnification 11
SECTION 3.27. Powers not Enumerated, etc. 11
<PAGE>
PAGE(S)
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ARTICLE 4--Investment Policy.
SECTION 4.1. Definitions 11
SECTION 4.2. Ownership of Income Producing Real Property 13
SECTION 4.3. Financing in Connection with Expected Ownership of Real Property 13
SECTION 4.4. Additional Investments 13
SECTION 4.5. Interim Use of Proceeds 14
SECTION 4.6. Prohibited Investments and Activities 14
SECTION 4.7. Combination of Permitted Investments 15
SECTION 4.8. Exercise of Powers under Article 3 15
SECTION 4.9. Obligor's Default 15
SECTION 4.10. Specifically Permitted Investments 15
ARTICLE 5--Limitations of Liability
of Shareholders, Trustees and Others.
SECTION 5.1. No Personal Liability of Shareholders, Trustees, etc. . 15
SECTION 5.2. Non-Liability of Trustees, etc. 16
SECTION 5.3. Mandatory Indemnification 16
SECTION 5.4. No Bond Required of Trustees 16
SECTION 5.5. No Duty of Investigation; Notice in Trust Instruments, etc. 16
SECTION 5.6. Reliance on Experts, etc. 17
ARTICLE 6--Shares of Beneficial
Interest.
SECTION 6.1. Description of Shares 17
SECTION 6.2. Common Shares 17
SECTION 6.3. Preferred Shares 17
SECTION 6.4. Trust Only 19
SECTION 6.5. Share Certificates 19
SECTION 6.6. Issuance of Shares 19
SECTION 6.7. Register of Shares 20
SECTION 6.8. Transfer Agent and Registrar 20
SECTION 6.9. Transfer of Shares 20
SECTION 6.10. Shareholders of Record by Operation of Law 20
SECTION 6.11. Joint Ownership 21
SECTION 6.12. No Obligation with Respect to Other Instruments 21
SECTION 6.13. Loss, etc. of Certificate 21
SECTION 6.14. Distributions to Shareholders 21
SECTION 6.15. Statement of Source of Funds 21
SECTION 6.16. Notices 22
SECTION 6.17. Purchase of Shares by the Trust; Treasury Shares 22
SECTION 6.18. Purchase, etc. of Shares by Trustees 22
SECTION 6.19. Redemption of Shares; Disclosure of Holding 22
SECTION 6.20. Warrants 22
SECTION 6.21. Issuance of Units 23
SECTION 6.22. Limitation of Pre-emptive Rights 23
SECTION 6.23. Dividend Investment Plan 23
<PAGE>
PAGE(S)
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ARTICLE 7--Shareholders.
SECTION 7.1. Ownership of Trust Property 23
SECTION 7.2. Shares Deemed Personal Property 24
SECTION 7.3. Meetings 24
SECTION 7.4. Notice of Meeting 24
SECTION 7.5. Quorum 24
SECTION 7.6. Type of Shareholder Action Binding on Trustees 24
SECTION 7.7. Fixing Date For Determination of Shareholders of Record 25
SECTION 7.8. Proxies; Voting 25
SECTION 7.9. Shareholder Action By Unanimous Written Consent 25
SECTION 7.10. Inspection of Records 25
ARTICLE 8--Adviser.
SECTION 8.1. Adviser 25
SECTION 8.2. Advisory Contract 26
SECTION 8.3. Relationship With Trustees 26
SECTION 8.4. Other Activities of the Adviser 26
SECTION 8.5. Increase of Adviser's Fee 27
ARTICLE 9--Compliance with
Provisions of Internal Revenue
Code.
SECTION 9.1. Compliance With Provisions of Internal Revenue Code 27
ARTICLE 10--Amendment or
Termination of Trust.
SECTION 10.1. Amendments or Termination 27
SECTION 10.2. Termination or Amendment by Trustees Prior to First Offering 27
SECTION 10.3. Powers of Trustees Upon Termination 27
SECTION 10.4. Power to Effect Reorganization 28
SECTION 10.5. Limitation on Shareholder Rights 28
SECTION 10.6. Class Voting Rights of Preferred Shares 29
ARTICLE 11--Miscellaneous.
SECTION 11.1. Governing Law; Filing 29
SECTION 11.2. Counterparts 30
SECTION 11.3. Conclusive Evidence 30
SECTION 11.4. Construction of Terms Used 30
ARTICLE 12--Duration of Trust.
<PAGE>
INDEX TO DEFINITIONS
SECTION
-----------
"Adviser" ....................................... 8.1.
"Annual Meeting" ................................ 7.3.
"Annual Report" ................................. 2.13.
"Appraisal" ..................................... 4.1.
"Board of Consultants" .......................... 2.14.
"Common Shares" ................................. 6.1.
"Construction Loans" ............................ 4.1.
"Conventional Loans" ............................ 4.1.
"Declaration of Trust" .......................... Preamble
"Development Loans" ............................. 4.1.
"Executive Committee" ........................... 2.12.
"FHA" ........................................... 4.1.
"FHA Loans" ..................................... 4.1.
"First Mortgage" ................................ 4.1.
"First Mortgage Loans" .......................... 4.1.
"Hubbard Real Estate Investments" ............... 1.1.
"Independent Contractor" ........................ 3.23.
"Individual" .................................... 6.19.
"Internal Revenue Code" ......................... Preamble
"Junior Mortgage" ............................... 4.1.
"Junior Mortgage Loans" ......................... 4.1.
"Majority of Trustees" .......................... 2.1.
"Mortgage Loans" ................................ 4.1.
"Mortgages" ..................................... 4.1.
"Ownership" ..................................... 6.19.
"Person" ........................................ 3.1.
"Preferred Shares" .............................. 6.1.
"President" ..................................... 2.5.
"Real Estate Investment Trust" .................. Preamble
"Real Property" ................................. 4.1.
"REIT Provisions of the Internal Revenue Code" . Preamble
"Secretary" ..................................... 2.5.
"Securities" .................................... 4.1.
"Securities of the Trust" ....................... 4.1.
"Shareholders" .................................. 6.1.
"Shares" ........................................ 6.1.
"Special Meeting" ............................... 7.3.
"Total Assets of the Trust Estate" .............. 4.1.
"Treasurer" ..................................... 2.15.
"Trust" ......................................... 1.1.
"Trustee" ....................................... 2.1.
"Trust Estate" .................................. 4.1.
"Trust Property" ................................ 4.1.
"Two-Thirds of Trustees" ........................ 2.1.
"VA" ............................................ 4.1.
"VA Loans" ...................................... 4.1.
"Warrants" ...................................... 6.20.
<PAGE>
FOURTH AMENDED AND RESTATED
DECLARATION OF TRUST
--------------------
HUBBARD REAL ESTATE INVESTMENTS
--------------------
The undersigned, a Trustee of Hubbard Real Estate Investments (the "Trust"), hereby certifies pursuant to Section 11.3
of the Third Amended and Restated Declaration of Trust, as amended by the Amendment dated March 30, 1971, that at a
meeting of shareholders of the Trust duly called and held on April 9, 1974 in accordance with such Third Amended and
Restated Declaration of Trust, as so amended, at which a quorum of shareholders was present and voting throughout, the
holders of not less than two-thirds of the outstanding shares of beneficial interest of the Trust vote that such Third
Amended and Restated Declaration of Trust, as theretofore amended, be amended in certain respects and authorized the filing
with Secretary of The Commonwealth of Massachusetts of a Fourth Amended
and Restated Declaration of Trust restating in a single instrument such Third
Amended and Restated Declaration of Trust as theretofore amended and as amended
at such meeting, and (ii) further certifies that the present Trustees of the
Trust, at a meeting duly called and held on April 9, 1974, at which a quorum was
present and voting throughout, by vote of majority of the Trustees present, duly
authorized the filing of this instrument with the Secretary of The Commonwealth
of Massachusetts restating such Third Amended and Restated Declaration of Trust,
as so amended, in its entirety to read as follows:
THIS FOURTH AMENDED AND RESTATED DECLARATION OF TRUST made this 9th day of
April, 1974.
This instrument amends and restates the Declaration of Trust made as of July
7, 1969, by the Trustees named therein, as amended and restated by the First
Amended and Restated Declaration of Trust dated as of July 29, 1969, and as
amended and restated by the Second Amended and Restated Declaration of Trust
dated as of October 2, 1969, and as amended and restated by the Third Amended
and Restated Declaration of Trust dated as of October 31, 1969, and as further
amended by the Amendment dated March 30, 1971, which Declaration of Trust as so
amended is hereby amended and restated in its entirety pursuant to Section 10.1
thereof to read as hereinafter provided.
The Trustees desire to form a trust for the principal purpose of investing in
Real Property and interests therein.
The Trustees desire that such Trust qualify as a "real estate investment
trust" under the provisions of Sections 856, 857, and 858 of the Internal
Revenue Code of 1954, as from time to time amended, and successor Sections
thereto, and the Regulations issued thereunder (hereinafter in this Declaration
of Trust a real estate investment trust as so qualified is referred to as a
"Real Estate Investment Trust" and said Code and Regulations and said Sections
and Regulations issued thereunder as amended to the time in question and any
successor Sections thereto, are referred to as the "Internal Revenue Code" and
the "REIT Provisions of the Internal Revenue Code", respectively).
The Trustees as trustees may hereafter require, hold, manage, and dispose of
certain assets and divide the gains therefrom, in the manner hereinafter stated.
It is proposed that the beneficial interest in the Trust shall be divided
into transferable shares of such class or classes as shall from time to time be
established, and evidenced by certificates therefor, as hereinafter provided.
THEREFORE, the Trustees hereby declare that they will hold all property of
every type and description which they are acquiring or may hereafter acquire as
such Trustees, together with the proceeds thereof, in trust, to manage and
dispose of the same for the benefit of the holders from time to time of the
Shares being issued and to be issued and to be issued hereunder and in the
manner and subject to the stipulations contained herein, which are:
<PAGE>
ARTICLE 1.
NAME, ETC.
SECTION 1.1. Name. The trust created by this Declaration of Trust is herein
referred to as the "Trust" and shall be known by the name "Hubbard Real Estate
Investments"; so far as may be practicable, legal and convenient, the affairs of
the Trust shall be conducted and transacted under such name, which name (and the
word "Trust" whenever used in this Declaration of Trust, except when the context
otherwise requires) shall refer to the Trustees as trustees and not individually
or personally and shall not refer to the beneficiaries or Shareholders of the
Trust, or to any officers, employees, or agents of the Trust or of such
Trustees. Under circumstances in which the Trustees determine that the use of
the name "Hubbard Real Estate Investments" is not practicable, legal or
convenient, they may as appropriate use their names with suitable reference to
their trustee status, or some other suitable designation, or they may adopt
another name under which the Trust may hold property or operate in any state,
which name shall not refer to the beneficiaries or Shareholders of the Trust, or
any officers, employees, or agents of the Trust or of such Trustees.
If Hubbard, Westervelt & Mottelay, Inc., or any successor of such
corporation, shall cease, for any reason, to render for the Trust the services
of Adviser, as defined in Section 8.1 hereof, to be rendered pursuant to the
contract referred to in Section 8.2 hereof, and any renewal or extension of such
contract, then the Trustees shall, upon request of said Hubbard, Westervelt &
Mottelay, Inc. or its successor and without any vote or consent of the
Shareholders being required, promptly amend this Declaration of Trust to change
its name to one which does not include "Hubbard" or any approximation thereof.
SECTION 1.2. Title to Property. Legal title to all of the Trust Property
shall be transferred to, vested in, and held by the Trustees, as joint tenants
with right survivorship as Trustees of this Trust, except as provided in Section
3.5. Where legal title is transferred (whether to or by the Trust) in the name
Hubbard Real Estate Investments, such name shall be deemed to refer to the
Trustee as aforesaid.
SECTION 1.3. Trust Only. The Trust shall be of the type commonly termed a
Massachusetts business trust and shall not be a general partnership, limited
partnership, joint stock association, or corporation. The Shareholders shall be
beneficiaries and their relationship to the Trustees shall be solely in that
capacity in accordance with the rights conferred upon them hereunder. Neither
the Trustees nor the Shareholders, nor any of them, shall for any purpose be, or
be deemed to be, partners or members of a joint stock association.
SECTION 1.4. Location of Offices. The principal office of the Trust in
Massachusetts shall be in Boston, Massachusetts, unless changed by the Trustees
to another location in Massachusetts. The Trust shall have such other offices or
places of business within or without The Commonwealth of Massachusetts as the
Trustees may from time to time determine.
ARTICLE 2.
TRUSTEES AND OFFICERS.
SECTION 2.1. Number of Trustees. The signatories to this Declaration of
Trust, so long as they shall continue in office in accordance with the terms
hereof, and all other persons who at the time in question have been duly elected
or appointed and have qualified as trustees in accordance with the provisions
hereof and are then in office, are herein referred to as the "Trustees", and
reference in this Declaration of Trust to a Trustee or Trustees shall refer to
such person or persons in their capacity as Trustees hereunder. Subject to the
provisions of any series of Preferred Shares at the time outstanding, there
shall be no less than three (3) nor more than fifteen (15) Trustees. Subject to
any such provisions, within the foregoing limitations, the number of Trustees
may be altered from time to time by vote of a Majority of the Trustees. Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in Section 2.4, the Trustee or Trustees continuing in office regardless
of their number shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration of Trust.
The terms "Two-thirds of the Trustees" and "Majority of the Trustees" whenever
used herein shall mean two-thirds and more than one-half, respectively, of the
total number of Trustees then in office when three or more Trustees are then in
office, and shall mean one Trustee if only one Trustee is at the time in office,
and shall mean both Trustees if only two Trustees are at the time in office.
SECTION 2.2. Term of Office; Election and Qualification. Subject to the
provisions of Sections 2.3 and 2.4, each Trustee shall hold office until the
expiration of his term and until the election and qualification of his
successor. The persons who have executed the original Declaration of Trust are
the original Trustees and the term of each of them and of each Trustee appointed
prior to the First Annual Meeting of Shareholders shall expire at such Annual
Meeting of Shareholders and upon the election and qualification of his
successor. Except as otherwise required by the provisions of any series of
Preferred Shares at the time outstanding, thereafter, the term of each Trustee
shall expire at the Annual Meeting of Shareholders held in the year following
the election of such Trustee and upon the election and qualification of his
successor. Trustees may succeed themselves in office. Except as otherwise
required by the provisions of any series of Preferred Shares at the time
outstanding, the election of Trustees at any meeting of Shareholders shall be by
the affirmative vote of the holders of majority of the Shares present in person
or by proxy at such meeting and then entitled to vote in the election of
Trustees. A Trustee shall be an individual at least twenty-one (21) years of age
who is not under a legal disability. Such individual shall qualify as a Trustee
by signing this Declaration of Trust, as amended to the time in question, or by
agreeing in writing to be bound by the terms of this Declaration of Trust, as so
amended. Trustees continuing in office by re-election or re-appointment need not
requalify as Trustees. Trustees may but need not own Shares.
SECTION 2.3. Resignation and Removal. Any Trustee may resign his trusteeship
by instrument in writing signed by him and delivered or mailed to the President
or Secretary, and such resignation shall take effect immediately on receipt by
the President or Secretary or at a later date according to the terms of the
instrument. Subject to the provisions of any series of Preferred Shares at the
time outstanding, the Shareholders, by action of the holders of a majority of
the Shares then outstanding and entitled to vote in the election of Trustees
(which action shall be taken only by vote at a meeting called for the purpose in
accordance with Section 7.3), may remove any Trustee with or without cause.
SECTION 2.4. Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the bankruptcy, adjudicated incompetence,
death, resignation or removal (pursuant to Section 2.3) of a Trustee. No such
vacancy shall operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust. Subject to the
provisions of any series of Preferred Shares at the time outstanding, vacancies
in the office of Trustee, including a vacancy resulting from an increase in the
number of Trustees, may be filled by a written appointment signed by a Majority
of the Trustees. Upon such appointment and the qualification of such Trustee,
the Trust Property shall vest in the new Trustee jointly with the continuing or
surviving Trustees without the necessity of any further act or conveyance.
SECTION 2.5. Officers and Agents. The Trustees shall annually elect a
President, who shall be the principal executive officer of the Trust, and a
Treasurer and a Secretary. The President, Treasurer and Secretary shall serve
until the first meeting of Trustees after then next Annual Meeting of
Shareholders and until their successors are elected and qualified or until their
sooner resignation or removal, with or without cause, by the affirmative vote of
a Majority of Trustees. The President shall be and the Treasurer and Secretary
may, but need not, be a Trustee. The Trustees may elect or appoint, from among
their number or otherwise, such other officers or agents, who shall have such
powers, duties and responsibilities, as to the Trustees may seem advisable, and
who shall hold office for such periods as may be determined by the Trustees or
by the by-laws. The Trustees shall fix the compensation of all officers, may
receive reasonable compensation fixed by the Trustees in good faith for their
general services as Trustees and officers hereunder, and may pay themselves or
any one or more of themselves such compensation for special services, legal or
otherwise, as they in good faith may deem reasonable.
