SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2)
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement
|_| Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Windsor Real Estate Investment Trust 8
(Name of Registrant as Specified in Its Charter)
Windsor Real Estate Investment Trust 8
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| No Fee Required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- --------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
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WINDSOR REAL ESTATE INVESTMENT TRUST 8
6430 South Quebec Street
Englewood, CO 80111
NOTICE OF ANNUAL MEETING
August __, 1998
Dear Shareholder:
It is a pleasure to invite you to attend the 1998 Annual Meeting of
Shareholders of Windsor Real Estate Investment Trust 8, a California business
trust (the "Trust"), to be held on August __, 1998, at 6430 South Quebec Street,
Englewood, Colorado 80111.
At the Annual Meeting you will be asked to approve:
(i) (a) the amendment of the Declaration of Trust of the
Trust through the approval and adoption of the form,
terms and provisions of the Amended and Restated
Declaration of Trust; and (b) the adoption of By-laws
of the Trust, through the approval of the form, terms
and provisions of a proposed form of By-laws for the
Trust; and
(ii) the annual election of trustees of the Trust.
Proposal (i) above is hereinafter sometimes referred to as the "Organizational
Amendments" or "Proposal 1," and Proposal (ii) above is hereinafter sometimes
referred to as the "Election of Trustees" or "Proposal 2."
At the Annual Meeting you will also be asked to vote on such other
matters as may properly come before the meeting.
The accompanying Proxy Statement provides detailed information
concerning the Organizational Amendments as well as transactions that are likely
to be engaged in and changes that are likely to be effected upon the approval of
Proposal 1 which you are urged to read carefully and consider, as well as other
information regarding other items on the Agenda at the Annual Meeting. It is
important that your Shares be represented at the Annual Meeting, regardless of
the number of Shares you hold. Therefore, you are urged to date, sign and return
your proxy card as soon as possible, whether or not you plan to attend the
Annual Meeting. If you attend the Annual Meeting and wish to revoke your proxy
and vote your Shares personally, you are entitled to do so at the meeting.
YOUR BOARD OF TRUSTEES BELIEVES THAT THE ORGANIZATIONAL AMENDMENTS ARE
IN THE BEST INTERESTS OF THE TRUST AND ITS SHAREHOLDERS. THE BOARD HAS
UNANIMOUSLY APPROVED THE ORGANIZATIONAL AMENDMENTS AND RECOMMENDS THAT YOU
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VOTE TO APPROVE THEM. THE BOARD ALSO UNANIMOUSLY RECOMMENDS THAT YOU APPROVE
EACH OF THE OTHER ITEMS TO BE VOTED ON AT THE ANNUAL MEETING.
Sincerely,
WINDSOR REAL ESTATE INVESTMENT TRUST 8
GARY P. McDANIEL, Trustee
KENNETH G. PINDER, Trustee
RICHARD B. RAY, Trustee
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WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST __, 1998
--------------
Notice is hereby given that the Annual Meeting of Shareholders of
Windsor Real Estate Investment Trust 8, a California business trust (the
"Trust"), will be held at 10:00 a.m., Denver time, on August __, 1998, at 6430
South Quebec Street, Englewood, Colorado 80111 (the "Annual Meeting"), for the
following purposes:
1. To approve (a) the amendment of the Declaration of Trust of the
Trust through the approval and adoption of the form, terms and provisions of the
Amended and Restated Declaration of Trust; and (b) the adoption of By-laws of
the Trust, through the approval of the form, terms and provisions of a proposed
form of By-laws for the Trust (the "Organizational Amendments");
2. To approve the annual election of trustees of the Trust (the
"Election of Trustees"); and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of the Trust's Common Shares and Preferred Shares of record at
the close of business on ________, 1998, shall be entitled to notice of, and to
vote at, the Annual Meeting. The Organizational Amendments and Election of
Trustees and other items on the agenda at the Annual Meeting are more fully
described in the accompanying Proxy Statement, and the Appendices thereto, which
form a part of this Notice.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, HOWEVER, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A
POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. ANY SHAREHOLDER ATTENDING
THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THAT SHAREHOLDER HAS RETURNED A
PROXY.
By Order of the Board of Trustees
Secretary
August __, 1998
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WINDSOR REAL ESTATE INVESTMENT TRUST 8
PROXY STATEMENT
This Proxy Statement is being furnished to the holders (the
"Shareholders") of (i) common shares of beneficial interest, $.01 per share
("Common Shares"); and (ii) preferred shares of beneficial interest, $.01 per
share ("Preferred Shares" and together with the Common Shares, the "Shares"), of
the Trust, in connection with the solicitation of proxies by the Trustees of the
Trust for use at the Annual Meeting of Shareholders of the Trust to be held at
6430 South Quebec Street, Englewood, Colorado 80111, on August __, 1998, at
10:00 a.m., Denver time, and at any and all adjournments or postponements
thereof (the "Annual Meeting").
This Proxy Statement is being furnished in connection with the
following proposals: (i) the amendment of the Declaration of Trust of the Trust
through the approval and adoption of the form, terms and provisions of the
Amended and Restated Declaration of Trust and the adoption of By-laws of the
Trust, through the approval of the form, terms and provisions of a proposed form
of By-laws for the Trust; and (ii) the annual election of trustees of the Trust.
In this Proxy Statement, the proposal specified in (i) above is hereinafter
sometimes referred to as the "Organizational Amendments" or "Proposal 1," and
the proposal specified in (ii) above is hereinafter sometimes referred to as the
"Election of Trustees" or "Proposal 2."
This Proxy Statement and the accompanying form of proxy are first being
mailed to the Shareholders of the Trust on or about August __, 1998. A
Shareholder who has given a proxy may revoke it at any time prior to its
exercise.
The close of business on _______, 1998 has been fixed as the record
date for determining Shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES, TO BE RECEIVED NO LATER THAN AUGUST __, 1998.
This Proxy Statement is dated August __, 1998.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE THE
SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN SUCH JURISDICTION.
NEITHER THE PROPOSALS NOR THIS PROXY STATEMENT HAVE BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THE PROPOSALS OR THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE TRUST OR THE TRUSTEES.
AVAILABLE INFORMATION
The Trust is subject to certain informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission at 7 World Trade Center, New York, New York 10048, and Northwest
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a site on the Internet
at http://www.sec.gov that contains reports, proxy and other information
statements and other information regarding registrants that file electronically
with the Commission.
Statements contained herein concerning the provisions of documents are
summaries of such documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document if attached as an appendix
hereto.
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SUMMARY
The following summarizes certain information contained elsewhere in
this Proxy Statement. While the purpose of this summary is to discuss and
disclose the material aspects of the proposals, this summary is not intended to
be complete, and is qualified in its entirety by reference to the more detailed
information contained elsewhere herein. Capitalized terms not defined in this
Summary have the meanings ascribed to them elsewhere in this Proxy Statement.
PROPOSAL 1 -- PROPOSED ORGANIZATIONAL AMENDMENTS
Introduction
Proposal 1 seeks (i) the amendment of the Declaration of Trust of the
Trust (the "Existing Declaration of Trust") through the approval and adoption of
the form, terms and provisions of the Amended and Restated Declaration of Trust
(the "Amended Declaration"); and (ii) the adoption of By-laws of the Trust,
through the approval of the form, terms and provisions of a proposed form of
By-laws (the "By-laws") for the Trust (the "Organizational Amendments").
The principal purposes of Proposal 1 are to convert the Trust from a
finite-life to an infinite-life entity, and to remove various restrictions and
limitations and other requirements contained in the Existing Declaration of
Trust which are not typically found in the more modern organizational documents
of leading real estate investment trusts ("REITs"). These include provisions
that (i) restrict the types and amounts of equity and debt securities that the
Trust may issue; (ii) limit the nature and types of investments that the Trust
may make; and (iii) mandate that proceeds from sales or refinancings of
properties be distributed to Shareholders, and not reinvested in assets (the
"Capital, Investment and Other Restrictions"). The Organizational Amendments
also provide for changing the name of the Trust to "N' Tandem Trust," a name
that the Trustees believe is better suited to the Trust given its future
proposed activities. See "Comparison of Principal Terms of Existing Declaration
of Trust and Amended Declaration and By-laws," for additional information
concerning the Organizational Amendments.
If Proposal 1 is approved by the Shareholders, it is expected that the
Trust will engage in the following transactions and effect the following
changes: (i) Chateau Communities, Inc. ("Chateau"), a publicly held REIT which
is the largest owner/operator of manufactured home communities in the United
States, and which is the owner and sole shareholder of The Windsor Corporation,
which serves as the Trust's advisor (the "Advisor"), is expected to purchase at
least an additional 130,000 Common Shares, or Preferred Shares, or a combination
thereof (which would give Chateau an approximate 45% ownership interest in the
Trust), for a purchase price (but not below $25 per share) equal to the
aggregate fair market value of such Shares, as determined by the independent
trustees of the Trust (the "Independent Trustees") (see "Additional Chateau
Investment"); (ii) the Trust will form an operating partnership subsidiary (the
"Operating Partnership") in order to facilitate tax-free and/or tax-deferred
acquisitions of additional properties (see "Organization of UPREIT; Contribution
Transaction"); (iii) the Trust will begin implementing a growth-oriented
business plan (the "Business Plan") intended to cause the Trust to attain
greater size and asset diversity (see "Implementation of Business Plan; Growth
Strategy"); and (iv) if successful in the implementation of the Business Plan,
the Trust anticipates that it will, within two to four years after the adoption
of the Organizational Amendments, seek to list the Common Shares on a national
securities exchange or NASDAQ, and if deemed appropriate, raise additional
capital through an underwritten public offering of the Common Shares, or other
securities of the Trust (see "Future Listing of Common Shares on Exchange;
Redemption of Preferred Shares"). There can be no assurance, however, that the
Trust will be successful in listing the Common Shares, or effecting such public
offering.
The Amended Declaration also provides for the exchange of each Common
Share and Preferred Share of the Trust for a share of a new class of Common
Shares and Preferred Shares, respectively, which will have substantially the
same rights as the existing classes of Shares, except that (i) in keeping with
the conversion of the Trust from a finite-life to an infinite-life entity, the
Trust will no longer be required to make distributions to
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Shareholders of all proceeds from sales or refinancings of properties; (ii)
effective upon the listing of the Common Shares on any national securities
exchange or NASDAQ, the Trust will have the right to redeem outstanding
Preferred Shares upon 60 days' written notice to Preferred Shareholders, at a
redemption price per Preferred Share equal to the Preferred Share Liquidation
Preference, which as of December 31, 1997 was $26.82; and (iii) each holder of
Preferred Shares shall have the right, which becomes exercisable if the
Preferred Shares are called for redemption, to convert each Preferred Share held
by such holder into one Common Share, at any time prior to the Redemption Date,
by the delivery of notice of such exercise to the Trust (the "Conversion
Rights").
The aspects of Proposal 1 that allow for the redemption of Preferred
Shares upon the listing of Common Shares are intended to allow the Trust the
option of eliminating the Preferred Shares from its capital structure if the
Trust moves ahead and pursues an underwritten public offering of its Common
Shares. The Trustees believe that the value of the Common Shares may be enhanced
if the Preferred Shares (which rank senior to the Common Shares with regard to
dividends and distributions) are retired at the time of the offering. At the
same time, by also granting Conversion Rights to the Preferred Shareholders as
part of the proposal, if the Preferred Shares are in fact called for redemption,
the holders of such Shares will have the option of either (i) being cashed out
through the redemption; or (ii) continuing their investment in the Trust, as
Common Shareholders, through the exercise of their Conversion Rights. See
"Comparison of Principal Terms of Existing Declaration of Trust and Amended
Declaration and By-laws" for additional information.
The Trust's current portfolio of properties is comprised of a 100%
ownership interest in three manufactured home community properties and a 40%,
11% and 11% interest, respectively, in three other manufactured home community
properties. The Trust believes that significant opportunities exist to acquire
additional properties that fit its investment objectives and guidelines. The
Trust will focus on acquisitions where the Trust believes there is substantial
opportunity to improve operational and financial results, or where for some
reason, because of poor management or otherwise, a property is operating
substantially below its potential.
If Proposal 1 is approved, Chateau has advised the Trust that it
intends to announce that the Trust will be a primary vehicle through which
Chateau will make investments in manufactured home communities that do not fit
the core asset type typical of the existing Chateau portfolio, which is
characterized by large, stable, institutional- quality, fully amenitized
properties. The Trust will employ higher levels of leverage than Chateau and
will focus primarily on "lower profile assets" meaning properties (i) that are
typically not part of a portfolio of manufactured housing community properties;
(ii) that are located in tertiary demographic and geographic markets; (iii) that
are not managed by a nationally known manufactured home community operator; (iv)
that may be managed by an on-site owner who lives at the property; and (v) that
may be smaller and are likely to have fewer amenities, and a greater proportion
of single-wide homes than the typical Chateau community. The Trust believes that
its affiliation with Chateau will benefit the Trust by providing it with access
to Chateau's national organization, management team and investment and
management philosophies. Through its affiliation with Chateau, the Trust
believes that it will be exposed to a wider range of acquisition opportunities
as a result of Chateau's national organization and knowledge of the manufactured
housing community industry, and will benefit from Chateau's expertise in
effectively and efficiently managing properties. Chateau is widely considered as
a leading property management company in the manufactured housing community
industry, and in 1998, the National Manufactured Housing Congress presented the
Chateau with the "National Operator of the Year" award for an unprecedented
sixth consecutive year, confirming Chateau's outstanding reputation for
excellence in property management and operations.
Summary Risk Factors
Fundamental Change in Nature of Investment. Proposal 1 involves a
fundamental change in the nature of the investment of the Common Shareholders
and Preferred Shareholders in the Trust in that it will transform the Trust from
a finite-life entity with a plan to liquidate its investments by no later than
December 31, 2006, and to distribute the proceeds from such liquidation to
Shareholders, to an infinite-life, growth-oriented entity which will not be
required to distribute sales or refinancings proceeds to Shareholders but will
instead be able to reinvest such proceeds in new investments. As a result,
Shareholders can expect to have an effective avenue to liquidate their
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investments only after the Trust succeeds in listing the Common Shares on a
national securities exchange or on NASDAQ, and such listing is not expected to
occur until at least two to four years after the approval of the Organizational
Amendments. In addition, there can be no assurance that the Trust will be
successful in its efforts to effect such listing. For additional details and
information relating to the change in the nature of the Shareholders'
investments, see "Risk Factors" and "Comparison of Principal Terms of Existing
Declaration of Trust and Amended Declaration and By-laws."
Changes in Shareholders' Rights. The Amended Declaration effects
various changes in Shareholders rights including the following: under the
Amended Declaration, Shareholders no longer have (i) the right to receive
distributions from sales or refinancing of properties (which will be
reinvested); (ii) the right to vote shares cumulatively in the election of
Trustees; (iii) certain appraisal and other rights in the event of a roll-up of
the Trust that are provided in the Existing Declaration of Trust; or (iv) the
right to remove Trustees with or without cause, upon a vote of the holders of a
majority of the Shares (under the Amended Declaration the Trustees may be
removed only for cause, and only upon a vote of the holders of at least 80% of
the Shares).
Removal of Investment Restrictions. Under the Existing Declaration of
Trust, the Trust is subject to various investment restrictions and generally is
prohibited from investing in securities of other entities. The Amended
Declaration does not contain such restrictions. The Trust will remain subject to
various investment restrictions which relate to maintaining its status as a
REIT. The Trust does not anticipate investing in securities of other entities
other than entities whose principal business is owning manufactured home
communities. To the extent that the Trust makes investments in such entities,
but does not control them, the Trust will be subject to all the risks associated
with being a minority shareholder, including not having control over the affairs
of any such entity.
Possible Mandatory Redemption of Preferred Shares. Under the Amended
Declaration, effective upon the listing of the Common Shares on any national
securities exchange or NASDAQ (and subject to each Preferred Shareholder's right
to convert each Preferred Share into one Common Share), the Trust will have the
right to redeem outstanding Preferred Shares at a redemption price per Preferred
Share equal to the Preferred Share Liquidation Preference, which as of December
31, 1997, was $26.82. Thus, holders of Preferred Shares may be forced to
liquidate their investments in the Trust or to convert their investment into
Common Shares.
Conflicts of Interest. Proposal 1 and the recommendation of Gary P.
McDaniel, a Trustee of the Trust, set forth herein could be deemed to involve
certain conflicts of interest between Mr. McDaniel, on the one hand, and the
Shareholders on the other hand, including the following:
Relationship of The Windsor Corporation to the Trust. The
Advisor is a wholly owned subsidiary of Chateau. Chateau and the
Advisor currently collectively own 19,339 Common Shares and 984
Preferred Shares, representing a combined 9.8% equity interest in the
Trust. Gary P. McDaniel, a Trustee of the Trust, is also the Chief
Executive Officer and a shareholder of Chateau. The Trustees expect
that the implementation of the Business Plan, by increasing the size of
the Trust's portfolio of properties, will operate to substantially
increase the total aggregate compensation payable to the Advisor under
the Advisory Agreement.
Removal of Certain Advisory Agreement Restrictions Under the
Existing Declaration of Trust. Under the Existing Declaration of Trust,
the Advisory Agreement cannot be renewed for periods longer than one
year, and must be terminable by the Trust without cause, on 60 days'
notice. No similar restrictions are contained in the Amended
Declaration. Accordingly, subject to the approval of the Independent
Trustees, the Trust may extend the Advisory Agreement for periods
beyond one year, and may modify the Advisory Agreement's termination
provisions.
Potential Future Conflicts of Interest. Following the adoption
of the Organizational Amendments, Chateau will continue to aggressively
pursue acquisition and development opportunities on its own behalf to
add to its portfolio. It is possible that the Advisor will find
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investment opportunities in the future that may be attractive to both
the Trust and Chateau thereby creating potential conflicts of interest.
This could result in the Trust not taking advantage of acquisition
opportunities identified by the Advisor and could result in the Trust's
engaging in activities which disproportionately benefit the Advisor or
Chateau.
Control by Chateau. If Proposal 1 is approved by the Shareholders, it
is expected that Chateau will purchase at least an additional 130,000 Common
Shares or Preferred Shares, or a combination thereof, and will therefore (i) own
approximately 45% of the outstanding capital stock of the Trust; (ii) have
substantial influence over the affairs of the Trust; and (iii) have the power,
with limited support from other Shareholders, to approve or block most actions
requiring the approval of the Shareholders of the Trust, including the sale of
all assets of the Trust and other extraordinary actions. Chateau's control of
the Trust and the Advisor and the potential conflicts of interest identified
above could result in the Trust not taking advantage of acquisition
opportunities identified by the Advisor and could result in the Trust's engaging
in activities which disproportionately benefit the Advisor or Chateau.
No Fairness Opinion Sought with Respect to Organizational Amendments.
The Trustees have not in connection with the proposed Organizational Amendments
sought to obtain an opinion relating to the fairness of the proposed
Organizational Amendments to the Shareholders. The Existing Declaration does not
require any such fairness opinion be obtained and the proposed Organizational
Amendments were approved by all of the Trustees of the Trust, including the
Independent Trustees. Had such opinion relating to fairness been obtained, the
terms of the proposed Organizational Amendments might have been different, and
possibly more favorable to the Shareholders.
Constraints on Growth Opportunities. If Proposal 1 is approved by
Shareholders, the Trust intends to pursue a full range of growth opportunities,
including acquisitions of additional properties, community expansions and, to a
lesser extent, new community development and redevelopment of existing
communities. The ability of the Trust to accomplish such growth will be subject
to a number of constraints, including the following:
Competition for Available Properties. The Trust will compete for growth
opportunities with national and regional manufactured home community owners,
most of which have greater name recognition and financial resources than the
Trust. The Trust's failure to compete successfully for acquisitions would
adversely affect the Trust's ability to expand its portfolio of properties.
The Trust Has Not Identified a Portfolio of Properties. The Trust has
not, at the present time, identified a portfolio of properties that it would
seek to invest in if the Organizational Amendments were approved, and if
sufficient capital were available to it. There is no assurance that suitable
communities for acquisition or development will be available or, if available,
will be on terms acceptable to the Trust.
No Assurance of Available Capital or Financing. The Trust currently
lacks commitments for any of the additional capital it needs to implement its
Business Plan and there can be no assurance that capital or other financing will
be available to the Trust, or if available, available on favorable terms. If the
Trust is not able to raise additional capital, or obtain other financing or
funding, on favorable or acceptable terms, it will need to substantially curtail
or abandon its Business Plan.
Background of the Transaction
The Trust was organized to invest in existing, substantially developed
and occupied manufactured home communities and to provide to its shareholders
(i) preservation, protection, and eventual return of the shareholder's
investment; (ii) quarterly dividends of cash from operations, some of which may
be a return of capital for tax purposes rather than taxable income; (iii)
realization of long-term appreciation in value of the properties acquired by the
Trust; and (iv) a hedge against inflation.
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The Trust was funded through a public offering of Common Shares and
Preferred Shares, commencing in April 1992 and terminating in April 1993. An
aggregate of 98,169 Common Shares and 98,323 Preferred Shares were sold at a
price of $25 per share for gross proceeds aggregating $2,454,225 and $2,458,075,
respectively.
In September 1997, Chateau in purchased all of the outstanding capital
stock of The Windsor Corporation, the Advisor to the Trust, for 101,239 common
shares of Chateau, and $750,000 in cash. Following Chateau's acquisition of The
Windsor Corporation shares, the Trustees of the Trust voluntarily resigned, and
in connection with such resignation, appointed the three existing Trustees of
the Trust, including the two Independent Trustees.
The Trustees believe that the Trust has been successful in achieving
certain of its objectives, especially in paying regular quarterly dividends out
of cash from operations. See "Historical and Comparative Distributions" for a
history of the Trust's payment of dividends. Based on the Estimated Liquidation
Payment of $26.82 payable to Preferred Shareholders if the Trust were liquidated
as of March 31, 1998 (versus an original investment of $25.00) (see "Certain
Alternatives--Liquidation of the Trust" below), it appears that the Trust has
been somewhat successful in preserving the capital invested by Preferred
Shareholders but based upon an Estimated Liquidation Payment of $22.40 payable
to Common Shareholders if the Trust were liquidated as of March 31, 1998 (versus
an original investment of $25.00), the Trust has been less successful in
preserving the capital invested by Common Shareholders. Based upon the Estimated
Liquidation Payments, the Trust has not been successful in providing long-term
capital appreciation to the Common Shareholders or the Preferred Shareholders
and has not provided the Shareholders with a hedge against inflation.
In an effort to enhance Shareholder value, the Trustees in the first
quarter of 1998 authorized the Advisor to attempt to identify additional
acquisition opportunities for the Trust. The Advisor located a number of
potential acquisitions and in March of 1998, the Trust entered into an agreement
to acquire a 627-site manufactured home community in Montgomery, Alabama, for
$5.5 million (the "Montgomery Acquisition"). In order to enable the Trust to
complete the acquisition, Chateau offered to make an investment in the Trust.
