UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 1-9317
HRPT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 04-6558834
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
400 Centre Street, Newton, Massachusetts 02458
(Address of principal executive offices) (Zip Code)
617-332-3990
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of Common Shares outstanding at May 10, 2000:
131,935,847 shares of beneficial interest, $0.01 par value.
<PAGE>
HRPT PROPERTIES TRUST
FORM 10-Q
MARCH 31, 2000
INDEX
PART I Financial Information Page
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets - March 31, 2000 and December 31,
1999 1
Consolidated Statements of Income - Three Months Ended March 31,
2000 and 1999 2
Consolidated Statements of Cash Flows - Three Months Ended March
31, 2000 and 1999 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
PART II Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 16
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
March 31, December 31,
2000 1999
------------ -------------
(unaudited) (note 1)
<S> <C> <C>
ASSETS
Real estate properties, at cost:
Land $ 354,649 $ 354,173
Buildings and improvements 2,305,333 2,302,171
----------- -----------
2,659,982 2,656,344
Less accumulated depreciation 121,714 106,859
----------- -----------
2,538,268 2,549,485
Real estate mortgages and notes receivable, net 6,866 10,373
Equity investments 306,210 311,113
Cash and cash equivalents 5,214 13,206
Interest and rents receivable 37,925 36,683
Other assets, net 39,898 32,448
----------- -----------
$ 2,934,381 $ 2,953,308
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 139,000 $ 132,000
Senior notes payable, net 957,623 957,586
Mortgage notes payable 55,145 55,441
Convertible subordinated debentures 204,863 204,863
Accounts payable and accrued expenses 42,699 53,851
Deferred rents 7,484 9,005
Security deposits 7,174 7,041
Due to affiliates 14,303 11,054
Shareholders' equity:
Preferred shares of beneficial interest, $0.01 par value:
50,000,000 shares authorized, none issued -- --
Common shares of beneficial interest, $0.01 par value:
150,000,000 shares authorized, 131,934,347 shares and
131,908,126 shares issued and outstanding, respectively 1,319 1,319
Additional paid-in capital 1,971,581 1,971,366
Cumulative net income 705,126 678,676
Distributions (1,163,744) (1,121,533)
Unrealized holding losses on investments (8,192) (7,361)
----------- -----------
Total shareholders' equity 1,506,090 1,522,467
----------- -----------
$ 2,934,381 $ 2,953,308
=========== ===========
</TABLE>
See accompanying notes
1
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
----------------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues:
Rental income $ 99,395 $101,313
Interest and other income 859 3,090
-------- --------
Total revenues 100,254 104,403
-------- --------
Expenses:
Operating expenses 33,827 24,006
Interest 25,098 19,437
Depreciation and amortization 15,874 18,831
General and administrative 4,697 4,841
-------- --------
Total expenses 79,496 67,115
-------- --------
Income before equity in earnings of equity investments
and gain on sale of properties 20,758 37,288
Equity in earnings of equity investments 5,692 2,008
-------- --------
Income before gain on sale of properties 26,450 39,296
Gain on sale of properties, net -- 8,307
-------- --------
Net income $ 26,450 $ 47,603
======== ========
Weighted average shares outstanding 131,921 131,660
======== ========
Basic and diluted earnings per common share:
Income before gain on sale of properties $ 0.20 $ 0.30
======== ========
Net income $ 0.20 $ 0.36
======== ========
</TABLE>
See accompanying notes
2
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
-------------------------------
2000 1999
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 26,450 $ 47,603
Adjustments to reconcile net income to cash provided by operating
activities:
Gain on sale of properties, net -- (8,307)
Equity in earnings of equity investments (5,692) (2,008)
Distributions from equity investments 10,445 2,680
Depreciation 14,855 18,217
Amortization 1,019 614
Amortization of bond discounts 37 37
Change in assets and liabilities:
Increase in interest and rents receivable and other assets (10,387) (6,788)
Decrease in accounts payable and accrued expenses (11,152) (265)
Decrease in deferred rents (1,521) (205)
Increase in security deposits 133 52
Increase in due to affiliates 3,464 5,266
--------- ---------
Cash provided by operating activities 27,651 56,896
--------- ---------
Cash flows from investing activities:
Real estate acquisitions and improvements (3,638) (2,814)
Proceeds from repayment of real estate mortgages and notes receivable 3,507 2,618
Proceeds from sale of real estate -- 22,177
Proceeds from repayment of loans to affiliate -- 1,000
--------- ---------
Cash (used for) provided by investing activities (131) 22,981
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 35,000 131,500
Payments on borrowings (28,296) (141,668)
Deferred finance costs incurred (5) (2,399)
Distributions (42,211) (50,378)
--------- ---------
Cash used for financing activities (35,512) (62,945)
--------- ---------
(Decrease) increase in cash and cash equivalents (7,992) 16,932
Cash and cash equivalents at beginning of period 13,206 15,643
--------- ---------
Cash and cash equivalents at end of period $ 5,214 $ 32,575
========= =========
Supplemental cash flow information:
Interest paid $ 27,504 $ 22,797
========= =========
Non-cash investing activities:
Investment in real estate mortgages receivable $-- $ 60,000
Issuance of common shares -- 4,959
Non-cash financing activities:
Issuance of common shares $ 215 $ 1,313
</TABLE>
See accompanying notes
3
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 1. Basis of Presentation
The financial statements of HRPT Properties Trust and its subsidiaries
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
interim periods are not necessarily indicative of the results that may be
expected for the full year.
Reclassifications have been made to the prior years' financial
statements to conform to the current year's presentation.
Note 2. Comprehensive Income
The following is a reconciliation of net income to comprehensive income
for the three months ended March 31, 2000 and 1999:
Three Months Ended March 31,
-----------------------------
2000 1999
---------- -----------
Net income $ 26,450 $ 47,603
Other comprehensive loss:
Unrealized holding losses on
investments (831) (5,639)
-------- --------
Comprehensive income $ 25,619 $ 41,964
======== ========
Note 3. Shareholders' Equity
During the three months ended March 31, 2000, 26,221 common shares were
issued as the incentive advisory fee for the year ended December 31, 1999.
On April 10, 2000, the Company declared a distribution on its common
shares with respect to the quarter ended March 31, 2000 of $0.32 per share,
which will be distributed on or about May 26, 2000, to shareholders of record as
of April 20, 2000.
Note 4. Equity Investments
At March 31, 2000, the Company had the following equity investments:
Ownership Equity in Equity
Percentage Earnings Investments
----------- --------- -----------
Senior Housing Properties Trust 49.3% $3,727 $197,873
Hospitality Properties Trust 7.1% 1,965 108,337
-------- --------
$5,692 $306,210
======== ========
At March 31, 2000, the Company owned 12,809,237 common shares of Senior
Housing Properties Trust ("SNH") with a carrying value of $197,873 and a fair
value based on quoted market prices, of $131.3 million. At March 31, 2000, the
Company owned four million common shares of Hospitality Properties Trust ("HPT")
with a carrying value of $108,337 and a fair value based on quoted market
prices, of $81,000.
4
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 5. Real Estate Properties, Mortgages and Notes Receivable, net
During the three months ended March 31, 2000, the Company funded $3,638
of improvements to its existing properties, and received scheduled principal
payments of $5 and repayment of a mortgage secured by one property totaling
$3,502.
Note 6. Indebtedness
In April 2000, the Company retired $27.5 million of its outstanding
Remarketed Reset Notes.
Note 7. Segment Information
The following is a summary of the Company's reportable segments as of
or for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000 Three Months Ended March 31, 1999
----------------------------------------- -----------------------------------------
Senior Senior
Housing Office Total Housing Office Total
----------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 448 $ 99,748 $ 100,196 $ 26,131 $ 77,661 $ 103,792
Operating expenses -- (33,827) (33,827) -- (24,006) (24,006)
Depreciation -- (14,855) (14,855) (6,296) (11,921) (18,217)
---------------------------------------- -----------------------------------------
Net operating income $ 448 $ 51,066 $ 51,514 $ 19,835 $ 41,734 $ 61,569
======================================== =========================================
Real estate investments $ 6,866 $ 2,659,982 $ 2,666,848 $ 858,128 $ 2,133,073 $ 2,991,201
Real estate acquired
during the year $-- $ 3,638 $ 3,638 $-- $ 2,814 $ 2,814
</TABLE>
The following tables reconcile the reported segment information to the
consolidated financial statements for the three months ended March 31, 2000 and
1999:
Three Months Ended March 31,
----------------------------
2000 1999
----------------------------
Revenues:
Total per reportable segment $ 100,196 $ 103,792
Unallocated other income 58 611
--------------------------
Total consolidated revenues $ 100,254 $ 104,403
==========================
Net operating income:
Total per reportable segment $ 51,514 $ 61,569
Unallocated amounts:
Other income 58 611
Interest expense (25,098) (19,437)
Amortization expense (1,019) (614)
General and administrative expenses (4,697) (4,841)
--------------------------
Total consolidated income before equity
in earnings of equity investments
and gain on sale of properties $ 20,758 $ 37,288
==========================
5
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 8. Pro Forma Information
On October 12, 1999, the Company spun-off 50.7% of a 100% owned
subsidiary, SNH, to its shareholders (the "Spin-Off"). Also, during 1999, the
Company sold 21 nursing homes for gross proceeds of approximately $96,200. The
following unaudited pro forma consolidated statement of income for the three
months ended March 31, 1999, is presented to reflect the effects of the Spin-Off
and the disposition of nursing home assets during 1999, as if these transactions
had occurred on January 1, 1999. This pro forma information does not purport to
present actual results of operations if these transactions had occurred on such
date or project operating results for any future period.
Pro Forma Unaudited Consolidated Statement of Income
(amounts in thousands, except per share amounts)
Three Months
Ended
March 31, 1999
----------------
Revenues:
Rental income $ 77,366
Interest and other income 1,374
--------
Total revenues 78,740
--------
Expenses:
Operating expenses 24,006
Interest 15,159
Depreciation and amortization 12,685
General and administrative 3,602
--------
Total expenses 55,452
--------
Income before equity in earnings of equity
investments and gain on sale of properties 23,288
Equity in earnings of equity investments 7,974
--------
Income before gain on sale of properties $ 31,262
========
Weighted average shares outstanding 131,660
========
Income before gain on sale of properties per
basic share $ 0.24
========
Pro forma funds from operations, on a diluted basis, were $52.3
million, or $0.37 per share for the three months ended March 31, 1999.
6
<PAGE>
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Total revenues for the three months ended March 31, 2000, decreased
$4.1 million to $100.3 million from $104.4 million for the three months ended
March 31, 1999. Revenues from our office segment increased $22.1 million and
revenues from our senior housing segment decreased $25.7 million. The increase
in revenues from our office segment is due to office building acquisitions made
subsequent to March 31, 1999. The decrease in revenues from our senior housing
segment is due primarily to the Spin-Off of our former subsidiary, SNH, in
October 1999, and the sale of some senior housing properties in 1999.
