<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1995.
REGISTRATION NO. 33-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANYAN STRATEGIC LAND FUND II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-1490038
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
150 SOUTH WACKER DRIVE, SUITE 2900, CHICAGO, ILLINOIS 60606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
-----------------------
BANYAN STRATEGIC LAND FUND II 1994 EXECUTIVE AND DIRECTOR STOCK OPTION PLAN
(FULL TITLE OF THE PLAN)
LEONARD G. LEVINE
BANYAN STRATEGIC LAND FUND II
150 SOUTH WACKER DRIVE
SUITE 2900
CHICAGO, ILLINOIS 60606
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(312) 553-9800
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE
WITH A COPY TO:
MICHAEL J. CHOATE, ESQ.
SHEFSKY, FROELICH & DEVINE LTD.
444 NORTH MICHIGAN AVENUE
SUITE 2500
CHICAGO, ILLINOIS 60611
(312) 527-4000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGRE- AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) PRICE PER SHARE (2) GATE OFFERING PRICE (2) REGISTRATION FEE
--------------------------- -------------- ------------------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE 1,000,000 $1.19 $1,190,000 $411
$0.01 PER SHARE SHARES
</TABLE>
(1) SUBJECT TO INCREASE (OR DECREASE) IN ACCORDANCE WITH RULE 416 OF
REGULATION C TO REFLECT A MERGER, CONSOLIDATION, REORGANIZATION,
RECAPITALIZATION, STOCK DIVIDEND, STOCK SPLIT OR OTHER CHANGE IN THE
CORPORATE STRUCTURE OF THE REGISTRANT WHICH RESULTS IN A CHANGE IN THE
NUMBER OF SHARES ISSUABLE PURSUANT TO OUTSTANDING AWARDS UNDER THE PLAN.
(2) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
PURSUANT TO RULES 457(C) AND 457(H) OF REGULATION C, ON THE BASIS OF THE
AVERAGE OF THE HIGH ($1.19) AND LOW ($1.19) PRICES OF THE SHARES OF
COMMON STOCK OF THE REGISTRANT ON THE CONSOLIDATED REPORTING SYSTEM ON
AUGUST 17, 1995.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities
and Exchange Commission are incorporated herein by reference:
(a) the Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994;
(b) the Quarterly Report on Form 10-QSB for the quarterly period
ended March 31, 1995;
(c) the Quarterly Report on Form 10-QSB for the quarterly period
ended June 30, 1995; and
(d) the description of the Registrant's Common Stock set forth
in Registrant's Registration Statement filed pursuant to
Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any amendments or reports
filed for the purpose of updating such description.
All documents filed subsequent to the foregoing by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
registered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be a part thereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification of the Registrant's directors and officers is
subject to the requirements of the laws of the State of Delaware, the
Registrant's state of incorporation, and the provisions of the Registrant's
By-Laws. The General Corporation Law of Delaware (the "GCL") provides that a
Delaware corporation has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil,
1
<PAGE> 3
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The GCL further provides
that a Delaware corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or the court in which such action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Delaware Court of Chancery or such other court deems proper.
The Registrant's By-Laws provide that the directors, the advisor and
their affiliates who perform services on behalf of the Registrant will be
indemnified and held harmless by the Registrant against any losses, judgments,
liabilities, expenses and amounts paid in settlement of any claims sustained by
them in connection with the Registrant, provided that (a) such person has
determined, in good faith, that the course of conduct which caused the loss or
liability was in the best interest of the Registrant, (b) such liability or
loss was not the result of negligence or misconduct by such person, and (c)
such indemnification or agreement to hold harmless is recoverable only out of
the assets of the Registrant and not from the Registrant's stockholders. The
Registrant's By-Laws do not allow indemnification for any liability imposed by
judgment, and costs associated therewith, including attorneys' fees, arising
from or out of a violation of state or federal securities laws.
Notwithstanding the foregoing, the Registrant's By-Laws provide that the
directors and their affiliates will not be indemnified for losses, liabilities,
settlements and related expenses of lawsuits alleging securities law violations
unless a court (a) approves the settlement and finds that indemnification of
the settlement and related costs should be made, or (b) approves
indemnification of litigation costs if there has been a dismissal with
prejudice or a successful adjudication on the merits of each count involving
alleged securities law violations as to the particular indemnitee.
Pursuant to the GCL, expenses (including attorneys' fees) incurred by
any officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by a corporation in
advance of the final disposition of the action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay all
amounts advanced if it is
2
<PAGE> 4
ultimately determined that he is not entitled to be indemnified by the
corporation. The Registrant's By-Laws provide that the Registrant may advance
funds to a person for legal expenses and other costs incurred as a result of a
legal action if the following three conditions are satisfied: (a) the legal
action relates to the performance of duties or services by such person on
behalf of the Registrant; (b) the legal action is initiated by a third party
who is not a stockholder of the Registrant; and (c) such person agrees in
writing to repay the Registrant any funds advanced on such person's behalf if
it is ultimately determined by a court of competent jurisdiction that he is not
entitled to indemnification by the Registrant.
The GCL also provides that a Delaware corporation has the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the GCL.
The Registrant's By-Laws grant the Registrant the power to purchase and
maintain liability insurance on behalf of any person entitle to indemnity
thereunder. The Registrant maintains liability insurance on behalf of its
officers and directors. The Registrant's By-Laws provide, however, that the
Registrant may not incur the cost of that portion of liability insurance which
insures any party against any liability for which he could not be indemnified.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable
ITEM 8. EXHIBITS.
Exhibit No.
4(a) Certificate of Incorporation of VMS Strategic Land Fund II
(now known as Banyan Strategic Land Fund II)
4(b) Certificate of Amendment of Certificate of Incorporation of
VMS Strategic Land Fund II (now known as Banyan Strategic
Land Fund II)
4(c) Certificate of Amendment of Certificate of Incorporation of
VMS Strategic Land Fund II (now known as Banyan Strategic
Land Fund II)
4(d) Third Amendment to the Certificate of Incorporation of
Banyan Strategic Land Fund II
4(e) By-Laws of VMS Strategic Land Fund II (now known as Banyan
Strategic Land Fund II)
3
<PAGE> 5
4(f) Banyan Strategic Land Fund II 1994 Executive and Director
Stock Option Plan
5 Opinion of Shefsky, Froelich & Devine Ltd. re: legality
23(a) Consent of Shefsky, Froelich & Devine Ltd. (included in its
opinion filed as Exhibit 5)
23(b) Consent of Ernst & Young LLP
24 Power of Attorney (included on the signature pages to this
Registration Statement).
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) to file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to include any additional or changed material
information on the plan of distribution.
(b) that, for determining liability under the Securities Act,
treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering
thereof.
(c) to file a post-effective amendment to remove from
registration any of the securities that remain unsold at the
end of the offering.
(d) that, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(e) insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection
with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate
4
<PAGE> 6
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
5
<PAGE> 7
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on August 16, 1995.
BANYAN STRATEGIC LAND FUND II
By: /s/Leonard G. Levine
President (Principal Executive Officer)
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert G. Higgins and Leonard G. Levine,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as full to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may all fully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ Leonard G. Levine President August 16, 1995
------------------------------------ (Principal Executive Officer)
Leonard G. Levine
/s/ Joel G. Teglia Chief Financial Officer August 16, 1995
------------------------------------ (Principal Financial Officer and
Joel G. Teglia Principal Accounting Officer)
/s/ Walter E. Auch, Sr. Director August 16, 1995
------------------------------------
Walter E. Auch, Sr.
/s/ Gerald L. Nudo Director August 16, 1995
------------------------------------
Gerald L. Nudo
/s/ Robert G. Ungerleider Director August 8, 1995
------------------------------------
Robert G. Ungerleider
</TABLE>
(A majority of the Registrant's board of directors)
<PAGE> 9
EXHIBITS
Exhibit No.
4(a) Certificate of Incorporation of VMS Strategic Land Fund II
(now known as Banyan Strategic Land Fund II)
4(b) Certificate of Amendment of Certificate of Incorporation of
VMS Strategic Land Fund II (now known as Banyan Strategic
Land Fund II)
4(c) Certificate of Amendment of Certificate of Incorporation of
VMS Strategic Land Fund II (now known as Banyan Strategic
Land Fund II)
4(d) Third Amendment to the Certificate of Incorporation of
Banyan Strategic Land Fund II
4(e) By-Laws of VMS Strategic Land Fund II (now known as Banyan
Strategic Land Fund II)
4(f) Banyan Strategic Land Fund II 1994 Executive and Director
Stock Option Plan
5 Opinion of Shefsky, Froelich & Devine Ltd. re: legality
23(a) Consent of Shefsky, Froelich & Devine Ltd. (included in
its opinion filed as Exhibit 5)
23(b) Consent of Ernst & Young LLP
24 Power of Attorney (included on the signature pages to this
Registration Statement).
<PAGE> 1
EXHIBIT 4(a)
CERTIFICATE OF INCORPORATION
OF
VMS STRATEGIC LAND FUND II
1. The name of the corporation is VMS Strategic Land Fund II (the
"Corporation").
2. The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, zip code 19801. The name of its registered
agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
by the Corporation is to lend funds secured by real property or by similar
security interests, and in general to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
4. The Corporation is authorized to issue 17,500,100 shares of common
stock, each share having a par value of $.01.
5. The name and mailing address of the incorporator is as follows:
Judith E. Twilla Prickett, Jones, Elliott,
Kristol & Schnee
1310 King Street
P. O. Box 1328
Wilmington, Delaware 19899
6. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend
or repeal the By-Laws of the Corporation only to the extend provided in such
By-Laws.
7. The number of directors which will constitute the whole Board of
Directors of the Corporation shall be as specified in the By-Laws of the
Corporation. The names and mailing addresses of the five initial Directors,
whose current terms shall expire at the first Annual Meeting of the
Stockholders, are as follows:
Peter R. Morris Walter E. Auch, Sr.
8700 West Bryn Mawr Avenue Chicago Board of Options Exchange
Chicago, Illinois 60631-3501 2100 South La Salle Street
Chicago, Illinois 60606
<PAGE> 2
Leonard G. Levine Gerald L. Nudo
8700 West Bryn Mawr Avenue Capital Realty Services, Inc.
Chicago, Illinois 60631-3501 2 North LaSalle Street
Suite 765
Chicago, Illinois 60602
Robert Ungerleider
Financial Risk Underwriting
Agency, Inc.
40 Exchange Place
Suite 2001
New York, New York 10005
8. The election of directors need not be by written ballot.
9. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 14th day of April, 1987.
Judith E. Twilla
----------------
Judith E. Twilla
<PAGE> 1
EXHIBIT 4(b)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VMS STRATEGIC LAND FUND II
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, the undersigned, VMS Strategic Land Fund II, a Delaware corporation
(the "Corporation"), hereby certifies that:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by striking the present Article 4 in its entirety and adding the
following as the text of the new Article 4:
4. The Corporation is authorized to issue 20,000,100 shares
of common stock, each share having a par value of $.01.
SECOND: The Certificate of Incorporation of the Corporation is further
amended by (1) renumbering the present Article 9 as Article 10, and (2)
inserting a new Article 9 as follows:
9. The duration of the Corporation's existence shall be limited to
December 31, 2007.
<PAGE> 2
THIRD: The aforesaid amendment to the Certificate of Incorporation of
the Corporation has been duly adopted in accordance with the provisions of
Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this instrument has been executed and delivered for
and on behalf and in the name of the Corporation by its officers thereunto duly
authorized on July 28, 1987.
VMS Strategic Land Fund II
By Scott Lager
--------------------------
Its Vice Pres. & Asst. Sec.
ATTEST:
Albert Kopin
-----------------------------
Secretary
- 2 -
<PAGE> 1
EXHIBIT 4(c)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
VMS Strategic Land Fund II, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation by the written
consent of its members, filed with the minutes of the board the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of VMS
Strategic Land Fund II, Inc. be amended by changing the First
Article thereof so that, as amended, said Article shall be and read
as follows:
"The name of the Corporation is Banyan Strategic Land Fund II"
SECOND: That the stockholders have given written consent to said
amendment in accordance with the provisions of section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of sections 242 and 228 of the General
Corporation Law of the State of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by Leonard Levine, its President, and attested by Leonard Levine, its
Secretary, this 19 day of June, 1991.
VMS Strategic Land Fund II
By: Leonard Levine
---------------------------
Leonard Levine, President
ATTEST:
By: Leonard Levine
-------------------------
Leonard Levine, Secretary
2
<PAGE> 1
EXHIBIT 4(d)
THIRD AMENDMENT TO THE AMENDED
CERTIFICATE OF INCORPORATION OF
BANYAN STRATEGIC LAND FUND II
THIS THIRD AMENDMENT TO THE AMENDED CERTIFICATE OF INCORPORATION of
Banyan Strategic Land Fund II (the "Fund") is hereby accepted this 30th day of
June, 1992, by the undersigned Directors of the Fund, who hereby declare that:
RECITALS
A. WHEREAS, the Fund was formed on April 14, 1987 pursuant to a
Certificate of Incorporation (the "Certificate") filed with the
Office of the Secretary of State of the State of Delaware and
dated April 14, 1987;
B. WHEREAS, the Certificate was amended on July 28, 1987 and June
20, 1991; and
C. WHEREAS, the Directors are amending the Certificate, as amended,
to acknowledge an amendment voted on and approved by the
stockholders of the Fund, in accordance with the provisions of
Title 8, Section 242, of the General Corporation Law of the
State of Delaware at the 1991 Annual Meeting of the Stockholders
held on June 30, 1992.