The Trustees accepted such offer and, on March 30, 1998, entered into an
agreement with Chateau, pursuant to which Chateau invested $5.7 million in the
Trust (the "Original Chateau Investment") in exchange for the issuance within 90
days of such investment of (i) such number of Common Shares (at a price of $25
per share) as the Trustees may determine; and (ii) promissory notes in a
principal amount of the balance of the investment (the "Promissory Notes"). In
connection with the Original Chateau Investment, on May 11, 1998, the Trust
issued to Chateau (i) 19,339 Common Shares (at a price of $25 per share); and
(ii) two Promissory Notes with an aggregate principal amount of $5,221,525.
After completing the acquisition of the Montgomery, Alabama property,
the Trustees authorized the Advisor to identify additional acquisition
opportunities for the Trust. The Trustees determined at this time that the Trust
was effectively prevented from taking advantage of such acquisition prospects as
a result of the Capital, Investment and Other Restrictions contained in the
Existing Declaration of Trust.
Following further discussion by the Trustees in April of 1998, the
Trustees determined that it would substantially enhance the Trust's capital
raising opportunities if it could restructure the Trust so that would be
organized in a manner that is more typical of the structure employed by leading
REITs. This determination eventually led in May, 1998, to the approval by the
Trustees of the Organizational Amendments and a decision to present such
amendments to the Shareholders of the Trust for their consideration and
approval.
Recommendation of the Trustees
The Trustees believe that adopting the Organizational Amendments is in
the best interests of the Trust and its Shareholders and recommend that
Shareholders vote FOR the approval of Proposal 1. In reaching this
determination, the Trustees considered, among other things, the following
factors:
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(i) the Trustees' belief that attractive acquisition and
development opportunities exist, and that the Trust's lack of
available capital and the Capital, Investment and Other
Restrictions effectively prevent the Trust from taking
advantage of such opportunities;
(ii) that if the Organizational Amendments are approved, the
Trust's more flexible organizational and capital structure
should position the Trust for additional growth;
(iii) that if the Organizational Amendments are approved, the
Trust's portfolio will become more diversified as it acquires
additional properties over time;
(iv) that if the Organizational Amendments are approved and the
Trust is successful in implementing the Business Plan, the
Trust anticipates that it may be able to list the Common
Shares on a national securities exchange or include them for
quotation on NASDAQ, within two to four years following the
adoption of the Organizational Amendments, thereby greatly
enhancing Shareholders' liquidity;
(v) the Trustees' belief that the implementation of the Trust's
Business Plan, which is expected to increase the size and
operating cash flow of the Trust, will provide opportunities
for the Trust to increase distributions to Shareholders over
time; and
(vi) that the approval of the Organizational Amendments and the
changes anticipated to be effected following the adoption of
the Organization Amendments will provide the Trust with a
capital and operating structure that will allow it to respond
more efficiently to, and anticipate the occurrence of,
changing conditions in the United States equity markets.
In reaching their determination, the Trustees also considered
potentially negative aspects of the proposed transaction, including the various
factors and information set forth under "Risk Factors" and elsewhere in this
Proxy Statement, including the following:
(i) the fundamental change in the nature of the Shareholders'
investment in the Trust and changes in Shareholders' rights;
(ii) the possible mandatory redemption of Preferred Shares by the
Trust under the Amended Declaration;
(iii) the current and potential conflicts of interest arising out of
the Trust's relationship with Chateau, and the Trust's
Advisor, which is also owned by Chateau;
(iv) Chateau's future control of the Trust and its affairs
following the adoption of the Amended Declaration and By-laws,
and the Additional Chateau Investment;
(v) constraints on growth opportunities and the implementation of
the Business Plan, and no assurance of capital or other
financing;
(vi) the risk that the properties that the Trust acquires and
develops may fail to perform in accordance with the Trust's
expectations; and
(vii) the risks associated with increased indebtedness and leverage.
The foregoing discussion of the positive, negative and other
information and factors considered by the Trustees is not intended to be
exhaustive. The Trustees did not assign relative weights to the above factors or
determine that any factor was of particular importance. A determination of
various weightings would, in the view
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of the Trustees, be impractical. Rather, the Trustees viewed their position and
recommendations as being based on the totality of the information presented to,
and considered by, them. The Trustees recommend that the Shareholders review and
consider independently the Risk Factors. In considering the recommendation of
the Trustees, Shareholders should consider that one of the Trustees, Gary P.
McDaniel, who is the Chief Executive Officer of Chateau, could be considered to
have potential conflicts of interest, and that Chateau, which is likely to
become a controlling shareholder shortly after the adoption of the
Organizational Amendments, may also be subject to potential conflicts of
interest. See "Risk Factors--Conflicts of Interest."
Certain Alternatives
In considering the Organizational Amendments, the Trustees also
analyzed two alternatives for the Trust: (i) liquidation of the Trust; and (ii)
continuation of the Trust in accordance with its existing organizational
structure, business plan and policies.
Liquidation of the Trust. In lieu of adopting the Organizational
Amendments, one option available to the Trust is for the Trust to commence an
orderly liquidation and to distribute the net proceeds from the liquidation to
Shareholders in accordance with the terms of the Existing Declaration of Trust.
The primary benefit of this strategy is that it would allow for an immediate and
final liquidation of the investments in the Trust held by, and a distribution of
cash to, Shareholders. Liquidation of the Trust at the current time would also
avoid the risks inherent in the proposed new structure for the Trust. In
addition, Shareholders would have the opportunity to reinvest the net proceeds
received in the liquidation in similar or different investments.
The Trustees have estimated, however, that the net proceeds available
for distribution to Shareholders upon completion of the liquidation would amount
to approximately $22.40 per Common Share and approximately $26.89 per Preferred
Share (each an "Estimated Liquidation Payment"). For a discussion of the
methodology employed by the Trust in developing these estimates, see "Background
of the Transaction."
In assessing the liquidation of the Trust, the Trustees observed that
the $22.40 estimated to be payable to holders of Common Shares is less than the
amount of the original offering price per Common Share in the Trust's initial
public offering. Thus, liquidating at the current time would deprive holders of
Common Shares of the ability to receive a full return of their originally
invested capital and also of the potential for enhancement in the value of their
investments in the Trust, which the Trustees believe will occur if the Trust is
successful in the implementation of its new business plan.
At the same time, the Trustees observed that the $26.89 estimated to be
payable to holders of Preferred Shares is slightly greater than the amount of
the original offering price of the Preferred Shares but would represent, on
average, less than a 2.0% annual appreciation in the value of the Preferred
Shares since the closing of the initial public offering. The Trustees concluded
that liquidating the Trust at the current time would deprive holders of
Preferred Shares from the further enhancement in the value of the Trust expected
to occur upon a successful implementation of the new Business Plan. In addition
to preserving for the Preferred Shareholders the potential for further
appreciation in the value of their investments, the Organizational Amendments
are also intended to protect against declines in such value. Under the terms of
the Organizational Amendments, the liquidation preference for the holders of
Preferred Shares is maintained so that if, in the future, the Trust would decide
to liquidate, the holders of Preferred Shares would receive, before any payments
are made to the holders of Common Shares, an amount per Share equal to the
amount they would have received if the Organizational Amendments were never
approved. In addition, the Organizational Amendments provides the Preferred
Shareholders with certain options. If Proposal 1 is approved by Shareholders,
the Trust is successful in implementing its new Business Plan, lists the Common
Shares on a national securities exchange or on NASDAQ, and exercises its right
to redeem the Preferred Shares at the time of the listing, holders of Preferred
Shares will be provided with a choice to either accept a cash payment for their
Shares in amount per Share equal to the Preferred Share Liquidation Preference
or to convert their shares into Common Shares a on one-for-one basis. As a
result of these factors, the Trustees concluded that
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Proposal 1 appropriately balances the interests of the holders of the Preferred
Shares and the Common Shares and is in the overall best interests of all
Shareholders.
Continuation of the Trust. A second option available for the Trust, in
lieu of adopting the Organizational Amendments, is for the Trust to continue its
operations in accordance with its existing organizational structure, business
plan and policies. Continuing the Trust without change has a number of
characteristics that could be considered benefits, including (i) there would be
no change in the nature of the Shareholders' investments; (ii) the Shareholders'
investment in the Trust would not be exposed to the additional risks associated
with the implementation and operation of the new Business Plan; (iii) the Trust
would liquidate its holdings and distribute the net proceeds from such
liquidation by no later than 2006; and (iv) the Trust would not incur any
expenses in connection with the adoption of the Organizational Amendments, which
are estimated to be approximately
$------------.
At the same time, the Trustees believe that continuing the Trust in its
current form will deprive Shareholders of the substantial benefits of the
proposed Organizational Amendments, and the other changes expected to be
effected following their adoption, and will prevent the Trust from implementing
the Business Plan and acquiring additional manufactured housing communities. The
Trustees also considered that continuation of the Trust in its current form
would not address the liquidity needs that Shareholders may have.
The Trustees also developed estimates of the values of the Common
Shares and Preferred Shares assuming the Trust would be continued in accordance
with its existing organizational structure, business plan and policies. The
estimates developed indicate values of approximately $25.97 per Common Share and
$25.73 per Preferred Share (each an "Estimated Continuation Value") which is to
Shareholders only marginally greater than the original offering price per Share
of the Common Shares and Preferred Shares. For a discussion of the methodology
employed by the Trust in developing these estimates, see "Background of the
Transaction."
Historical and Comparative Distributions
Set forth below is certain information relating to distributions made
by the Trust since January 1, 1994, the first full year of operation of the
Trust:
<TABLE>
<CAPTION>
Common Shares(1) Preferred Shares(2)
---------------- -------------------
Year Aggregate Per Share Aggregate Per Share
- ---- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1998* $ 37,304 $0.375 $ 36,800 $0.375
1997 $135,254 $1.50 $147,110 $1.50
1996 $135,254 $1.50 $147,110 $1.50
1995 $132,436 $1.35 $144,413 $1.47
1994 $104,298 $1.06 $113,687 $1.06
- ------------------------------
* Through March 31, 1998.
</TABLE>
(1) The portion of such distribution representing a return of capital to
Shareholders is as follows: 1997 (100%); 1996 (100%); 1995 (100%);
and 1994 (3%).
(2) The portion of such distribution representing a return of capital to
Shareholders is as follows: 1997 (77%); 1996 (84%);
1995 (67); and 1994 (3%).
The Trust is not in arrears with respect to any dividends, and the
Trust has made all distributions required to be made by it under the Existing
Declaration of Trust.
With respect to distributions to Shareholders of cash from operations,
if the Organizational Amendments are approved, the Trust intends to maintain its
current dividend policies and in connection therewith, intends to
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<PAGE>
continue to timely pay the Preferred Share Dividend Preference and the Common
Share Dividend Preference. The Trust does not intend, in the future, to
distribute to Shareholders proceeds from the sale or refinancing of properties,
but instead intends to reinvest such proceeds in new investments.
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<PAGE>
COMPARISON OF PRINCIPAL TERMS OF EXISTING DECLARATION
OF TRUST AND AMENDED DECLARATION AND BY-LAWS
Set forth below is a summary comparison of certain of the principal
terms of the Existing Declaration of Trust, as currently in effect, against
those that would be in effect if the Amended Declaration, and By-laws, were
approved and adopted. A more thorough comparison is set forth elsewhere herein
and the Amended Declaration, and By-laws, are set forth in their entirety in
Appendix A, and Appendix B, respectively.
EXISTING DECLARATION OF TRUST
AMENDED DECLARATION
AND BY-LAWS
Length of Investment o The Trust is a finite-life entity.
The term of the Trust will expire on December 31, 2006. Following such date
all remaining assets of the Trust would be liquidated, and final
distributions would be made to the Shareholders.
The Trust would become, under the Amended Declaration, an infinite-life
entity with the intention of continuing its operations for an
indefinite time period.
As an infinite-life entity no future liquidation or dissolution of the
Trust would be required or planned.
Voting Rights
With certain limited exceptions, each Common Share and each Preferred Share
entitles each holder to one vote on all matters submitted to a vote of
Shareholders.
Except as described below, the
voting rights of the Common Shares and Preferred Shares under the Amended
Declaration and By-laws will remain the same as those under the Existing
Declaration of Trust.
Each Shareholder has the option to use cumulative voting in the Election of
Trustees.
Under the Amended Declaration and By-laws cumulative voting for the
election of Trustees will be eliminated.
Under the Existing Declaration of Trust the Advisor, the Trustees, and
their Affiliates, are restricted from voting Shares held by them with
respect to a wide range of affiliated trans- actions, and other
transactions where a conflict of interest may exist (the "Voting
Restrictions").
The Voting Restrictions contained in the Existing Declaration of Trust are
not included in the Amended Declaration or By-laws.
Under the Existing Declaration of Trust, Shareholders have cumulative
voting rights in the election of Trustees.
The Amended Declaration eliminates cumulative voting rights of Shareholders.
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AMENDED DECLARATION
EXISTING DECLARATION OF TRUST AND BY-LAWS
Distributions;
Liquidating
Proceeds
Operating Distributions
Under the Existing Declaration of Trust, the Trustees are required to declare
annually a Preferred Share Dividend Preference. At their option, they may also
declare a Common Share Dividend Preference. Under the Amended Declaration the
provisions relating to the Preferred Share Dividend Preference and Common Share
Dividend Preference remain unchanged.
Distributions of Cash from Sales or Refinancings of Properties
The Existing Declaration of Trust requires that all proceeds from the sales
or refinancing of properties be promptly distributed to the Shareholders as
follows: first to Preferred Shareholders in the amount of the Preferred
Share Liquidation Preference, second to the Common Shareholders in the
amount of the Common Share Liquidation Preference and third, 85% of any
remaining proceeds to the Shareholders pro rata and 15% to the Advisor.
Distributions of Cash from
Sales or Refinancings of Properties
The Amended Declaration does not mandate the distribution of proceeds from
sales or refinancings of properties to Shareholders. Except upon a
liquidation of the Trust, proceeds from sales or refinancings of Properties
will be distributed in the same manner as operating distributions.
Liquidating Proceeds
Distribution of proceeds in connection with a liquidation of the Trust are
the same as set forth in "Distribution of Cash From Sales or Refinancings
of Properties" above.
Liquidating Proceeds
Upon a liquidation of the Trust's properties and a winding-up of the Trust,
the distribution of proceeds would be the same as under the Existing
Declaration of Trust.
Issuance of Additional
Securities
The Existing Declaration of Trust authorizes the issuance of an unlimited
amount of Common Shares and Preferred Shares only.
Under the Amended Declaration, the Trust may issue unlimited amounts of
Common Shares and Preferred Shares and issue other classes of securities as
it sees fit.
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<PAGE>
AMENDED DECLARATION
EXISTING DECLARATION OF TRUST AND BY-LAWS
Redemption and
Conversion
Rights
Other than redemption rights of the Trust relating to Ownership
Limitations, the Existing Declaration of Trust does not provide for
any rights with respect to the conversion or redemption of any Common
Shares or Preferred Shares.
The Amended Declaration provides the Trust with right, exercisable
upon the listing of the Common Shares on any national securities
exchange or NASDAQ, to redeem any or all Preferred Shares for a
purchase price per Share equal to the Preferred Share Liquidation
Preference.
The Amended Declaration also provides each holder of Preferred Shares
with the right to convert each Preferred Share held by such holder
into one Common Share, which may be exercised after the Preferred
Shares are called for redemption and prior to the Redemption Date.
Investment Restrictions
Generally, the Existing Declaration of Trust prohibits the Trust from
investing in securities of other entities.
The Amended Declaration does not contain any restriction on the nature
or type of investments that the Trust may make.
Limitations on
Borrowing; Debt
Under the Existing Declaration of Trust, the Trust is limited with
respect to secured and unsecured borrowings and the issuance of debt
securities.
The Trust would not be limited with respect to secured or unsecured
borrowings, or the issuance of debt securities.
Engagement of Advisor
The current relationship between the Trust and the Advisor is governed
by the Advisory Agreement.
The Advisory Agreement will remain in full force and effect.
Under the Existing Declaration of Trust, the Advisory Agreement cannot
be extended at any given time for more than one year, and may be
terminated by the Trust with or without cause, on 60 days' notice (the
"Renewal and Termination Restrictions").
The Renewal and Termination Restrictions are not included in
the Amended Declaration.
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Antitakeover
Provisions
The Existing Declaration of Trust contains various "anti-takeover" provisions.
The Existing Declaration of Trust also provides for various shareholder rights
derived from the NASAA Real Estate Investment Trust Guideline provisions
regarding Roll-Ups.
The Amended Declaration and By- laws contain various "antitakeover" provisions,
including the following: (i) the authorization of "blank check" preferred
shares; and (ii) a requirement that Trustees be removed only for cause and only
by a vote of at least 80% of the outstanding Shares. There are no provisions
relating to Roll-Ups.
Transactions with
Affiliates
Transactions involving any actual or potential conflict of interest with a
Trustee or Advisor, or an affiliate of such persons, are required to be approved
by a majority of the Independent Trustees of the Trust.
Certain transactions with a Trustee or Advisor, or their affiliates, are
prohibited.
There are no provisions in the Amended Declaration or By-laws relating to
transactions involving any actual or potential conflict of interest with a
Trustee or Advisor, or an affiliate of such persons. The Trust's policy with
respect to such transactions will be to obtain the approval of a majority of the
Independent Trustees of the Trust.
There are no prohibitions on transactions with a Trustee or Advisor, or their
affiliates.
Limitation on Total
Operating Expenses
The Existing Declaration of Trust provides that, subject to certain conditions,
the Total Operating Expenses of the Trust shall not exceed in any fiscal year
the greater of 2% of the Average Invested Assets of the Trust or 25% of the
Trust's Net Income.
There are no limitations in the Amended Declaration or By-laws on the Total
Operating Expenses of the Trust.
Ownership Limitations
Under the Existing Declaration of Trust no entity or individual may own
more than 9.8% of the outstanding Shares.
Subject to certain exceptions, the Amended Declaration provides that no
holder may own more than 9.8% of the outstanding Shares (the "Ownership
Limit").
Under the Amended Declaration, Chateau is excluded from the Ownership
Limit.
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PROPOSAL 2 -- ELECTION OF DIRECTORS
Proposal 2 relates to the Annual Election of Trustees of the Trust.
See "Proposal 2: Election of Trustees" herein for additional details.
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RISK FACTORS AND OTHER CONSIDERATIONS
Proposal 1 involves certain risks, conflicts of interest and other
considerations, which are discussed below. In considering the recommendations of
the Trustees with respect to the Organizational Amendments, Shareholders are
urged to consider carefully the basis of such recommendations, the changes that
are effected, and likely to be effected, upon approval of the Organizational
Amendments, and potential conflicts of interest and other risk factors described
below.
Fundamental Change in Nature of Investment
ProposalDeclaration the Trustees may be removed only for cause, and
only upon a vote of the holders of at least 80% of the Shares).
Possible Mandatory Redemption of Preferred Shares
Under the Amended Declaration, effective upon the listing of the Common
Shares on any national securities exchange or NASDAQ (and subject to each
Preferred Shareholder's right to convert each Preferred Share into one Common
Share), the Trust will have the right to redeem outstanding Preferred Shares at
a redemption price per Preferred Share equal to the Preferred Share Liquidation
Preference, which as of December 31, 1997 was $26.82. Should the Trust exercise
such right, each Preferred Shareholder will be faced with the choice of being
cashed out at the redemption price or converting its Preferred Shares to Common
Shares thereby altering the various preferences relating to such Shareholder's
original investment in the Trust.
Conflicts of Interest
Proposal 1 and the recommendationt the Trust will be
successful in its efforts to effect such listing. For additional details and
information relating to the change in the nature of shareholder investments and
rights of shareholders, see "Comparison of Principal Terms of Existing
Declaration of Trust and Amended Declaration and By-laws."
Changes in Shareholders' Rights
The Amended Declaration effects various changes in Shareholders rights
including the following: under the Amended Declaration, Shareholders no longer
have (i) the right to receive distributions from sales or refinancing of
properties (which will be reinvested); (ii) the right to vote shares
cumulatively in the election of Trustees; (iii) certain appraisal and other
rights in the event of a roll-up of the Trust that are provided in the Existing
Declaration of Trust; or (iv) the right to remove Trustees with or without
cause, upon a vote of the holders of a majority of the Shares (under the Amended
Declaration the Trustees may be removed only for cause, and only upon a vote of
the holders of at least 80% of the Shares).
Possible Mandatory Redemption of Preferred Shares
Under the Amended Declaration, effective upon the listing of the Common
Shares on any national securities exchange or NASDAQ (and subject to each
Preferred Shareholder's right to convert each Preferred Share into one Common
Share), the Trust will have the right to redeem outstanding Preferred Shares at
a redemption price per Preferred Share equal to the Preferred Share Liquidation
Preference, which as of December 31, 1997 was $26.82. Should the Trust exercise
such right, each Preferred Shareholder will be faced with the choice of being
cashed out at the redemption price or converting its Preferred Shares to Common
Shares thereby altering the various preferences relating to such Shareholder's
original investment in the Trust.
Conflicts of Interest
Proposal 1 and the recommendation of Gary P. McDaniel, a Trustee of the
Trust, set forth herein could be deemed to involve certain conflicts of interest
between Mr. McDaniel, on the one hand, and the Shareholders on the other hand,
including the following:
Relationship of The Windsor Corporation to the Trust. The Advisor is a
wholly owned subsidiary of Chateau. Chateau and the Advisor currently
collectively own 19,339 Common Shares and 984 Preferred Shares, representing
a combined 9.8% equity interest in the Trust. Gary P. McDaniel, a Trustee
of the Trust, is also the Chief Executive Officer and a shareholder of
Chateau. Pursuant to the Advisory Agreement dated January 30, 1992 (as
amended), between the Advisor and the Trust (the "Advisory Agreement"),
the Advisor is responsible for day-to-day operations and property management
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<PAGE>
functions of the Trust and performs a wide range of services and activities
relating to the assets and operations of the Trust. In consideration for the
rendering of these services pursuant to the Advisory Agreement, the Advisor is
entitled to the following fees: (i) annual subordinated advisory fees of up to
1% of invested assets, and .5% of uninvested assets of the Trust; (ii) brokerage
commissions in connection with the acquisition of properties by the Trust equal
to the lesser of one-half of the brokerage commission paid, or 3% of the sales
price; and (iii) a subordinated incentive fee on the disposition and liquidation
of the Trust's properties equal to 15% of cash remaining from the liquidation of
the Trust's properties after the Preferred Shareholders and Common Shareholder
have received their liquidation preferences. While the adoption of the
Organizational Amendments and the implementation of the Business Plan do not
affect the Advisor compensation structure under the Advisory Agreement, the
Trustees expect that the implementation of the Business Plan, by increasing the
size of the Trust's portfolio of properties, will operate to increase the total
aggregate compensation payable to the Advisor under the Advisory Agreement.
Aggregate annual compensation payable to the Advisor in fiscal year 1997 and
fiscal year 1996 was [$54,500] and [$112,600], respectively. If, following the
adoption of the Organizational Amendments, the Trust were able to double the
value of the properties held by the Trust, through the acquisition or
development of additional properties following the adoption of the
Organizational Amendments, from $13.4 million to $26.8 million, the annual
subordinated advisory fees payable to the Advisor could increase by as much as
$134,000 per year, and the Advisor could receive aggregate brokerage fees in
connection with acquisition of new properties of up to $402,000.