For the three months ended March 31, 2000, rental income decreased $1.9
million and interest and other income decreased $2.2 million compared to the
prior period. Rental income decreased primarily because of the Spin-Off of SNH,
offset by acquisitions made subsequent to March 31, 1999. Interest and other
income decreased primarily as a result of the Spin-Off of SNH.
Total expenses for the three months ended March 31, 2000, increased to
$79.5 million from $67.1 million for the three months ended March 31, 1999.
Operating expenses increased by $9.8 million as a result of our increased
investment in office buildings made subsequent to March 31, 1999. Interest
expense increased by $5.7 million as a result of increased borrowings
outstanding during 2000 compared to the prior year period. Depreciation and
amortization, and general and administrative expenses decreased by $3.0 million
and $144,000, respectively, primarily as a result of the Spin-Off of SNH.
Equity in earnings of equity investments increased in 2000 by $3.7
million from the 1999 period due to the Spin-Off of SNH in October 1999.
Net income decreased to $26.5 million, or $0.20 per basic and diluted
share, for the 2000 period, from $47.6 million, or $0.36 per basic and diluted
share, for the 1999 period. The change in net income is due primarily to the
Spin-Off of SNH and the sale of some senior housing properties in 1999, offset
by office building acquisitions made subsequent to March 31, 1999.
Funds from operations for the three months ended March 31, 2000, were
$46.1 million, or $0.35 per basic share, and $59.7 million, or $0.45 per basic
share, for the 1999 period. Diluted funds from operations for the three months
ended March 31, 2000, were $50.2 million, or $0.35 per diluted share, and $63.7
million, or $0.45 per diluted share, for the 1999 period. Distributions declared
which relate to the three months ended March 31, 2000 and 1999, were $42.2
million, or $0.32 per share, and $50.1 million, or $0.38 per share,
respectively. The decrease in distributions reflects the reduced distributions
paid after the Spin-Off of SNH.
LIQUIDITY AND CAPITAL RESOURCES
Total assets were $2.9 billion at March 31, 2000 compared to $3.0
billion at December 31, 1999.
During the three months ended March 31, 2000, we funded $3.6 million of
improvements to our existing properties, received $5,000 of regularly scheduled
principal payments and received a $3.5 million principal repayment of a mortgage
secured by one property.
7
<PAGE>
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - continued
At March 31, 2000, we owned 12.8 million, or 49.3%, of the common
shares of beneficial interest of SNH with a carrying value of $197.9 million and
a market value of $131.3 million, and 4.0 million, or 7.1%, of the common shares
of beneficial interest of HPT with a carrying value of $108.3 million and a
market value of $81.0 million.
During January and February of 2000, two of SNH's tenants, accounting
for approximately 48% of SNH's revenues, filed for bankruptcy. During March and
April 2000, SNH reached conditional agreements with both tenants calling for the
cancellation and modification of leases and mortgage obligations and the
exchange of certain properties leased to the tenants for cash and other
consideration. Also, the level of annual distributions to be paid by SNH to us
and other SNH shareholders, was reduced from $2.40 per SNH share to $1.20
beginning with the distribution declared by SNH in April 2000. Under both
agreements, SNH will assume operating responsibility for a total of 58
properties. Both of these agreements are subject to final documentation,
approval by the bankruptcy court and other contingencies. Therefore, no
assurance can be given as to if, and when, these transactions will close, or if
all of the terms currently agreed to will be implemented. As a result of these
transactions, SNH may recognize additional gains or losses in the future, which
will be reflected in our consolidated statement of income through our ownership
interest of SNH.
In April 2000, we retired $27.5 million of our Remarketed Reset Notes
due 2009 at their par value using borrowings under our bank credit facility.
At March 31, 2000, we had $5.2 million of cash and cash equivalents, as
well as $139 million outstanding and $361 million available for borrowing under
our bank credit facility. At March 31, 2000, $2.5 billion was available on our
$3 billion effective shelf registration statement.
There can be no assurances that debt or equity financing will be
available to fund future growth, but we do expect that financing will be
available. As of March 31, 2000, our debt as a percentage of total book
capitalization was approximately 47%.
Year 2000
In prior years, we discussed the nature and progress of our plans to
become year 2000 compliant and, in late 1999, we completed our remediation and
testing of systems. As a result of these efforts, we experienced no significant
disruptions in our information and non-information technology systems, and we
believe these systems successfully responded to the year 2000 date change. We
are not aware of any material problems resulting from year 2000 issues by our
systems or the systems of our tenants and vendors, but we will continue to
monitor these systems throughout the year to ensure that any late year 2000
issues that may arise are addressed promptly. Costs incurred to date and
anticipated future costs are not material.
8
<PAGE>
HRPT PROPERTIES TRUST
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market changes in interest rates. We manage our
exposure to this market risk through our monitoring of available financing
alternatives. Our strategy to manage exposure to changes in interest rates is
unchanged from December 31, 1999. Furthermore, we do not foresee any significant
changes in our exposure to fluctuations in interest rates or in how this
exposure is managed in the near future. At March 31, 2000, our total outstanding
fixed rate debt consisted of the following:
Amount Coupon Maturity
Unsecured senior notes:
$40.0 million 7.25% 2001
160.0 million 6.875% 2002
150.0 million 6.75% 2002
164.9 million 7.50% 2003
100.0 million 6.7% 2005
90.0 million 7.875% 2009
65.0 million 8.375% 2011
143.0 million 8.5% 2013
Secured notes:
$3.5 million 9.12% 2004
11.1 million 8.40% 2007
17.6 million 7.02% 2008
12.2 million 8.00% 2008
10.7 million 7.66% 2009
No principal repayments are due under the unsecured senior notes until
maturity. If, at maturity, the unsecured senior notes were to be refinanced at
interest rates which are 1/2 percentage point higher than shown above, our per
annum interest cost would increase by approximately $4.6 million. The secured
notes are secured by 11 of our office properties and require principal and
interest payments through maturity.
The market prices, if any, of each of our fixed rate obligations as of
March 31, 2000, are sensitive to changes in interest rates. Typically, if market
rates of interest increase, the current market price of a fixed rate obligation
will decrease. Conversely, if market rates of interest decrease, the current
market price of a fixed rate obligation will typically increase. Based on the
balances outstanding at March 31, 2000, and discounted cash flow analyses, a
hypothetical immediate one percentage point change in interest rates would
change the fair value of our fixed rate debt obligations by approximately $39.2
million.
Each of our obligations for borrowed money has provisions that allow us
to make repayments earlier than the stated maturity date. In some cases, we are
not allowed to make early repayment prior to a cutoff date and in other cases we
are allowed to make prepayments only at a premium to face value. In any event,
these prepayment rights may afford us the opportunity to mitigate the risk of
refinancing at maturity at higher rates by refinancing at lower rates prior to
maturity.
At March 31, 2000, we had a $500 million unsecured bank credit facility
and unsecured Remarketed Reset Notes (the "Reset Notes") that were subject to
floating interest rates. Because these debt instruments are at a floating rate,
changes in interest rates will not affect their value. However, changes in
interest rates will affect our operating results. For example, the interest rate
payable on our outstanding Reset Notes of $250 million at March 31, 2000, was
7.28% per annum. An immediate 10% change in that interest rate, or 73 basis
points, would increase or decrease our costs by $1.8 million, or $0.01 per share
per year (dollars in thousands):
Impact of Changes in Interest Rates
----------------------------------------------
Total Interest
Interest Rate Outstanding Expense Per
Per Year Debt Year
------------- ----------- -------------
At March 31, 2000 7.28% $250,000 $18,200
10% reduction 6.55% 250,000 16,375
10% increase 8.01% 250,000 20,025
9
<PAGE>
HRPT PROPERTIES TRUST
Item 3. Quantitative and Qualitative Disclosures About Market Risk - continued
The foregoing table presents a so called "shock" analysis which assumes
that the interest rate change by 10% is in effect for a whole year. If interest
rates were to change gradually over one year the impact would be less.
We borrow in U.S. dollars and our current borrowings under our bank
credit facility and our Reset Notes are subject to interest at LIBOR plus a
premium. Accordingly, we are vulnerable to changes in U.S. dollar based short
term rates, specifically LIBOR.
During the past few months, short-term U.S. dollar based interest rates
have tended to rise. We are unable to predict the direction or amount of
interest rate changes during the next year. We have decided not to purchase an
interest rate cap or other hedge to protect against future rate increases, but
we may enter such agreements in the future. Also, we may incur additional debt
at floating or fixed rates, which would increase our exposure to market changes
in interest rates.
10
<PAGE>
Part II Other Information
Item 1. Legal Proceedings
In April 2000, the arbitration panel issued an award in the arbitration
proceeding described in Item 3 of the Company's Annual Report on Form 10-K,
which arose following the Company's commencement in 1995 of an action in Florida
state court to collect on a secured indemnity agreement from a former tenant and
mortgagor, together with certain related parties. In its award, the arbitration
panel dismissed all claims against the Company and awarded the Company $3.2
million in connection with the Company's indemnity claims. The Company has
applied to the United States District Court for an order confirming the award.
The final outcome of this confirmation process, and the ability of the Company
to realize on its award, are not known at this time, and if opposed, a
confirmation may be subject to appeal. The previously disclosed related cases
filed against the Company and others by creditors or assignees of the former
tenant remain pending, and the outcome of those proceedings cannot be predicted.
Item 2. Changes in Securities
On February 17, 2000, the Company issued 26,221 common shares as an
incentive fee of approximately $215,000 for services rendered during 1999, based
upon a per common share price of $8.1932. These restricted securities were
issued pursuant to the exemption from registration provided under Section 4(2)
of the Securities Act.