NOW, THEREFORE, having stated the foregoing, the Certificate shall
be amended as follows:
1. Article 4 is hereby modified to read as follows:
"4. The Corporation is authorized to issue 50,000,000 shares
of Common Stock, each share having a par value of $.01."
IN WITNESS WHEREOF, we, the undersigned, have sworn to this Third
Amendment to the Amended Certificate of Incorporation or Banyan Strategic
Land Fund II as of the date and year first written above.
/s/ Robert M. Ungerleider
----------------------------
Robert M. Ungerleider
----------------------------
Walter E. Auch, Sr.
-----------------------------
Gerald L. Nudo
<PAGE> 2
THIRD AMENDMENT TO THE AMENDED
CERTIFICATE OF INCORPORATION OF
BANYAN STRATEGIC LAND FUND II
THIS THIRD AMENDMENT TO THE AMENDED CERTIFICATE OF INCORPORATION of
Banyan Strategic Land Fund II (the "Fund") is hereby accepted this 30th day of
June, 1992, by the undersigned Directors of the Fund, who hereby declare that:
RECITALS
A. WHEREAS, the Fund was formed on April 14, 1987 pursuant to a
Certificate of Incorporation (the "Certificate") filed with the
Office of the Secretary of State of the State of Delaware and
dated April 14, 1987;
B. WHEREAS, the Certificate was amended on July 28, 1987 and
June 20, 1991; and
C. WHEREAS, the Directors are amending the Certificate, as amended,
to acknowledge an amendment voted on and approved by the
stockholders of the Fund, in accordance with the provisions of
Title 8, Section 242, of the General Corporation Law of the
State of Delaware at the 1991 Annual Meeting of the Stockholders
held on June 30, 1992.
NOW, THEREFORE, having stated the foregoing, the Certificate shall
be amended as follows:
1. Article 4 is hereby modified to read as follows:
"4. The Corporation is authorized to issue 50,000,000 shares
of Common Stock, each share having a par value of $.01."
IN WITNESS WHEREOF, we, the undersigned, have sworn to this Third
Amendment to the Amended Certificate of Incorporation of Banyan Strategic
Land Fund II as of the date and year first written above.
-----------------------------
Robert M. Ungerleider
/s/ Walter E. Auch, Sr.
-----------------------------
Walter E. Auch, Sr.
-----------------------------
Gerald L. Nudo
<PAGE> 3
THIRD AMENDMENT TO THE AMENDED
CERTIFICATE OF INCORPORATION OF
BANYAN STRATEGIC LAND FUND II
THIS THIRD AMENDMENT TO THE AMENDED CERTIFICATE OF INCORPORATION of
Banyan Strategic Land Fund II (the "Fund") is hereby accepted this 30th day of
June, 1992, by the undersigned Directors of the Fund, who hereby declare that:
RECITALS
A. WHEREAS, the Fund was formed on April 14, 1987 pursuant to a
Certificate of Incorporation (the "Certificate") filed with the
Office of the Secretary of State of the State of Delaware and
dated April 14, 1987;
B. WHEREAS, the Certificate was amended on July 28, 1987 and June
20, 1991; and
C. WHEREAS, the Directors are amending the Certificate, as amended,
to acknowledge an amendment voted on and approved by the
stockholders of the Fund, in accordance with the provisions of
Title 8, Section 242, of the General Corporation Law of the
State of Delaware at the 1991 Annual Meeting of the Stockholders
held on June 30, 1992.
NOW, THEREFORE, having stated the foregoing, the Certificate shall
be amended as follows:
1. Article 4 is hereby modified to read as follows:
"4. The Corporation is authorized to issue 50,000,000 shares
of Common Stock, each share having a par value of $.01."
IN WITNESS WHEREOF, we, the undersigned, have sworn to this Third
Amendment to the Amended Certificate of Incorporation of Banyan Strategic
Land Fund II as of the date and year first written above.
----------------------------
Robert M. Ungerleider
----------------------------
Walter E. Auch, Sr.
/s/ Gerald L. Nudo
----------------------------
Gerald L. Nudo
<PAGE> 1
EXHIBIT-4(e)
BY-LAWS
OF
VMS STRATEGIC LAND FUND II
SECTION I
DEFINITIONS
1. Definitions. Whenever used in these by-laws, the following terms
shall have the meaning set forth below, unless the context otherwise requires:
"Acquisition Expenses" shall mean expenses related to the Fund's
selection of, and investment in, Mortgage Loans (whether or not made),
including but not limited to legal fees and expenses, travel and
communications expenses, costs of appraisals, accounting fees and expenses,
title insurance and miscellaneous other expenses.
"Acquisition Fees" shall mean the total of all fees and commissions,
however designated, paid by any party in connection with the making or investing
in Mortgage Loans by the Fund.
"Advisor" shall mean VMS Realty Investors, which, pursuant to the
Advisory Agreement, will serve as the initial investment advisor and
administrator of the Fund, or any successor Advisor selected by the Directors;
it shall also include any person or entity to which the Advisor subcontracts
substantially all of its administrative functions.
"Advisory Agreement" shall mean the agreement between the Fund and the
Advisor, pursuant to which the Advisor will act as the investment advisor and
administrator of the Fund.
"Affiliate" shall mean (i) any person directly or indirectly
controlling, controlled by or under common control with another person, (ii)
any person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such other person, (iii) any officer,
director, trustee or general partner of such person and (iv) if such other
person is an officer, director, trustee or partner of another entity, then the
entity for which that person acts in any such capacity.
<PAGE> 2
"Affiliated Borrower" shall mean Affiliates of VMS Realty Partners
which obtain a Mortgage Loan from the Fund.
"Affiliated Directors" shall mean those Directors who are not
Independent Directors.
"Appraised Value" shall mean the value of any real property securing a
Mortgage Loan, according to an MAI Appraisal.
"As-Built Appraised Value of the Property" shall mean (i) for
Pre-Development Loans, the land portion of the Appraised Value of the mortgaged
property, taking into account the planned development of the property, and (ii)
for Construction Loans, the Appraised Value of the Mortgaged Property,
including improvements, taking into account the planned construction of the
property.
"Average Invested Assets" shall mean, for any period, the average Total
Assets of the Fund invested, directly or indirectly, in Mortgage Loans,
before reserves for bad debts or other similar non-cash reserves, computed by
taking the average of such values at the end of each month during such period.
"Certificate of Incorporation" shall mean the certificate of
incorporation filed by the Fund in Delaware, as it may be amended from time to
time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of any successor legislation.
"Construction Loan" shall mean a Mortgage Loan for the purpose of
constructing improvement on real property.
"Delaware Corporation Statute" shall mean the General Corporation Law
of the State of Delaware, as it may be amended from time to time.
"Directors" shall mean, as of any particular time, Directors holding
office under the Certificate of Incorporation and By-laws at such time, whether
they be the Directors named therein or additional or successor Directors.
"Fund" shall mean VMS Strategic Land Fund II, a Delaware corporation.
"Gross Proceeds" shall mean the Total Proceeds from the sale of Shares
before deductions for volume discounts or Organization and Offering Expenses.
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<PAGE> 3
"Gross Proceeds To Be Raised" shall mean the greater of the Maximum
Amount or the Gross Proceeds actually raised from this public offering.
"Independent Directors" shall mean the Directors who (i) are not
affiliated, directly or indirectly, with the Advisor, whether by ownership of,
ownership interest in, employment by, any material business or professional
relationship with, or service as an officer or director of, the Advisor or its
Affiliates; (ii) do not serve as a director or trustee for more than two other
REITs organized by the Advisor or its Affiliates; and (iii) perform no other
services for the Fund, except as Directors. An indirect relationship shall
include circumstances in which the immediate family of a Director has one of
the foregoing relationships with the Advisor or the Fund.
"Interest Reserve" shall mean the amount loaned to a Borrower to fund
the Borrower's projected future payments of Basic Interest to the Fund and upon
which Basic Interest shall be charged.
"MAI Appraisal" shall mean an appraisal made by a member in good
standing of the American Institute of Real Estate Appraisers.
"Majority Vote" shall mean the vote or consent in person or by proxy of
Stockholders owning more than 50% of the outstanding Shares.
"Mortgage Loans" shall mean notes, debentures, bonds and other
evidences of indebtedness or obligations (other than temporary investments made
by the Fund) which are secured or collateralized by (i) interests in real
property, (ii) other beneficial interests essentially equivalent to a mortgage
on real property or (iii) interests in partnerships, joint ventures or other
entities which own real property.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the nationwide automated quotations system operated
by the NASD.
"Net Assets" shall mean the Total Assets (other than intangibles) at
cost before deducting depreciation or other non-cash reserves, less total
liabilities, calculated at least quarterly according to generally accepted
accounting principles on a basis consistently applied.
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<PAGE> 4
"Net Income" for any period shall mean total revenues applicable to
such period as determined for federal income tax purposes, less the expenses
applicable to such period, other than additions to reserves for bad debts or
other similar non-cash reserves; for purposes of calculating Operating
Expenses, Net Income shall not include the gain from the sale of the Fund's
assets.
"Net Proceeds" shall mean the Gross Proceeds less Organization and
Offering Expenses.
"Operating Expenses" shall mean all operating, general and
administrative expenses of the Fund as determined under generally accepted
accounting principles, including rent, utilities, capital equipment, salaries,
fringe benefits, travel expenses and other administrative items, but excluding
the expenses of raising capital, interest payments, taxes, non-cash
expenditures (e.g., depreciation, amortization, bad debt reserve), the
Subordinated Incentive Fee, and the costs related directly to a specific
Mortgage Loan investment by the Fund, such as expenses for originating,
acquiring, servicing or disposing of a Mortgage Loan.
"Organization and Offering Expenses" shall mean those expenses incurred
in connection with the formation, qualification and registration of the Fund
and in marketing, distributing and processing Shares, including any Sales
Commissions and Expenses and any other expenses actually incurred and directly
related to the offering and sale of Shares, including such expenses as: (a)
fees and expenses paid to attorneys in connection with the offering, (b)
registration fees, filing fees and taxes, (c) the costs of qualifying,
printing, amending, supplementing, mailing and distributing the Fund's
Registration Statement and Prospectus, including telephone and telegraphic
costs, (d) the costs of qualifying, printing, amending, supplementing, mailing
and distributing sales materials used in connection with the issuance of
Shares, including telephone and telegraphic costs, (e) remuneration of officers
and employees of the Advisor and its Affiliates while directly engaged in
marketing, distributing, processing and establishing records of Shares and
establishing records and paying Sales Commissions and Expenses, and (f)
accounting and legal fees and expenses incurred in connection therewith to the
Advisor or its Affiliates.
"Pre-Development Loan" shall mean a Mortgage Loan obtained by a
Borrower for the purpose of acquiring, carrying, and engaging in
pre-development activities with respect to, real property prior to the
construction of improvements thereon.
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"Principal" of a Mortgage Loan shall mean the funds loaned to a
Borrower, excluding the amount of the Interest Reserve.
"Prospectus" shall mean the final prospectus of the Fund with respect
to the offer and sale of Shares filed with the Securities and Exchange
Commission as part of the Fund's Registration Statement on Form S-11, as
amended.
"REIT" and "real estate investment trust" shall mean a real estate
investment trust as defined in Sections 856 to 860 of the Code.
"Shares" shall mean shares of common stock of the Fund, evidencing a
pro rata ownership interest in the assets of the Fund.
"Sponsor" shall mean any person directly or indirectly instrumental in
organizing, wholly or in part, the Fund or any person who will manage or
participate in the management of the Fund; and any Affiliate of any such
person, but excluding (i) a person whose only relationship with the Fund is
that of an independent property manager and whose only compensation is as such,
and (ii) wholly independent third parties such as attorneys, accountants and
underwriters whose only compensation is for professional services.
"Stockholders" shall mean as of any particular time the registered
holders of outstanding Shares at such time.
"Total Assets" shall mean the book value of all assets of the Fund,
determined in accordance with generally accepted accounting principles.
"Unimproved Real Property" shall mean property which has each of the
following three characteristics: (i) it was not acquired for the purpose of
producing rental or other operating income, (ii) there is no development or
construction in process on such land, and (iii) there is no development or
construction planned in good faith to commence on such land within one year.
SECTION 2
OFFICES
2.1 Principal Office. The principal office for the transaction of the
business of the Fund shall be located at 8700 West Bryn Mawr Avenue, Chicago,
Illinois. The Board of Directors is hereby granted full power and authority to
change
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said principal office to another location within or without the State of
Delaware.
2.2 Other Offices. The Fund may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Fund may require.
SECTION 3
MEETINGS OF STOCKHOLDERS
3.1 Annual Meetings; Election of Directors. Annual meetings of
Stockholders shall be held not less than 30 days after delivery of the annual
report, but within six months after the end of each fiscal year, for the
purpose of electing Directors and transacting such other proper business as may
come before the meeting. Directors shall continue in office for one year or
until the election and qualification of their successors. If Directors are not
elected at an annual meeting of Stockholders or if such meeting is not held,
Directors may be elected at a special meeting of Stockholders.
3.2 Special Meetings. Special meetings shall be held solely for the
purpose or purposes specified in the notice of hearing. Special meetings of
the Stockholders may be called at any time by the Chairman upon his own motion
and shall be called by the Chairman at the request of: (a) a majority of the
Directors; (b) a majority of the Independent Directors; or (c) upon written
request of Stockholders holding not less than 10% of the outstanding shares.