Any person may hold two or more offices.
SECTION 2.6. By-Laws. A Majority of the Trustees may adopt and from to time
to time amend or repeal by-laws for the conduct of the business of the of the
Trust, and in such by-laws may define the duties of their officers, employees,
agents and representatives.
SECTION 2.7. Meetings of Trustees; Action by Trustees. Meetings of the
Trustees may be held from time to time upon call by the President, the Secretary
or any two Trustees. Meetings of the Trustees shall be held within or without
The Commonwealth of Massachusetts at such place as may be specified in or
determined in accordance with the by-laws and the notice of a meeting shall
state the place, as well as the time thereof.
Unless otherwise restricted by the by-laws, all or any one or more Trustees
may participate in a meeting of the Trustees or any committee thereof by means
of conference telephone 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 such communications shall constitute presence in person
at such meeting.
SECTION 2.8. Notice of Meeting; Waiver of Notice. Notice of a meeting shall
be given by mail or by telegram or delivered personally. If notice is given by
mail, it shall be mailed not later than the third business day preceding the
meeting (excluding from such computation the day of the meeting itself) and if
given by telegram or personal delivery such telegram shall be sent or delivery
made not later than the business day preceding the meeting.
<PAGE>
Notice of a meeting of Trustees may be waived before or after such meeting by
signed written waivers. Not notice need be given of action taken by unanimous
written consent. The attendance of a Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Trustee attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened.
SECTION 2.9. Quorum; Action by Trustees at Meetings. A Majority of the
Trustees shall constitute a quorum for the transaction of business at any
meeting of the Trustees but if less than such Majority is present at a meeting,
a majority of the Trustees present may adjourn the meeting from time to time
without further notice. The act of the majority of the Trustees present at a
meeting at which a quorum is present shall be the act of the Trustees and shall
have the same effect as if assented to by all except that any action which by
the terms of any provision of this Declaration of Trust other than this Section
2.9 is required to be taken by a Majority of the Trustees or by Two-thirds, of
the Trustees shall require the affirmative vote of such Majority or Two-thirds,
as the case may be, and thereupon shall constitute the act of the act of the
Trustees and shall have the same effect as if assented to by all.
SECTION 2.10. Action by Unanimous Written Consent. Except as otherwise
authorized by this Declaration of Trust, any action which could be taken by the
Trustees only at a meeting may be taken without a meeting only if all the
Trustees consent to the action in writing and the written consents are filed
with the records of the meetings of Trustees. Such consents shall be deemed for
all purposes to be action taken at a meeting.
SECTION 2.11. Delegation of Powers of One or More Trustees; Execution of
Instruments. Subject to their ultimate responsibilities as set forth in Section
8.1, the Trustees may delegate from time to time to such one or more of their
number, or to such one or more officers or agents, the doing of such things and
the execution of such deeds or other instruments either in the names of the
Trustees or as their attorney or attorneys or otherwise as the Trustees may from
time to time deem expedient.
Any deed, mortgage, evidence of indebtedness or other instrument or agreement
executed by one or more of the Trustees, officers of agents of the Trust, shall
be valid and binding upon the Trustees and the Trust when authorized or ratified
(pursuant to specific or general authorization or ratification) at a meeting or
by written authorization or ratification without a meeting in accordance with
the provisions of Section 2.9 and Section 2.10.
SECTION 2.12. Committees. The Trustees, by vote of a Majority of Trustees,
may appoint from among their own number committees, including an Executive
Committee of two or more persons to whom the Trustees may delegate such of the
powers herein given to the Trustees as that may deem expedient, except that
powers requiring the vote of a Majority or Two-thirds of the Trustees may not be
so delegated.
SECTION 2.13. Reports. With respect to fiscal years commencing with the first
full fiscal year of the Trust, the Trustees shall cause to be prepared and
mailed to each Shareholder, within 120 days after the end of every fiscal year,
an annual report of the affairs of the Trust, including a statement of the
income and expenses of the Trust based on the books of account of the Trust. If,
in the opinion of the Trustees, such statement fails to meet the requirements of
any governmental authority or agency having jurisdiction over the Trust, or of
any securities exchange on which the Shares are listed or to be listed , the
Trustees shall in addition include in such annual report a statement of income
and expenses which will, in their sole discretion, meet such requirements. Such
annual report shall also contain a balance sheet and statement of surplus, both
as of the end of the fiscal year consistent with either of such statements of
income and expenses, as determined by the Trustees. Such annual report shall
also include an opinion on the financial statements of an independent certified
accountant or independent public accountant based on an examination of the books
and records of the Trust not materially limited in scope made in accordance with
generally accepted auditing standards and procedures. In addition, commencing
after the close of the first full quarter of the first full fiscal year of the
Trust, the Trustees shall mail to the Shareholders within 60 days after the
close of that quarter and of each quarter thereafter (or as soon thereafter as
may be practicable), other than the end of the fiscal year, an interim report
containing a summary statement of income and expenses of the trust for such
fiscal quarter, which a may be unaudited, and such other pertinent information
regarding the trust and its activities in the quarter covered by the report as
the trustees may deem appropriate.
SECTION 2.14. Board of Consultants. The trustees may appoint a Board of
Consultants to provide the Trustees with such advice as they may request in the
performance of their duties as Trustees. Members of such Board of Consultants
shall be appointed in any number and shall be removed by the vote of a Majority
of the Trustees, and shall meet at such time and place as may be determined from
time to time by the Trustees or the by-laws. The Board of Consultants shall have
no power or authority over the Trust. Members of the Board of Consultants may be
reasonably compensated for their services by the Trustees.
<PAGE>
SECTION 2.15. Ownership by Trustees, etc. of Securities of the Trust. Any
Trustee, officer or agent may on his personal account acquire, hold and sell
Securities of the Trust either in his individual name, or in a fiduciary
capacity or jointly with other persons, or as a member of a firm or association
or otherwise, without being thereby disqualified as a Trustee, officer or agent,
and while so holding any such Securities of the Trust on his personal account
shall be entitled to the same rights and privileges as other holders thereof.
Without limiting the foregoing, but subject to any applicable requirements of
Section 3.23, any Person, including any Person specified in Section 3.23, may
purchase as underwriter Securities of the Trust.
ARTICLE 3.
POWERS OF THE TRUSTEES.
SECTION 3.1. Absolute and Exclusive Power. The Trustees, subject only to the
specific limitations expressly stated in this Declaration of Trust, shall have,
without other or further authorization, continuing full, absolute and exclusive
power, control and authority over and management of the Trust Property and of
the affairs of the Trust, to the same extent as if the Trustees were the sole
owners of such property and the sole persons interested in such Trust in their
own right. Such powers of the Trustees may be exercised only on behalf of or for
the advantage of the Trust; and all payments or reimbursements made by the
Trustees shall be made only from Trust Property. Such powers of the Trustees may
be exercised without the necessity of applying to any court or to the
Shareholders for leave to do so. No Person (the word "Person" whenever used in
this Declaration of Trust, except where the context otherwise requires, being
deemed to mean any individual, individuals, association, trust, partnership,
corporation, or other entity) shall in any event be bound to see to the
application of any money or property paid to or delivered to the Trustees or
their authorized representative. In the exercise of the powers given by this
Article 3, the Trustees shall not be limited to obligations maturing before the
possible termination of the Trust. The Trustees shall not be bound or limited by
any law now or hereafter in force limiting the investments of trustees or other
fiduciaries, but they shall have full authority and power to make any and all
investments, within the limitations of this Article 3 and Article 4 that they,
in their absolute discretion, shall deem proper in order to accomplish the
purposes of this Trust, all to such extent as to them shall seem proper, even
though such investments shall investments shall be of a character or in an
amount not customarily considered proper for the investment of trust funds or
which do not or may not produce income. The Trustees shall have power to enter
into commitments to make any investment, purchase or acquisition authorized by
this Article 3. Without restricting or limiting the generality of the foregoing,
such powers of the Trustees shall include among others the powers enumerated in
the ensuing Sections of this Article 3.
The exercise of the powers of the Trustees in this Article 3 shall be subject
at all times to the investment policy set forth in Article 4 hereof.
SECTION 3.2. Investments, etc. The Trustees shall have power, for such
consideration as they may deem proper, to invest in, purchase or otherwise
acquire, for cash or other property or through the issuance of Securities of the
Trust or for other consideration, and hold for investment, the entire or any
participating interest in real, personal or mixed, tangible or intangible,
property (including stocks, bonds, debentures, notes, certificates of
indebtedness and securities of every nature) and obligations secured thereby and
interests therein and rights thereto, including, without limiting the generality
of the foregoing, the entire or any participating interest in notes, bonds or
other obligations secured by Mortgages or other interests in Real Property. In
connection with any such investment, purchase or acquisition, the Trustees shall
have the power to acquire a share of rents, lease payments, or other income
from, or a share of the profits from, or a share in the equity or ownership of
Real Property. The Trustees shall also have power invest in loans secured by the
pledge or transfer of mortgage obligations.
SECTION 3.3. Powers With Respect to Real Property. Without limiting the
powers expressed in Section 3.2, the Trustees shall have the power to (a)
acquire, construct, hold, own, manage, subdivide, improve, develop, alter, tear
down, lease from or to others (including building leases, part of the
consideration for which is the building on or adding to the premises by the
lessee) for terms which may extend beyond the possible termination of the Trust,
or otherwise deal in Real Property of any type and description, including any
type of interest therein or right pertaining thereto, wherever situated in the
United States or any territory or possession thereof or in Canada; and
(b) to sell, exchange, or otherwise dispose of, or grant participations in,
any Real Property or interest therein at any time held or acquired hereunder,
free and clear from any and all trusts, at public or private sale, for cash or
on terms, without advertisement, and subject to such restrictions, stipulations,
agreements and reservations as they shall deem proper, including the power to
take back mortgages to secure the whole or any part of the purchase price of any
of the Trust Property sold or transferred by them, and to execute and deliver
any deed, or other instrument in connection with the foregoing; and
<PAGE>
(c) to grant easements, give consents, and make contracts relating to Real
Property or its use; and
(d) to release or dedicate any interest in Real Property.
SECTION 3.4. Powers With Respect to Other Property. Without limiting the
powers expressed in Section 3.2 the Trustees shall have with respect to all
types of property, real, personal or mixed, tangible or intangible or any
interest therein the powers set forth in Section 3. 3 with respect to Real
Property.
SECTION 3.5. Title to Trust Property. The Trustees shall have the power to
cause legal title to any Trust Property to be held in the name of one or more of
the Trustees, or any other person as nominee, on such terms, in such manner, and
with such powers as the Trustees may determine, provided that the interest of
the Trust is appropriately protected. The Trustees shall have the power to hold
securities in bearer form. In furtherance of the forgoing provisions of this
Section, the Trustees may form for the purposes of furthering the interests of
the Trust, a corporation, partnership, trust or other business association,
owned by the Trustees or by their nominees, for the purpose of holding title to
the property of the Trust or managing the property of the Trust.
SECTION 3.6. Borrowings. The Trustees shall have power to borrow or in any
other manner raise such sum or sums of money or other property as they shall
deem advisable in any manner and on any terms and to evidence the same by notes,
debentures, bonds or other evidences of indebtedness of the Trust, subordinated
or otherwise, which may mature at any time or times even beyond the possible
termination of the Trust, to reacquire such evidences of indebtedness, to enter
into other contracts on behalf of the Trust, to reacquire such evidences of
indebtedness, to enter into other contracts on behalf of the Trust, and to
execute and deliver any Mortgage, pledge or other instrument to secure any such
indebtedness or other obligations or contracts. Subject to the provisions of any
series of Preferred Shares at the time outstanding, any such notes, debentures,
bonds, instruments or other evidences of indebtedness of the Trust may, at the
discretion of the Trustees, without vote of the Shareholders, be convertible
into Shares of any class or series at such time and on such terms as the
Trustees may prescribed.
SECTION 3.7. Issuance of Securities of the Trust. Subject to the provisions
of any series of Preferred Shares at the time outstanding, the trustees shall
have power to issue any type of Securities of the Trust, without vote of or
other action by the Shareholders, to such Persons (except to the extent provided
in Section 6.22) for such cash, property or other consideration (including
Securities issued or created by, or interests in any Person) at such time or
times and on such terms as the Trustees may deem advisable (provided, however,
except as may be provided in the resolutions governing any series of Preferred
Shares and except in connection with a dividend investment plan generally
available to all holders of Common Shares, the purchase price for Shares
purchased through exercise of Warrants, rights or options shall be not less than
the fair market value of such Shares (determined in the manner provided in
Section 6.19) on the date of, or prior to, the issuance of such Warrants, rights
or options fixed by the trustees for such determination) and to list any of the
foregoing Securities of the Trust on any securities exchange and to purchase or
otherwise acquire, hold, cancel, reissue, sell and transfer any such Securities
of the Trust. The Trustees may authorize the use facsimile signatures and/or a
facsimile seal of the Trust on Securities of the Trust, provided that where
facsimile signatures are so used, one of the authorized signatures be manual or
the Security be manually countersigned or authenticated by an authenticating
agent or trustee or similar Person. In case any Person who shall have signed (or
whose facsimile signature shall appear on) Securities of the Trust shall have
ceased to occupy the office or perform the function with respect to which such
signature was authorized before such Securities shall have been actually issued,
such Securities may nevertheless be issued with the same effect as though such
Person had not ceased to occupy such office or perform such function.
SECTION 3.8. Exercise Powers of Ownership, etc. The Trustees shall have power
to exercise all the rights, powers and privileges appertaining to the ownership
of all or any Securities forming part of the Trust Property to the same extent
that an individual might, and, without limiting the generality of the foregoing,
to vote or give any consent, request, or notice or waive any notice either in
person or by proxy or power of attorney with or without power of substitution,
to one or more Persons, which proxies and powers of attorney may be for meetings
or action generally or for any particular meetings or action, and may include
the exercise of discretionary powers.
SECTION 3.9. Delegation of Powers. The Trustees shall have the power to
delegate their powers to one or more Trustees, officers or agents, or to
committees of Trustees and to the Adviser, as provided in Sections 2.11, 2.12
and 8.1, respectively.
SECTION 3.10. Miscellaneous Administrative Powers. The Trustees shall have
power to collect, sue for, receive and receipt for all sums of money or other
property coming due to this Trust, to consent to the extension of the time for
payment, or to the renewal, of any bonds or other securities or obligations, and
to engage or intervene in, prosecute, defend, compound, compromise, abandon, or
adjust by arbitration or otherwise any actions, suits, proceedings, disputes,
claims, demands or things relating to the Trust Property; to foreclose any
Mortgage or other security securing any notes, debentures, bonds, obligations or
contracts, by virtue of which any sums of money are owed to the Trust, to
exercise any power of sale held by them and exercise all rights pertaining to
any Security or instrument held by or for the Trust, and to convey good title
thereunder free of any and all trusts, and in connection with any such
foreclosure or sale, to purchase or otherwise acquire title to any property,
whether or not such property meets the requirements of this Article 3 with
respect to investments; to be parties to reorganizations and to transfer to and
deposit with any Person any stocks, shares, or bonds, or other securities or
obligations of any corporation, trust, association, or other organization, the
securities of which form a part of the Trust Property, for the purpose of any
reorganization of any such corporation, trust, association, or other
organization, or otherwise to participate in any arrangement for enforcing or
protecting the interests of the Trustees as the owners or holders of such stock,
shares, bonds, or other securities or obligations and to pay any assessment
levied in connection with such reorganization or arrangement; and to give time
with or without security for the payment or delivery of any debts or property
and to execute and enter into releases, agreements, and other instruments; and
to pay or satisfy any debts or claims upon any evidence that the Trustee shall
think sufficient.
SECTION 3.11. Payment of Debts and Expenses; Power to Employ or Contract. The
Trustees shall have power to incur and pay any charges or expenses in the
opinion of the Trustees necessary or incidental to or proper for carrying out
any of the purposes of this Trust and to employ or contract with any Persons in
accordance with the provisions of Section 8.1 and to pay appropriate fees to
such Persons from the funds of the Trust.
SECTION 3.12. Endorsements and Guaranties, etc. The trustees shall have power
to endorse, guarantee or act as surety for, the payment or performance of any
obligations of any Person in whose affairs or prosperity the Trust has an
interest; to make contracts of guaranty or suretyship, or enter into other
obligations therefor; and to mortgage and pledge the real and personal property
of this Trust or any part thereof to secure any or all of such obligations.
SECTION 3.13. Depositaries. The Trustees shall have power to deposit any
money or securities included in the Trust Property with any one or more banks,
trust companies , or other banking institutions deemed by the Trustees to be
responsible, such money or securities to be subject to withdrawal on notice or
upon demand and in such manner as the Trustees may determine, and the Trustees
shall have no responsibility for any loss which may occur by reason of the
failure of the Person with whom the money or securities have been deposited
properly to account for the money or securities so deposited.