Removal of Certain Advisory Agreement Restrictions Under the Existing
Declaration of Trust. Under the Existing Declaration of Trust, the Advisory
Agreement cannot be renewed for periods longer than one year, and must be
terminable by the Trust without cause, on 60 days' notice. No similar
restrictions are contained in the Amended Declaration. Accordingly, subject to
the approval of the Independent Trustees, the Trust may extend the Advisory
Agreement for periods beyond one year, and may modify the Advisory Agreement's
termination provisions.
Potential Future Conflicts of Interest. Chateau is the largest publicly
held REIT in the United States that is principally engaged in the acquisition,
development and management of manufactured home communities and will continue to
aggressively pursue acquisition and development opportunities on its own behalf
to add to its portfolio. It is possible that the Advisor will find investment
opportunities in the future that may be attractive to both the Trust and Chateau
thereby creating potential conflicts of interest. The conflicts of interest
identified herein and the future control of the Trust and the Advisor by Chateau
identified below could result in the Trust not taking advantage of acquisition
opportunities identified by the Advisor and could result in the Trust's engaging
in activities which disproportionately benefit the Advisor or Chateau.
Control by Chateau
Chateau and the Advisor currently collectively own, in the aggregate,
20,123 Common Shares and 200 Preferred Shares, representing a combined 9.8%
equity interest in the Trust, and the Trust and Chateau anticipate that promptly
following the approval of Proposal 1 by the Shareholders, Chateau will purchase
at least an additional 130,000 Common Shares or Preferred Shares, or a
combination thereof, for a purchase price (but not below $25 per Share) equal to
the aggregate fair market value of such Shares, as determined by the Independent
Trustees, which would give Chateau an aggregate 45% equity ownership interest in
the Trust. It is expected that for at least the first two years following the
adoption of the Organizational Amendments, Chateau may seek to maintain
ownership of up to 45% of the outstanding Shares. It is anticipated that
additional investments by Chateau will be on substantially the same terms as
investments by unaffiliated third parties involved in any such investment or, if
such third parties are not involved, on such terms as the Independent Trustees
shall determine. With limited exceptions, under the Amended Declaration, matters
voted on by the Shareholders (including the Election of Trustees) are voted on
by the holders of the Common Shares and Preferred Shares, voting as a single
class. Accordingly, assuming Chateau makes the additional above described
investment, Chateau will have substantial influence over the affairs of the
Trust, and will have the power, with limited support from the other
Shareholders, to approve or block most actions requiring the approval of the
Shareholders of the Trust, including the sale of all assets of the Trust and
other extraordinary actions.
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<PAGE>
Chateau's control of the Trust and the Advisor and the potential
conflicts of interest identified above could result in the Trust not taking
advantage of acquisition opportunities identified by the Advisor and could
result in the Trust's engaging in activities which disproportionately benefit
the Advisor or Chateau.
No Fairness Opinion Sought with Respect to Organizational Amendments
The Trustees have not in connection with the proposed Organizational
Amendments sought to obtain an opinion relating to the fairness of the proposed
Organizational Amendments to the Shareholders. The Existing Declaration does not
require any such Fairness Opinion be obtained and the proposed Organizational
Amendments were approved by all of the Trustees of the Trust, including the
Independent Trustees. Had such opinion relating to fairness been obtained, the
terms of the proposed Organizational Amendments might have been different, and
possibly more favorable to the Shareholders.
Potential Increase in Indebtedness; Additional Use of Leverage
Under the Existing Declaration of Trust (i) total indebtedness of the
Trust cannot exceed 300% of the net asset value of the Trust's assets; and (ii)
the net asset value of the Trust's assets must be at least 300% of the amount of
unsecured indebtedness of the Trust. In accordance with these restrictions, the
Trust currently has in the aggregate approximately $8.2 million in outstanding
indebtedness (including its pro rata share of indebtedness from joint ventures
and limited partnerships), of which approximately $6.7 million is secured by
mortgages on the Trust's assets. Currently, total indebtedness of the Trust
equals approximately 160% of the net asset value of the Trust's assets, and the
net asset value of the Trust's assets equals approximately 331% of the Trust's
unsecured indebtedness. Currently, the total indebtedness of the Trust is
approximately 62% of the value of its assets. Neither the Amended Declaration
nor the By-laws limit the amount of indebtedness that the Trust may incur.
If the Organizational Amendments are approved, the Trust will no longer
be limited under its organizational documents in the total amount of
indebtedness that it may incur. The Trust's policy will be to limit total
indebtedness of the Trusts the Trust's to 80% of the value of the Trust's
assets, which is slightly higher than existing levels of indebtedness and
significantly higher than the historic debt profile of the Trust. The use of a
greater amount of leverage by the Trust could increase its vulnerability to
general economic and real estate industry conditions (including increases in
interest rates) and could impair the Trust's ability to obtain additional
financing in the future and to take advantage of significant acquisition
opportunities that may arise. There is no assurance that the Trust will be able
to meet its future debt service obligations and, to the extent that it cannot,
the Trust risks the loss of some or all of its assets to foreclosure. Adverse
economic conditions could cause the terms at which borrowings are available to
be unfavorable. In such circumstances, if the Trust is in need of capital to
repay indebtedness in accordance with its terms or otherwise, it could be
required to liquidate one or more investments in its properties at times which
may not permit realization of the maximum return on such investments. The
incurrence of additional indebtedness and use of additional leverage by the
Trust could result in reduced distributions to Shareholders and could impair the
ability of the Trust to continue to timely pay the Preferred Share Dividend
Preference and Common Share Dividend Preference.
Risks Related to Removal of Investment Restrictions
Under the Existing Declaration of Trust, the Trust is subject to
various investment restrictions and generally is prohibited from investing in
securities of other entities. The Amended Declaration does not contain such
restrictions. The Trust will remain subject to various investment restrictions
which relate to maintaining its status as a REIT. The Trust does not anticipate
investing in securities of other entities other than entities whose principal
business is owning manufactured home communities. To the extent that the Trust
makes investments in such entities, but does not control them, the Trust will be
subject to all the risks associated with being a minority shareholder, including
not having control over the affairs of any such entity.
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Constraints on Growth Opportunities
If Proposal 1 is approved by Shareholders, the Trust intends to pursue
a full range of growth opportunities, including acquisitions of additional
properties, community expansions and, to a lesser extent, new community
development and redevelopment of existing communities. The ability of the Trust
to accomplish such growth will be subject to a number of constraints, including
the following:
Competition for Available Properties. The Trust will compete for growth
opportunities with national and regional manufactured home community owners,
most of which have greater name recognition and financial resources than the
Trust. The Trust's failure to compete successfully for acquisitions would
adversely affect the Trust's ability to expand its portfolio of properties.
The Trust Has Not Identified a Portfolio of Properties. The Trust's
ability to successfully pursue new growth opportunities will depend on a number
of factors, including, among other things, the Trust's ability to identify
manufactured home communities for acquisition or development, to finance
acquisitions and renovations and to successfully integrate new communities into
its operations. The Trust has not, at the present time, identified a portfolio
of properties that it would seek to invest in if the Organizational Amendments
were approved, and if sufficient capital were available to it. There is no
assurance that suitable communities for acquisition or development will be
available or, if available, will be on terms acceptable to the Trust.
No Assurance of Available Capital or Financing. The implementation of
the Trust's Business Plan will require substantial additional capital. The Trust
will seek additional capital through additional equity or debt offerings,
mortgage loans and other borrowings and additional investments by Chateau or
other third parties. The Trust currently lacks commitments for any of the
additional capital it needs to implement its Business Plan and there can be no
assurance that capital or other financing will be available to the Trust, or if
available, available on favorable terms. If the Trust is not able to raise
additional capital, or obtain other financing or funding, on favorable or
acceptable terms, it will need to substantially curtail or abandon its Business
Plan. There also can be no assurance that the Trust will be successful in
listing the Common Shares on any national securities exchange or on NASDAQ in
the future.
Acquisition and Development Risks
If Proposal 1 is approved, the Trust intends to implement an aggressive
acquisition program and, to a lesser extent, to pursue the development of new
communities and the redevelopment of existing communities. The acquisition and
development of new properties entails the risk that investments will fail to
perform in accordance with the Trust's expectations. New project development and
property redevelopment activities are subject to a number of risks, including,
without limitation, risks of construction delays or cost overruns, risks that
the properties will not achieve anticipated performance levels and new project
commencement risks such as receipt of zoning, occupancy and other required
governmental permits and authorizations. These and other risks could result in
the incurrence of substantial costs for a project that is never completed. There
is no assurance that financing for these projects will be available or, if
available, will be on terms acceptable to the Trust. Unanticipated delays or
expenses in connection with the development of new properties could have an
adverse effect on the results of operations and financial condition of the
Trust. The acquisition and development risks identified herein could result in
reduced distributions to Shareholders and could impair the ability of the Trust
to continue to timely pay the Preferred Share Dividend Preference and Common
Share Dividend Preference.
Environmental Matters
In connection with the Trust's acquisition of properties in the future,
it generally intends to conduct a Phase I environmental assessment prior to
acquisition. A Phase I environmental assessment involves researching historical
usages of a property, databases containing registered underground storage tanks
and other matters, including an on-site inspection, to determine whether an
environmental issue exists with respect to the property which needs to be
addressed. It is possible that Phase I environmental assessment will not reveal
all environmental liabilities or compliance concerns or that there will exist
material environmental problems or compliance concerns with respect
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to new acquisition of which the Trust is not aware. The Trust is not aware of
any material environmental problems at any of the properties contained in its
current portfolio. There can be no assurance, however, that environmental
problems do not actually exist at such properties, and that the liability of the
Trust with respect to any such problem would not be material.
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PROPOSAL 1 -- PROPOSED ORGANIZATIONAL AMENDMENTS
Introduction
Proposal 1 seeks (i) the amendment of the Existing Declaration of Trust
of the Trust through the approval and adoption of the form, terms and provisions
of the Amended Declaration; and (ii) the adoption of By-laws of the Trust,
through the approval of the form, terms and provisions of a proposed form of
By-laws for the Trust.
The principal purposes of Proposal 1 are to convert the Trust from a
finite-life to an infinite-life entity, and to remove various restrictions and
limitations and other requirements contained in the Existing Declaration of
Trust which are not typically found in the more modern organizational documents
of leading REITs. These include provisions that (i) restrict the types and
amounts of equity and debt securities that the Trust may issue; (ii) limit the
nature and types of investments that the Trust may make; and (iii) mandate that
proceeds from sales or refinancings of properties be distributed to
Shareholders, and not reinvested in assets. The Organizational Amendments also
provide for changing the name of the Trust to "N' Tandem Trust," a name that the
Trustees believe is better suited to the Trust given its future proposed
activities. See "Comparison of Principal Terms of Existing Declaration of Trust
and Amended Declaration and By-laws," for additional information concerning the
Organizational Amendments.
If Proposal 1 is approved by the Shareholders, it is expected that the
Trust will engage in the following transactions and effect the following
changes: (i) Chateau, a publicly held REIT which is the largest owner/operator
of manufactured home communities in the United States and the sole shareholder
of the Advisor, is expected to purchase at least an additional 130,000 Common
Shares, or Preferred Shares, or a combination thereof, for a purchase price (but
not below $25 per share) equal to the aggregate fair market value of such
Shares, as determined by the Independent Trustees (see "Additional Chateau
Investment"); (ii) the Trust will form the Operating Partnership in order to
facilitate tax-free and/or tax-deferred acquisitions of additional properties
(see "Organization of UPREIT; Contribution Transaction"); (iii) the Trust will
begin implementing the Business Plan, to cause the Trust to attain greater size
and asset diversity (see "Implementation of Business Plan; Growth Strategy");
and (iv) if successful in the implementation of the Business Plan in the next
two to four years, the Trust anticipates that it will seek to list the Common
Shares on a national securities exchange or NASDAQ, and if deemed appropriate,
raise additional capital through an underwritten public offering of the
Common Shares, or other securities of the Trust (see "Future Listing of
Common Shares on Exchange; Redemption of Preferred Shares"). There can be no
assurance, however, that the Trust will be successful in listing the Common
Shares or effecting such public offering.
The Amended Declaration also provides for the exchange of each Common
Share and Preferred Share of the Trust for a share of a new class of Common
Shares and Preferred Shares, respectively, which will have substantially the
same rights as the existing classes of shares, except that (i) in keeping with
the conversion of the Trust from finite-life to infinite-life, the Trust will no
longer be required to make distributions to Shareholders of all proceeds from
sales or refinancings of properties; (ii) effective upon the listing of the
Common Shares on any national securities exchange or NASDAQ, the Trust will have
the right to redeem outstanding Preferred Shares upon 60 days' written notice to
Preferred Shareholders, at a redemption price per Preferred Share equal to the
Preferred Share Liquidation Preference, which as of December 31, 1997 was
$26.82; and (iii) each holder of Preferred Shares shall have the right, which
becomes exercisable if the Preferred Shares are called for redemption, to
convert each Preferred Share held by such holder into one Common Share, at any
time prior to the Redemption Date, by the delivery of notice of such exercise to
the Trust. The purpose of the redemption is to enable the Trust to create a
simpler and more streamlined capital structure which will facilitate the Trust's
implementation of the Business Plan and create an optimal structure for pursuing
a public offering, or major private placement, of the Common Shares. The purpose
of the granting of the Conversion Rights to the Preferred Shareholders is to
effectively provide Preferred Shareholders with the option of (i) being cashed
out through the redemption; or (ii) of continuing their investment in the Trust,
as Common Shareholders, through the exercise of their Conversion Rights. See
"Comparison of Principal Terms of Existing Declaration of Trust and Amended
Declaration and By-laws" for additional information.
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The aspects of Proposal 1 that allow for the redemption of Preferred
Shares upon the listing of Common Shares are intended to allow the Trust the
option of eliminating the Preferred Shares from its capital structure if the
Trust moves ahead and pursues an underwritten public offering of its Common
Shares. The Trustees believe that the value of the Common Shares may be enhanced
if the Preferred Shares (which rank senior to the Common Shares with regard to
dividends and distributions) are retired at the time of the offering. At the
same time, by also granting Conversion Rights to the Preferred Shareholders as
part of the Proposal, if the Preferred Shares are in fact called for redemption,
the holders of such Shares will have the option of either (i) being cashed out
through the redemption; or (ii) continuing their investment in the Trust, as
Common Shareholders, through the exercise of their Conversion Rights. See
"Comparison of Principal Terms of Existing Declaration of Trust and Amended
Declaration and By-laws" for additional information.
The Trust's current portfolio of properties is comprised of a 100%
ownership interest in three manufactured home community properties and a 40%,
11% and 11% interest, respectively, in three other manufactured home community
properties. The Trust believes that significant opportunities exist to acquire
additional properties that fit its investment objectives and guidelines. The
Trust will focus on acquisitions where the Trust believes there is substantial
opportunity to improve operational and financial results, or where for some
reason, because of poor management or otherwise, a property is operating
substantially below its potential.
If Proposal 1 is approved, Chateau has advised the Trust that it
intends to announce that the Trust will be a primary vehicle through which
Chateau will make investments in manufactured home communities that do not fit
the core asset type typical of the existing Chateau portfolio, which is
characterized by large, stable, institutional- quality, fully amenitized
properties. The Trust will employ higher levels of leverage than Chateau and
will focus primarily on lower profile assets the Trust will employ higher levels
of leverage than Chateau and will focus primarily on "lower profile assets"
meaning properties (i) that are typically not part of a portfolio of
manufactured housing community properties; (ii) that are located in tertiary
demographic and geographic markets; (iii) that are not managed by a nationally
known manufactured home community operator; (iv) that may be managed by an
on-site owner who lives at the property; and (v) that are likely to have fewer
amenities, and a greater proportion of single-wide homes than the typical
Chateau community. The Trust believes that its affiliation with Chateau will
benefit the Trust by providing it with access to Chateau's national
organization, management team and investment and management philosophies.
Through its affiliation with Chateau, the Trustees believe that the trust will
be exposed to a wider range of acquisition opportunities as a result of
Chateau's national organization and knowledge of the manufactured housing
industry, and will benefit from Chateau's expertise in effectively and
efficiently managing properties. Chateau is widely considered as a leading
property management company in the manufactured housing community industry, and
in 1998, the National Manufactured Housing Congress presented the Chateau with
the "National Operator of the Year" award for an unprecedented sixth consecutive
year, confirming Chateau's outstanding reputation for excellence in property
management and operations.
Background of the Transaction
The Trust was organized to invest in existing, substantially developed
and occupied manufactured home communities. Its investment objectives are to
provide to its shareholders (i) preservation, protection, and eventual return of
the shareholder's investment; (ii) quarterly dividends of cash from operations,
some of which may be a return of capital for tax purposes rather than taxable
income; (iii) realization of long-term appreciation in value of the properties
acquired by the Trust; and (iv) a hedge against inflation.
The Trust was funded through a public offering of Common Shares and
Preferred Shares, commencing in April 1992 and terminating in April 1993. An
aggregate of 98,169 Common Shares and 98,323 Preferred Shares were sold for
an offering price of $25.00 resulting in gross proceeds aggregating $2,454,225
and $2,458,075, respectively. Originally, the Declaration of Trust prevented
the Trust from incurring any secured or unsecured indebtedness. In October,
1993, the Shareholders approved a proposal to permit the Trust to incur secured
and unsecured indebtedness within certain prescribed limits principally for
the purpose of enabling the Trust to acquire additional properties and/or
ownership interests in properties.
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As of December 31, 1997, the Trust owned interests in the following
manufactured home communities:
Ownership
Name of Property Percentage Date Acquired Location
West Star 100% January 1993 Tucson, Arizona
El Frontier 100% February 1994 Tucson, Arizona
Long Lake 40% June 1995 West Palm Beach, Florida
Apache East 11% February 1997 Phoenix, Arizona
Denali Park 11% February 1997 Phoenix, Arizona
The Trust believes that the proceeds from its initial public offering
were invested in accordance with purposes set forth in the prospectus used in
the initial public offering.
In September 1997, Chateau purchased all of the outstanding capital
stock of The Windsor Corporation, the Advisor to the Trust, for 101,239 common
shares of Chateau, and $750,000 in cash. Following Chateau's acquisition of The
Windsor Corporation shares, the Trustees of the Trust voluntarily resigned, and
in connection with such resignation, appointed three new Trustees, including two
Independent Trustees.
The Trustees believe that the Trust has been successful in achieving
certain of its objectives, especially in paying regular quarterly dividends out
of cash from operations. Based on the amounts of the Estimated Liquidation
Payments of $26.89 per Preferred Share and $22.40 per Common Share (see "Certain
Alternatives--Liquidation of the Trust" below), it appears that the Trust
has been somewhat successful in preserving the capital invested by Preferred
Shareholders but has been less successful in preserving the capital invested
by Common Shareholders. The Trust has not been successful in providing long-
term capital appreciation to the Common Shareholders or the Preferred
Shareholders and has not provided such Shareholders with a hedge against
inflation.
In an effort to enhance Shareholder value, the Trustees in the first
quarter of 1998 authorized the Advisor to identify additional properties for
acquisition by the Trust. In March of 1998, the Trust entered into an agreement
to acquire a 627-site manufactured home community in Montgomery, Alabama for
$5.5 million. In order to enable the Trust to complete the acquisition, Chateau
offered to make an investment in the Trust. The Trustees accepted such offer
and, on March 30, 1998, entered into an agreement with Chateau, pursuant to
which Chateau invested $5.7 million in the Trust in exchange for the issuance
within 90 days of such investment of (i) such number of Common Shares (at a
price of $25 per share) as the Trustees may determine; and (ii) Promissory Notes
in a principal amount of the balance of the investment. In connection with the
Original Chateau Investment, on May 11, 1998, the Trust issued to Chateau (i)
19,339 Common Shares (at a price of $25 per share); and (ii) two Promissory
Notes with an aggregate principal amount of $5,221,525.
After completing the acquisition of the Montgomery, Alabama property,
the Trustees authorized the Advisor to identify additional acquisition
opportunities for the Trust. However, the Trustees determined at this time that
the Trust was effectively prevented from taking advantage of additional
acquisition opportunities as a result of the Trust's lack of available capital
and the Capital, Investment and Other Restrictions contained in the Declaration
of Trust.
Following further discussion by the Trustees in April of 1998, the
Trustees determined that it would substantially enhance the Trust's capital
raising prospects if it could restructure the Trust so that would be organized
in a manner that is more typical of the structure employed by leading REITs.
This determination eventually led, in May 1998, to the approval by the Trustees
of the Organizational Amendments and a decision to present such amendments to
the Shareholders of the Trust for their consideration and approval.
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Recommendation of the Trustees
The Trustees believe that adopting the Organizational Amendments is in
the best interests of the Trust and its Shareholders and recommend that
Shareholders vote FOR the approval of Proposal 1. In reaching this
determination, the Trustees considered, among other things, the following
factors:
Availability of Attractive Investments; Inability of the Trust
to Capitalize Under Current Structure. The Advisor and the Trustees of
the Trust believe that there are significant opportunities for the
Trust to acquire additional real properties, and ownership interests in
real properties and entities owning real property, in the current
market at prices that are likely to provide attractive investment
returns. However, given (i) the Trust's lack of available capital to
make such investments; and (ii) the Capital, Investment and Other
Restrictions, the Trust is effectively prevented from engaging in such
acquisitions and taking advantage of such investment opportunities. The
Trustees believe that the Capital, Investment and Other Restrictions
severely restrict the Trust's ability to grow. The Trustees also
believe there is very limited investor demand for equity interests in
real estate investment entities with small capitalizations and limited
real estate portfolio size, especially where there are substantial and
numerous investment and other restrictions which severely restrict such
entities' potential growth, and return on equity. Such investments have
limited appeal for the majority of investors in the market, and almost
no appeal for institutional and other major investors. In its current
form, the Trust is restricted in its ability to raise additional equity
capital or other financing in the public markets, should it desire to
do so to take advantage of attractive investment opportunities or for
any reason.
Potential for Growth; Enhanced Access to Capital. If the
Organizational Amendments are approved, the Trust's more flexible
organizational and capital structure should position the Trust for
additional growth. In particular, the Organizational Amendments, which
exempt Chateau from the Trust's existing ownership limit, will allow
Chateau to make the Additional Chateau Investment. This additional
equity investment will enable the Trust to purchase additional
manufactured housing communities. The Trust's ability to access
additional capital will also be enhanced by the provisions of the
Amended Declaration that will permit the Trust to issue different types
of equity securities (as opposed to only the existing classes of Common
Shares and Preferred Shares) and by the Trust's association with
Chateau. If the Trust is able to grow in size, the Trustees believe
that the Trust will become more attractive to prospective investors
which should further enhance its capital raising opportunities.
Diversification. The Trust's current portfolio of properties
is comprised of a 100% ownership interest in three manufactured home
community properties and a 40%, 11% and 11% interest, respectively, in
three other manufactured home community properties. If the
Organizational Amendments are approved, the Trust's portfolio will
become more diversified as it acquires additional properties over time.
The Trustees believe that the increased size and diversity of the
Trust's portfolio will reduce the dependence of the performance of the
Trust on any particular investment.