3.3 Time and Place of Meetings. Subject to the provisions of Section
3.1, each meeting of Stockholders shall be held at a time and place convenient
to Stockholders, as determined by the Board of Directors. Such meetings may be
at the principal office of the Fund or at such place within or without the
State of Delaware, and at such hour, as shall be fixed by the Board of
Directors or in the notice of the meeting or, in the case of an adjourned
meeting, as announced at the meeting at which the adjournment is taken.
3.4 Notice of Meetings. A written notice of each meeting of
Stockholders, stating the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
shall be given either personally or by mail or telegraph, charges prepaid, to
each Stockholder entitled to vote at the meeting. Unless otherwise provided by
statute, the notice shall be given not less than 20 nor more than 60 days
before the date of the
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<PAGE> 7
meeting and, if mailed, shall be deposited in the United States mail, postage
prepaid, and if by telegraph, delivered to the telegraph company, charges
prepaid, both directed to the Stockholder at his address as it appears on the
records of the Fund or as theretofore given by him to the Fund for the purpose
of notice. No notice need be given to any person with whom communication is
unlawful, nor shall there be any duty to apply for any permit or license to
give notice to any such person.
Notice shall be provided for any special meeting requested by the
Stockholders pursuant to Section 3.2(c) within 10 business days after receipt
of a written request either in person or by registered mail stating the purpose
of the special meeting requested.
3.5 Waiver of Notice. Anything herein to the contrary notwithstanding,
notice of any meeting of Stockholders need not be given to any Stockholder who
in person or by proxy shall have waived in writing notice of the meeting,
either before or after such meeting, or who shall attend the meeting in person
or by proxy, unless he attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. All such written waivers shall be
filed with the Fund's records or made a part of the minutes of the meeting.
3.6 Quorum; Manner of Acting and Order of Business. Subject to the
provisions of these By-Laws, the Certificate of Incorporation and statutes as
to the vote that is required for a specified action, the presence in person or
by proxy of the holders of a majority of the outstanding Shares of the Fund
entitled to vote at any meeting of Stockholders shall constitute a quorum
for the transaction of business. The Majority Vote of Stockholders shall be
binding on all Stockholders of the Fund, unless the vote of a greater number or
voting by classes is required by law or the Certificate of Incorporation or
these By-Laws. The Stockholders present at a duly called or held meeting at
which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough Stockholders to leave less than a
quorum.
Stockholders holding a majority of the Shares present in person or by
proxy and entitled to vote may, regardless of whether or not they constitute a
quorum, adjourn the meeting to another time and place. Any business which
might have been transacted at the original meeting may be transacted at any
adjourned meeting at which a quorum is present.
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Meetings of the Stockholders shall be presided over by the Chairman of
the Board, if any, or in his absence by the Vice Chairman of the Board, if any,
or in his absence by the President, or in his absence by a Vice President, or
in the absence of the foregoing persons by a chairman designated by the Board
of Directors, or in the absence of such designation by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting. The order of business at all meetings of the Stockholders
shall be determined by the chairman. The order of business so determined,
however, may be changed by vote of the holders of Shares entitled to cast a
majority of votes at the meeting present in person or represented by proxy.
3.7 Voting. Stockholders may vote by proxy but no proxy shall be
voted or acted upon after three years from its date of execution, unless the
proxy provides for a longer period, which in no case shall exceed seven years
from its date. Except as provided in the Certificate of Incorporation or in
any statute relating to the election of directors or to other particular
matters, each outstanding share, regardless of class, shall be entitled to one
vote on each matter submitted to a vote of Stockholders.
3.8 Inspectors of Election. (a) In advance of any meeting of
Stockholders, the Board of Directors may appoint inspectors of election to act
at each meeting of Stockholders and any adjournment thereof. If inspectors of
election are not so appointed, the chairman of the meeting may, and upon the
request of any Stockholder or his proxy shall, appoint inspectors of election
at the meeting. The number of inspectors shall be either one or three. If
appointed at the meeting upon the request of one or more Stockholders or
proxies, the vote of the holders of a majority of Shares present shall
determine whether one or three inspectors are appointed. In case any person
appointed as an inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment made by the Directors in advance of the
convening of the meeting or at the meeting by the person acting as Chairman.
(b) The inspectors of election shall determine the outstanding stock
of the Fund and the voting power of each class and series, the stock
represented at the meeting and the existence of a quorum, shall receive votes,
ballots or consents, shall count and tabulate all votes and shall determine the
result; and in connection therewith, the inspector shall determine the
authority, validity and effect of proxies, hear and determine all challenges
and questions, and do such other ministerial acts as may be proper to conduct
the
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<PAGE> 9
election or vote with fairness to all Stockholders. If there are three
inspectors of election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. If no
inspectors of election are appointed, the Secretary shall pass upon all
questions and shall have all other duties specified in this Section.
(c) Upon request of the chairman of the meeting or any Stockholder
or his proxy, the inspectors of election shall make a report in writing of any
challenge or question or other matter determined by him and shall execute a
certificate of any fact found in connection therewith. Any such report or
certificate shall be filed with the record of the meeting.
3.9 Action Without a Meeting. Any action required to be taken at
any annual or special meeting of Stockholders, or any action which may be taken
at any annual or special meeting of Stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding Shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those Stockholders who have not consented in writing.
3.10 Revocation of Consent. Any Stockholder giving a written
consent, or the Stockholder's proxyholders, or a transferee of the Shares or a
personal representative of the Stockholder or their respective proxyholders,
may revoke the consent by a writing received by the Fund prior to the time that
written consents of the number of Shares required to authorize the proposed
action have been filed with the Secretary of the Corporation, but may not do so
thereafter. Such revocation is effective upon its receipt by the Secretary of
the Fund.
SECTION 4
BOARD OF DIRECTORS
4.1 Number. The Fund shall have not less than three nor more than
nine Directors, at least a majority of whom shall at all times be Independent
Directors. The number of Independent Directors at any time shall not exceed the
number of Affiliated Directors by more than one. The range in the authorized
number of directors may be changed by Majority Vote
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of the Stockholders, and the exact number of Directors shall be fixed within the
limits herein specified by resolution of the Board of Directors, in the manner
provided in these By-Laws. Each Director shall hold office for a term of one
year or until the election and qualification of his Successor. Each Director
may be re-elected by the Stockholders. Directors need not be Stockholders.
4.2 Nomination of Directors. The Independent Directors shall nominate
persons to be elected as Independent Directors or may appoint a committee of
Directors to make such nominations. The Affiliated Directors shall be
nominated by the Board of Directors, after considering the recommendations of
the Advisor.
4.3 Annual Meetings. As promptly as practicable after each annual
meeting of Stockholders, at the same place as regular meetings, an annual
meeting of the Board of Directors shall be held for the purpose of election of
officers and the transaction of any other business. The Directors, including a
majority of the Independent Directors, shall at least annually review the
investment policies of the Fund to determine that the policies being followed
by the Fund are in the best interests of the Stockholders, and each such
determination and the basis therefor shall be set forth in the minutes of
meetings of the Directors.
4.4 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and on such dates as may be designated by the Board
at the principal office of the Fund or at any other place as may be designated
by the Board. Regular meetings shall be held at least four times per year.
4.5 Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman, and the Chairman shall call a special meeting at any
time upon the request of any two Directors.
4.6 Business of Meetings. Except as otherwise expressly provided in
these By-Laws, any and all business may be transacted at any meeting of the
Board of Directors; provided, that if so stated in the notice of meeting, the
business transacted at a special meeting shall be limited to the purpose or
purposes specified in the notice. The Directors may adopt such rules and
regulations for their conduct and the management of the affairs of the Fund as
they may deem proper and as are not inconsistent with the Certificate of
Incorporation or By-Laws.
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4.7 Time and Place of Meetings. Subject to the provisions of Section
4.5, each meeting of the Board of Directors shall be held on such date, at such
hour and in such place as fixed by the Board or in the notice or waivers of
notice of the meeting or, in the case of an adjourned meeting, as announced at
the meeting at which the adjournment is taken. Meetings may be held within or
without the State of Delaware, at such places as shall be designated by the
Directors.
4.8 Notice of Meetings. No notice need be given of any annual or
regular meeting of the Board of Directors. Notice of the date, hour, place and
purpose of all special meetings shall be given to each Director personally, by
telephone, by telegraph or by mail. If by mail, the notice shall be deposited
in the United States mail, postage prepaid, directed to the Director at his
address appearing on the books of the Fund or theretofore given by him to the
Fund, for the purpose of notice. If given by telegraph, the notice shall be
directed to the Director at his address appearing on the books of the Fund or
theretofore given by him to the Fund for the purpose of notice. If the meeting
is to be held in person, such notice shall be given at least 48 hours prior to
the time fixed for the holding of the meeting. If the meeting is to be held by
conference telephone or similar equipment, such notice shall be given at least
eight hours prior to the time fixed for the holding of the meeting. If notice
is not so given by the Secretary, it may be given by the President, or the
Directors requesting the meeting may issue the call and give notice.
4.9 Waiver of Notice. Anything herein to the contrary
notwithstanding, notice of any meeting of the Board of Directors need not be
given to any Director who shall have waived in writing notice of the meeting,
either before or after the meeting, or who shall attend such meeting, unless he
attends for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. All such waivers shall be filed with the records or made a part
of the minutes of the meeting.
4.10 Attendance by Telephone. Directors may participate in meetings
of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all Directors participating in the
meeting can hear one another, and such participation shall constitute presence
in person in the meeting.
4.11 Quorum and Manner of Acting; Adjournment. A majority of the
Directors, as well as a majority of the Independent Directors, shall constitute
a quorum for the transaction of business at any meeting of the Board of
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<PAGE> 12
Directors and, except as otherwise provided in these By-Laws, in the
Certificate of Incorporation or by statute, the act of a majority of the
Directors present at any meeting at which a quorum is present shall be the act
of the Board. A meeting at which a quorum is initially present may continue to
transact business, notwithstanding the withdrawal of Directors if any action
taken is approved by a least a majority of the required quorum for such
meeting. A majority of the Directors present at any meeting, regardless of
whether or not they constitute a quorum, may adjourn the meeting to another
time or place. The motion for adjournment shall be lodged with the records of
the Fund or the minutes of the meeting. Notice of the time and place of an
adjourned meeting need not be given to any Director if the time and place is
fixed at the meeting adjourned. Any business which might have been transacted
at the original meeting may be transacted at any adjourned meeting at which a
quorum is present.
The acquisition of any investment shall require the approval of a
majority of the Directors. Any action taken by the Fund in which the Sponsor,
the Advisor or their Affiliates have an interest, including any determination
to retain and the conditions for the retention of an advisor affiliated with
the Sponsor, must be approved by a majority of the Independent Directors who
are not interested parties in the transaction. In addition, any investment,
distribution, payment or disposition of assets or funds between the Fund and
the Sponsor, the Advisor or a Director or any of their respective Affiliates,
requires the additional approval of a majority of the Directors who are not
parties to the transaction or Affiliates, of any person or entity (other than
the Fund) who is a party to the transaction. Any agreement, deed, mortgage,
lease or other instrument or writing executed by any one or more of the
Directors or by any one or more authorized persons shall be valid and binding
upon the Directors and upon the Fund when authorized by action of the Directors
or as provided in these By-Laws.
4.12 Action Without a Meeting. Any action which could be taken at a
meeting of the Board of Directors may be taken without a meeting if all of the
directors consent to the action in writing and the writing or writings are
filed with the records of the Fund or the minutes of proceedings of the Board.
4.13 Resignation of Directors. Any Director may resign at any time
upon written notice to the Fund. The resignation shall become effective on the
date such notice is given or at any later time specified in the notice and,
unless otherwise provided in the notice, acceptance of the resignation shall
not be necessary to make it effective.
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<PAGE> 13
In the event that a person elected as an Independent Director ceases to
satisfy the requirements of an Independent Director, such Director shall cease
to be an Independent Director and if, as a result, a majority of the directors
are no longer Independent Directors, such person shall immediately resign
as a Director and such vacancy shall be filled in a manner consistent with
Section 4.15 hereof. If at any time, an Affiliate of the Sponsor is not the
Advisor, the Affiliated Directors shall immediately resign as Affiliated
Directors and successor Directors may be appointed by the person who becomes
the investment advisor to the Fund, to serve until the next election of
Directors by the Stockholders.
4.14 Removal of Directors. A director may be removed at any time with
or without cause by a Majority Vote of the Stockholders. For purposes of the
two immediately preceding sentences, "cause" shall include, without limitation,
any physical and/or mental inability, due to a condition or illness which is
expected to be a permanent or indefinite duration, to perform the duties of a
Director. Any reduction of the authorized number of directors does not remove
any Director prior to the expiration of such Director's term of office.
4.15 Filling of Vacancies. A vacancy or vacancies in the Board of
Directors shall exist when any authorized position of Director is not then
filled by a duly elected Director, whether caused by death, resignation,
removal, change in the authorized number of directors (by the Board or the
Stockholders) or otherwise. The Board of Directors may declare vacant the
office of a Director who has been declared of unsound mind by an order of court
or convicted of a felony.