Item 5. Other Information
The Company's Board of Trustees has amended and restated the Company's
Bylaws. The following is a summary of certain provisions of the Bylaws, as
amended. Because it is a summary, it does not contain all of the information
which may be important to a shareholder or other investor. For more information,
the Company refers to the full text of its amended and restated Bylaws which are
being filed as an exhibit to this Quarterly Report on Form 10-Q.
o The Company has elected to be subject to Section 3-804(b) and (c) and
Section 3-805 of Title 3, Subtitle 8 of the Maryland General Corporation
Law. Those sections:
o provide that the number of trustees may be fixed only by a vote of the
Board of Trustees;
o provide that vacancies on the Board of Trustees may be filled only by
the affirmative vote of a majority of the remaining trustees in
office, even if the remaining trustees do not constitute a quorum, and
o provide that special meetings of shareholders may be called only by
the written request of a majority of all the votes entitled to be cast
at the meeting.
o The amended Bylaws provide that nomination of persons for election to the
Board of Trustees at an annual meeting of shareholders and business to be
transacted by the shareholders at an annual meeting of shareholders may be
properly brought before the meeting only (1) pursuant to the Company's
notice of meeting, (2) by or at the direction of the Board of Trustees, or
(3) by any shareholder who is a shareholder of record both at the time of
giving of the advance notice described below and at the time of the annual
meeting, who is entitled to vote at the meeting and who complies with the
advance notice and other applicable terms and provisions set forth in the
Bylaws. No business may be transacted at a special meeting of shareholders
except as specifically designated in the notice of the meeting. Nominations
of persons for election to the Board of Trustees at a special meeting of
shareholders at which trustees are to be elected may be made only (1)
pursuant to the Company's notice of meeting; (2) by or at the direction of
the Board of Trustees, or (3) by any shareholder who is a shareholder of
record both at the time of giving of the advance notice described below and
at the time of the special meeting, who is entitled to vote at the meeting
and who complies with the advance notice and other applicable terms and
provisions set forth in the Bylaws.
o The amended Bylaws require a shareholder who is nominating a person for
election to the Board of Trustees at an annual meeting or proposing
business to be transacted at an annual meeting to give notice of such
nomination or proposal to the secretary of the Company at the principal
executive offices of the Company not later than the close of business on
the 90th day nor earlier than the close of business on the 120th day prior
to
11
<PAGE>
the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting. If the date of mailing of the notice for
the annual meeting is advanced or delayed by more than 30 days from the
anniversary date of the date of mailing of the notice for the preceding
year's annual meeting, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 120th day prior to
the date of mailing of the notice for such annual meeting and not later
than the close of business on the later of: (1) the 90th day prior to the
date of mailing of the notice for such annual meeting or (2) the 10th day
following the day on which public announcement of the date of mailing of
the notice for such meeting is first made by the Company. The public
announcement of a postponement of the mailing of the notice for such annual
meeting or of an adjournment or postponement of an annual meeting to a
later date or time will not commence a new time period for the giving of a
shareholder's notice. If the number of Trustees to be elected to the Board
of Trustees is increased and there is no public announcement by the Company
of such action or specifying the size of the increased Board of Trustees at
least one hundred (100) days prior to the first anniversary of the date of
mailing of notice for the preceding year's annual meeting, a shareholder's
notice also shall be considered timely, but only with respect to nominees
for any new positions created by such increase, if the notice is delivered
to the secretary at the Company's principal executive offices not later
than the close of business on the 10th day immediately following the day on
which such public announcement first is made by the Company.
o The amended Bylaws require a shareholder who is nominating a person for
election to the Board of Trustees at a special meeting at which trustees
are to be elected to give notice of such nomination to the secretary of the
Company at its principal executive offices not earlier than the close of
business on the 120th day prior to such special meeting and not later than
the close of business on the later of (1) the 90th day prior to such
special meeting or (2) the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Trustees to be elected at such meeting. The public
announcement of a postponement or adjournment of a special meeting to a
later date or time will not commence a new time period for the giving of a
shareholder's notice as described above.
o The amended Bylaws provide that a shareholder's notice of a nomination for
election to the Board of Trustees or of a proposal of business to be
transacted at a shareholders meeting must be in writing and must include:
o as to each person whom the shareholder proposes to nominate for
election or reelection as a Trustee, (1) the person's name, age,
business address and residence address, (2) the class and number of
shares of beneficial interest of the Company that are beneficially
owned or owned of record by such person and (3) all other information
relating to such person that is required to be disclosed in
solicitations of proxies for election of Trustees in an election
contest, or is otherwise required, in each case pursuant to Regulation
14A or any successor provision under the Securities Exchange Act of
1934, including such person's written consent to being named in the
proxy statement as a nominee and to serving as a Trustee if elected;
o as to any business that the shareholder proposes to bring before the
meeting, a description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting
and any interest of such shareholder in such business (including any
anticipated benefit to the shareholder therefrom) and of each
beneficial owner, if any, on whose behalf the proposal is made; and
o as to the shareholder giving the notice and each beneficial owner, if
any, on whose behalf the nomination or proposal is made, (1) the name
and address of such shareholder, as they appear on the Company's share
ledger and current name and address, if different, of any such
beneficial owner and (2) the class and number of shares of the Company
which are owned beneficially and of record by such shareholder and any
such beneficial owner.
o The amended Bylaws provide that, at the same time as or prior to the
submission to the Board of Trustees of any shareholder proposal of business
to be conducted at an annual or special meeting of the shareholders that,
if approved or implemented, would cause the Company to be in breach of a
covenant under any existing or proposed debt instrument or agreement with
any lender, the proponent shareholder must submit to the secretary of the
Company at the principal executive offices of the Company evidence
satisfactory to the Board of Trustees of the lender's willingness to waive
the breach or a plan for repayment of affected indebtedness which is
satisfactory to the Board of Trustees and which specifically identifies the
source of funds to be used in the repayment and presents evidence
satisfactory to the Board of Trustees that the identified funds could be
applied by the Company to the repayment.
12
<PAGE>
o The amended Bylaws provide that, at the same time as or prior to the
submission to the Board of Trustees of any shareholder proposal of business
to be conducted at an annual or special meeting of the shareholders that,
if approved, could not be implemented by the Company without notifying or
obtaining the consent or approval of any regulatory body, the proponent
shareholder must submit to the secretary of the Company at the principal
executive offices of the Company evidence satisfactory to the Board of
Trustees that any and all required notices, consents or approvals have been
given or obtained or a plan, satisfactory to the Board of Trustees, for
making the requisite notices or obtaining the requisite consents or
approvals, as applicable, prior to the implementation of the proposal.
o The amended Bylaws provide that the Company is not required to include in
its proxy statement a shareholder nomination of persons for election to the
Board of Trustees or a shareholder proposal of business to be brought
before an annual or special meeting of shareholders, unless the proponent
shareholder has complied with (1) all applicable requirements of state and
federal law and the rules and regulations thereunder, including Rule 14a-8
or any successor provision under the Securities Exchange Act of 1934, and
(2) the advance notice and the other applicable procedures and requirements
set forth in the Bylaws. This Bylaw provision does not affect any right of
the Company to omit a shareholder proposal from the Company's proxy
statement under the Securities Exchange Act of 1934, including nominations
of persons for election to the Board of Trustees and business to be brought
before the shareholders at an annual or special meeting of shareholders.
o The amended Bylaws include provisions to clarify the organization and
conduct of meetings of shareholders. These include, among other things,
that
o meetings of shareholders will be conducted by an individual appointed
by the Trustees to be chairperson of the meeting or, in the absence of
such appointment or the absence of the appointed individual, by
specified officers of the Company or, in the absence of such officers,
a chairperson chosen by the shareholders by the vote of holders of
shares of beneficial interest representing a majority of the votes
cast by shareholders present in person or represented by proxy;
o the order of business and all other matters of procedure at any
meeting of shareholders will be determined by the chairperson of the
meeting;
o the chairperson of the meeting may prescribe such rules, regulations
and procedures and take such actions as, in the discretion of such
chairperson, are appropriate for the proper conduct of the meeting,
including, without limitation: (1) restricting admission to the time
set for the commencement of the meeting; (2) limiting attendance at
the meeting to shareholders of record of the Company, their duly
authorized proxies or other such persons as the chairperson of the
meeting may determine; (3) limiting participation at the meeting on
any matter to shareholders of record of the Company entitled to vote
on such matter, their duly authorized proxies or other such persons as
the chairperson of the meeting may determine; (4) limiting the time
allotted to questions or comments by participants; (5) maintaining
order and security at the meeting; (6) removing any shareholder or
other person who refuses to comply with meeting procedures, rules or
guidelines as set forth by the chairperson of the meeting; and (7)
recessing or adjourning the meeting to a later date and time and place
announced at the meeting; and
o unless otherwise determined by the chairperson of the meeting,
meetings of shareholders are not required to be held in accordance
with the rules of parliamentary procedure or any established rules of
order.
As stated in the Company's proxy statement dated March 23, 2000
relating to the annual meeting of shareholders held on May 9, 2000, shareholder
proposals intended to be presented at the Company's 2001 Annual Meeting of
Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934
must be received by the Company at its principal executive offices not later
than November 24, 2000.
Under the amended Bylaws, in order to be considered "timely" within the
meaning of Rule 14a-4(c) under the Securities Exchange Act of 1934, notice of a
shareholder proposal intended for presentation at the Company's 2001 Annual
Meeting of Shareholders made outside of Rule 14a-8 under the Securities Exchange
Act of 1934 must be received by the Company no later than December 26, 2000 and
no earlier than November 24, 2000, rather than respective dates which were
specified in the Company's proxy statement dated March 23, 2000, and must be
made in accordance with the provisions, requirements and procedures set forth in
the Company's amended Bylaws.
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Articles Supplementary of the Company. (filed herewith)
3.2 Amended and Restated Bylaws of the Company. (filed herewith)
27. Financial Data Schedule. (filed herewith)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the three
months ended March 31, 2000.
14
<PAGE>
HRPT PROPERTIES TRUST
CERTAIN IMPORTANT FACTORS
This Quarterly Report on Form 10-Q contains statements which constitute
forward looking statements within the meaning of the Securities Exchange Act of
1934, as amended. Those statements appear in a number of places in this Form
10-Q and include statements regarding our intent, belief or expectations with
respect to the declaration or payment of distributions, policies and plans
regarding financings and other matters. Readers are cautioned that any forward
looking statements are not guaranteed, and that actual results may differ
materially from those contained in the forward looking statements as a result of
various factors. Such factors include without limitation changes in financing
terms, our ability or inability to complete acquisitions and financing
transactions, results of operations of our properties and general changes in
economic conditions not presently contemplated. The information contained in
this Form 10-Q and our Annual Report on Form 10-K for the year ended December
31, 1999, including the information under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations", identifies other
important factors that could cause differences.
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING THE COMPANY,
DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HRPT PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
15
<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, thereunto duly authorized.
HRPT PROPERTIES TRUST
By: /s/ John A. Mannix
John A. Mannix
President and Chief Operating Officer
Dated: May 12, 2000
By: /s/ John C. Popeo
John C. Popeo
Treasurer and Chief Financial Officer
Dated: May 12, 2000
16
EXHIBIT 3.1
HRPT PROPERTIES TRUST
ARTICLES SUPPLEMENTARY
HRPT Properties Trust, a Maryland real estate investment trust (the
"Trust"), hereby certifies to the State Department of Assessments and Taxation
of Maryland, that:
FIRST: Under a power contained in Title 3, Subtitle 8 of the Maryland
General Corporation Law (the "MGCL"), as applicable to Maryland real estate
investment trusts, the Trust, by resolution of its Board of Trustees (the "Board
of Trustees") duly adopted at a meeting duly called and held on May 9, 2000,
amended the Bylaws of the Trust (the "Bylaws") to provide that the Trust elects
to be subject to Sections 3-804(b) and (c) and 3-805 of the MGCL.