SECTION 3.14. Discretion in Classification and in Accounting Treatment. The
Trustees shall have power to determine conclusively whether any money,
securities, or other properties of the Trust are for the purposes of the Trust
to be considered as capital or income and in what manner any expenses or
disbursements are to be borne as between capital and income whether or not in
the absence of this provision such money, securities, or other properties would
be regarded as capital or as income and whether or not in the absence of this
provision such expense or disbursement would ordinarily be charged to capital or
to income; and to determine what constitutes net earnings, profits and surplus;
and to allocate to capital stock less than all of the consideration for any
Share, in which case the balance of such consideration shall be paid-in surplus
and, subject to the provisions of any series of Preferred Shares at the time
outstanding, to utilize all surplus, including paid-in surplus for any purpose,
including the payment of dividends, all as the Trustees may reasonably deem
proper.
SECTION 3.15. Valuation, etc. The Trustees shall have power to determine
conclusively the value of any of the Real Property, securities or other
properties of this Trust and of any services, securities, property or other
consideration hereafter to be acquired by this Trust; and to revalue the real
estate, securities, or other properties of the Trust from time to time in
accordance with appraisals made by one or more of the Trustees deem responsible
and experienced.
SECTION 3.16. Fiscal year and Method of Accounting. The Trustees shall have
power to determine the fiscal year of the Trust and the method or form in which
its accounts shall be kept and from time to time to change the fiscal year or
method or form of accounts.
SECTION 3.17. Dividends. The Trustees shall have power to declare and pay
dividends and make other distributions to Shareholders as provided in Section
6.14.
SECTION 3.18. Payment of Taxes, etc. The Trustees shall have the power to pay
all taxes or assessments, of whatever kind or nature, imposed upon or against
the Trustees individually or collectively in connection with the Trust Property
or income, or upon or against the Trust Property or income or any part thereof,
to settle and compromise disputed tax liabilities, and for the foregoing
purposes to make such returns and do all such other acts and things as may be
deemed by the Trustees necessary or desirable.
SECTION 3.19. Seal. The Trustees shall have the power to adopt a seal for the
Trust in such form or forms as the Trustees may approve, which form or forms may
be revised from time to time by the Trustees. Unless otherwise required by law
or by the Trustees, the use of the Trust seal on Securities, agreements and
other instruments and papers of the Trust shall not be a condition to their
validity or effectiveness.
SECTION 3.20. Conditions of Being FHA Approved Mortgagee. If the Trust shall
be a so-called "FHA Approved Mortgage", then during such times or times, the
Trustees shall not have the power to sell or otherwise dispose of any mortgage
or mortgages or partial interest in such mortgage or mortgages insured by the
FHA which the Trust owns unless such transfer is to a mortgagee approved by the
FHA or is otherwise in accordance with the provisions of The National Housing
Act, as amended, or regulations promulgated thereunder. The provision shall also
apply in the event of dissolution or winding-up of the Trust. The Trustees shall
have the power to execute on behalf of this Trust, in connection with any rental
project on which the FHA has insured the indebtedness the Regulatory Agreement
(FHA Form 2466), Application for Transfer of Physical Assets (FHA Form 2266),
deed of trust or mortgage, and any and all other agreements, documents and forms
which may be required by the FHA in connection with and approval by that
Administration of the transfer of physical assets from any entity to the
Trustees or the insurance by that Administration of any indebtedness or any
rental project as to which the Trustees are or shall become owners for the
benefit of this Trust. The provisions of such Regulatory Agreement shall be
binding upon the Trust notwithstanding any conflict with or limitation of this
Declaration of Trust.
SECTION 3.21. Loans. The Trustees shall have power to lend money on behalf of
the Trust to such Persons and on such terms as the Trustees shall deem
advisable, subject to any applicable requirements of Section 3.23.
SECTION 3.22. Insurance. Nowithstanding any other provision of this
Declaration of Trust, the Trustee shall have power to purchase and pay for out
of assets of the Trust insurance contracts and policies insuring the Trustees,
officers and agents of the Trust individually against all claims and liabilities
of every nature arising be reason of holding, being or having held any such
office or position or by reason of any action alleged to have been taken or
omitted by any such person as Trustee, officer or agent of the Trust, whether or
not the Trust would have the power to indemnify such Person against such
liability.
SECTION 3.23. Transactions with Trustees, etc. The Trustees may contract or
engage in transactions with any Person; provided, however, that the Trustees
shall not knowingly, directly or indirectly, contract or engage in any
transaction (other than transactions involving the holding of title as an
accommodation to the Trust) with (1) and Trustee, officer or employee or member
of any Board of Consultants of the Trust or (2) any officer, director or
employee of the Adviser or of any Affiliate of the Adviser, or (3) the Adviser
or independent contractor or (4) any corporation, partnership, trust or other
organization of which a Trustee, any officer or employee of the Trust, the
Adviser or any officer, director or employee of the Adviser is an Affiliate,
unless (i) such contract or transaction has been approved or ratified, after
disclosure of such an affiliation, by 75% of all the Trustees who are not
parties to, or Affiliates of any Person (other than the Trust) who is a party
to, such contract or transaction, and (ii) the Trustees approving the
transaction have determined that such contract or transaction is on terms which
are fair and reasonable to the Trust and the Shareholders, and (iii) the
acquisition by the Trust of Real Property or Mortgages from any of the foregoing
Persons in such transactions involves:
(A) the acquisition by the Trust of federally insured or guaranteed Mortgages
at prices not exceeding the currently quoted prices at which the Federal
National Mortgage Association is purchasing comparable Mortgages; or
(B) the acquisition by the Trust of other Mortgages on terms determined by
the Trustees approving the transaction to be comparable to those available for
similar transactions, if any, known to the Trustees with others who are not so
affiliated; or
(C) the acquisition by the Trust of Real Property at prices not exceeding the
fair value thereof as set forth in an Appraisal.
The Trustees and the Adviser shall disclose any interest, including expected
commissions, which they have and any interest known to them which any of their
Affiliates have, in any investment or contract or other transaction involving
the Trust. Any interested Trustee or Trustees within the meaning of this Section
3.23 may be counted in determining the existence of a quorum and may vote at any
meeting of the Trustees which shall authorize or ratify the matter in question.
The Trustees in their capacity as Trustees shall not be required to devote
their full time to the affairs of the Trust. Except as the Trustees may from
time to time otherwise determine, Trustees, officers, agents, or members of the
Board of Consultants, any Adviser and independent contractors of the Trust may
engage individually or with or on behalf of other Persons in business activities
of the types to be conducted by the Trust.
For the purposes of this Section 3.23 (i) the term "independent contractor"
shall mean an independent contractor as defined in the REIT Provisions of the
Internal Revenue Code, which furnishes or renders services to tenants of, or
manages or operates, Real Property owned by the Trust and (ii) the term
"Affiliate" shall mean as to any corporation, partnership or trust any Person
who (a) holds beneficially, directly or indirectly, 1% or more of the
outstanding capital stock, shares or equity interests of such corporation,
partnership or trust, (b) is an officer, director, employee, partner or trustee
of such corporation, partnership or trust or of any Person which controls, is
controlled by, or is under common control with, such corporation, partnership or
trust, or (c) controls, is controlled by, or is under common control with, such
corporation, partnership or trust.
SECTION 3.24. Acting as Principal or Agent; Participations with Others.
The Trustees shall have power to acquire, manage or dispose of any property,
real, personal or mixed, tangible or intangible and take any action as
principal or as agent and may participate with others in any corporation,
partnership, limited partnership, joint venture, or other association of any
kind.
SECTION 3.25. Charitable Contributions. The Trustees shall have power to make
donations, irrespective of benefit to the Trust, for the public welfare or for
community fund, hospital, charitable, religious, educational, scientific, civic
or similar purpose, and in time of war or other national emergency in aid
thereof.
SECTION 3.26. Indemnification. In addition to the mandatory indemnification
provided for in Section 5.3, the Trustees shall have power to the extent
permitted by law to indemnify or enter into agreements with respect to
indemnification with any person or entity with whom this Trust has dealings,
including, without limitation, any Adviser or independent contractor, to such
extent as the Trustees shall determine.
SECTION 3.27. Powers not Enumerated, etc. The Trustees shall have power to do
all such things and execute all such instruments as they deem necessary, proper
or desirable in order to carry out, promote or advance the purposes of this
Trust although such matters or things are not herein specifically mentioned. Any
determination of the purposes of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Declaration of Trust,
the presumption shall be in favor of the grant of power to the Trustees.
ARTICLE 4
INVESTMENT POLICY
SECTION 4.1. Definitions. As used in this Declaration of Trust the term:
"REAL PROPERTY" shall mean land, rights in land (including, without
limitation, leaseholds), and any buildings, structures, improvements,
furnishings, fixtures and equipment located on or used in connection with land,
leasehold interests and rights in land, or interests therein, but does not
include Mortgages, Mortgage Loans, or interests therein;
"MORTGAGES" shall mean mortgages, deeds of trust or other evidences of
indebtedness secured by a lien on Real Property or on or in rights or interests
in Real Property;
"FIRST MORTGAGE" shall mean a mortgage which takes priority or precedence
over all other charges or encumbrances upon the same property, and which must be
satisfied before such other charges are entitled to participate in the proceeds
of any sale. Such encumbered property may include a lesseen's interest therein.
However, such priority shall not be deemed as abrogated by liens for taxes,
assessments which are not due or remain payable without penalty, contracts
(other than contracts for repayment of borrowed money); by leases, mechanics'
and materialmen's liens for work performed and materials furnished which are not
in default or are in food faith being contested; nor by other claims normally
deemed in the same local jurisdiction, not to abrogate the priority of a first
mortgage;
"JUNIOR MORTGAGE" shall mean a Mortgage which (1) has the same priority or
precedence over all charges or encumbrances upon Real Property as that required
for a First Mortgage except that it is subject to the priority of one or more
the other Mortgages and (2) must be satisfied before such other charges or
encumbrances (other than prior Mortgages) are entitled to participate in the
proceeds of any sale or other disposition of such Real Property;
"MORTGAGE LOANS" shall mean loans evidenced by notes, debentures, bonds, and
other evidences of indebtedness or obligations, which are negotiable or
non-negotiable, and which are secured or collateralized by Mortgages;
"FIRST MORTGAGE LOANS" shall mean Mortgage Loans secured or collateralized,
at the time of acquisition thereof, by First Mortgages;
"JUNIOR MORTGAGE LOANS" shall mean Mortgage Loans secured or collateralized,
at the time of acquisition thereof, by Junior Mortgages;
"TRUST ESTATE" or "TRUST PROPERTY" shall mean as of any particular time any
and all property; real, personal or otherwise, tangible or intangible, which is
transferred, conveyed or paid to the Trust or Trustees and all rents, income,
profits and gains therefrom and which at such time is owned or held by or for
the Trust or the Trustees;
"TOTAL ASSETS OF THE TRUST ESTATE" shall mean the aggregate amount of all of
the assets of the Trust Estate appearing on the most recent quarterly balance
sheet or more recent interim balance sheet of the Trust, if any, available to
the Trustees (increased, for purposes of computing restrictions under Sections
4.6(a), (b), (c) and (e) applicable to proposed Trust investments, by the
aggregate amount of assets proposed to be acquired in such transaction), without
deduction for mortgages or other security interest to which such assets are
subject but after deduction for depreciation and other assets valuation
reserves;
"SECURITIES" shall mean any stock, shares, voting trust certificates, bonds,
debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise or in general any instruments commonly
known as "securities" or any certificates of interest, shares or participations
in temporary or interim certificates for, receipts for guarantees of, or
warrants, options or rights to subscribe to, purchase or acquire any of the
foregoing;
"SECURITIES OF THE TRUST" shall mean any Securities issued by the Trust;
"FHA" and "VA" shall mean respectively the Federal Housing Administration and
the Veterans Administration, and any successors thereto;
"FHA LOANS" shall mean Mortgage Loans which are insured under the provisions
of the National Housing Act of 1934, as amended, or any analagous successor
legislation;
"VA LOANS" shall mean Mortgage Loans which are guaranteed under the
provisions of the Servicemen's Readjustment Act of 1944, as amended, or any
analagous successor legislation;
"DEVELOPMENT LOANS" shall mean Mortgage Loans incurred to finance all or part
of the cost of acquiring and improving vacant land and developing it into sites
suitable for the construction of dwellings, including multi-family dwellings,
and other income-producing properties, such as shopping centers and office and
industrial buildings, and other structures, or suitable for other residential,
commercial, industrial or public uses;
"CONSTRUCTION LOANS" shall mean Mortgage Loans incurred to finance all or
part of the cost of acquiring and improving land and the construction or
improvement of dwellings, including multi-family dwelling, and other
income-producing properties, such as shopping centers and office and industrial
buildings, thereon; and
"APPRAISAL" shall mean the value, as of the date of the Appraisal, of Real
Property (or the aggregate of Real Property subject to a single Mortgage) in its
existing state or in a state to be created, as determined by the Trustees or by
a disinterested person having no economic interest in the Real Property, who, in
the sole judgement of the Trustees, is properly qualified to make such a
determination. The Trustees may in good faith rely on a previous Appraisal made
on behalf of other Persons provided it meets the aforesaid standards and was
made in connection with a Mortgage Loan in which the Trust acquires an entire or
participating interest or which was prepared not earlier than two years prior to
the acquisition by the Trust of its interest in the Real Property or Mortgage
Loan.
SECTION 4.2. Ownership of Income Producing Real Property. It shall be the
policy of the Trustees to invest the Trust Estate primarily in entire or
participating ownerships in Real Property which is income producing or which at
the time of acquisition of such ownership the Trustees reasonably expect (by
development, improvement, construction, alteration, lease or otherwise) to
become income-producing within three years. The consideration given by the Trust
for income-producing Real Property or Real Property which the Trustees
reasonably expect to become income-producing within three years shall not exceed
the value thereof set forth in an Appraisal by a disinterested person, except
that the Trust may acquire at cost undeveloped or newly-constructed property
which has not been in use for more than one year.
SECTION 4.3. Financing in Connection with Expected Ownership of Real
Property. In furtherance of the primary policy stated in Section 4.2, the
Trustees may (by loan, secured or unsecured, by lease, by guarantee, by issuance
of obligations of the Trust or by any combination thereof or by commitment, with
or without fee, to do any of the foregoing or by commitment to purchase) finance
the acquisition, improvement or development of, or the construction or
alteration of stuctures on, any Real Property which within three years from the
time of such financing, (a) the Trustees reasonably expect to acquire the entire
or participating ownership of and (b) the Trustees reasonably expect to be
income-producing. Any such financing shall not be subject to nor constitute part
of any other investment limitation in this Article 4.
SECTION 4.4. Additional Investments. In addition to investments pursuant to
Sections 4.2 and 4.3. the Trustees may, subject to Section 9.1, also invest in
entire or participating interests in any Mortgage Loan (including without
limitation Construction, Development and other Mortgage Loans) or any other
investment and may make commitment to make any such investment, unless such
investment or commitment would result in the aggregate of all such additional
investments (including amounts with respect to which commitments are
outstanding), determined in accordance with the procedure for determining Total
Assets of the Trust Estate, exceeding 40% of the Total Assets of the Trust
Estate.
SECTION 4.5. Interim Use of Proceeds. Pending utilization thereof in
accordance with the investment policies of this Article 4 the proceeds from (a)
any public or private offering of Securities of the Trust, (b) any borrowing or
financing arrangement by the Trust, or (c) the sale of any capital asset may be
invested subject to Section 9.1, in investments permitted under Section 4.4
(without being limited to 40% of Total Assets of the Trust Estate).
SECTION 4.6. Prohibited Investments and Activities. It shall be the policy of
the Trustees not to invest in the following investments or engage in the
following activities:
(a) Entire or participating ownership of non-income producing Real Property
in excess of 10% of the Total Assets of the Trust Estate, except as permitted in
Section 4.2 and Section 4.3.
(b) Obligations secured by Mortgages other than First Mortgages, except as
expressly permitted by Sections 4.3 and 4.4 and except that such Mortgages may
be taken as additional collateral for First Mortgage Loans, or as part of the
proceeds of the sale by the Trust of Real Property; provided, however, that in
any event the Trustees may not invest in obligations secured by mortgages other
than first mortgages (including "warehousing loans" collateralized by
obligations other than First Mortgages) pursuant to any authorization in this
Declaration of Trust in an aggregate amount exceeding 15% of the Total Assets of
the Trust Estate.
(c) Junior Mortgage Loans (excluding wrap-around loans) if as a result if
such investment, the aggregate amount of Junior Mortgage Loans (determined in
accordance with the procedure for determining Total Assets of the Trust Estate)
would exceed 10% of the Total Assets of the Trust Estate. Notwithstanding the
foregoing, Junior Mortgages may be taken as additional collateral for the First
Mortgage Loans, as part of the proceeds of the sale by the Trust of Real
Property or in any other transaction not involving a Junior Mortgage Loan.