Vacancies and newly created directorships resulting from an increase in
the authorized number of Directors may be filled as follows: vacancies among
the Independent Directors shall be filled for the unexpired term by a majority
of the remaining Independent Directors, though less than a quorum, or by a sole
remaining Independent Director. Vacancies occurring among the Affiliated
Directors shall be filled by appointment by the remaining Affiliated
Director(s), after considering the recommendation of the Advisor. If at any
time there shall be no Independent or Affiliated Directors in office, successor
Directors shall be elected by the Stockholders. The Directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and qualified, unless sooner displaced. Until vacancies are filled, the
remaining Director or Directors may exercise the powers of the Directors
hereunder.
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<PAGE> 14
In order that a majority of the Directors shall at all times be
Independent Directors, if, at any time, by reason of one or more vacancies,
there shall not be such a majority, then within 90 days after such vacancy
occurs, the continuing Independent Director or Directors then in office shall
appoint a sufficient number of other persons who are Independent Directors, so
that there shall be such a majority. Notwithstanding the provisions of Section
4.1, of the preceding sentence of this Section, or of any other provisions of
these By-Laws, however, there shall be no requirement as to the election,
appointment or incumbency of, or as to any action by, Independent Directors at
any time that all of the outstanding Shares of the Fund are owned by the
Advisor and Affiliated persons of the Advisor.
4.16 Compensation of Directors. The Independent Directors shall be
paid their reasonable expenses, incurred in connection with their services as
Directors, including, without limitation, travel to and attendance at each
meeting of the Board of Directors and any Committee thereof, as well as each
annual meeting of Stockholders. Each Independent Director shall also initially
be entitled to receive $15,000 per year for his services as Director hereunder.
The compensation payable to the Independent Directors for their services
hereunder may be increased or decreased at the discretion of the Directors. The
Affiliated Directors shall not be entitled to receive, directly or indirectly,
any remuneration for services rendered to the Fund in any capacity, including,
without limitation, services as an officer of or consultant to the Fund, legal,
accounting or other professional services, or otherwise.
SECTION 5
COMMITTEES OF THE BOARD OF DIRECTORS
5.1 Executive Committee. By resolution adopted by an affirmative vote
of the majority of the Board of Directors, the Board may appoint an Executive
Committee consisting of three or more Directors, a majority of whom shall be
Independent Directors and, if deemed desirable, one or more Directors as
alternate members who may replace any absentee or disqualified member at any
meeting of the Executive Committee. If so appointed, the Executive Committee
shall, when the Board is not in session, have and may exercise all the powers
and authority of the Board in the management of the business and affairs of the
Fund not reserved to the whole Board by the Delaware Corporation Statute. The
Executive Committee shall keep a record of its acts and proceedings and shall
report the same from time to time to the Board of Directors. The Directors
14
<PAGE> 15
shall have the power to prescribe the manner in which proceedings of the
Executive Committee, if appointed, and other committees, shall be conducted.
5.2 Other Committees. By resolution adopted by an affirmative vote
of the majority of the Board of Directors, the Board may from time to time
appoint such other committees of the Board, including without limitation, audit
and nominating committees, consisting of three or more Directors, a majority of
whom shall be Independent Directors, and, if deemed desirable, one or more
directors who shall act as alternate members and who may replace any absentee
or disqualified member at any meeting of the committee, and may delegate to
each such committee any of the powers and authority of the Board in the
management of the business and affairs of the Fund not reserved by law, the
Certificate of Incorporation, or these By-Laws, to the whole Board. Each such
committee shall keep a record of its acts and proceedings and shall report the
same from time to time to the Board of Directors.
5.3 Election of Committee Members; Vacancies. So far as
practicable, members of the committees of the Board and their alternates (if
any) shall be appointed at each annual meeting of the Board of Directors and,
unless sooner discharged by an affirmative vote of a majority of the Board
members present at any meeting of the entire Board at which a quorum is
present, committee members shall hold office until the next organization
meeting of the Board and until their respective successors are appointed.
Vacancies in committees of the Board created by death, resignation or removal
may be filled by an affirmative vote of a majority of the committee members
present at any meeting at which a quorum is present.
5.4 Meetings. Each committee of the Board may provide for regular
meetings of such committee. Special meetings of each committee may be called by
any two members of the committee (or, if there is only one member, by that
member in concert with the President) or by the President of the Fund. The
provisions of Section 3 regarding the business, time and place, notice and
waivers of notice of meetings, attendance at meetings and action without a
meeting shall apply to each committee of the Board, except that the references
in such provisions to the Directors and the Board of Directors shall be deemed
respectively to be references to the members of the committee and to the
committee. Each committee shall keep regular minutes of its proceedings and
report the same to the Board of Directors when required.
5.5 Quorum and Manner of Acting. The majority of the members of any
committee of the Board shall constitute a quorum for the transaction of
business at meetings of the committee.
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<PAGE> 16
and the act of a majority of the members present at any meeting at which a
quorum is present shall be the act of the committee. A majority of the members
present at any meeting, regardless of whether or not they constitute a quorum,
may adjourn the meeting to another time or place. Any business which might have
been transacted at the original meeting may be transacted at any adjourned
meeting at which a quorum is present.
SECTION 6
OFFICERS
6.1 Election and Appointment. The elected officers of the Fund shall
consist of a President, one or more Vice Presidents, a Secretary, a Treasurer,
and such other elected officers and agents as shall from time to time be
designated by the Board of Directors, including, in its discretion, a Chairman
of the Board of Directors. When their duties do not conflict, any two or more
officers, except those of President and Secretary, or President and Assistant
Secretary, may be held by the same person.
6.2 Chairman of the Board. The Chairman of the Board of Directors
shall have the power to preside at all meetings of the Board of Directors, and
to call meetings of the Stockholders and of the Board of Directors to be held
within the limitations prescribed by law or by these By-Laws, at such times and
at such places as the Chairman of the Board shall deem proper. The Chairman of
the Board shall have such other powers and shall be subject to such other
duties as the Board of Directors may from time to time prescribe.
6.3 President. The powers and duties of the President are:
(a) To act as the chief executive officer of the Fund and, subject to
the control of the Board of Directors, to have general supervision, direction
and control of the business and affairs of the Fund.
(b) To preside at all meetings of the Stockholders and, in the absence
of the Chairman of the Board, at all meetings of the Board of Directors.
(c) To call meetings of the Stockholders and also of the Board of
Directors to be held, subject to the limitations prescribed by law or by these
By-Laws, at such times and at such places as the President shall deem proper.
<PAGE> 17
(d) To be an ex officio member of all standing committees.
(e) Subject to the direction of the Board of Directors, to have general
charge of the property of the Fund, to supervise and control all officers,
agents and employees of the Fund, and to exercise such other general powers of
management as are usually vested in the office of President of a corporation
organized under the laws of the State of Delaware.
6.4 Vice President. In case of the absence, disability or death of
the President, the Vice President, or one of the Vice Presidents, shall
exercise all the powers and perform all the duties of the President. If there
is more than one Vice President, the order in which the Vice Presidents shall
succeed to the powers and duties of the President shall be in order of their
rank as fixed by the Board of Directors, or, if not ranked, the Vice President
designated by the Board of Directors. The Vice President or Vice Presidents
shall have such other powers and perform such other duties as may be granted or
prescribed by the Board of Directors.
6.5 Secretary. The powers and duties of the Secretary are:
(a) To keep a book of minutes at the principal office of the Fund, or
such other place as the Board of Directors may order, of all meetings of its
directors and Stockholders with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof given, the
names of those present at Directors' meetings, the number of Shares present or
represented at Stockholders' meetings and the proceedings thereof.
(b) To maintain custody of and keep the books of account and other
records of the Fund except as are in the custody of the Treasurer.
(c) To keep the seal of the Fund and to affix the same to all
instruments which may require it.
(d) To keep or cause to be kept at the principal office of the Fund a
share register, or duplicate share register if the original is kept at the
office of the transfer agent or agents, showing the names of the Stockholders
and their addresses, the number and classes of Shares held by each, the number
and date of certificates issued for shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
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(e) To keep a supply of certificates for Shares of the Fund, to fill
in all certificates issued and to make a proper record of each such issuance;
provided, that so long as the Fund shall have one or more duly appointed and
acting transfer agents of the Shares, or any class or series of Shares, of the
Fund, such duties with respect to such Shares shall be performed by such
transfer agent or transfer agents.
(f) To transfer upon the share books of the Fund any and all Shares of
the Fund; provided, that so long as the Fund shall have one or more duly
appointed and acting transfer agents of the Shares, or any class or series of
Shares, of the Fund, such duties with respect to such Shares shall be performed
by such transfer agent or transfer agents, and the method of transfer of each
certificate shall be subject to the reasonable regulations of the transfer
agent to which the certificate is presented for transfer, and also, if the Fund
then has one or more duly appointed and acting registrars, to the reasonable
regulations of the registrar to which the new certificate is presented for
registration; and provided, further, that no certificate for Shares shall be
issued or delivered or, if issued or delivered, shall have any validity
whatsoever until and unless it has been signed or authenticated in the manner
provided in Section 7.1 hereof.
(g) To make service and publication of all notices that may be
necessary or proper. In case of the absence, disability, refusal or neglect of
the Secretary to make service or publication of any notices, then such notices
may be served and/or published by the President or a Vice President, or by any
person thereunto authorized by either of them or by the Board of Directors or
by the holders of a majority of the outstanding Shares of the Fund entitled to
vote thereon.
(h) Generally to do and perform all such duties as pertain to the
office of Secretary and as may be required by the Board of Directors.
6.6 Treasurer. The powers and duties of the Treasurer are:
(a) To supervise and control the keeping and maintaining of adequate
and correct accounts of the Fund's investments and business transactions,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and Shares. The Treasurer shall maintain all
books of account and other records of the Fund, except such as are in the
custody of the Secretary.
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(b) To have the custody of all money, securities, evidence of
indebtedness and other valuable documents of the Fund, and, at the Treasurer's
discretion, to cause any or all thereof to be deposited for the account of the
Fund with such depositary as may be designated from time to time by the Board
of Directors.
(c) To receive or cause to be received, and to give or cause to be
given, receipts and acquittances for moneys paid in for the account of the
Fund.
(d) To disburse, or cause to be disbursed, all money of the Fund as
may be directed by the Board of Directors, taking proper vouchers for such
disbursements.
(e) To render to the President and to the Board of Directors, whenever
they may require, accounts of all transactions and of the financial condition
of the Fund.
(f) Generally to do and perform all such duties as pertain to the
office of Treasurer and as may be required by the Board of Directors.
6.7 Term of Office and Vacancy. So far as practicable, the elected
officers shall be elected at each organization meeting of the Board, and shall
hold office until the next organization meeting of the Board and until their
respective successors are elected and qualified. If a vacancy shall occur in
any elected office, the Board of Directors may elect a successor for the
remainder of the term. Any officer may resign by written notice to the Fund.
6.8 Removal of Elected Officers. Elected officers may be removed at
any time, either for or without cause, by the affirmative vote of a majority of
a quorum of the whole Board of Directors.
6.9 Compensation of Elected Officers. The compensation of all elected
officers of the Fund shall be fixed from time to time by the Board of
Directors.
SECTION 7
SHARES AND TRANSFER OF SHARES
7.1 Stock Record and Certificates. Records shall be kept by or on
behalf of the Fund, which shall contain the names and addresses of
Stockholders, the number of Shares held by them respectively, and the number or
Certificates, if any, representing the Shares, and in which their shall be
recorded
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all transfers of Shares. Every Stockholder shall be entitled to a
certificate signed by the Chairman or Vice Chairman of the Board of Directors,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the class and number of Shares owned by him in the Corporation;
provided that any and all signatures on a certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
Officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Fund with the same effect as if he or it were such officer,
trnsfer agent or registrar at the date of issue.
7.2 Transfer Agents and Registrars. The Board of Directors may, in
its discretion, appoint one of more responsible banks or trust companies as the
Board may deem advisable, from time to time, to act as transfer agents and
registrars of Shares of the Fund; and, when such appointments shall have been
made, no certificate for Shares of the Fund shall be valid until countersigned
by one of such transfer agents and registered by one of such registrars.
7.3 Stockholders Addresses. Every Stockholder or transferee shall
furnish the Secretary or a transfer agent with the address to which notice of
meetings and all other notices may be served upon or mailed to said Stockholder
or transferee, and in default thereof, said Stockholder or transferee shall not
be entitled to service or mailing of any such notice.
7.4 Lost Certificates. In case any certificate for Shares of the Fund
shall be lost, stolen, mutilated or destroyed, the Board of Directors, in its
discretion, or any transfer agent thereunto duly authorized by the Board, may
authorize the issue of a substitute certificate in place of the certificate so
lost, stolen, mutilated, or destroyed, and may cause such substitute
certificate to be countersigned by the appropriate transfer agent (if any) and
registered by the appropriate registrar (if any); provided that, in each such
case, the applicant for a substitute certificate shall furnish to the Fund and
to such of its transfer agents and registrars as may require the same, evidence
to their satisfaction, in their discretion, of the loss, theft, mutilation or
destruction of such certificate and of the ownership thereof, and also such
security or indemnity as may by them be required. The Board of Directors may
adopt such other provisions and restrictions with reference to lost
certificates, not inconsistent with applicable law, as it shall in its
discretion deem appropriate.