Possible Enhanced Liquidity. Currently, the Common Shares and
the Preferred Shares are not listed on any securities exchange or
included for quotation on NASDAQ. As a result, the Shares are illiquid
and Shareholders have limited opportunities to dispose of their
investments in the Trust. It is expected that if the Organizational
Amendments are approved and the Trust is successful in implementing the
Business Plan, the Trust will seek to list the Common Shares on a
national securities exchange or include them for quotation on NASDAQ
within two to four years following the adoption of the Organizational
Amendments. There can, however, be no assurance that a listing will be
achieved. Although it is not expected that the Preferred Shares will
also be listed, if the listing of the Common Shares is accomplished,
the Preferred Shares will become convertible into Common Shares, thus
providing liquidity for holders of Preferred Shares.
Potential Increased Distributions. For the year ended December
31, 1997 and for the first quarter of 1998, the Trust paid quarterly
distributions to Shareholders at the rate of $0.375 per Share. The
Trustees believe that the implementation of the Trust's Business Plan,
which is expected to increase the
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size and operating cash flow of the Trust, will provide opportunities
for the Trust to increase distributions to Shareholders over time.
Flexible Operating Structure. Approval of the Organizational
Amendments and the changes anticipated to be effected following the
adoption of the Organization Amendments will provide the Trust with a
capital and operating structure that will allow it to respond more
efficiently to, and anticipate the occurrence of, changing conditions
in the United States equity markets (including interest rate
fluctuations), thereby potentially reducing the adverse effects of such
changes.
In reaching their determination, the Trustees also considered
potentially negative aspects of the proposed transaction, including the various
factors and information set forth in the Risk Factors and elsewhere in this
Proxy Statement, including the following:
Fundamental Change in Nature of Investment: Proposal 1
involves a fundamental change in the nature of the investment
of the Common Shareholders and Preferred Shareholders in the
Trust in that it will transform the Trust from a finite-life
entity to an infinite-life, growth-oriented entity which will
not be required to distribute sales or refinancings proceeds
to Shareholders but will instead be able to reinvest such
proceeds in new investments;
Changes in Shareholders' Rights: The Amended Declaration
effects various changes in Shareholders rights including the
following: under the Amended Declaration, Shareholders no
longer have (i) the right to receive distributions from sales
or refinancing of properties (which will be reinvested); (ii)
the right to vote shares cumulatively in the election of
Trustees; (iii) certain appraisal and other rights in the
event of a roll-up of the Trust that are provided in the
Existing Declaration of Trust; or (iv) the right to remove
Trustees with or without cause, upon a vote of the holders of
a majority of the Shares (under the Amended Declaration the
Trustees may be removed only for cause, and only upon a vote
of the holders of at least 80% of the Shares);
Risks Related to Removal of Investment Restrictions: Under the
Existing Declaration of Trust, the Trust is subject to various
investment restrictions and generally is prohibited from
investing in securities of other entities. The Amended
Declaration does not contain such restrictions;
Possible Mandatory Redemption of Preferred Shares: Under the
Amended Declaration, effective upon the listing of the Common
Shares on any national securities exchange or NASDAQ (and
subject to each Preferred Shareholder's right to convert each
Preferred Share into one Common Share), the Trust will have
the right to redeem outstanding Preferred Shares at a
redemption price per Preferred Share equal to the Preferred
Share Liquidation Preference, which as of December 31, 1997,
was $26.82;
Conflicts of Interest: Gary P. McDaniel, a Trustee of the
Trust, is also the Chief Executive Officer and a director
and shareholder of Chateau, which is the sole shareholder of
the Advisor. Mr. McDaniel, the Advisor and Chateau all could
be considered to have potential conflicts of interest;
Control by Chateau: If Proposal 1 is approved by the
Shareholders, it is expected that Chateau will purchase at
least an additional 130,000 Common Shares or Preferred Shares,
or a combination thereof and as a result thereof will own
approximately 45% of the outstanding Shares;
Constraints on Growth Opportunities; No Assurance of Capital
or Financing: The Trust currently lacks commitments for the
additional capital it needs to implement its Business Plan and
there can be no assurance that capital or other financing will
be available to the Trust, or if available, available on
favorable terms;
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Acquisition and Development Risks: The acquisition and
development of new properties entails the risk that
investments will fail to perform in accordance with the
Trust's expectations; and
Indebtedness: Neither the Amended Declaration nor the
By-laws limit the amount of indebtedness that the Trust may
incur.
The foregoing discussion of the positive, negative and other
information and factors considered by the Trustees is not intended to be
exhaustive. The Trustees did not assign relative weights to the above factors or
determine that any factor was of particular importance. A determination of
various weightings would, in the view of the Trustees, be impractical. Rather,
the Trustees viewed their position and recommendations as being based on the
totality of the information presented to, and considered by, them. The Trustees
recommend that the Shareholders review and consider independently the Risk
Factors. In considering the recommendation of the Trustees, Shareholders should
consider that one of the Trustees, Gary P. McDaniel, who is the Chief Executive
Officer of Chateau, could be considered to have potential conflicts of interest,
and that Chateau, which is likely to become a controlling shareholder shortly
after the adoption of the Organizational Amendments, may also be subject to
potential conflicts of interest. See "Risk Factors--Conflicts of Interest."
Certain Alternatives
In considering the Organizational Amendments, the Trustees also
analyzed two alternatives for the Trust: (i) liquidation of the Trust; and (ii)
continuation of the Trust in accordance with its existing organizational
structure, business plan and policies.
Liquidation of the Trust. In lieu of adopting the Organizational
Amendments, one option available to the Trust is for the Trust to commence an
orderly liquidation and to distribute the net proceeds from the liquidation to
Shareholders in accordance with the terms of the Existing Declaration of Trust.
The primary benefit of this strategy is that it would allow for an immediate and
final liquidation of the investments in the Trust held by, and a distribution of
cash to, Shareholders. Liquidation of the Trust at the current time would also
avoid the risks inherent in the proposed new structure for the Trust. In
addition, Shareholders would have the opportunity to reinvest the net proceeds
received in the liquidation in similar or different investments.
The Trustees have estimated, however, that the net proceeds available
for distribution to Shareholders upon completion of the liquidation would amount
to approximately $22.40 per Common Share and approximately $26.89 per Preferred
Share. These estimates are based on the assumption that the manufactured housing
communities and joint venture interests held by the Trust would by sold as of
March 31, 1998 and that the following items would be paid: (a) the estimated
expenses of effecting the asset sales; (b) other liabilities of the Trust,
including existing indebtedness as of March 31, 1998; and (c) all fees required
to be paid to the Advisor pursuant to the Advisory Agreement; and that the
remaining proceeds received by the Trust would be distributed to the holders of
Common Shares and Preferred Shares in accordance with the terms of the Existing
Declaration of Trust. The estimated sales prices of the manufactured housing
communities and joint venture interests held by the Trust were determined based
on applying selected capitalization rates to each property's projected 1998 net
operating income (i.e., operating income less operating expenses, including
property management fees). The capitalization rates for the properties ranged
from 8.0% to 9.5% and were selected based on information provided by the Advisor
concerning the markets in which the Trust's properties are located. In the case
of each joint venture interest, the capitalized value of the underlying
manufactured housing community was multiplied by the percentage interest held by
the Trust in the joint venture to determine the value of the Trust's interest in
such joint venture. The Trustees believe that the methodology used to estimate
the values of the communities and joint venture interests owned by the Trust is
commonly employed to determine property valuations in the real estate industry
and therefore provides an appropriate basis for estimating the amounts that
could be expected to be realized by the Trust upon sale of its real property
assets. In determining the Estimated Liquidation Payments, the estimated cash
available for distribution was allocated among the Common Shares and Preferred
Shares in accordance with the terms of the Existing Declaration of Trust.
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In assessing the liquidation of the Trust, the Trustees observed that
the $22.40 estimated to be payable to holders of Common Shares is less than the
amount of the original offering price per Common Share in the Trust's initial
public offering. Thus, liquidating at the current time would deprive holders of
Common Shares of the ability to receive a full return of their originally
invested capital and also of the potential for enhancement in the value of their
investments in the Trust, which the Trustees believe will occur if the Trust is
successful in the implementation of its new business plan.
At the same time, the Trustees observed that the $26.89 estimated to be
payable to holders of Preferred Shares is slightly greater than the amount of
the original offering price of the Preferred Shares but would represent, on
average, less than a 2.0% annual appreciation in the value of the Preferred
Shares since the closing of the initial public offering. The Trustees concluded
that liquidating the Trust at the current time would deprive holders of
Preferred Shares from the further enhancement in the value of the Trust expected
to occur upon a successful implementation of the new Business Plan. In addition
to preserving for the Preferred Shareholders the potential for further
appreciation in the value of their investments, the Organizational Amendments
are also intended to protect against declines in such value. Under the terms of
the Organizational Amendments, the liquidation preference for the holders of
Preferred Shares is maintained so that if, in the future, the Trust would decide
to liquidate, the holders of Preferred Shares would receive, before any payments
are made to the holders of Common Shares, an amount per Share equal to the
amount they would have received if the Organizational Amendments were never
approved. In addition, the Organizational Amendments provide the Preferred
Shareholders with certain options. If Proposal 1 is approved by Shareholders,
the Trust is successful in implementing its new Business Plan, lists the Common
Shares on a national securities exchange or on NASDAQ, and exercises its right
to redeem the Preferred Shares at the time of the listing, holders of Preferred
Shares will be provided with a choice to either accept a cash payment for their
Shares in amount per Share equal to the Preferred Share Liquidation Preference
or to convert their shares into Common Shares on a one-for-one basis. As a
result of these factors, the Trustees concluded that Proposal 1 appropriately
balances the interests of the holders of the Preferred Shares and the Common
Shares and is in the overall best interests of all Shareholders.
Continuation of the Trust. A second option available for the Trust, in
lieu of adopting the Organizational Amendments, is for the Trust to continue its
operations in accordance with its existing organizational structure, business
plan and policies. Continuing the Trust without change has a number of
characteristics that could be considered benefits, including (i) there would be
no change in the nature of the Shareholders' investments; (ii) the Shareholders'
investment in the Trust would not be exposed to the additional risks associated
with the implementation and operation of the new Business Plan; (iii) the Trust
would liquidate its holdings and distribute the net proceeds from such
liquidation in accordance with its existing Business Plans; and (iv) the Trust
would not incur any expenses in connection with the adoption of the
Organizational Amendments, which are estimated to be approximately
$____________.
At the same time, the Trustees believe that continuing the Trust in its
current form will deprive Shareholders of the substantial benefits from the
proposed Organizational Amendments, and the other changes expected to be
effected following their adoption, and will prevent the Trust from implementing
the Business Plan and acquiring additional manufactured housing communities. The
Trustees also considered that continuation of the Trust in its current form
would not address the liquidity needs that Shareholders may have.
The Trustees also developed estimates of the values of the Common
Shares and Preferred Shares assuming the Trust would be continued in accordance
with its existing organizational structure, business plan and policies. The
estimates developed indicate values of approximately $25.97 per Common Share and
$25.73 per Preferred Share (each an "Estimated Continuation Value") which is
only marginally greater than the original offering price per Share of the Common
Shares and Preferred Shares.
The Estimated Continuation Values of the Common Shares and Preferred
Shares in the analysis are based on a discounted cash flow analysis (i.e., an
analysis utilizing a range of discount rates) of (i) the present value of the
projected operating cash flows from the manufactured housing communities and
joint venture interests held by the Trust; and (ii) the present value of the
projected net proceeds of the future liquidation of such assets after an
additional five years of operations (after payment of the expenses of the sales,
other liabilities of the Trust and fees
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to the Advisor). In this analysis, the Trustees utilized the financial and
operating forecasts of the net operating income of the assets for the five years
of the forecast period, and applied discount rates of 12% to projected net
operating income and to projected residual value which was based upon
capitalizing projected net operating income for the final year of the forecast
at 8.0% to 9.5%. The selected discount and capitalization rates were selected
based on information provided by the Advisor concerning the markets in which the
Trust's properties are located. In this analysis, it was assumed that (i) the
component of the continuation value tied to the forecasted operating cash flows
from the manufactured housing communities and joint venture interests would be
distributed among the holders of Common Shares and Preferred Shares in
accordance with the provisions of the Existing Declaration of Trust relating to
operating distributions; and (ii) the component of the continuation value tied
to the residual value of the assets at the conclusion of the forecast period
would be distributed among the holders of Common Shares and Preferred Shares in
accordance with the provisions of the Existing Declaration of Trust relating to
distributions of Cash From Sale or Refinancing of Properties. See "Comparison of
Principal Terms of Existing Declaration of Trust and Amended Declaration and
By-laws -- Distributions; Liquidation Preferences."
TRANSACTIONS AND CHANGES TO BE EFFECTED UPON APPROVAL OF PROPOSAL 1
Additional Chateau Investment
Chateau expects that, upon approval of Proposal 1, it will make the
Additional Chateau Investment whereby it will purchase at least an additional
130,000 Common Shares, or Preferred Shares, or a combination thereof, for a
purchase price (but not below $25 per Share) equal to the aggregate fair market
value of such Shares, as determined by the Independent Trustees. Any purchase
price will be paid through the cancellation of a portion of the indebtedness due
under the Promissory Notes.
The terms of the Additional Chateau Investment will be determined by
the Independent Trustees of the Trust. Following the closing of the Additional
Chateau Investment, it is anticipated that Chateau will own Preferred Shares and
Common Shares representing in the aggregate a 45% equity interest in the Trust.
Organization of UPREIT; Contribution Transaction
Promptly following the approval of Proposal 1 the Trust intends to
engage in the following restructuring transactions: (i) the Trust will form an
Operating Partnership subsidiary of the Trust to be named N' Tandem Operating
Partnership, L.P.; and (ii) the Trust will contribute substantially all of the
assets of the Trust to the Operating Partnership in exchange for the issuance of
general and limited partnership interests in the Operating Partnership to the
Trust, and limited partnership interests to N' Tandem Holding Corp., a newly
formed subsidiary of the Trust.
The principal purpose for creating the above described UPREIT structure
is to (i) maximize the Trust's ability to take advantage of appropriate
investment opportunities; and (ii) maximize the flexibility that the Trust has
available to it in structuring its investments to take advantage of certain
available tax benefits, or to meet the needs and requirements of particular
sellers of properties, or interests in or entities owning, real properties. The
principal advantage of the UPREIT structure is that it permits the Trust to
engage in transactions that are structured to delay, and in some cases avoid,
capital gains taxes that would otherwise be payable by sellers of property held
in limited partnership form.
Implementation of Business Plan; Growth Strategy
If Proposal 1 is approved by the Shareholders, the Trust intends to
pursue a full range of growth opportunities, including acquisition of additional
properties, community expansions and, to a lesser extent, new community
development and redevelopment of existing communities. The Trust anticipates
that it will utilize a substantial amount of mortgage and other debt financing
in connection with such acquisitions and the implementation of its Business
Plan. However, it will be the Trust's policy following the approval of Proposal
1 to limit total indebtedness to 80% of the value of the Trust's assets.
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If Proposal 1 is approved, Chateau has advised the Trust that it
intends to announce that the Trust will be a primary vehicle through which
Chateau will make investments in manufactured home communities that do not fit
the core asset type typical of the existing Chateau portfolio, which is
characterized by large, stable, institutional- quality, fully amenitized
properties. The Trust will employ higher levels of leverage than Chateau and
will focus primarily on lower profile assets. The Trust believes that its
affiliation with Chateau will benefit the Trust by providing it with access to
Chateau's national organization, management team and investment and management
philosophies.
Future Listing of Common Shares on Exchange; Redemption of Preferred Shares
Fully implementing the Trust's Business Plan will require substantial
amounts of capital beyond that which may be available through mortgages and
private investors. If the Trust is successful in its initial efforts to
implement its Business Plan, it is likely that the Trust will seek to list the
Common Shares on a national securities exchange or NASDAQ, and to raise
additional capital through an underwritten public offering of Common Shares, or
other securities of the Trust, to enable it to continue with the Business Plan
in the next two to four years. There can be no assurance the Trust will be
successful in this regard.
Upon such listing, the Trust will have the right to redeem such of the
Preferred Shares as it may deem appropriate, for a redemption price equal to the
Preferred Share Dividend Preference, by giving Preferred Shareholders not less
than 60 days' prior written notice. Upon any proposed redemption the Preferred
Shareholders will have the right to convert each Preferred Share owned by them
to one Common Share, at any time prior to the redemption date. Although the
Trust anticipates that it would use proceeds from the issuance of equity or debt
securities or borrowings to redeem the Preferred Shares, other sources of funds
would be considered as well. To the extent applicable to any Redemption, the
Trust will comply with the provisions of the Williams Act and the rules
promulgated by the Commission thereunder in effecting such Redemption.
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COMPARISON OF PRINCIPAL TERMS OF EXISTING DECLARATION
OF TRUST AND AMENDED DECLARATION AND BY-LAWS
Set forth below is a comparison of the principal terms of the Existing
Declaration of Trust, as currently in effect, against those that would be in
effect if the Amended Declaration, and By-laws, were approved and adopted.
Capitalized terms in this section that are not defined herein, or elsewhere in
this Proxy Statement, have the meanings ascribed to them in the Existing
Declaration of Trust, Amended Declaration, or By-laws, as the case may be. The
Amended Declaration, and By-laws, are set forth in their entirety in Appendix A,
and Appendix B, respectively. For additional information relating to the Trust,
reference is made to Item 6 "Management's Discussion and Analysis" contained in
the Trust's Annual Report on Form 10-KSB for the year ended December 31, 1997,
Item 7 "Financial Statements" contained in the Trust's Annual Report on Form
10-KSB for the year ended December 31, 1997, Item 2 "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
Trust's Form 10-QSB Quarterly Report for the quarter ended March 31, 1998, and
Item 1 "Financial Statements" contained in the Trust's Form 10-QSB Quarterly
Report for the quarter ended March 31, 1998, which sections are hereby
incorporated by reference into this Proxy Statement.
EXISTING DECLARATION OF TRUST AMENDED DECLARATION AND BY-LAWS
Organization
The Trust is an unincorporated business trust organized on November 18, 1991
under California law, and is governed by the California REIT statute. The Trust
is qualified as a REIT under Section 856 of the Code. The Trust is an externally
advised REIT.
Under the Amended Declaration and By-laws, the Trust would continue to be an
unincorporated business trust organized under California law, and be governed
by, the California REIT Statute. The Trust would continue to qualify as a REIT
under the Code, and operate as an externally advised REIT.
Length of Investment
The Trust is a finite-life entity. During the term of the Trust, the Trustees
are required to distribute all proceeds from the sale or refinancing of
properties to the Shareholders promptly upon the sale or refinancing of any
property. The term of the Trust will expire on December 31, 2006. Following such
date all remaining assets of the Trust would be liquidated, and final
distributions would be made to the Shareholders in accordance with the terms and
provisions of the Existing Declaration of Trust. The Trust would become, under
the Amended Declaration, an infinite-life entity with the intention of
continuing its operations for an indefinite time period. Proceeds from the sale
or refinancing of properties would not be required to be distributed to the
Shareholders and, subject to the distribution requirements relating to
maintaining the Trust's status as a REIT, it is anticipated that such proceeds
would be likely to be reinvested, or held for future investment, in additional
properties. As an infinite- life entity no future liquidation or dissolution of
the Trust would be required or planned.
Voting Rights
With certain limited exceptions, each Common Share and each Preferred Share
entitles the holder thereof to one vote on all matters submitted to a vote of
Shareholders. Common Shares and Preferred Shares vote as one class except with
respect to proposals that operate to diminish the liquidation rights and
preferences of the Common Shares or Preferred Shares, as the case may be, which
proposals require the affirmative vote of a majority of the Common Shareholders,
and Preferred Shareholders, voting as separate classes. Each Shareholder has the
option to use cumulative voting in the Election of Trustees. The total number of
votes available to holders electing cumulative voting is equal to three times
the number of Shares held, which may be allocated in the holder's discretion.
Under the Existing Declaration of Trust the Advisor, the Trustees, and their
Affiliates, are restricted from voting Shares held by them with respect to the
following matters (the "Voting Restrictions") (i) election of the Independent
Trustees; (ii) amendments to the Existing Declaration of Trust; (iii) approval
or disapproval of contracts with Affiliates; (iv) removal of any or all
Trustees; (v) dissolution of the Trust; (vi) removal of the Advisor; or (vii)
regarding any transaction between the Trust and the Advisor, a Trustee, or their
Affiliates.
Except as described below, the voting rights of the Common Shares
and Preferred Shares under the Amended Declaration and By-laws will remain the
same as those under the Existing Declaration of Trust.
Under the Amended Declaration and By-laws cumulative voting for the election of
Trustees will be eliminated, and the Shareholders will be entitled to cast one
vote for or against each nominee for each Common Share or Preferred Share held.
The Voting Restrictions contained in the Existing Declaration of Trust are not
included in the Amended Declaration or By-laws. If the Organizational Amendments
are approved, the Advisor and its Affiliates will have the same voting rights as
other holders of Shares.
Distributions; Liquidating Proceeds
Operating Distributions.
Common Shares and Preferred receive distributions of cash from operations when
and as declared by the Trustees. The Trustees are required to declare a
Preferred Share dividend on the Preferred Shares annually, equal to between 6%
and 7% of the per share original offering price of the Preferred Shares, as
adjusted for prior distributions. Once the annual Preferred Share Dividend
Preference is declared and paid, the Trustees may declare annually, in their
discretion, a Common Share dividend which may not exceed the amount of the
Preferred Share dividend for such year. Any distributions in excess of the above
amounts are required to be distributed pro-rata among the Preferred Shares and
the Common Shares as a single class.
Distributions of Cash from Sales or Refinancings of
Properties.
The Existing Declaration of Trust requires that all proceeds from the sales or
refinancings of properties be promptly distributed following any such sales or
refinancings. The distribution of cash from the sale or refinancing of
properties is made on a property-by-property basis, and is allocated between
Preferred Shares and Common Shares in ratio to the gross proceeds of the
original offering raised from the sale of Preferred Shares and Common Shares,
respectively. The cash is distributed, first, to Preferred Shareholders in an
amount equal to 100% of their capital deemed invested in the property, plus a
return thereon of 8% per annum cumulative (not compounded), less a ratable
portion of all prior distributions of cash from operations to Preferred
Shareholders (the "Preferred Share Liquidation Preference"); second, to Common
Shareholders in an amount equal to 100% of their capital deemed invested in the
property, plus a return thereon of 10% per annum cumulative (not compounded),
less a ratable portion of all prior distributions of cash from operations to
Common Shareholders (the "Common Share Liquidation Preference"); third, 15% of
the balance, if any, is reserved for payment to the Advisor as an incentive fee,
but is not paid to the Advisor until the holders of Preferred Shares have
received the Preferred Share Liquidation Preference and Common Shares have
received the Common Share Liquidation Preference, with the remaining 85% of such
balance being distributed to the Shareholders pro rata.
Operating Distributions.
Under the Amended Declaration the provisions providing for distributions of cash
from operations remain unchanged.
Distributions of Cash from Sales or Refinancings of
Properties.
The Amended Declaration does not mandate the distribution of proceeds from sales
or refinancings of properties to Shareholders.
To the extent that the Trustees determine to distribute, rather than reinvest,
proceeds from the sale or refinancing of properties then such proceeds will be
distributed in the same manner as proceeds from a liquidation and winding up of
the Trust.
Liquidating Proceeds.