SECOND: The Bylaws described above provide that, notwithstanding any
other provision in the Declaration of Trust or the Bylaws to the contrary, the
Trust elects to be subject to Sections 3-804(b) and (c) and 3-805 of the MGCL,
the repeal of which may be effected only by a subsequent amendment to the Bylaws
adopted or approved by the Board of Trustees.
THIRD: These Articles Supplementary have been approved by the Board of
Trustees in the manner and by the vote required by law.
FOURTH: The undersigned President of the Trust acknowledges these
Articles Supplementary to be the trust act of the Trust and, as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that, to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties of perjury.
IN WITNESS WHEREOF, the Trust has caused these Articles Supplementary
to be executed under seal in its name and on its behalf by its President and
attested by its Secretary on this 10th day of May, 2000.
ATTEST: HRPT PROPERTIES TRUST
/s/ John C. Popeo /s/ John A. Mannix, (SEAL)
John C. Popeo, John A. Mannix,
Secretary President
EXHIBIT 3.2
HRPT PROPERTIES TRUST
AMENDED AND RESTATED BYLAWS
As Amended and Restated May 9, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I
OFFICES.....................................................................................1
Section 1.1 Principal Office...............................................................1
Section 1.2 Additional Offices.............................................................1
ARTICLE II
MEETINGS OF SHAREHOLDERS....................................................................1
Section 2.1 Place..........................................................................1
Section 2.2 Annual Meeting.................................................................1
Section 2.3 Special Meetings...............................................................4
Section 2.4 Notice of Regular or Special Meetings..........................................4
Section 2.5 Notice of Adjourned Meetings...................................................4
Section 2.6 Scope of Notice................................................................4
Section 2.7 Organization of Shareholder Meetings...........................................5
Section 2.8 Quorum.........................................................................5
Section 2.9 Voting.........................................................................5
Section 2.10 Proxies.......................................................................6
Section 2.11 Voting Rights.................................................................6
Section 2.12 Voting of Shares by Certain Holders...........................................7
Section 2.13 Inspectors....................................................................7
Section 2.14 Reports to Shareholders.......................................................7
Section 2.15 Nominations and Proposals by Shareholders....................................10
Section 2.16 Shareholder Actions by Written Consent.......................................10
Section 2.17 Voting by Ballot.............................................................10
ARTICLE III
TRUSTEES...................................................................................10
Section 3.1 General Powers; Qualifications; Trustees Holding Over.........................11
Section 3.2 Independent Trustees..........................................................11
Section 3.3 Managing Trustees.............................................................11
Section 3.4 Number and Tenure. ..........................................................11
Section 3.5 Annual and Regular Meetings...................................................11
Section 3.6 Special Meetings..............................................................11
Section 3.7 Notice........................................................................12
Section 3.8 Quorum........................................................................12
Section 3.9 Voting........................................................................12
Section 3.10 Telephone Meetings...........................................................12
<PAGE>
Section 3.11 Informal Action by Trustees..................................................12
Section 3.12 Waiver of Notice.............................................................13
Section 3.13 Vacancies....................................................................13
Section 3.14 Compensation; Financial Assistance...........................................13
Section 3.15 Removal of Trustees..........................................................13
Section 3.16 Loss of Deposits.............................................................13
Section 3.17 Surety Bonds.................................................................13
Section 3.18 Reliance.....................................................................14
Section 3.19 Interested Trustee Transactions..............................................14
Section 3.20 Qualifying Shares Not Required...............................................14
Section 3.21 Certain Rights of Trustees, Officers, Employees
and Agents...................................................................14
Section 3.22 Certain Transactions.........................................................14
ARTICLE IV
COMMITTEES.................................................................................14
Section 4.1 Number; Tenure and Qualifications.............................................14
Section 4.2 Powers........................................................................14
Section 4.3 Meetings......................................................................15
Section 4.4 Telephone Meetings............................................................15
Section 4.5 Informal Action by Committees.................................................15
Section 4.6 Vacancies.....................................................................15
ARTICLE V
OFFICERS...................................................................................15
Section 5.1 General Provisions............................................................15
Section 5.2 Removal and Resignation.......................................................16
Section 5.3 Vacancies.....................................................................16
Section 5.4 Chief Executive Officer.......................................................16
Section 5.5 Chief Operating Officer.......................................................16
Section 5.6 Chief Financial Officer.......................................................16
Section 5.7 Chairman and Vice Chairman of the Board.......................................16
Section 5.8 President.....................................................................17
Section 5.9 Vice Presidents...............................................................17
Section 5.10 Secretary....................................................................17
Section 5.11 Treasurer....................................................................17
Section 5.12 Assistant Secretaries and Assistant Treasurers...............................17
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<PAGE>
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS......................................................17
Section 6.1 Contracts.....................................................................18
Section 6.2 Checks and Drafts.............................................................18
Section 6.3 Deposits......................................................................18
ARTICLE VII
SHARES.....................................................................................18
Section 7.1 Certificates..................................................................18
Section 7.2 Transfers.....................................................................18
Section 7.3 Replacement Certificate.......................................................19
Section 7.4 Closing of Transfer Books or Fixing of Record Date............................19
Section 7.5 Share Ledger..................................................................19
Section 7.6 Fractional Shares; Issuance of Units..........................................19
ARTICLE VIII
FISCAL YEAR................................................................................20
ARTICLE IX
DISTRIBUTIONS..............................................................................20
Section 9.1 Authorization.................................................................20
Section 9.2 Contingencies.................................................................20
ARTICLE X
SEAL.......................................................................................20
Section 10.1 Seal.........................................................................20
Section 10.2 Affixing Seal................................................................20
ARTICLE XI
WAIVER OF NOTICE...........................................................................20
ARTICLE XII
AMENDMENT OF BYLAWS........................................................................21
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ARTICLE XIII
MISCELLANEOUS..............................................................................21
Section 13.1 References to Declaration of Trust...........................................21
Section 13.2 Inspection of Bylaws.........................................................21
Section 13.3 Election to be Subject to Part of Title 3, Subtitle 8........................21
</TABLE>
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HRPT PROPERTIES TRUST
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1.1 Principal Office. The principal office of the Trust shall
be located at such place or places as the Board of Trustees may designate.
Section 1.2 Additional Offices. The Trust may have additional offices
at such places as the Board of Trustees may from time to time determine or the
business of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1 Place. All meetings of shareholders shall be held at the
principal office of the Trust or at such other place within the United States as
is designated by the Trustees or the Chairman or President, given either before
or after the meeting and filed with the secretary of the Trust.
Section 2.2 Annual Meeting. An annual meeting of the shareholders for
the election of Trustees and the transaction of any business within the powers
of the Trust shall be held within six months after the end of each fiscal year.
Failure to hold an annual meeting does not invalidate the Trust's existence or
affect any otherwise valid acts of the Trust.
Section 2.3 Special Meetings.
Section 2.3.1 General. The chief executive officer, the Board
of Trustees or a majority of the Independent Trustees (as defined in the
Declaration of Trust) may call a special meeting of the shareholders. Subject to
section 2.3.2 of this Section 2 and pursuant to the Articles Supplementary
accepted for record by the State Department of Assessments and Taxation (the
"SDAT") as of May 10, 2000, a special meeting of shareholders shall also be
called by the secretary of the Trust upon the written request of the
shareholders entitled to cast not less than a majority of all the votes entitled
to be cast at such meeting (the "Special Meeting Percentage").
Section 2.3.2 Shareholder Requested Special Meetings.
(a) Any shareholder of record seeking to have shareholders
request a special meeting shall, by sending written notice to the secretary (the
"Record Date Request Notice") by registered mail, return receipt requested,
request the Trustees to fix a record date to determine the
<PAGE>
shareholders entitled to request a special meeting (the "Request Record Date").
The Record Date Request Notice shall set forth the purpose of the meeting and
the matters proposed to be acted on at it, shall be signed by one or more
shareholders of record as of the date of signature (or their duly authorized
agents), shall bear the date of signature of each such shareholder (or other
agent) signing the Record Date Request Notice and shall set forth all
information relating to each such shareholder that must be disclosed in
solicitations of proxies for election of Trustees in an election contest (even
if an election contest is not involved), or is otherwise required, in each case
pursuant to Regulation 14A (or any successor provision) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Upon receiving the Record
Date Request Notice, the Board of Trustees may fix a Request Record Date. The
Request Record Date shall not precede and shall not be more than ten (10) days
after the close of business on the date on which the resolution fixing the
Request Record Date is adopted by the Board of Trustees. If the Board of
Trustees, within ten (10) days after the date on which a valid Record Date
Request Notice is received, fails to adopt a resolution fixing the Request
Record Date and make a public announcement of such Request Record Date, the
Request Record Date shall be the close of business on the tenth (10th) day after
the first date on which the Record Date Request Notice is received by the
secretary.
(b) In order for any shareholder to request a special meeting,
one or more written requests for a special meeting signed by shareholders of
record (or their duly authorized agents) as of the Request Record Date entitled
to cast not less than the Special Meeting Percentage (the "Special Meeting
Request") shall be delivered to the secretary. In addition, the Special Meeting
Request shall set forth the purpose of the meeting and the matters proposed to
be acted on at it (which shall be limited to the matters set forth in the Record
Date Request Notice received by the secretary), shall bear the date of signature
of each such shareholder (or other agent) signing the Special Meeting Request,
shall set forth the name and address, as they appear in the Trust's books, of
each shareholder signing such request (or on whose behalf the Special Meeting
Request is signed) and the class and number of shares of beneficial interest of
the Trust which are owned of record and beneficially by each such shareholder,
shall be sent to the secretary by registered mail, return receipt requested, and
shall be received by the secretary within sixty (60) days after the Request
Record Date. Any requesting shareholder may revoke his, her or its request for a
special meeting at any time by written revocation delivered to the secretary.
(c) The secretary shall inform the requesting shareholders of
the reasonably estimated cost of preparing and mailing the notice of meeting
(including the Trust's proxy materials). The secretary shall not be required to
call a special meeting upon shareholder request and such meeting shall not be
held unless, in addition to the documents required by paragraph (b) of this
Section 2.3.2, the secretary receives payment of such reasonably estimated cost
prior to the mailing of any notice of the meeting.