(d) Commodities, foreign currencies, bullion, or chattels, except such as
required in the day-to-day business of the Trust or in connection with its Real
Property or Mortgage Loans.
(e) Real estate contracts of sale for purchase prices aggregating in excess
of 1% of the Total Assets of the Trust Estate; provided, however, that nothing
in this Section 4.6 shall prevent the holding of contracts of sale as security
for loans made by the Trust and the ownership of such contracts of sale upon
foreclosure of, or realization upon, such security interests and contracts of
sale so held or owned shall not be counted in computing the percentage of assets
invested in contracts of sale.
(f) Engage in any short sale.
(g) Incur indebtedness, whether secured or unsecured, in excess of 75% of the
Total Assets of the Trust Estate (increased by the consideration received by the
Trust for such indebtedness) at the time of such incurrence.
(h) Encumber the aggregate of the Real Property of the Trust (excluding Real
Property acquired by the Trust as a result of or in connection with foreclosure
of any mortgages, or conveyed to the Trustees in full or partial satisfaction of
indebtedness to the Trust and excluding Real Property of the Trust subject to
FHA and VA or other governmentally insured or guaranteed encumbrances) in excess
of 66 2/3 % of the aggregate fair market value of all and said Real Property not
so excluded at the time of such encumbrance as determined under Section 3.15
hereof.
(i) Issue "redeemable securities" as defined in Section 2(a)(32) of the
Investment Company Act of 1940 as amended.
(j) Invest in Securities in any real estate investment trust except upon the
affirmative vote of at least 75% of the Trustees then in office.
(k) Engage in trading as compared with investment activities, or engage in
the business of underwriting or agency distribution of securities issued by
others, but this prohibition shall not prevent the Trust from selling
participations in Mortgage Loans or interests in real estate.
SECTION 4.7. Combination of Permitted Investments. The Trustees may make any
investment permitted under any provision of Article 4 in combination with any
other investment or investments permitted under any other provision of this
Article 4.
SECTION 4.8. Exercise of Powers Under Article 3. Nothing in this Article 4
shall be deemed to prohibit or limit the exercise by the Trustees of the powers
set forth in Article 3 except to the extent expressly provided in this Article
4.
SECTION 4.9. Obligor's Default. Notwithstanding any provision in any Article
of this Declaration of Trust, when an obligor to the Trust is in default under
the terms of any obligation to the Trust (or in the good faith judgment of the
Trustees, there is a significant risk that such default may occur), the Trustees
shall have the power to pursue any remedies permitted by law which, in their
sole judgment, are in the interest of the Trust, and the Trustees shall have the
power to hold property of a type or in an amount not permitted hereunder and to
enter into any desirable investment commitment or obligation of the Trust
resulting from the pursuit of such remedies as may be necessary or desirable in
the sole judgment of the Trustees to dispose of property acquired in the pursuit
of such remedies.
SECTION 4.10. Specifically Permitted Investments. Nothing contained in this
Declaration of Trust shall preclude the Trustee from investing funds of the
Trust, and notwithstanding any other provision of this Declaration of Trust the
Trustees are specifically authorized and empowered to invest funds of the Trust,
in any investments specifically referred to in the Registration Statement
described in Section 10.2.
ARTICLE 5.
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS.
SECTION 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any other
Person in connection with Trust Property or the affairs of the Trust and no
Trustee, officer or agent of the Trust, or member of the Board of Consultants
shall be subject to any personal liability whatsoever, in tort, contract or
otherwise, to any other Person in connection with Trust Property of the affairs
of the Trust, save only that arising from his bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties or for his failure to act
in good faith in the reasonable belief that his action was in the best interests
of the Trust; and all such other Persons shall look solely to the Trust Property
for satisfaction of claims of any nature arising in connection with the affairs
of the Trust. If any Shareholder, Trustee, officer, agent, or member of the
Board of Consultants, as such, of this Trust, is made a party to any suit or
proceeding to enforce any such liability, he shall not on account thereof be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities, to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in appropriate situation even though not specifically
provided herein.
SECTION 5.2. Non-Liability of Trustees etc. No trustee, officer or agent of
the Trust or member of the Board of Consultants, shall be liable to the Trust or
to any Shareholder, Trustee, officer agent or member of the Board of Consultants
thereof for any action of failure to act (including without to limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties or for his failure to act in good faith in the
reasonable belief that his action was in the best interests of the Trust.
SECTION 5.3. Mandatory Indemnification. The Trust shall indemnify each of its
Trustees, officers, agents and members of the Bord of Consultants, if any
(including persons who serve at its request as directors, officers or trustees
of another organization in which it has any interest, as a shareholder, creditor
or otherwise) against all liabilities and expenses, including amounts paid in
satisfaction of judgements, in compromise or as fines and penalties, and counsel
fees, reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which may
be involved or with which he may be threatened, while in office or thereafter,
by reason of his being or having been such a Trustee, officer, agent or member
of the Board of Consultants, except with respect to any matter as to which he
shall have been adjudicated to have acted in bad faith, willful misfeasance,
reckless disregard of his duties or gross negligence or not to have acted in
good faith in the reasonable belief that his action was in the best interests of
the Trust; provided, however, that as to any matter disposed of by a compromise
payment by such person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless the Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that if either the matter
or willful misfeasance, reckless disregard of duty or gross negligence, or the
matter of good faith and reasonable belief as to the best interests of the
Trust, had been adjudicated, it would have been adjudicated in favor of such
Person. The rights accruing to any Person under these provisions shall not
exclude any other right to which he may be lawfully entitled; provided, that no
Person may satisfy any right of indemnity or reimbursement granted herein or in
Section 5.1 or to which he may be otherwise entitled except out of the property
of the Trust, and no Shareholder shall be personally liable to any Person with
respect to any claim for indemnity or reimbursement or otherwise. The Trustees
may make advance payments in connection with indemnification under this Section
5.3, provided that the indemnified person shall have given a written undertaking
to reimburse the Trust in the event it is subsequently determined that he is not
entitled to such indemnification.
SECTION 5.4. No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of his duties hereunder.
SECTION 5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other person dealing with the Trustees or
any officer or agent of the Trust shall be bound to make any inquiry concerning
the validity of any transaction purporting to be made by the Trustees or by said
officer or agent or be liable for the application of money or property, paid,
loaned, or delivered to or on the order of the Trustees or of said officer or
agent. Every note, debenture, bond, obligation, contract, instrument,
certificate, Share or undertaking, and every other act or thing whatsoever
executed in connection with the Trust shall be conclusively taken to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration of Trust or in their capacity as officers or agents of
the Trust. Every written such note, debenture, bond, obligation, contract,
instrument, certificate, Share or undertaking made or issued by the Trustees or
by any officers or agents of the Trust, in their capacity as such, shall contain
an appropriate recital to the effect that the Shareholders, Trustees, officers
and agents of the Trust shall not be personally liable thereunder, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim thereunder, and appropriate references shall be made therein to the
Declaration of Trust, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any of the Trustees, Shareholders, officers or agents of
the Trust. The Trustees shall, at all times, maintain insurance for the
protection of the Trust Property, its Shareholders, Trustees, officers and
agents in such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgement
shall deem advisable.
SECTION 5.6. Reliance on Experts, etc. Each Trustee and officer of the Trust
shall, in the performance of his duties, be fully protected in relying in good
faith upon the books of account of the Trust, reports made to the Trust by any
of its officers or employees or by the Adviser or by counsel, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees or officers, or upon other records of the Trust.
ARTICLE 6.
SHARES OF BENFICIAL INTEREST
SECTION 6.1. Description of Shares. The interest of the Shareholders
hereunder shall be divided into shares of beneficial interest which shall be
known collectively as "Shares", all of which shall be without par value and
shall be fully paid and no assessment shall ever be made upon Shareholders.
There shall be two classes of Shares; one such class shall be known as "Common
Shares" and the other shall be known as "Preferred Shares". The number of Common
Shares which the Trust shall have authority to issue is unlimited, and the
number of Preferred Shares which the Trust shall have authority to issue is
2.000,000 Preferred Shares. Holders of record at any time of outstanding Shares
of any class are herein referred to as "Shareholders".
SECTION 6.2. Common Shares. Subject to the provisions of any series of
Preferred Shares which may at the time be outstanding, the holders of Common
Shares shall be entitled to receive, when and as declared from time to time by
the Trustees out of any funds legally available for the purpose, such dividends
as may be declared from time to time by the Trustees in accordance with Section
6.12. In the event of the termination of the Trust pursuant to Section 10.1, or
upon the distribution of its assets, after the payment in full or the setting
apart for payment of such preferential amounts, if any, as the holders of
Preferred Shares at the time outstanding shall be entitled, the remaining assets
of the Trust available for payment and distribution to Shareholders shall,
subject to any participating or similar rights of Preferred Shares at the time
outstanding, be distributed ratably among the holders of Common Shares at the
time outstanding in accordance with Section 10.3. All Common Shares shall have
non-cumulative voting rights, and shall have no preference, conversion, exchange
or redemption rights.
SECTION 6.3. Preferred Shares. The Trustees are hereby expressly authorized
at any time, and from time to time, upon the affirmative vote of at least 75% of
the Trustees then in office, to provide for the issuance of Preferred Shares in
one or more series, with such voting powers, full or limited, or without voting
powers, and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Trustees, and as are
not stated and expressed in the Declaration of Trust, including (without
limiting the generality thereof) the following as to each such series:
(a) the designation of such series,
(b) the dividends payable with respect to such series, the rates or basis
for determining such dividends, any conditions and dates upon which such
dividends shall be payable, the preferences, if any, of such dividends over, or
the relation of such dividends, shall be payable on any other class or series of
Shares of the Trust, whether such dividends shall be non-cumulative or
cumulative and, if cumulative, the date or dates from which such dividends shall
be cumulative,
(c) whether, subject to Section 4.6(i), Preferred Shares of shall be
redeemable (in addition to the Trust's right of redemption as set forth in
Section 6.19) at the option of the Trust or the holder or both or upon the
happening of a specified event and, if redeemable, whether for cash, property or
rights, including Securities of the Trust, the times, prices or rates and any
adjustment and other terms and conditions of such redemption,
(d) the terms and amount of any sinking, retirement or purchase fund
provided for the purchase or redemption of Preferred Shares of such series,
(e) whether or not Preferred Shares of such series shall be convertible
into or exchangeable for Shares of another class or series, at the option of the
Trust or of the holder or both or upon the happening of a specified event and,
if provision be made for such conversion or exchange, the terms, prices, rates,
adjustments and any other terms and conditions thereof,
(f) the extent, if any, to which the holders of the Preferred Shares of
such series shall be entitled to vote with respect to the election of Trustees
or otherwise, including, without limitation, the extent, if any, to which such
holders shall be entitled, voting as a series or as part of a class, to elect
one or more Trustees upon the happening of a specified event or otherwise,
(g) the restrictions, if any, on the issue or reissue of Preferred Shares
of such series or any other series,
(h) the extent, if any, to which the holders of the Preferred Shares of
such series shall be entitled to preemptive rights, and
(i) the rights of the holders of the Preferred Shares of such series upon
the termination of the Trust or any distribution of its assets.
Before the Trust shall issue any Preferred Shares of any series, a certificate
setting forth the resolution or resolutions of the Trustees fixing the voting
powers, designations, preferences and rights of such series, the qualifications,
limitations or restrictions thereof, and the number of Preferred Shares of such
series authorized by the Trustees, shall be signed by a Trustee or the Secretary
of the Trust and filed in accordance with Section 11.1.
Unless otherwise provided in any such resolution or resolutions, the number of
Preferred Shares of the series authorized by such resolution or resolutions may
be increased or decreased (but not below the number of Preferred Shares of such
series then outstanding) by a certificate, setting forth a resolution or
resolutions adopted by at least 75% of the Trustees then in office authorizing
such increase or decrease, signed by a Trustee or the Secretary of the Trust and
filed in accordance with Section 11.1. Unless otherwise provided in the
resolution or resolutions creating such series, the number of Preferred Shares
specified in any such decrease shall be restored to the status of authorized but
unissued Preferred Shares (without designation as to series). Unless otherwise
provided in such resolution or resolutions, any other amendment to such
resolution or resolutions may be effected by a certificate, setting forth a
resolution adopted by at least 75% of the Trustees then in office authorizing
such amendment and certifying that such amendment has been approved by such
votes, if any, as may be required pursuant to Section 10.6, signed by a Trustee
or the Secretary of the Trust and filed in accordance with Section 11.1. Any
such amendment may, without limitation, cancel or otherwise affect the right of
the holders of Preferred Shares of such series to receive dividends which have
accrued but have not been declared. Holders of Common Shares shall not be
entitled to vote on such amendments to any such resolutions.
SECTION 6.4. Trust Only. It is the intention of the Trustees to create on]y
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time, and to give to each Shareholder only such rights
and to impose upon him only such obligations as are conferred or imposed upon
him as a beneficiary hereunder. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust or in the certificates of Shares shall
be construed to make the holders of said certificates, either by themselves or
with the Trustees, partners or members of a joint stock association.
SECTION 6.5. Share Certificates. Every Shareholder shall be entitled to
receive a certificate specifying the number of Shares of the applicable class or
series held by him. Such certificates shall be treated as negotiable and title
thereto, and to the Shares represented thereby, shall be transferred by delivery
thereof to the same extent in all respects as stock certificates, and the shares
represented thereby of a Massachusetts business corporation. Unless otherwise
determined by the Trustees such certificates shall be signed by the President
and Treasurer or Secretary, and shall be countersigned by a transfer agent, if
any and registered by a registrar, if any. There shall be filed with each
transfer agent and registrar, if any, a copy of the authorized form of
certificate, certified by the President or Secretary and such form shall
continue to be used unless and until the Trustees approve some other form. In
case any one or more officers of the Trust who shall have signed (or whose
facsimile signature shall appear on ) certificates shall cease to be such
officer or officers before such certificates shall have been actually issued,
such certificates may nevertheless be issued with the same effect as though the
persons who signed such certificates (or whose facsimile signature appears
thereon) had not ceased to be such officers of the Trust. The Trustees may, in
their discretion, authorize certificates to be signed or authenticated by the
facsimile signature of an officer or officers of the Trust provided that any
certificate signed or authenticated by the facsimile signature of an officer
shall not be valid unless manually countersigned by either a transfer agent or a
registrar.
Each certificate issued by the Trust after April 9, 1974 to represent any
Shares shall include, on the face or back thereof, a statement that the Trust
will furnish to the holder therof, upon written request without charge, the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of Shares or series thereof and the qualifications,
limitations or restrictions thereof.
SECTION 6.6. Issuance of Shares. Subject to the provisions of any series of
Preferred Shares at the time outstanding, the Trustees, in their discretion, may
from time to time without vote of the Shareholders issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash,
property or services, at such time or times, and on such terms as the Trustees
may deem best, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption, of
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares or may provide for the issuance of scrip
for fractions of Shares and determine the terms of such scrip including, without
limiting the generality of the foregoing, the time which any such scrip must be
surrendered for exchange into Shares and the rights if any, of holders of scrip
upon the expiration of the time so fixed, the rights, if any, to receive
proportional distributions, and the rights, if any, to redeem scrip for cash, or
the Trustees may, in their discretion, or if they see fit at the option of each
holder, provide in lieu of scrip for the adjustment of fractions in cash. The
provisions of Section 6.5 hereinabove relative to certificates for Shares shall
apply so far as appropriate to such scrip, except that such scrip may in the
discretion of the Trustees be signed by a transfer agent alone notwithstanding
that there is then a registrar for the Shares and need not be signed by any
officer of the Trust.
SECTION 6.7. Register of Shares. A register shall be kept by or on behalf of
the Trustees under the direction of the Trustees which shall contain the names
and addresses of the Shareholders and the number of Shares of each class and
series thereof held by them respectively and the numbers of the certificates
representing such Shares and a record of all transfers thereof. Only
Shareholders whose certificates are so recorded shall be entitled to receive
dividends or distributions applicable to the respective classes or series of
Shares held by them, or otherwise to exercise or enjoy the rights of
Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein provided,
until he has give his address to a transfer agent or such other officer or agent
of the Trustees as shall keep the said register for entry thereon.
SECTION 6.8. Transfer Agent and Registrar. The Trustees shall have power to
employ a transfer agent or transfer agents, and a registrar or registrars for
any one or more classes or series of Shares. The transfer agent or transfer
agents may keep the said register and record therein the original issues and
transfers, if any, of the said Shares and countersign certificates of Shares
issued to the persons entitled to the same. Any such transfer agents and
registrars shall perform the duties usually performed by transfer agents and
registrars of certificates of stock in a corporation, except as modified by the
Trustees. In accordance with the usual custom of corporations having a transfer
agent, certificates for Shares in blank (signed or bearing facsimile signatures)
may be deposited with any transfer agent of the Trust, to be used by the
transfer agent in accordance with the authority conferred upon it as occasion
may require, and in so doing the signers of such certificates shall not be
responsible for any loss resulting therefrom.