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7.5 Distributions to Stockholders. The Directors shall declare and
pay to Stockholders quarterly distribution with 45 days after the end of each
quarter, beginning 45 days after the end of the first full quarter after the
Final Closing Date. Distributions will be apportioned among Stockholders pro
rata based upon the number of their outstanding Shares on the record date, as
determined by Section 7.6. Such distributions will be in cash and may be made
from any source, provided that such distributions comply with the Delaware
Corporation Statute. In any event, the Directors shall, from time to time,
declare and pay to the Stockholders such distributions as may be necessary to
continue to qualify the Funds as a real estate investment trust, so long as
such qualification, in the opinion of the Directors, is in the best interest of
the Stockholders. The Fund shall furnish the Stockholders at the time of each
such distribution with a statement in writing advising as to the source of the
funds so distributed or, if the source thereof has not been determined, a
written statement disclosing that the source shall be sent to each Stockholder
who received the distribution not later than 75 days after the close of the
fiscal year in which the distribution was made.
7.6 Record Dates. In order that the Fund may determine the
Stockholders entitled to notice of or to vote at any meeting of Stockholders,,
or any adjournment thereof, or to express consent to action in writing without
a meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of Shares or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date which
shall be not more than sixty nor less than ten days before the date of any
meeting of Stockholders, and not more than sixty days prior to any other
action. In such case, those Stockholders, and only those Stockholders, who are
Stockholders of record on the date fixed by the Board of Directors shall,
notwithstanding any subsequent transfer of Shares on the books of the Fund, be
entitled to notice of and to vote at such meeting of Stockholders, or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of such dividend or other
distribution or allotment of rights, or entitled to exercise rights in respect
of any such change, conversion or exchange of Shares or to participate in any
such other lawful action.
7.7 Transfers of Shares. Subject to Section 7.8, Shares of the Fund
may be transferred by delivery of the certificates therefor, accompanied either
by an assignment in writing on the back of the certificates or by written power
of attorney to sell, assign and transfer the same, signed by the
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<PAGE> 22
record holder thereof; but no transfer shall affect the right of the Fund to
pay any distribution upon the Shares to the holder of record thereof, or to
treat the holder of record as the holder in fact thereof for all purposes, and
no transfer shall be valid, except between the parties thereto, until such
transfer shall have been made upon the books of the Fund.
7.8 Stockholders' Disclosure; Directors' Right to Refuse to Transfer
Shares; Limitation on Holdings; Repurchase of Shares.
(a) The Stockholders shall upon demand disclose to the Directors in
writing such information with respect to direct and indirect ownership of the
Shares as the Directors deem necessary to comply with the requirements of any
taxing authority or governmental agency.
(b) Whenever it is deemed by them to be reasonably necessary to
protect the tax status of the Fund as a REIT, the Directors may require a
statement or affidavit from each proposed transferee of Shares setting forth
the number of Shares already owned by him and any related person specified in
the form prescribed by the Directors and, in connection therewith, if the
proposed transfer may jeopardize the qualification of the Fund as REIT, the
Directors shall have the right, but not a duty, to refuse to transfer the
Shares to the proposed transferee. All contracts for the sale or other
transfer of Shares shall be subject to this provision.
(c) Notwithstanding any other provision of these By-Laws to the
contrary and subject to the provisions of subsection 7.8(e), the Fund may
prohibit any person from directly or indirectly acquiring ownership in the
aggregate of more than 9.9% of the outstanding Shares of the Fund (the
"Limit"). Shares owned by a person or group of persons in excess of the Limit
at any time shall be deemed "Excess Shares." For the purposes of this Section,
"person" shall have the meaning set forth in Section 7701(a)(1) of the Internal
Revenue Code of 1954, as amended, and shall also mean any partnership, limited
partnership, syndicate or other group deemed to be a "person" pursuant to
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; and a
person shall be deemed to own (a) Shares actually owned by such person, (b)
Shares constructively owned by such person after applying the rules of Section
544 of the Internal Revenue Code, and (c) Shares of which such person is
beneficial owner as defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934. All Shares which any person has the right to acquire
upon exercise of outstanding rights, options and warrants, and upon conversion
of any securities convertible into Shares, if any, shall be considered
outstanding for purposes of the Limit
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<PAGE> 23
if such inclusion will cause such person to own more than the Limit.
(d) The Directors, by notice to the holder thereof, may redeem any or
all Shares that are Excess Shares (including Shares that remain or become
Excess Shares because of the decrease in outstanding Shares resulting from such
repurchase); and from and after the date of giving of such notice of repurchase
("Repurchase Date") the Shares called for repurchase shall cease to be
outstanding and the holder thereof shall cease to be entitled to dividends,
voting rights and other benefits with respect such Shares excepting only the
right to payment by the Fund of the repurchase price determined and payable as
set forth in the following two sentences. Subject to the limitation on payment
set forth in the following sentence, the repurchase price of each Excess Share
called for repurchase shall be the average daily per Share closing sales price
if the Shares are listed on a national securities exchange, and if the Shares
are not so listed shall be the mean between the average per Share closing bid
and asked prices, in each case during the 30 calendar day period ending on the
business day prior to the Repurchase Date, or if there have been no sales on a
national securities exchange and no published bid quotations and no published
asked quotations with respect to Shares during such 30 calendar day period, the
repurchase price shall be the price determined by the Directors in good faith.
Unless the Directors determine that it is in the interest of the Fund to make
earlier payment of all of the amount determined as the repurchase price per
Share in accordance with the preceding sentence, the repurchase price shall be
payable only upon the liquidation of the Fund and shall not exceed an amount
which is the sum of the per Share distributions designated as liquidation
distributions and return of capital distributions declared with respect to
unrepurchased Shares of record subsequent to the Repurchase Date, and no
interest shall accrue with respect to the period subsequent to the Repurchase
Date to the date of such payments; provided, however, that in the event that
within 30 days after the Repurchase Date the person from whom the Excess Shares
have been repurchased sells (and notifies the Fund of such sale) a number of
the remaining Shares owned by him at least equal to the number of such Excess
Shares (and such sale is to a person in whose hands the Shares sold would not
be Excess Shares), then the Fund shall rescind the repurchase of the Excess
Shares if following such rescission such person would not be the holder of
Excess Shares, except that if the Fund receives an opinion of its counsel that
such rescission would jeopardize the tax status of the Fund as a REIT, then the
Fund shall in lieu of rescission make immediate payment of the repurchase price.
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(e) The Limit set forth in Section 7.8(c) shall not apply to
acquisitions of Shares pursuant to a cash tender offer made for all outstanding
Shares (including securities convertible into Shares) in conformity with
applicable federal and state securities laws where a majority of the
outstanding Shares (not including Shares or securities convertible into Shares
held by the tender offerer and/or any "affiliates" or "associates" thereof
within the meaning of the Act) are duly tendered and accepted pursuant to the
cash tender offer; nor shall the Limit apply to the acquisition of Shares by an
underwriter in a public offering of Shares, or in any transaction involving the
issuance of Shares by the Fund, in which a majority of the Directors determine
that the underwriter or other person or party initially acquiring such Shares
will make a timely distribution of such Shares to or among other holders such
that, following such distribution, none of such Shares will be Excess Shares.
(f) The Directors in their discretion may exempt from the Limit
ownership of certain designated Shares while owned by a person who has provided
the Directors with evidence and assurance acceptable to the Directors that the
qualification of the Fund as a REIT would not be jeopardized thereby.
7.9 Repurchase of Shares on Open Market. The Fund may purchase its
Shares on the open market and invest its assets in its own Shares, provided,
that in each case the consent of the Board of Directors, including a majority
of the Independent Directors, shall have been obtained.
SECTION 8
ADVISOR AND OTHER AGENTS
8.1 Employment of Advisor, Employees and Agents. The Directors are
responsible for the general policies of the Fund and for such general
supervision of the business of the Fund conducted by all officers, agents,
employees, advisors, managers or independent contractors of the Fund as may be
necessary to insure that such business conforms to the provisions of these
By-Laws. However, the Directors shall have the power to retain an Advisor
and/or to appoint, employ or contract with any person as the Directors may deem
necessary or proper for the transaction of the business of the Fund, and for
such purpose may grant or delegate such authority to any such person as the
Directors may in their sole discretion deem necessary or desirable, provided
that (i) such authority is exercised under the supervision of the Board of
Directors; and (ii) that any determination to retain an Advisor which is
affiliated with the Sponsor shall be valid only if made or
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<PAGE> 25
ratified with the approval of a majority of the Independent Directors; and
(iii) that any such delegation shall not preclude the qualification of the Fund
as a REIT under the Code. No advisory contract with a person affiliated with
the Sponsor shall be entered into or renewed without the approval of a majority
of the Independent Directors.
It shall be the fiduciary duty of the Directors (a) to evaluate the
performance of the Advisor before entering into or renewing an advisory
contract; (b) to monitor the administrative procedures, investment operations,
and performance of the Fund and the Advisor; and (c) to determine from time to
time but at least annually that the total fees and expenses of the Fund are
reasonable in light of the investment experience of the Fund, its Net Assets,
its Net Income, and the fees and expenses of other comparable advisors in real
estate, with each such determination reflected in the minutes of the Directors'
meetings.
The Directors, subject to the approval of a majority of the Independent
Directors, and subject to the provisions of Section 9, shall have the power to
determine the terms and compensation of the Advisor or any other person whom
they may employ or with whom they may contract. The Directors may exercise
broad discretion in allowing the Advisor to administer and regulate the
operations of the Fund, to act as agent for the Fund, to execute documents on
behalf of the Directors, and to make executive decisions which conform to
general policies and general principles previously established by the
Directors.
8.2 Term. The Directors shall not enter into any contract with an
Advisor unless such contract has an initial term of not more than one year,
provides for annual renewal or extension thereafter and provides that it may be
terminated at any time by the Directors, without cause, upon 60 days' written
notice or by the Advisor, without penalty, upon 120 days' written notice. Any
agreement with the Advisor may be terminated by a majority of the Independent
Directors. If the Agreement with the Advisor is terminated, the Advisor will
cooperate with the Fund and take all reasonable steps requested to assist the
Directors in making an orderly transition of the advisory function. The
Directors shall determine that any successor Advisor possesses sufficient
qualifications (a) to perform the advisory function for the Fund and (b) to
justify the compensation provided for in its contract with the Fund.
8.3 Activities of Advisor. The Advisor may render advice and services
to the Fund as its sole and exclusive function, or engage in other activities
including, without limitation, the rendering of advice to other investors and
the management of other investments or other real estate investment
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<PAGE> 26
trusts with similar investment objectives, including, without limitation,
investors and investments advised, sponsored or organized by the Advisor or its
Affiliates. The Directors may request the Advisor to engage in certain other
activities which complement the Trust's investments. Nothing herein shall
limit or restrict the right of any director, officer, employee or shareholder
of the Advisor, whether or not also a Director, officer or employee of the
Fund, to engage in any other business or to render services of any kind to any
other partnership, corporation, firm, individual, trust or association. The
Advisor may, with respect to any loan or other investment in which the Fund may
participate or allot a participation, render advice and service, with or
without remuneration, to each and every participant in that loan or other
investment.
8.4 Advisor Compensation. The Independent Directors shall at least
annually review generally the performance of the Advisor in order to determine
whether the compensation which the Fund has contracted to pay to the Advisor is
within the limits set forth herein and is reasonable in relation to the nature
and quality of services performed and whether the provisions of the contract
with the Advisor are being carried out. The Independent Directors have a
fiduciary duty to the Stockholders to supervise the relationship of the Fund
with the Advisor in all respects, including the level of compensation. Each
such determination shall be based on such of the following and other factors as
the Independent Directors deem relevant, and shall be reflected in the minutes
of the meetings of the Directors:
(a) the size of the fees payable to the Advisor in relation to the
size, composition and profitability of the portfolio of the Fund;
(b) the success of the Advisor in generating opportunities that meet
the investment objectives of the Fund;
(c) the rates charged to other REITs and to investors other than REITs
by advisors performing similar services;
(d) additional revenues realized by the Advisor and its Affiliates
through their relationship with the Fund, whether paid by the Fund or by others
with whom the Fund does business;
(e) the quality and extent of service and advice furnished to the Fund
by the Advisor;
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<PAGE> 27
(f) the performance of the investment portfolio of the Fund,
including income, conservation or appreciation of capital, frequency of problem
investments and competence in dealing with distress situations; and
(g) the quality of the portfolio of the Fund in relationship to
any investments generated by the Advisor for its own account.
SECTION 9
FEES AND EXPENSES
9.1 The total of all Acquisition Fees and Acquisition Expenses paid
by the Fund in connection with an investment in a Mortgage Loan shall in no
event exceed 6% of the funds advanced, unless a majority of the Directors
(including a majority of the Independent Directors) not otherwise interested in
the transaction approve the transaction as being fair and reasonable to the
Fund.
9.2 Annual Operating Expenses. The annual Operating Expenses of the
Fund shall not exceed the greater of (a) 2% of the Average Invested Assets of
the Fund or (b) 25% of the Net Income of the Fund for such year. The Advisor
shall reimburse the Fund for the amount by which the aggregate annual expenses
paid or incurred by the Fund exceed the limitations herein provided, within 60
days after the end of such year.
SECTION 10
RESTRICTIONS
10.1 Transactions with Affiliates. (a) The Fund shall not engage in
transactions with the Sponsor, the Advisor, any Director, officer or any
Affiliated person of such Advisor, Director or officer, except to the extent
that each such transaction has, after disclosure of such affiliation, been
approved or ratified by the affirmative vote of a majority of the Independent
Directors who are not interested parties in the transactions after a
determination by them that:
(i) the transaction is fair and reasonable to the
Fund and its Stockholders; and
(ii) the terms of such transaction are at least as
favorable as the terms of any comparable transactions made on an arm's length
basis.