(d) Except as provided in the next sentence, any special
meeting shall be held at such place, date and time as may be designated by the
chief executive officer, the Board of Trustees or a majority of the Independent
Trustees, whoever has called the meeting. In the case of any special meeting
called by the secretary upon the request of shareholders (a "Shareholder
Requested Meeting"), such meeting shall be held at such place, date and time as
may be designated by the
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<PAGE>
Board of Trustees; provided, however, that the date of any Shareholder Requested
Meeting shall be not more than ninety (90) days after the record date for such
meeting (the "Meeting Record Date"); and provided further that if the Board of
Trustees fails to designate, within ten (10) days after the date that a valid
Special Meeting Request is actually received by the secretary (the "Delivery
Date"), a date and time for a Shareholder Requested Meeting, then such meeting
shall be held at 2:00 p.m. local time on the 90th day after the Meeting Record
Date or, if such 90th day is not a Business Day (as defined below), on the first
preceding Business Day; and provided further that in the event that the Board of
Trustees fails to designate a place for a Shareholder Requested Meeting within
ten (10) days after the Delivery Date, then such meeting shall be held at the
principal executive offices of the Trust. In fixing a date for any special
meeting, the chief executive officer, the Board of Trustees or a majority of the
Independent Trustees may consider such factors as he, she or it deems relevant
within the good faith exercise of business judgment, including, without
limitation, the nature of the matters to be considered, the facts and
circumstances surrounding any request for meeting and any plan of the Board of
Trustees to call an annual meeting or a special meeting. In the case of any
Shareholder Requested Meeting, if the Board of Trustees fails to fix a Meeting
Record Date that is a date within thirty (30) days after the Delivery Date, then
the close of business on the 30th day after the Delivery Date shall be the
Meeting Record Date.
(e) If at any time as a result of written revocations of
requests for the special meeting, shareholders of record (or their duly
authorized agents) as of the Request Record Date entitled to cast less than the
Special Meeting Percentage shall have delivered and not revoked requests for a
special meeting, the secretary may refrain from mailing the notice of the
meeting or, if the notice of the meeting has been mailed, the secretary may
revoke the notice of the meeting at any time before ten (10) days before the
meeting if the secretary has first sent to all other requesting shareholders
written notice of such revocation and of the intention to revoke the notice of
the meeting. Any request for a special meeting received after a revocation by
the secretary of a notice of a meeting shall be considered a request for a new
special meeting.
(f) The chairman of the Board of Trustees, the president or
the Board of Trustees may appoint regionally or nationally recognized
independent inspectors of elections to act as the agent of the Trust for the
purpose of promptly performing a ministerial review of the validity of any
purported Special Meeting Request received by the secretary. For the purpose of
permitting the inspectors to perform such review, no such purported request
shall be deemed to have been delivered to the secretary until the earlier of (i)
5 Business Days after receipt by the secretary of such purported request and
(ii) such date as the independent inspectors certify to the Trust that the valid
requests received by the secretary represent at least a majority of the issued
and outstanding shares of stock that would be entitled to vote at such meeting.
Nothing contained in this paragraph (f) shall in any way be construed to suggest
or imply that the Trust or any shareholder shall not be entitled to contest the
validity of any request, whether during or after such 5 Business Day period, or
to take any other action (including, without limitation, the commencement,
prosecution or defense of any litigation with respect thereto, and the seeking
of injunctive relief in such litigation).
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<PAGE>
(g) For purposes of these Bylaws, "Business Day" shall mean
any day other than a Saturday, a Sunday or a day on which banking institutions
in the Commonwealth of Massachusetts are authorized or obligated by law or
executive order to close.
Section 2.4 Notice of Regular or Special Meetings. Written notice
specifying the place, day and hour of any regular or special meeting, the
purposes of the meeting, and all other matters required by law shall be given to
each shareholder of record entitled to vote, either personally or by sending a
copy thereof by mail, telegraph or telecopier, charges prepaid, to his address
appearing on the books of the Trust or theretofore given by him to the Trust for
the purpose of notice or, if no address appears or has been given, addressed to
the place where the principal office of the Trust is situated. If mailed, such
notice shall be deemed to be given once deposited in the U.S. mail addressed to
the shareholder at his post office address as it appears on the records of the
Trust, with postage thereon prepaid. It shall be the duty of the secretary to
give notice of each Annual Meeting of the Shareholders at least fifteen (15)
days and not more than sixty (60) days before the date on which it is to be
held. Whenever an officer has been duly requested by the Trustees to call a
special meeting of shareholders, it shall be his duty to fix the date and hour
thereof, which date shall be not less than twenty (20) days and not more than
sixty (60) days after the receipt of such request, and to give notice of such
special meeting within ten (10) days after receipt of such request.
Section 2.5 Notice of Adjourned Meetings. It shall not be necessary to
give notice of the time and place of any adjourned meeting or of the business to
be transacted thereat other than by announcement at the meeting at which such
adjournment is taken, except that when a meeting is adjourned for more than 120
days after the original record date, notice of the adjourned meeting shall be
given as in the case of an original meeting.
Section 2.6 Scope of Notice. Any business of the Trust may be
transacted at an annual meeting of shareholders without being specifically
designated in the notice, except such business as is required by statute to be
stated in such notice. No business shall be transacted at a special meeting of
shareholders except as specifically designated in the notice.
Section 2.7 Organization of Shareholder Meetings. Every meeting of
shareholders shall be conducted by an individual appointed by the Trustees to be
chairperson of the meeting or, in the absence of such appointment or the absence
of the appointed individual, by the chairman of the board or, in the case of a
vacancy in the office or absence of the chairman of the board, by one of the
following officers present at the meeting: the vice chairman of the board, if
there be one, the president, the vice presidents in their order of rank and
seniority or, in the absence of such officers, a chairperson chosen by the
shareholders by the vote of holders of shares of beneficial interest
representing a majority of the votes cast by shareholders present in person or
represented by proxy. The secretary or, in the secretary's absence, an assistant
secretary or, in the absence of both the secretary and any and all assistant
secretaries, a person appointed by the Trustees or, in the absence of such
appointment, a person appointed by the chairperson of the meeting shall act as
secretary of the meeting and record the minutes of the meeting. If the secretary
presides as chairperson at a meeting of the shareholders, then the secretary
shall not also act as secretary of the meeting and record the minutes of the
meeting. The order of business and all other matters of procedure at any
-4-
<PAGE>
meeting of shareholders shall be determined by the chairperson of the meeting.
The chairperson of the meeting may prescribe such rules, regulations and
procedures and take such action as, in the discretion of such chairperson, are
appropriate for the proper conduct of the meeting, including, without
limitation: (a) restricting admission to the time set for the commencement of
the meeting; (b) limiting attendance at the meeting to shareholders of record of
the Trust, their duly authorized proxies or other such persons as the
chairperson of the meeting may determine; (c) limiting participation at the
meeting on any matter to shareholders of record of the Trust entitled to vote on
such matter, their duly authorized proxies or other such persons as the
chairperson of the meeting may determine; (d) limiting the time allotted to
questions or comments by participants; (e) maintaining order and security at the
meeting; (f) removing any shareholder or other person who refuses to comply with
meeting procedures, rules or guidelines as set forth by the chairperson of the
meeting; and (g) recessing or adjourning the meeting to a later date and time
and place announced at the meeting. Unless otherwise determined by the
chairperson of the meeting, meetings of shareholders shall not be required to be
held in accordance with the rules of parliamentary procedure or any established
rules of order.
Section 2.8 Quorum. At any meeting of shareholders, the presence in
person or by proxy of shareholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute or the Declaration of Trust
for the vote necessary for the adoption of any measure. If, however, such quorum
shall not be present at any meeting of the shareholders, the shareholders
entitled to vote at such meeting, present in person or by proxy, shall have the
power to adjourn the meeting from time to time to a date not more than 120 days
after the original record date. At such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2.9 Voting. A majority of all the votes cast at a meeting of
shareholders duly called and at which a quorum is present shall be sufficient to
elect a Trustee. Each share may be voted for as many individuals as there are
Trustees to be elected and for whose election the share is entitled to be voted.
A majority of the votes cast at a meeting of shareholders duly called and at
which a quorum is present shall be sufficient to approve any other matter which
may properly come before the meeting, unless more than a majority of the votes
cast is required herein or by statute or by the Declaration of Trust.
Section 2.10 Proxies. A shareholder may cast the votes entitled to be
cast by him either in person or by proxy executed by the shareholder or by his
duly authorized agent in any manner permitted by law. Such proxy shall be filed
with such officer of the Trust as the Trustees shall have designated for such
purpose for verification prior to such meeting. Any proxy relating to the
Trust's shares of beneficial interest shall be valid until the expiration date
therein or, if no expiration is so indicated, for such period as is permitted
pursuant to Maryland law. At a meeting of shareholders, all questions concerning
the qualification of voters, the validity of proxies, and the acceptance or
rejection of votes, shall be decided by the secretary of the meeting, unless
inspectors of election are appointed pursuant to Section 2.13, in which event
such inspectors shall pass upon all questions and shall have all other duties
specified in said section.
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Section 2.11 Voting Rights. The Board of Trustees shall fix the date
for determination of shareholders entitled to vote at a meeting of shareholders.
If no date is fixed for the determination of the shareholders entitled to vote
at any meeting of shareholders, only persons in whose names shares entitled to
vote stand on the share records of the Trust at the opening of business on the
day of any meeting of shareholders shall be entitled to vote at such meeting.
Section 2.12 Voting of Shares by Certain Holders.
(a) Shares of the Trust registered in the name of a
corporation, partnership, trust or other entity, if entitled to be voted, may be
voted by the president or a vice president, a general partner or trustee
thereof, as the case may be, or a proxy appointed by any of the foregoing
individuals, unless some other person who has been appointed to vote such shares
pursuant to a bylaw or a resolution of the governing board of such corporation
or other entity or pursuant to an agreement of the partners of the partnership
presents a certified copy of such bylaw, resolution or agreement, in which case
such person may vote such shares. Any trustee or other fiduciary may vote shares
registered in his name as such fiduciary, either in person or by proxy.
(b) Shares of the Trust directly or indirectly owned by it
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares entitled to be voted at any given time,
unless they are held by it in a fiduciary capacity, in which case they may be
voted and shall be counted in determining the total number of outstanding shares
at any given time.
(c) The Trustees may adopt by resolution a procedure by which
a shareholder may certify in writing to the Trust that any shares registered in
the name of the shareholder are held for the account of a specified person other
than the shareholder. The resolution shall set forth the class of shareholders
who may make the certification, the purpose for which the certification may be
made, the form of certification and the information to be contained in it; if
the certification is with respect to a record date or closing of the share
transfer books, the time after the record date or closing of the share transfer
books within which the certification must be received by the Trust; and any
other provisions with respect to the procedure which the Trustees consider
necessary or desirable. On receipt of such certification, the person specified
in the certification shall be regarded as, for the purposes set forth in the
certification, the shareholder of record of the specified shares in place of the
shareholder who makes the certification.