SECTION 6.9. Transfer of Shares. Shares shall be transferable on the records
of the Trust (other than pursuant to Section 6.10) only by, the record holder
thereof or by his agent thereunto duly authorized in writing, upon delivery to
the Trustees or a transfer agent of the Trust of the certificate therefor,
properly endorsed or accompanied by a duly executed instrument of transfer,
together with such evidence of the genuineness of each such endorsement,
execution, and authorization and of other matters as may reasonably be required.
Upon such delivery the transfer shall be recorded on the register of the Trust
and a new certificate for the Shares so transferred shall be issued to the
transferee, and in case of a transfer of only a part of the Shares represented
by any certificate, a new certificate for the residue thereof, shall be issued
to the transferor. But until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of the proposed transfer.
SECTION 6.10. Shareholders of Record by Operation of Law. Any person becoming
entitled to any Shares in consequence of the death, bankruptcy, or incompetence
of any Shareholder, or otherwise by operation of law, shall be recorded as the
holder of such Shares and receive a new certificate therefor upon production of
the proper evidence thereof and delivery of the existing certificate to the
Trustees or a transfer agent of the Trust. But until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares for all
purposes hereof and neither the Trustees nor any transfer agent or registrar nor
any officer or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law.
SECTION 6.11. Joint Ownership. The Trustees may treat two or more Persons
holding any Shares as joint tenants of the entire interest therein unless their
ownership is expressly otherwise recorded on the register of the Trust, but no
entry shall be made in the register or in any certificate that any Person is in
any other manner entitled to any future, limited, or contingent interest in any
Share; provided, however, that any Person recorded as a holder of any Share may,
subject to the provisions hereinafter contained, be described in the register or
in any certificate as a fiduciary of any kind and any customary words may be
added to the description of the holder to identify the nature of such fiduciary
relationship.
SECTION 6.12. No Obligation with the Respect to Other Instruments. The
Trustees shall not, nor shall the Shareholders, or any officer, transfer agent
or other agent of the Trust or of the Trustees, be bound to see to the execution
of any trust, express, implied or constructive, or of any charge, pledge, or
equity to which any of the Shares or any interest therein are subject, or to
ascertain or inquire whether any sale or transfer or any such Shares or
interests therein by any such Shareholder or his personal representatives is
authorized by such trust, charge, pledge or equity, or to recognize any Person
as having any interest therein except for the Persons recorded as such
Shareholders. The receipt of the Person in whose name any Share is recorded, or,
if such Share is recorded in the names of more than one Person, the receipt of
any one of such Persons or the receipt of the duly authorized agent of any such
Person shall be sufficient discharge for all dividends and other money and for
all Shares, notes, debentures, bonds, obligations, scrip, and other property
payable, issuable, or deliverable in respect of any such Share and from all
liability to see to the application thereof.
SECTION 6.13. Loss, etc. of Certificate. In case of the loss, mutilation or
destruction of any certificate of Shares hereunder, the Trustees may issue or
cause to be issued a new certificate on such terms as they may see fit.
SECTION 6.14. Distributions to Shareholders. Subject to the provisions of any
series of Preferred Shares at the time outstanding, the Trustees shall from time
to time distribute such proportion of the net profits, surplus (including
paid-in surplus), capital, or assets held by the Trustees as they may deem
proper. Subject to any such provisions, the holders of Common Shares shall be
entitled to receive, in proportion to their respective ownership of Common
Shares, any such dividends or distributions. Subject to any such provisions,
such distribution may be made in cash or property (including without limitation
any type of obligations of the trust or any assets thereof), and the Trustees
may distribute to the holders of Shares of any class or series, in proportion to
their respective ownership thereof, additional Shares of such class or series,
as the case may be, or of any other class or series, in such manner and on such
terms as the Trustees may deem proper. Subject to any such provisions, and such
distributions may be made even though the paid-in capital of this Trust at the
time of any distribution exceeds the net assets of the Trust based either on the
market value or the book value, and such distributions may be among the
Shareholders or record at the time of declaring a distribution or among the
Shareholders of record at such other date (not more than thirty days prior to
payment of such distribution) as the Trustees shall determine. Subject to any
such provisions, the Trustees may always retain from the net profits such amount
as they may deem necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the business.
SECTION 6.15. Statement of Source of Funds. In connection with each
distribution to Shareholders, the Trustees shall furnish the Shareholders with a
statement in writing advising as to the source of the funds so distributed or,
if the source thereof has not then been determined, the communication shall so
state, and in such event, the statement as to source shall be forwarded to
Shareholders not later than sixty (60) days after the close of the fiscal year
in which the distribution was made.
SECTION 6.16. Notices. Any and all notices to which any Shareholder hereunder
may be entitled and any and all communications shall be deemed duly served or
given if mailed, postage prepaid, addressed to any Shareholder of record at his
last known address as recorded on the register of the Trustee.
SECTION 6.17. Purchase of Shares by the Trust; Treasury Shares. Subject to
the provisions of any series of Preferred Shares at the time outstanding the
Trustees may, on behalf of the Trust, at any time purchase or otherwise acquire
outstanding Shares of the Trust for such consideration and on such terms as they
may deem proper. Shares so purchased or acquired by the Trustees on behalf of
the Trust shall not, so long as they belong to the Trust, receive dividends or
distributions or be entitled to any voting rights or be deemed outstanding for
any purpose hereunder. Subject to any such provisions, such Shares may in the
discretion of the Trustees be cancelled or such Shares may in the discretion of
the Trustees be transferred at such times, to such parties, and for such
consideration as the Trustees may determine.
SECTION 6.18. Purchase etc. of Shares by Trustee. The Trustee, or any of
them, may in their individual capacity, purchase and otherwise acquire or sell
and otherwise dispose of Shares issued hereunder and in so doing shall be
subject to the same limitations as a director of a Massachusetts business
corporation at the time of the exercise of such power.
SECTION 6.19. Redemption of Shares; Disclosure of Holding. If the Trustee
shall, at any time and in good faith be of the opinion that direct or indirect
ownership of Shares of the Trust has or may become concentrated in any
individual or individuals to an extent which would disqualify the Trust as a
Real Estate Investment Trust then the Trustees shall have the power by lot or
other means deemed equitable to them (i) to call for redemption a number of
concentrated Shares sufficient, in the opinion of the Trustees, to maintain or
bring the direct or indirect ownership of Shares of the Trust into conformity
with the requirements of such qualification and (ii) to refuse to transfer
Shares to any person whose acquisition of the Shares in question would in the
opinion of the Trustees result in such disqualification. The redemption price
for a class or series shall be equal to the fair market value of the Shares as
reflected in the latest bid quotation for the Shares (if then traded
over-the-counter) or the closing sale price (if then listed on a national
securities exchange) of such class or series as of the business day preceding
the day on which notice of redemption is sent, or, if no quotations or closing
sale price for the Shares are available, as determined in good faith by the
Trustees. From and after the date fixed for redemption by the Trustee, the
holder of any Shares so called for redemption shall cease to the entitled to
dividends, voting rights and other benefits with respect to such Shares
expecting only the right to payment of the redemption price fixed as aforesaid.
For the purpose of this Section 6.19, the terms "individual" and "ownership" of
Shares shall be defined in accordance with or by reference to the qualification
requirements of the REIT Provisions of the Internal Revenue Code.
The Shareholders shall upon demand disclose to the Trustees in writing such
information with respect to direct and indirect ownership of Shares as the
Trustee deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other taxing authority.
SECTION 6.20. Warrants. Subject to the provisions of any series of Preferred
Shares at the time outstanding, the Trustees, in their discretion, may from time
to time without vote of the Shareholders issue share purchase warrants (herein
referred to as "Warrants") which shall entitle the holders thereof to subscribe
to Shares and/or fractional Shares of such class or series or scrip at such time
or times and on such terms as the Trustees may prescribe including, without
limiting the generality of the foregoing, the times within which any such
Warrants must be exercised, any provision for redemption of Warrants by the
Trust and the consideration to be paid for such Shares. Subject to any such
provisions, warrants may be issued to such parties (but subject to Shareholder
preemptive rights to the extent provided in Section 6.22) and for such
consideration (subject to Section 3.7) as the Trustees may from time to time
determine (including the issuance of detachable or non-detachable Warrants as an
inducement to persons acquiring or underwriting any Securities of the Trust).
The provisions of this Article 6 relative to certificates for Shares shall apply
so far as appropriate to such Warrants, except that such Warrants may in the
discretion of the Trustee, be signed by the Transfer Agent or Warrant Agent
only.
SECTION 6.21. Issuance of Shares in Units. Notwithstanding any other
provision of this Declaration of Trust, the Trustees may issue from time to time
Units containing multiple Shares, with or without detachable or non-detachable
Warrants. Each Share issued in any such Unit shall have the same characteristics
and entitle the registered holder thereof to the same rights as any other Share
of the same class or series issued by the Trustees, except that the Trustees may
provide (and may cause a notation to be placed on the certificate representing
such Unit or the Shares issued in any such Unit) that for a specified period not
to exceed one year after issuance, Shares and/or Warrants issued in any such
Unit may be transferred upon the books of the Trust only in such Unit.
SECTION 6.22. Limitation of Pre-emptive Rights. Holders of Common Shares
shall have no pre-emptive rights with respect to any Shares of any class or
series or any Securities of the Trust which evidence indebtedness (or any Shares
into which such Securities of the Trust may be converted) sold, offered or
issued by the Trust at any time and shall have no pre-emptive rights with
respect to Warrants, rights and options of the Trust sold, offered or issued by
the Trust at any time as part of a public offering of such Warrants, rights or
options or as part of a private financing or borrowing arrangement or pursuant
to a stock option plan providing for the issuance of Shares pursuant to
"qualified stock options", as defined in the Internal Revenue Code, as from time
to time amended. Subject to the provisions of any series of Preferred Shares at
the time outstanding, and subject to the foregoing limitations, holders of
Common Shares shall have pre-emptive rights solely with respect to the sale,
offering or issuance of Warrants, rights and options to acquire Common Shares
issued by the Trust. Holders of any series of Preferred Shares shall have
pre-emptive rights only to the extent, if any, provided in the provisions of
such series.
SECTION 6.23. Dividend Investment Plan. Subject to the provisions of any
series of Preferred Shares at the time outstanding, the Trustees may establish
from time to time a plan for holders of Common Shares permitting the investment
of dividends in Common Shares and may amend, modify, alter and terminate any
such plan. Any such dividend investment plan may include a provision fixing the
purchase price at market price or book value or at the lower of market price or
the book value of the Common Shares.
ARTICLE 7
SHAREHOLDERS.
SECTION 7.1. Ownership of Trust Property. The ownership of all Trust Property
and the control of the affairs of the Trust are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares issued hereunder, and they shall
have no right to call for any partition or division of any property, profits,
rights, or interests. Notwithstanding any other provisions hereof, all real
estate at any time forming part of the Trust Property shall be held upon trust
for sale and conversion into personal estate at such time or times and in such
manner and upon such terms as the Trustees shall approve, but the Trustees shall
have power, until the termination of this Trust, to postpone such conversion so
long as they in their uncontrolled discretion shall think fit, and for the
purpose of determining the nature of the interest of the Shareholders therein,
all such real estate shall at all time be considered as personal estate; and the
real estate and personal property comprised in the trust estate shall constitute
a single fund.
SECTION 7.2 Shares Deemed Personal Property. The Shares issued hereunder
shall be personal property giving only the rights in this Declaration of Trust
and in the certificates thereof specifically set forth. The death of a
Shareholder during the continuance of this Trust shall not terminate the Trust
nor give his legal representatives a right to an accounting or to take any
action in the courts or otherwise against other Shareholders or the Trustees or
the property held hereunder, but shall simply entitle the legal representatives
of the deceased Shareholder to demand and receive a new certificate held by the
deceased Shareholder, and upon the acceptance of which new certificate such
legal representatives shall succeed to all the rights of the deceased
Shareholder under this Trust.
SECTION 7.3. Meetings. The Annual Meeting of Shareholders shall be held each
year after mailing to the Shareholders of the annual Report described in Section
2.13 at a place, within or without the Commonwealth of Massachusetts, and on a
date to be fixed, from time to time, by the Trustees or by the By-laws.
Special Meetings of the Shareholders shall be called at any time when ordered
by the President or by two Trustees, or, subject to the provisions of any series
of Preferred Shares then outstanding, upon the written request of the holders of
25% of the Shares of all classes then outstanding and entitled to vote at such
meeting, specifying the nature of the business for which said meeting is called
and no other business shall be considered at such meeting. In the event an
Annual Meeting is not held in a year as above provided in this Section 7.3, a
Special Meeting of Shareholders may be held in lieu thereof with all the force
and effect of an Annual Meeting.
SECTION 7.4. Notice of Meeting. Notice of all meetings of the Shareholders
shall be mailed or delivered by a Trustee or Trustees or an officer or agent of
the Trust to each Shareholder entitled to vote thereat at his registered address
at least ten (10) days before the meeting. No business shall be transacted at
any Special Meeting of Shareholders unless notice of such business has been
given in the call for the meeting. Any adjourned meeting may be held as
adjourned without further notice.
SECTION 7.5. Quorum. Subject to the provisions of any series of Preferred
Shares at the time outstanding, the presence, in person or by proxy, of the
holders of record of Shares (of any class) entitled to vote at the meeting
aggregating a majority of the total number of Shares of all classes then issued
and outstanding and entitled to vote on any question shall be necessary and
sufficient to constitute a quorum for action on such question at any Annual or
Special Meeting of Shareholders. If a quorum shall not be present a majority of
the Shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn from time to time the meeting until quorum
shall be present or represented. At any adjourned meeting at which a quroum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
SECTION 7.6. Type of Shareholder Action Binding on Trustees. Subject to the
provisions of any series of Preferred Shares then outstanding, only action taken
by the Shareholders of the type specified in Section 2.2, 2.3, 7.3, 8.5, 10.1,
10.4, 10.5 and 10.6 hereof (and then only if such action receives the requisite
Shareholder approval) shall in any way bind the Trustees. Subject to Section
10.6, the holders of Preferred Shares of any series shall be entitled to vote
upon the matters referred to in the preceding sentence or any other matters only
to the extent specified in the Trustee resolutions providing for such series.
SECTION 7.7. Fixing Date For Determination of Shareholders of Record. Except
as may be provided in the provisions of any series of Preferred Shares at the
time outstanding, for the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to participate in any dividend, or for the purpose of any other action
the Trustees may from time to time close the transfer books for such period not
exceeding sixty (60) days as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than sixty (60) days prior
to the date of any meeting of Shareholders or dividend payment or other action
as a record date for the determination of Shareholders entitled to vote at such
meeting or any adjournment thereof or to receive such dividend or to be treated
as Shareholders of record for purposes of such other action and any Shareholder
who was a Shareholder at the time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to receive such dividend or to be treated
as a Shareholder of record for purposes of such other action even though he has
since that date disposed of his Shares, and no Shareholder becoming such after
said date shall be so entitled to vote at said meeting or any adjournment
thereof or to receive such dividend or to be treated as a Shareholder of record
for purposes of such other action.
SECTION 7.8. Proxies; Voting. At any meeting of the Shareholders, any
Shareholder entitled to vote thereat may vote by proxy, provided that no proxy
shall be voted on any matter unless it shall have been filed prior to the vote
on such matter with the Secretary or with such other officer or agent of the
Trust as the Secretary may direct. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Pursuant to a resolution adopted by a Majority of the Trustees, proxies may be
solicited in the name of one or more Trustees or one or more officers of the
Trust. Only Shareholders of record shall be entitled to vote and each full Share
having voting power shall be entitled to one vote or, in the case of Preferred
Shares having voting power, such greater or lesser vote as may have been
provided in the Trustees' resolutions providing for such Preferred Shares. When
any full Share is held jointly by several persons, any one of them may vote at
any meeting in person or by proxy in respect of such Share, but if more than one
of them shall be present at such meeting in person or by proxy in respect of
such Share, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such Share. If
the holder of any such Share is a minor or a person of unsound mind, and subject
to guardianship or to the legal control of any other person as regards the
charge or management of such Share, he may vote by his guardian or such other
person appointed or having such control, and such vote may be given in person or
by proxy.
SECTION 7.9. Share Action by Unanimous Written Consent. Any action taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
Shareholder action by less than unanimous written consent or authorization may
be taken only as expressly provided in this Declaration of Trust.
SECTION 7.10. Inspection of Records. Shareholders and any Federal or state
securities or "blue sky" administrator or other similar authority shall have the
right and for proper purposes, to inspect the records of the Trust at such
office or offices as the records may be regularly maintained to the same extent
as is permitted to shareholders of a Massachusetts business corporation.
ARTICLE 8
ADVISER.