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<PAGE> 28
(b) Payments to the Advisor or to any Director or officer for
services rendered in a capacity other than that as Advisor, Director, or
officer may only be made upon determination that:
(i) the compensation is not in excess of their
compensation paid for any comparable services; and
(ii) the compensation is not greater than the
charges for comparable services available from others who are competent and not
affiliated with any of the parties involved.
(c) The Fund shall not purchase property from the Sponsor, the
Advisor, the Directors or their Affiliates, unless (i) a majority of the
Directors (including a majority of the Independent Directors) not otherwise
interested in such transaction approve the transaction as being fair and
reasonable to the Fund and at a price to the Fund no greater than the cost of
the asset to such Sponsor, Advisor, Director or Affiliate thereof, or (ii) if
the price to the Fund is in excess of such costs, that substantial
justification for such excess exists and such excess is not unreasonable; in no
event shall the cost of such asset to the Fund exceed its current appraised
value as determined by a qualified independent real estate appraiser selected
by the Independent Directors;
(d) The Fund shall not sell property to the Sponsor, the Advisor,
the Directors or their Affiliates;
(e) The Fund may not make loans to or borrow money from the
Sponsor, Advisor, Directors or Affiliates thereof, including Affiliated
Borrowers, unless a majority of the Directors (including a majority of the
independent Directors) not otherwise interested in such transaction approve the
transaction as being fair, competitive and commercially reasonable and no less
favorable to the Fund than loans between unaffiliated lenders and borrowers
under the same circumstances. In addition, the Fund will not make a Mortgage
Loan to an Affiliated Borrower unless the Independent Directors obtain a letter
of opinion from an Independent Advisor that a proposed Mortgage Loan is fair
and at least as favorable to the Fund as a loan to an unaffiliated borrower in
similar circumstances;
(f) The Fund may enter into joint investments with Affiliates of
the Advisor if a majority of the Directors (including a majority of the
Independent Directors) approve the joint investment as being fair and
reasonable to the Fund and on substantially the same terms and conditions as
those of the other Affiliates participating in the joint investment. In
connection with such a joint investment, both the Fund and the
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<PAGE> 29
Affiliate would be required to approve any material decisions concerning the
investment, including refinancings and capital improvements.
10.2 Other Restrictions. The Fund shall not engage in any of the
following investment practices or activities:
(a) invest in any foreign currency, bullion or commodities or
commodities future contracts or effect short sales of commodities or
securities;
(b) invest in contracts for the sale of real estate unless
such contracts are recordable in the chain of title;
(c) issue (i) "redeemable securities," "face amount
certificates of the installment type" or "periodic payment plan certificates,"
all as defined in the Investment Company Act of 1940, (ii) more than one class
of equity security (excluding warrants, rights, options and convertible
obligations), (iii) nonvoting or assessable securities (other than debt
securities), or (iv) convertible or nonconvertible debt securities to the
public unless the historical cash flow of the Fund or the substantiated future
cash flow of the Fund, excluding extraordinary items, is sufficient to cover
the interest of the debt securities;
(d) grant options, warrants or rights to purchase Shares at
exercise prices less than the fair market value of such Shares on the date of
grant and for consideration (which may include services) that in the judgment
of the Directors has a market value less than the value of such option, warrant
or right on the date of grant; any such options, warrants or rights to purchase
Shares issued to the Advisor, Directors, Sponsor or their Affiliates shall be
on the same terms as those sold to the public and shall not exceed an amount
equal to 10% of the number of outstanding Shares on the date of grant;
(e) engage in underwriting or the agency distribution of
securities issued by others;
(f) invest more than 10% of Total Assets of the Fund in
Unimproved Real Property or indebtedness secured by a deed of trust or Mortgage
Loans on Unimproved Real Property;
(g) engage in trading, as compared with investment, activities
or in any other activity which would have the effect of causing the Fund to
fail to qualify as a REIT under the Code;
(h) allow the aggregate borrowings of the Fund, secured and
unsecured, to exceed 200% of the Net Assets of the Fund; or borrow, on an
unsecured basis, if such borrowing will
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result in an asset coverage of less than 300% ("asset coverage" means the ratio
which the value of the total assets, less all liabilities and indebtedness
except indebtedness for unsecured borrowings, bears to the aggregate amount of
all unsecured borrowings of the Fund); in any event, the aggregate borrowings
of the Fund, secured and unsecured, shall be reasonable in relation to the Net
Assets of the Fund and shall be reviewed by the Directors at least quarterly;
(i) acquire securities in any company holding investments or engaging
in activities prohibited by this Seciton 10.2;
(j) invest in or make Mortgage Loans unless the Fund obtains (i) an
MAI Appraisal concerning the underlying property, which Appraisal shall be
maintained in the Fund's records for at least five years and shall be available
for inspection and duplication by any Stockholder; and (ii) a mortgagee's or
owner's title insurance policy or commitment as to the priority of the mortgage
or the condition of the title;
(k) make Mortgage Loans except where the Principal amount of such
Mortgage Loans (excluding interest and working capital and interest Reserves)
plus the outstanding amount of senior debt does not exceed 85% of the As-Built
Appraised Value of the Property, unless a majority of the Independent Directors
determines that an increased amount is justified by additional credit or
collateral;
(l) make a junior Mortgage Loan which is subordinate to a mortgage
held by the Advisor, Directors, Sponsors or Affiliates of the Fund;
(m) purchase insurance either through or from any Affiliate of the
Advisor or the Sponsor, unless (i) before a master insurance policy covering
all the Fund's assets is placed through such brokerage services, there will
have been received quotations from two independent insurance brokers relating
to the proposed coverage, which quotations shall be upon coverage and terms
comparable to those proposed to be provided by the Affiliate and such Affiliate
shall not provide such insurance brokerage services unless it can obtain such
insurance at a cost which is no greater than the lowest of the two unaffiliated
insurance agency quotations for such master insurance policy; and (ii) if at
any time the Affiliates cease to derive at least 75% of their business from
insurance commissions with respect to insurance written for individuals,
partnerships, corporations, trusts or other entities which are not Affiliates of
the Advisor or the Sponsor, the Affiliates shall not write any further
insurance on behalf of the Fund or on properties then owned by it;
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<PAGE> 31
(n) invest in equity securities of any nongovernmental issuer,
including other REITS or limited partnerships, for a holding period in excess
of 18 months; such investments in entities affiliated with the Advisor or its
Affiliates will not be permitted unless a majority of the Directors (including
a majority of the Independent Directors) not otherwise interested in such
transaction approve the transaction as being fair and reasonable to the Fund;
(o) issue its Shares on a deferred payment basis or other similar
arrangement; or
(p) invest in or make a Mortgage Loan on any one property if the
Principal actually advanced by the Fund would exceed 20% of the Gross Proceeds
to be Raised.
SECTION 11
REPORTS
11. Annual Reports. The Directors shall cause to be prepared and
mailed to the Stockholders not later than 120 days after the close of each
fiscal year of the Fund, and in any event not less than 30 days prior to the
Fund's annual meeting of Stockholders, a report of the business and operation of
the Fund during such fiscal year, which report shall constitute the accounting
of the Directors for such fiscal year. The report shall be in such form and
have such content as the Directors deem proper, but shall in any event include
(a) a balance sheet, an income statement and a statement of changes in
financial position, each prepared in accordance with generally accepted
accounting principles, audited by an independent certified public accountant
and accompanied by the report of such accountant thereon; (b) a statement
setting forth (i) the ratio of the costs of raising capital during the period
to the capital raised, and (ii) the aggregate amount and type of fees paid to
the Advisor and all Affiliates of the Advisor by the Fund and by third parties
doing business with the Fund who make such payments for the account of the
Fund; and (c) a description of the material terms and circumstances of any
transactions between the Fund and the Sponsor, the Advisor, any Director,
officer of any Affiliate thereof, including without limitation purchases from,
loans to or from, or joint ventures with the Fund, and a statement that a
majority of the Directors and a majority of the disinterested Independent
Director determined that such transactions were fair and reasonable to the Fund
and on terms not less favorable than those available from unaffiliated third
parties.
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SECTION 12
LIABILITY, INDEMNIFICATION AND OTHER MATTERS
12.1 Limitation of Liability of Directors and Officers. The Directors
and Advisor of the Trust shall be deemed to be in a fiduciary relationship to
the Stockholders. No Director or officer of the Fund shall be liable to the
Fund or to any Director or Stockholder for any act or omission of any other
Director, officer or agent of the Fund or be held to any personal liability
whatsoever in tort, contract or otherwise in connection with the affairs of this
Fund if it is determined that such person acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Fund, unless such liability was the result of negligence or misconduct by the
Director.
12.2 Indemnification. The Directors, the Advisor and any of their
Affiliates who perform services on behalf of the Fund shall be indemnified and
held harmless by the Fund against any losses, judgments, liabilities, expenses
and amounts paid in settlement of any claims sustained by them in connection
with the Fund, provided that (a) such person has determined, in good faith,
that the course of conduct which caused the loss or liability was in the best
interest of the Fund, (b) such liability or loss was not the result of
negligence or misconduct by such person, (c) such indemnification or agreement
to hold harmless is recoverable only out of the the assets of the Fund and not
from the Stockholders, and (d) Affiliates of the Advisor will only be
indemnified for their actions or inactions which occurred while they were
engaged in activities which could have been engaged in by the Advisor in its
capacity as such. Indemnification will not be allowed for any liability
imposed by judgment, and costs associated therewith, including attorneys' fees,
arising from or out of a violation of state or federal securities laws.
Notwithstanding the above, the Directors, the Advisor, their Affiliates and any
person acting as a broker-dealer shall not be indemnified for losses,
liabilities, settlements and related expenses of lawsuits alleging securities
law violations unless a court (i) approves the settlement and finds that
indemnification of the settlement and related costs should be made, or (ii)
approves indemnification of litigation costs if there has been a dismissal with
prejudice or a successful adjudication on the merits of each count involving
alleged securities law violations as to the particular indemnitee. Any person
seeking indemnification shall apprise the court of the position of the
Securities and Exchange Commission, the Massachusetts Securities Division, the
Missouri Commissioner of Securities, the Pennsylvania Securities Commission and
the Tennessee Securities Division with respect to indemnification for
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<PAGE> 33
securities law violations, before seeking court approval for indemnification.
The Fund may not advance funds to any person for legal expenses and other costs
incurred as a result of any legal action initiated against such person by a
Stockholder of the Fund. The Fund may advance funds to a person for legal
expenses and other costs incurred as a result of a legal action if the
following three conditions are satisfied: (1) the legal action relates to the
performance of duties or services by such person on behalf of the Fund; (2) the
legal action is initiated by a third party who is not a Stockholder of the
Fund; and (3) such person agrees in writing to repay the advanced funds to the
Fund if it is ultimately determined that he is not entitled to indemnification
by the Fund as authorized herein. The rights accruing to any person under these
provisions shall not exclude any other right to which he may be lawfully
entitled, nor shall anything contained herein restrict such right of a Director
to contribution as may be available under applicable law. The Fund shall have
power to purchase and maintain liability insurance on behalf of any person
entitled to indemnity hereunder, including the Directors, but the Fund shall
not incur the cost of that portion of liability insurance which insures any
party against any liability for which he could not be indemnified hereunder.
12.3 Right of Directors and Officers to Own Shares or Other Property
and to Engage in Other Business. Any Director or officer may acquire, own,
hold and dispose of Shares in the Fund, for his individual account, and may
exercise all rights of a Stockholder to the same extent and in the same manner
as if he were not a Director or officer. Any Director or officer may have
personal business interests and may engage in personal business activities,
which interests and activities may include the acquisition, syndication,
holding, management, development, operation or investment in, for his own
account or for the account of others, interests in real property or persons
engaged in the real estate business. However, each Affiliated Director must
present investment opportunities which comply with the Fund's investment
policies to the Fund prior to engaging in such transactions themselves.
SECTION 13
BY-LAW AMENDMENTS
13.1 By the Stockholders. Except as provided in Section 13.2, these
By-Laws may only be amended by obtaining the Majority Vote of Stockholders,
except that Stockholders owning two-thirds of the outstanding Shares must
approve any amendment which would change any rights with respect to any
outstanding class of securities of the Fund, reduce the amount
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<PAGE> 34
payable thereon upon liquidation of the Fund, or diminish or eliminate any
voting rights pertaining thereto.
13.2 By the Directors. A majority of the Directors (including a
majority of the Independent Directors), without the vote or consent of
Stockholders, may at any time amend these By-Laws to the extent deemed by the
Directors in good faith to be necessary (a) to clarify any ambiguities or
correct any inconsistencies; (b) to meet the requirements for qualification as
a real estate investment trust under Sections 856-860 of the Code or any
interpretation thereof by a court or other governmental agency of competent
jurisdiction, but the Directors shall not be liable for failing to do so;
(c)(i) to restructure the Fund's activities to the extent necessary to comply
with any exemption in the final plan asset regulation adopted by the Department
of Labor, including establishing a fixed percentage of Shares permitted to be
held by Qualified Plans or other Tax-Exempt Entities, discontinuing sales to
such investors after a given date as necessary to obtain a prohibited
transaction exemption from the Department of Labor or (ii) to terminate the
offering or to compel a dissolution and termination of the Fund.