(d) Notwithstanding any other provision contained herein or in
the Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the
Corporations and Associations Article of the Annotated Code of Maryland (or any
successor statute) shall not apply to any acquisition by any person of shares of
beneficial interest of the Trust. This section may be repealed, in whole or in
part, at any time, whether before or after an acquisition of control shares and,
upon such repeal, may, to the extent provided by any successor bylaw, apply to
any prior or subsequent control share acquisition.
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Section 2.13 Inspectors.
(a) At any meeting of shareholders, the chairperson of the
meeting may appoint one or more persons as inspectors for such meeting. Such
inspectors shall ascertain and report the number of shares represented at the
meeting based upon their determination of the validity and effect of proxies,
count all votes, report the results and perform such other acts as are proper to
conduct the election and voting at the meeting.
(b) Each report of an inspector shall be in writing and signed
by him or by a majority of them if there is more than one inspector acting at
such meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or inspectors
on the number of shares represented at the meeting and the results of the voting
shall be prima facie evidence thereof.
Section 2.14 Reports to Shareholders. The Trustees shall submit to the
shareholders at or before the annual meeting of shareholders a report of the
business and operations of the Trust during such fiscal year containing
financial statements of the Trust, accompanied by the report of an independent
certified public accountant, and such further information as the Trustees may
determine is required pursuant to any law or regulation to which the Trust is
subject. Within the earlier of twenty (20) days after the annual meeting of
shareholders or 120 days after the end of the fiscal year of the Trust, the
Trustees shall place the annual report on file at the principal office of the
Trust and with any governmental agencies as may be required by law and as the
Trustees may deem appropriate.
Section 2.15 Nominations and Proposals by Shareholders. Nominations of
persons for election to the Board of Trustees and business to be transacted by
the shareholders at an annual or special meeting of shareholders may be properly
brought before the meeting only by shareholders who comply with the terms and
provisions set forth in this Section 2.15. All judgments and determinations made
by the Board of Trustees or the chairperson of the meeting, as applicable, under
this Section 2.15 (including without limitation judgments as to whether any
matter or thing is satisfactory to the Board of Trustees and determinations as
to the propriety of a proposed nomination or order of business) shall be made in
good faith.
Section 2.15.1 Annual Meetings of Shareholders.
(a) Nominations of persons for election to the Board of
Trustees and business to be transacted by the shareholders at an annual meeting
of shareholders may be properly brought before the meeting (i) pursuant to the
Trust's notice of meeting, (ii) by or at the direction of the Trustees or (iii)
by any shareholder of the Trust who is a shareholder of record both at the time
of giving of notice provided for in this Section 2.15.1 and at the time of the
annual meeting, who is entitled to vote at the meeting and who complies with the
terms and provisions set forth in this Section 2.15.1.
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(b) For nominations for election to the Board of Trustees or
business to be properly brought before an annual meeting by a shareholder
pursuant to Section 2.15.1(a)(iii), the shareholder must have given timely
notice thereof in writing to the secretary of the Trust and such business must
otherwise be a proper matter for action by shareholders. To be timely, a
shareholder's notice shall be delivered to the secretary at the principal
executive offices of the Trust not later than the close of business on the 90th
day nor earlier than the close of business on the 120th day prior to the first
anniversary of the date of mailing of the notice for the preceding year's annual
meeting; provided, however, that in the event that the date of mailing of the
notice for the annual meeting is advanced or delayed by more than thirty (30)
days from the anniversary date of the date of mailing of the notice for the
preceding year's annual meeting, notice by the shareholder to be timely must be
so delivered not earlier than the close of business on the 120th day prior to
the date of mailing of the notice for such annual meeting and not later than the
close of business on the later of: (i) the 90th day prior to the date of mailing
of the notice for such annual meeting or (ii) the 10th day following the day on
which public announcement of the date of mailing of the notice for such meeting
is first made by the Trust. In no event shall the public announcement of a
postponement of the mailing of the notice for such annual meeting or of an
adjournment or postponement of an annual meeting to a later date or time
commence a new time period for the giving of a shareholder's notice as described
above. A shareholder's notice shall set forth: (A) as to each person whom the
shareholder proposes to nominate for election or reelection as a Trustee, (1)
such person's name, age, business address and residence address, (2) the class
and number of shares of beneficial interest of the Trust that are beneficially
owned or owned of record by such person and (3) all other information relating
to such person that is required to be disclosed in solicitations of proxies for
election of Trustees in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A (or any successor provision) under the Exchange
Act, including such person's written consent to being named in the proxy
statement as a nominee and to serving as a Trustee if elected; (B) as to any
business that the shareholder proposes to bring before the meeting, a
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any interest of such
shareholder in such business (including any anticipated benefit to the
shareholder therefrom) and of each beneficial owner, if any, on whose behalf the
proposal is made; and (C) as to the shareholder giving the notice and each
beneficial owner, if any, on whose behalf the nomination or proposal is made,
(1) the name and address of such shareholder, as they appear on the Trust's
share ledger and current name and address, if different, of any such beneficial
owner and (2) the class and number of shares of the Trust which are owned
beneficially and of record by such shareholder and any such beneficial owner.
(c) Notwithstanding anything in the second sentence of Section
2.15.1(b) to the contrary, in the event that the number of Trustees to be
elected to the Board of Trustees is increased and there is no public
announcement by the Trust of such action or specifying the size of the increased
Board of Trustees at least one hundred (100) days prior to the first anniversary
of the date of mailing of notice for the preceding year's annual meeting, a
shareholder's notice required by this Section 2.15.1 also shall be considered
timely, but only with respect to nominees for any new positions created by such
increase, if the notice is delivered to the secretary at the principal executive
offices of the Trust not later than the close of business on the 10th day
immediately following the day on which such public announcement first is made by
the Trust.
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Section 2.15.2 Shareholder Proposals Causing Covenant
Breaches. At the same time as or prior to the submission of any shareholder
proposal of business to be conducted at an annual or special meeting that, if
approved and implemented by the Trust, would cause the Trust to be in breach of
any covenant of the Trust in any existing or proposed debt instrument of the
Trust or agreement of the Trust with any lender, the proponent shareholder or
shareholders must submit to the secretary of the Trust at the principal
executive offices of the Trust (a) evidence satisfactory to the Board of
Trustees of the lender's willingness to waive the breach of covenant or (b) a
plan for repayment of the indebtedness to the lender, satisfactory to the Board
of Trustees, specifically identifying the source of funds to be used in the
repayment and presenting evidence satisfactory to the Board of Trustees that the
identified funds could be applied by the Trust to the repayment.
Section 2.15.3 Shareholder Proposals Requiring Regulatory
Notice, Consent or Approval. At the same time or prior to the submission of any
shareholder proposal of business to be conducted at an annual or special meeting
that, if approved, could not be implemented by the Trust without notifying or
obtaining the consent or approval of any federal, state, municipal or other
regulatory body, the proponent shareholder or shareholders must submit to the
secretary of the Trust at the principal executive offices of the Trust (a)
evidence satisfactory to the Board of Trustees that any and all required
notices, consents or approvals have been given or obtained or (b) a plan,
satisfactory to the Board of Trustees, for making the requisite notices or
obtaining the requisite consents or approvals, as applicable, prior to the
implementation of the proposal.
Section 2.15.4 Special Meetings of Shareholders. As set forth
in Section 2.6, only business brought before the meeting pursuant to a proper
notice of meeting shall be conducted at a special meeting of shareholders.
Nominations of persons for election to the Board of Trustees only may be made at
a special meeting of shareholders at which Trustees are to be elected: (a)
pursuant to the Trust's notice of meeting; (b) by or at the direction of the
Board of Trustees; or (c) provided that the Board of Trustees has determined
that Trustees shall be elected at such special meeting, by any shareholder of
the Trust who is a shareholder of record both at the time of giving of notice
provided for in this Section 2.15.4 and at the time of the special meeting, who
is entitled to vote at the meeting and who complies with the notice procedures
set forth in this Section 2.15.4. In the event the Trust calls a special meeting
of shareholders for the purpose of electing one or more Trustees to the Board of
Trustees, any such shareholder may nominate a person or persons (as the case may
be) for election to such position as specified in the Trust's notice of meeting,
if the shareholder's notice contains the information required by Section
2.15.1(b) and the shareholder has given timely notice thereof in writing to the
secretary of the Trust at the principal executive offices of the Trust. To be
timely, a shareholder's notice shall be delivered to the secretary of the Trust
at the principal executive offices of the Trust not earlier than the close of
business on the 120th day prior to such special meeting and not later than the
close of business on the later of (i) the 90th day prior to such special meeting
or (ii) the 10th day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Trustees to be elected at such meeting. In no event shall the public
announcement of a postponement or adjournment of a special meeting to a later
date or time commence a new time period for the giving of a shareholder's notice
as described above.
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Section 2.15.5 General.
(a) Only such persons who are nominated in accordance with the
procedures set forth in this Section 2.15 shall be eligible to serve as Trustees
and only such business as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 2.15 shall be
transacted at a meeting of shareholders. The chairperson of the meeting shall
have the power and duty to determine whether a nomination proposed to be made at
or any business proposed to be brought before the meeting was made at or brought
before the meeting, as the case may be, in accordance with the procedures set
forth in this Section 2.15 and, if any proposed nomination or business is not
made at or brought before the meeting in compliance with this Section 2.15, to
declare that such nomination or business is out of order and shall be
disregarded.
(b) For purposes of this Section 2.15, (i) the "date of
mailing of the notice" shall mean the date of the proxy statement for the
solicitation of proxies for the election of Trustees and (ii) "public
announcement" shall mean disclosure in (A) a press release either transmitted to
the principal securities exchange on which the Trust's common shares of
beneficial interest are traded or reported by a recognized news service or (B) a
document publicly filed by the Trust with the United States Securities and
Exchange Commission.
(c) The Trust shall not be required to include in the Trust's
proxy statement a shareholder nomination of one or more persons for election to
the Board of Trustees or a shareholder proposal of business to be brought before
an annual or special meeting of shareholders unless the proponent shareholder or
shareholders shall have complied with (i) all applicable requirements of state
and federal law and the rules and regulations thereunder, including without
limitation Rule 14a- 8 (or any successor provision) under the Exchange Act, and
(ii) the applicable procedures and other requirements set forth in this Section
2.15. Nothing in this Section 2.15 shall be deemed to affect any right of the
Trust to omit a shareholder proposal from the Trust's proxy statement under the
Exchange Act, including without limitation nominations of persons for election
to the Board of Trustees and business to be brought before the shareholders at
an annual or special meeting of shareholders.
Section 2.16 Shareholder Actions by Written Consent. Any action
required or permitted to be taken at a meeting of shareholders may be taken
without a meeting if a consent in writing, setting forth such action, is signed
by the holders of a majority (or such higher percentage as may be specified
elsewhere in the Declaration of Trust or these Bylaws) of the shares outstanding
and entitled to vote.
