SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A - Number 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 1998
BANYAN STRATEGIC REALTY TRUST
(Exact name of Registrant as specified in its charter)
Massachusetts 0-15465 36-3375345
(State of or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
150 South Wacker Drive, Suite 2900, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 553-9800
This document consists of 20 pages.
Exhibit index is located on page 2.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
a) Financial Statements.
(i) Technology Park/Johns Creek Park Properties
(See Attached).
b) Pro Forma Financial Information
c) EXHIBIT NUMBER DESCRIPTION
Exhibit (3)(c)
and (3)(d) Amended and Restated Declaration of
Trust dated as of August 8, 1986, as amended on March 8, 1991, May 4, 1993
and August 12, 1998, including Certificate of designations, preferences and
rights of Series A convertible preferred shares
Exhibit (10)(vii) First Amendment to Loan Agreement dated
September 11, 1998 among BSRT Fountain Square L.L.C., BSRT Phoenix Business
Park L.L.C., BSRT Newtown Trust, BSRT Southlake L.L.C., BSRT Technology
Center L.L.C., BSRT Airways Plaza L.L.C., BSRT Peachtree Pointe L.L.C.,
BSRT Avalon Center L.L.C., BSRT Sand Lake Tech Center L.L.C., BSRT Park
Center L.L.C., BSRT Metric Park L.L.C., and BSRT University Corporate
Center L.L.C., as Borrower, and the Capital Company of America LLC, as
Lender.
Exhibit (10)(viii) First Amendment to Loan Agreement dated
September 11, 1998 between BSRT Lexington B Corp., and BSRT Lexington
Trust, as Borrower and the Capital Company of America LLC, as Lender.
Exhibit (10)(ix) First Amendment to Loan Agreement dated
September 11, 1998 between Banyan/Morgan Wisconsin L.L.C., as Borrower, and
Banyan/Morgan Elmhurst L.L.C., as Lender and the Capital Company of America
LLC, as Borrower.
Exhibit (23) Consent of Independent Auditors
<PAGE>
SIGNATURES
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 hereunto duly authorized.
Date:October 1, 1998 BANYAN STRATEGIC REALTY TRUST
(Registrant)
By: /s/ Joel L. Teglia
-----------------------
Vice President,
Chief Financial and
Accounting Officer
<PAGE>
a) FINANCIAL STATEMENTS
(i) TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
---------------------------------------------
Combined Statements of Revenue and
Certain Expenses
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
For the year ended December 31, 1997 and
For the period from January 1, 1998
to August 14, 1998
<PAGE>
Report of Independent Auditors
The Board of Directors
Banyan Strategic Realty Trust
We have audited the accompanying Combined Statements of Revenue and Certain
Expenses of the Technology Park/Johns Creek Park Properties (the
Properties) for the year ended December 31, 1997 and for the period from
January 1, 1998 to August 14, 1998. These Combined Statements of Revenue
and Certain Expenses are the responsibility of the Properties' management.
Our responsibility is to express an opinion on these Statements of Revenue
and Certain Expenses based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Combined Statements of
Revenue and Certain Expenses are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Combined Statements of Revenue and Certain Expenses. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the Combined Statements of Revenue and Certain Expenses.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying Combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Current Report on
Form 8-K/A of Banyan Strategic Realty Trust as described in Note 2 and is
not intended to be a complete presentation of the Properties' combined
revenue and expenses.
In our opinion, the Combined Statements of Revenue and Certain Expenses
referred to above present fairly, in all material respects, the combined
revenue and certain expenses described in Note 2 of the Properties for the
year ended December 31, 1997 and for the period from January 1, 1998 to
August 14, 1998 in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Chicago, Illinois
September 10, 1998
<PAGE>
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
Combined Statements of Revenue and Certain Expenses
(Amounts in thousands)
Period from
January 1,
Year ended 1998 to
December 31, August 14,
1997 1998
----------- -----------
REVENUE
Rental. . . . . . . . . . . . . . . . . $ 2,068 $ 1,348
Other . . . . . . . . . . . . . . . . . 259 164
------- -------
Total revenue . . . . . . . . . 2,327 1,512
------- -------
Expenses
Real estate taxes . . . . . . . . . . . 183 106
General operating . . . . . . . . . . . 227 142
Utilities . . . . . . . . . . . . . . . 134 92
Management fees . . . . . . . . . . . . 98 73
Insurance . . . . . . . . . . . . . . . 21 14
------- -------
Total expenses. . . . . . . . . 663 427
------- -------
Revenue in excess of certain expenses . . $ 1,664 $ 1,085
======= =======
See accompanying notes.
<PAGE>
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
Notes to Combined Statements of Revenue and Certain Expenses
1. BUSINESS
The accompanying Combined Statements of Revenue and Certain Expenses relate
to the operations of the Technology Park/Johns Creek Park Properties (the
Properties), which consist of five office buildings located in northeast
metro-Atlanta, Georgia totaling 265,012 square feet. The Properties
include:
Address Park Square Feet
205 Scientific Drive, Norcross Technology Park 21,380
302 Research Drive, Norcross Technology Park 58,157
303 Research Drive, Norcross Technology Park 66,132
11455 Lakefield Drive, Duluth Johns Creek Park 59,343
3851 Lakefield Drive, Swanee Johns Creek Park 60,000
The properties were acquired by Banyan Strategic Realty Trust ("Banyan") on
August 14, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Current Report on
Form 8-K/A of Banyan. The Combined Statements of Revenue and Certain
Expenses are not representative of the actual operations of the Properties
for the periods presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization, interest and asset
management fees, which may not be comparable to the expenses expected to be
incurred by Banyan in future operations of the Properties, have been
excluded. The operations of the Properties have been presented on a
combined basis because all of the Properties have been under common
ownership.
Revenue and Expense Recognition
Rental income is recognized as revenue on a straight line basis over the
terms of the operating leases. Expenses are recognized in the period in
which they are incurred.
<PAGE>
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
Notes to Combined Statements of Revenue and Certain Expenses
(continued)
Use of Estimates
The preparation of the Combined Statements of Revenue and Certain Expenses
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of revenue and expenses during the reporting periods. Actual
results could differ from these estimates.
3. MANAGEMENT FEES
During the year ended December 31, 1997 and the period from January 1, 1998
to August 14, 1998, the Property paid a property management fee totaling
$98,671 and $73,181, respectively, to an unrelated third party. The fee
was paid monthly and was based on 2% -5% of gross receipts and an
allocation of the property supervisor's salary depending on the property.
4. LEASES AND SIGNIFICANT TENANTS
The Properties had six tenants which accounted for approximately 78% and
69% of the total rental income earned for the year ended December 31, 1997
and the period from January 1, 1998 to August 14, 1998, respectively.
<PAGE>
b) PRO FORMA FINANCIAL INFORMATION
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
This unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented assuming that as of June 30, 1998, the Trust acquired Johns Creek
Park and Technology Park properties.
This unaudited Pro Forma condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position would have
been at June 30, 1998, nor does it purport to represent the future
financial position of the Trust.
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
(Dollars in thousands)
<CAPTION>
Technology
Park /
Johns Creek Pro
Historical Park Forma
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investment in Real Estate, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . $ 36,326 $ 2,420 $ 38,746
Building. . . . . . . . . . . . . . . . . . . . 156,612 15,761 172,373
Building Improvements . . . . . . . . . . . . . 6,475 -- 6,475
----------- ----------- -----------
199,413 18,181 217,594
Less: Accumulated Depreciation . . . . . . . (8,773) -- (8,773)
----------- ----------- -----------
190,640 18,181 208,821
----------- ----------- -----------
Cash and Cash Equivalents . . . . . . . . . . . . 4,275 110 4,385
Restricted Cash . . . . . . . . . . . . . . . . . 2,989 -- 2,989
Interest and Accounts Receivable. . . . . . . . . 959 -- 959
Deferred Financing Costs, net . . . . . . . . . . 1,880 54 1,934
Other Assets. . . . . . . . . . . . . . . . . . . 3,029 49 3,078
----------- ----------- -----------
Total Assets. . . . . . . . . . . . . . . . . $ 203,772 $ 18,394 $ 222,166
=========== =========== ===========
<PAGE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
Technology
Park /
Johns Creek Pro
Historical Park Forma
----------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses . . . . . . $ 2,275 $ 30 $ 2,305
Accrued real estate taxes payable . . . . . . . . 1,786 115 1,901
Mortgage loans payable. . . . . . . . . . . . . . 110,923 18,100 129,023
Bonds payable . . . . . . . . . . . . . . . . . . 21,537 -- 21,537
Accrued interest payable. . . . . . . . . . . . . 603 -- 603
Unearned revenue. . . . . . . . . . . . . . . . . 901 115 1,016
Security deposits . . . . . . . . . . . . . . . . 1,286 34 1,320
----------- ----------- -----------
Total liabilities . . . . . . . . . . . . . . 139,311 18,394 157,705
----------- ----------- -----------
Minority interest in consolidated partnerships. . 2,051 -- 2,051
SHAREHOLDERS' EQUITY
Shares of beneficial interest . . . . . . . . . . 119,390 -- 119,390
Accumulated deficit . . . . . . . . . . . . . . . (49,614) -- (49,614)
Treasury shares at cost . . . . . . . . . . . . . (7,366) -- (7,366)
----------- ----------- -----------
Total shareholders' equity. . . . . . . . . . 62,410 -- 62,410
----------- ----------- -----------
Total liabilities and shareholders' equity. . $ 203,772 $ 18,394 $ 222,166
=========== =========== ===========
</TABLE>
<PAGE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
The unaudited Pro Forma Condensed Consolidated Statements of
Operations for the six months ended June 30, 1998 is presented as if each
of the 1998 acquisition properties ("1998 Acquisition Properties") had been
acquired as of January 1, 1998.
The unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1997 is presented as if the following had
occurred as of January 1, 1997; (a) the acquisition of the 1998 Acquisition
Properties; (b) the acquisition and disposition of various properties
during 1997; (c) the October, 1997 issuance of 2,192,501 shares of
beneficial interest the proceeds of which were used to repay borrowings
under a line of credit of $9 million.
These unaudited Pro Forma Condensed Consolidated Statements of
Operations have been prepared by management of the Trust and do not purport
to be indicative of the results which would actually have been obtained had
the transactions described above had been completed on the dates indicated
or which may be obtained in the future.
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
1998 Acquisitions (A)
----------------------------------------------------------
Tech-
nology
Park/ Pro
Peach- Orlando Johns Forma
Histor- tree Avalon Avalon Tower Port- Creek Adjust- Pro
ical Pointe Center Ridge Lane folio Park ments Forma
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rental income. . $ 16,003 $ 44 $ 57 $ 20 $ 201 $ 889 $ 1,084 $ -- $ 18,298
Operating cost
reimbursement . 1,570 -- 3 -- -- 111 132 -- 1,816
Miscellaneous
tenant income . 533 -- -- -- 7 1 -- -- 541
Income on
investments . . 115 -- -- -- -- -- -- -- 115
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenue . . 18,221 44 60 20 208 1,001 1,216 -- 20,770
-------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses:
Property
operating . . . 6,296 7 15 10 61 276 343 -- (B) 7,008
Interest . . . . 4,230 -- -- -- -- -- -- 1,668(C) 5,898
Depreciation and
amortization. . 2,305 -- -- -- -- -- -- 397(D) 2,702
General and admin-
istrative . . . 2,176 -- -- -- -- -- -- -- 2,176
Amortization of
deferred loan
fees and
financing
costs . . . . . 141 -- -- -- -- -- -- 20(D) 161
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Expenses. . 15,148 7 15 10 61 276 343 2,085 17,945
-------- -------- -------- -------- -------- -------- -------- -------- --------
<PAGE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1998 Acquisitions (A)
----------------------------------------------------------
Tech-
nology
Park/ Pro
Peach- Orlando Johns Forma
Histor- tree Avalon Avalon Tower Port- Creek Adjust- Pro
ical Pointe Center Ridge Lane folio Park ments Forma
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income before
minority
interest . . . . $ 3,073 $ 37 $ 45 $ 10 $ 147 $ 725 $ 873 $ (2,085) $ 2,825
Minority in-
terest in
consolidated
partnerships . . (298) -- -- -- -- -- -- (39) (337)
Extraordinary
item, net of
minority
interest . . . . (141) -- -- -- -- -- -- 141(E) --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income. . . . $ 2,634 $ 37 $ 45 $ 10 $ 147 $ 725 $ 873 $ (1,983) $ 2,488
======== ======== ======== ======== ======== ======== ======== ======== ========
Weighted number
of shares out-
standing -
Basic. . . . . .13,267,394 13,267,394
Per share -
Basic. . . . . .$ 0.20 $ 0.19
========== ==========
Weighted number
of shares out-
standing -
Diluted. . . . .13,909,705 13,909,705
Per share -
Diluted. . . . .$ 0.19 $ 0.18
========== ==========
- ---------------
<PAGE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
<FN>
(A) These adjustments relate to certain properties acquired subsequent to December 31, 1997 and include each
property's operations for the period of time from January 1, 1998 through its respective date of acquisition or
June 30, 1998 if acquired subsequent to that date.
(B) The pro forma adjustment to reflect management fees and insurance expense assuming the Trust's operating
cost structure is immaterial.
(C) The pro forma adjustment reflects the increase in interest expense relating to acquired properties. These
properties, except Tower Lane, were acquired using variable interest rate debt. Avalon Ridge was under
construction and did not start operations until March of 1998. Interest for Avalon Ridge was capitalized during
its construction period. If the variable interest rate was higher by 0.125% for all variable rate debt, the pro
forma interest expense would be $5,924.
(D) The pro forma adjustment reflects depreciation for the acquisition properties (calculated using the
straight-line method with a 40 year useful life), and amortization of additional loan costs relating to debt for
acquisition properties.
(E) To eliminate extraordinary item on debt refinancing.
</TABLE>
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
1997 1997
Acquisitions Dispositions
Historical (A) (B)
---------- ------------ ------------
<S> <C> <C> <C>
Revenue:
Rental income . . . . . $ 25,370 $ 4,795 $(1,242)
Operating cost reimburse-
ment. . . . . . . . . 2,441 112 --
Miscellaneous tenant
income. . . . . . . . 707 161 (170)
Income on investments . 267 -- --
------- ------- -------
Total revenue . . . . . . 28,785 5,068 (1,412)
------- ------- -------
Expenses:
Property operating. . . 10,689 2,104 (1,162)
Interest expense. . . . 6,447 404 (297)
Depreciation and
amortization. . . . . 3,490 -- (222)
General and administra-
tive. . . . . . . . . 4,315 -- --
Amortization of deferred
loan fees and financing
costs . . . . . . . . 723 -- (54)
Recovery of losses on
loans, notes and
interest receivable . (161) -- --
------- ------- -------
Total expenses. . . . . . 25,503 2,508 (1,735)
------- ------- -------
<PAGE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1997 1997
Acquisitions Dispositions
Historical (A) (B)
---------- ------------ ------------
Income before minority
interest and income
from operations of
real estate venture . . $ 3,282 $ 2,560 $ 323
Minority interest in
consolidated partner-
ships . . . . . . . . . (590) -- 20
Income (loss) from
operations of real
estate venture. . . . . 37 -- (37)
Gain on disposition and
extraordinary item. . . 817 -- (881)
------- ------- -------
Net income. . . . . . . . $ 3,546 $ 2,560 $ (575)
======= ======= =======
Weighted number of shares
outstanding - Basic. . . 11,149,982
Per share - Basic . . . . $0.32
==========
Weighted number of shares
outstanding - Diluted. . 11,245,242
Per share - Diluted . . . $0.32
==========
</TABLE>
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
<CAPTION>
1998 Acquisitions (C)
----------------------------------------------------------------
Johns Creek
Peach- Orlando and
tree Avalon Avalon Tower Port- Technology Pro Forma
Pointe Center Ridge Lane folio Park Adjustments Pro Forma
-------- -------- -------- -------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rental income . . . . $ 868 $ 107 $ -- $ 792 $ 2,399 $ 2,068 $ -- $ 35,157
Operating cost reimburse-
ment. . . . . . . . 43 7 -- -- 339 259 -- 3,158
Miscellaneous tenant
income. . . . . . . 8 -- -- 3 34 -- -- 786
Income on investments -- -- -- -- -- -- -- 267
------- ------- ------- ------- ------- -------- ------ -------
Total revenue . . . . . 919 114 -- 795 2,772 2,327 -- 39,368
------- ------- ------- ------- ------- -------- ------ -------
Expenses:
Property operating. . 485 27 1 255 832 663 -- (D) 13,894
Interest expense. . . -- -- -- -- -- -- 5,108 (E) 11,662
Depreciation and
amortization. . . . -- -- -- -- -- -- 1,541 (F) 4,809
General and administra-
tive. . . . . . . . -- -- -- -- -- -- -- 4,315
Amortization of deferred
loan fees and financing
costs . . . . . . . -- -- -- -- -- -- 125 (F) 794
Recovery of losses on
loans, notes and
interest receivable -- -- -- -- -- -- -- (161)
------- ------- ------- ------- ------- ------ ------- -------
Total expenses. . . . . 485 27 1 255 832 663 6,774 35,313
------- ------- ------- ------- ------- ------ ------- -------
<PAGE>
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1998 Acquisitions (C)
----------------------------------------------------------------
Johns Creek
Peach- Orlando and
tree Avalon Avalon Tower Port- Technology Pro Forma
Pointe Center Ridge Lane folio Park Adjustments Pro Forma
-------- -------- -------- -------- -------- ----------- ---------- ---------
Income before minority
interest and income
from operations of
real estate venture . $ 434 $ 87 $ (1) $ 540 $ 1,940 $ 1,664 $(6,774) $ 4,055
Minority interest in
consolidated partner-
ships . . . . . . . . -- -- -- -- -- -- (135) (705)
Income (loss) from
operations of real
estate venture. . . . -- -- -- -- -- -- -- --
Gain on disposition and
extraordinary item. . -- -- -- -- -- -- 64 (G) --
------- ------- ------- ------- ------- ------- ------- --------
Net income. . . . . . . $ 434 $ 87 $ (1) $ 540 $ 1,940 $ 1,664 $(6,845) $ 3,350
======= ======= ======= ======= ======= ======= ======= ========
Weighted number of shares
outstanding - Basic. . 13,125,324
Per share - Basic . . . $ 0.26
==========
Weighted number of shares
outstanding - Diluted. 13,584,994
Per share - Diluted . . $ 0.25
==========
- ----------------
<PAGE>
<FN>
(A) These adjustments relate to certain properties acquired subsequent to December 31, 1996 and include each
property's operations for the period of time from January 1, 1997 through its respective date of acquisition.
(B) The Dispositions column eliminates the historical revenues and expenses of certain properties that were sold
prior to December 31, 1997.
(C) The 1998 Acquisitions columns reflect the 1997 historical revenues and operating expenses of properties
acquired after December 31, 1997.
(D) The pro forma adjustment to reflect management fees and insurance expense assuming the Trusts operating cost
structure is immaterial.
(E) The pro forma adjustment reflects the increase in interest expense relating to acquired properties, net of
the decrease in interest expense resulting from the repayment of debt utilizing proceeds received from the sale of
properties and the issuance of shares. Avalon Ridge was under construction for the whole year of 1997, and the Avalon
Center was under construction until August of 1997. Interest for Avalon Center and Avalon Ridge was capitalized during
the periods the properties were under construction. The Trust used variable interest rate debt to purchase various of
its properties. If the variable rate was higher by 0.125% for all variable rate debt, the pro forma interest expense
would be $11,724.
(F) The pro forma adjustment reflects the depreciation expense for 1997 and 1998 acquisition properties
(calculated using the straight-line method with a 40 year useful life), and amortization of additional loan costs
relating to debt for acquisition properties and costs relating to the unsecured corporate financing completed on October
14, 1997.
(G) To eliminate extraordinary item on debt refinancing.