Upon a liquidation of the Trust's properties and a winding-up of the Trust, the
distribution of proceeds would be the same as under the Existing Declaration of
Trust.
Liquidating Proceeds.
Distributions of proceeds in connection with a liquidation of the Trust are the
same as set forth in "Distributions of Cash From Sale or Refinancings of
Properties" above.
Issuance of Additional Securities
The Existing Declaration of Trust authorizes the issuance of an unlimited amount
of Common Shares and Preferred Shares. No other classes of shares of beneficial
interest or other equity securities are authorized under the Trust or may be
issued. Under the Amended Declaration the Board of Trustees will have broad
discretion in the types and nature of the equity and other securities that the
Trust may authorize and issue. The Board of Trustees may, in its discretion,
authorize the issuance of additional Common Shares or Preferred Shares, and such
other equity securities as it deems appropriate including other series of
beneficial interests which may have preferences and rights senior to those
attaching to the Common Shares and Preferred Shares.
Redemption and Conversion Rights
Other than redemption rights of the Trust relating to Ownership Limitations, the
Existing Declaration of Trust does not provide for any rights with respect to
the conversion or redemption of any Common Shares or Preferred Shares, or any
other securities of the Trust.
The Amended Declaration provides the Trust with a redemption right (the
"Redemption Right"), exercisable upon the listing of the Common Shares on any
national securities exchange or NASDAQ, whereby the Trust may redeem such issued
and outstanding Preferred Shares as it deems appropriate on not less than 60
days notice to such holders of Preferred Shares as it may select (the
"Redemption Notice"), for a purchase price per share equal to the Preferred
Share Liquidation Preference (the "Purchase Price") with respect to each such
Preferred Share. Such Redemption Notice is required to specify, among other
things, (i) the number of Preferred Shares proposed to be redeemed from such
holder; (ii) the Purchase Price; and (iii) the proposed redemption date
("Redemption Date").
The Amended Declaration also provides each holder of Preferred Shares with the
right, which becomes exercisable if the Preferred Shares are called for
redemption, to convert each Preferred Share held by such holder into one Common
Share, any time prior to the Redemption Date, by the delivery of notice of such
exercise to the Trust (the "Conversion Right").
Had the Redemption Right been exercisable on December 31, 1997, the Purchase
Price for the Preferred Shares on such date would have been $26.82 per share.
To the extent applicable to any Redemption, the Trust will comply with the
provisions of the Williams Act and the rules promulgated by the Commission
thereunder in effecting such Redemption.
The provisions set forth above relating to the Redemption Right and Conversion
Right are entirely new to the Amended Declaration, and no comparable provisions
are included in the Existing Declaration of
Trust.
Investment Restrictions
The Existing Declaration of Trust provides that the Trust will not engage in any
of the following investment practices or activities: (1) invest in commodities
or commodity future contracts; (2) invest more than 10% of its total assets in
unimproved real property or indebtedness secured by a deed of trust or mortgage
loan on unimproved real property; (3) invest in or make mortgage loans; (4)
invest in contracts for the sale of real estate; (5) engage in any short sale;
(6) acquire securities in any company holding investments or engaging in
activities prohibited by these restrictions; or (7) invest in the equity
securities of any non-governmental issuer, including other real estate
investment trusts or limited partnerships for a period in excess of 18 months.
The Amended Declaration does not contain any restriction on the nature or type
of investments that the Trust may make. The nature and types of investments that
the Trust may make are limited only by the requirements and restrictions
relating to the Trust's maintaining its status as a REIT.
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EXISTING DECLARATION OF TRUST AMENDED DECLARATION AND BY-LAWS
Limitations on Borrowing; Debt
Under the Existing Declaration of Trust (i) total indebtedness of the Trust
cannot exceed 300% of the net asset value of the Trust's assets; and (ii) the
net asset value of the Trust's assets must be at least 300% of the amount of
unsecured indebtedness of the Trust.
It is also the policy of the Trust that it will not incur mortgage indebtedness
in the aggregate which exceeds 50% of the total value of the Trust's assets. The
Trust would not be limited with respect to secured or unsecured borrowings, or
the issuance of debt securities.
The Trust's policy will be to limit total indebtedness to 80% of the value of
the Trust's assets.
Management Control
The Trustees are, subject to certain narrow limitations, vested with all
management authority to conduct the business of the Trust, including authority
and responsibility for overseeing all executive, supervisory and administrative
services rendered to the Trust. The Trustees are not classified, and are elected
by the Shareholders annually. The Board of Trustees will continue to direct the
management of the Trust's business and affairs. The Trustees are not classified,
and will continue to be elected by Shareholders annually.
Engagement of Advisor
The Trust is an externally advised REIT. The Windsor Corporation has been the
advisor to the Trust since the Trust's formation. The current relationship
between the Trust and the Advisor is governed by the Advisory Agreement. Under
the Existing Declaration of Trust, the Advisory Agreement cannot be extended at
any given time for more than one year, and may be terminated by the Trust
without cause, on 60 days' notice (the "Renewal and Termination Restrictions").
The Trust will continue as an externally advised REIT, and The Windsor
Corporation will continue as the advisor to the REIT pursuant to the Advisory
Agreement. The Renewal and Termination restrictions are not included in the
Amended
Declaration.
Antitakeover Provisions
The Existing Declaration of Trust contains provisions that may have the effect
of delaying or discouraging an unsolicited proposal for the acquisition of the
Trust or the removal of incumbent management, including provisions designed to
avoid concentration of share ownership in a manner that would jeopardize the
Trust's status as a REIT under the Code.
The Existing Declaration of Trust also includes provisions derived from NASAA's
Real Estate Investment Trust Guidelines regarding Roll-Ups. These provisions
which are set forth in Article XIX of the Existing Declaration of Trust, include
provisions for (a) appraisal of Trust assets by an independent expert, (b) the
rights of Shareholders to accept securities of a roll-up entity, or receive cash
for their Shares based on the appraised value of net assets of the Trust or
remain as Shareholders of the Trust and (c) certain democracy, access to records
and other rights to be provided by the roll-up entity. The Amended Declaration
and By-laws of the Trust contain a number of provisions that may have the effect
of delaying or discouraging a change in control of the Trust that might be in
the best interests of Shareholders. The Amended Declaration and Bylaws provide
for the following: (i) the authorization of shares of beneficial interest that
may be classified and issued as a variety of equity securities in the discretion
of the Trustees, including securities that have superior voting rights to the
Shares; (ii) a requirement that Trustees be removed only for cause and only by a
vote of at least 80% of the outstanding Shares; and (iii) provisions designed to
avoid concentration of share ownership in a manner that would jeopardize the
Trust's status as a REIT under the Internal Revenue Code.
There are no appraisal or compensation procedures or requirements in the Amended
Declaration and Bylaws relating to "roll-up" transactions.
Transactions with Affiliates
The Trust is prohibited from engaging in transactions with any Trustee, officer,
sponsor, Advisor, or any affiliates of such persons (all such persons and
entities being hereinafter referred to as "Affiliates"), unless such transaction
has, after disclosure of such affiliation, been approved by the affirmative vote
of a majority of the Independent Trustees not affiliated with a person who is a
party to the transaction, and (i) the transaction is fair and reasonable to the
Trust and its Shareholders; and (ii) the terms are at least as favorable as an
arms length transaction would be the price does not exceed the appraised value
of the property being acquired, if an acquisition is involved. Payments to the
Advisor, its Affiliates and the Trustees for services rendered in any capacity
other than that as Advisor or Trustee may only be made upon a determination by
the Independent Trustees 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.
Additional restrictions in the Existing Declaration of Trust relating to
transactions with Affiliates include, among others, restrictions on (i)
purchasing property from Affiliates; (ii) selling property to Affiliates; (iii)
making loans or borrowing money from Affiliates; and (iv) investing in joint
ventures with Affiliates.
There are no provisions in the Amended Declaration or By-laws relating to
transactions involving any actual or potential conflict of interest with a
Trustee or Advisor, or an affiliate of such persons. The Trust's policy with
respect to such transactions will be to obtain the approval of a majority of the
Independent Trustees of the Trust.
Limitation on Total Operating Expenses
The Existing Declaration of Trust provides that, subject to the conditions
described in the following paragraph, the Total Operating Expenses of the Trust
shall not exceed in any fiscal year the greater of 2% of the Average Invested
Assets of the Trust during such fiscal year of 25% of the Trust's Net Income
during such fiscal year.
There are no limitations in the Amended Declaration or By-laws on the total
operating expenses of the Trust.
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Ownership Limitations
Under the Existing Declaration of Trust no entity or individual may own more
than 9.8% of the outstanding Shares. The Trustees may refuse to permit any
transfer of Shares which would violate the 9.8% ownership limit, and may redeem
Shares, subject to certain requirements, in order to remedy any violation of the
9.8% ownership limit.
Subject to certain exceptions, the Amended Declaration provides that no holder
may own, or be deemed to own by virtue of the attribution provisions of the
Code, more than (i) 9.8% of the lesser of the number or value of Shares
outstanding; or (ii) 9.8% of the lesser of the number or value of the issued and
outstanding preferred shares of any class or series of the Trust (the "Ownership
Limit"). Chateau currently owns a 9.8% ownership interest in the Trust. Under
the Amended Declaration, Chateau is excluded from the Ownership Limit in order
to enable Chateau to make the Additional Chateau Investment, which will allow
the Trust to begin promptly its implementation of the Business Plan. The
Trustees may, but in no event will be required to, grant exemptions from the
Ownership Limit with respect to particular shareholders in the future if it
determines that such ownership will not jeopardize the Trust's status as a REIT.
As a condition of such waiver, the Trustees may require opinions of counsel
satisfactory to it and/or undertakings or representations from the applicant
with respect to preserving the REIT status of the Trust.
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PROPOSAL 2 -- ANNUAL ELECTION OF TRUSTEES
Election of Trustees
All Trustees of the Trust are elected for a one-year term and continue
in office until their successors are elected and qualified. The Trust has three
Trustees, two of which are Independent Trustees.
Kenneth G. Pinder and Richard B. Ray are currently the Trust's
Independent Trustees. On April 8, 1998, the Independent Trustees selected the
following three nominees for re-election as Trustees at the Annual Meeting, each
for a one-year term expiring on the date of the Annual Meeting in 1999, and
until their successors are elected and qualified: Kenneth G. Pinder, Richard B.
Ray and Gary P. McDaniel. Each nominee is a current Trustee of the Trust.
The Trust's Existing Declaration of Trust requires that a majority of
Trustees must be Independent Trustees, that a majority of each committee of
Trustees must be Independent Trustees, and that Independent Trustees shall
nominate successor Independent Trustees.
It is intended that proxies will be voted to elect as Trustees the
three nominees named for terms ending on the date of the 1999 Annual Meeting. If
any nominee is unable or declines to serve, an event the Board of Trustees does
not expect, proxies will be voted for the election of a substitute nominee.
A short biography of each nominee for re-election as Trustee follows:
Gary P. McDaniel (52) became a Trustee of the Trust in September of 1997.
He has been Chief Executive Officer and a director of Chateau since
February 1997. Mr. McDaniel was Chairman of the Board, President and Chief
Executive Officer of ROC Communities, Inc. at the time of its merger with
Chateau in February 1997. He had been a principal of ROC and its
predecessors since 1979, and has been active in the manufactured home
industry since 1972. Mr. McDaniel has been active in several state and
national manufactured home associations, including associations in Florida
and Colorado. In 1996, he was named "Industry Person of the Year" by the
National Manufactured Housing Industry Association. Mr. McDaniel is on the
Board of Directors of the Manufactured Housing Institute. He is a graduate
of the University of Wyoming and served as a Captain in the United States
Air Force.
Richard B. Ray (57) became a Trustee of the Trust in September of
1997. Since 1995 he has been Co- Chairman of the Board and Chief Financial
Officer of 21st Century Mortgage Corporation, (a lender to the manufactured
home industry) and a director of the following companies: BankFirst, Radio
Systems Corporation and Knox Corporation Housing Partnership (a not for
profit developer of low income housing in Knox County, Tennessee).
Previously, he was Executive Vice President, Chief Financial Officer, and
Director of Clayton Homes Inc. (a vertically integrated manufactured
housing company) from 1982-1994 and a Director of Palm Harbor Homes, Inc.
(a national producer of manufactured homes) from 1994-1995.
Kenneth G. Pinder (62) became a Trustee of the Trust in September of
1997. Mr. Pinder entered the manufactured housing business in 1970 managing
a manufactured housing site rental community and formed American Living
Homes Inc., a manufactured housing dealership, in 1974. He continues to be
the owner and president of this corporation. He is also sole owner of Able
Mobile Housing Inc., a temporary housing company for fire loss victims and
has developed manufactured home sites and purchased and sold numerous
communities over the past twenty years. Mr. Pinder has been a member of the
Michigan Manufactured Housing Association for over 35 years. In 1992 he was
elected to the Michigan Manufactured Housing Board of Directors, and serves
on its Executive Committee. Board of Trustees
The business and affairs of the Trust are managed under the direction
of the Board of Trustees. Members of the Board keep informed of the Trust's
business and activities by reports and proposals sent to them in advance
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of each Board meeting and reports made to them during these meetings by the
Chairman. Members of the Advisor and the property manager are available at Board
meetings or other times to answer questions and discuss issues.
In 1997, the Board of Trustees had two board meetings and three actions
approved by unanimous written consent. Each Trustee attended all meets of the
Board and committees of the Board on which such Trustee served.
Attendance at these meetings averaged 100% among all Trustees in 1997.
Committees of the Board
The Board has one committee, the Audit Committee, of which the Board's two
Independent Trustees are the members: Kenneth G. Pinder and Richard B. Ray.
This committee recommends to the Board of Trustees the engagement of
independent accountants; reviews with the accountants the audit plan, non-audit
services, and fees related to each; reviews the Trust's internal financial
controls and auditing; reviews annual financial statements before issuance; and
makes appropriate reports and recommendations to the Board. The committee met
one time in 1997.
Advisor
The Windsor Corporation is the Advisor to the Trust. Its services
include managing the day-to-day Trust affairs and serving as financial and
investment advisor in connection with policy decisions made by the Trustees. The
current contract with the Advisor has a one-year term ending April 10, 1999, and
is renewable for successive one-year periods subject to the approval of the
Board, including a majority of the Independent Trustees. The Advisory Contract
may be terminated without cause by either the Board or the Advisor upon 60 days'
notice. Gary P. McDaniel, Chairman of the Board, is a controlling person of the
Advisor.
Share Ownership of Directors, Executive Officers and Certain Shareholders
The following table contains information concerning the ownership of
Common Shares and Preferred Shares by each person or entity that is a beneficial
owner of more than five percent of the Trust:
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Shares Owned Percentage of Class
Chateau Communities, Inc. 20,123 Common Shares 18.90%
6430 South Quebec Street
Englewood, CO 80111
The Windsor Corporation 984 Common Shares 0.10%
6430 South Quebec Street 200 Preferred Shares 0.02%
Englewood, CO 80111
Other than these Shares, no Trustee or executive officer owns Trust
Shares either of record or beneficially, directly or indirectly, as of the date
of this Proxy Statement. If the Organizational Amendments are approved, it is
anticipated that Chateau will purchase at least an additional 130,000 Common
Shares, or Preferred Shares, or a combination thereof, for a purchase price (but
not below $25 per share) equal to the aggregate fair market value of such
Shares, as determined by the Independent Trustees. Upon such purchase Chateau
would have an approximate 45% ownership interest in the Trust. See "Additional
Chateau Investment."
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and executive officers of the Trust and beneficial owners of
more than 10% of its Common Stock are required to file initial reports of
ownership and reports of changes in ownership of the Trust's securities pursuant
to Section 16(a) of the Exchange Act and to provide the Trust with copies of
such reports. The Trust has reviewed all such reports from persons known to the
Trust to be subject to these Section 16(a) provisions. Based solely on
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such review, the Trust believes that for the year ended December 31, 1997, all
Section 16(a) filing requirements were met, except the Trustees who became
Trustees in September 1997 filed such reports on ______.
Independent Trustees Compensation
Each of the Independent Trustees received $7,500 in trustee fees in
1997 for services rendered.
Executive Compensation
The Trust did not pay compensation to Gary McDaniel, Chairman of the
Board. Compensation was paid to affiliates of Gary McDaniel as described under
the next caption. The Trust does not have any executive officers.
Related Party Compensation and Expense Reimbursement
Expense Reimbursements - Optional Costs. The Advisor and its affiliates
were paid $34,500 in 1997 in expense reimbursements for Trust operational costs
and transfer agent service costs incurred by the Advisor.
Advisory Fee. Pursuant to the Advisory Agreement, the Advisor among
other things (i) serves as the Trust's investment and financial advisor and
provides research, economic and statistical data in connection with the Trust's
investments and investment and financial policies; (ii) is responsible for
investigating, selecting and establishing relationships with consultants, banks,
investment banks, sellers, brokers, investors, builders, developers and others
on behalf of the Trust; and (iii) consults with the Trustees and advises the
Trustees with respect to acquiring new properties and investments and
dispositions of existing properties and investments and has primary
responsibility for effecting acquisitions and dispositions of properties and
other investments of the Trust.
Under the terms of the Advisory Agreement, the Advisor earned advisory
fees from the Trust in the amount of $54,500 in 1997. None of this fee was paid
to the Advisor. This fee is being deferred by the Advisor, without interest, for
payment at a later date. As of December 31, 1997, the Trust owed the Advisor
$112,600 in respect of services rendered under the Advisory Agreement.
VOTING PROCEDURES AND MISCELLANEOUS MATTERS
The Annual Meeting
The Annual Meeting will be held at the Trust's principal executive
offices at 6430 South Quebec Street, Englewood, Colorado 80111 on August __,
1998, at 10:00 a.m. (or at such other date and time to which the Annual Meeting
is adjourned), to consider and vote on the Organizational Amendments, and the
Election of Directors, and related matters.
Change in Accountants
On January 21, 1998, the Trust dismissed its principal outside
accounting firm, Deloitte & Touche, LLP and hired Coopers & Lybrand, LLP as its
new outside accounting firm. For additional details please see the Trust's Form
8-K dated January 27, 1998, and related Form 8-KA dated February 3, 1998 which
is hereby incorporated herein in its entirety by reference.
Solicitation of Proxies; Administrative Agent
In addition to soliciting proxies by mail, proxies may be solicited by
directors, officers and employees of the Trust and their affiliates, who will
not receive additional compensation therefor, by personal interview, telephone,
telegram, courier service, or similar means of communication. In addition, the
Trust has retained Arlen Capital, LLC as mailing agent to mail proxies with
respect to the proposals (the "Administrative Agent"), to administer the
delivery of information to the Shareholders and to receive and tally votes and
engage in certain other
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non-solicitation activities for the Trust. Whether or not the proposals are
approved by the Shareholders, the Administrative Agent will be paid a fee by the
Trust in accordance with the agreement between the Trust and the Administrative
Agent.
Record Date; Vote Required
The close of business on _____, 1998, has been fixed as the record date
("Record Date") for determining the Shareholders entitled to cast votes, in
person or proxy, with respect to the proposals. As of the Record Date, there
were 109,308 Common Shares outstanding held of record by a total of 180
Shareholders, and 98,073 Preferred Shares outstanding held of record by a total
of 311 Shareholders. With certain limited exceptions, each Common Share and each
Preferred Share entitles the holder thereof to one vote on all matters submitted
to a vote of Shareholders.
Except as set forth below, at the Annual Meeting each Shareholder of
record at the close of business on that the record date will be entitled to one
vote for each Common Share or Preferred Share registered in that Shareholder's
name. Any person acquiring title to Shares after that date will be entitled to
one vote for each full Share for which a proxy has been received from the
Shareholder of record. Holders of a majority of all outstanding Shares entitled
to vote, present in person or by proxy, constitute a meeting quorum.
As the Organizational Amendments may affect Common Shareholders and
Preferred Shareholders differently, under the Existing Declaration of Trust, the
affirmative vote in person or by proxy, of the holders of a majority of the
Common Shares and Preferred Shares, each voting as a separate class, is required
to approve the Organizational Amendments.
Only Shareholders of record on the Record Date will receive notice of,
and be entitled to vote with respect to, the proposals. The proxy may be used by
each Shareholder in casting his votes for or against the Organizational
Amendments, and for the Election of Trustees. The Shareholder may mark the proxy
to vote "for" or "against" the Organizational Amendments or may abstain with
respect to its Shares. A Shareholder electing to vote "for" approval of the
Organizational Amendments must vote all Shares owned by the Shareholder in the
Trust for such approval.
Election of Trustees. The Election of Trustees is decided by a
plurality of the votes cast by the Shares entitled to vote in the election. Each
Shareholder has the option to use cumulative voting in the Election of Trustees.
The total number of votes available to holders electing if cumulative voting is
equal to three times the number of Shares held, which may be allocated to the
Trustees in such holder's discretion.
Abstentions and Broker Non-Votes. Abstentions and broker non-votes (if
any) will not count toward the number of consents required for approval and have
the effect of "NO" on the proposed Organizational Amendments for purposes of
tallying the vote.
Under the Existing Declaration of Trust, the Advisor and its affiliates
are restricted from voting with respect to certain matters, including (i) the
election of Independent Trustees; and (ii) the adoption of the Organizational
Amendments. Chateau, which collectively with the Advisor currently owns 20,123
Common Shares and 200 Preferred Shares constituting in the aggregate a 9.8%
ownership interest in the Trust, has advised the Trust that it intends to (i)
abstain from voting the Shares held by it with respect to the Organizational
Amendments, and the election of the Independent Trustees; and (ii) vote for the
election of Gary P. McDaniel as a Trustee.
No Dissenters' or Appraisal Rights
The Shareholders are not entitled to any appraisal, dissenters' or
other similar rights in connection with the adoption of the Organizational
Amendments, under the Existing Declaration of Trust, or any statute applicable
to the Trust. This means that if the Organizational Amendments are adopted the
Shareholders will have only the rights conferred to them under the Amended
Declaration and By-laws.
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Voting Procedures and Powers
Each holder of Common Shares or Preferred Shares may grant proxies to
vote Shares held by it. This Proxy Statement is accompanied by a separate proxy.
The persons named in the proxy as proxies will vote as instructed by each
Shareholder submitting a proxy with respect to the proposals and will have
authority, as a result of holding such proxy, to vote in their discretion as to
procedural matters relating to the Annual Meeting including, without limitation,
with respect to the adjournment of the Annual Meeting from time to time.
Any Shareholder who fails to vote or "abstains" will be deemed to have
voted "against" the proposals. A Shareholder who submits a signed proxy but
fails to indicate any vote on a question presented on the proxy will be deemed
to have voted "for" the question not voted upon.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal (if permitted) of the proxies will be
determined by the Trustees, whose determination will be final and binding. The
Trust reserves the right to reject any or all proxies that are not in proper
form or the acceptance of which, in the opinion of counsel, would be unlawful.
The Trust also reserves the right to waive any irregularities or conditions of
the proxy. Unless waived, any irregularities in connection with the proxies must
be cured within such time as the Trust shall determine. The Trust shall not be
under any duty to give notification of defects in such proxies nor shall it
incur liabilities for failure to give such notification. The delivery of the
proxies will not be deemed to have been made until such irregularities have been
cured or waived.