Section 2.17 Voting by Ballot. Voting on any question or in any
election may be viva voce unless the presiding officer of the meeting or any
shareholder shall demand that voting be by ballot.
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ARTICLE III
TRUSTEES
Section 3.1 General Powers; Qualifications; Trustees Holding Over. The
business and affairs of the Trust shall be managed under the direction of its
Board of Trustees. A Trustee shall be an individual at least twenty-one (21)
years of age who is not under legal disability. In case of failure to elect
Trustees at an annual meeting of the shareholders, the Trustees holding over
shall continue to direct the management of the business and affairs of the Trust
until their successors are elected and qualify.
Section 3.2 Independent Trustees. A majority of the Trustees holding
office shall at all times be Independent Trustees (as defined below); provided,
however, that upon a failure to comply with this requirement as a result of the
creation of a temporary vacancy which must be filled by an Independent Trustee,
whether as a result of enlargement of the Board of Trustees or the resignation,
removal or death of a Trustee who is an Independent Trustee, such requirement
shall not be applicable. An Independent Trustee is one who is not an employee of
the Advisor (as defined in the Declaration of Trust) and who is not involved in
the Trust's day-to-day activities.
Section 3.3 Managing Trustees. Any Trustee who is not an Independent
Trustee may be designated a Managing Trustee by the Board of Trustees.
Section 3.4 Number and Tenure. Pursuant to the Articles Supplementary
accepted for record by the SDAT as of May 10, 2000, the number of Trustees
constituting the entire Board of Trustees may be increased or decreased from
time to time only by a vote of the Trustees, provided however that the tenure of
office of a Trustee shall not be affected by any decrease in the number of
Trustees.
Section 3.5 Annual and Regular Meetings. An annual meeting of the
Trustees shall be held immediately after and at the same place as the annual
meeting of shareholders, no notice other than this Bylaw being necessary. The
time and place of the annual meeting of the Trustees may be changed by the Board
of Trustees. The Trustees may provide, by resolution, the time and place, either
within or without the State of Maryland, for the holding of regular meetings of
the Trustees without other notice than such resolution.
Section 3.6 Special Meetings. Special meetings of the Trustees may be
called at any time by the chairman of the board, any Managing Trustee or the
president and shall be called by request of any two (2) Trustees then in office.
The person or persons authorized to call special meetings of the Trustees may
fix any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Trustees called by them.
Section 3.7 Notice. Notice of any special meeting shall be given by
written notice delivered personally, telegraphed, delivered by electronic mail,
telephoned, facsimile-transmitted or mailed to each Trustee at his business or
residence address. Personally delivered, telegraphed, telephoned,
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facsimile-transmitted or electronically mailed notices shall be given at least
twenty-four (24) hours prior to the meeting. Notice by mail shall be deposited
in the U.S. mail at least seventy-two (72) hours prior to the meeting.
Telephonic or facsimile-transmission notice shall be given at least forty- eight
(48) hours prior to the meeting. If mailed, such notice shall be deemed to be
given when deposited in the U.S. mail properly addressed, with postage thereon
prepaid. If given by telegram, such notice shall be deemed to be given when the
telegram is delivered to the telegraph company. Electronic mail notice shall be
deemed to be given upon transmission of the message to the electronic mail
address given to the Trust by the Trustee. Telephone notice shall be deemed
given when the Trustee is personally given such notice in a telephone call to
which he is a party. Facsimile-transmission notice shall be deemed given upon
completion of the transmission of the message to the number given to the Trust
by the Trustee and receipt of a completed answer-back indicating receipt.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the Trustees need be stated in the notice, unless
specifically required by statute or these Bylaws.
Section 3.8 Quorum. A majority of the Trustees shall constitute a
quorum for transaction of business at any meeting of the Trustees, provided
that, if less than a majority of such Trustees are present at a meeting, a
majority of the Trustees present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the
Declaration of Trust or these Bylaws, the vote of a majority of a particular
group of Trustees is required for action, a quorum for that action must also
include a majority of such group.
The Trustees present at a meeting which has been duly called and
convened may continue to transact business until adjournment, notwithstanding
the withdrawal of enough Trustees to leave less than a quorum.
Section 3.9 Voting. The action of the majority of the Trustees present
at a meeting at which a quorum is present shall be the action of the Trustees,
unless the concurrence of a greater proportion is required for such action by
specific provision of an applicable statute, the Declaration of Trust or these
Bylaws.
Section 3.10 Telephone Meetings. Trustees may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting. Such meeting shall be deemed to have been held at a place
designated by the Trustees at the meeting.
Section 3.11 Informal Action by Trustees. Unless specifically otherwise
provided in the Declaration of Trust, any action required or permitted to be
taken at any meeting of the Trustees may be taken without a meeting, if a
majority of the Trustees shall individually or collectively consent in writing
to such action. Such written consent or consents shall be filed with the records
of the Trust and shall have the same force and effect as the affirmative vote of
such Trustees at a duly held meeting of the Trustees at which a quorum was
present.
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Section 3.12 Waiver of Notice. The actions taken at any meeting of the
Trustees, however called and noticed or wherever held, shall be as valid as
though taken at a meeting duly held after regular call and notice if a quorum is
present and if, either before or after the meeting, each of the Trustees not
present signs a written waiver of notice, a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be lodged with the Trust records or made a part of the minutes
of the meeting.
Section 3.13 Vacancies. Pursuant to the Articles Supplementary accepted
for record by the SDAT as of May 10, 2000, if for any reason any or all the
Trustees cease to be Trustees, such event shall not terminate the Trust or
affect these Bylaws or the powers of the remaining Trustees hereunder (even if
fewer than three (3) Trustees remain). Any vacancy on the Board of Trustees may
be filled only by a majority of the remaining Trustees, even if the remaining
Trustees do not constitute a quorum. Any Trustee elected to fill a vacancy shall
hold office for the remainder of the full term of the class of Trustees in which
the vacancy occurred and until a successor is elected and qualifies.
Section 3.14 Compensation; Financial Assistance.
Section 3.14.1 Compensation. The Trustees shall be entitled to
receive such reasonable compensation for their services as Trustees as the
Trustees may determine from time to time. Trustees may be reimbursed for
expenses of attendance, if any, at each annual, regular or special meeting of
the Trustees or of any committee thereof; and for their expenses, if any, in
connection with each property visit and any other service or activity performed
or engaged in as Trustee. The Trustees shall be entitled to receive remuneration
for services rendered to the Trust in any other capacity, and such services may
include, without limitation, services as an officer of the Trust, services as an
employee of the Advisor (as defined in the Declaration of Trust), legal,
accounting or other professional services, or services as a broker, transfer
agent or underwriter, whether performed by a Trustee or any person affiliated
with a Trustee.
Section 3.14.2 Financial Assistance to Trustees. The Trust may
lend money to, guarantee an obligation of or otherwise assist a Trustee or a
trustee of its direct or indirect subsidiary. The loan, guarantee or other
assistance may be with or without interest, unsecured or secured in any manner
that the Board of Trustees approves, including by a pledge of shares.
Section 3.15 Removal of Trustees. The shareholders may, at any time,
remove any Trustee in the manner provided in the Declaration of Trust.
Section 3.16 Loss of Deposits. No Trustee shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association or other institution with whom moneys or shares have been
deposited.
Section 3.17 Surety Bonds. Unless specifically required by law, no
Trustee shall be obligated to give any bond or surety or other security for the
performance of any of his duties.
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Section 3.18 Reliance. Each Trustee, officer, employee and agent of the
Trust shall, in the performance of his duties with respect to the Trust, be
fully justified and protected with regard to any act or failure to act in
reliance in good faith upon the books of account or other records of the Trust,
upon an opinion of counsel or upon reports made to the Trust by any of its
officers or employees or by the Advisor, accountants, appraisers or other
experts or consultants selected by the Trustees or officers of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
Section 3.19 Interested Trustee Transactions. Section 2-419 of the
Maryland General Corporation Law (the "MGCL") shall be available for and apply
to any contract or other transaction between the Trust and any of its Trustees
or between the Trust and any other trust, corporation, firm or other entity in
which any of its Trustees is a trustee or director or has a material financial
interest.
Section 3.20 Qualifying Shares Not Required. Trustees need not be
shareholders of the Trust.
Section 3.21 Certain Rights of Trustees, Officers, Employees and
Agents. The Trustees shall have no responsibility to devote their full time to
the affairs of the Trust. Any Trustee or officer, employee or agent of the
Trust, in his personal capacity or in a capacity as an affiliate, employee or
agent of any other person, or otherwise, may have business interests and engage
in business activities similar or in addition to those of or relating to the
Trust.
Section 3.22 Certain Transactions. Notwithstanding any other provision
in the Bylaws, no determination shall be made by the Trustees nor shall any
transaction be entered into by the Trust that would cause any shares or other
beneficial interest in the Trust not to constitute "transferable shares" or
"transferable certificates of beneficial interest" under Section 856(a)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), or which would cause
any distribution to constitute a preferential dividend as described in Section
562(c) of the Code.
ARTICLE IV
COMMITTEES
Section 4.1 Number; Tenure and Qualifications. The Board of Trustees
may appoint an audit committee and other committees, composed of three (3) or
more members, at least one (1) of which shall be a Trustee, to serve at the
pleasure of the Board of Trustees.
Section 4.2 Powers. The Trustees may delegate any of the powers of the
Trustees to committees appointed under Section 4.1 and composed solely of
Trustees, except as prohibited by law.
Section 4.3 Meetings. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another Trustee to act in the place of such
absent member. Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Trustees.
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One-third, but not less than one, of the members of any committee shall
be present in person at any meeting of such committee in order to constitute a
quorum for the transaction of business at such meeting, and the act of a
majority present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee. The Board of Trustees may designate
a chairman of any committee, and such chairman or any two members of any
committee may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any such
committee, the members thereof present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
Trustee to act at the meeting in the place of such absent or disqualified
members.
Each committee shall keep minutes of its proceedings and shall report
the same to the Board of Trustees at the next succeeding meeting, and any action
by the committee shall be subject to revision and alteration by the Board of
Trustees, provided that no rights of third persons shall be affected by any such
revision or alteration.
Section 4.4 Telephone Meetings. Members of a committee of the Trustees
may participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 4.5 Informal Action by Committees. Any action required or
permitted to be taken at any meeting of a committee of the Trustees may be taken
without a meeting, if a consent in writing to such action is signed by each
member of the committee and such written consent is filed with the minutes of
proceedings of such committee.