</TABLE>
EXHIBIT (3)(c) AND (3)(d)
- -------------------------
SECOND AMENDED AND RESTATED
DECLARATION OF TRUST
OF
BANYAN STRATEGIC REALTY TRUST,
including Certificate of Designations, Preferences and
rights of Series A Convertible Preferred Shares
of Banyan Strategic Realty Trust
THIS AMENDED AND RESTATED DECLARATION OF TRUST, dated as of March 14,
1986, as amended and restated as of August 8, 1986, and amended on March 8,
1991 and May 4, 1993 and amended on August 12, 1998, is hereby accepted by
the Trustees of BANYAN STRATEGIC REALTY TRUST (the "Trust"), who hereby
declare that all property, real, personal or mixed, tangible or intangible
or of any other description now held or hereafter acquired by or
transferred to them in their capacities as Trustee hereunder, together with
the income and profits therefrom and the proceeds thereof, shall be held by
them in trust and shall be received, managed and disposed of for the
benefit of the Shareholders hereunder and in the manner and subject to the
terms and conditions herein provided.
ARTICLE I
THE TRUST, DEFINITIONS
1.1 NAME. The trust created by this Declaration of Trust, herein
referred to as the "Trust," shall be known by the name "BANYAN STRATEGIC
REALTY TRUST" (the "Trust"). So far as may be practicable, legal and
convenient, the affairs of the Trust shall be conducted and transacted
under that name, which name shall not refer to the Trustees individually or
personally or to the Shareholders of the Trust, or to any officers,
employees or agents of the Trust or the Trustees.
Under circumstances in which the Trustees determine that the use of
the name "BANYAN STRATEGIC REALTY TRUST" is not practicable, legal and
convenient, they may as appropriate use and adopt another name under which
the Trust may hold property or operate in any jurisdiction. Legal title to
all the properties subject from time to time to this Declaration of Trust
shall be transferred to, vested in and held by the Trustees as joint
tenants with right of survivorship as Trustees of this Trust, and not
individually, except that the Trustees shall have the power to cause legal
title to any property of this Trust to be held by and/or 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 therein is appropriately protected.
1.2 PLACE OF BUSINESS. The Trust shall maintain an office in
Boston, Massachusetts, and shall designate a resident agent for service of
process, which office and agent initially shall be c/o CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. This office and the
<PAGE>
name and address of the Trust's resident agent for service of process may
change from time to time in the determination of the Trustees, with any
changes reported from time to time to the Secretary of the Commonwealth of
Massachusetts. The Trust may have such other offices or places of business
within or without the Commonwealth of Massachusetts as the Trustees may
from time to time determine.
1.3 NATURE OF TRUST. The Trust is a trust or voluntary association
of the type referred to in Section 1 of Chapter 182 of the General Laws of
the Commonwealth of Massachusetts and commonly known as a business trust.
It is intended that the Trust elect to carry on business as a real estate
investment trust as described in Sections 856-860 of the Code as soon as
and as long as it is deemed by the Trustees to be in the best interest of
the Shareholders to make such election; provided, however, that, by
affirmative vote of the holders of two-thirds of the outstanding shares,
the Shareholders may determine that the Trust shall no longer carry on the
business as a real estate investment trust and shall cease to qualify as
such under the Code. The Trust is not intended to be, shall not be deemed
to be, and shall not be treated as, a general partnership, limited
partnership, joint venture, corporation, or joint stock company or
association (but nothing herein shall preclude the Trust from being taxable
as an association under Section 856-860 of the Code) nor shall the Trustees
or Shareholders or any of them for any purpose be deemed to be or be
treated in any way whatsoever to be, liable or responsible hereunder as
partners or joint venturers or as agents of one another. The relationship
of the Shareholders to the Trustees shall be solely that of beneficiaries
of the Trust and their rights shall be limited to those conferred upon them
by this Declaration.
1.4 PURPOSE OF THE TRUST. The purpose of the Trust is to lend
funds secured by real property, by interests in entities which own real
property or by a similar security interest, and in general to carry on any
other acts in connection with or arising out of the foregoing and to have
and exercise all powers that are available to voluntary associations formed
under the laws of the Commonwealth of Massachusetts and to do any or all of
the things herein set forth to the same extent as natural persons might or
could do.
1.5 DEFINITIONS. The terms defined in this Section 1.5 whenever
used in this Declaration shall, unless the context otherwise requires, have
the respective meanings hereinafter specified in this Section 1.5. In this
Declaration, words in the singular number include the plural and in the
plural number include the singular.
"Advisor." VMS Realty Partners, which, pursuant to the Advisory
Agreement, will serve as the initial investment advisor and administrator
of the Trust, or any successor Advisor selected by the Trustees; it shall
also include any person or entity to which the Advisor subcontracts
substantially all of its administrative functions.
"Affiliate." An Affiliate of, or a person Affiliated with, a
specified person, is (i) any person directly or indirectly controlling,
controlled by or under common control with another person, (ii) any person
owning or controlling 10% or more or the outstanding voting securities or
beneficial interests of such other person, (iii) any officer, director,
trustee or general partner of such person and (iv) if such other person is
an officer, director, trustee or partner of another entity, then the entity
for which that person acts in any such capacity.
<PAGE>
"Annual Meeting of Shareholders." The meeting referred to in the
first sentence of Section 7.7.
"Annual Report." The report referred to in Section 7.9.
"As-Built Appraised Value of the Property" shall mean the land
portion of the Appraised Value of the mortgaged property, taking into
account the planned development of the property as determined by an MAI
appraisal.
"Average Invested Assets." For any period, the average Total Assets
of the Trust, invested, directory or indirectly, in Mortgage Loans before
reserves for bad debts or other similar non-cash reserves, computed by
taking the average of such values at the end of each month during such
period.
"By-Laws." The By-Laws referred to in Section 4.4, if adopted.
"Chairman." The Advisor, if any, shall designate one of the Trustees
to be Chairman of the Board of Trustees. The Chairman shall not have any
powers not also delegated to the other Trustees, except as expressly
provided herein.
"Code." The Internal Revenue Code of 1986, as amended, or
corresponding provisions of any successor legislation.
"Commission." The Securities and Exchange Commission.
"Declaration." This Declaration of Trust and all amendments or
modifications hereof.
"Independent Trustee" shall mean a person other than an officer or
employee of the Trust or its subsidiaries or any other individual having a
relationship which, in the opinion of the Board of Trustees, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a Trustee.
"Mortgage Loans." Notes, debentures, bonds and other evidences of
indebtedness or obligations which are secured or collateralized by
interests in real property.
"Net Assets." The Total Assets (other than intangibles) of the Trust
at cost before deducting depreciation or other non-cash reserves, less
total liabilities, calculated at least quarterly according to generally
accepted accounting principles on a basis consistently applied.
<PAGE>
"Net Income." The net income of the Trust for any period shall mean
total revenues applicable to such period as determined for federal income
tax purposes, less the expenses applicable to such period, other than
additions to reserves for bad debts or other similar non-cash reserves; for
purposes of calculating Operating Expenses, Net Income shall not include
the gain from the sale of the Trust's assets.
"Operating Expenses." All operating, general and administrative
expenses of the Trust as determine under generally accepted accounting
principles, including rent, utilities, capital equipment, salaries, fringe
benefits, travel expenses and other administrative items, but excluding the
expenses of raising capital, interest payments, taxes, non-cash
expenditures (e.g., depreciation, amortization, bad debt reserves), the
Subordinated Incentive Fee, and the costs related directly to a specific
Mortgage Loan investment by the Trust, such as expenses for originating,
acquiring, servicing or disposing of a Mortgage Loan.
"Registration Statement." The Trust's registration statement on Form
S-11 filed with the Securities and Exchange Commission, as amended,
relating to the Trust's first public offering of securities.
"Preferred Shares" shall mean preferred shares of beneficial interest
of the Trust, designated by the Board of Trustees and issued pursuant to
the Declaration.
"REIT" and "real estate investment trust." A real estate investment
trust as defined in Sections 856-860 of the Code.
"Shareholders." The registered holders of Shares.
"Shares." Shares of beneficial interest of the Trust, evidencing a
pro rata ownership interest in the Trust Estate and being of a class having
the right to elect the Trustees of the Trust, issued pursuant to the
Declaration.
"Sponsor." Any person directly or indirectly instrumental in
organizing, wholly or in part, the Trust or any person who will manage or
participate in the management of the Trust, and any Affiliate of any such
person, but excluding: (i) a person whose only relationship with the Trust
is that of an independent property manager and whose only compensation is
as such; and (ii) wholly independent third parties; such as attorneys,
accountants and underwriters whose only compensation is for professional
services.
"Total Assets." The book value of all assets of the Trust,
determined in accordance with generally accepted accounting principles.
"Trust." The Trust created by this Declaration.
<PAGE>
"Trustees." As of any particular time, means the individuals holding
office under this Declaration at such time, whether they be the Trustees
named herein or additional or successor Trustees.
"Trust Estate." The assets of the Trust, the legal title to which is
held by the Trustees as Trustees of the Trust and the equitable title to
which is evidenced by the Shares and held by the Shareholders.
"Unimproved Real Property." Property which has each of the following
three characteristics: (i) it was not acquired for the purpose of producing
rental or other operating income, (ii) there is no development or
construction in process on such land, and (iii) there is no development or
construction planned in good faith to commence on such land within one
year.
ARTICLE II
INVESTMENT POLICY
2.1 GENERAL STATEMENT OF POLICY. It is the general policy of the
Trust that the Trustees invest the Trust Estate principally in investments
which will conserve and protect the Trust's invested capital, produce
income and cash which may be used to make cash distributions to Share-
holders, and offer the potential for participation in the appreciation
realized upon the sale, refinancing or other disposition of the properties
which secure such investments. The Trustees shall at least annually
review the investment policies of the Trust to determine that the policies
being followed by the Trust are in the best interests of the Shareholders,
and each such determination and the basis therefor shall be set forth in
the minutes of meetings of the Trustees.
2.2 ADDITIONAL INVESTMENTS. To the extent that the Trust has
assets not otherwise invested in accordance with Section 2.1, the Trustees
may invest such assets in:
2.2.1 mortgage-backed obligations of or guaranteed or insured -
by the United States Government or any agencies or
political subdivisions thereof;
2.2.2 other obligations of or guaranteed or insured by the
United States Government or by any state, territory or possession of the
United States of America or any agencies or political subdivisions thereof;
2.2.3 shares of other REITs; or
2.2.4 other investments which qualify as "real estate assets,
cash and cash items (including receivables), and Government securities"
under Section 856(c)(5)(A) of the
<PAGE>
Code; provided, however, that the assets of the Trust
shall at all times be invested in a manner which permits the Trust to
qualify as a REIT under the Code, so long as the Trust elects to qualify as
a REIT.
ARTICLE 3
TRUSTEES
3.1 NUMBER, TERM OF OFFICE, QUALIFICATION OF TRUSTEES. The Board
of the Trust shall be comprised of no fewer than three nor more than nine
Trustees, unless one or more Trustees are required to be added to the Board
under the designations of any Preferred Shares, in which case the
authorized number of Trustees shall be increased in order to comply with
such designations. At least a majority of the Trustees shall at all times
be Independent Trustees. The range in the authorized number of Trustees
may be changed by vote of Shareholders holding or having the right to vote
a majority of the Shares, provided that the exact number of Trustees within
such range shall be specified by the Trustees from time to time. There
shall be no cumulative voting in the election of Trustees. Trustees may be
reelected without limit as to the number of times. A Trustee shall be an
individual at least 21 years of age who is not under legal disability.
Unless otherwise required by law or by action of the Trustees, no Trustee
shall be required to give bond, surety or security in any jurisdiction for
the performance of any duties or obligations hereunder. The Trustees in
their capacity as Trustees shall not be required to devote their entire
time or any specified portion of their time to the business and affairs of
the Trust.
3.2 ELECTION OF TRUSTEES. The initial Trustees shall be elected at
the annual meeting of the Shareholders, except as provided in Sections 3.4
or 3.5, and each Trustee elected shall hold office until the next annual
meeting of the Shareholders of the Trust and until his or her successor is
duly elected and qualified, or until his or her death or retirement or
until he or she resigns or is removed in the manner hereinafter provided.
Such election shall be by written ballot.
3.3 COMPENSATION AND OTHER REMUNERATION. Each Independent Trustee
shall be entitled to receive $20,000 per year for his or her services as an
Independent Trustee plus $1,000 for each meeting of the Board attended in
person and $500 per hour for each meeting of the Board attended via
telephonic conference call. The compensation payable to the Trustees for
their services hereunder may be increased or decreased upon the affirmative
vote of the holders of a majority of Shares at an Annual Meeting of Share-
holders or a special meeting of Shareholders called for that purpose. The
Trustees shall be reimbursed for their reasonable expenses incurred in
connection with their services as Trustees, including, without limitation,
travel to and attendance at meetings of the Board of Trustees and Annual
Meetings of Shareholders.
3.4 RESIGNATION, REMOVAL AND DEATH OF TRUSTEES. A Trustee may
resign at any time by giving written notice to the remaining Trustees.
Such resignation shall take effect on the date such notice is given or at
any later time specified in the notice. A Trustee may be removed at any
time with or without cause by vote or written consent of Shareholders
holding or having the right to vote a majority of the outstanding Shares,
<PAGE>
and can be removed at a special meeting pursuant to Section 7.7 herein,
unless the designations of any Preferred Shares require otherwise, in which
case the terms of the designations shall prevail. A Trustee may also be
removed with cause by a majority of the remaining Trustees, unless the
designations of any Preferred Shares require otherwise, in which case the
terms of the designations shall prevail. For purposes of the immediately
preceding sentence "cause" shall include, without limitation, any physical
and/or mental inability, due to a condition or illness which is expected to
be of permanent or indefinite duration, to perform the duties of a Trustee.
Upon the resignation or removal of any Trustee, or his otherwise ceasing to
be a Trustee, he shall execute and deliver such documents, if any, as the
remaining Trustees shall reasonably require for the conveyance of any Trust
property held in his name, shall account to the remaining Trustees as they
require for all property which he holds as Trustee and shall thereupon be
discharged as Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall perform the acts, if any, set forth in the
preceding sentence and the discharge mentioned therein shall run to such
legal representative and to the incapacitated Trustee, or the estate of the
deceased Trustee, as the case may be.
3.5 VACANCIES. If any or all of the Trustees cease to be Trustees
hereunder, whether by reason of resignation, removal, incapacity, death or
otherwise, such event shall not terminate the Trust or affect its
continuity. Until vacancies are filled, the remaining Trustee or Trustees
may exercise the power of the Trustees hereunder. Vacancies among the
Trustees (including vacancies created by increases in the number of
Trustees) shall be filled by a majority of the remaining Trustees, unless
the designations of any Preferred Shares require otherwise, in which case
the terms of the designations shall prevail. If at any time there shall be
no Trustees in office, successor Trustees shall be elected by the
Shareholders as provided in Section 7.7, unless the designations of any
Preferred Shares require otherwise, in which case the terms of the
designations shall prevail.
3.6 SUCCESSOR AND ADDITIONAL TRUSTEES. The right, title and
interest of the Trustees in and to the Trust property, shall also vest in
successor and additional Trustees upon their qualification, and they shall
thereupon have all the rights and obligations of Trustees hereunder. Such
right, title and interest shall vest in the Trustees whether or not
conveyancing documents have been executed and delivered pursuant to
Section 3.4 or otherwise. Appropriate written evidence of the election and
qualification of successor and additional Trustees shall be filed with the
records of the Trust and in such other offices or places as the Trustees
may deem necessary, appropriate or desirable. Upon, the resignation,
removal or death of a Trustee, he (and in the event of his death, his
estate) shall automatically cease to have any right, title or interest in
or to any of the Trust property, and the right, title and interest in such
Trustee in and to the Trust Estate shall vest automatically in the
remaining Trustees without any further act.
3.7 ACTIONS BY TRUSTEES. The Trustees may act with or without a
meeting. A quorum for all meetings of the Trustees shall be a majority of
the Trustees. Unless specifically provided otherwise in this Declaration,
any action of the Trustees may be taken at a meeting by vote of a majority
of the Trustees present at such meeting if a quorum is present, or without
<PAGE>
a meeting by written consent of all of the Trustees. The acquisition of
any investment shall require the approval of the majority of the Trustees.
Any action taken by the Trust in which the Sponsor, the Advisor or their
Affiliates have an interest must be approved by a majority of the Trustees.
In addition, any investment, distribution, payment or disposition of assets
or funds between the Trust and the Sponsor, the Advisor or a Trustee or any
of their respective Affiliates require the additional approval of a
majority of the Trustees who are not parties to the transaction or Affili-
ates of any person or entity (other than the Trust) who is a party to the
transaction. Any agreement, deed, mortgage, lease or other instrument or
writing executed by any one or more of the Trustees or by any one or more
authorized persons shall be valid and binding upon the Trustees and upon
the Trust when authorized by action of the Trustees or as approved in the
By-Laws, if the same are adopted. Trustees may conduct meetings by
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such
meeting.
An annual meeting of the Trustees shall be held at substantially the
same time as the Annual Meeting of Shareholders. Regular meetings shall be
held at least four times per year at such times as shall be fixed by the
Trustees. No notice shall be required of an annual or a regular meeting of
Trustees.
Special meetings of the Trustees shall be called by the Chairman upon
the request of any two Trustees and may be called by the Chairman on his
own motion, on not less than two days' notice to each Trustee if the
meeting is to be held in person, and/or not less than eight hours' notice
if the meeting is to be held by conference telephone or similar equipment.
Such notice, which shall state the purpose of the meeting, shall be by
oral, telegraphic, telephonic or written communication stating the time and
place therefor. Notice of any special meeting need not be given to any
Trustee entitled thereto who submits a written and signed waiver of notice,
either before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to
him.
Regular or special meetings of the Trustees may be held within or
without the Commonwealth of Massachusetts, at such places as shall be
designated by the Trustees. The Trustees may adopt such rules and
regulations for their conduct and the management of the affairs of the
Trust as they may deem proper and as are not inconsistent with this De-
claration.
3.8 INDEPENDENT TRUSTEES. In order that a majority of the Trustees
shall at all times be Independent Trustees, if, at any time, by reason of
one or more vacancies, there shall not be such a majority, then within 90
days after such vacancy occurs, the continuing Independent Trustee or
Trustees then in office shall appoint, pursuant to Section 3.5, a
sufficient number of other persons who are Independent Trustees, so that
there shall be such a majority. Notwithstanding the provisions of
Section 3.1, of the preceding sentence of this Section 3.8, or of any other
provision of this Declaration of Trust, however, there shall be no
requirement as to the election, appointment or incumbency of, or as to any
action by, Independent Trustees at any time that all of the outstanding
Shares of the Trust are owned by the Advisor and Affiliated persons of the
Advisor, and by employees of the Advisor and of such Affiliated persons.
<PAGE>
3.9 COMMITTEES. The Trustees may appoint from among their number
an executive committee and such other standing committees, including
without limitation, audit and nominating committees, or special committees
as the Trustees determine. Each standing committee shall consist of three
or more members, a majority of whom shall be Independent Trustees. Each
committee shall have such powers, duties and obligations as may be required
by any governmental agency or other regulatory body or as the Trustees may
deem necessary and appropriate.
3.10 RESIGNATION OF INDEPENDENT TRUSTEES. In the event that a
person elected as an Independent Trustee ceases to be an Independent
Trustee, and if, as a result, a majority of Trustees are no longer
Independent Trustees, such person shall immediately resign as a Trustee and
such vacancy shall be filled in a manner consistent with Sections 3.5, 3.6
and 3.8 hereof.
ARTICLE IV
TRUSTEES' POWERS
4.1 POWER AND AUTHORITY OF TRUSTEES. The Trustees, subject only to
the specific limitations contained in this Declaration, shall have, without
further or other authorization, and free from any power of control on the
part of the Shareholders, full, absolute and exclusive power, control and
authority over the Trust Estate and over the business and affairs of the
Trust to the same extent as if the Trustees were the sole owners thereof in
their own right, and to do all such acts and things as in their sole
judgment and discretion are necessary or incidental to, or desirable for,
the carrying out of any of the purposes of the Trust or conducting the
business of the Trust. Any determination made in good faith by the
Trustees of the purposes of the Trust or the existence of any power or
authority hereunder shall be conclusive and each such determination and the
basis therefor shall be set forth in the minutes of meetings of the
Trustees. In construing the provisions of this Declaration, the
presumption shall be in favor of the grant of powers and authority to the
Trustees. The enumeration of any specific power or authority herein shall
not be construed as limiting the general powers or authority or any other
specified power or authority conferred herein by statute or rule of law
upon the Trustees.