Completion Instructions
Each Shareholder is requested to complete and execute the proxy in
accordance with the instructions contained therein. For the proxy to be
effective, each Shareholder must deliver its proxy at any time prior to the
Annual Meeting or any adjournment thereof to:
Arlen Capital, LLC
1650 Hotel Circle North
Suite 200
San Diego, CA 92108
Attention: Mr. Lynn Wells
Telephone:
A pre-paid self-addressed envelope for return of the proxy has been
included with this Proxy Statement.
The Trustees may elect, at their option, to require that each proxy be
accompanied by evidence (which may include an opinion of counsel acceptable to
the Trust) that the Shareholder has met all requirements of its governing
instruments, and is authorized to execute such proxy under the laws of the
jurisdiction in which such Shareholder resides.
Withdrawal or Change of Vote
Proxies may be withdrawn or revoked at any time prior to the Annual
Meeting. In addition, subsequent to submission of a proxy but prior to the
Annual Meeting, a Shareholder may change its vote. For a withdrawal or change of
vote to be effective, however, a written or facsimile transmission notice of
withdrawal or change of vote must be timely received by the Trust prior to the
Annual Meeting at the address set forth under "Completion Instructions" above
and must specify the name of the person who executed the proxy that is to be
withdrawn or changed and the name of the registered holder, if different from
that of the person who executed the proxy.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (or portions thereof) filed with the Commission
by the Trust (File No. 0-21470) pursuant to the Exchange Act are incorporated
herein by reference:
(i) Item 6, "Management's Discussion and Analysis,"
contained in the Trust's Annual Report on Form 10-KSB
for the year ended December 31, 1997;
(ii) Item 7, "Financial Statements" contained in the
Trust's Annual Report on Form 10-KSB for the year
ended December 31, 1997;
(ii) The Trust's Current Report on Form 8-K filed on
January 27, 1998 and the related Form 8-K/A dated
February 3, 1998;
(iii) Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations"
contained in the Trust's Quarterly Report on Form
10-QSB for the quarter ended March 31, 1998;
(iv) Item 1, "Financial Statements" contained in the
Trust's Form 10-QSB Quarterly Report for the quarter
ended March 31, 1998; and
(v) The Trust's Current Report on Form 8-K filed on
June 16, 1998.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document that is incorporated by reference herein modifies or
supersedes such earlier statement. Any such statements modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Proxy Statement.
Copies of any or all of the documents specifically incorporated herein
by reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents) will be furnished
without charge to each person, including any beneficial owner, to whom a copy of
this Proxy Statement is delivered upon written or oral request. Requests should
be made to: REIT 8 - Investor Relations, 6430 S.
Quebec St., Englewood, Colorado 80111.
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Appendix A
AMENDED AND RESTATED DECLARATION OF TRUST
FORM OF
WINDSOR REAL ESTATE INVESTMENT TRUST 8
AMENDED AND RESTATED DECLARATION OF TRUST
Windsor Real Estate Investment Trust 8, a business trust organized
under the laws of California (the "Trust"), desires to amend and restate its
Declaration of Trust as currently in effect and as hereinafter amended (as so
amended and restated, the "Declaration of Trust").
The following provisions are all the provisions of the Declaration of
Trust currently in effect and as hereinafter amended:
ARTICLE I
FORMATION
The Trust is a real estate investment trust within the meaning
of Part 4, Title 3, Sections 23000 through 23006, of the Corporations Code of
California, as the same may be amended from time to time (the "California REIT
Statute"). The Trust shall not be deemed to be a general partnership, limited
partnership, joint venture, joint stock company or a corporation (but nothing
herein shall preclude the Trust from being treated for tax purposes as an
association under the Internal Revenue Code of 1986, as amended (the "Code")).
ARTICLE II
NAME
The name of the Trust is: 'N Tandem Trust. Under circumstances
in which the Board of Trustees of the Trust (the "Board of Trustees" or "Board")
determines that the use of the name of the Trust is not practicable, the Trust
may use any other designation or name for the Trust.
ARTICLE III
PURPOSES AND POWERS
Section 3.1 Purposes. The purposes for which the Trust is
formed are to invest in and to acquire, hold, manage, administer, control and
dispose of property, including, without limitation or obligation, engaging in
business as a real estate investment trust under the Code.
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Section 3.2 Powers. The Trust shall have all of the powers
granted to unincorporated business trusts under California law, and real estate
investment trusts by the California REIT Statute, and all other powers set forth
in the Declaration of Trust which are not inconsistent with law and are
appropriate to promote and attain the purposes set forth in the Declaration of
Trust.
In furtherance of the foregoing, to the extent the same is
permitted under California and federal law, the Trust shall have the power to:
(a) have perpetual existence unaffected by any rule
against perpetuities;
(b) sue, be sued, complain, and defend in all courts;
(c) transact its business, carry on its operations, and
exercise the powers granted by this article in any state, territory district, or
possession of the United States and in any foreign country;
(d) make contracts, incur liabilities, and borrow money;
(e) sell, mortgage, lease, pledge, exchange, convey, transfer,
and otherwise dispose of all or any part of its assets;
(f) issue bonds, notes, and other obligations and secure them
by mortgage or deed of trust of all or any part of its assets;
(g) acquire by purchase or in any other manner and take,
receive, own, hold, use, employ, improve, encumber, and otherwise deal with any
interest in real and personal property, wherever located;
(h) purchase, take, receive, subscribe for, or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, loan, pledge, or
otherwise dispose of and deal in and with:
(i) securities, shares, and other interests in any
obligations of domestic and foreign corporations, other real
estate investment trusts, associations, partnerships, and
individuals; and
(ii) direct and indirect obligations of the United States,
any other government, state, territory, government district, and
municipality, and any instrumentality of them;
(i) elect or appoint trustees, officers, and agents of the
Trust for the period of time this declaration of trust or the Trust's
bylaws provide, define their duties, and determine their compensation;
(j) adopt and implement employee and officer benefit plans;
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(k) make and alter the Trust's bylaws not inconsistent with
law or with this declaration of trust to regulate the government of the Trust
and the administration of its affairs;
(l) exercise these powers, including the power to take, hold,
and dispose of the title to real and personal property in the name of the Trust
or in the name of its trustees, without the filing of any bond;
(m) generally exercise the powers set forth in this
declaration of trust which are not inconsistent with law and are appropriate to
promote and attain the purposes set forth in this declaration of trust;
(n) enter into any business combination permitted under
California law; and
(o) indemnify or advance expenses to trustees, officers,
employees, and agents of the trust to the same extent as is permitted for
directors, officers, employees, and agents of a California corporation.
ARTICLE IV
RESIDENT AGENT
The name of the resident agent of the Trust in the State of
California is _________________, whose post office address is
__________________________________. The resident agent is a citizen of and
resides in the State of California. The Trust may have such offices or places of
business within or outside the State of California as the Board of Trustees may
from time to time determine.
ARTICLE V
BOARD OF TRUSTEES; ADVISOR; INDEPENDENT TRUSTEES;
ENGAGEMENT OF ADVISOR
Section 5.1 Powers. Subject to any express limitations
contained in the Declaration of Trust or in the bylaws of the Trust, as the same
may be amended from time to time (the "Bylaws"), (a) the business and affairs of
the Trust shall be managed under the direction of the Board of Trustees
(sometimes hereinafter the "Board") and (b) the Board shall have full, exclusive
and absolute power, control and authority over any and all property of the
Trust. The Board may take any action as in its sole judgment and discretion is
necessary or appropriate to conduct the business and affairs of the Trust. The
Declaration of Trust shall be construed with the presumption in favor of the
grant of power and authority to the Board. Any construction of the Declaration
of Trust or determination made in good faith by the Board concerning its powers
and authority hereunder shall be conclusive. The enumeration and definition of
particular powers of the Trustees included in the Declaration of Trust or in the
Bylaws shall in no way be limited or restricted by reference to or inference
from the terms of this or any other provision of the Declaration of Trust or the
Bylaws or construed or deemed by inference or otherwise in any manner to exclude
or limit the powers conferred upon the
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Board or the Trustees under the general laws of the State of California or any
other applicable laws.
The Board, without any action by the shareholders of the
Trust, shall have and may exercise, on behalf of the Trust, without limitation,
the power to determine that compliance with any restriction or limitations on
ownership and transfers of shares of the Trust's beneficial interest set forth
in Article VII of the Declaration of Trust is no longer required in order for
the Trust to qualify as a REIT; to adopt Bylaws of the Trust, which may
thereafter be amended or repealed as provided therein; to elect officers in the
manner prescribed in the Bylaws; to solicit proxies from holders of shares of
beneficial interest of the Trust; and to do any other acts and deliver any other
documents necessary or appropriate to the foregoing powers.
Section 5.2 Number. The number of Trustees (hereinafter the
"Trustees") shall initially be three, and shall not be decreased, but may be
increased to a maximum of [fifteen] pursuant to the Bylaws of the Trust.
Notwithstanding the foregoing, if for any reason any or all of the Trustees
cease to be Trustees, such event shall not terminate the Trust or affect the
Declaration of Trust or the powers of the remaining Trustees. The Trustees shall
be elected by the shareholders at every annual meeting thereof in the manner
provided in the Bylaws or, in order to fill any vacancy on the Board of
Trustees, in the manner provided in the Bylaws. The names and addresses of the
initial three Trustees, who shall serve until the first annual meeting of
shareholders and until their successors are duly elected and qualify, or until
such later time as determined by the Board of Trustees as hereinafter provided,
are:
NAME ADDRESS
Gary P. McDaniel _________________________
Richard B. Ray _________________________
Kenneth G. Pinder _________________________
The Board of Trustees may at its option increase the number of Trustees and fill
any vacancy, whether resulting from an increase in the number of Trustees or
otherwise, on the Board of Trustees, with the Trustees of each class to hold
office until their successors are duly elected and qualify. Election of Trustees
by shareholders shall require the vote and be in accordance with the procedures
set forth in the Bylaws.
It shall not be necessary to list in the Declaration of Trust
the names and addresses of any Trustees hereinafter elected.
Section 5.3 Independent Trustees. A majority of the trustees
shall be Independent Trustees. As used in this Declaration of Trust "Independent
Trustee" means a Trustee who is not affiliated, directly or indirectly, with an
advisor of the Trust, whether by ownership of, ownership in, employment by, any
material business or professional relationship
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with, such advisor, or an affiliate of such advisor, or by virtue of servicing
as a an officer or director of any advisor, or affiliate of such advisor.
Section 5.4 Transaction with Affiliates. The Trust shall not
engage in any transaction with any Trustee or advisor, or affiliate of any
Trustee or advisor, or in which any of them have a direct or indirect interest,
unless after disclosure of any such relationship, affiliation or interest, such
transaction has been approved by the affirmative vote of a majority of the
Trustees that do not have any such relationship, affiliation or interest.
Section 5.5 Engagement of Advisor.
(a) The Trustees shall be responsible for the general policies
of the Trust and for such general supervision of the business of the Trust
conducted by all officers, agents, employees, advisors, managers or independent
contractors of the Trust as may be necessary or appropriate to insure that such
business conforms to the provisions of this Declaration. However, the Trustees
shall not be required personally to conduct the business of the Trust, and
consistent with their ultimate responsibility as stated above, the Trustees
shall have the power to appoint, employ or contract with any person (including
one or more of themselves or any corporation, partnership, or trust in which one
or more of them may be directors, officers, stockholders, partners or trustees)
as the Trustees may deem necessary or proper for the transaction of the business
of the Trust (hereafter "Advisors"). The Trustees may therefore employ or
contract with such Advisor and the Trustees may grant or delegate such authority
to the Advisor as the Trustees may in their sole discretion deem necessary or
desirable without regard to whether such authority is normally granted or
delegated by trustees or real estate investment trusts.
(b) The Independent Trustees shall determine from time to time
that the compensation which the Trust agrees to pay the Advisor is reasonable in
relation to the nature and quality of services performed and that such
compensation is within the limits prescribed herein. The Independent Trustees
shall also supervise the performance of the Advisor and compensation paid to it
by the Trust to determine that the provisions of any agreement between the Trust
and any such Advisor ("Advisory Agreement") are being carried out. Each such
determination shall be based on the factors set forth below and such other
factors the Independent Trustees may deem relevant:
(i) The size of the advisory fee in relation to the size,
composition and profitability of the portfolio of the Trust.
(ii) The success of the Advisor in generating opportunities
that meet the investment objectives of the Trust.
(iii) The rates charged to other real estate investment trusts
and to investors other than real estate investment trusts by advisors
performing similar services;
(iv) additional revenues realized by the Advisor its any
affiliates through their relationship with the Trust, including loan
administration, underwriting or broker
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commissions, servicing, engineering, inspection and other fees, whether
paid by the Trust or by others with whom the Trust does business;
(v) The quality and extent of service and advice
furnished by the Advisor; and
(vi) The performance of the investment portfolio of the Trust,
including income, conservation or appreciation of capital, frequency of
problem investments and competence in dealing with distress situations.
(c) If the Advisor, a Trustee, or affiliate of either,
provides a substantial amount of services in the effort to sell any property of
the Trust, then he or she or it may receive up to one-half of the brokerage
commission paid but in no event to exceed an amount equal to 3% of the
contracted for sales price. In addition, the amount paid when added to the sums
paid to unaffiliated parties in such capacity shall not exceed the lessor of a
"competitive real estate commission" or an amount equal to 6% of the contracted
paid for the purchase or sale of a property which is reasonable, customary and
competitive in light of the size, type and location of such property.
Section 5.6 Resignation, Removal or Death. Any Trustee may
resign by written notice to the Board, effective upon execution and delivery to
the Trust of such written notice or upon any future date specified in the
notice. A Trustee may be removed at any time, only with cause, at a meeting of
the shareholders, by the affirmative vote of the holders of not less than eighty
percent of the Shares then outstanding and entitled to vote generally in the
election of Trustees, voting as a single class.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1 Authorized Shares. (a) The beneficial interest of
the Trust shall be divided into shares of beneficial interest (the "Shares").
The Trust has authority to issue 750,000,000 shares of beneficial interest, $.01
par value per share, of which 500,000,000 are initially classified as "Common
Shares," 100,000,000 are initially classified as "Preferred Shares," and
125,000,000 are initially classified as "Excess Shares." Subject to Article VII,
the Board of Trustees may classify and reclassify any unissued shares of
beneficial interest by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares of beneficial interest.
(b) Upon the effectiveness of this Amended and Restated Declaration of
Trust, each outstanding common share, $.01 par value, of beneficial interest in
the Trust shall be exchanged for a new Common Share which, subject to Article
VII below, shall have the following preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemptions:
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(1) Each Common Share shall have one vote and, except for the
Preferred Shares or as otherwise provided in respect of any class of
beneficial interest hereafter classified or reclassified, the exclusive
voting power for all purposes shall be vested in the holders of the
Common Shares. Common Shares shall not have cumulative voting rights or
preemptive rights;
(2) Subject to the provisions of law and any preferences of
the Preferred Shares described below or any other class of shares of
beneficial interest hereafter classified or reclassified, dividends or
other distributions, including dividends or other distributions payable
in shares of another class beneficial interest of the Trust, may be
paid ratably on the Common Shares at such time and in such amounts as
the Board of Trustees may deem advisable;
(3) Subject to provisions described below with regard to the
Preferred Shares or any payments due to the Advisor of the Trust
described below, or any other class of shares of beneficial interest
hereafter classified or reclassified having preference on distributions
in the liquidation, in the event of any liquidation, dissolution or
winding up of the Trust, whether voluntary or involuntary, the holders
of the Common Shares shall be entitled, together with the holders of
Excess Shares and any other class of stock hereafter classified or
reclassified not having a preference on distributions in liquidation,
to share ratably in the net assets of the Trust remaining, after
payment or provision for payment of the debts and other liabilities of
the Trust; and
(4) Each Common Share is convertible into Excess Shares as
provided in Article VII.
(c) Upon the effectiveness of this Amended and Restated Declaration of
Trust, each outstanding preferred share, $.01 par value, of beneficial interest
in the Trust shall be exchanged for a new Preferred Share which, subject to
Article VII below, shall have the following preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemptions:
(1) Each Preferred Share shall have one vote and, except as
otherwise required by law, shall vote together with the holders of
Common Shares as a single class on all matters. Preferred Shares shall
not have cumulative voting rights or preemptive rights;
(2) Holders of Preferred Shares shall be entitled to a
Preferred Shares Annual Dividend Preference, fixed annually by the
Trustees, of not less than 6%, nor more than 7%, of $___ per Share.
Preferred Shares shall be paid their Preferred Share Annual Dividend
Preference cumulative (non compounded) each year before (subject to the
provisions in the last sentence of this paragraph) any dividends may be
paid on Common Shares. After the Preferred Share Annual Dividend
Preference has been declared and either paid or funds therefor have
been set aside, then dividends may be declared and paid on Common
Shares non cumulative up to an amount per Common Share that is equal to
the per share amount of the Preferred Share Annual Dividend Preference
for that
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year; provided, however, that quarterly dividends may be paid on Common
Shares if the Trustees, including a majority of the Independent
Trustees, reasonably and in good faith determine that the Preferred
Share Annual Dividend Preference will be covered and paid for the year,
and if it later appears that a shortfall in said Dividend Preference
may occur, it will then be made up before any further Common Share
quarterly or other dividend may be declared and paid. Thereafter, the
balance of dividends for that year, if any, will be paid equally per
share on all Common Shares and Preferred Shares as one class.
(3) Subject to the rights of any other class of shares of
beneficial interest hereafter classified or reclassified, in the event
of any liquidation, dissolution or winding up of the Trust, whether
voluntary or involuntary, the holders of Preferred Shares shall be
entitled to receive, out of the net assets of the Trust remaining after
payment or provision for payment of the debts and other liabilities of
the Trust, and before any payments are made to the holders of Common
Shares or any other class of shares of beneficial interest hereafter
classified or reclassified ranking junior to the Preferred Shares with
regard to liquidation, an amount per share equal to $____ plus $2.00
per share per annum cumulative (not compounded) less all prior
distributions to holders of Preferred Shares (the "Preferred Share
Liquidation Preference"). After the payment of the Preferred Share
Liquidation Preference, the holders of Common Shares shall receive out
of the net assets available for distribution upon liquidation,
dissolution or winding up of the Trust an amount per Share equal to
$____ plus $2.50 per share per annum cumulative (not compounded) less
all prior distributions to holders of Common Shares (the "Common Share
Liquidation Preference"). The balance, if any, of such net assets will
be distributed and paid as follows: (i) 85% of the balance will be
distributed among Preferred Shares and Common Shares in direct ratio to
their respective Liquidation Preferences; and (ii) 15% of the balance
shall be paid to the Advisor(s) as an incentive fee.
(4) In the event that the Common Shares shall be listed on a
national securities exchange or included for quotation on NASDAQ, the
Trust shall have the right to redeem the Preferred Shares (the
"Redemption Right"), at a redemption price per share equal to the
Preferred Share Liquidation Preference (the "Redemption Price"). In
order to exercise the Redemption Right, the Trust must deliver a notice
of redemption (the "Redemption Notice") to the holder of Preferred
Shares specifying the date of redemption (the "Redemption Date"), which
date shall be at least 60 days after the date specified in the notice,
the amount of shares proposed to be redeemed on such Redemption Date
and the Redemption Price. If a notice of redemption is given by the
Trust, the Preferred Shares shall be redeemed on the Redemption Date,
unless prior to that date the holder thereof exercises its conversion
rights specified below and converts the Preferred Shares into Common
Shares. On the Redemption Date, all rights of the holder with regard to
the Preferred Shares shall cease and on that date the holders of those
shares will have no interest in or claims against the Trust by virtue
of the Preferred Shares and will have no voting or other rights with
respect to the Preferred Shares, except the right to receive the
Redemption Payment.
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(5) Upon receipt of a redemption notice from the Trust, each
holder of shares of Preferred Shares will have the right (the
"Conversion Right") at any time prior to the Redemption Date, at the
holder's option, to convert each or any of the Preferred Shares held of
record by the holder into one fully paid and non-assessable Common
Share, subject to appropriate adjustment as determined in the judgment
of the Trustees to prevent dilution or enlargement of the Preferred
Shares in the event of any share dividend or split, combination or
reclassification of the Common Shares (without a corresponding change
in the Preferred Shares) after the date hereof. In order to exercise
the Conversion Right, the holder of each Preferred Share to be
converted must, prior to the Redemption Date, surrender the certificate
representing that share to the Trust with the Notice of Election to
Convert on the back of that certificate duly completed and signed, at
the principal office of the Trust. If the shares issuable on conversion
are to be issued in a name other than the name in which the Preferred
Share is registered, each share surrendered for conversion must be
accompanied by an instrument of transfer, in form satisfactory to the
Trust, duly executed by the holder or the holder's duly authorized
attorney and by funds in an amount sufficient to pay any transfer or
similar tax which is required to be paid in connection with the
transfer or evidence that tax has been paid. As promptly as practicable
after the surrender by a holder of certificates representing Preferred
Shares, the Trust will issue and will deliver to the holder at the
office of the Trust, or on the holder's written order, a certificate or
certificates for the number of full Common Shares issuable upon the
conversion of the shares of Preferred Shares. The Trust will at all
times reserve and keep available, free from preemptive rights, out of
the authorized but unissued Common Shares for the purpose of effecting
conversion of the Preferred Shares, the maximum number of Common Shares
which the Trust would be required to deliver upon the conversion of all
the outstanding Preferred Shares.
(d) A description of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the Excess Shares of the Trust is set
forth in Article VII.
Section 6.2 Classified or Reclassified Shares. Prior to
issuance of classified or reclassified shares of any class or series of
beneficial interest, the Board of Trustees by resolution shall (a) designate
that class or series to distinguish it from all other classes and series of
shares; (b) specify the number of shares to be included in the class or series;
and (c) set, subject to the provisions of Article VII and subject to the express
terms of any class or series of shares outstanding at the time, the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications and terms and conditions of
redemption for each class or series. Any of the terms of any class or series of
shares set pursuant to clause (c) of this Section 6.2 may be made dependent upon
facts ascertainable outside the Declaration of Trust (including the occurrence
of any event, including a determination or action by the Trust or any other
person or body) and may vary among holders thereof, provided that the manner in
which such facts or variations shall operate upon the terms of such class or
series of shares as so designated.
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Section 6.3 Authorization by Board of Share Issuance. The
Board of Trustees may authorize the issuance from time to time of Shares of any
class or series, whether now or hereafter authorized, or securities or rights
convertible into shares of any class or series, whether now or hereafter
authorized, for such consideration (whether in cash, property, past or future
services, obligation for future payment or otherwise) as the Board of Trustees
may deem advisable (or without consideration in the case of a share split or
share dividend), subject to such restrictions or limitations, if any, as may be
set forth in the Declaration of Trust or the Bylaws of the Trust.
Section 6.4 Dividends and Distributions. The Board of Trustees
may, in its discretion, from time to time authorize and declare to shareholders
the dividends and distributions described in this Section, and such other
dividends or distributions, in cash or other assets of the Trust or in
securities of the Trust or from any other source as the Board of Trustees in its
discretion shall determine. The Board of Trustees shall endeavor to declare and
pay such dividends and distributions as shall be necessary for the Trust to
qualify as a real estate investment trust under the Code; however, shareholders
shall have no right to any dividend or distribution unless and until authorized
and declared by the Board. The exercise of the powers and rights of the Board of
Trustees pursuant to this Section 6.4 shall be subject to the provisions of any
class or series of shares at the time outstanding.