SECTION 8.1. Adviser. The Trustees are responsible for the general policies
of the Trust and for such general supervision of the business of the Trust
conducted by all officers, agents, employees, advisers, managers, or independent
contractors of the Trust as may be necessary to ensure that such business
conforms to the provisions of this Declaration of Trust. However, the Trustees
are not required personally to conduct the business of the Trust and, consistent
with their ultimate responsibility as stated above, the Trustees shall have the
power to appoint, employ, or contract with such Persons including one or more of
themselves and any corporation, partnership, or trust in which one or more of
them may be directors, officers, stockholders, partners or trustees, subject to
any applicable requirements of Section 3.23i as the Trustees may deem necessary
or desirable for the transaction of the business of the Trust. The Trustees may
also employ or contract with a corporation, partnership, trust, or individual
(herein referred to as the "Adviser"), to whom, consistent with their ultimate
responsibility as stated above the Trustees may grant or delegate such authority
as the Trustees may, in their sole discretion, deem necessary or desirable,
without regard to whether such authority is normally granted or delegated by
trustees. The Trustees may exercise broad discretion in allowing the Advisor to
administer the operations of the Trust, to act as agent for the Trust, to
execute documents on behalf of the Trustees, and to make executive decisions
which conform to general policies and general principles previously established
by the Trustees. The Trustees shall have the power to determine the terms of
compensation of the Adviser (subject to the provisions of Section 8.5 hereof) or
any other such Person or Persons whom they may employ or with whom they may
contract.
SECTION 8.2. Advisory Contract. The first contract with the Adviser entered
into by the Trustees may have an initial term which expires at the end of the
first fiscal year of the Trust which commences after the first public offering
of Shares; thereafter, the Trustees shall not enter into any contract (or
extension thereof) with the Adviser unless such contract has an initial term of
no more than one year and provides for annual renewal or extension thereafter.
The initial contract with the Adviser and any extension or renewal thereof shall
be terminable by either party on sixty (60) days notice. The Trustees shall not
enter into such a contract with any corporation, trust or partnership in which a
Trustee is a director, officer, Trustee or holder of more than 1% of the
outstanding capital stock or participating or beneficial interest unless such
contract requires for renewal or extension thereof the affirmative vote of a
majority of the disinterested Trustees.
SECTION 8.3 Relationship With Trustees. Not more than 49% of the total number
of Trustees may be affiliated (i.e., may be a director, officer, partner,
trustee, employee or holder of more than a one percent ownership interest) with
the Adviser and its affiliates, provided, however, that if at any time the
percentage of Trustees who are so affiliated becomes by reason of one or more
vacancies in the Trustees more than 49% of the total number of Trustees then in
office, then within 60 days of such vacancy occurring the continuing Trustees or
Trustee then in office shall appoint, pursuant to Section 2.4 hereof, a
sufficient number of other individuals as Trustees so that there is again not
more than 49% of the total number of Trustees then in office who are so
affiliated. The Trustees shall at all times endeavor to comply with the
requirements of this Section 8.3 but failure to so comply shall not invalidate
any action taken by the Trustees, the office of any Trustee or any act, or the
authority to act, of the Advisor.
SECTION 8.4. Other Activities of the Adviser. The Adviser which the Trustees
employ or with which they contract and any officer, director, employee or
shareholder of the Adviser who may also be a Trustee, officer or employee of the
Trust, may engage in other activities, including acquiring, managing, operating,
disposing of and otherwise dealing in property of all types, real, personal and
mixed, tangible and intangible, and acting as a broker for, and/or rendering
advice and other services to, other Persons in connection with the sale or
purchase of real estate or Mortgages and the management of its or his own
investments and the investments of other Persons and may be compensated for any
such advice or services by such other Person. Where the Adviser originates or
arranges the acquisition or disposition of a Trust investment, it may receive a
brokerage commission or other compensation therefor from the seller or buyer or
other Person, provided that except upon termination or non-renewal of the
contract with the Adviser, such commission or other compensation is required to
be deducted from future advisory fees otherwise payable by the Trust to the
Adviser. The Adviser may also receive a brokerage commission or other
compensation from a participant for services rendered to such participant in a
real estate, mortgage or other investment in which the Trust has invested.
SECTION 8.5. Increase of Adviser's Fee. The affirmative written consent or
vote of the holders of a majority of the aggregate number of Shares then
outstanding and entitled to vote thereon shall be required for any increase in
the Adviser's rate of compensation contained in the first contract executed with
the Adviser subsequent to the date thereon.
ARTICLE 9
COMPLIANCE WITH PROVISIONS OF INTERNAL REVENUE CODE.
SECTION 9.1. Compliance With Provisions of Internal Revenue Code. The
Trustees, in exercising the powers herein granted to them, shall exercise due
diligence to so conduct the affairs of the Trust as to qualify the Trust, as
promptly as possible consistent with their investment objectives and
requirements, and continue its qualification, as a Real Estate Investment Trust;
provided, however, that no Trustee, officer or agent of this Trust shall be
liable for any act or omission resulting in the loss of tax benefits under that
law, except for that arising from his own bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties.
ARTICLE 10
AMENDMENT OR TERMINATION OF TRUST.
SECTION 10.1. Amendments or Termination. Except for amendments effected
pursuant to the final paragraph of Section 6.3 and except as provided in the
provisions of any series of Preferred Shares at the time outstanding, the
provisions of this Declaration of Trust maybe amended or altered (except as to
the limitation of personal liability of the Shareholders, Trustees and members
of the Board of Consultants, if any, and the prohibition of assessments upon
Shareholders) or the Trust may be terminated, at any meeting of Shareholders
called for the purpose, by the affirmative vote of the holders of not less than
a majority of the aggregate number of Shares then outstanding and entitled to
vote thereon or by an instrument in writing, without a meeting, signed by a
Majority of the Trustees and the holders of not less than a majority of such
Shares; provided, however, that after fifteen (15) days' written notice to the
Shareholders of the proposed action, the Trustees may, from time to time by vote
of Two-thirds of the Trustees, amend or alter the provisions of this Declaration
of Trust (except for provisions subject to Section 10.5), without the vote or
assent of the Shareholders, to the extent deemed by the Trustees in good faith
to be necessary to meet the requirements for qualification as a Real Estate
Investment Trust under the provisions of the Internal Revenue Code.
Notwithstanding the foregoing, no amendment may be made pursuant to this Section
10.1 which would change any rights with respect to any outstanding Common Shares
of the Trust by reducing the amount payable thereon upon liquidation of the
Trust or by diminishing or eliminating any voting rights pertaining thereto,
except with the vote or written consent of the holders of two-thirds ( 2/3 ) of
the outstanding Common Shares entitled to vote thereon.
SECTION 10.2. Termination or Amendment by Trustees Prior to First Offering.
Notwithstanding any other provision hereof until such time as a Registration
Statement under the Securities Act of 1933 as amended, covering the first public
offering of Shares of the Trust shall have become effective this Declaration of
Trust may be terminated or amended in any respect by a vote of a Majority of the
Trustees or by unanimous written consent of the Trustees.
SECTION 10.3. Powers of Trustees Upon Termination. Upon the Termination of
the Trust, the Trustees may sell and convert into money the whole of the Trust
Property, or any part thereof, and after paying, retiring, or providing for the
payment of, all known liabilities and obligations of the Trustees and providing
for indemnity against any other outstanding liabilities and obligations, shall
divide the proceeds thereof among, and distribute in kind, at valuations made by
them which shall be conclusive, all other property then held by them in trust
hereunder to, the Shareholders ratably according to the respective rights of the
class or series of Shares held by them. In making any sale under this provision
the Trustees shall have power to sell by public auction or private contract and
to buy in or rescind or vary any contract of sale and to resell without being
answerable for loss and for said purposes, to do all things, including the
execution and delivery of instruments, as may by their performance thereof be
shown to be in their judgment necessary or desirable in connection therewith.
The powers of sale and all other powers herein given to the Trustees shall
continue as to all property at any time remaining in their hands or ownership
even though all times herein fixed for distribution of Trust Property may have
passed.
SECTION 10.4. Power to Effect Reorganization. Except as provided in the
provisions of any series of Preferred Shares at the time outstanding, the
Trustees, by vote of, or written instrument signed by, a Majority of the
Trustees, may direct the organization of a corporation, association, trust or
other organization into which the Trust, if permitted by law, may merge, or
which shall take over the Trust Property and carry on the affairs of the Trust,
and after receiving an affirmative vote of the holders of not less than a
majority of the aggregate number of Shares then outstanding and entitled to vote
thereon, at a meeting of Shareholders called for the purpose, or after receipt
of an instrument in writing, without a meeting, signed by the holders of not
less than a majority of such Shares, the Trustees may effect such merger or may
sell, convey and transfer the Trust Property to any such corporation,
association, trust or organization in exchange for shares or securities thereof,
or beneficial interest therein, and the assumption by such transferee of the
liabilities of the Trust and thereupon terminate this Trust and deliver such
shares, securities or beneficial interest to Shareholders in accordance with the
terms of the merger or other agreement governing the transaction; provided,
however, that no such merger into or sale, conveyance or transfer of the Trust
Property shall be made to any corporation, association, trust or other
organization unless and until the Trustees shall be furnished with the opinion
of counsel selected by the Trustees that (i) such transferee will qualify for
benefits with respect to the federal income tax which are substantially equal to
the benefits for which this Trust qualifies at such time, or will qualify under
the Federal Income Tax Law as enacted although not then in effect, (ii) such
transferee has a primary purpose substantially the same as the principal purpose
of this Trust, as stated in the Preamble to this Declaration of Trust, and (iii)
the shares, securities, or beneficial interest which will be issued to holders
of each class or series of Shares in exchange for such property will constitute
an investment substantially equal in quality and substantially the same as an
investment in such Shares.
SECTION 10.5. Limitation on Shareholder Rights. The provisions of Sections
2.2, 2.3, 7.3, 8.5, 10.1, 10.4, and 10.6 shall be subject to the requirements of
the Internal Revenue Code. If any provision granting limiting the voting rights
and rights to consent of Shareholders in such Sections shall conflict with the
requirements for qualification as a Real Estate Investment Trust, such
provisions shall be deemed to be void and without any force or effect ab initio
(except that any action taken pursuant to any such provision prior to the
express determination by the Trustees of such conflict shall be valid) and the
Trustees, without Shareholder consent shall promptly amend the Declaration of
Trust to conform to the aforesaid requirements. In the event that any provision
relating to the election of Trustees by the Shareholders of the Trust shall be
deemed to be without force or effect, the Trustee then in office shall be deemed
to be the qualified and acting Trustees until such time as the successor
Trustees have been named and qualified. At the next meeting of Shareholders
after the determination of such conflict, there shall be submitted to the
Shareholders the question as to whether such Shareholder's right or rights
should be restored. If the holders of a majority of the Shares outstanding and
entitled to vote on the matter and voting, vote to restore such right or rights,
the Trustees, without further Shareholder consent, shall promptly make any
amendments to the Declaration of Trust necessary to restore such right or
rights.
SECTION 10.6. Class Voting, Right of Preferred Shares. The holders of the
outstanding Preferred Shares shall be entitled to vote a class upon any proposed
amendment or alteration of this Declaration of Trust pursuant to Section 10.1 or
any proposed reorganization pursuant to Section 10.4, or upon any proposed
amendment to be offered pursuant to the third sentence of the final paragraph of
Section 6.3 whether or not otherwise entitled to vote thereon separately or
together with other classes, if the proposed amendment alteration or
reorganization would alter or change the powers, preferences or special rights
expressly applicable to the Preferred Shares so as to affect them adversely. If
any such proposed amendment, alteration or reorganization would alter or change
the powers, preferences or special rights expressly applicable to the Preferred
Shares of any series so as to affect them adversely in a manner different from
other series of Preferred Shares, then only the Preferred Shares of such series
together with any other series of Preferred Shares adversely affected in the
same manner, shall be considered a separate class for purposes of this Section
10.6. Any vote pursuant to this Section 10.6 shall require the affirmative vote
of the holders of not less than two-thirds of the outstanding Preferred Shares
or series thereof, as the case may be, or an instrument or instruments in
writing, without a meeting signed by at lease 75% of the Trustees then in office
and the holders of not less than two-thirds of the outstanding Preferred Shares
or series thereof as the case may be. Any resolution adopted by the Trustees
pursuant to Section 6.3 providing for any series of Preferred Shares may specify
amendments, alterations or reorganizations which shall not, for purposes of this
Section 10.6 be deemed to change the powers, preferences or special rights
expressly applicable to the Preferred Shares of such series so as to affect them
adversely, but the absence of such specification as to any one or more
amendments, alterations, or reorganizations shall not create any inference that
such unspecified amendments, alterations or reorganizations would adversely
affect such series.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Governing Law; Filing. This Declaration of Trust is executed by
the Trustees and is delivered in the City of Boston, Massachusetts and with
reference to the laws of The Commonwealth of Massachusetts, and the rights of
all parties and the validity, construction and effect of every provision hereof
and the administration of the Trust created hereby shall be subject to and
construed according to the laws of said Commonwealth. This Declaration of Trust
and any amendment hereof (including any resolution adopted pursuant to Section
6.3) shall as soon as reasonably practicable after its execution or adoption, be
filed in the office of the Secretary of The Commonwealth of Massachusetts, which
filing shall be a condition precedent to the effectiveness of any such
amendment. The Trustees shall also cause to be filed in the aforementioned
office and in all other offices in which recording of the amendment or
instrument in question shall be required from time to time by the laws of The
Commonwealth of Massachusetts or by any other applicable laws or in which such
recording shall seem desirable to the Trustees, all amendments to this
Declaration of Trust and appropriate instruments disclosing changes in the
persons who are Trustees of the Trust but such filing shall not be deemed a
condition to the effectiveness of, and (except as to the required filing or
amendments in the office of the Secretary of The Commonwealth of Massachusetts)
the failure to so file shall not be deemed to invalidate any such amendment or
any election or appointment of any person as a Trustee or the resignation or
removal of any Trustee. In the event the filing under this Section 11.1 of any
such amendment or instrument is not at the time permitted to be made in the
office of the Secretary of The Commonwealth of Massachusetts, the recording of
such amendment or instrument in the Registry of Deeds for Suffolk County,
Massachusetts shall have the same effect as such filing.
SECTION 11.2. Counterparts. This Declaration of Trust and any amendment
hereof may be simultaneously executed in several counterparts each of which so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument, which shall be sufficiently evidenced by
any such counterpart.
SECTION 11.3. Conclusive Evidence. Any certificate signed by a person who
according to the records in the office of the Secretary of The Commonwealth of
Massachusetts or in any recording office wherein instruments affecting local
real estate are customarily recorded appears to be a Trustee hereunder
certifying the number of identity of Trustees, the due authorization of the
execution of any instrument or writing the form of any vote passed at a meeting
of Trustees or Shareholders, the fact that the number of Trustees present at any
meeting or executing any written instrument satisfied the requirements of this
Declaration of Trust the form of any by-law adopted by or the identity of any
officer elected by the Trustees or the existence or non-existence of any fact or
facts which in any manner relate to the affairs of the Trust shall be conclusive
evidence as to the matters so certified in favor of any person dealing with the
Trustees or any one or more or them and the successors or assigns of such
person.
SECTION 11.4. Construction of Terms Used. In the construction of this
Declaration of Trust whether or not so expressed, words used in the singular or
in the plural respectively include both the plural and singular, word denoting
males include females and words denoting persons including individuals, firms,
associations, companies (joint, stock or otherwise), trusts and corporations
unless a contrary intention is to be inferred from or required by the subject
matter or context. The cover, title, heading of different parts hereof, the
tables of contents, the index of definitions and the marginal notes, if any, are
inserted only for convenience of reference and are not to be taken to be any
part hereof or to control or affect the meaning, construction, interpretation or
effect hereon.
<PAGE>
ARTICLE 12
DURATION OF TRUST
Subject to possible earlier termination in accordance with the provisions of
Article 10 hereof the Trust shall continue until the expiration of twenty (20)
years after the death of the last survivor of the following named persons,
whichever first occurs:
July 18, 1966 Gordon
A. Carpenter Concord
born: son of: Circle Arlington,
Bradford C. Carpenter....... address: Mass.
May 6, 1969 C. Dean
born: son of: Dusseault 16 Edgemoor
Christopher D. Dusseault ... address: Road Belmont, Mass.
April 2, 1968 Arthur
born: daughter G. Siler 40 Heath Hill
Juliet Siler................ of: address: Brookline, Mass
March 28, 1966 Jerome
M. Leonard 65
born: son of: Coronation Drive
Jerome M. Leonard, Jr. ..... address: Dedham, Mass
May 5, 1966 Fred R.
born: daughter Becker 27 Albion
Marth Kerr Becker........... of: address: Street Newton, Mass
July 27, 1967 John A.
born: son of: Ritsher 36 Upland Road
Walter D. Ritsher........... address: Cambridge, Mass.
January 4, 1969 Nelson
born: son of: G. Ross 16 Michael
Douglas M. Ross............. address: Road Hingham, Mass.
January 27, 1966 John
born: son of: L. Worden 8 Kensington
Andrew B. Worden............ adress: Road Arlington, Mass.