4.2 SPECIFIC POWERS AND AUTHORITIES. Subject only to the express
limitations contained in this Declaration and in addition to any powers and
authorities conferred by this Declaration or which the Trustees may have by
virtue of any present or future statute or rule of law, the Trustees,
without any action or consent by the Shareholders shall have and may
exercise, at any time, and from time to time, the following powers and
authorities which may or may not be exercised by them in their sole
judgment and discretion, and in such manner, and upon such terms and
conditions as they may, from time to time, deem proper:
4.2.1 to retain, invest and reinvest the capital or other funds
of the Trust and, for such consideration as they deem proper, to purchase
or otherwise acquire for cash or other property or through the issuance of
Shares or other securities of the Trust and hold for
<PAGE>
investment real or personal property of any kind, tangible or
intangible, in entirety or in participation and to possess and exercise all
the rights, powers and privileges appertaining to the ownership of the
Trust Estate with respect thereto;
4.2.2 to sell, rent, lease, hire, exchange, release,
partition, assign, mortgage, pledge, hypothecate, grant security
interests in, encumber, negotiate, convey, transfer or otherwise dispose
of or grant interests in all or any portion of the Trust Estate by deeds,
financing statements, security agreements and other instruments, trust
deeds, assignments, bills of sale, transfers, leases or mortgages, for any
of such purposes;
4.2.3 to enter into leases, contracts, obligations, and other
agreements for a term extending beyond the term of office of the Trustees
and beyond the possible termination of the Trust or for a lesser term;
4.2.4 to borrow money and give negotiable or non-negotiable
instruments therefor; to guarantee, indemnify or act as surety with respect
to payment or performance of obligations of third parties; to enter into
other obligations on behalf of the Trust; and to assign, convey, transfer,
mortgage, subordinate, pledge, grant security interests in, encumber or
hypothecate the Trust Estate to secure any of the foregoing;
4.2.5 to lend money, whether secured or unsecured, to any
person, including any person affiliated with the Trust or the Advisor;
4.2.6 to create reserve funds for any purpose;
4.2.7 to incur and pay out of the Trust Estate any charges or
expenses, and disburse any funds of the Trust, which charges, expenses or
disbursements are, in the opinion of the Trustees, necessary or incidental
to or desirable for the carrying out of any of the purposes of the Trust or
conducting the business of the Trust, including, without limitation, taxes
and other governmental levies, charges and assessments, of whatever kind or
nature, imposed upon or against the Trustees in connection with the Trust
or the Trust Estate or upon or against the Trust Estate or any part
thereof, and for any of the purposes herein;
4.2.8 to deposit funds of the Trust in or with banks, trust
companies, savings and loan associations, money market organizations and
other depositories or issuers of depository-type accounts, whether or not
such deposits will draw interest or be insured, the same to be subject to
withdrawal or redemption on such terms and in such manner and by such
person or persons (including any one or more Trustees, officers, agents or
representatives) as the Trustees may determine;
4.2.9 to possess and exercise all the rights, powers and
privileges appertaining to the ownership of any or all mortgages or
securities issued or created by, or interests in, any person, forming part
of the Trust Estate, to the same extent that an individual might
<PAGE>
and, without limiting the generality of the foregoing, to vote or
give 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 meeting or action, and
may include the exercise of discretionary powers;
4.2.10 to enter into joint ventures, general or limited
partnerships and any other lawful combinations or associations;
4.2.11 to elect or appoint officers of the Trust (none of
whom needs be a Trustee), who may be removed or discharged at the
discretion of the Trustees, such officers to have such powers and duties,
and to serve such terms, as may be prescribed by the Trustees or by the By-
Laws of the Trust, if adopted, or as may pertain to such offices;
4.2.12 subject to the provisions of Article 5, to retain
an Advisor and to pay the Advisor for its services so retained;
4.2.13 subject to the provisions of Sections 8.5 and 8.6,
to engage or employ any persons as agents, representatives, employees or
independent contractors (including without limitation, real estate
advisors, investment advisors, transfer agents, registrars, underwriters,
accountants, attorneys at law, real estate agents, managers, appraisers,
brokers, architects, engineers, construction managers, general contractors
or otherwise) in one or more capacities, in connection with the management
of the Trust's affairs or otherwise, and to pay compensation from the Trust
for services in as many capacities as such person may be so engaged or
employed and notwithstanding that any such person is, or is an Affiliated
person of, a Trustee or officer of the Trust, and, except as prohibited by
law, to delegate any of the powers and duties of the Trustees to any one or
more Trustees, agents, representatives, officers, employees, independent
contractors or other persons, including the Advisor, provided, however,
that no such delegation shall be made to an Affiliated person of the
Advisor except with the approval of a majority of the Independent Trustees;
4.2.14 to determine whether moneys, securities or other
assets received by the Trust shall be charged or credited to income or
capital or allocated between income and capital, including the power to
amortize or fail to amortize any part or all of any premium or discount, to
treat all or any part of the profit resulting from the maturity or sale of
any asset, whether purchased at a premium or at a discount, as income or
capital, or apportion the same between income and capital, to apportion the
sales price of any asset between income and capital, and to determine in
what manner any expenses or disbursements are to be borne as between income
and capital, whether or not in the absence of the power and authority
conferred by this subsection such moneys, securities or other assets would
be regarded as income or as capital or such expense or disbursement would
be charged to income or to capital; to treat any dividend or other
distribution on any investment as income or capital or to apportion the
same between income and capital; to provide or fail to provide reserves for
depreciation, amortization, doubtful collection, or obsolescence in respect
of all or any part of the Trust Estate subject to depreciation,
amortization, collection, or obsolescence in such amounts and by such
methods as they shall determine; and to determine the method or form in
which the accounts and records of the Trust shall be kept and to changed
from time to time such method or form;
<PAGE>
4.2.15 to determine from time to time the value of all or
any part of the Trust Estate and of any services, securities, property or
other consideration to be furnished to or acquired by the Trust, and from
time to time to revalue all or any part of the Trust Estate in accordance
with such valuations or other information, which valuations or other
information may be provided by the Advisor and or by other persons retained
for the purpose, as the Trustees, in their sole judgment, may deem
necessary;
4.2.16 to collect, sue for and receive all sums of money
coming due to the Trust, and to engage in, intervene in, prosecute, join,
defend, compound, compromise, abandon or adjust, by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims, con-
troversies, demands or other litigation relating to the Trust, the Trust
Estate or the Trust's affairs, to enter into agreement therefor, whether or
not any suit is commenced or claim accrued or asserted and, in advance of
any controversy, to enter into agreements regarding arbitration,
adjudication or settlement thereof;
4.2.17 to renew, modify, release, compromise, extend,
consolidate or cancel, in whole or in part, any obligation to or of the
Trust;
4.2.18 subject to Section 8.4 below, to purchase and pay
for out of the Trust Estate insurance contracts and policies insuring the
Trust Estate against any and all risks and insuring the Trust, the
Trustees, the Shareholders, the officers of the Trust, the Advisor or any
or all of them, against any and all claims and liabilities of every nature
asserted by any person arising by reason of any action alleged to have been
taken or omitted by the Trust or by the Trustees, Shareholders, officers or
the Advisor;
4.2.19 to cause legal title to any of the Trust Estate to
be held by or in the name of the Trust or one or more of the Trustees
or any other person as the Trustees may determine, on such terms and in
such manner and with such powers (not inconsistent with Section 1.1), and
with or without disclosure that the Trust or Trustees are interested
therein;
4.2.20 to adopt an accounting method for the Trust, and
from time to time to change such accounting method, and to engage a firm of
independent certified public accountants to audit the financial records of
the Trust;
4.2.21 to adopt and use a seal (but the use of a seal
shall not be required for the execution of instruments or obligations of
the Trust);
<PAGE>
4.2.22 with respect to any securities issued by the Trust,
to provide that the same may be signed by the manual signature of one or
more Trustees or officers, or persons who have theretofore been Trustees or
officers or by the facsimile signature of any such person (with or without
countersignature by a transfer agent, registrar, authenticating agent or
other similar person), and to provide that ownership of such securities may
be conclusively evidenced by the books and records of the Trust or in any
appropriate evidence of the Trust without the necessity of any certificate,
all as determined by the Trustees from time to time to be consistent with
normal commercial practices;
4.2.23 to declare and pay cash distributions to
Shareholders as provided in Section 7.5, subject to any restrictions set
forth in the designations of any Preferred Shares;
4.2.24 to adopt a distribution reinvestment or similar
such plan for the Trust, and to provide for the cost of the administration
thereof to be borne by the Trust, subject to any restrictions set forth in
the designations of any Preferred Shares;
4.2.25 to file any and all documents and take any and all
such other action as the Trustees in their sole judgment may deem necessary
in order that the Trust may lawfully conduct its business in any
jurisdiction;
4.2.26 to participate in any reorganization, readjustment,
consolidation, merger, dissolution, sale or purchase of assets, lease or
similar proceedings of any corporation, partnership or other organization
in which the Trust shall have an interest and in connection therewith to
delegate discretionary powers to any reorganization, protective or similar
committee and to pay assessments and other expenses in connection
therewith, subject to any restrictions set forth in the designations of any
Preferred Shares;
4.2.27 to determine whether or not, at any time or from
time to time, to attempt to cause the Trust to qualify or to cease to
qualify as a real estate investment trust for federal income tax purposes,
and to take all action deemed by the Trustees appropriate in connection
with maintaining or ceasing to maintain such qualification;
4.2.28 to do all other such acts and things as are
incident to the foregoing, and to exercise all powers which are necessary
or useful to carry on the business of the Trust, to promote any of the
purposes for which the Trust is formed, and to carry out the provisions of
this Declaration; and
4.2.29 in the event that either (a) the assets of the
Trust would constitute "plan assets" for purposes of ERISA or (b) the
transactions contemplate hereunder would constitute "prohibited
transactions" under ERISA or the Code and an exemption for such
transactions is not obtainable, or not sought by the Trustees, from the
United States Department of Labor, to (1) restructure the Trust's
activities to the extent necessary to comply with any exemption in any
final plan asset regulation adopted by the Department of Labor or
<PAGE>
to comply with any requirement the Department of Labor might impose
as a condition to granting a prohibited transaction exemption, and/or
(2) terminate the offering of Shares or compel a dissolution and
termination of the Trust. The Trustees are empowered to amend such
provisions to the minimum extent they believe is necessary in accordance
with the advice of accountants and/or counsel to comply with any applicable
federal or state legislation, rules, regulations, administrative
pronouncements or interpretations and/or judicial interpretations thereof
after the date of this Declaration. Such amendment(s) made by the Trustees
in reliance upon the advice of competent accountants or counsel described
above shall be deemed to be made pursuant to the fiduciary obligation of
the Trustees to the Trust and Shareholders, and no such amendment shall
give rise to any claim or cause of action by any Shareholder.
4.3 INVESTMENT OPPORTUNITIES. All Trustees must present investment
opportunities which comply with the Trust's investment policies to the
Trust prior to engaging in such investments themselves.
4.4 BY-LAWS. The Trustees may, but are not required to, make,
adopt, amend or repeal By-Laws containing provisions relating to the
business of the Trust, the conduct of its affairs, its rights or powers and
the rights or powers of its Shareholders, Trustees or officers not incon-
sistent with law or with this Declaration. Such By-Laws may provide for
the appointment of assistant officers or agents of the Trust, subject,
however, to the right of the Trustees to remove or discharge such officers
or agents.
ARTICLE V
ADVISOR AND OTHER AGENTS; ANNUAL OPERATING EXPENSES
5.1 EMPLOYMENT OF ADVISOR, EMPLOYEES AND AGENTS. 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, advisors, managers or independent contractors of the Trust as
may be necessary to insure that such business conforms to the provisions of
this Declaration. However, the Trustees shall have the power and may, but
are not obligated to, retain an Advisor and/or to appoint, employ or
contract with any person as the Trustees may deem necessary, or proper for
the transaction of the business of the Trust, and for such purpose may
grant or delegate such authority to any such person 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; provided,
however, that any determination to retain an Advisor which is an Affiliate
shall be valid only if made or ratified with the approval of a majority of
the Trustees; and provided further that any such delegation shall not
preclude the qualification of the Trust as a REIT under the Code. No
advisory contract with an Affiliate shall be entered into or renewed
without the approval of a majority of the Trustees.
It shall be the duty of the Trustees (a) to evaluate the performance
of the Advisor before entering into or renewing an advisory contract;
(b) to monitor the administrative procedures, investment operations, and
<PAGE>
performance of the Trust and the Advisor; and (c) to determine from time to
time but at least annually that the total fees and expenses of the Trust
are reasonable in light of the investment experience of the Trust, its Net
Assets, its Net Income, and the fees and expenses of other comparable
advisors in real estate, with each such determination reflected in the
minutes of the Trustees' meetings.
The Trustees, subject to the approval of a majority of the
Independent Trustees, and subject to the provisions of Section 5.4, shall
have the power to determine the terms and compensation of the Advisor or
any other person whom they may employ or with whom they may contract. The
Trustees may exercise broad discretion in allowing the Advisor to
administer and regulate the operations of the Trust, to act as agent for
the Trust, to execute documents on behalf or the Trustees, and to make
executive decisions which conform to general policies and general
principles previously established by the Trustees.
5.2 TERM. The Trustees shall not enter into any contract with an
Advisor unless such contract has an initial term of not more than one year,
provides for annual renewal or extension thereafter and provides that it
may be terminated at any time by the Trustees, without cause, upon 60 days
written notice or by the Advisor, without penalty, upon 120 days written
notice. Any agreement with the Advisor may be terminated by a majority of
the Independent Trustees. If the Agreement with the Advisor is terminated,
the Advisor will cooperate with the Trust and take all reasonable steps re-
quested to assist the Trustees in making an orderly transition of the
advisory function. The Trustees shall determine that any successor Advisor
possesses sufficient qualifications (a) to perform the advisory function
for the Trust and (b) to justify the compensation provided for in its
contract with the Trust.
5.3 ACTIVITIES OF ADVISOR. The Advisor may render advice and
services to the Trust as its sole and exclusive function, or engage in
other activities including, without limitation, the rendering of advice to
other investors and the management of other investments or other real
estate investment trusts with similar investment objectives, including,
without limitation, investors and investments advised, sponsored or
organized by the Advisor. The Trustees may request the Advisor to engage
in certain other activities which complement the Trust's investments.
Nothing in this Declaration shall limit or restrict the right of any
director, officer, employee or shareholder of the Advisor, whether or not
also a Trustee, officer or employee of the Trust, to engage in any other
business or to render services of any kind to any other partnership,
corporation, firm, individual, trust or association. The Advisor may, with
respect to any loan or other investment in which the Trust may participate
or allot a participation, render advice and service, with or without
remuneration, to each and every participant in that loan or other
investment.
5.4 ANNUAL OPERATING EXPENSES. The annual Operating Expenses of
the Trust shall not exceed the greater of (a) 2% of the Average Invested
Assets of the Trust or (b) 25% of the Net Income of the Trust for such
year. If the Trust engages an Advisor, the agreement with the Advisor
shall require the Advisor to reimburse the Trust for the amount by which
<PAGE>
the aggregate annual expenses paid or incurred by the Trust exceed the
limitations herein provided, within 60 days after the end of such year.
In the event the Shares are listed for trading on the American Stock
Exchange or included for quotation on Nasdaq, then, if required for listing
or quotation, each contract with the Advisor shall also provide that, so
long as the Shares are listed or quoted, the Advisor will reimburse the
Trust within 120 days after the end of the Trust's fiscal year for any
amount by which the aggregate compensation paid by the Trust to the Advisor
with respect to such fiscal year exceeds the compensation permitted to be
paid by the Trust to the Advisor pursuant to the listing guidelines, as
applicable from time to time, of the American Stock Exchange or Nasdaq, as
the case may be.
The Trust shall send to its Shareholders quarterly a statement
setting forth: (i) the ratio of the costs of raising capital during the
quarter to the capital raised; and (ii) the aggregate amount and type of
fees paid to the Advisor and all Affiliates of the Advisor by the Trust and
by third parties doing business with the Trust who make such payments for
the account of the Trust.
5.5 ADVISOR COMPENSATION. The Independent Trustees shall at least
annually review generally the performance of the Advisor, if any, in order
to determine whether the compensation which the Trust has contracted to pay
to the Advisor is within the limits set forth in this Declaration and is
reasonable in relation to the nature and quality of services performed and
whether the provisions of the contract with the Advisor are being carried
out. The Independent Trustees have a fiduciary duty to the Shareholders to
supervise the relationship of the Trust with the Advisor in all respects,
including the level of compensation. Each such determination shall be
based on such of the following and other factors as the Independent
Trustees deem relevant, and shall be reflected in the minutes of the
meetings of the Trustees:
5.5.1 the size of the fees payable to the Advisor in relation
to the size, composition and profitability of the portfolio of the Trust;
5.5.2 the success of the Advisor in generating opportunities
that meet the investment objectives of the Trust;
5.5.3 the rates charged to other REITs and to investors other
than REITs by advisors performing similar services;
5.5.4 additional revenues realized by the Advisor and its
Affiliates through their relationship with the Trust, whether paid by the
Trust or by others with whom the Trust does business;
5.5.5 the quality and extent of service and advice furnished to
the Trust by the Advisor;
<PAGE>
5.5.6 the performance of the investment portfolio of the Trust,
including income, conservation or appreciation of capital, frequency of
problem investments and competence in dealing with distress situations; and
1.1.1
5.5.7 the quality of the portfolio of the Trust in relationship
to any investments generated by the Advisor for its own account.
ARTICLE VI
PROHIBITED ACTIVITIES
6.1 PROHIBITED INVESTMENTS AND ACTIVITIES. The Trust shall not
engage in any of the following investment practices or activities:
6.1.1 invest in any foreign currency, bullion or commodities or
commodities future, contracts or effect short sales of commodities or
securities;
6.1.2 invest in contracts for the sale of real estate unless
such contracts are recordable in the chain of title;
6.1.3 issue (a) "redeemable securities," "face amount
certificates of the installment type" or "periodic payment plan
certificates," all as defined in the Investment Company Act of 1940, (b)
[reserved], (c) nonvoting or assessable securities (other than debt
securities), and (d) convertible or nonconvertible debt securities to the
public unless the historical cash flow of the Trust or the substantiated
future cash flow of the Trust, excluding extraordinary items, is sufficient
to cover the interest of the debt securities;
6.1.4 grant options, warrants or rights to purchase Shares at
exercise prices less than the fair market value of such Shares on the date
of grant and for consideration (which may include services) that in the
judgment of the Trustees has a market value less than the value of such
option, warrant or right on the date of grant; any such options, warrants
or rights to purchase Shares issued to the Advisor, Trustees, Sponsor or
their Affiliates shall be on the same terms as those sold to the public and
shall not exceed an amount equal to 10% of the number of outstanding Shares
on the date of the grant;
6.1.5 engage in underwriting or the agency distribution of
securities issued by others;
6.1.6 invest more than 10% of Total Assets of the Trust in
Unimproved Real Property or indebtedness secured by a deed of trust or
Mortgage Loans on Unimproved Real Property;
<PAGE>
6.1.7 engage in trading, as compared with investment,
activities or in any other activity which would have the effect of causing
the Trust to fail to qualify as a REIT under the Code;
6.1.8 [Reserved].