SECTION 14
DISSOLUTION
The duration of the Fund shall be for the period set forth in the
Fund's Certificate of Incorporation, as amended, unless the Fund is dissolved
in accordance with these By-Laws, the Delaware Corporation Statute or by
operation of law. The Fund may be dissolved by a Majority Vote of Stockholders
pursuant to the procedures set forth in the Delaware Corporation Statute.
SECTION 15
MISCELLANEOUS
15.1 Fiscal Year. The fiscal year of the Fund shall be fixed by
resolution of the Board of Directors.
15.2 Signature on Negotiable Instruments. All bills, notes, checks
or other instruments for the payment of money shall be signed or countersigned
in such manner as from time to time may be prescribed by resolution of the
Board of Directors.
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<PAGE> 35
15.3 Form of Records. Any records maintained by the Fund in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible form
within a reasonable time.
15.4 Inspection of Fund's Records. Any Stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating a purpose reasonably related to his interests as a Stockholder, have
the right during usual business hours to inspect for any proper purpose the
Fund's stock ledger, a list of its Stockholders, the books of account, the
minutes of the proceedings of the Stockholders and the Board of Directors, and
the Fund's other books and records and to make copies or extracts therefrom. In
every instance where an attorney or other agent shall be the person who seeks
the right to inspection, the demand under oath shall be accompanied by a power
of attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the Stockholder. The demand under oath shall be directed
to the Fund at its registered office in Delaware or at its principal place of
business.
Any Director shall have the right to examine the Fund's stock ledger, a
list of its Stockholders and its other books and records for a purpose
reasonably related to his position as a Director.
15.5 Notices. Any reference in these By-Laws to the time a notice
is given or sent means, unless otherwise expressly provided, the time a written
notice by mail is deposited in the United States mails, postage prepaid,
addressed to such Stockholder at his address as it appears on the records of
the Fund; or the time any other written notice is personally delivered to the
recipient or is delivered to a common carrier for transmission, or actually
transmitted by the person giving the notice by electronic means, to the
recipient; or the time any oral notice is communicated, in person or by
telephone or wireless, to the recipient or to a person at the office of the
recipient who the person giving the notice has reason to believe will promptly
communicate it to the recipient.
15.6 Name. VMS Realty Partners has a proprietary interest in the
name "VMS." Accordingly, and in recognition of this right, if at any time the
Fund ceases to retain VMS Realty Investors or an Affiliate thereof to perform
the services Of Advisor, the Directors of the Fund will, promptly after receipt
of written request from VMS Realty Investors (if such request is made within
three months after such entity ceases to perform
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<PAGE> 36
such services of Advisor), change the name of the Fund to a name that does not
contain the name "VMS" or any other word or words that might, in the sole
discretion of the Advisor, be susceptible of indication of some form of
relationship between the Fund and the Advisor or any Affiliate thereof.
Consistent with the foregoing, it is specifically recognized that the Advisor
or one or more of its Affiliates has in the past and may in the future
organize, sponsor or otherwise permit to exist other investment vehicles
(including vehicles for investment in real estate) and financial and service
organizations having "VMS" as a part of their name, all without the need for
any consent (and without the right to object thereto) by the Fund or the
directors.
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EXHIBIT 4(f)
BANYAN STRATEGIC LAND FUND II
1994 EXECUTIVE AND DIRECTOR STOCK OPTION PLAN (THE "PLAN")
I. GENERAL.
A. PURPOSE.
The purpose of this 1994 Executive and Director Stock Option Plan
(the "Plan") is to advance the interests of the stockholders of Banyan
Strategic Land Fund II (the "Fund") by providing the Fund's directors, key
employees and certain employees of Banyan Management Corp. with an opportunity
to acquire or increase their proprietary interests in the Fund by granting them
options to purchase shares of the Fund's common stock (the "Shares" or "Common
Stock"). By encouraging these individuals to become owners of Shares, the Fund
seeks to motivate, retain and attract those highly competent individuals upon
whose judgment, initiative, and leadership the Fund's success in large measure
depends. The options granted hereunder are not "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986.
B. STRUCTURE OF THE PLAN.
The Plan shall consist of a "Director Option Grant Program,"
described in Section II, and an "Executive Option Grant Program," described in
Section III. Under the Director Option Grant Program, the Directors will be
granted options to purchase Shares and any other stock or security resulting
from the adjustment thereof or substitution therefor. Under the Executive
Option Grant Program, the Fund's independent directors, as defined in the
Fund's By-laws (the "Board" or the "Directors") may grant options to purchase
Shares and any other stock or security resulting from the adjustment thereof or
substitution therefor to the Fund's key management personnel, including
employees of Banyan Management Corp.
C. GENERAL GRANTS AND RIGHTS.
Unless stated otherwise, the provisions of Sections I and IV hereof
shall apply with equal force to both the Executive Option Grant Program and the
Director Option Grant Program. The right to acquire Shares pursuant to the
Director Option Grant Program and the Executive Option Grant Program shall be
referred to as a "Director Option" and an "Executive Option," respectively.
Options granted under either the Executive Option Grant Program or the Director
Option Grant Program shall be referred to herein as "Options."
II. DIRECTOR OPTION GRANT PROGRAM
A. ELIGIBILITY.
Each individual serving as a Director shall be eligible to
participate in the Director Option Grant Program and be granted Director
Options.
B. GRANT.
Each of Messrs. Gerald L. Nudo, Robert M. Ungerleider and Walter E.
Auch, (each of whom has served as a director since 1987), on the tenth
business day after adjournment of the Fund's annual meeting convened on June
30, 1994, shall automatically receive an option to acquire 50,000 Shares.
Each of Messrs. David J. Brail and Alan S. Cooper (each of whom has served as
a director since 1993), on the tenth business day after adjournment of the
Fund's annual meeting convened on June 30, 1994, shall automatically receive
an option to acquire 10,000 Shares.
<PAGE> 2
C. OPTION PERIOD.
The length of each Director Option shall be ten years and one day
from the day of grant. Each Director Option not exercised shall terminate at
the end of its term if not subject to earlier termination as herein provided or
as provided in the Option Agreement.
D. OPTION PRICE.
The price per share at which Shares may be acquired on exercise of a
Director Option shall be one hundred percent (100%) of the Fair Market Value on
the date of grant.
III. THE EXECUTIVE OPTION GRANT PROGRAM
A. ADMINISTRATION.
The Board shall have plenary authority in its discretion, but subject
to the express provisions of the Plan, to: (i) determine the purchase price of
the Common Stock covered by each Executive Option; (ii) determine the key
management personnel to whom Executive Options shall be granted; (iii)
determine the number of Shares subject to each Executive Option; (iv) determine
the exercise period for each Executive Option; (v) prescribe, amend, and
rescind rules and regulations relating to the Executive Option Grant Program;
(vi) determine the terms and provisions (and amendments thereof) of the
respective Option Agreements (which need not be identical), including the terms
and provisions (and amendments) as shall be required in the Board's judgment to
conform to any change in law or regulation applicable thereto; and (vii) make
all other determinations deemed necessary or advisable for administrating the
Executive Option Grant Program. Each Executive Option granted hereunder shall
be evidenced by minutes of a meeting or the written consent of the Board. The
Board may at any time, and from time to time, amend or suspend the Executive
Option Program. Except as otherwise provided in the Plan, the Board may
modify, extend, replace or renew outstanding Options under the Plan, or accept
the surrender of outstanding Options (to the extent not yet otherwise
exercised) and grant new Options in substitution therefore. Notwithstanding
the foregoing, no amendment or suspension of the Plan without the written
consent of an Optionee shall alter or impair the rights of the Optionee under
any Option previously granted to the Optionee. The Board's determination on
the foregoing matters shall be conclusive.
B. ELIGIBILITY.
Except as provided herein, the Board shall designate the key
management personnel eligible to participate in the Executive Option Grant
Program and shall prescribe the terms and conditions governing each Executive
Option. No Director shall be eligible to receive Executive Options under the
Executive Option Grant Program.
C. OPTION PERIOD.
The Board may determine the length of each Executive Option but in no
event shall the term of any Executive Option exceed ten years and one day from
the date of grant. Each Option not exercised shall terminate at the end of its
term if not subject to earlier termination as herein provided or as provided in
the Option Agreement.
D. OPTION PRICE.
The price per share at which Shares may be acquired on exercise of an
Executive Option shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date the Executive Option is granted.
IV. SHARES SUBJECT TO THE PLAN.
A. NUMBER OF SHARES.
The stock subject to the Options granted under this Plan shall be the
Company's Common Stock and any other stock or security resulting from the
adjustment thereof or substitution therefor as described in Section IV.G.(3).
There shall be 1,000,000 Shares, subject to adjustment under Section IV.G.(3),
reserved and available for purchase
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<PAGE> 3
on exercise of Options granted under the Plan. The Shares issued upon exercise
of an Option may be authorized and unissued Shares, or Shares issued and
re-acquired by the Fund.
B. RELEASE OF SHARES.
If any Option granted hereunder shall be cancelled, expire or
terminate for any reason without having been exercised in full, the Shares
subject to the Option shall not thereafter be available for grant under this
Plan except if and to the extent issued to an Optionee under the Plan in
replacement for outstanding Options surrendered by the Optionee.
C. RESTRICTIONS ON SHARES.
All Shares issued on exercise of an Option shall be subject to the
terms and conditions specified herein and to those other terms, conditions and
restrictions contained in the Option Agreement, as well as applicable federal
and state laws, rules and regulations including, as may be required, approval
by any government or regulatory agency. The Fund may issue or deliver
certificates for Shares prior to: (i) listing the Shares on any stock exchange
on which the Common Stock may then be listed; (ii) registering or qualifying
the Shares under federal or state law; provided, however, the Fund shall not
issue or deliver certificates for Shares prior to an Optionee tendering to the
Fund those documents or payments as the Board may deem necessary to satisfy any
applicable withholding obligation for the Fund to obtain a deduction on its
federal, state or local tax return with respect to the exercise of an Option.
The Fund may cause any Common Stock to be properly marked with a legend or
other notation reflecting the limitations on transfer provided in the Plan, the
Option Agreement or as the Board may otherwise reasonably require to comply
with law. Fractional Shares shall not be delivered, but shall be rounded to
the next lower whole number of Shares.
D. STOCKHOLDER RIGHTS.
An Optionee shall not have any rights of a stockholder as to Shares
subject to an Option until, after properly exercising the Option, the Shares
are recorded on the Fund's official stockholder records as issued or
transferred to the party exercising the Option. No adjustment shall be made
for cash dividends or other rights if the record date for the cash dividend or
other right is prior to the date the Shares are recorded as issued or
transferred to the party exercising the Option, in the Fund's official
stockholder records, except as provided in Article IV.G.3. The Fund shall
record the Shares as issued or transferred in an expeditious manner.
E. STOCK VALUATION.
Any determination of the value or closing price of Common Stock
required by the Plan shall be determined in accordance with the following
provisions, as applicable (which value or closing price shall be referred to
herein as the "Fair Market Value per Share," or for a group of Shares a total
"Fair Market Value"):
(1) if, on the relevant date, the Common Stock is traded on a
national or regional securities exchange or on the
NASDAQ National Market System, on the basis of the closing
sale price on the principal securities exchange on which the
Common Stock may then be traded or, if there is no sale on
the relevant date, then on the last previous day on which a
sale was reported;
(2) if, on the relevant date, the Common Stock is not listed on
any securities exchange or traded on the NASDAQ
National Market System, but otherwise is publicly-traded and
reported on NASDAQ, on the basis of the mean between the
closing bid and asked quotations in the over-the-counter
market as reported by NASDAQ; but if there are no bid and
asked quotations in the over-the-counter market as reported
by NASDAQ on that date, then the mean between the closing bid
and asked quotations in the over-the-counter market as
reported by NASDAQ on the last previous day any bid and asked
prices were quoted; and
(3) if, on the relevant date, the Common Stock is not
publicly-traded as described in (i) or (ii), in good
faith by the Board.
F. OPTION PROVISIONS.
(1) Option Agreement. Each Option granted hereunder shall be
evidenced by a written option agreement ("Option
Agreement"), specifying, among other things, the Optionee,
the period for which the Option thereunder is granted, the
number of Shares for which the Option is granted, the Option
price and the
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<PAGE> 4
exercise schedule. The grant and exercise of Options
hereunder are subject to all applicable federal, state and
local laws, rules and regulations and, if required, any
approvals by any government or regulatory agency.
(2) Exercise of Options. Executive Options granted hereunder
shall vest and be exercisable in installments as
follows: (i) to the extent of 33.3% of the number of Shares
commencing on the first anniversary of the date of grant;
(ii) to the extent of an additional 33.3% of Shares
commencing on the second anniversary of the date of grant;
and (iii) to the extent of an additional 33.4% of Shares
commencing on the third anniversary of the date of grant.