Section 4.6 Vacancies. Subject to the provisions hereof, the Board of
Trustees shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 5.1 General Provisions. The officers of the Trust shall include
a president, a secretary and a treasurer and may include a chairman of the
board, a vice chairman of the board, a chief executive officer, a chief
operating officer, a chief financial officer, one or more vice presidents, one
or more assistant secretaries and one or more assistant treasurers. In addition,
the Trustees may from time to time appoint such other officers with such powers
and duties as they shall deem necessary or desirable. The officers of the Trust
shall be elected annually by the Trustees at the first meeting of the Trustees
held after each annual meeting of shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until his
successor is elected and qualifies or until his death, resignation or removal in
the manner hereinafter provided. Any two or more offices except
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president and vice president may be held by the same person. In their
discretion, the Trustees may leave unfilled any office except that of president
and secretary. Election of an officer or agent shall not of itself create
contract rights between the Trust and such officer or agent.
Section 5.2 Removal and Resignation. Any officer or agent of the Trust
may be removed by the Trustees if in their judgment the best interests of the
Trust would be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Any officer of the Trust
may resign at any time by giving written notice of his resignation to the
Trustees, the chairman of the board, the president or the secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. The acceptance of a resignation shall not be
necessary to make it effective unless otherwise stated in the resignation. Such
resignation shall be without prejudice to the contract rights, if any, of the
Trust.
Section 5.3 Vacancies. A vacancy in any office may be filled by the
Trustees for the balance of the term.
Section 5.4 Chief Executive Officer. The Trustees may designate a chief
executive officer from among the elected officers. The chief executive officer
shall have responsibility for implementation of the policies of the Trust, as
determined by the Trustees, and for the administration of the business affairs
of the Trust. In the absence of both the chairman and vice chairman of the
board, the chief executive officer shall preside over the meetings of the
Trustees at which he shall be present. The Managing Trustees, or any of them,
may be designated to function as the chief executive officer of the Trust.
Section 5.5 Chief Operating Officer. The Trustees may designate a chief
operating officer from among the elected officers. Said officer will have the
responsibilities and duties as set forth by the Trustees or the chief executive
officer.
Section 5.6 Chief Financial Officer. The Trustees may designate a chief
financial officer from among the elected officers. Said officer will have the
responsibilities and duties as set forth by the Trustees or the chief executive
officer.
Section 5.7 Chairman and Vice Chairman of the Board. The chairman of
the board, if any, shall in general oversee all of the business and affairs of
the Trust. In the absence of the chairman of the board, the vice chairman of the
board, if any, shall preside at such meetings at which he shall be present. The
chairman and the vice chairman of the board, if any, may execute any deed,
mortgage, bond, contract or other instrument, except in cases where the
execution thereof shall be expressly delegated by the Trustees or by these
Bylaws to some other officer or agent of the Trust or shall be required by law
to be otherwise executed. The chairman of the board and the vice chairman of the
board, if any, shall perform such other duties as may be assigned to him or them
by the Trustees. In the absence of a chairman and vice chairman of the board or
if none are appointed, the Managing Trustees, or either of them, shall perform
all duties and have all power and authority assigned to the chairman under these
Bylaws.
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Section 5.8 President. The president may execute any deed, mortgage,
bond, contract or other instrument, except in cases where the execution thereof
shall be expressly delegated by the Trustees or by these Bylaws to some other
officer or agent of the Trust or shall be required by law to be otherwise
executed; and in general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the Trustees from time
to time.
Section 5.9 Vice Presidents. In the absence of the president or in the
event of a vacancy in such office, the vice president (or in the event there be
more than one vice president, the vice presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the president and when so acting
shall have all the powers of and be subject to all the restrictions upon the
president; and shall perform such other duties as from time to time may be
assigned to him by the president or by the Trustees. The Trustees may designate
one or more vice presidents as executive vice president, senior vice president
or as vice president for particular areas of responsibility.
Section 5.10 Secretary. The secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Trustees and committees of the Trustees in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the Trust records and of the seal of the Trust; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the secretary by such shareholder; (e) maintain at the principal office of
the Trust a share register, showing the ownership and transfers of ownership of
all shares of the Trust, unless a transfer agent is employed to maintain and
does maintain such a share register; and (f) in general perform such other
duties as from time to time may be assigned to him by the chief executive
officer, the president or the Trustees.
Section 5.11 Treasurer. The treasurer shall have the custody of the
funds and securities of the Trust and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust and shall deposit all
moneys and other valuable effects in the name and to the credit of the Trust in
such depositories as may be designated by the Trustees.
He shall disburse the funds of the Trust as may be ordered by the
Trustees, taking proper vouchers for such disbursements, and shall render to the
president and Trustees, at the regular meetings of the Trustees or whenever they
may require it, an account of all his transactions as treasurer and of the
financial condition of the Trust.
Section 5.12 Assistant Secretaries and Assistant Treasurers. The
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the secretary or treasurer, respectively,
or by the president or the Trustees. The assistant treasurers shall, if required
by the Trustees, give bonds for the faithful performance of their duties in such
sums and with such surety or sureties as shall be satisfactory to the Trustees.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 6.1 Contracts. The Trustees may authorize any officer or agent
to enter into any contract or to execute and deliver any instrument in the name
of and on behalf of the Trust and such authority may be general or confined to
specific instances. Any agreement, deed, mortgage, lease or other document
executed by one or more of the Trustees or by an authorized person shall be
valid and binding upon the Trustees and upon the Trust when authorized or
ratified by action of the Trustees.
Section 6.2 Checks and Drafts. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Trust shall be signed by such officer or agent of the Trust in such
manner as shall from time to time be determined by the treasurer or by the
Trustees.
Section 6.3 Deposits. All funds of the Trust not otherwise employed
shall be deposited from time to time to the credit of the Trust in such banks,
trust companies or other depositories as the treasurer or the Trustees may
designate.
ARTICLE VII
SHARES
Section 7.1 Certificates. Ownership of shares shall be evidenced by
certificates, as described in Section 6.2 of the Declaration of Trust. Such
certificates shall be signed by the chief executive officer, the president or a
vice president and countersigned by the secretary or an assistant secretary or
the treasurer or an assistant treasurer and may be sealed with the seal, if any,
of the Trust. Certificates shall be consecutively numbered; and if the Trust
shall from time to time issue several classes of shares, each class may have its
own number series. A certificate is valid and may be issued whether or not an
officer who signed it is still an officer when it is issued.
Section 7.2 Transfers.
(a) Certificates shall be treated as negotiable and title
thereto and to the shares they represent shall be transferred, as described in
Sections 6.2 and 6.6 of the Declaration of Trust.
(b) The Trust shall be entitled to treat the holder of record
of any share or shares as the holder in fact thereof and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided in these Bylaws or by the
laws of the State of Maryland.
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<PAGE>
(c) Notwithstanding the foregoing, transfers of shares of
beneficial interest of the Trust will be subject in all respects to the
Declaration of Trust and all of the terms and conditions contained therein.
Section 7.3 Replacement Certificate. Any officer designated by the
Trustees may direct a new certificate to be issued in place of any certificate
previously issued by the Trust alleged to have been lost, stolen or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost, stolen or destroyed. When authorizing the issuance of a
new certificate, an officer designated by the Trustees may, in his discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or the owner's legal representative to
advertise the same in such manner as he shall require and/or to give bond, with
sufficient surety, to the Trust to indemnify it against any loss or claim which
may arise as a result of the issuance of a new certificate.
Section 7.4 Closing of Transfer Books or Fixing of Record Date.
(a) The Trustees may set, in advance, a record date for the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or determining shareholders entitled to receive payment
of any dividend or the allotment of any other rights, or in order to make a
determination of shareholders for any other proper purpose.
(b) In lieu of fixing a record date, the Trustees may provide
that the share transfer books shall be closed for a stated period but not longer
than twenty (20) days. If the share transfer books are closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days before the
date of such meeting.
(c) If no record date is fixed and the share transfer books
are not closed for the determination of shareholders, (i) the record date for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the day on which the notice
of meeting is mailed or the 30th day before the meeting, whichever is the closer
date to the meeting; and (ii) the record date for the determination of
shareholders entitled to receive payment of a dividend or an allotment of any
other rights shall be the close of business on the day on which the resolution
of the Trustees, declaring the dividend or allotment of rights, is adopted.
(d) When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 7.5 Share Ledger. The Trust shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent a share
ledger containing the name and address of each shareholder and the number of
shares of each class held by such shareholder.
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<PAGE>
Section 7.6 Fractional Shares; Issuance of Units. The Trustees may
issue fractional shares or provide for the issuance of scrip, as described in
Section 6.3 of the Declaration of Trust.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Trust shall be the calendar year.
ARTICLE IX
DISTRIBUTIONS
Section 9.1 Authorization. Dividends and other distributions upon the
shares of beneficial interest of the Trust may be authorized and declared by the
Trustees, subject to the provisions of law and the Declaration of Trust.
Dividends and other distributions may be paid in cash, property or shares of the
Trust, subject to the provisions of law and the Declaration of Trust.
Section 9.2 Contingencies. Before payment of any dividends or other
distributions, there may be set aside out of any funds of the Trust available
for dividends or other distributions such sum or sums as the Trustees may from
time to time, in their absolute discretion, think proper as a reserve fund for
contingencies or for any other purpose as the Trustees shall determine to be in
the best interest of the Trust, and the Trustees may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
SEAL
Section 10.1 Seal. The Trustees may authorize the adoption of a seal by
the Trust. The seal shall have inscribed thereon the name of the Trust and the
year of its formation. The Trustees may authorize one or more duplicate seals
and provide for the custody thereof.
Section 10.2 Affixing Seal. Whenever the Trust is permitted or required
to affix its seal to a document, it shall be sufficient to meet the requirements
of any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Trust.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Declaration
of Trust, these Bylaws or applicable law, a waiver thereof in writing, signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving
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<PAGE>
of such notice. Neither the business to be transacted at nor the purpose of any
meeting need be set forth in the waiver of notice, unless specifically required
by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XII
AMENDMENT OF BYLAWS
Except for any change for which the Declaration or these Bylaws
requires approval by more than a majority vote of the Trustees, these Bylaws may
be amended or repealed or new or additional Bylaws may be adopted only by the
vote or written consent of a majority of the Trustees.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 References to Declaration of Trust. All references to the
Declaration of Trust shall include any amendments thereto.
Section 13.2 Inspection of Bylaws. The Trustees shall keep at the
principal office for the transaction of business of the Trust the original or a
copy of the Bylaws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
Section 13.3 Election to be Subject to Part of Title 3, Subtitle 8.
Notwithstanding any other provision contained in the Declaration of Trust or
these Bylaws, the Trust hereby elects to be subject to Section 3-804(b) and (c)
and Section 3-805 of Title 3, Subtitle 8 of the Corporations and Associations
Article of the Annotated Code of Maryland (or any successor statute). This
section 13.3 only may be repealed, in whole or in part, by a subsequent
amendment to these Bylaws.
-21-
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