1.1.1
6.1.9 acquire securities in any company holding investments or
engaging in activities prohibited by this Section 6.1;
6.1.10 the Trust may not make junior Mortgage Loans except
where the principal amount of such junior Mortgage Loans (excluding
interest and working capital and interest reserves) plus the outstanding
amount of senior debt does not exceed 85% of the As-Built Appraised Value
of the Property, unless a majority of the Independent Trustees determine
that an increased amount is justified by additional credit or collateral;
the Trust may not make a junior Mortgage Loan which is subordinate to a
mortgage held by the Advisor, Trustees, Sponsors or Affiliates of the
Trust;
6.1.11 purchase property from the Sponsor, the Advisor or
any Trustee or their Affiliates, unless (i) a majority of the Trustees not
otherwise interested in such transaction approve the transaction as being
fair and reasonable to the Trust and at a price to the Trust no greater
than the cost of the asset to such Sponsor, Advisor, Trustee or Affiliate
thereof, or, (ii) if the price to the Trust is in excess of such costs,
that substantial justification for such excess exists and such excess is
not unreasonable; in no event shall the cost of such asset to the Trust
exceed its current appraised value as determined by a qualified independent
real estate appraiser selected by the Trustees not otherwise interested in
such transaction; or (b) sell property to the Sponsor, the Advisor, any
Trustee or their Affiliates;
6.1.12 borrow funds from the Sponsor or its Affiliates
unless the interest and other financing charges or fees received by the
Sponsor or its Affiliates do not exceed the amount which would be charged
by unrelated lending institutions on comparable loans for the same purpose;
6.1.13 purchase insurance either through or from any
Affiliate of the Advisor or the Sponsor, unless: (i) before a master
insurance policy covering all the Trust's assets is placed through such
brokerage services, there will have been received quotations from two
independent insurance brokers relating to the proposed coverage, which
quotations shall be upon coverage and terms comparable to those proposed to
be provided by the Affiliate, and such Affiliate shall not provide such
insurance brokerage services unless it can obtain such insurance at a cost
which is no greater than the lowest of the two unaffiliated insurance
agency quotations for such master insurance policy; and (ii) if at any time
the Affiliates cease to derive at least 75% of their business from
insurance commissions with respect to insurance written for individuals,
partnerships, corporations, trusts or other entities which are not
Affiliates of the Advisor or the Sponsor, the Affiliates shall not write
any further insurance on behalf of the Trust or on properties then owned by
it;
<PAGE>
6.1.14 invest in equity securities of any nongovernmental
issuer, including other REITs or limited partnerships, for a holding period
in excess of 18 months; such investments in entities affiliated with the
Advisor or its Affiliates will not be permitted unless a majority of the
Trustees (including a majority of the Independent Trustees) not otherwise
interested in such transaction approve the transaction as being fair and
reasonable to the Trust; or
6.1.15 issue its Shares on a deferred payments basis or
other similar arrangement.
6.2 OBLIGOR'S DEFAULT. Notwithstanding any provision in any
Article of this Declaration, when an obligor to the Trust is in default
under the terms of any obligation to the Trust, 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
enter into any necessary investment, commitment or obligation of the Trust
resulting from the pursuit of such remedies that are necessary or desirable
to dispose of property acquired in the pursuit of such remedies.
6.3 PERCENTAGE DETERMINATIONS. Whenever standards contained in
this Article VI are expressed in terms of a percentage, whether of value,
total assets, cost or otherwise, such percentage shall be determined at
the time of the approval of a Mortgage Loan by the Trust for a transaction
covered by such standard hereunder.
ARTICLE VII
SHARES AND SHAREHOLDERS
7.1 TRUST ESTATE. The beneficial interest in the Trust shall be
divided into shares of beneficial interest. The Trust shall have authority
to issue an unlimited number of common shares of beneficial interest, no
par value per share (the "Shares"), and two million preferred shares of
beneficial interest, no par value per share (the "Preferred Shares"). The
Preferred Shares may be issued on such rights, preferences and designations
as determined by the Trustees, including without limitation such rights,
preferences and designations which grant the holders of Preferred Shares
rights in the Trust Estate superior to those rights of the holders of
Shares. The Shares and Preferred Shares may be issued for such
consideration as the Trustees shall determine, including, upon the
conversion of convertible debt, or by way of share distribution or share
split in the discretion of the Trustees. Subject to Section 7.12 hereof,
outstanding Shares or Preferred Shares shall be transferrable and
assignable in like manner as are shares of common stock or preferred stock
of a Massachusetts business corporation. Shares or Preferred Shares
reacquired by the Trust shall no longer be deemed outstanding and shall
have no voting or other rights unless and until reissued. Shares or
Preferred Shares reacquired by the Trust may be cancelled by action of the
Trustees. All Shares or Preferred Shares shall be fully paid and non-
assessable by or on behalf of the Trust upon receipt of full consideration
for which they have been issued or without additional consideration if
issued by way of distribution, split, or upon the conversion of convertible
debt. Neither the Shares nor the Preferred Shares shall entitle the holder
to preference, preemptive, conversion or exchange rights of any kind,
except as the Trustees may specifically determine with respect to any
Shares or Preferred Shares at the time of issuance of such shares, as set
forth in the applicable designations (in the case of Preferred Shares), and
except as specifically required by law.
<PAGE>
7.2 LEGAL OWNERSHIP OF TRUST ESTATE. The legal ownership of the
Trust Estate and the right to conduct the business of the Trust are vested
exclusively in the Trustees, and the Shareholders shall have no interest
therein other than the beneficial interest in the Trust conferred by their
Shares issued hereunder and they shall have no right to compel any
partition, division, dividend or distribution of the Trust or any of the
Trust Estate, nor can they be called upon to share or assume any losses of
the Trust or suffer an assessment of any kind by virtue of their ownership
of Shares.
7.3 SHARES DEEMED PERSONAL PROPERTY. The Shares shall be personal
property and shall confer upon the holders thereof only the interest and
rights specifically set forth in this Declaration. The death, insolvency
or incapacity of a Shareholder shall not dissolve or terminate the Trust or
affect its continuity nor give his legal representative any rights
whatsoever, whether against or in respect of other Shareholders, the
Trustees or the Trust Estate or otherwise except the sole right to demand
and, subject to the provisions of this Declaration, the By-Laws, if
adopted, and any requirements of law, to receive a new certificate for
Shares registered in the name of such legal representative, in exchange for
the certificate held by such Shareholder.
7.4 SHARE RECORD; ISSUANCE AND TRANSFERABILITY OF SHARES. Records
shall be kept by or on behalf of and under the direction of the Trustees,
which shall contain the names and addresses of the Shareholders, the number
of Shares held by them respectively, and the number of certificates, if
any, representing the Shares, and in which there shall be recorded all
transfers of Shares. The persons in whose names Shares are so recorded
shall be deemed the absolute owners of such Shares for all purposes of this
Trust; but nothing herein shall be deemed to preclude the Trustees or
officers, or their agents or representatives from inquiring as to the
actual ownership of Shares. Until a transfer is duly registered on the
records of the Trust, the Trustees shall not be affected by any notice of
such transfer, either actual or constructive. The payment thereof to the
person in whose name any Shares are registered on the records of the Trust
or to the duly authorized agent of such person (or if such Shares are so
registered in the names of more than one person, to any one of such persons
or to the duly authorized agent of such person) shall be sufficient
discharge for all distributions payable or deliverable in respect of such
Shares.
In case of the loss, mutilation or destruction of any certificate for
Shares, the Trustees may issue or cause to be issued a replacement
certificate on such terms and subject to such rules and regulations as the
Trustees may from time to time prescribe. Nothing in this Declaration
shall impose upon the Trustees or a transfer agent a duty, or limit their
rights, to inquire into adverse claims.
<PAGE>
Any issuance, redemption or transfer of Shares which would operate to
disqualify the Trust as a real estate investment trust for federal income
tax purposes, is null and void, and such transaction will be cancelled when
so determined in good faith by the Trustees.
7.5 DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall declare and
pay to Shareholders quarterly distributions in cash, out of current or
accumulated income, capital, capital gains, principal, surplus, proceeds
from the increase or refinancing of Trust obligations, from the repayment
of loans made by the Trust, from the sale of portions of the Trust Estate,
or from any other source as the Trustees in their discretion shall
determine within 45 days after the last day of each fiscal quarter during
which the "real estate investment trust taxable income" (as defined in Code
Section 856(b)(2)) of the Trust was greater than zero; but, in any event,
the Trustees, shall, from time to time, declare and pay to the Shareholders
such distributions as may be necessary to continue to qualify the Trust as
a real estate investment trust, so long as such qualification, in the
opinion of the Trustees, is in the best interest of the Shareholders.
Shareholders shall have no right to any distribution unless and until
declared by the Trustees. The date for determining the Shareholders who
are entitled to participate in such distributions shall be such date as the
Trustees shall designate. The Trustees shall furnish the Shareholders at
the time of each such distribution 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, a written statement disclosing the source shall be
sent to each Shareholder who received the distribution not later than 75
days after the close of the fiscal year in which the distribution was made.
7.6 TRANSFER AGENT, DISTRIBUTION, DISBURSING AGENT AND REGISTRAR.
The Trustees shall have power to employ one or more transfer agents,
distribution disbursing agents, distribution reinvestment plan agents and
registrars and to authorize them on behalf of the Trust to keep records, to
hold and disburse any distributions and to have and perform powers and
duties customarily had and performed by transfer agents, distribution
disbursing agents, distribution reinvestment plan agents and registrar as
may be conferred upon them by the Trustees.
7.7 SHAREHOLDERS' MEETINGS AND CONSENTS. The Trustees shall cause
to be called and held an Annual Meeting of Shareholders at such time and
such place as they may determine, at which Trustees shall be elected and
any other proper business may be conducted. The Annual Meeting of
Shareholders shall be held within six months after the end of each fiscal
year, after not fewer than 10 days nor more than 60 days written notice of
such meeting has been sent to Shareholders by the Trustees and not less
than 30 days after delivery to the Shareholders of the Annual Report for
the fiscal year then ended. Special meetings of Shareholders may be called
by a majority of the Trustees, and shall be called by the Board of Trustees
upon the written request of Shareholders holding or having the right to
vote not less than 10% of the outstanding Shares of the Trust. Within 45
days after receipt of a written request either in person or by registered
mail stating the purpose of the meeting requested by Shareholders, the
Trust shall provide all Shareholders written notice (either in person or by
mail) of a meeting and the purpose of such meeting to be held on a date not
fewer than 20 days nor more than 60 days before the date of such meeting,
at a time and place convenient to Shareholders. The call and notice of any
special meeting shall state the purpose of the meeting and no other
business shall be considered at such meeting. If there shall be no
Trustees, a special meeting of the Shareholders shall be held promptly for
the election of successor Trustees. Notwithstanding anything contained in
this Section 7.7 to the contrary, the Trustees may grant to the holders of
Preferred Shares the right to call a special meeting, as set forth in the
designations of the applicable Preferred Shares.
<PAGE>
A majority of the outstanding Shares entitled to vote at any meeting
represented in person or by proxy shall constitute a quorum at such
meeting. Whenever Shareholders are required or permitted to take any
action, such action may be taken, except as otherwise provided by this
Declaration or required by law, by a majority of the votes cast at a
meeting of Shareholders at which a quorum is present by holders of Shares
entitled to vote thereon, or without a meeting by written consent setting
forth the action so taken signed by the holders of a majority of the
outstanding Shares entitled to vote thereon or such larger proportion
thereof as would be required for a vote of Shareholders at a meeting. Any
written consent may be revoked by a writing received by the Trust prior to,
but not after, the time that written consents of the number of Shares
required to authorize the proposed action have been filed with the Trust.
Notwithstanding this or any other provision of this Declaration, no vote or
consent of Shareholders shall be required to approve the sale, exchange or
other disposition, pledging, hypothecating, granting security interests in,
mortgaging, encumbering or leasing by the Trustees of less taken half of
the assets of the Trust or upon the liquidation and dissolution of the
Trust in the ordinary course.
7.8 PROXIES. Whenever the vote or consent of Shareholders is
required or permitted under this Declaration, such vote or consent may be
given either directly by the Shareholder or by a proxy. The Trustees may
solicit such proxies from the Shareholders or any of them in any matter
requiring or permitting the Shareholders' vote or consent.
7.9 REPORTS TO SHAREHOLDERS. The Trustees shall cause to be
prepared and mailed to the Shareholders not later than 120 days after the
close of each fiscal year of the Trust, and in any event not less than 15
days prior to the Trust's annual meeting of Shareholders, a report of the
business and operation of the Trust during such fiscal year, which report
shall constitute the accounting of the Trustees for such fiscal year. The
report shall be in such form and have such content as the Trustees deem
proper, but shall in any event include: (a) a balance sheet, an income
statement and a statement of changes in financial position, each prepared
in accordance with generally accepted accounting principles, shall be
audited by an independent certified public accountant thereon, and shall be
accompanied by the report of such accountant thereon; and (b) a description
of the material terms and circumstances of any transactions between the
Trust and the Sponsor, the Advisor, any Trustee, Officer of any Affiliate
thereof, including, without limitation, purchases from loans to or from or
joint ventures with the Trust, and a statement that a majority of the
Trustees and a majority of the disinterested Trustees determined that such
transactions were fair and reasonable to the Trust and on terms not less
favorable than those available from unaffiliated third parties.
7.10 FIXING RECORD DATE. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof or for the purpose of any other action, the Trustees
shall fix a date not more than 60 days prior to the date of any meeting of
<PAGE>
Shareholders or distribution 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 take any other action. Any Shareholder who was a
Shareholder at the time so fixed shall be entitled to vote at such meeting
or adjournment thereof or to take such other action, even though he has
since that date disposed of his Shares, and no Shareholder becoming such
after that date shall be so entitled to vote at such meeting or any
adjournment thereof or to take such other action. The provisions of this
Section 7.10 shall not limit the rights of holders of Preferred Shares to
vote at any special meeting, as set forth in the designations of the
applicable Preferred Shares.
7.11 NOTICE TO SHAREHOLDERS. Any notice of meeting or other notice,
communication or report to any Shareholder shall be deemed duly delivered
to such Shareholder when such notice, communication or report is deposited,
with postage thereon prepaid, in the United States mail, addressed to such
Shareholder at his address as it appears on the records of the Trust or is
delivered in person to such Shareholder.
7.12 SHAREHOLDERS' DISCLOSURE; TRUSTEES' RIGHT TO REFUSE TO TRANSFER
SHARES; LIMITATION ON HOLDINGS; REDEMPTION OF SHARES.
7.12.1 The Shareholders shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of the Shares as the Trustees deem necessary to comply with
Sections 856-860 of the Code or to comply with the requirements of any
taxing authority or governmental agency.
7.12.2 Whenever it is deemed by them to be reasonably necessary
to protect the tax status of the Trust as a REIT, the Trustees may require
a statement or affidavit from each proposed transferee of Shares setting
forth the number of Shares already owned by him and any related person
specified in the form prescribed by the Trustees and, in connection
therewith, if the proposed transfer may jeopardize the qualification of the
Trust as a REIT, the Trustees shall have the right, but not a duty, to
refuse to transfer the Shares to the proposed transferee. All contracts
for the sale or other transfer of Shares shall be subject to this
provision.
7.12.3 Notwithstanding any other provision of this Declaration
of Trust to the contrary and subject to the provisions of subsection
7.12.5, no person shall at any time directly or indirectly acquire
ownership in the aggregate of more than 9.9% of the outstanding Shares of
the Trust (the "Limit"). Shares owned by a person or group of persons in
excess of the Limit at any time shall be deemed "Excess Shares." For the
purposes of this Section 7.12, "person" shall have the meaning set forth in
Section 7701(a)(1) of the Code, and shall also mean any partnership,
limited partnership, syndicate or other group deemed to be a "person"
pursuant to Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended; and a person shall be deemed to own (a) Shares actually owned by
such person, (b) Shares
<PAGE>
constructively owned by such person after applying the rules of
Section 544 of the Code, and (c) Shares of which such person is beneficial
owner as defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934. All Shares which any person has the right to acquire upon
exercise of outstanding rights, options and warrants, and upon conversion
of any securities convertible into Shares, if any, shall be considered
outstanding for purposes of the Limit if such inclusion will cause such
person to own more than the Limit.
7.12.4 The Trustees, by notice to the holder thereof, may redeem
any or all Shares that are Excess Shares (including Shares that remain or
become Excess Shares because of the decrease in outstanding shares
resulting from such redemption); and from and after the date of giving of
such notice of redemption ("Redemption Date") the Shares called for
redemption shall cease to be outstanding and the holder thereof shall cease
to be entitled to dividends, voting rights and other benefits with respect
to such Shares excepting only the right to payment by the Trust of the
redemption price determined and payable as set forth in the following two
sentences. Subject to the limitation on payment set forth in the following
sentence, the redemption price of each Excess Share called for redemption
shall be the average daily per Share closing sales price if the Shares of
the Trust are listed on a national securities exchange, and if the Shares
are not so listed shall be the mean between the average per Share closing
bid and asked prices, in each case during the 30 calendar day period ending
on the business day prior to the Redemption Date, or if there have been no
sales on a national securities exchange and no published bid quotations and
no published asked quotations with respect to Shares of the Trust during
such 30 calendar day period, the redemption price shall be the price
determined by the Trustees in good faith. Unless the Trustees determine
that it is in the interest of the Trust to make earlier payment of all of
the amount determined as the redemption price per Share in accordance with
the preceding sentence, the redemption price shall be payable only upon the
liquidation of the Trust and shall not exceed an amount which is the sum of
the per Share distributions designated as liquidation distributions and
return of capital distributions declared with respect to unredeemed Shares
of the Trust of record subsequent to the Redemption Date, and no interest
shall accrue with respect to the period subsequent to the Redemption Date
to the date of such payments; provided, however, that in the event that
within 30 days after the Redemption Date the person from whom the Excess
Shares have been redeemed sells (and notifies the Trust of such sale) a
number of the remaining Shares owned by him at least equal to the number of
such Excess Shares (and such sale is to a person in whose hands the Shares
sold would not be Excess Shares), then the Trust shall rescind the
redemption of the Excess Shares if following such rescission such person
would not be the holder of Excess Shares, except that if the Trust receives
an opinion of its counsel that such rescission would jeopardize the tax
status of the Trust as a REIT then the Trust shall in lieu of rescission
make immediate payment of the redemption price.
7.12.5 The Limit set forth in Section 7.12.3 shall not apply to
acquisitions of Shares pursuant to a cash tender offer made for all
outstanding Shares of the Trust (including securities convertible into
Shares) in conformity with applicable federal and state securities laws
where a majority of the outstanding Shares (not including Shares or
securities convertible into Shares held by the
<PAGE>
tender offerer and/or any "affiliates" or "associates" thereof within
the meaning of the Act) are duly tendered and accepted pursuant to the cash
tender offer; nor shall the Limit apply to the acquisition of Shares by an
underwriter in a public offering of Shares, or in any transaction involving
the issuance of Shares by the Trust, in which a majority of the Trustees
determine that the underwriter or other person or party initially acquiring
such Shares will make a timely distribution of such Shares to or among
other holders such that, following such distribution, none of such Shares
will be Excess Shares.
7.12.6 The Trustees in their discretion may exempt from the
Limit ownership of certain designated Shares while owned by a person who
has provided the Trustees with evidence and assurance acceptable to the
Trustees that the qualification of the Trust as a REIT would not be
jeopardized thereby.
7.12.7 Notwithstanding any other provisions of this Declaration
of Trust to the contrary, any purported acquisition of Shares of the Trust
which would result in the disqualification of the Trust as a REIT shall be
null and void, ab initio.
7.12.8 Nothing contained in this Section 7.12 or in any other
provision of this Declaration of Trust shall limit the authority of the
Trustees to take such other action as they deem necessary or advisable to
protect the Trust and the interests of the Shareholders by preservation of
the Trust's qualification as a REIT under Section 856-860 of the Code.
7.12.9 If any provision of this Section 7.12 or any application
of any such provision is determined to be invalid by any federal or state
court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision
shall be affected only to the extend necessary to comply with the
determination of such court. To the extent this Section 7.12 may be
inconsistent with any other provision of this Declaration of Trust, this
Section 7.12 shall be controlling.
7.13 INSPECTION BY SHAREHOLDERS. The Trust will maintain a list of
the names and addresses of all Shareholders as part of its books and
records. Inspection of the Trust's books and records (including a list of
Shareholders) by a state securities administrator shall be permitted upon
request upon reasonable notice and during normal business hours.
Inspection of the books and records of the Trust by the Shareholders shall
be permitted to the same extent as permitted under the laws of the
Commonwealth of Massachusetts applicable to business corporations.
<PAGE>
ARTICLE VIII
LIABILITY OF TRUSTEES, SHAREHOLDERS
AND OFFICERS, AND OTHER MATTERS
8.1 LIMITATION OF LIABILITY OF TRUSTEES AND OFFICERS. The Trustees
of the Trust shall be deemed to be in a fiduciary relationship to the
Shareholders. No Trustee, officer, employee or other agent of the Trust
shall be liable to the Trust or to any Trustee or Shareholder for any act
or omission of any other Trustee, Shareholder, officer, agent or employee
of the Trust or be held to any personal liability whatsoever in tort,
contract or otherwise, in connection with the affairs of this Trust if it
is determined that such person acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of
the Trust, unless such liability was the result of gross negligence or
misconduct by the person.