Notwithstanding any other provision in the Declaration of
Trust, no determination shall be made by the Board of Trustees nor shall any
transaction be entered into by the Trust which would cause any shares or other
beneficial interest in the Trust not to constitute "transferable shares" or
"transferable certificates of beneficial interest" under Section 856(a)(2) of
the Code or which would cause any distribution to constitute a preferential
dividend as described in Section 562(c) of the Code.
Section 6.5 General Nature of Shares. All shares of beneficial
interest shall be personal property entitling the shareholders only to those
rights provided in the Declaration of Trust. The shareholders shall have no
interest in the property of the Trust and shall have no right to compel any
partition, division, dividend or distribution of the Trust or of the property of
the Trust. The death of a shareholder shall not terminate the Trust. The Trust
is entitled to treat as shareholders only those persons in whose names shares
are registered as holders of shares on the beneficial interest ledger of the
Trust.
Section 6.6 Fractional Shares. The Trust may, without the
consent or approval of any shareholder, issue fractional shares, eliminate a
fraction of a Share by rounding up or down to a full Share, arrange for the
disposition of a fraction of a Share by the person entitled to it, or pay cash
for the fair value of a fraction of a Share.
Section 6.7 Declaration and Bylaws. All shareholders
are subject to the provisions of the Declaration of Trust and the Bylaws of the
Trust.
Section 6.8 Divisions and Combinations of Shares.
Subject to an express provision to the contrary in the terms of any class or
series of beneficial interest hereafter
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series of beneficial interest hereafter authorized, the Board of Trustees shall
have the power to divide or combine the outstanding shares of any class or
series of beneficial interest, without a vote of shareholders.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1 Definitions. For the purpose of this
Article VII, the following terms shall have the following meanings:
Beneficial Ownership. The term "Beneficial Ownership" shall
mean ownership of Shares by a Person, whether the interest in Shares is held
directly or indirectly (including by a nominee), and shall include interests
that would be treated as owned through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
Business Day. The term "Business Day" shall mean any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in New York, New York are authorized or required by
law, regulation or executive order to close.
Charitable Beneficiary. The term "Charitable Beneficiary"
shall mean one or more beneficiaries of the Charitable Trust as determined
pursuant to Section 7.3.7, provided that each such organization must be
described in Sections 501(c)(3), 170(b)(1)(A) and 170(c)(2) of the Code.
Charitable Trust. The term "Charitable Trust" shall mean any
trust provided for in Section 7.2.1(b)(i) and Section 7.3.1.
Charitable Trustee. The term "Charitable Trustee" shall mean
the Person unaffiliated with the Trust and a Prohibited Owner, that is appointed
by the Trust to serve as trustee of the Charitable Trust.
Code. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
Constructive Ownership. The term "Constructive Ownership"
shall mean ownership of Shares by a Person, whether the interest in Shares is
held directly or indirectly (including by a nominee), and shall include
interests that would be treated as owned through the application of Section
318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively Owned" shall
have the correlative meanings.
Declaration of Trust. The term "Declaration of Trust" shall
mean this Amended and Restated Declaration of Trust, and any amendments thereto.
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Excepted Holder. The term "Excepted Holder" shall mean a
shareholder of the Trust for whom an Excepted Holder Limit is created by the
Board of Trustees pursuant to Section 7.2.7.
Excepted Holder Limit. The term "Excepted Holder Limit" shall
mean, provided that the affected Excepted Holder agrees to comply with the
requirements established by the Board of Trustees pursuant to Section 7.2.7, and
subject to adjustment pursuant to Section 7.2.8, the percentage limit
established by the Board of Trustees pursuant to Section 7.2.7.
Initial Date. The term "Initial Date" shall mean the date upon
which this Amended and Restated Declaration of Trust containing this Article VII
is filed for record with the [California Commissioner].
Market Price. The term "Market Price" on any date shall mean,
with respect to any class or series of outstanding Shares, the Closing Price for
such Shares on such date. The "Closing Price" on any date shall mean the last
sale price for such Shares, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, for such
Shares, in either case as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such Shares are listed or admitted to trading or,
if such Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price, or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
NASDAQ Stock Market or, if such system is no longer in use, the principal other
automated quotation system that may then be in use or, if such Shares are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such Shares
selected by the Board of Trustees or, in the event that no trading price is
available for such Shares, the fair market value of Shares, as determined in
good faith by the Board of Trustees.
Ownership Limit. The term "Ownership Limit" shall mean (i)
with respect to the Common Shares, 9.9% (in value or number of shares, whichever
is more restrictive) of the outstanding Common Shares of the Trust; and (ii)
with respect to any class or series of Preferred Shares, 9.9% (in value or
number of Shares, whichever is more restrictive) of the outstanding shares of
such class or series of Preferred Shares of the Trust.
Person. The term "Person" shall mean an individual,
corporation, partnership, estate, trust (including a trust qualified under
Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity and also includes a
group as that term is used for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
Prohibited Owner. The term "Prohibited Owner" shall mean, with
respect to any purported Transfer, any Person who, but for the provisions of
Section 7.2.1, would Beneficially Own or Constructively Own Shares, and if
appropriate in the context, shall also mean any
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Person who would have been the record owner of Shares that the Prohibited Owner
would have so owned.
REIT. The term "REIT" shall mean a real estate investment
trust within the meaning of Section 856 of the Code.
Restriction Termination Date. The term "Restriction
Termination Date" shall mean the first day after the Initial Date on which the
Board of Trustees determines that it is no longer in the best interests of the
Trust to attempt to, or continue to, qualify as a REIT or that compliance with
the restrictions and limitations on Beneficial Ownership, Constructive Ownership
and Transfers of Shares set forth herein is no longer required in order for the
Trust to qualify as a REIT.
Transfer. The term "Transfer" shall mean any issuance, sale,
transfer, gift, assignment, devise or other disposition, as well as any other
event that causes any Person to acquire Beneficial Ownership or Constructive
Ownership, or any agreement to take any such actions or cause any such events,
of Shares or the right to vote or receive dividends on Shares, including (a) a
change in the capital structure of the Trust, (b) a change in the relationship
between two or more Persons which causes a change in ownership of Shares by
application of Section 544 of the Code, as modified by Section 856(h), (c) the
granting or exercise of any option or warrant (or any disposition of any option
or warrant), pledge, security interest, or similar right to acquire Shares, (d)
any disposition of any securities or rights convertible into or exchangeable for
Shares or any interest in Shares or any exercise of any such conversion or
exchange right and (e) Transfers of interests in other entities that result in
changes in Beneficial or Constructive Ownership of Shares; in each case, whether
voluntary or involuntary, whether owned of record, Constructively Owned or
Beneficially Owned and whether by operation of law or otherwise. (For purposes
of this Article VII, the right of a limited partner in 'N Tandem Operating
Partnership, L.P., a Delaware limited partnership, to require the partnership to
redeem such limited partner's units of partnership interest pursuant to Section
8.6 of the Agreement of Limited Partnership of 'N Tandem Operating Partnership,
L.P. shall not be considered to be an option or similar right to acquire Shares
of the Trust.) The terms "Transferring" and "Transferred" shall have the
correlative meanings.
Section 7.2 Shares.
Section 7.2.1 Ownership Limitations. During the
period commencing on the Initial Date and prior to the Restriction Termination
Date:
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted
Holder, shall Beneficially Own or Constructively Own Shares in
excess of the Ownership Limit and (2) no Excepted Holder shall
Beneficially Own or Constructively Own Shares in excess of the
Excepted Holder Limit for such Excepted Holder.
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(ii) No Person shall Beneficially or Constructively Own Shares
to the extent that (1) such Beneficial Ownership of Shares would result
in the Trust being "closely held" within the meaning of Section 856(h)
of the Code (without regard to whether the ownership interest is held
during the last half of a taxable year), or (2) such Beneficial or
Constructive Ownership of Shares would result in the Trust otherwise
failing to qualify as a REIT (including, but not limited to,
Constructive Ownership that would result in the Trust owning (actually
or Constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Trust from such
tenant would cause the Trust to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code).
(iii) No Person shall Transfer any Shares if, as a result of the
Transfer, the Shares would be beneficially owned by less than 100
Persons (determined without reference to the rules of attribution under
Section 544 of the Code). Notwithstanding any other provisions
contained herein, any Transfer of Shares (whether or not such Transfer
is the result of a transaction entered into through the facilities of
the NYSE or any other national securities exchange or automated
inter-dealer quotation system) that, if effective, would result in
Shares being beneficially owned by less than 100 Persons (determined
under the principles of Section 856(a)(5) of the Code) shall be void ab
initio, and the intended transferee shall acquire no rights in such
Shares.
(b) Transfer in Trust. If any Transfer of Shares (whether or not such
Transfer is the result of a transaction entered into through the facilities of
the NYSE or any other national securities exchange or automated inter-dealer
quotation system) occurs which, if effective, would result in any Person
Beneficially Owning or Constructively Owning Shares in violation of Section
7.2.1(a)(i) or (ii),
(i) then that number of Shares the Beneficial or Constructive
Ownership of which otherwise would cause such Person to violate Section
7.2.1(a)(i) or (ii)(rounded to the nearest whole share) shall be
automatically transferred to a Charitable Trust for the benefit of a
Charitable Beneficiary, as described in Section 7.3, effective as of
the close of business on the Business Day prior to the date of such
Transfer, and such Person shall acquire no rights in such Shares; or
(ii)if the transfer to the Charitable Trust described in clause (i)
of this sentence would not be effective for any reason to prevent the
violation of Section 7.2.1(a)(i) or (ii), then the Transfer of that
number of Shares that otherwise would cause any Person to violate
Section 7.2.1(a)(i) or (ii) shall be void ab initio, and the intended
transferee shall acquire no rights in such Shares.
Section 7.2.2 Remedies for Breach. If the Board of Trustees or
any duly authorized committee thereof shall at any time determine in good faith
that a Transfer or other event has taken place that results in a violation of
Section 7.2.1 or that a Person intends to acquire or has attempted to acquire
Beneficial or Constructive Ownership of any Shares in violation of Section 7.2.1
(whether or not such violation is intended), the Board of Trustees or a
committee thereof shall take such action as it deems advisable to refuse to give
effect to or to
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prevent such Transfer or other event, including, without limitation, causing the
Trust to redeem Shares, refusing to give effect to such Transfer on the books of
the Trust or instituting proceedings to enjoin such Transfer or other event;
provided, however, that any Transfer or attempted Transfer or other event in
violation of Section 7.2.1 shall automatically result in the transfer to the
Charitable Trust described above, and, where applicable, such Transfer (or other
event) shall be void ab initio as provided above irrespective of any action (or
non-action) by the Board of Trustees or a committee thereof.
Section 7.2.3 Notice of Restricted Transfer. Any Person who
acquires or attempts or intends to acquire Beneficial Ownership or Constructive
Ownership of Shares that will or may violate Section 7.2.1(a), or any Person who
would have owned Shares that resulted in a transfer to the Charitable Trust
pursuant to the provisions of Section 7.2.1(b), shall immediately give written
notice to the Trust of such event, or in the case of such a proposed or
attempted transaction, give at least 15 days prior written notice, and shall
provide to the Trust such other information as the Trust may request in order to
determine the effect, if any, of such acquisition or ownership on the Trust's
status as a REIT.
Section 7.2.4 Owners Required To Provide Information. From
the Initial Date and prior to the Restriction Termination Date:
(a) every owner of more than five percent (or such lower percentage
as required by the Code or the Treasury Regulations promulgated thereunder) of
the outstanding Shares, within 30 days after the end of each taxable year, shall
give written notice to the Trust stating the name and address of such owner, the
number of Shares Beneficially Owned and a description of the manner in which
such Shares are held; provided that a shareholder of record who holds
outstanding Shares as nominee for another Person, which other Person is required
to include in gross income the dividends received on such Shares (an "Actual
Owner"), shall give written notice to the Trust stating the name and address of
such Actual Owner and the number of Shares of such Actual Owner with respect to
which the shareholder of record is nominee. Each owner shall provide to the
Trust such additional information as the Trust may request in order to determine
the effect, if any, of such Beneficial Ownership on the Trust's status as a REIT
and to ensure compliance with the Ownership Limit.
(b) each Person who is a Beneficial or Constructive Owner of Shares
and each Person (including the shareholder of record) who is holding Shares for
a Beneficial or Constructive Owner shall provide to the Trust such information
as the Trust may request, in good faith, in order to determine the Trust's
status as a REIT and to comply with requirements of any taxing authority or
governmental authority or to determine such compliance.
Section 7.2.5 Remedies Not Limited. Subject to Section 5.1 of
the Declaration of Trust, nothing contained in this Section 7.2 shall limit the
authority of the Board of Trustees to take such other action as it deems
necessary or advisable to protect the Trust and the interests of its
shareholders in preserving the Trust's status as a REIT.
Section 7.2.6 Ambiguity. In the case of an ambiguity in
the application of any of the provisions of this Section 7.2, Section 7.3 or
any definition contained in Section 7.1, the
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Board of Trustees shall have the power to determine the application of the
provisions of this Section 7.2 or Section 7.3 with respect to any situation
based on the facts known to it. If Section 7.2 or 7.3 requires an action by the
Board of Trustees and the Declaration of Trust fails to provide specific
guidance with respect to such action, the Board of Trustees shall have the power
to determine the action to be taken so long as such action is not contrary to
the provisions of Section 7.1, 7.2 or 7.3.
Section 7.2.7 Exceptions.
(a) The Board, in its sole and absolute discretion, may grant to any
Person who makes a request therefor an exception to the Ownership Limit with
respect to the ownership of any series or class of Preferred Shares, subject to
the following conditions and limitations: (A) the Board shall have determined
that (x) assuming such Person would Beneficially or Constructively Own the
maximum amount of Common Shares and Preferred Shares permitted as a result of
the exception to be granted and (y) assuming that all other Persons who would be
treated as "individuals" for purposes of Section 542(a)(2) (determined taking
into account Section 856(h)(3)(A) of the Code) would Beneficially or
Constructively Own the maximum amount of Common Shares and Preferred Shares
permitted under this Article VII (taking into account any exception, waiver, or
exemption granted under this Section 7.2.7 to (or with respect to) such
Persons), the Trust would not be "closely held" within the meaning of Section
856(h) of the Code (assuming that the ownership of Shares is determined during
the second half of a taxable year) and would not otherwise fail to qualify as a
REIT; and (B) such Person provides to the Board such representations and
undertakings, if any, as the Board may, in its sole and absolute discretion,
determine to be necessary in order for it to make the determination that the
conditions set forth in clause (A) above of this Section 7.2.7(a) have been
and/or will continue to be satisfied (including, without limitation, an
agreement as to a reduced Ownership Limit or Excepted Holder Limit for such
Person with respect to the Beneficial or Constructive Ownership of one or more
other classes of Shares not subject to the exception), and such Person agrees
that any violation of such representations and undertakings or any attempted
violation thereof will result in the application of the remedies set forth in
Section 7.2 with respect to Shares held in excess of the Ownership Limit or the
Excepted Holder Limit (as may be applicable) with respect to such Person
(determined without regard to the exception granted such Person under this
subparagraph (a)). If a member of the Board requests that the Board grant an
exception pursuant to this subparagraph (a) with respect to such member or with
respect to any other Person if such Board member would be considered to be the
Beneficial or Constructive Owner of Shares owned by such Person, such member of
the Board shall not participate in the decision of the Board as to whether to
grant any such exception.
(b) In addition to exceptions permitted under subparagraph (a) above,
the Board shall except a Person from the Ownership Limit if: (i) such Person
submits to the Board information satisfactory to the Board, in its reasonable
discretion, demonstrating that such Person is not an individual for purposes of
Section 542(a)(2) of the Code (determined taking into account Section
856(h)(3)(A) of the Code); (ii) such Person submits to the Board information
satisfactory to the Board, in its reasonable discretion, demonstrating that no
Person who is an individual for purposes of Section 542(a)(2) of the
Code (determined taking into account Section 856(h)(3)(A) of the Code)
would be considered to Beneficially Own Shares in excess of the
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Ownership Limit by reason of the Excepted Holder's ownership of Shares in excess
of the Ownership Limit pursuant to the exception granted under this subparagraph
(b); (iii) such Person submits to the Board information satisfactory to the
Board, in its reasonable discretion, demonstrating that clause (2) of
subparagraph (a)(ii) of Section 7.2.1 will not be violated by reason of the
Excepted Holder's ownership of Shares in excess of the Ownership Limit pursuant
to the exception granted under this subparagraph (b); and (iv) such Person
provides to the Board such representations and undertakings, if any, as the
Board may, in its reasonable discretion, require to ensure that the conditions
in clauses (i), (ii) and (iii) hereof are satisfied and will continue to be
satisfied throughout the period during which such Person owns Shares in excess
of the Ownership Limit pursuant to any exception thereto granted under this
subparagraph (b), and such Person agrees that any violation of such
representations and undertakings or any attempted violation thereof will result
in the application of the remedies set forth in Section 7.2 with respect to
Shares held in excess of the Ownership Limit with respect to such Person
(determined without regard to the exception granted such Person under this
subparagraph (b)).
(c) Prior to granting any exception or exemption pursuant to
subparagraph (a) or (b), the Board may require a ruling from the IRS or an
opinion of counsel, in either case in form and substance satisfactory to the
Board, in its sole and absolute discretion as it may deem necessary or advisable
in order to determine or ensure the Trust's status as a REIT; provided, however,
that the Board shall not be obligated to require obtaining a favorable ruling or
opinion in order to grant an exception hereunder.
(d) Subject to Section 7.2.1(a)(ii), an underwriter that participates in
a public offering or a private placement of Shares (or securities convertible
into or exchangeable for Shares) may Beneficially or Constructively Own Shares
(or securities convertible into or exchangeable for Shares) in excess of the
Ownership Limit, but only to the extent necessary to facilitate such public
offering or private placement.
(e) The Board of Trustees may only reduce the Excepted Holder Limit
for an Excepted Holder: (1) with the written consent of such Excepted Holder at
any time, or (2) pursuant to the terms and conditions of the agreements and
undertakings entered into with such Excepted Holder in connection with the
establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted
Holder Limit shall be reduced to a percentage that is less than the Ownership
Limit.
Section 7.2.8 Increase in Ownership Limit. The Board of
Trustees may from time to time increase the Ownership Limit, subject to the
limitations provided in this Section 7.2.8.
(a) The Ownership Limit may not be increased if, after giving effect
to such increase, five Persons who are considered individuals pursuant to
Section 542 of the Code, as modified by Section 856(h)(3) of the Code (taking
into account all of the Excepted Holders), could Beneficially Own, in the
aggregate, more than 49.5% of the value of the outstanding Shares.
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(b) Prior to the modification of the Ownership Limit pursuant to this
Section 7.2.8, the Board may require such opinions of counsel, affidavits,
undertakings or agreements as it may deem necessary or advisable in order to
determine or ensure the Trust's status as a REIT if the modification in the
Ownership Limit were to be made.
Section 7.2.9 Legend. Each certificate for Shares shall
bear substantially the following legend:
The shares represented by this certificate are subject to
restrictions on Beneficial and Constructive Ownership and
Transfer for the purpose of the Trust's maintenance of its
status as a Real Estate Investment Trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code").
Subject to certain further restrictions and except as
expressly provided in the Trust's Declaration of Trust, and
subject to the exception granted to Chateau Communities Inc.,
a Maryland real estate investment trust ("Chateau") pursuant
to Chateau's application for such exception pursuant to
Section 7.2.7 of the Declaration of Trust (i) no Person may
Beneficially or Constructively Own Common Shares of the Trust
in excess of 9.9 percent (in value or number of shares) of the
outstanding Common Shares of the Trust unless such Person is
an Excepted Holder (in which case the Excepted Holder Limit
shall be applicable); (ii) with respect to any class or series
of Preferred Shares, no Person may Beneficially or
Constructively Own more than 9.9 percent (in value or number
of shares) of the outstanding shares of such class or series
of Preferred Shares of the Trust, unless such Person is an
Excepted Holder (in which case the Excepted Holder Limit shall
be applicable); (iii) no Person may Beneficially or
Constructively Own Shares that would result in the Trust being
"closely held" under Section 856(h) of the Code or otherwise
cause the Trust to fail to qualify as a REIT; and (iv) no
Person may Transfer Shares if such Transfer would result in
Shares of the Trust being owned by fewer than 100 Persons. Any
Person who Beneficially or Constructively Owns or attempts to
Beneficially or Constructively Own Shares which cause or will
cause a Person to Beneficially or Constructively Own Shares in
excess or in violation of the above limitations must
immediately notify the Trust. If any of the restrictions on
transfer or ownership are violated, the Shares represented
hereby will be automatically transferred to a Charitable
Trustee of a Charitable Trust for the benefit of one or more
Charitable beneficiaries. In addition, upon the occurrence of
certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. A Person
who attempts to Beneficially or Constructively Own Shares in
violation of the ownership limitations described above shall
have no claim, cause of action,
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or any recourse whatsoever against a transferor of such
Shares. All capitalized terms in this legend have the meanings
defined in the Trust's Declaration of Trust, as the same may
be amended from time to time, a copy of which, including the
restrictions on transfer and ownership, will be furnished to
each holder of Shares of the Trust on request and without
charge.
Instead of the foregoing legend, the certificate may state
that the Trust will furnish a full statement about certain restrictions on
transferability to a shareholder on request and without charge.
Section 7.3 Transfer of Shares in Trust.
Section 7.3.1 Ownership in Trust. Upon any purported Transfer
or other event described in Section 7.2.1(b) that would result in a transfer of
Shares to a Charitable Trust, such Shares shall be deemed to have been
transferred to the Charitable Trustee as trustee of a Charitable Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Charitable Trustee shall be deemed to be effective as of the close of business
on the Business Day prior to the purported Transfer or other event that results
in the transfer to the Charitable Trust pursuant to Section 7.2.1(b). The
Charitable Trustee shall be appointed by the Trust and shall be a Person
unaffiliated with the Trust and any Prohibited Owner. Each Charitable
Beneficiary shall be designated by the Trust as provided in Section 7.3.7.
Section 7.3.2 Status of Shares Held by the Charitable Trustee.
Shares held by the Charitable Trustee shall be issued and outstanding Shares of
the Company. The Prohibited Owner shall have no rights in the Shares held by the
Charitable Trustee. The Prohibited Owner shall not benefit economically from
ownership of any Shares held in trust by the Charitable Trustee, shall have no
rights to dividends or other distributions and shall not possess any rights to
vote or other rights attributable to the Shares held in the Charitable Trust.
The Prohibited Owner shall have no claim, cause of action, or any other recourse
whatsoever against the purported transferor of such Shares.