Director Options granted hereunder shall vest and be
exercisable in installments as follows: (i) to the extent of
50.0% of the number of Shares commencing on the first
anniversary of the date of grant; and (ii) to the extent of
50.0% of the number of Shares commencing on the second
anniversary of the date of grant. If the Optionee does not
in any given period purchase all of the Shares subject to the
Option, the Optionee's right to purchase any Shares not
purchased in the period shall continue until the expiration
or sooner termination of the Option, except to the extent
provided otherwise in the Option Agreement. Except as
otherwise provided herein or in an Option Agreement, as a
condition to the grant of the Executive Option, an Optionee
shall remain in the continuous employ of the Fund, its
subsidiaries or Banyan Management Corp. for the period of
time specified by the Board in the Option Agreement. To
exercise an Option, an Optionee shall give written notice to
the Fund's Vice President General Counsel at the Fund's
office at Suite 2900, 150 South Wacker Drive, Chicago,
Illinois 60606 (or the office which is the successor main
office or which is otherwise designated as the office to
which notice is to be given) of the number of Shares to be
acquired and make any arrangements with the General Counsel
as are acceptable to the General Counsel to satisfy the
Optionee's federal, state and local tax withholding
obligations and satisfy the Optionee's obligation under the
Plan and the Option Agreement.
(3) Cancellation of Options. Except as otherwise provided, an
Executive Option is exercisable by an Optionee only
prior to "termination of employment" as defined herein. For
purposes of this Plan and any Option Agreement, a person
shall incur a "termination of employment" on the latest date
on which the person no longer is, for whatever reason, an
officer, director or employee of the Fund, its subsidiaries
or Banyan Management Corp. ("Termination of Employment").
Notwithstanding anything herein to the contrary, if an
Optionee incurs a Termination of Employment due to death or
permanent and total disability or retirement in accordance
with the Fund's retirement practices, all Options granted
under the Plan and outstanding on the date of the Termination
of Employment shall be exercisable to the extent provided in
the Optionee's Option Agreement. A Director Option is
exercisable by an Optionee only so long as the director
continues to hold office; provided, however, that if the
director ceases to hold office due to death, permanent and
total disability or expiration of the director's term of
office after the director attains his 75th birthday, all
Options granted under the Plan shall be exercisable.
(4) Payment of Purchase Price on Exercise. Unless otherwise
determined by the Board in the case of an Executive
Option, the purchase price of the Shares acquired on exercise
of an Option shall be paid to the Fund at the time of
exercise in cash, Shares or any other form of payment
acceptable to the Board in the case of an Executive Option.
(5) Nonassignability. Options are not transferable except by
will or the laws of descent and distribution, and are
exercisable during an Optionee's lifetime only by the
Optionee, or the appointed guardian or legal representative
of the Optionee.
G. PROVISIONS APPLICABLE TO THE PLAN.
(1) Termination of Plan. This Plan shall terminate on July 15,
2004, or at such earlier time as determined by the
Board. No Options shall be granted under the Plan after that
date. Any Options outstanding under the Plan at the time of
its termination shall remain in effect until they shall have
been exercised, expired or otherwise cancelled or terminated
as provided herein or in the Option Agreement. Termination
of the Plan shall not diminish the authority granted to the
Board to administrate the Plan.
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<PAGE> 5
(2) Investment Representation. If the disposition of Common
Stock acquired on exercise of any Option is not covered
by a then current registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from registration, the acquired Shares shall
be restricted against transfer to the extent required by the
Securities Act or regulations thereunder. Each Option
Agreement shall contain a requirement that, on demand by the
Board, the individual exercising an Option shall state in
writing, as a condition precedent to each exercise, that the
Optionee is acquiring the Common Stock for investment only
and not for resale or with a view to distribution. The Board
may set forth in an Option Agreement other terms and
conditions relating to the registration or qualification of
the Common Stock under federal or state securities laws as it
desires.
(3) Effect of Certain Changes.
a. Adjustments. If the Fund declares a stock dividend,
stock split, combination or exchange of shares,
recapitalization or other change in the capital
structure (including, but not limited to, a
split-up, spin-off, split-off or distribution to
Fund stockholders other than a normal cash
dividend), sells all or a substantial portion of its
assets (if measured on either a stand-alone or
consolidated basis), undertakes a reorganization,
rights offering, share offering, partial or complete
liquidation, or any other corporate transaction or
event involving the Fund and having an effect
similar to any of the foregoing, then the Board may
adjust or substitute, as the case may be, the number
of Shares available for Options under the Plan, the
number of Shares covered by outstanding Options, the
exercise price per Share of outstanding Options, any
target Fair Market Value per Share that the Common
Stock is required to reach for all or a portion of
any Options to vest, and any other characteristics
or terms of the Options as the Board deems necessary
or appropriate to equitably reflect the effects of
those changes to the Option holders; provided,
however, that any fractional Shares resulting from
the adjustment shall be eliminated by rounding to
the next lower whole number of Shares with
appropriate payment for the fractional Shares as
determined by the Board. The Board may waive any
limitations set forth in or imposed pursuant to the
terms and conditions of the Plan or an Option
Agreement so that all Options, from and after a date
prior to the effective date of an event specified
above or a Change in Control (as defined below),
shall be exercisable in full.
b. Dissolution, Liquidation, Corporate Separation or
Division. If the Board proposes to dissolve or
liquidate the Fund or the Fund is involved in any
other corporate transaction or event and having
effects on the Options similar to any of the
foregoing, the Board may, in addition to the
provisions of this Section IV.G.(3)(a), terminate
each outstanding Option granted under the Plan as of
a date fixed by the Board; provided, however, that
not less than thirty (30) days prior written notice
of the date so fixed shall be given to each Optionee
(or Beneficiary), who shall have the right, during
the thirty (30) days preceding such date, to
exercise all Options, whether or not otherwise
exercisable, as to all or any part of the Shares
covered thereby.
c. Merger, Consolidation, or Sale of Assets. If the
Fund is merged into or consolidated with
another corporation under circumstances where the
Fund is not the surviving corporation, or the Fund
sells or otherwise disposes of all or a substantial
portion of its assets or is involved in any other
transaction or event which has an effect on the
Shares or Options similar to the foregoing, then in
addition to the provisions of this Section IV.G.(3),
all Options outstanding under the Plan shall become
exercisable at that time and the Board may cancel
all outstanding Options as of the effective date of
any transaction or event; provided that not less
than thirty (30) days prior written notice of the
date so fixed for cancellation shall be given to
each Optionee (or Beneficiary), who shall have the
right, during the thirty (30) days preceding the
effective date of the transaction or event, to
exercise all Options, whether or not otherwise
exercisable, as to all or any part of the Shares
covered thereby.
d. Certain Mergers and Consolidations. This Section
IV.G.(3) shall not apply to a merger or
consolidation in which the Fund is the surviving
corporation and Shares are not converted into or
exchanged for stock, securities of any other
corporation, cash or any other thing of value.
5
<PAGE> 6
e. Definition of Common Stock. In the event of a
change in the Fund's Common Stock as presently
constituted, the Shares resulting from any change
shall be deemed to be the Common Stock within the
meaning of the Plan.
f. Determination of the Board. The Board shall make
all adjustments required under this Section
IV.G.(3). All adjustments shall be final, binding
and conclusive.
g. Limitations under this Section IV.G.(3). The grant
of an Option pursuant to the Plan shall not in
any way effect the Fund's right or power to make
adjustments, reclassifications, reorganizations or
changes to its capital or business structures or to
merge or to consolidate or to dissolve, liquidate,
sell or transfer all or part of its business or
assets.
(4) Withholding Obligations.
The Optionee or Beneficiary may satisfy any withholding
obligation under the Plan or an Option Agreement by requesting the Fund to
withhold and not transfer or issue Shares with a fair market value equal to the
withholding obligation, otherwise issuable or transferable to the Optionee
pursuant to the exercise of an Option. The provisions of this Section IV.G.(4)
shall apply and be available to any Optionee who, on the date of exercise of an
Option may be subject, in the Fund's opinion, to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder (a "Section 16(b) Optionee") only if, and to the
extent that: (i) the Section 16(b) Optionee requests withholding of the Shares
not earlier than six (6) months subsequent to the date of the grant of the
Option; or (ii) the election by the Section 16(b) Optionee otherwise complies
with the exemptive provisions of Rule 16b-3 under the Exchange Act as
determined in the sole opinion of the Company's General Counsel. If an
Optionee is issued Shares without making an election as described in this
Section IV.G.(4) and if the date on which the amount of tax withholding is
determined is deferred until at least six months after the exercise date of the
Option, the Board may require as a condition to issuance of Shares that the
Optionee tender to the Company the proper number of Shares to satisfy the
withholding obligation on the date the tax withholding is determined. Any
right or election of an Optionee under this Section IV.G.(4) shall be subject
to the approval of the Board. With respect to persons subject to Section 16 of
the Exchange Act, transitions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent any provision of this Plan or any action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board.
(5) Rights with Respect to Continuance of Employment.
The Plan and any Option granted under the Plan shall not
confer upon any Optionee any right to continued employment by the Fund, its
subsidiaries or Banyan Management Corp., nor shall they interfere in any way
with the right of the Fund, its subsidiaries or Banyan Management Corp. to,
subject to other agreements with the Optionee, terminate an Optionee's
employment at any time.
(6) Notice to the Company of Optionee's Election.
Any Optionee exercising an election under Section 83 of the
Code to have the receipt of Shares hereunder taxed currently, without regard to
the restrictions imposed under the Plan or an Option Agreement or law, shall
give notice to the Fund of the election immediately upon making the election.
H. INDEMNIFICATION OF THE BOARD.
In addition to such other rights of indemnification as they may have
as Board members, and to the extent permitted by law, the members of the Board
shall be indemnified and held harmless by the Fund and each direct or indirect
subsidiary of the Fund against the reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal thereof, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided the settlement
is approved by the Fund's legal counsel) or paid by them in satisfaction of a
judgment in any action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in the action, suit or proceeding that the Board
member is liable for gross negligence or gross misconduct in the performance of
its
6
<PAGE> 7
duties; provided that within sixty (60) days after institution of any action,
suit or proceeding a Board member shall in writing offer the Fund the
opportunity, at its own expense, to handle and defend the action.
I. PLAN BINDING ON SUCCESSORS.
Except as provided herein, the Plan shall be binding on the
successors and assigns of the Fund.
J. INTERPRETATION AND GOVERNING LAW.
Whenever necessary or appropriate in this Plan and where the context
admits, the singular term and the related pronouns shall include the plural and
the masculine and feminine gender. The Plan shall be construed and enforced
according to the internal laws of the State of Delaware.
7
<PAGE> 1
EXHIBIT 5
[SHEFSKY, FROELICH & DEVINE LTD LETTERHEAD]
In Reply Refer To:
5175-40-A
August 16, 1995
Banyan Strategic Land Fund II
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Re: Banyan Strategic Land Fund II:
Registration of 1.0 million shares of Common Stock
Ladies and Gentlemen:
In connection with the registration of 1.0 million shares of common
stock, par value $.01 (the "Shares") by Banyan Strategic Land Fund II, a
Delaware corporation (the "Company") under the Securities Act of 1933, as
amended (the "Act"), on Form S-8 filed with the Securities and Exchange
Commission (the "Commission") on August ___, 1995, (the "Registration
Statement") you have requested our opinion with respect to the matters set
forth below.
For purposes of this opinion, we have reviewed the Company's 1994
Executive and Director Stock Option Plan (the "Plan") pursuant to which the
Company anticipates issuing the Shares upon exercise of options granted under
the Plan. In addition, we have examined the originals or copies certified or
otherwise identified to our satisfaction of: (i) the Company's Certificate of
Incorporation, as amended to date; (ii) the Bylaws of the Company, as amended
to date; (iii) records of the corporate proceedings of the Company as we deemed
material; (iv) such other certificates, records and documents as we considered
necessary or appropriate as a basis for the opinions set forth herein; and (v)
those matters of law as we have deemed necessary or appropriate as a basis for
the opinions set forth herein. We have not made any independent review or
investigation of the organization, existence, good standing, assets, business
or affairs of the Company, or of any other matters. In rendering our opinions,
we have assumed without inquiry the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of these documents submitted to us as copies.
We have not undertaken any independent investigation to determine
facts bearing on this opinion, and no inference as to the best of our knowledge
of facts based on an independent investigation should be drawn from this
representation. Further, our opinions, as hereinafter expressed, are subject
to the following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; and (ii) the effect of general
principles of equity whether enforcement is considered in a proceeding in
equity or at law and the discretion of the court before which any proceeding
therefore may be brought.
<PAGE> 2
SHEFSKY, FROELICH & DEVINE LTD.
Banyan Strategic Land Fund II
August 16, 1995
Page 2
We are admitted to the bar of the State of Illinois and express no
opinion as to the laws of any other jurisdiction except the General Corporation
Law of the State of Delaware and in effect on the date hereof with respect to
the opinions expressed below.
On the basis of, and in reliance upon, the foregoing, and subject to
the qualifications contained herein, we are of the opinion that the Shares are
validly authorized and reserved for issuance and, when issued and delivered to
the holders of options upon exercise of the options in accordance with the
terms of the Plan, will be fully-paid and nonassessable.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be
relied upon by you for any other purpose or furnished, or quoted to, or relied
upon by any other person, firm or corporation for any purpose without our prior
express written consent.
Respectfully submitted,
/s/ Shefsky, Froelich & Devine Ltd.
SHEFSKY, FROELICH & DEVINE LTD.
SF&D/jfr
151707
<PAGE> 1
EXHIBIT 23(b)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Banyan Strategic Land Fund II 1994 Executive and
Director Stock Option Plan of our report dated March 20, 1995 with respect to
the consolidated financial statements of Banyan Strategic Land Fund II included
in its Annual Report (Form 10-KSB) for the year ended December 31, 1994, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
August 15, 1995