8.2 LIMITATION OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OFFICERS.
The Trustees and officers in incurring any debts, liabilities or
obligations, or in taking or omitting any other actions for or in
connection with the Trust are, and shall be deemed to be, acting as
Trustees or officers of the Trust and not in their own individual
capacities. Except to the extent provided in Section 8.1, no Trustee,
officer or Shareholder shall be liable for any debt, claim, demand,
judgment, decree, liability or obligation of any kind of, against or with
respect to the Trust arising out of any action taken or omitted for or on
behalf of the Trust and the Trust shall be solely liable therefor and
resort shall be had solely to the Trust Estate for the payment or
performance thereof. Each Shareholder shall be entitled to pro rata
indemnity from the Trust Estate if, contrary to the provisions hereof, such
Shareholder shall be held to any such personal liability.
8.3 EXPRESS EXCULPATORY CLAUSES IN INSTRUMENTS. As far as
practicable, the Trustees shall cause any written instrument creating an
obligation of the Trust to include a reference to this Declaration and to
provide that neither the Shareholders nor the Trustees nor the officers of
the Trust shall be liable thereunder and that the other parties to such
instrument shall look solely to the Trust Estate for the payment of any
claim of such obligation. The omission of this provision from any such
instrument shall not render the Shareholders or any Trustee or officer of
the Trust liable nor shall the Trustees or any officer of the Trust be
liable to anyone for such omission.
8.4 INDEMNIFICATION. Any person made a party to any action, suit
or proceeding or against whom a claim or liability is asserted by reason of
the fact that he, his testator or intestate was or is a Trustee, officer,
employee or other agent acting on behalf of the Trust shall be indemnified
and held harmless by the Trust against any losses, judgments, liabilities,
expenses and amounts paid in settlement of any claim sustained by them in
connection with the Trust, provided that (a) such person has determined, in
good faith, that the course of conduct which caused the loss or liability
was in the best interests of the Trust, (b) such liability or loss was not
the result of gross negligence or misconduct by such person, and (c) such
indemnification or agreement to hold harmless is recoverable only out of
the assets of the Trust and not from the personal assets of any
Shareholder. Indemnification will not be allowed for any liability imposed
<PAGE>
by judgment, and costs associated therewith, including attorneys' fees,
arising from or out of a violation of state or federal securities laws
associated with the offer and sale of the Shares. Indemnification will not
be allowed for losses, liabilities, settlements and related expenses of
lawsuits alleging securities law violations unless (1) a court approves the
settlement and finds that indemnification of the settlement and related
costs should be made, or (2) there has been a dismissal with prejudice or a
successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee. Any person
seeking indemnification shall apprise the court of the position of the
Securities and Exchange Commission and the Massachusetts Securities
Division with respect to indemnification for securities law violations,
before seeking court approval for indemnification. The Trust may advance
funds to any person for legal expenses and other costs incurred as a result
of a legal action initiated against the person if (i) the legal action
relates to the performance of duties or services by the person on behalf
of the Trust; and (ii) such person agrees in writing to repay the advanced
funds to the Trust if it is ultimately determined that he or she is not
entitled to indemnification by the Trust as authorized herein. The rights
accruing to any person under these provisions shall not exclude any other
right to which he or she may be lawfully entitled, nor shall anything
contained herein restrict the right of any person to contribution as may
be available under applicable law. The Trust shall have power to purchase
and maintain liability insurance on behalf of any person entitled to
indemnity hereunder, including the Trustees, but the Trust shall not incur
the cost of that portion of liability insurance which insures any party
against any liability for which he or she could not be indemnified under
this Declaration.
8.5 RIGHT OF TRUSTEES AND OFFICERS TO OWN SHARES OR OTHER PROPERTY
AND TO ENGAGE IN OTHER BUSINESS. Any Trustee or officer may acquire, own,
hold and dispose of Shares in the Trust, for his individual account, and
may exercise all rights of a Shareholder to the same extent and in the same
manner as if he were not a Trustee or officer. Any Trustee or officer may
have personal business interests and may engage in personal business
activities, which interests and activities may include the acquisition,
syndication, holding, management, development, operation or investment in,
for his own account or for the account of others, interests in real
property or persons engaged in the real estate business. Subject to the
provisions of Article V and Section 3.10, any Trustee or officer may be
interested as trustee, officer, director, stockholder, partner, member,
Advisor or employee, or otherwise have a direct or indirect interest in any
person who may be engaged to render advice or services to the Trust, and
may receive compensation from such person as well as compensation as
Trustee, officer or otherwise hereunder and no such activities shall be
deemed to conflict with his duties and powers as Trustee or officer.
8.6 TRANSACTIONS WITH AFFILIATES. The Trust shall not engage in
transactions with the Sponsor, the Advisor, any Trustee, officer or any
Affiliated person of such Advisor, Trustee or officer, except to the extent
that each such transaction has, after disclosure of such affiliation, been
approved or ratified by the affirmative vote of a majority of the
Independent Trustees who are not interested parties in the transactions
after a determination by them that:
<PAGE>
8.6.1 the transaction is fair and reasonable to the Trust and
its Shareholders;
8.6.2 the terms of such transaction are at least as favorable
as the terms of any comparable transactions made on an arm's length basis;
8.6.3 payments to the Advisor or to any Trustee or officer for
services rendered in a capacity other than that as Trustee, or officer may
only be made upon determination that:
1. the compensation is not in excess of their compensation paid
for any comparable services; and
2. the compensation is not greater than the charges for comparable
services available from others who are competent and not affiliated with
any of the parties involved.
The Trust may enter into joint investments with Affiliates of the
Advisor if a majority of the Trustees (including a majority of the
Independent Trustees) approve the joint investment as being fair and
reasonable to the Trust and on substantially the same terms and conditions
as those of the other Affiliates participating in the joint investment. In
connection with such a joint investment, both the Trust and the Affiliate
would be required to approve any material decisions concerning the
investment, including refinancings and capital improvements.
8.7 PERSONS DEALING WITH TRUSTEES OR OFFICERS. Any act of the
Trustees or officers purporting to be done in their capacity as such shall,
as to any persons dealing with such Trustees or officers, be conclusively
deemed to be within the purposes of this Trust and within the powers of the
Trustees and officers. No person dealing with the Trustees or any of them,
or with the authorized officers, agents or representatives of the Trust
shall be bound to see to the application of any funds or property passing
into their hands or control. The receipt of the Trustees or any of them,
or of authorized officers, agents or representatives of the Trust, for
moneys or other consideration, shall be binding upon the Trust.
ARTICLE IX
DURATION, TERMINATION, AMENDMENT
AND REORGANIZATION OF TRUST
9.1 DURATION AND TERMINATION OF TRUST. The duration of the Trust
shall be perpetual unless a majority of the Trustees shall determine that
the Trust should be terminated and liquidated. Any determination by the
Trustees of the date upon which termination shall occur shall be reflected
in a vote of or written instrument signed by a majority of all of the
Trustees then in office, including a majority of the Independent Trustees;
provided that the Trust shall be subject to termination at any time by the
vote or consent of Shareholders holding or having the right to vote a
majority of the outstanding Shares entitled to vote thereon.
<PAGE>
9.1.1 Upon the termination of the Trust;
a. the Trust shall carry on no business except for the
purpose of winding up its affairs;
b. the Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up, including
the power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, transfer or otherwise dispose of
all or any part of the remaining Trust Estate to one or more persons at
public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge or pay
its liabilities, and do all other acts appropriate to liquidate its
business (and provided that the Trustees may, if permitted by applicable
law, and if they deem it to be in the best interest of the Shareholders,
appoint a liquidating trustee or agent or other entity to perform one or
more of the foregoing functions); and
c. after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, and
after payment in full of the liquidation preferences to holders of any
Preferred Shares as required under the applicable designations of Preferred
Shares, the Trustees or any liquidating trust, agent or other entity
appointed by them, shall distribute the remaining Trust Estate among the
Shareholders, pro rata, according to the number of Shares held by each.
If any plan for the termination of the Trust approved by Shareholders
holding or having the right to vote two-thirds of the outstanding Shares
and agreeable to a majority of the Trustees provides for actions of the
Trustees other than as aforesaid, the Trustees shall have full authority to
take all action as in their opinion is necessary or appropriate to
implement such plan.
9.1.2 After termination of the Trust and distribution to the
Shareholders as provided herein or in any such plan so approved by the
Shareholders, the Trustees shall execute and include among the records of
the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder and the rights and interests of
all Shareholders hereunder shall thereupon cease.
<PAGE>
9.2 MERGER, ETC. Upon the vote or written consent of a majority of
the Trustees, and with the approval of Shareholders holding or having the
right to vote two-thirds of the Shares then outstanding, at a meeting the
notice for which included a statement of the proposed action, the Trustees
may (a) merge the Trust into, or sell, convey and transfer the Trust Estate
to, any corporation, association, trust or other organization, which may or
may not be a subsidiary of the Trust, in exchange for shares or securities
thereof, or beneficial interests therein, or other consideration, and the
assumption by such transferee of the liabilities of the Trust and (b)
thereupon terminate the Trust and, subject to this Section 9 and in
compliance with the designations of any Preferred Shares, distribute such
shares, securities, beneficial interests or other consideration ratably
among the Shareholders in redemption of their Shares; provided, however,
that: (i) the Shareholders would, thereafter, be the sole equity owners of
such entity; and (ii) such entity and the Shareholders would thereafter be
subject to federal income tax in much the same manner as they were so long
as the Trust qualified as a REIT.
9.3 AMENDMENT PROCEDURE. This Declaration may be amended by the
vote or written consent of a majority of the Trustees and of Shareholders
holding or having the right to vote a majority of the outstanding Shares;
provided, however, that no amendment which would reduce the priority of
payment or amount payable to holders of Shares of the Trust upon
liquidation of the Trust or that would diminish or eliminate any voting
rights pertaining to holders of Shares shall be made unless approved by the
vote or consent of Shareholders holding or having the right to vote two-
thirds of the outstanding Shares; provided further, however, that a
majority of the Trustees without the vote or consent of Shareholders may at
any time amend the Declaration to the extent deemed by the Trustees in good
faith to be necessary (i) to clarify any ambiguities or correct any
inconsistencies; (ii) to meet the requirements for qualification as a real
estate investment trust under Sections 856-860 of the Code or any
interpretation thereof by a court or other governmental agency of competent
jurisdiction, but the Trustees shall not be liable for failing so to do;
(iii) (a) to restructure the Trust's activities to the extent necessary to
comply with any exemption in the final plan asset regulation adopted by the
Department of Labor, including establishing a fixed percentage of Shares
permitted to be held by Qualified Plans or other Tax-Exempt Entities,
discontinuing sales to such investors after a given date as necessary to
obtain a prohibited transaction exemption from the Department of Labor
and/or (b) to terminate the offering or to compel a dissolution and
termination of the Trust. Actions by the Trustees pursuant to the third
paragraph of Section 1.1 hereof or pursuant to Subsection 10.3.1 hereof
that result in amending this Declaration may also be effected without vote
or consent of any Shareholder.
9.4 ACTIONS PRIOR TO FIRST PUBLIC SALE OF SHARES. Notwithstanding
any other provision of this Declaration, at such time as there is only one
holder of all of the outstanding Shares and prior to the issuance of Shares
pursuant to a registration statement under the Securities Act of 1933, said
holder of all of the outstanding Shares may, without any vote or consent of
the Trustees: (i) amend this Declaration in whole or in part; (ii)
terminate this Trust; (iii) remove and/or replace any of all of the
Trustees; and (iv) instruct the investment and disposition of any funds or
properties held by the trustees.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 APPLICABLE LAW. This Declaration of Trust is made in The
Commonwealth of Massachusetts; the situs, domicile and residency of the
Trust for all purposes is Massachusetts; and the Trust is created under and
is to be governed by and construed and administered according to the laws
of such Commonwealth, including the Massachusetts Business Corporation Law
as the same may be amended from time to time, to which reference is made
with the intention that matters not specifically covered herein or as to
which an ambiguity may exist shall be resolved as if the Trust were a
Massachusetts business corporation, but the reference to such Business
Corporation Law is not intended to and shall not give the Trust, the
Trustees, the Shareholders or any other person any right, power, authority
or responsibility available only to or in connection with an entity
organized in corporate form.
10.2 FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with
the Secretary of The Commonwealth of Massachusetts and with the Boston City
Clerk, as well as any other governmental office where such filing may from
time to time be required, but the failure to make any such filing shall
not impair the effectiveness of this instrument or any such amendment.
Anyone dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such amendments have been made, as to
the identities of the Trustees and officers, and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it
were the original, may rely on a copy certified by an officer of the Trust
to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument, and
all expressions like "herein," "hereof," and "hereunder" shall be deemed to
refer to this instrument as a whole as the same may be amended or affected
by any such amendments. The masculine gender shall include the feminine
gender and the neuter. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
10.3 PROVISIONS OF THE TRUST IN CONFLICT WITH LAW OR REGULATIONS.
10.3.1 The provisions of this Declaration are severable and if a
majority of the Trustees shall determine, with the advice of counsel, that
any one or more of such provision (the "Conflicting Provisions") would have
the effect of preventing the Trust from qualifying as a real estate
investment trust under Sections 856-860 of the Code (and if the Trustees
have determined the Trust should elect to be taxed as a REIT under the
Code) or are in conflict with other applicable federal or state laws or
regulations, the Conflicting Provisions shall be deemed never to have
constituted a part of the Declaration; provided, however, that such
determination by the Trustees shall not affect or impair any of the
remaining provisions of this Declaration or render invalid or improper any
action taken or omitted (including
<PAGE>
but not limited to the election of Trustees) prior to such
determination. A certification signed by a majority of the Trustees
setting forth any such determination and reciting that it was duly adopted
by the Trustees, or a copy of this Declaration, with the Conflicting
Provisions removed pursuant to such a determination, signed by a majority
of the Trustees, shall be conclusive evidence (except as to Shareholders,
as to whom it shall only be prima facie evidence) of such determination
when included in the records of the Trust. The Trustees shall not be
liable for failure to make any determination under this Section 10.3.1.
Nothing in this Section 10.3.1 shall in any way limit or affect the right
of the Trustees to amend this Declaration as provided in Section 9.3.
10.3.2 If any provision of this Declaration shall be held
invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render invalid
or unenforceable any other provision of this Declaration, and this
Declaration shall be carried out as if any such invalid or unenforceable
provisions were not contained herein.
10.4 BINDING EFFECT; SUCCESSOR IN INTEREST. Each person who becomes
a Shareholder shall, as a result thereof, be deemed to have agreed to and
to be bound by the provisions of this Declaration of Trust. This
Declaration shall be binding upon and inure to the benefit of the Trustees
and the Shareholders and each of their respective successors, assigns,
heirs, distributees and legal representatives.
<PAGE>
ADDRESSES OF TRUSTEES
---------------------
Walter E. Auch, Sr.
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Norman M. Gold
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Marvin A. Sotoloff
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
<PAGE>
CERTIFICATE
The undersigned, being the duly elected, qualified and acting
President of Banyan Strategic Realty Trust, a Massachusetts business trust
("BSRT"), and as President having authority to certify as true and correct
resolutions of the board of trustees of BSRT (the "Trustees"), does hereby
certify that at a meeting of the Trustees held November 17, 1997, the
Trustees adopted and approved the amendments to the Amended and Restated
Declaration of Trust of BSRT reflected in the Second Amended and Restated
Declaration of Trust of BSRT, and that these amendments were approved by
BSRT's shareholders at the Annual Meeting of Shareholders held July
23,1998, as subsequently adjourned.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
August, 1998.
/s/ Leonard G. Levine
_________________________________
Leonard G. Levine
President
<PAGE>
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
of
SERIES A CONVERTIBLE PREFERRED SHARES
of
BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
BANYAN STRATEGIC REALTY TRUST, a Massachusetts business trust (the
"Trust"), hereby certifies that the following resolutions were adopted by
the Board of Trustees of the Trust pursuant to the authority of the Board
of Trustees.
RESOLVED, that pursuant to the authority granted to the Board of
Trustees in accordance with the provisions of the Trust's Second Amended
and Restated Declaration of Trust, the Board of Trustees hereby authorizes
a series of the Trust's previously authorized Preferred Shares, no par
value per share, and hereby states the designation and number of shares,
and fixes the relative rights, preferences, privileges and restrictions
thereof as follows:
1. DESIGNATION, RANK AND NUMBER OF SHARES. The preferred
shares created and authorized hereby shall be designated as the "Series A
Convertible Preferred Shares" ("Series A Convertible Preferred Shares").
The Series A Convertible Preferred Shares will rank, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, (i)
senior to Junior Securities, as they exist on the date hereof or as such
Junior Securities may be constituted from time to time; (ii) on a parity
with Parity Securities, as such Parity Securities may be constituted from
time to time; and (iii) junior to Senior Securities, as such Senior
Securities may be constituted from time to time. The number of Series A
Convertible Preferred Shares shall be 200,000. The Series A Convertible
Preferred Shares shall be issuable solely in whole shares that shall
entitle the holder thereof to exercise the voting rights, to participate in
the distributions and to have the benefit of all other rights of holders of
Series A Convertible Preferred Shares as set forth herein and in the
Declaration of Trust and under applicable law. The Series A Convertible
Preferred Shares shall, in addition to those provided by applicable law,
have the rights, preferences, privileges and terms set forth in this
Certificate of Designations.
.2 DEFINITIONS. Capitalized terms used herein have the
meanings assigned to them herein. The following terms, which are not
otherwise defined herein, when used herein have the meanings set forth
below:
"Board" means the Board of Trustees of the Trust.
"Change in Control" means any of the following: (i) the sale,
lease, conveyance or other disposition of all or substantially all of the
Trust's assets as an entirety or substantially as an entirety to
<PAGE>
any person or "group" (within the meaning of SECTION 13(d)(3) of the
Exchange Act) in one or a series of transactions, provided that a
transaction where the holders of Shares immediately prior to such
transaction own, directly or indirectly, 50% or more of the Shares of such
person or group immediately after such transactions shall not be a Change
in Control; (ii) the acquisition by the Trust and/or any of its
subsidiaries of 50% or more of the aggregate voting power of the Shares in
one transaction or a series of related transactions; (iii) the liquidation
or dissolution of the Trust, provided that a liquidation or dissolution of
the Trust which is part of a transaction or series of related transactions
that does not constitute a Change in Control under the "provided" clause of
clause (i) above shall not constitute a Change in Control under this clause
(iii); or (iv) any transaction or series of transactions (as a result of a
tender offer, merger, consolidation or otherwise) that results in, or that
is in connection with, (a) any person, including a "group" (within the
meaning of SECTION 13(d)(3) of the Exchange Act) that includes such person,
acquiring "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% or more of the aggregate
voting power of the Shares of the Trust or "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act), directly, of 50% or more of
the Shares outstanding, or (b) less than 50% (measured by either the
aggregate voting power or the right to participate in dividends,
distributions or liquidation of all classes) of the Trust's Shares being
registered under SECTION 12(b) or 12(g) of the Exchange Act.
"Change in Control Redemption Price" means 105% of the
Liquidation Preference.
"Conversion Rate" has the meaning specified in SECTION 8(a).
"Current Market Price" per share of beneficial interest (or
other security, as applicable) on any date shall be deemed to be the
average of the sale prices of a share of such beneficial interest (or other
security, as applicable) for the fifteen consecutive trading days
commencing twenty trading days before the earliest of the date in question
and the date before the "ex date" with respect to the issuance or
distribution requiring such computation. For the purposes of this
definition, the term "ex date," when used with respect to any issuance or
distribution, means the first date on which the share of beneficial
interest (or other security, as applicable) trades regular way on the
principal national securities exchange on which the share of beneficial
interest is listed or admitted to trading (or if not so listed or admitted,
on NASDAQ, or a similar organization if NASDAQ is no longer reporting
trading information) without the right to receive such issuance or
distribution.