April 24, 1967 John L.
born: son of: Worden 8 Kensington
James D. Worden............. address: Road Arlington, Mass.
IN WITNESS WHEREOF, BRINLEY M. HALL, as a Trustee as aforesaid, has signed
these presents this 11th day of April, 1974.
/s/ BRINLEY M. HALL
-------------------------
BRINLEY M. HALL
April 11, 1974
COMMONWEALTH OF MASSACHUSETTS |
> ss
COUNTY OF SUFFOLK |
Then personally appeared before me, BRINLEY M. HALL, who acknowledged the
foregoing instrument to be his free act and deed and the free act and deed of
the Trustees of Hubbard Real Estate Investments.
/s/ Ann Adams Hurley
--------------------------
Notary Public
ANN ADAMS HURLEY, Notary Public
My Commission Expires: June 16, 1975
[NOTARY SEAL]
<PAGE>
Exhibit 9 (a)(1)
A true Copy Witnessed under the Great
Seal of the Commonwealth of Massachusetts.
/s/ Paul Guzzi
-------------------
Paul Guzzi
Secretary of the Commonwealth.
/s/ John Grace
-------------------
Deputy Secretary.
<PAGE>
HUBBARD REAL ESTATE INVESTMENTS
Certificate of Amendment of Fourth
Amended and Restated Declaration of Trust
The undersigned, a Trustee of Hubbard Real Estate Investments (the
"Trust"), hereby certifies pursuant to Section 1.3 of the Fourth Amended and
Restated Declaration of Trust (the "Declaration of Trust"), that at a meeting of
shareholders of the Trust duly called and held on March 29, 1977 in accordance
with said declaration of Trust, at which a quroum of shareholders was present
and voting throughout, the holders of not less than a majority of the aggregate
number of shares of beneficial interest of the Trust then outstanding and
entitled to vote thereon voted to amend the Declaration of Trust by amending
Section 8.4 thereof to read as follows:
SECTION 8.4. Other Activities of the Advisor. The Advisor which the
Trustees employ or with which they contract and any office director, employee or
shareholder of the Adviser who may also be a Trustee, officer or employee of the
Trust, may engage in other activities, including acquiring, managing, operating,
disposing of and otherwise dealing in property of all types, real, personal and
mixed, tangible and intangible, and acting as a broker for, and/or rendering
advice and other services to, other Persons in connection with the sale of
purchase of real estate of Mortgages and the management of its or his own
investments and the investment of other Persons and may be compensated for any
such advice or service by such other Person. Where the Adviser originates or
arranges the acquisition or disposition of a Trust investment, it may receive a
brokerage commission or other compensation therefor from the seller or buyer or
other Person, provided that except upon termination or non-renewal of the
contract with the Adviser, such commission or other compensation is required to
be deducted from future advisory fees otherwise payable by the Trust to the
Adviser. The Adviser may also receive a brokerage commission or other
compensation from a participant for services rendered to such participant in a
real estate, mortgage or other investment in which the Trust has invested
Affiliates of the Adviser may receive compensation from the Trust or other
Persons in connection with investments and activities of the Trust and such
compensation shall not be required to be deducted form advisory fees otherwise
payable by the Trust to the Adviser.
The undersigned further certifies that, pursuant to Section 10 thereof,
such Declaration of Trust has bee amended as aforesaid, effective upon the
filing of this Certificate of Amendment in the Office of the Secretary of the
Commonwealth of Massachusetts.
WITNESS may hand this 29th day of March, 1977.
/s/ Brinley M. Hall
----------------------
Brinley M. Hall - Trustee
<PAGE>
COMMONWEALTH OF MASSACHUSETTS |
> ss:
COUNTY OF SUFFOLK |
On this 29th day of March, 1977, before me personally appeared Brinley M.
Hall, who executed the foregoing instrument and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Trustee of
Hubbard Real Estate Investments.
/s/ Ann Adams Hurley
---------------------
Notary Public
SEAL
My Commission Expires:
ANN ADAMS HURLEY
NOTARY PUBLIC
My commission expires June 18, 1978
<PAGE>
HUBBARD REAL ESTATE INVESTMENTS
Certificate of Amendment of
Fourth Amended and Restated
Declaration of Trust
The undersigned, a Trustee of Hubbard Real Estate Investments (the
"Trust") hereby certifies pursuant to Section 11.3 of the Fourth Amended and
Restated Declaration of Trust (the "Declaration of Trust"), of the Trust, that
at a meeting of shareholders of the Trust duly called and held on March 9, 1982
in accordance with said Declaration of Trust, at which a quorum of shareholders
was present and voting throughout, the holders of not less than a majority of
the aggregate number of shares of beneficial interest of the Trust then
outstanding and entitled to vote thereon voted to amend the Declaration of Trust
in the following respects:
SECTION 6.19. To amend Section 6.19 of the Declaration of Trust to read in
its entirety as follows:
SECTION 6.19. Redemption of Shares; Disclosure of Holding. In the
event that any Person, or Persons acting as a group, shall at any time
acquire ownership in the aggregate of more than 9.9% of the outstanding
Common Shares of this Trust, the Trustees may redeem such shares in excess
of 9.9% (the "Excess Shares"). Any such redemption right may be exercised
at any time but in no event later than 60 days after the Trustees shall
have received written notice from such Person or Persons regarding such
acquisition. After such 60 day period, the foregoing redemption right
shall extend only to any Excess Shares not referred to in such notice and
may be exercised at any time but in no event later than 60 days after the
Trustees shall have received a similar notice regarding such additional
Excess Shares. The redemption price shall be equal to the fair market
value of the Shares as reflected in the latest bid quotation for the
Shares (if then traded over-the-counter) or the closing sale price (if
then listed on a national securities exchange) of such Shares as of the
business day, preceding the day on which notice of redemption is sent, or,
if no quotations or closing sale price for the Shares are available, as
determined in good faith by the Trustees. From and after the date fixed
for redemption by the Trustees, the holder of any Shares so called for
redemption shall cease to be entitled to dividends, voting rights and
other benefits with respect to such Shares excepting only the right to
payment of the redemption price fixed as aforesaid. The right of
redemption in this Section shall not apply to Excess Shares or additional
Excess Shares acquired as a result of an offer for all outstanding Common
Shares of the Trust. For the purpose of this Section 6.19, the term
"ownership" of Shares shall be defined in accordance with or by reference
to the qualfication requirements of the REIT Provisions of the Internal
Revenue Code and shall also mean ownership as defined under Rule 13(d), as
in effect on January 15, 1982, promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934; and the term
"group" shall have the same meaning as that term has for purposes of such
Rule 13(d), as in effect on January 15, 1982.
The Shareholders shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other
taxing authority.
SECTION 6.22. To amend Section 6.22 of the Declaration of Trust to read in
its entirety as follows:
SECTION 6.22. Limitation of Pre-emptive Rights. Holders of Common
Shares shall have no pre-emptive rights with respect to any Shares of any
class or series or any Securities of the Trust which evidence indebtedness
(or any Shares into which such Securities of the Trust may be converted)
sold, offered or issued by the Trust. Holders of any series of Preferred
Shares shall have pre-emptive rights only to the extent, if any, provided
in the provisions of such series.
SECTION 6.23. To amend Section 6.23 of the Declaration of Trust to read in
its entirety an follows:
<PAGE>
SECTION 6.23. Dividend Investment and Share Purchase Plans. Subject
to the provisions of any series of Preferred Shares at the time
outstanding, the Trustees may establish from time to time one or more
plans for holders of Common Shares which may permit Shareholders to invest
dividends in Common Shares and which may also permit Shareholders to
purchase additional Common Shares. The Trustees may amend, modify, alter
and terminate any such plans. Any such plans may include a provision
fixing the purchase price at such price as the Trustees shall from time to
time determine, which price may be below market price or book value, or
both, of the Common Shares.
The undersigned further certifies that, pursuant to Section 10.1 thereof,
such Declaration of Trust has been amended as aforesaid, effective upon filing
of this Certificate of Amendment in the Office of the Secretary of The
Commonwealth of Massachusetts.
WTTNESS my hand this 9th day of March, 1982.
/s/ Brinley M. Hall
----------------------------
Brinley M. Hall - Trustee
<PAGE>
HUBBARD REAL ESTATE INVESTMENTS
Certificate of Amendement of
Fourth Amended and Restated
Declaration of Trust
The undersigned, a Trustee of Hubbard Real Estate Investments (the
"Trust") hereby certifies pursuant to Section 11.3 of the Fourth Amended and
Restated Declaration of Trust (the "Declaration of Trust"), of the Trust, that
at a meeting of shareholders of the Trust duly called and held on March 12, 1985
in accordance with said Declaration of Trust, at which a quorum of shareholders
was present and voting throughout, the holders of not less than a majority of
the aggregate number of shares of beneficial interest of the Trust then
outstanding and entitled to vote thereon voted to amend the Declaration of Trust
in the following respect:
To amend the second paragraph of Section 1.1 of the Declaration of Trust
to read in its entirety as follows:
Upon the written request of Hubbard Advisory Corporation ("HAC") or
any successor to HAC made no later than 30 days after termination or
expiration of the Advisory Agreement dated as of May 1, 1981 between the
Trust and HAC, as the same may be amended from time to time (such
termination or expiration being hereinafter referred to as the
"termination"), the Trustees shall not later than the earlier of (a) 9
months following the termination or 9 months following the date of such
request, whichever is later, or (b) following the termination, offering
securities in a firm commitment or best efforts underwritten public
offering registered with the Securities and Exchange Commission or in a
firm commitment or best efforts underwritten private offering of equity
securities of the Trust involving more than 35 purchasers, without any
vote or consent of the Shareholders being required, amend the Declaration
of Trust of the Trust to change the name of the Trust to "HRE Properties"
or other name selected by the Trustees which does not' include "Hubbard"
or any approximation thereof including any name using the three or four
letters "Hub" or "Hubb." Upon the effectiveness of such name change, HAC
or its successor shall promptly pay the Trust $50,000 in lieu and in full
discharge of any reimbursement by HAC or its successor of any and all
expenses incurred by the Trust in operation with such name change. In no
event shall the Trust be required to change its name less that 60 days
following the later of the foregoing written request or the termination.
The undersigned further certifies that, pursuant to Section 10.1 thereof,
such Declaration of Trust has been amended as aforesaid, effectve uoon filing of
this Certificate of Amendment in the Office of the Secretary of The Commonwealth
of Massachusetts.
WITNESS my hand this 29th day of March, 1985.
/s/ William F. Murdoch, Jr.
----------------------------
William F. Murdoch, Jr.
<PAGE>
HRE PROPERTIES
Certificate of Amendment of
Fourth Amended and Restated
Declaration of Trust
The undersigned, a Trustee of HRE Properties (formerly named Hubbard Real
Estate Investments) (the 'Trust") hereby certifies pursuant to Section 11.3 of
the Fourth Amended and Restated Declaration of Trust (the "Declaration of
Trust"), of the Trust, that at a meeting of shareholders of the Trust duly
called and held on March 18, 1987 in accordance with said Declaration of Trust,
at which a quorum of shareholders was present and voting throughout, the holders
of not less than a majority of the aggregate number of shares of beneficial
interest of the Trust then outstanding and entitled to vote thereon voted' to
amend Sections 5.1, 5.2 and 5.3 of the Declaration of Trust to read as set forth
in Appendix A to this certificate.
The undersigned further certifies that, pursuant to Section 10.1 thereof,
such Declaration of Trust has been amended as aforesaid, effective upon filing
of this Certificate of Amendment in the Office of the Secretary of The
Commonwealth of Massachusetts.
WITNESS my hand this 19th day of March, 1987.
/s/ William F. Murdoch, Jr.
-----------------------------------
William F. Murdoch, Jr. - Trustee
<PAGE>
APPENDIX A
Amendments to Sections 5.1, 5.2 and 5.3 of
Declaration of Trust of HRE Properties
Adopted at Meeting of Shareholders
Held on March 18, 1987
-------------------------------------------
VOTED: That Sections 5.1, 5.2 and 5.3 of the Declaration of Trust of HRE
Properties be and they hereby are amended to read in their entirety
as set forth below, and that invalidity or unenforceability of any
of the provisions set forth below shall not affect the validity or
enforceability of the remainder of such provisions:
Section 5.1. No Personal Liability of Shareholders, Trustees, etc.. No
Shareholder shall be subject to any personal liability whatsoever to any other
Person in connection with Trust Property or the affairs of the Trust and no
Trustee, officer, employee or agent of the Trust, or member of the Board of
Consultants, shall be subject to any personal liability whatsoever, in tort,
contract, or otherwise, to any other Person, in connection with Trust Property
or the affairs of the Trust, save only that arising from his bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties or for his
failure to act in good faith in the reasonable belief that his action was in the
best interests of the Trust; and all such other Persons shall look solely to the
Trust Property for satisfaction of claims of any nature arising in connection
with the affairs of the Trust. If any Shareholder, Trustee, officer, employee,
agent, or member of the Board of Consultants, as such, of this Trust, is made a
party to any suit or proceeding to enforce any such liability, he shall not on
account thereof be hold to any personal liability. The Trust shall indemnify and
hold each Shareholder harmless from and against all claims and liabilities, to
which such may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably him in connection with any such claim or liability. The
rights accruing to a Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer or
employee or agent of he Trust or member of the Board of Consultants, shall be
liable to the Trust or to any Shareholder, Trustee, officer, employee, agent or
member of the Board of Consultants thereof for any action or failure to act
(including without limitation the failure to compel in any way any former or
acting Trustee to redress any breach of trust) except for his own bad faith,
willful misfeasance, gross negligence or reckless disregard of his duties or for
his failure to act in good faith in the reasonable belief that his action was in
the best interests of the Trust. Notwithstanding anything in this Article 5 or
in Article 9 or elsewhere in this Declaration of Trust to the contrary and
without in any way increasing the liability of the Trustees beyond that
otherwise provided in this Declaration of Trust, no Trustee of the Trust shall
be liable to the Trust or to any Shareholder, Trustee, officer, employee, agent
or member of the Board of Consultants for monetary damages for breach of
fiduciary duty as a Trustee; provided that such provision shall not eliminate or
limit the liability of a Trustee (i) for any breach of the Trustee's duty of
loyalty to the Trust or its Shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or knowing violation of law, or
(iii) for any transaction from which the Trustee derived an improper personal
benefit.
Section 5.3. Mandatory Indemnification. The Trust shall indemnify each of
its Trustees, officers, employees, agents and members of the Board of
Consultants, if any (including persons who serve at its request as directors,
officers, trustees, employees or agents of any Trust employee benefit plan or
another organization in which it has any interest, as a shareholder, creditor or
otherwise) against all liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees, reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceedings, whether civil or criminal, in which he
may be involved or with which he may be threatened, while in office or
thereafter, by reason of his being or having been such a Trustee, officer,
employee, agent or member of the Board of Consultants, except with respect to
any matter as to which he shall have been adjudicated to have acted in bad
faith, willful misfeasance, reckless disregard of his duties or gross negligence
or not to have acted in good faith in the reasonable belief that his action was
in the best interests of the Trust (however, notwithstanding the foregoing
exception, such indemnification shall extend to Trustees who shall have no
personal liability for monetary damages to the Trust or its Shareholders
pursuant to the last sentence in Section 5.2); provided, however, that as to any
matter disposed of by a compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless .the Trust shall have received a written
opinion from independent legal counsel approved by the Trustees to the effect
either (i) that if the matter of bad faith, willful misfeasance, gross
negligence or reckless disregard of duty or good faith and reasonable belief as
to the best interests of the Trust, had been adjudicated, it would have been
adjudicated in favor of such Person or (ii) if the matter of the personal
liability of a Trustee to the Trust or any Shareholder, Trustee, officer,
employee, agent or member of the Board of Consultants for monetary damages for
breach of fiduciary duty pursuant to the last sentence of Section 5.2, had been
adjudicated, it would have been adjudicated in favor of such Person. A Person
shall be entitled to indemnification if such counsel opines favorably as to
either the matter in clause (i) or the matter in clause (ii).
The rights accruing to any Person under the provisions of this Section 5.3
shall not exclude any other right to which he may be lawfully entitled,
including any provision of the By-laws of the Trust consistent with this Section
5.3, nor shall anything contained herein restrict the right of this Trust to
indemnify or reimburse any Person in any proper case even though not
specifically provided for herein, nor shall anything contained herein restrict
such rights of any Person to contribution as may be available under applicable
law, provided, that no Person may satisfy any right of indemnity or
reimbursement granted herein or in Section 5.1 or to which he may be otherwise
entitled except out of the property of the Trust, and no Shareholder shall be
personally liable to any Person with respect to any claim for indemnity or
reimbursement or otherwise. The Trust may make advance payments (and may agree
in advance to make such advance payments generally or in particular cases) in
connection with indemnification under this Section 5.3, provided that the
indemnified Person shall have given a written undertaking to reimburse the Trust
in the event it is subsequently determined that such Person is not entitled to
such indemnification.