"Default Period" has the meaning specified in SECTION 3(b)(1).
"Determination Date" means, with respect to any dividend or
other distribution, the date fixed for the determination of the holders of
shares of beneficial interest or other equity securities of the Trust
entitled to receive such dividend or distribution, or if a dividend or
distribution is paid or made without fixing such a date, the date of such
dividend or distribution.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder Redemption Date" has the meaning specified in
SECTION 6(c).
"Holder Redemption Price" has the meaning specified in SECTION
6(a).
"Implied Price" means the Stated Value divided by the
Conversion Rate.
"Issue Date" has the meaning specified in SECTION 4(a).
"Liquidation" means the date of the final distribution of the
assets of the Trust upon any liquidation, dissolution or winding up of the
Trust, whether voluntary or involuntary.
"Liquidation Preference" has the meaning specified in
SECTION 7.
"Junior Securities" means the Shares and the shares of any
other class or series of beneficial interest or other equity securities of
the Trust which (by the terms of the Declaration of Trust or of the
instrument by which the Board acting pursuant to authority granted in the
Declaration of Trust, shall fix the relative rights, preferences and
limitations thereof) shall be subordinated to the Series A Convertible
Preferred Shares in respect of the right to receive dividends and assets of
the Trust in Liquidation.
"Optional Conversion" has the meaning specified in SECTION
8(a).
"Notice of Change in Control" shall state (i) that a Change in
Control has occurred, and that the holder may exercise its right to
optional redemption ("Change in Control Redemption Right"), (ii) the
expiration of such Change in Control Redemption Right (iii) the Change in
Control Redemption Price, and (iv) a description of the procedure which a
holder must follow to exercise its Change in Control Redemption Right.
"Parity Securities" means the shares of any class or series of
beneficial interest or other equity securities of the Trust which (by the
terms of the Declaration of Trust or of the instrument by which the Board,
acting pursuant to authority granted in the Declaration of Trust, shall fix
the relative rights, preferences and limitations thereof) shall, in the
event that the amounts payable thereon in Liquidation are not paid in full,
be entitled to share ratably with the Series A Convertible Preferred Shares
in any distribution of assets other than by way of dividends in accordance
with the sums which would be payable in such distribution of assets if all
sums payable were discharged in full.
<PAGE>
"Redemption Date" has the meaning specified in SECTION 5(b).
"Redemption Default Period" has the meaning specified in
SECTION 6(d)(1).
"Redemption Price" means 100% of Liquidation Preference, as
required pursuant to SECTION 5 herein.
"Sale Price" has the meaning specified in SECTION 8(c)(4).
"Senior Securities" means the shares of any class or series of
beneficial interest or other equity securities of the Trust which (by the
terms of the Declaration of Trust or of the instrument by which the Board
acting pursuant to authority granted in the Declaration of Trust, shall fix
the relative rights, preferences and limitations thereof) shall be senior
to the Series A Convertible Preferred Shares in respect of the right to
receive dividends and assets of the Trust in Liquidation.
"Series A Convertible Preferred Shares" has the meaning
specified in SECTION 1.
"Stated Value" means the per share value of Series A
Convertible Preferred Shares, which shall be initially established at One
Hundred Dollars ($100.00) per share.
"Trust" means Banyan Strategic Realty Trust, a Massachusetts
business trust.
"Voting Parity Securities" has the meaning specified in
SECTION 3(b)(1).
3. VOTING RIGHTS.
(a) Voting Power. The holders of Series A Convertible
Preferred Shares shall have the right to vote together with the holders of
Shares as a single class in any and all matters with respect to which
holders of Shares have voting or consent rights. Each Series A Convertible
Preferred Share shall be entitled to cast such number of votes as are equal
to the number of votes which could be cast by the number of Shares into
which such Series A Convertible Preferred Share is then convertible;
provided, however, that any fraction of a vote attributable to the
aggregate number of votes entitled to be cast by a shareholder as a result
of computing votes from the voting conversion calculation shall be
disregarded for voting purposes. The Conversion Rate to be used in
connection with the foregoing shall be the Conversion Rate in effect on the
date fixed for the determination of holders of Shares entitled to vote on
such matter. The holders of the Series A Convertible Preferred Shares and
the holders of Shares shall vote as one class except as otherwise provided
by law or this Declaration of Trust.
(b) Votes on Default.
(1) In the event that any accrued dividends (whether or
not declared) on the Series A Convertible Preferred Shares shall not have
been paid when required by SECTION 4, in addition to their other rights,
holders of Series A Convertible Preferred Shares shall be entitled to vote
<PAGE>
their Series A Convertible Preferred Shares, together with the holders of
any Parity Securities upon which like voting rights have been conferred and
are exercisable (the "Voting Parity Securities"), in accordance with the
procedures set forth below, (i) immediately to elect, as a class, two
trustees to the Board of Trustees, and, (ii) if, on the first anniversary
after the election (the "Initial Election") of such trustees, any accrued
dividends (whether or not declared) on the Series A Convertible Preferred
Shares shall not have been paid, to elect one additional trustee, and (iii)
if, on each succeeding anniversary of the Initial Election any accrued
dividends (whether or not declared) on the Series A Preferred Shares shall
not have been paid, to elect one additional trustee. So long as any Series
A Convertible Preferred Shares shall be outstanding, the holders of Series
A Convertible Preferred Shares shall retain the right to vote and elect,
with the holders of such Voting Parity Securities, as a class, the trustees
permitted by the preceding sentence until all accrued but unpaid dividends
on the Series A Convertible Preferred Shares are paid in full or declared
and set aside for payment. The period during which holders of Series A
Convertible Preferred Shares retain such right is referred to as a "Default
Period."
(2) So long as any Series A Convertible Preferred
Shares shall be outstanding, during any Default Period, the voting right
described in SUBSECTION (1) above may be exercised initially at a special
meeting called pursuant to SUBSECTION (3) below or at any annual meeting of
shareholders. The absence of a quorum of holders of Shares (or any class
thereof) shall not affect the exercise of such voting rights by the holders
of Series A Convertible Preferred Shares and Voting Parity Securities.
Holders of Series A Convertible Preferred Shares and Voting Parity
Securities shall be entitled, as among the class of holders of Series A
Convertible Preferred Shares and Voting Parity Securities, to one vote for
each $100 of Liquidation Preference represented by the shares so held.
(3) Unless the holders of Series A Convertible
Preferred Shares and Voting Parity Securities, if any are then outstanding,
have, during an existing Default Period, previously exercised their right
to elect trustees, the Board may, and upon the request of the holders of
record of not less than 10% of the aggregate Liquidation Preference of
Series A Convertible Preferred Shares, the Board shall, order the calling
of a special meeting of holders of Series A Convertible Preferred Shares
and Voting Parity Securities, if any are then outstanding, which meeting
shall thereupon be called by the President, a Vice President or the
Secretary of the Trust. Notice of such meeting and of any annual meeting
at which holders of Series A Convertible Preferred Shares and Voting Parity
Securities are entitled to vote pursuant to this SUBSECTION (3) shall be
given to each holder of record of Series A Convertible Preferred Shares by
mailing a copy of such notice to such holder at such holder's last address
as it appears on the books of the Trust. Such meeting shall be called for
a date not later than 90 days after such order or request, or, in default
of the calling of such meeting within 90 days after such order or request,
such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than 10% of the aggregate
Liquidation Preference of the Series A Convertible Preferred Shares.
Notwithstanding the provisions of this SUBSECTION (3), the Trust shall not
be required to call such a special meeting if such request is received less
than 120 days before the date fixed for the next ensuing annual meeting of
shareholders of the Trust, at which meeting such trusteeships shall be
filled by vote of the holders of Series A Convertible Preferred Shares and
Voting Parity Securities.
<PAGE>
(4) During any Default Period, the holders of Shares,
and other classes of beneficial interest or other equity securities of the
Trust, if applicable, shall continue to be entitled to elect all of the
trustees unless and until the holders of Series A Convertible Preferred
Shares and Voting Parity Securities shall have exercised their right to
elect trustees voting as a class. After the exercise of this right (i) the
trustees so elected by the holders of Series A Convertible Preferred Shares
and Voting Parity Securities shall continue in office until the earlier of
(A) such time as their successors shall have been elected by such holders
and (B) the expiration of the Default Period, and (ii) any vacancy in the
Board with respect to a trusteeship to be elected pursuant to this Section
by the holders of Series A Convertible Preferred Shares and Voting Parity
Securities may be filled by vote of the remaining trustee(s) previously
elected by such holders. References in this SUBSECTION (b) to trustees
elected by the holders of a particular class of beneficial interest or
other equity security shall include trustees elected by such trustees to
fill vacancies as provided in clause (ii) of the foregoing sentence.
(5) Immediately upon the expiration of a Default
Period, (i) the right of the holders of Series A Convertible Preferred
Shares to elect trustees pursuant to this SECTION 3(b) shall cease, (ii)
the term of any trustees elected by the holders of Series A Convertible
Preferred Shares and Voting Parity Securities pursuant to this Section
shall terminate, and (iii) the number of trustees shall be such number as
may be provided for in the Declaration of Trust or bylaws irrespective of
any increase made pursuant to SUBSECTION (1) of this SECTION 3(b) (such
number being subject, however, to subsequent change in any manner provided
by law or in the Declaration of Trust or bylaws).
(c) ISSUANCE OF PARITY AND SENIOR SECURITIES. So long as any
Series A Convertible Preferred Shares are outstanding, the vote or consent
of the holders of 66-2/3% of the outstanding Series A Convertible Preferred
Shares, voting together as a single class, shall be necessary to authorize
or issue any additional class or series of Parity Securities or Senior
Securities, or any security convertible into Parity Securities or Senior
Securities, or to issue (except in replacement or exchange of outstanding
shares) any share of Series A Convertible Preferred Shares other than upon
conversion of the notes issued pursuant to the Convertible Term Loan
Agreement dated as of October 10, 1997 between the Trust and the Lenders
named therein.
(d) AMENDMENTS TO DECLARATION OF TRUST. So long as any
Series A Convertible Preferred Shares are outstanding, in addition to any
vote or consent that may be otherwise required by law or this Declaration
of Trust, the vote or consent of the holders of a majority of the Series A
Convertible Preferred Shares outstanding shall be required to amend, alter
or repeal any provision of this Declaration of Trust so as to affect
adversely the rights, preferences, powers or privileges of the Series A
Convertible Preferred Shares.
4. DIVIDENDS. (a) The holders of Series A Convertible
Preferred Shares shall be entitled to receive, when, as and if declared by
<PAGE>
the Board, out of funds legally available therefor, cash dividends,
accruing from the date of issuance, at the annual rate of 10% per annum on
the Stated Value of the Series A Convertible Preferred Shares, and no more,
payable, when, as and if declared by the Board, quarterly on March 31, June
30, September 30 and December 31 of each year (each quarterly period ending
on any such date being hereinafter referred to as a "dividend period"), at
such annual rate. Each dividend will be payable to holders of record as
they appear on the stock books of the Trust on such record dates, not
exceeding 45 days preceding the payment dates thereof, as shall be fixed by
the Board of the Trust. The date of initial issuance of a share of Series
A Convertible Preferred Shares is hereinafter referred to as the "Issue
Date" of such share. Dividends payable on the Series A Convertible
Preferred Shares (i) for any period other than a full dividend period,
shall be computed on the basis of a 360-day year consisting of twelve 30-
day months and (ii) for each full dividend period, shall be computed by
dividing the annual dividend rate by four.
(b) Dividends on Series A Convertible Preferred Shares shall
be cumulative from the Issue Date whether or not there shall be funds
legally available for the payment thereof. If there shall be outstanding
shares -of any other series of Preferred Shares ranking on a parity with
the Series A Convertible Preferred Shares as to dividends, no full
dividends shall be declared or paid or set apart for payment on any such
other series for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series A
Convertible Preferred Shares for all dividend periods terminating on or
prior to the date of payment of such dividends. If dividends on the Series
A Convertible Preferred Shares and on any other series of Preferred Shares
ranking on a parity as to dividends with the Series A Convertible Preferred
Shares are in arrears, in making any dividend payment on account of such
arrears, the Trust shall make payments ratably upon all outstanding shares
of the Series A Convertible Preferred Shares and shares of such other
series of Preferred Shares in proportion to the respective amounts of
dividends in arrears on-the Series A Convertible Preferred Shares and on
such other series of Preferred Shares to the date of such dividend payment.
During a Default Period, the holders of the Series A Convertible Preferred
Shares shall be entitled to receive dividends at an annual rate of 11% per
annum. No further interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments which may be in
arrears.
(c) Unless full cumulative dividends on all outstanding
Series A Convertible Preferred Shares shall have been paid or declared and
set aside for payment for all past dividend periods and the Trust is not in
default or in arrears in respect to the optional redemption of any Series A
Convertible Preferred Shares, no dividend shall be declared upon the Junior
Securities, nor shall the Trust make any payment on account of, or set
apart money for, the purchase, redemption or other retirement of, or for a
sinking or other analogous fund for any shares of Junior Securities or make
any distribution in respect thereof, whether in cash or property or in
obligations or shares of beneficial interest or other equity security of
the Trust, other than distributions of Junior Securities which is neither
convertible into, nor exchangeable or exercisable for, any securities of
the Trust other than Junior Securities.
<PAGE>
5. REDEMPTION AT THE OPTION OF THE TRUST.
(a) At any time, or from time to time, from and after three
years after their Issue Date, the Series A Convertible Preferred Shares
issued on such Issue Date shall be redeemable, in whole or in part, at the
option of the Trust, upon the giving of notice as provided in SECTION 5(b)
hereof, at the Redemption Price plus accrued and unpaid dividends to and
including the Redemption Date, without interest.
(b) At least 30 days, but not more than 60 days, prior to the
date fixed for the redemption of Series A Convertible Preferred Shares
pursuant to SECTION 5(a) hereof (the "Redemption Date"), written notice of
such redemption shall be mailed to each holder of record of Series A
Convertible Preferred Shares to be redeemed in a postage prepaid envelope
sent by first class mail and addressed to such holders at their last
addresses as they shall appear on the stock register of the Trust.
Each such notice shall state:
(i) the Redemption Date;
(ii) the number of Series A Convertible Preferred Shares
to be redeemed and, if less than all of the Series A Convertible Preferred
Shares held by such holder are to be redeemed from such holder, the number
of Series A Convertible Preferred Shares to be redeemed from such holder
and the method used to calculate such number;
(iii)the Redemption Price and the amount of any accrued
but unpaid dividends to and including the Redemption Date; and
(iv) the place or places where certificates for such
Series A Convertible Preferred Shares are to be surrendered for payment of
the Redemption Price.
On or after the Redemption Date, each holder of Series A
Convertible Preferred Shares to be redeemed shall present and surrender its
certificate or certificates for such Series A Convertible Preferred Shares
to the Trust at the place designated in such notice, and thereupon, the
Redemption Price (together with any accrued by unpaid dividends to and
including the Redemption Date) for such Series A Convertible Preferred
Shares shall be paid to or on the order of the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled. In the event that fewer than all of the
Series A Convertible Preferred Shares represented by such certificate shall
be redeemed, a new certificate shall be issued to the person whose name
appears on such certificate representing the unredeemed Series A
Convertible Preferred Shares. The issuance of such new certificates shall
be made without charge to the holder for any tax or withholding imposed in
respect of the issuance thereof, other than any tax which may be payable
with respect to any transfer involved in the issue and delivery of any
certificate in a name other than that of the holder of the Series A
Convertible Preferred Shares being redeemed.
<PAGE>
(c) If following the making of the Redemption Notice
contemplated by SECTION 5(b), but on or before any Redemption Date, the
Trust deposits with any bank or trust company in New York, as a trust fund,
(1) a sum (including accrued and unpaid dividends) sufficient to redeem, on
the Redemption Date, the Series A Convertible Preferred Shares called for
redemption and (2) irrevocable instructions and authority to the bank or
trust company to give notice of redemption thereof (or to complete the
giving of the notice if already commenced) and to pay, on and after the
Redemption Date or prior thereto, the Redemption Price of the Series A
Convertible Preferred Shares to their respective holders upon the surrender
of their share certificates, then from and after the Redemption Date, the
shares so called shall be redeemed on, and dividends on those shares shall
cease to accrue after, the Redemption Date, the deposit shall constitute
full payment of the shares to their holders and from and after the
Redemption Date the shares shall no longer be outstanding and the holders
shall cease to be shareholders with respect to those shares and shall have
no rights with respect thereto except the right to receive from the bank or
trust company payment of the Redemption Price of the shares without
interest (upon the surrender of their certificates). Notwithstanding
anything in this SECTION 5(c) to the contrary, any rights of conversion
which may be provided under this SECTION 2 for those shares shall continue
until the Redemption Date. Any moneys so deposited on account of the
Redemption Price of Series A Convertible Preferred Shares that are
converted after the making of that deposit shall be repaid to the Trust
forthwith upon the conversion of such Series A Convertible Preferred
Shares. Any interest accrued on any funds so deposited shall be property
of, and paid to, the Trust. If the holders of Series A Convertible
Preferred Shares so called for redemption shall not, at the end of two
years from the Redemption Date, have claimed any funds so deposited, the
bank or trust company shall pay over to the Trust the unclaimed funds, and
the bank or trust company shall thereafter be relieved of all
responsibility to those holders and those holders shall look only to the
Trust for payment of the Redemption Price.
(d) If fewer than all of the Series A Convertible Preferred
Shares are to be redeemed, the Board of Trustees of the Trust shall
allocate the aggregate number of shares to be redeemed pro rata (or as
nearly pro rata as practicable) or by lot.
6. REDEMPTION AT THE OPTION OF THE HOLDER.
(a) At any time, or from time to time, three years after the
Issue Date of Series A Convertible Preferred Shares, the Series A
Convertible Preferred Shares issued on such Issue Date shall be redeemable,
in whole or in part, at the option of the Holder, upon the giving of notice
as provided in SECTION 6(c) hereof, at a per share price equal to 100% of
the Stated Value (the "Holder Redemption Price") plus accrued and unpaid
dividends to and including the Holder Redemption Date, without interest.
(b) If there occurs a Change in Control with respect to the
Trust, then each share of Series A Convertible Preferred Shares may be
redeemed, at the option of the holder thereof at any time from the date of
such Change in Control until the expiration of 90 days after the date of
the Notice of Change in Control has been received by such holder of Series
A Convertible Preferred Shares, at the Change in Control Redemption Price.
<PAGE>
(c) At least 5 days prior to the date of the Holder's
exercise of its option to have Series A Convertible Preferred Shares
redeemed pursuant to SECTION 6(a) hereof (the "Holder Redemption Date"),
written notice of such exercise of its option, stating the number of shares
to be redeemed and the Holder Redemption Date, shall be mailed to the Trust
(the "Holder Redemption Notice").
On or after the Holder Redemption Date, each holder of Series A
Convertible Preferred Shares to be redeemed shall present and surrender its
certificate or certificates for such Series A Convertible Preferred Shares
to the Trust at a place designated by the Trust, and thereupon, the Holder
Redemption Price (together with any accrued by unpaid dividends to and
including the Holder Redemption Date) for such Series A Convertible
Preferred Shares shall be paid to or on the order of the person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled. In the event that fewer than
all of the Series A Convertible Preferred Shares represented by such
certificate shall be redeemed, a new certificate shall be issued to the
person whose name appears on such certificate representing the unredeemed
Series A Convertible Preferred Shares. The issuance of such new
certificates shall be made without charge to the holder for any tax or
withholding imposed in respect of the issuance thereof; provided that the
Trust shall not be required to pay any tax which may be payable with
respect to any transfer involved in the issue and delivery of any
certificate in a name other than that of the holder of the Series A
Convertible Preferred Shares being redeemed.
(d) If following the making of the Holder Redemption Notice
contemplated by SECTION 6(c), but on or before any Holder Redemption Date,
the Trust deposits with any bank or trust company in New York, as a trust
fund, (1) a sum (including accrued and unpaid dividends) sufficient to
redeem, on the Holder Redemption Date, the Series A Convertible Preferred
Shares selected for redemption and (2) irrevocable instructions and
authority to the bank or trust company to pay, on and after the Holder
Redemption Date or prior thereto, the Holder Redemption Price of the Series
A Convertible Preferred Shares to their respective holders upon the
surrender of their share certificates, then within 90 days after the Holder
Redemption Date, the shares so identified in the Holder Redemption Notice
as shares to be redeemed shall be redeemed on the date the respective share
certificates for such shares have been surrendered, or upon receipt of
sufficient evidence as to lost, mutilated or destroyed share certificates,
and dividends on those shares shall cease to accrue after, the Holder
Redemption Date. Any shares identified in the Holder Redemption Notice to
be redeemed, whose respective share certificates, or requisite evidence of
loss, mutilation or destruction, have not been surrendered within 90 days
of the Holder Redemption Date, shall not be redeemed, and the Holder
Redemption Notice relating to such unredeemed shares shall be deemed
cancelled, and such shares shall remain, and be deemed to have been,
outstanding. The deposit shall constitute full payment of the shares to
their holders and from and after the Holder Redemption Date the shares
shall no longer be outstanding and the holders shall cease to be
shareholders with respect to those shares and shall have no rights with
respect thereto except the right to receive from the bank or trust company
payment of the Holder Redemption Price of the shares without interest (upon
the surrender of their certificates). Notwithstanding anything in this
SECTION 6(d) to the contrary, any rights of conversion which may be
provided in this SECTION 2 for those shares shall continue until the Holder
<PAGE>
Redemption Date. Any moneys so deposited on account of the Holder
Redemption Price of Series A Convertible Preferred Shares that are
converted after the making of that deposit shall be repaid to the Trust
forthwith upon the conversion of such Series A Convertible Preferred
Shares. Any interest accrued on any funds so deposited shall be property
of, and paid to, the Trust. If the holders of Series A Convertible
Preferred Shares so selected for redemption shall not, at the end of two
years from the Holder Redemption Date, have claimed any funds so deposited,
the bank or trust company shall pay over to the Trust the unclaimed funds,
and the bank or trust company shall thereafter be relieved of all
responsibility to those holders and those holders shall look only to the
Trust for payment of the Holder Redemption Price.
(e) Votes on Redemption Default.
(1) In the event that the Trust fails to redeem any
share of Series A Convertible Preferred Shares selected for redemption by
the holder thereof pursuant to Section 6(a) or 6(b) above in the manner set
forth in 6(c) and 6(d) above (the "Selected Shares"), then holders of
Series A Convertible Preferred Shares shall be entitled to vote their
Series A Convertible Preferred Shares, together with the holders of any
Voting Parity Securities, in accordance with the procedures set forth
below, (i) immediately to elect, as a class, two trustees to the Board of
Trustees, and, (ii) if, on the first anniversary after the election (the
"Redemption Initial Election") of such trustees, any Selected Shares have
yet to be redeemed, to elect as a class the one additional trustee, and
(iii) if on each succeeding anniversary of the Redemption Initial Election,
any Selected Shares have yet to be redeemed, to elect one additional
trustee. So long as any Selected Shares are outstanding, the holders of
Series A Convertible Preferred Shares shall retain the right to vote and
elect, with the holders of such Voting Parity Securities, as a class, the
trustees permitted by the preceding sentence, until all Selected Shares
have been redeemed by the Trust. The period during which holders of Series
A Convertible Preferred Shares retain such right is referred to as a
"Redemption Default Period."
(2) So long as any Selected Shares are outstanding,
during any Redemption Default Period, the voting right described in
SUBSECTION (1) above may be exercised initially at a special meeting called
pursuant to SUBSECTION (3) below or at any annual meeting of shareholders.
The absence of a quorum of holders of Shares (or any class thereof) shall
not affect the exercise of such voting rights by the holders of Series A
Convertible Preferred Shares and Voting Parity Securities. Holders of
Series A Convertible Preferred Shares and Voting Parity Securities shall be
entitled, as among the class of holders of Series A Convertible Preferred
Shares and Voting Parity Securities, to one vote for each $100 of
Liquidation Preference represented by the shares so held.
(3) Unless the holders of Series A Convertible
Preferred Shares and Voting Parity Securities, if any are then outstanding,
have, during an existing Redemption Default Period, previously exercised
their right to elect trustees, the Board may, and upon the request of the
<PAGE>
holders of record of not less than 10% of the aggregate liquidation
preference of Series A Convertible Preferred Shares and Voting Parity
Securities, the Board shall, order the calling of a special meeting of
holders of Series A Convertible Preferred Shares and Voting Parity
Securities, if any Series A Convertible Preferred Shares are then
outstanding, which meeting shall thereupon be called by the President, a
Vice President or the Secretary of the Trust. Notice of such meeting and
of any annual meeting at which holders of Series A Convertible Preferred
Shares and Voting Parity Securities are entitled to vote pursuant to this
SUBSECTION (3) shall be given to each holder of record of Series A
Convertible Preferred Shares by mailing a copy of such notice to such
holder at such holder's last address as it appears on the books of the
Trust. Such meeting shall be called for a date not later than 90 days
after such order or request, or, in default of the calling of such meeting
within 90 days after such order or request, such meeting may be called on
similar notice by any shareholder or shareholders owning in the aggregate
not less than 10% of the aggregate liquidation preference of the Series A
Convertible Preferred Shares and Voting Parity Securities. Notwithstanding
the provisions of this SUBSECTION (3), the Trust shall not be required to
call such a special meeting if such request is received less than 120 days
before the date fixed for the next ensuing annual meeting of shareholders
of the Trust, at which meeting such trusteeships shall be filled by vote of
the holders of Series A Convertible Preferred Shares and Voting Parity
Securities.
(4) During any Redemption Default Period, the holders
of Shares, and other classes of beneficial interest or other equity
securities of the Trust, if applicable, shall continue to be entitled to
elect all of the trustees unless and until the holders of Series A
Convertible Preferred Shares and Voting Parity Securities shall have
exercised their right to elect trustees voting as a class. After the
exercise of this right (i) the trustees so elected by the holders of Series
A Convertible Preferred Shares and Voting Parity Securities shall continue
in office until the earlier of (A) such time as their successors shall have
been elected by such holders and (B) the expiration of the Redemption
Default Period, and (ii) any vacancy in the Board with respect to a
trusteeship to be elected pursuant to this Section by the holders of Series
A Convertible Preferred Shares and Voting Parity Securities may be filled
by vote of the remaining trustee(s) previously elected by such holders.
References in this SUBSECTION (c) to trustees elected by the holders of a
particular class of shares of beneficial interest or other equity
securities shall include trustees elected by such trustees to fill
vacancies as provided in clause (ii) of the foregoing sentence.
(5) Immediately upon the expiration of a Redemption
Default Period, (i) the right of the holders of Series A Convertible
Preferred Shares to elect trustees pursuant to this Section shall cease,
(ii) the term of any trustees elected by the holders of Series A
Convertible Preferred Shares and Voting Parity Securities pursuant to this
Section shall terminate, and (iii) the number of trustees shall be such
number as may be provided for in the Declaration of Trust or bylaws
irrespective of any increase made pursuant to SUBSECTION (1) of this
SECTION 6(e) (such number being subject, however, to subsequent change in
any manner provided by law or in the Declaration of Trust or bylaws).
7. PRIORITY OF SERIES A CONVERTIBLE PREFERRED SHARES IN
EVENT OF LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any
Liquidation, after payment or provision for payment of the debts and other
<PAGE>
liabilities of the Trust, and after payment or provision for payment to
holders of Senior Securities (provided that the issuance of such Senior
Securities was duly approved by the holders of Series A Convertible
Preferred Shares in accordance with the provision of SECTION 3(c) herein),
the holders of Series A Convertible Preferred Shares shall be entitled to
receive, out of the remaining net assets of the Trust, the amount of One
Hundred dollars ($100.00) plus accrued and unpaid dividends (the
"Liquidation Preference") in cash for each share of Series A Convertible
Preferred Shares, before any payment shall be made or any assets
distributed to the holders of the Shares or any other Junior Securities
upon such Liquidation. If upon any Liquidation the amounts payable with
respect to the Liquidation Preference of Series A Convertible Preferred
Shares and any Parity Securities are not paid in full, the holders of
Series A Convertible Preferred Shares and of the Parity Securities will
share pro rata in the amounts payable and other property distributable with
respect to such Liquidation so that the per share amounts to which holders
of Series A Convertible Preferred Shares and the Parity Securities are
entitled will in all cases bear to each other the same ratio that the
Liquidation Preferences of the Series A Convertible Preferred Shares and
the liquidation preference of the Parity Securities bear to each other.
Except as otherwise provided in this SECTION 7, holders of Series A
Convertible Preferred Shares shall not be entitled to any distribution in
the event of Liquidation. Neither a consolidation, merger or other
business combination of the Trust with or into another corporation or other
entity, nor a sale or transfer of all or part of the Trust's assets for
cash, securities or other property shall constitute a Liquidation for
purposes of this SECTION 7. With regard to rights to receive distributions
upon Liquidation, the Series A Convertible Preferred Shares shall rank
prior to any other equity securities of the Trust, including the Shares of
the Trust except with respect to Senior Securities and Parity Securities.
8. CONVERSION.
(a) OPTIONAL CONVERSION. Each share of Series A Convertible
Preferred Shares is convertible, at any time or from time to time prior to
the close of business on the Redemption Date, in whole or in part, at the
option of the holders thereof ("Optional Conversion"), into duly and
validly issued, fully paid and nonassessable Shares at a rate of 19.4174
Shares for each share of Series A Convertible Preferred Shares, subject to
adjustment as set forth below (such rate, as adjusted from time to time,
being the "Conversion Rate"). If sufficient funds for redemption have been
deposited as contemplated by SUBSECTIONS 5(a) or 6(a), the right of
conversion of any Series A Convertible Preferred Shares called for
redemption will terminate at the close of business on the Redemption Date
or Holder Redemption Date, as applicable, with respect to such Series A
Convertible Preferred Shares.
Optional Conversion of Series A Convertible Preferred Shares
may be effected by delivering the certificates evidencing such Series A
Convertible Preferred Shares, together with written notice of conversion
and proper assignment of such certificates to the Trust or in blank, to the
office maintained by the Trust for that purpose. Each Optional Conversion
shall be deemed to have been effected immediately prior to the close of
business on the date on which the foregoing requirements shall have been
satisfied and the person or persons entitled to receive the Shares
deliverable upon conversion of the Series A Convertible Preferred Shares
shall be treated for all purposes as the record holder or holders of such
<PAGE>
Shares at such time on such date. The Optional Conversion shall be at the
Conversion Rate in effect at such time on such date.
(b) ISSUANCE OF SHARE CERTIFICATES. Upon any conversion
described in SECTION 8(a) above, the Trust shall, as soon as practicable
after the surrender for conversion of certificates evidencing Series A
Convertible Preferred Shares and compliance with any other required
conditions, deliver to the person for whom such Series A Convertible
Preferred Shares are so surrendered, or to the nominee or nominees of such
person, certificates evidencing the number of full Shares to which such
person shall be entitled, together with a cash payment in respect of any
fraction of a Share as hereinafter provided.
(c) ADJUSTMENT. From and after October 10, 1997, the
Conversion Rate is subject to adjustment from time to time as provided
below in this SECTION 8(c).
(1) If the Trust shall fix a Determination Date with
respect to the payment of, or the making of, a dividend or other
distribution with respect to its Shares in Shares (including by way of
reclassification of any of its Shares), the Conversion Rate in effect at
the opening of business on the day following the Determination Date shall
be increased by multiplying the Conversion Rate in effect at the closing of
business on the Determination Date by a fraction, the numerator of which
shall be the sum of the number of Shares outstanding at the close of
business on the Determination Date, excluding the effect of such dividend
or distribution, plus the total number of Shares constituting such dividend
or other distribution, and the denominator of which shall be the number of
Shares outstanding at the close of business on the Determination Date,
excluding the effect of such dividend or distribution, such increase to
become effective at the opening of business on the day following the
Determination Date. For the purposes of this clause (1), the number of
Shares at any time outstanding shall not include -shares held in the
treasury of the Trust and the number of shares constituting such dividend
()r other distribution shall include, if applicable, shares represented by
cash issued in lieu of fractional Shares.
(2) If outstanding Shares shall be subdivided or split
into a greater number of Shares, the Conversion Rate in effect at the
opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased,
and, conversely, in case outstanding Shares shall be combined into a lesser
number of Shares, the Conversion Rate in effect at the opening of business
on the day following the day upon which such combination becomes effective
shall be proportionately reduced, such increase or reduction, as the case
may be, to become effective at the opening of business on the day following
the day upon which such subdivision or split or combination becomes
effective.
(3) If the Trust shall distribute to holders of Shares
evidences of indebtedness, equity securities other than Shares (including,
without limitation, equity interests in the Trust's subsidiaries) or other
assets (other than regular cash dividends), or shall distribute to holders
of Shares rights, options or warrants to subscribe to securities, then in
each such case the Conversion Rate shall be adjusted so that it shall equal
<PAGE>
the rate determined by multiplying the Conversion Rate in effect
immediately prior to the date of such distribution by a fraction of which
the numerator shall be the Current Market Price per Share on the record
date mentioned below, and of which the denominator shall be such Current
Market Price less the then fair market value of the evidences of
indebtedness, equity securities and assets so distributed, or of such
subscription rights, warrants or options, applicable to one Share. For the
purposes of this SUBSECTION (3), in the event of a distribution of shares
of capital stock or other securities of any subsidiary of the Trust as a
dividend on Shares, the "then fair market value" of the shares or other
securities so distributed shall be the greater of (X) the value of such
shares or other securities on the record date mentioned below as determined
by an independent appraiser of national repute appointed in good faith, by
the Board of Trustees, and (y) the Current Market Price of the shares or
other securities so distributed as of a date 20 days following the
distribution date thereof Such adjustment shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such distribution.
(4) If the Trust shall sell, transfer, or otherwise
convey Shares at a gross price per share (the "Sale Price") less than the
Implied Price (or, if previously adjusted pursuant to this SUBSECTION (4),
at a price per share less than the lowest of all the preceding Sale Prices)
per Share, then in such case the Conversion Rate shall be adjusted so, that
it shall equal the rate determined by dividing the Stated Value per Series
A Convertible Preferred Share in effect immediately prior to the date of
such conveyance by the Sale Price. Notwithstanding the foregoing, the
Trust shall not, issue, sell, transfer, or otherwise convey Shares at less
than their fair market value as determined in the reasonable good faith
judgment of the Board of Trustees (which fair market value, under all the
circumstances relevant, might not be equivalent to the Current Market
Price).
(5) All adjustments to the Conversion Rate will be
calculated to the nearest 1/100th of a Share. No adjustment in the
Conversion Rate will be required unless such adjustment would require an
increase or decrease of at least one percent in the Conversion Rate;
PROVIDED, however, that any adjustments which by reason of this SECTION
8(c)(5) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All adjustments to the Conversion
Rate shall be made successively.
(d) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
If there shall occur any capital reorganization or any reclassification of
the beneficial interest or other equity securities of the Trust,
consolidation, merger or other business combination of the Trust with or
into another corporation or other entity, or the conveyance of all or
substantially all of the assets of the Trust to another corporation or
other entity, each share of Series A Convertible Preferred Shares shall
thereafter be convertible into the number of shares or other securities or
property to which a holder of the number of Shares deliverable upon
conversion of each share of Series A Convertible Preferred Shares would
have been entitled upon such reorganization, reclassification,
consolidation, merger or conveyance. In any such case, appropriate
adjustment (as determined by the Board) shall be made in the application of
the provisions hereof with respect to the rights of the holders of Series A
Convertible Preferred Shares such that the provisions hereof (including,
without limitation, provisions with respect to changes in and other
adjustments of the Conversion Rate) shall thereafter be applicable, as
nearly as reasonably practicable, in relation to any shares or other
property thereafter deliverable upon the conversion of the Series A
Convertible Preferred Shares.
<PAGE>
(e) COMPUTATION AND NOTIFICATION OF ADJUSTMENT. Whenever the
Conversion Rate is (or in the case of clause (3) below, will be) adjusted
as provided in SECTION 8, the Trust shall:
(1) forthwith compute the adjusted Conversion Rate in
accordance with this SECTION 8 and prepare a certificate signed and
verified by the Chairman of the Board, the President or a Vice President of
the Trust and by the Chief Financial Officer, the Treasurer or an Assistant
Treasurer of the Trust setting forth the adjusted Conversion Rate, the
method of calculation thereof in reasonable detail and the facts requiring
such adjustment and upon which such adjustment is based, and shall maintain
such certificate at its principal executive office; and
(2) mail a notice stating that the Conversion Rate has
been adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted Conversion Rate, to the
holders of record of the outstanding Series A Convertible Preferred Shares
at their last addresses as they shall appear on the stock register of the
Trust, as soon as practicable after such adjustment has been made.
(3) at least twenty (20) days prior to the record date
therefor, mail a notice to each holder of Series A Convertible Preferred
Shares stating, if applicable, (a) the date as of which the holders of
record of Shares to be entitled to a dividend, distribution, split, right,
option or warrant are to be determined and a reasonably detailed
description of such dividend, distribution, split, right, option or
warrant, or (b) the date on which a reorganization, reclassification,
consolidation, merger, sale, lease, transfer, liquidation, dissolution or
winding-up is expected to become effective, and the date as of which it is
expected that holders of record of Shares shall be entitled to exchange
their shares for securities or other property, if any, deliverable upon
such reorganization, reclassification, consolidation, merger, sale, lease,
transfer, liquidation, dissolution or winding-up.
9. NO FRACTIONAL SHARES. No fractional Shares shall be
issued upon the conversion of any Series A Convertible Preferred Shares.
Upon any such conversion, in lieu of any fractional Share otherwise
issuable in respect of the aggregate number of Series A Convertible
Preferred Shares of any holder that are converted, such holders shall be
entitled to receive an amount in cash (computed to the nearest cent, with
one-half cent rounded upward) equal to the same fraction of the current
value of one Share, such value to be conclusively determined by the Board
in its sole and absolute discretion. If more than one share of Series A
Convertible Preferred Shares shall be surrendered for conversion at one
time by or for the same holder, the number of full Shares issuable upon
conversion thereof shall be computed on the basis of the aggregate number
of Series A Convertible Preferred Shares so surrendered.
<PAGE>
10. RESERVATION OF SHARES. The Trust shall at all times
reserve and keep available out of its authorized and unissued Shares,
solely for issuance upon the conversion of Series A Convertible Preferred
Shares as herein provided, free from any preemptive rights, such number of
Shares as shall from time to time be sufficient to permit the conversion of
all the Series A Convertible Preferred Shares then outstanding.
11. STATUS OF REDEEMED OR CONVERTED SERIES A CONVERTIBLE
PREFERRED SHARES. So long as Series A Convertible Preferred Shares
redeemed by the Trust or converted into Shares will be restored to the
status of authorized but unissued Preferred Shares and may not thereafter
be issued as Series A Convertible Preferred Shares. Upon the redemption or
conversion of Series A Convertible Preferred Shares such that no Series A
Convertible Preferred Shares remain outstanding, all unissued Series A
Convertible Preferred Shares will be restored to the status of authorized
but unissued Preferred Shares without designation as to series and may not
thereafter be issued as Series A Convertible Preferred Shares.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this Certificate of
Designations as of the 20th day of August, 1998.
BANYAN STRATEGIC REALTY TRUST
By: /s/ Leonard G. Levine
_____________________
Name: Leonard G. Levine
Title: President
EXHIBIT (10) (vii)
- ------------------
FIRST AMENDMENT AGREEMENT
THIS FIRST AMENDMENT AGREEMENT ("Amendment") dated as of
September 11, 1998 is made between BSRT Fountain Square L.L.C, an Illinois
limited liability company ("Fountain"), BSRT Phoenix Business Park L.L.C,
an Illinois limited liability company ("Phoenix"), BSRT Newtown Trust, a
Massachusetts business trust ("Newtown"), BSRT Southlake L.L.C., an
Illinois limited liability company ("Southlake"), BSRT Technology Center
L.L.C., an Illinois limited liability company ("Technology"), BSRT Airways
Plaza L.L.C., an Illinois limited liability company ("Airways"), BSRT
Peachtree Pointe L.L.C. an Illinois limited liability company
("Peachtree"), and BSRT Avalon Center L.L.C., an Illinois limited liability
company ("Avalon Center"), BSRT Sand Lake Tech Center L.L.C., an Illinois
limited liability company ("Sand Lake"), BSRT Park Center L.L.C., an
Illinois limited liability company ("Park Center"), BSRT Metric Plaza
L.L.C., an Illinois limited liability company ("Metric") and BSRT
University Corporate Center L.L.C., an Illinois limited liability company
("University") (Fountain, Phoenix, Newtown, Southlake, Technology, Airways,
Peachtree, Avalon Center, Sand Lake, Park Center, Metric and University are
each referred to as an "Owner" and collectively, together with their
respective successors and assigns, referred to as "Borrower"), and THE
CAPITAL COMPANY OF AMERICA LLC, a limited liability company organized under
the laws of the State of Delaware (together with its permitted successors
and assigns, "Lender").