In order to carry out the intent and purposes of this Section 5.3, and to
assure the Trust's performance of its obligations hereunder, the Trust shall
have the power to enter into agreements with Trustees, officers, employees,
agents or members of the Board of Consultants designated by the Trustees,
without specific approval thereof by the shareholders of this Trust. The terms
of any such agreements need not be identical to the terms of any other such
agreement and any such agreement which had been entered into may subsequently be
amended or changed by mutual agreement of the parties thereto, without specific
approval thereof by the shareholders of the Trust.
The Trust shall have the power to dedicate the assets of the Trust to
establish arrangements for funding its indemnification obligations under this
Section 5.3, including but not limited to depositing assets in trust funds,
obtaining bank letters of credit in favor of indemnified Persons, establishing
specific reserve accounts and otherwise funding special self-insurance
arrangements for these purposes.
<PAGE>
HRE PROPERTIES
Certificate of Vote of the Trustees
Designating a Series of Preferred Shares
The undersigned, a Trustee of HRE Properties (formerly named Hubbard Real
Estate Investments) (the "Trust") hereby certifies pursuant to Section 11.3 of
the fourth amended and restated Declaration of Trust (the "Declaration of
Trust"), of the Trust, that at a meeting of the Trustees of the Trust duly
called and held on October 27, 1988 in accordance with said Declaration of
Trust, at which a quorum of Trustees were present and voting throughout, no less
than seventy-five percent of the Trustees then in office voted to designate a
series of Preferred Shares pursuant to Section 6.3 of the Declaration of Trust
as set forth in Appendix A to this Certificate.
WITNESS my hand this day of October 27th, 1988.
/s/ William F. Murdoch, Jr.
-----------------------------------
William F. Murdoch, Jr.
Trustee
<PAGE>
APPENDIX A
VOTE OF THE TRUSTEES OF HRE PROPERTIES
DESIGNATING A SERIES OF
PREFERRED SHARES
VOTED: That pursuant to the authority vested in the Trustees in accordance
with Section 6.3 of the Declaration of Trust, as amended, a series of Preferred
Shares be and it hereby is created, and that the designation and amount thereof
and the voting powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Preferred Shares" (the "Series A Shares")
and the number of shares constituting such series shall be 150,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Shares ranking prior and superior to the
Series A Shares with respect to dividends, the holders of Series A Shares
shall be entitled to receive, when, as and if declared by the Trustees out
of funds legally available for the purpose, quarterly dividends payable in
cash to holders of record on the 15th day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Shares, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $.25 or (b) subject to the provision for
adjustment set forth in Section 7 hereof, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in Common Shares or a subdivision of the
outstanding Common Shares (by reclassification or otherwise), declared on
the Common Shares of the Trust (the "Common Shares") since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share of
fraction of a share of Series A Shares.
(B) The Trust shall declare a dividend or distribution on the Series
A Shares as provided in paragraph (A) of this Section 2 immediately after
it declares a dividend or distribution on the Common Shares (other than a
dividend payable in shares of or subdivision with respect to Common
Shares); provided, however, that, in the event no dividend or distribution
shall have been declared on the Common Shares during the period between
any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $.25 per share on the Series A Shares
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Shares from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Shares, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Shares
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Shares in an amount less than the total amount
of all such dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Trustees may fix a record date for the
determination of holders of shares of Series A Shares entitled to receive
payment of a dividend or distribution declared thereon, which record date
shall be no more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Shares shall
have the following voting rights:
(A) Subject to the provision for adjustment set forth in Section
7 hereof, each share Of Series A Shares shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
Trust.
(B) Except as otherwise provided herein, in the Declaration of
Trust, as amended, of the Trust (the "Declaration of Trust") or by law,
the holders of shares of Series A Shares and the holders of shares of
Common Shares shall vote together as one class on all matters submitted to
a vote of shareholders of the Trust.
(C)
(i) If at the time of any annual meeting of shareholders for
the election of trustees a default in preferred dividends (as
hereinafter defined) shall exist, the holders of shares of Preferred
Shares voting separately as a class without regard to series (with
each share of Preferred Shares being entitled to that number of
votes to which it is entitled on matters submitted to shareholders
generally, or, if it is not entitle to vote with respect to such
matters, to one vote), shall have the right to elect two members of
the Trustees of the Trust. The holders of Common Shares shall not be
entitled to vote in the election of the two Trustees so to be
elected by the holders of shares of Preferred Shares. Any trustee
elected by the holders of shares of Preferred Shares, voting as a
class as aforesaid, shall continue to serve as such trustee for the
full term for which he shall have been elected notwithstanding that
prior to the end of such term a default in preferred dividends shall
cease to exist. If, prior to the end of the term of any trustee
elected by the holders of the Preferred Shares, voting as a class as
aforesaid, a vacancy in the office of such trustee shall occur by
reason of death, resignation, removal or disability, or for any
other cause, such vacancy shall be filled for the unexpired term in
the manner provided in the Declaration of Trust, provided that, if
the Declaration of Trust provides that such vacancy shall be filled
by election by the shareholders at a meeting thereof, the right to
fill such vacancy shall be vested in the holders of Preferred
Shares, voting as a class as aforesaid, unless, in any such case, no
default in preferred dividends shall exist at the time of such
election.
(ii) For the purposes of paragraph (C)(i) of this Section 3, a
default in preferred dividends shall be deemed to have occurred
whenever the amount of dividends in arrears upon any series of
Preferred Shares shall be equivalent to six full quarterly dividends
or more and, having so occurred, such default in preferred dividends
shall be deemed to exist thereafter until all accrued dividends on
all shares of Preferred Shares then outstanding shall have been paid
to the end of the last preceding quarterly dividend period. Nothing
herein contained shall be deemed to prevent an amendment of the
Declaration of Trust, in the manner therein provided, which shall
increase the number of Trustees so as to provide as additional
places on the Trustees either or both the trusteeships to be filled
by the two Trustees so to be elected by the holders of the Preferred
Shares or to prevent any other change in the number of trustees of
the Trust.
(D) Except as set forth herein, holders of Series A Shares shall
have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common
Shares as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Shares outstanding shall
have been paid in full, the Trust shall not
(i) declare of pay dividends on, make any other distribution
on, or redeem or purchase or otherwise acquire for consideration any
beneficial shares ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Shares;
(ii) declare or pay dividends on or make any other
distributions of any beneficial shares ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with
the Series A Shares, except dividends paid ratably on the Series A
Shares and all such parity shares on which dividends are payable or
in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration any beneficial shares ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Shares, provided that the Trust may at any time redeem,
purchase or otherwise acquire such parity shares in exchange for any
beneficial shares of the Trust ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Shares; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Shares, or any beneficial shares ranking on a
parity with the Series A Shares, except in accordance with a
purchase offer made in writing or by publication (as determined by
the Trustees) to all holders of such shares upon such terms as the
Trustees, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Trust shall not permit any subsidiary of the Trust to
purchase or otherwise acquire for consideration any beneficial shares of
the Trust unless the Trust could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Trust, no distribution shall be made to the holders of
beneficial shares ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Shares unless,
prior thereto, the holders of shares of Series A Shares shall have
received $100 per share plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"). Following the
payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series
A Shares unless, prior thereto, the holders of shares of Common Stock
(which term shall include, for the purposes only of this Section 5, any
series of the Trust's Preferred Shares ranking on a parity with the Common
Shares upon liquidation, dissolution or winding up) shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained
by dividing (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in Section 7 hereof to reflect such
events as share splits, share dividends and recapitalizations with respect
to the Common Shares; such number in clause (ii), the "Adjustment
Number"). In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common
Shares. Following the payment of the full amount of the Series A
Liquidation Preference and the common Adjustment in respect of all
outstanding shares of Series A Shares and Common Shares, respectively,
holders of Series A Shares and holders of shares of Common Shares shall
receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to one (1) with
respect to such Series A Shares and Common Shares, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred Shares,
if any, which rank on a parity with the Series A Shares, then such
remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences.
Section 6. Consolidation, Merqer, etc. In case the Trust shall enter into
any consolidation, merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case the Series A Shares shall at the same
time be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment set forth in Section 7 hereof) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each Common Share is
changed or exchanged.
Section 7. Certain Adjustments. In the event the Trust shall at any time
declare or pay any dividend on common Shares payable in Common Shares, or effect
a subdivision or combination or consolidation of the outstanding Common Shares
(by reclassification or otherwise than by payment of a dividend in common
Shares) into a greater or lesser number of shares of Common Shares, then, in
each such case, the amounts set forth in Sections 2(A), 3(A), 5(A) and 6 hereof
with respect to the multiple of (i) cash and non-cash dividends, (ii) votes,
(iii) the Series A Liquidation Preference and (iv) an aggregate amount of stock,
securities, cash and/or other property referred to in Section 6 hereof, shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
Section 8. Ranking. The Series A Shares shall rank pari passu with (or if
determined by the Trustees in any vote establishing any other series of
Preferred Shares, either, senior or preferred to or junior and subordinate to as
the case may be) each other series of Preferred Shares of the Trust with respect
to dividends and/or preference upon liquidation, dissolution or winding up.
Section 9. Redemption. Series A Shares may be redeemed by the Trust at
such times and on such terms as may be agreed to between the Trust and the
redeeming shareholder, subject to any limitations which may be imposed by law or
the Declaration of Trust.
Section 10. Amendment. The Declaration of Trust, shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series A Shares so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Series A Shares, if any, voting together as a single class.
Section 11. Fractional Share. Series A Shares may be issued by fractions
of a share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series A
Shares.
<PAGE>
Certificate Of Amendment
Of Fourth Amended and
Restated Declaration of Trust
The undersigned, a Trustee of Hubbard Real Estate Investments (the
"Trust"), hereby certifies pursuant to Section 11.3 of the Fourth Amended and
Restated Declaration of Trust (the "Declaration of Trust") of the Trust, that at
a meeting of Trustees of the Trust duly called and held on December 17, 1985, in
accordance with said Declaration of Trust, at which a quorum of Trustees
was present and voting throughout, the Trustees unanimously voted to amend the
Declaration of Trust, effective February 1, 1966, in the following respect:
To amend Section 1.1 of the Declaration of Trust to read in its
entirely as follows:
SECTION 1.1. Name. The trust created by this Declaration of Trust is
herein referred to as the "Trust" and shall be known by the name "HRE
Properties"; so far as may be practicable, legal and convenient, the affairs of
the Trust shall be conducted and transacted under such name, which name (and
the word "Trust" whenever used in this Declaration of Trust, except when the
context otherwise requires) shall refer to the trustees as trustees and not
individually or personally and shall not refer to the beneficiaries or
Shareholders of the Trust, or to any officers, employees, or agents of the Trust
or of such Trustees. Under circumstances in which the Trustees determine that
the use of the name "HRE Properties" is not practicable, legal or convenient,
they may as appropriate use their names with suitable reference to their trustee
status, or some other suitable designation, or they may adopt another name under
which the Trust may hold property or operate in any state, which name shall not
refer to the beneficiaries or Shareholders of the Trust, or any officers
employees, or agents of the Trust or of such Trustees.
To amend Section 1.2 of the Declaration of Trust to read in its entirety
as follows:
SECTION 1.2. Title to Property. Legal title to all of the Trust Property
shall be transferred to, vested in and held by the Trustees, as joint tenants
with right of survivorship as Trustees of this Trust, except as provided in
Section 3.5. Where legal title is transferred (whether to or by the Trust) in
the name HRE Properties, such name shall be deemed to refer to the Trustees as
aforesaid.
The undersigned further certifies that pursuant to Section 10.1. thereof,
such Declaration of Trust has been amended as aforesaid, effective February 1,
1986.
WITNESS my hand this 15 day of January, 1986.
/s/ William F. Murdoch, Jr.
-----------------------------------
William F. Murdoch, Jr.
Trustee
<PAGE>
HRE PROPERTIES
Certificate of Amendment
Fourth Amended and Restated
Declaration of Trust
The undersigned, a Trustee of HRE Properties (fomerly named Hubbard Real
Estate Investments) (the "Trust") hereby certifies pursuant to Section 11.3 of
the Fourth Amended and Restated Declaration of Trust (the "Declaration of
Trust"), of the Trust, that at a meeting of shareholders of the Trust duly
called and held on March 3, 1994 in accordance with said Declaration of Trust,
at which a quorum of shareholders was present and voting throughout, the holders
of not less than a majority of the aggregate number of shares of beneficial
interest of the Trust then outstanding and entitled to vote thereon voted to
amend the Declaration of Trust in the following respect:
To amend Section 2.2 of the Declaration of Trust to read in its entirety
as follows:
Section 2.2 Terms of Office; Election and Qualification. Subject to
the provisions of Sections 2.3 and 2.4, each Trustee shall hold office
until the expiration of his term and until the election and qualification
of his successor. Except as otherwise required by the provisions of any
series of Preferred Shares at the time outstanding, commencing at the
Annual Shareholders Meeting held in 1994, the terms of office of the Board
of Trustees shall be divided into three classes, Class 1, Class II and
Class III. All classes shall be as nearly equal in number as possible, and
no class shall include fewer than one or more than five Trustees.
The terms of office of the Trustees initially classified shall be as
follows: (i) that of Class I shall expire at the Annual Meeting of
Shareholders to be held in 1995, (ii) that of Class II shall expire at the
Annual Meeting of Shareholders to be held in 1996, and (iii) that of Class
III shall expire at the Annual Meeting of Shareholders to be held in 1997,
and in all cases until a successor shall have been duly elected and shall
have qualified. At each Annual Meeting of Shareholders after the
aforementioned classification, the successor to Trustees whose terms shall
then expire shall be elected to serve from the time of election and
qualification until the third Annual Meeting of Shareholders following
election and until a successor shall have been duly elected and shall have
qualified. Trustees may succeed themselves in office.
Except as otherwise required by the provisions of any series of
Preferred Shares at the time outstanding, the election of Trustees at any
meeting of Shareholders shall be by the affirmative vote of the holders of
a majority of the shares present in person or by proxy at such meeting and
then entitled to vote in the election of Trustees. A Trustee shall be an
individual at least twenty-one (21) years of age who is not under legal
disability. Such individual shall qualify as a Trustee by signing this
Declaration of Trust, as so amended. Trustees continuing in office by
re-election or re-appointment need not re-qualify as Trustees. Trustees
may, but need not, own shares.
The undersigned further certifies that, pursuant to Section 10.1 thereof,
such Declaration of Trust has been amended as aforesaid, effective upon filing
of this Certificate of Amendment in the Office of the Secretary of The
Commonwealth of Massachusetts.
WITNESS my hand this 3rd day of March, 1994.
/s/ Charles J. Urstadt
--------------------------
Charles J. Urstadt
<PAGE>
NO. 30
AMENDMENT RE: TRUSTEES TERMS OF OFFICE
HRE PROPERTIES
<PAGE>
HRE PROPERTIES
Certificate of Amendment
Fourth Amended and Restated
Declaration of Trust
The undersigned, a Trustee of HRE Properties (formerly named Hubbard Real Estate Investments)(the "Trust") hereby
certifies pursuant to Section 11.3 of the Fourth Amended and Restated Declaration of Trust (the "Declaration of Trust"), of
the Trust, that at a meeting of shareholders of the Trust duly called and held on March 15, 1995, as adjourned and reconvened
and held on April 5, 1995 in accordance with said Declaration of Trust, at which a quorum of shareholders was present and
voting throughout, the holders of not less than a majority of the aggregate number of shares of beneficial interest of the
Trust then outstanding and entitled to vote thereon voted to amend the Declaration of Trust in the following respects:
To amend Section 2.3 of the Declaration of Trust to read in its entirety as follows:
Section 2.3 Resignation and Removal. Any Trustee may resign his trusteeship by instrument in writing signed by him
and delivered or mailed to the President or Secretary, and such resignation shall take effect immediately upon receipt
by the President or Secretary of at a later date according to the terms of the instrument. Subject to the provisions of
any series of Preferred Shares at the time outstanding, the Shareholders, by action of the holders of two-thirds (2/3)of
the Shares then outstanding and entitled to vote in the election of Trustees (which action shall be taken only by vote
at a meeting called for the purpose in accordance with Section 7.3), may remove any Trustee with or without cause.
To amend Section 10.1 of the Declaration of Trust to add the following additional sentence at the end of current Section
10.1:
. . .Further, notwithstanding the foregoing, no amendment may be made pursuant to this Section 10.1 which would
relate to Section 2.3 except with the vote or written consent of the holders of two-thirds (2/3) of the outstanding
Common Shares entitled to vote thereon.
The undersigned further certifies that, pursuant to Section 10.1 thereof, such Declaration of Trust has been amended as
aforesaid, effective upon filing of this Certificate of Amendment in the Office of the Secretary of The Commonwealth of
Massachusetts.
WITNESS my hand this 5th day of April, 1995.
Charles J. Urstadt
</TABLE>
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<ARTICLE> 5
<S> <C>
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