W I T N E S S E T H:
-------------------
WHEREAS, on May 22, 1998, Borrower and Nomura Asset Capital
Corporation, a Delaware corporation ("NACC") entered into a Loan Agreement
providing for a loan to Borrower in the amount of $34,812,360 (the "Loan
Agreement"); unless otherwise defined herein, all capitalized terms used
herein shall have the respective meanings set forth in Section 1 of the
Loan Agreement;
WHEREAS, on May 22, 1998, Borrower executed and delivered to Lender
that Renewal and Consolidation Note in the amount of $34,812,360 (the
"Note");
WHEREAS, NACC has assigned the Note and its rights under the Loan
Agreement to Lender;
WHEREAS, Lender and Borrower have agreed to amend the Loan Agreement
and the Note to provide for a different prepayment period applicable to the
Loan;
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Amendment, the parties
hereto hereby covenant, agree, represent and warrant as follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby
amended as follows:
<PAGE>
Section 1.1 Section 2.3.1 of the Loan Agreement is deleted in its
entirety and the following inserted in its place:
REPAYMENT. Borrower shall repay any outstanding principal
indebtedness of the Loan in full on the Maturity Date of the Loan, together
with interest thereon to (but excluding) the date of repayment. Other than
as set forth in Sections 2.3.2 and 2.3.3 below, Borrower shall have no
right to prepay all or any portion of the Loan during the period commencing
on the Closing Date to but not including that date which will be the third
Payment Date occurring before the Optional Prepayment Date. From and after
the third Payment Date occurring before the Optional Prepayment Date, the
Loan may be prepaid in whole or in part without penalty or premium.
Section 1.2 Section 2.7.3(b) of the Loan Agreement is hereby amended
by adding the following sentence to the end of Section 2.7.3(b):
In the event of a prepayment which is permitted under Section
2.3.1, Borrower shall pay any Early Prepayment Return-of-Amount which may
be applicable to such prepayment.
Section 1.3 Exhibit D to the Loan Agreement is hereby replaced by the
Exhibit D attached hereto as Schedule 1, which is substituted in lieu of
the original Exhibit D.
Section 1.4 Except as expressly modified by this Amendment, the Loan
Agreement is hereby ratified and confirmed by the parties as being in full
force and effect.
II. AMENDMENTS TO NOTE. The Note is hereby amended as follows:
Section 2.1 Section 6 of the Note is hereby deleted in its entirety
and the following material is substituted therefor:
This Note may not be prepaid prior to that scheduled
payment date which will be the third scheduled payment date prior to the
Optional Prepayment Date (except in connection with a Casualty/Condemnation
Prepayment under Section 2.3.2 of the Loan Agreement); provided, however,
Maker shall have the right and option to release the Mortgaged Property
from the lien of the Mortgages in accordance with the provisions set forth
in Section 2.3 of the Loan Agreement (the "Defeasance Option").
Notwithstanding the foregoing sentence, Maker shall have the privilege to
prepay the entire principal balance of this Note and any other amounts
outstanding on any scheduled payment date occurring on or after the
scheduled payment date which will be the third scheduled payment date
<PAGE>
prior to the Optional Prepayment Date without payment of the
Yield Maintenance Premium or any other premium or penalty. If prior to the
date which is the third scheduled payment date prior to the Optional
Prepayment Date and following the occurrence and during the continuance of
any Event of Default, Maker shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale of any Parcel, either through
foreclosure or the exercise of the other remedies available to Payee under
the Mortgages, such tender by Maker shall be deemed to be voluntary and
Maker shall pay, in addition to the Debt, the Yield Maintenance Premium, if
any, that would be required under the Defeasance Option, together with any
Return-of-Fee Amount which may be required under the Loan Agreement.
Section 2.2 Except as expressly modified by this Amendment, the Note
is hereby ratified and confirmed by the parties as being in full force and
effect.
III. MISCELLANEOUS.
Section 3.1 Headings. The Article and/or Section headings in this
Amendment are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose.
Section 3.2 Severability. Wherever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amendment.
Section 3.3 Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Amendment and the provisions of the
Loan Agreement or the Note, the provisions of this Amendment shall control.
The parties hereto acknowledge that they were represented by counsel in
connection with the negotiation and drafting of this Amendment and that
this Amendment shall not be subject to the principle of construing their
meaning against the party which drafted same.
Section 3.4 Successors; Counterparts. This Amendment shall inure to
the benefit of and be binding upon the parties and their respective heirs,
successors and assigns. This Amendment may be executed in two or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Amendment is
solely intended to and shall amend the Original Loan Agreement. Nothing in
this Amendment is intended to or shall impair any Lien which Lender ever
had, now has, or may hereafter have on any property of Borrower under the
Loan Documents including, without limitation, the collateral for the Loan.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
BORROWER
BSRT FOUNTAIN SQUARE L.L.C., an
Illinois limited liability company
By: BSRT PORTFOLIO CORP., an
Illinois corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT PHOENIX BUSINESS PARK L.L.C., an
Illinois limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT NEWTOWN TRUST, a Massachusetts
business trust
By: BSRT PORTFOLIO CORP., an
Illinois corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
<PAGE>
BSRT SOUTHLAKE L.L.C., an Illinois
limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT TECHNOLOGY CENTER L.L.C., an Illinois
limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT AIRWAYS PLAZA L.L.C., an Illinois
limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT PEACHTREE POINTE L.L.C., an Illinois
limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
<PAGE>
BSRT AVALON CENTER L.L.C., an Illinois
limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT SAND LAKE TECH CENTER L.L.C., an
Illinois limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT PARK CENTER L.L.C., an Illinois limited
liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
<PAGE>
BSRT METRIC PLAZA L.L.C., an Illinois limited
liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT UNIVERSITY CORPORATE CENTER L.L.C.,
an Illinois limited liability company
By: BSRT PORTFOLIO CORP., an Illinois
corporation
By: /s/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
THE CAPITAL COMPANY OF AMERICA LLC, a
Delaware limited liability company
By: /S/ ROBERT J. WALTER
----------------------------------------
Name: Robert J. Walter
Title: Director
<PAGE>
SCHEDULE 1
<PAGE>
EXHIBIT D
--------
THE PROPERTY AND THE ALLOCATED LOAN AMOUNTS
-------------------------------------------
ALLOCATED
PROPERTY NAME NOTE AMOUNTS LOAN AMOUNTS
Colonial Penn Insurance $5,064,381.00 $ 5,571,800
Phoenix Business Center 3,895,796.00 4,286,100
Sand Lake Center 3,522,232.00 3,875,100
Avalon Center 3,185,035.00 3,504,100
Peachtree Point 3,087,767.00 3,397,100
Southlake Corporate Center 2,864,074.00 3,151,000
Newtown Business Center 2,757,812.00 3,034,100
University CC III 1,882,326.00 2,070,900
University CC II 1,784,599.00 1,963,400
Airways Plaza 1,741,229.00 1,915,700
Technology Center 1,347,884.00 1,482,900
Park Center 1,268,353.00 1,395,400
University CC IV 814,577.00 896,200
Atrium 791,511.00 870,800
University CC 1 437,397.00 481,200
Metric Plaza 367,387.00 404,200
$34,812,360.00 $38,300,000
EXHIBIT (10) (viii)
- -------------------
FIRST AMENDMENT AGREEMENT
THIS FIRST AMENDMENT AGREEMENT ("Amendment") dated as of
September 11, 1998 is made between BSRT LEXINGTON B CORP., an Illinois
corporation ("Lexington B") and BSRT LEXINGTON TRUST, a Massachusetts
business trust ("Lexington Trust") (Lexington B and Lexington Trust,
together with their respective successors and assigns, are collectively
referred to as "Borrower"), and THE CAPITAL COMPANY OF AMERICA LLC, a
limited liability company organized under the laws of the State of Delaware
(together with its permitted successors and assigns, "Lender").
W I T N E S S E T H:
-------------------
WHEREAS, on May 22, 1998, Borrower and Nomura Asset Capital
Corporation, a Delaware corporation ("NACC") entered into a Loan Agreement
providing for a loan to Borrower in the amount of $7,700,000 (the "Loan
Agreement"); unless otherwise defined herein, all capitalized terms used
herein shall have the respective meanings set forth in Section 1 of the
Loan Agreement;
WHEREAS, ON May 22, 1998, Borrower executed and delivered to Lender
that Note in the amount of $7,700,000 (the "Note");
WHEREAS, NACC has assigned the Note and its rights under the Loan
Agreement to Lender;
WHEREAS, Lender and Borrower have agreed to amend the Loan Agreement
and the Note to provide for a different prepayment period applicable to the
Loan;
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Amendment, the parties
hereto hereby covenant, agree, represent and warrant as follows:
I. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby
amended as follows:
Section 1.1 As used in the Loan Agreement, the term "Stated Maturity
Date" shall mean June 11, 2029.
Section 1.2 Section 2.3.1 of the Loan Agreement is deleted in its
entirety and the following inserted in its place:
REPAYMENT. Borrower shall repay any outstanding principal
indebtedness of the Loan in full on the Maturity Date of the Loan, together
with interest thereon to (but excluding) the date of repayment. Other than
as set forth in Sections 2.3.2, 2.3.6 and 2.3.7 below, Borrower shall have
no right to prepay all or any portion of the Loan
<PAGE>
during the period commencing on the Closing Date to but not including
that date which will be the third Payment Date occurring before the
Optional Prepayment Date. From and after the third Payment Date occurring
before the Optional Prepayment Date, the Loan may be prepaid in whole or in
part without penalty or premium.
Section 1.3 Section 2.7.3(b) of the Loan Agreement is hereby amended
by adding the following sentence to the end of Section 2.7.3(b):
In the event of a prepayment which is permitted under Section
2.3.1, Borrower shall pay any Early Prepayment Return-of-Amount which may
be applicable to such prepayment.
Section 1.4 Except as expressly modified by this Amendment, the Loan
Agreement is hereby ratified and confirmed by the parties as being in full
force and effect.
II. AMENDMENTS TO NOTE. The Note is hereby amended as follows:
Section 2.1 As used in the Note, the term "Maturity Date" shall mean
June 11, 2029.
Section 2.2 Section 6 of the Note is hereby deleted in its entirety
and the following material is substituted therefor:
This Note may not be prepaid prior to that
scheduled payment date which will be the third scheduled payment date prior
to the Optional Prepayment Date (except in connection with a
Casualty/Condemnation Prepayment under Section 2.3.2 of the Loan
Agreement); provided, however, Maker shall have the right and option to
release the Mortgaged Property from the lien of the Mortgages in accordance
with the provisions set forth in Section 2.3 of the Loan Agreement (the
"Defeasance Option"). Notwithstanding the foregoing sentence, Maker shall
have the privilege to prepay the entire principal balance of this Note and
any other amounts outstanding on any scheduled payment date occurring on or
after the scheduled payment date which will be the third scheduled payment
date prior to the Optional Prepayment Date without payment of the Yield
Maintenance Premium or any other premium or penalty. If prior to the date
which is the third scheduled payment date prior to the Optional Prepayment
Date and following the occurrence and during the continuance of any Event
of Default, Maker shall tender payment of an amount sufficient to satisfy
the Debt at any time prior to a sale of any Parcel, either
<PAGE>
through foreclosure or the exercise of the other remedies
available to Payee under the Mortgages, such tender by Maker shall be
deemed to be voluntary and Maker shall pay, in addition to the Debt, the
Yield Maintenance Premium, if any, that would be required under the
Defeasance Option, together with any Return-of-Fee Amount which may be
required under the Loan Agreement.
Section 2.3 Except as expressly modified by this Amendment, the Note
is hereby ratified and expressly modified by this as being in full force
and effect.
III. MISCELLANEOUS.
Section 3.1 Headings. The Article and/or Section headings in this
Amendment are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose.
Section 3.2 Severability. Wherever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amendment.
Section 3.3 Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Amendment and the provisions of the
Loan Agreement, the provisions of this Amendment shall control. The
parties hereto acknowledge that they were represented by counsel in
connection with the negotiation and drafting of this Amendment and the
Amendment Documents and that such documents shall not be subject to the
principle of construing their meaning against the party which drafted same.
Section 3.4 Successors; Counterparts. This Amendment shall inure to
the benefit of and be binding upon the parties and their respective heirs,
successors and assigns. This Amendment may be executed in two or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Amendment is
solely intended to and shall amend the Original Loan Agreement. Nothing in
this Amendment is intended to or shall impair any Lien which Lender ever
had, now has, or may hereafter have on any property of Borrower under the
Loan Documents including, without limitation, the collateral for the Loan.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
BORROWER
BSRT LEXINGTON B CORP., an Illinois
corporation
By: /S/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BSRT LEXINGTON TRUST, a Massachusetts
business trust
By: BSRT PORTFOLIO B CORP., an Illinois
corporation, its sole trustee
By: /S/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
THE CAPITAL COMPANY OF AMERICA LLC, a
Delaware limited liability company
By: /S/ ROBERT J. WALTER
------------------------------
Name: Robert J. Walter
Title: Director
EXHIBIT (10) (ix)
- -----------------
FIRST AMENDMENT AGREEMENT
THIS FIRST AMENDMENT AGREEMENT ("Amendment") dated as of
September 11, 1998 is made between BANYAN/MORGAN WISCONSIN L.L.C., an
Illinois limited liability company ("Wisconsin") and BANYAN/MORGAN ELMHURST
L.L.C., an Illinois limited liability company ("Elmhurst") (Wisconsin and
Elmhurst, together with their respective successors and assigns, are
collectively referred to as "Borrower"), and THE CAPITAL COMPANY OF AMERICA
LLC, a limited liability company organized under the laws of the State of
Delaware (together with its permitted successors and assigns, "Lender").
W I T N E S S E T H:
--------------------
WHEREAS, on June 22, 1998, Borrower and Nomura Asset Capital
Corporation, a Delaware corporation ("NACC") entered into a Loan Agreement
providing for a loan to Borrower in the amount of $6,953,383 (the "Loan
Agreement"); unless otherwise defined herein, all capitalized terms used
herein shall have the respective meanings set forth in Section 1 of the
Loan Agreement;
WHEREAS, on June 22, 1998, Borrower executed and delivered to Lender
that Note in the amount of $6,953,703 (the "Note");
WHEREAS, NACC has assigned the Note and its rights under the Loan
Agreement and the Note to Lender;
WHEREAS, Lender and Borrower have agreed to amend the Loan Agreement
to provide for a different prepayment period applicable to the Loan;
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Amendment, the parties
hereto hereby covenant, agree, represent and warrant as follows:
I. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby
amended as follows:
Section 1.1 Section 2.3.1 of the Loan Agreement is deleted in its
entirety and the following inserted in its place:
REPAYMENT. Borrower shall repay any outstanding principal
indebtedness of the Loan in full on the Maturity Date of the Loan, together
with interest thereon to (but excluding) the date of repayment. Other than
as set forth in Sections 2.3.2 and 2.3.3 below, Borrower shall have no
right to prepay all or any portion of the Loan during the period commencing
on the Closing Date to but not including that date which will be the third
Payment Date occurring before the Optional Prepayment Date. From and
<PAGE>
after the third Payment Date occurring before the Optional Prepayment
Date, the Loan may be prepaid in whole or in part without penalty or
premium.
Section 1.2 Section 2.7.3(b) of the Loan Agreement is hereby amended
by adding the following sentence to the end of Section 2.7.3(b):
In the event of a prepayment which is permitted under Section
2.3.1, Borrower shall pay any Early Prepayment Return-of-Amount which may
be applicable to such prepayment.
Section 1.3 Except as expressly modified by this Amendment, the Loan
Agreement is hereby ratified and confirmed by the parties as being in full
force and effect.
II. AMENDMENTS TO NOTE. The Note is hereby amended as follows:
Section 2.1 Section 6 of the Note is hereby deleted in its entirety
and the following material is substituted therefor:
This Note may not be prepaid prior to that scheduled
payment date which will be the third scheduled payment date prior to the
Optional Prepayment Date (except in connection with a Casualty/Condemnation
Prepayment under Section 2.3.2 of the Loan Agreement); provided, however,
Maker shall have the right and option to release the Mortgaged Property
from the lien of the Mortgages in accordance with the provisions set forth
in Section 2.3 of the Loan Agreement (the "Defeasance Option").
Notwithstanding the foregoing sentence, Maker shall have the privilege to
prepay the entire principal balance of this Note and any other amounts
outstanding on any scheduled payment date occurring on or after the
scheduled payment date which will be the third scheduled payment date prior
to the Optional Prepayment Date without payment of the Yield Maintenance
Premium or any other premium or penalty. If prior to the date which is the
third scheduled payment date prior to the Optional Prepayment Date and
following the occurrence and during the continuance of any Event of
Default, Maker shall tender payment of an amount sufficient to satisfy the
Debt at any time prior to a sale of any Parcel, either through foreclosure
or the exercise of the other remedies available to Payee under the
Mortgages, such tender by Maker shall be deemed to be voluntary and Maker
shall pay, in addition to the Debt, the Yield Maintenance Premium, if any,
that would be required under the Defeasance Option, together with any
Return-of-Fee Amount which may be required under the Loan Agreement.
<PAGE>
Section 2.2 Except as expressly modified by this amendment, the Note
is hereby ratified and confirmed by the parties as being in full force and
effect.
III. MISCELLANEOUS.
Section 3.1 Headings. The Article and/or Section headings in this
Amendment are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose.
Section 3.2 Severability. Wherever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amendment.
Section 3.3 Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Amendment and the provisions of the
Loan Agreement or the Note, the provisions of this Amendment shall control.
The parties hereto acknowledge that they were represented by counsel in
connection with the negotiation and drafting of this Amendment and that
this Amendment shall not be subject to the principle of construing their
meaning against the party which drafted same.
Section 3.4 Successors; Counterparts. This Amendment shall inure to
the benefit of and be binding upon the parties and their respective heirs,
successors and assigns. This Amendment may be executed in two or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Amendment is
solely intended to and shall amend the Original Loan Agreement. Nothing in
this Amendment is intended to or shall impair any Lien which Lender ever
had, now has, or may hereafter have on any property of Borrower under the
Loan Documents including, without limitation, the collateral for the Loan.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
BORROWER
BANYAN/MORGAN WISCONSIN L.L.C., an
Illinois limited liability company
By: BSRT PORTFOLIO C CORP., an Illinois
corporation, its Managing Member
By: /S/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
BANYAN/MORGAN ELMHURST L.L.C., an
Illinois limited liability company
By: BSRT PORTFOLIO C CORP., an
Illinois corporation, its
Managing Member
By: /S/ NEIL D. HANSEN
------------------------------
Name: Neil D. Hansen
Title: Vice President
THE CAPITAL COMPANY OF AMERICA LLC, a Delaware
limited liability company
By: /S/ ROBERT J. WALTER
------------------------------
Name: Robert J. Walter
Title: Director
EXHIBIT (23)
- ------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-49437) pertaining to the Banyan Strategic Realty Trust
1997 Omnibus Stock and Incentive Plan and in the Registration Statement
(Form S-3 No. 333-0047) of Banyan Strategic Realty Trust of our report
dated September 10, 1998 with respect to the combined statements of
revenues and certain expenses of Technology Park/Johns Creek Park
Properties for the year ended December 31, 1997 and for the period from
January 1, 1998 to August 14, 1998 included in the Current Report (Form 8-
K/A) of Banyan Strategic Realty Trust filed October 1, 1998 with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
October 1, 1998