Section 7.3.3 Dividend and Voting Rights. The Charitable
Trustee shall have all voting rights and rights to dividends or other
distributions with respect to Shares held in the Charitable Trust, which rights
shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any
dividend or other distribution paid prior to the discovery by the Trust that
Shares have been transferred to the Charitable Trustee shall be paid with
respect to such Shares to the Charitable Trustee upon demand and any dividend or
other distribution authorized but unpaid shall be paid when due to the
Charitable Trustee. Any dividends or distributions so paid over to the
Charitable Trustee shall be held in trust for the Charitable Beneficiary. The
Prohibited Owner shall have no voting rights with respect to Shares held in the
Charitable Trust and, subject to Maryland law, effective as of the date that
Shares have been transferred to the Charitable Trustee, the Charitable Trustee
shall have the authority (at the Charitable Trustee's sole discretion) (i) to
rescind as void any vote cast by a Prohibited Owner prior to the discovery by
the Trust that Shares have been transferred to the Charitable Trustee and (ii)
to recast such vote in accordance with the desires of the Charitable Trustee
acting for the benefit of the
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Charitable Beneficiary; provided, however, that if the Trust has already taken
irreversible action, then the Charitable Trustee shall not have the power to
rescind and recast such vote. Notwithstanding the provisions of this Article
VII, until the Trust has received notification that Shares have been transferred
into a Charitable Trust, the Trust shall be entitled to rely on its share
transfer and other shareholder records for purposes of preparing lists of
shareholders entitled to vote at meetings, determining the validity and
authority of proxies and otherwise conducting votes of shareholders.
Section 7.3.4 Rights Upon Liquidation. Upon any voluntary or
involuntary liquidation, dissolution or winding up of or any distribution of the
assets of the Trust, the Charitable Trustee shall be entitled to receive,
ratably with each other holder of Shares of the class or series of Shares that
is held in the Charitable Trust, that portion of the assets of the Trust
available for distribution to the holders of such class or series (determined
based upon the ratio that the number of Shares or such class or series of Shares
held by the Charitable Trustee bears to the total number of Shares of such class
or series of Shares then outstanding). The Charitable Trustee shall distribute
any such assets received in respect of the Shares held in the Charitable Trust
in any liquidation, dissolution or winding up of, or distribution of the assets
of the Trust, in accordance with Section 7.3.5.
Section 7.3.5 Sale of Shares by Charitable Trustee. Within 20
days of receiving notice from the Trust that Shares have been transferred to the
Charitable Trust, the Charitable Trustee of the Charitable Trust shall sell the
Shares held in the Charitable Trust to a person, designated by the Charitable
Trustee, whose ownership of the Shares will not violate the ownership
limitations set forth in Section 7.2.1(a). Upon such sale, the interest of the
Charitable Beneficiary in the Shares sold shall terminate and the Charitable
Trustee shall distribute the net proceeds of the sale to the Prohibited Owner
and to the Charitable Beneficiary as provided in this Section 7.3.5. The
Prohibited Owner shall receive the lesser of (1) the price paid by the
Prohibited Owner for the Shares or, if the Prohibited Owner did not give value
for the Shares in connection with the event causing the Shares to be held in the
Charitable Trust (e.g., in the case of a gift, devise or other such
transaction), the Market Price of the Shares on the day of the event causing the
Shares to be held in the Charitable Trust and (2) the price per share received
by the Charitable Trustee from the sale or other disposition of the Shares held
in the Charitable Trust. Any net sales proceeds in excess of the amount payable
to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.
If, prior to the discovery by the Trust that Shares have been transferred to the
Charitable Trustee, such Shares are sold by a Prohibited Owner, then (i) such
Shares shall be deemed to have been sold on behalf of the Charitable Trust and
(ii) to the extent that the Prohibited Owner received an amount for such Shares
that exceeds the amount that such Prohibited Owner was entitled to receive
pursuant to this Section 7.3.5, such excess shall be paid to the Charitable
Trustee upon demand. The Charitable Trustee shall have the right and power (but
not the obligation) to offer any Equity Share held in trust for sale to the
Trust on such terms and conditions as the Charitable Trustee shall deem
appropriate.
Section 7.3.6 Purchase Right in Shares Transferred to the
Charitable Trustee. Shares transferred to the Charitable Trustee shall be deemed
to have been offered for sale to the Trust, or its designee, at a price per
share equal to the lesser of (i) the price per share in the
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transaction that resulted in such transfer to the Charitable Trust (or, in the
case of a devise or gift, the Market Price at the time of such devise or gift)
and (ii) the Market Price on the date the Trust, or its designee, accepts such
offer. The Trust shall have the right to accept such offer until the Charitable
Trustee has sold the Shares held in the Charitable Trust pursuant to Section
7.3.5. Upon such a sale to the Trust, the interest of the Charitable Beneficiary
in the Shares sold shall terminate and the Charitable Trustee shall distribute
the net proceeds of the sale to the Prohibited Owner.
Section 7.3.7 Designation of Charitable Beneficiaries. By
written notice to the Charitable Trustee, the Trust shall designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Charitable Trust such that (i) Shares held in the Charitable Trust would not
violate the restrictions set forth in Section 7.2.1(a) in the hands of such
Charitable Beneficiary and (ii) each such organization must be described in
Sections 501(c)(3), 170(b)(1)(A) or 170(c)(2) of the Code.
Section 7.4 Stock Exchange Transactions. Nothing in this
Article VII shall preclude the settlement of any transaction entered into
through the facilities of any national securities exchange or automated
inter-dealer quotation system. The fact that the settlement of any transaction
is so permitted shall not negate the effect of any other provision of this
Article VII and any transferee in such a transaction shall be subject to all of
the provisions and limitations set forth in this Article VII.
Section 7.5 Enforcement. The Trust is authorized specifically
to seek equitable relief, including injunctive relief, to enforce the provisions
of this Article VII.
Section 7.6 Non-Waiver. No delay or failure on the part of the
Trust or the Board of Trustees in exercising any right hereunder shall operate
as a waiver of any right of the Trust or the Board of Trustees, as the case may
be, except to the extent specifically waived in writing.
ARTICLE VIII
SHAREHOLDERS
Section 8.1 Meetings. There shall be an annual meeting of the
shareholders, to be held on proper notice at such time (after the delivery of
the annual report) and convenient location as shall be determined by or in the
manner prescribed in the Bylaws, for the election of the Trustees, if required,
and for the transaction of any other business within the powers of the Trust.
Except as otherwise provided in the Declaration of Trust, special meetings of
shareholders may be called in the manner provided in the Bylaws. If there are no
Trustees, the officers of the Trust shall promptly call a special meeting of the
shareholders entitled to vote for the election of successor Trustees. Any
meeting may be adjourned and reconvened as the Trustees determine or as provided
in the Bylaws.
Section 8.2 Voting Rights. Subject to the provisions of
any class or series of Shares then outstanding, the shareholders shall be
entitled to vote only on the following matters:
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(a) election of Trustees as provided in Section 5.2 and the removal of Trustees
as provided in Section 5.6; (b) amendment of the Declaration of Trust as
provided in Article X; (c) termination of the Trust as provided in Section 10.3;
(d) merger or consolidation of the Trust, or the sale or disposition of
substantially all of the property of the Trust, as provided in Article XI; (e)
such other matters with respect to which the Board of Trustees has adopted a
resolution declaring that a proposed action is advisable and directing that the
matter be submitted to the shareholders for approval or ratification; and (f)
such other matters as may be properly brought before a meeting by a shareholder
pursuant to the Bylaws. Except as otherwise provided herein, shareholders shall
be entitled to one vote for each share held, and the affirmative vote of the
holders of a majority of all Shares, voting as a single class, shall be
sufficient to approve any such matter submitted. Except with respect to the
foregoing matters, no action taken by the shareholders at any meeting shall in
any way bind the Board of Trustees.
Section 8.3 Preemptive and Appraisal Rights. Except as may be
provided by the Board of Trustees in setting the terms of classified or
reclassified Shares pursuant to Section 6.5, no holder of Shares shall, as such
holder, (a) have any preemptive right to purchase or subscribe for any
additional Shares of the Trust or any other security of the Trust which it may
issue or sell or (b), except as expressly required by Section, have any right to
require the Trust to pay him the fair value of his Shares in an appraisal or
similar proceeding.
Section 8.4 Extraordinary Actions. Except as otherwise
specifically provided in the Declaration of Trust (including without limitation,
in those provisions relating to election and removal of Trustees and changes in
the number of authorized Shares), notwithstanding any provision of law
permitting or requiring any action to be taken or authorized by the affirmative
vote of the holders of a greater number of votes, any transaction the approval
of which requires by law the affirmative vote of shareholders and pursuant to
which the Trust's business and assets will be combined with those of one or more
other entities (whether by merger, sale or other transfer of assets,
consolidation or share exchange) (a "Business Combination") shall be effective
and valid if taken or authorized by the affirmative vote of not less than the
affirmative vote of not less than sixty-six and two-thirds percent (66 2/3%) of
all the votes entitled to be cast on the matter.
Section 8.5 Action By Shareholders without a Meeting. The
Bylaws of the Trust may provide that any action required or permitted to be
taken by the shareholders may be taken without a meeting by the written consent
of the shareholders entitled to cast a sufficient number of votes to approve the
matter as required by statute, the Declaration of Trust or the Bylaws of the
Trust, as the case may be.
ARTICLE IX
LIABILITY LIMITATION, INDEMNIFICATION
AND TRANSACTIONS WITH THE TRUST
Section 9.1 Limitation of Shareholder Liability. No
shareholder shall be liable for any debt, claim, demand, judgment or
obligation of any kind of, against or with respect to the Trust by reason
of his being a shareholder, nor shall any shareholder be subject to any
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personal liability whatsoever, in tort, contract or otherwise, to any person in
connection with the property or the affairs of the Trust by reason of his being
a shareholder.
Section 9.2 Limitation of Trustee and Officer Liability. To
the maximum extent that California law in effect from time to time permits
limitation of the liability of trustees and officers of a business trust or a
real estate investment trust, no Trustee or officer of the Trust shall be liable
to the Trust or to any shareholder for money damages. Neither the amendment nor
repeal of this Section 9.2, nor the adoption or amendment of any other provision
of the Declaration of Trust inconsistent with this Section 9.2, shall apply to
or affect in any respect the applicability of the preceding sentence with
respect to any act or failure to act which occurred prior to such amendment,
repeal or adoption. In the absence of any California statute limiting the
liability of trustees and officers of a California business trust or real estate
investment trust for money damages in a suit by or on behalf of the Trust or by
any shareholder, no Trustee or officer of the Trust shall be liable to the Trust
or to any shareholder for money damages except to the extent that (a) the
Trustee or officer actually received an improper benefit or profit in money,
property, or services, for the amount of the benefit or profit in money,
property, or services actually received; or (b) a judgment or other final
adjudication adverse to the Trustee or officer is entered in a proceeding based
on a finding in the proceeding that the Trustee's or officer's action or failure
to act was the result of active and deliberate dishonesty and was material to
the cause of action adjudicated in the proceeding.
Section 9.3 Indemnification. The Trust shall have the power,
to the maximum extent permitted by California law in effect from time to time,
to obligate itself to indemnify, and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to, (a) any individual who is a
present or former shareholder, Trustee or officer of the Trust or (b) any
individual who, while a Trustee of the Trust and at the request of the Trust,
serves or has served as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust, employee benefit plan
or any other enterprise from and against any claim or liability to which such
person may become subject or which such person may incur by reason of his status
as a present or former shareholder, Trustee or officer of the Trust. The Trust
shall have the power, with the approval of its Board of Trustees, to provide
such indemnification and advancement of expenses to a person who served a
predecessor of the Trust in any of the capacities described in (a) or (b) above
and to any employee or agent of the Trust or a predecessor of the Trust.
Section 9.4 Transactions Between the Trust and its Trustees,
Officers, Employees and Agents. Subject to any express restrictions in the
Declaration of Trust or adopted by the Trustees in the Bylaws or by resolution,
the Trust may enter into any contract or transaction of any kind with any
person, including any Trustee, officer, employee or agent of the Trust or any
person affiliated with a Trustee, officer, employee or agent of the Trust,
whether or not any of them has a financial interest in such transaction.
Section 9.5 Express Exculpatory Clauses in Instruments. The
Board of Trustees shall cause to be inserted in every written agreement,
undertaking or obligation made or issued on behalf of the Trust, an appropriate
provision to the effect that neither the Shareholders nor the Trustees,
officers, employees or agents of the Trust shall be liable under any written
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instrument creating an obligation of the Trust, and all Persons shall look
solely to the property of the Trust for the payment of any claim under or for
the performance of that instrument. The omission of the foregoing exculpatory
language from any instrument shall not affect the validity or enforceability of
such instrument and shall not render any Shareholder, Trustee, officer, employee
or agent liable thereunder to any third party nor shall the Trustees or any
officer, employee or agent of the Trust be liable to anyone for such omission.
ARTICLE X
AMENDMENTS
Section 10.1 General. The Trust reserves the right from time
to time to make any amendment to the Declaration of Trust, now or hereafter
authorized by law, including any amendment altering the terms or contract
rights, as expressly set forth in the Declaration of Trust, of any Shares. All
rights and powers conferred by the Declaration of Trust on shareholders,
Trustees and officers are granted subject to this reservation. [Articles of
Amendment] to the Declaration of Trust (a) shall be signed and acknowledged by
at least a majority of the Trustees, or an officer duly authorized by at least a
majority of the Trustees, (b) shall be filed for record as provided in Section
13.5 and (c) shall become effective as of the later of the time the [California
Commissioner] accepts the [Articles of Amendment] for record or the time
established in the [Articles of Amendment], not to exceed 30 days after the
Articles of Amendment are accepted for record. All references to the Declaration
of Trust shall include all amendments thereto.
Section 10.2 By Trustees. The Trustees may amend the
Declaration of Trust from time to time, without any action by the shareholders,
to qualify as a real estate investment trust under the Code or under the
California REIT Statute and as otherwise provided in the Declaration of Trust.
Section 10.3 By Shareholders. Except as otherwise provided in
this Declaration of Trust, any amendment to the Declaration of Trust shall be
valid only (a) if in connection with a Business Combination, if approved by the
affirmative vote of not less than a two-thirds of all the votes entitled to be
cast on the matter and (b) otherwise, if approved by the affirmative vote of not
less than a majority of all the votes entitled to be cast on the matter.
ARTICLE XI
MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY
Section 11.1 Subject to the provisions of any class or series
of Shares at the time outstanding, the Trust shall have the power to engage in
any merger or consolidation or other business combination or other extraordinary
transaction permitted under the California REIT Statute including without
limitation (a) a merger of the Trust with or into another entity, (b) the
consolidation of the Trust with one or more other entities into a new entity or
otherwise, or (c) the sale, lease, exchange or other transfer of all or
substantially all of the property of the Trust. Any such action must be approved
by the Board of Trustees and, after notice to all shareholders
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entitled to vote on the matter, by the affirmative vote of not less than
sixty-six and two thirds percent (66 2/3%) of all the votes entitled to be cast
on the matter.
ARTICLE XII
DURATION AND TERMINATION OF TRUST
Section 12.1 Duration. The Trust shall continue perpetually
unless terminated pursuant to Section 12.2 or pursuant to any applicable
provision of the California REIT Statute.
Section 12.2 Termination.
(a) Subject to the provisions of any class or series of Shares
at the time outstanding, the Trust may be terminated at any meeting of
shareholders, by the affirmative vote of sixty-six and two thirds percent (66
2/3%) of all the votes entitled to be cast on the matter.
Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose
of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under the Declaration of
Trust shall continue, including the powers to fulfill or discharge the
Trust's contracts, collect its assets, sell, convey, assign, exchange,
transfer or otherwise dispose of all or any part of the remaining
property of the Trust to one or more persons at public or private sale
for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its
liabilities and do all other acts appropriate to liquidate its
business.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
agreements as they deem necessary for their protection, the Trust may
distribute the remaining property of the Trust among the shareholders
so that after payment in full or the setting apart for payment of such
preferential amounts, if any, to which the holders of any Shares at the
time outstanding shall be entitled, the remaining property of the Trust
shall, subject to any participating or similar rights of Shares at the
time outstanding, be distributed ratably among the holders of Common
Shares at the time outstanding.
(b) After termination of the Trust, the liquidation of its
business and the distribution to the shareholders as herein provided, a majority
of the Trustees shall execute and file with the Trust's records a document
certifying that the Trust has been duly terminated, and the Trustees shall be
discharged from all liabilities and duties hereunder, and the rights and
interests of all shareholders shall cease.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Governing Law. The Declaration of Trust is
executed by the undersigned Trustees and delivered in the State of California
with reference to the laws thereof, and the rights of all parties and the
validity, construction and effect of every provision hereof shall be subject to
and construed according to the laws of the State of California without regard to
conflicts of laws provisions thereof.
Section 13.2 Reliance by Third Parties. Any certificate shall
be final and conclusive as to any person dealing with the Trust if executed by
the Secretary or an Assistant Secretary of the Trust or a Trustee, and if
certifying to: (a) the number or identity of Trustees, officers of the Trust or
shareholders; (b) the due authorization of the execution of any document; (c)
the action or vote taken, and the existence of a quorum, at a meeting of the
Board of Trustees or shareholders; (d) a copy of the Declaration of Trust or of
the Bylaws as a true and complete copy as then in force; (e) an amendment to the
Declaration of Trust; (f) the termination of the Trust; or (g) the existence of
any fact or relating to the affairs of the Trust. No purchaser, lender, transfer
agent or other person shall be bound to make any inquiry concerning the validity
of any transaction purporting to be made by the Trust on its behalf or by any
officer, employee or agent of the Trust.
Section 13.3 Severability.
(a) The provisions of the Declaration of Trust are severable,
and if the Board of Trustees shall determine, with the advice of counsel, that
any one or more of such provisions (the "Conflicting Provisions") are in
conflict with the Code, or other applicable federal or state laws, the
Conflicting Provisions, to the extent of the conflict, shall be deemed never to
have constituted a part of the Declaration of Trust, even without any amendment
of the Declaration of Trust pursuant to Article X and without affecting or
impairing any of the remaining provisions of the Declaration of Trust or
rendering invalid or improper any action taken or omitted prior to such
determination. No Trustee shall be liable for making or failing to make such a
determination. In the event of any such determination by the Board of Trustees,
the Board shall amend the Declaration of Trust in the manner provided in Section
10.2.
(b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such holding shall apply only to
the extent of any such invalidity or unenforceability and shall not in any
manner affect, impair or render invalid or unenforceable such provision in any
other jurisdiction or any other provision of the Declaration of Trust in any
jurisdiction.
Section 13.4 Construction. In the Declaration of Trust, unless
the context otherwise requires, words used in the singular or in the plural
include both the plural and singular and words denoting any gender include all
genders. The title and headings of different parts are inserted for convenience
and shall not affect the meaning, construction or effect of the Declaration of
Trust. In defining or interpreting the powers and duties of the Trust and its
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Trustees and officers, reference may be made by the Trustees or officers, to the
extent appropriate and not inconsistent with the Code or the California REIT
Statute.
Section 13.5 Recordation. The Declaration of Trust and any
articles of amendment hereto shall be filed for record with the [California
Commissioner] and may also be filed or recorded in such other places as the
Trustees deem appropriate, but failure to file for record the Declaration of
Trust or any articles of amendment hereto in any office other than in the State
of California shall not affect or impair the validity or effectiveness of the
Declaration of Trust or any amendment hereto. A restated Declaration of Trust
shall, upon filing, be conclusive evidence of all amendments contained therein
and may thereafter be referred to in lieu of the original Declaration of Trust
and the various articles of amendments thereto.
Section 13.6 Annual Report. Each year, the Trust shall
prepare an annual report of its operations. The report shall include a balance
sheet, an income statement, and a surplus statement.
(a) Report to be audited. The financial statements in the
annual report shall be certified by an independent certified public accountant
based on the accountant's full examination of the books and records of the real
estate investment trust in accordance with generally accepted auditing
procedure.
(b) Report to be submitted to shareholders and held on
file.--The annual report:
(i) shall be submitted to shareholders at or before the annual
meeting of shareholders; and
(ii) within the earlier of 20 days after the annual meeting of
shareholders or 120 days after the end of the fiscal year, shall be
placed on file at the principal office of the real estate investment
trust.
Section 13.7
13.7.1 Definitions. In this section the following words having
the meanings indicated.
(a) "Business trust" means an unincorporated trust or
association, including a Maryland real estate investment trust, a common-law
trust, or a Massachusetts trust, which is engaged in business and in which
property is acquired, held, managed, administered, controlled, invested, or
disposed of for the benefit and profit of any person who may become a holder of
a transferable unit of beneficial interest in the trust.
(b) "Foreign business trust" means a business trust organized
under the laws of the United States, another state of the United Sates, or a
territory, possession, or district of the United Sates.
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(c) "California real estate investment trust" means a real
estate investment trust in compliance with the provisions of the California
Investment Law REIT.
(d) "Domestic limited partnership" means a partnership formed
by 2 or more persons under the laws of the State of California and having one or
more general partners and one or more limited partners.
(e) "Foreign limited partners" means a partnership formed
under the laws of any state other than the State of California or under the laws
of a foreign country and having as partners one or more limited partners.
(f) "Domestic limited liability company" means a limited
liability company formed under the laws of the State of California.
(g) "Foreign limited liability company" means a limited
liability company formed under the laws of any state other than the State of
California or under the laws of a foreign country.
13.7.2 Merger authorized. Unless the declaration of trust
provides otherwise, the Trust may merge into a California or foreign business
trust, into a California or foreign corporation having capital stock, or into a
domestic or foreign limited partnership or limited liability company; or one or
more such business trusts, such corporations, domestic or foreign limited
partnerships, or limited liability companies may merge into it.
(a) A merger need be approved by the Trust's successor only by
a majority of its entire board of trustees if:
(i) The merger does not reclassify or change its outstanding
shares or otherwise amend its declaration of trust; and
(ii) The number of shares to be issued or delivered in the
merger is not more than 15 percent of the number of its shares of the
same class or series outstanding immediately before the merger becomes
effective.
(b) The board of trustees of the Trust shall:
(i) Adopt a resolution that declares the proposed
transaction is advisable on substantially the terms and conditions set
forth or referred to in the resolution; and
(ii) Direct that the proposed transaction be submitted for
consideration at either an annual or special meeting of shareholders.
13.7.3 Notice to shareholders. Notice which states that a
purpose of a meeting will be to act upon the proposed merger shall be given by
each Maryland real estate
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investment trust in the manner provided for mergers of corporations under the
California Corporation Code.
(a) Each of its shareholders entitled to vote on the
proposed transaction; except
(b) Each of its shareholders not entitled to vote on the
proposed transaction, except the shareholders of a successor in a merger if the
merger does not alter the contract rights of their shares as expressly set forth
in the declaration of trust.
13.7.4 Shareholders' approval. [Except as provided in ss.
8-202(c) of this title,] the proposed merger shall be approved by the
shareholders of the Trust by the affirmative vote of two thirds of all the votes
entitled to be cast on the matter.
13.7.5 Articles of merger. Articles of merger containing
provisions required byss. 3-109 of this article and such other provisions as may
be permitted by that section shall be:
(a) Executed for each party to the articles in the manner
required by Title 1 of this article; and
(b) Filed for the record with the Department.
13.7.6 Abandonment of proposed merger.
(a) A proposed merger may be abandoned before the
effective date of the articles;
(i) If the articles so provide, by majority vote of the entire
board of trustees of any one business trust party to the articles or of
the entire board of directors of any one corporation party to the
articles;
(ii) Unless the articles provide otherwise, by majority vote of
the entire board of trustees of each Maryland real estate investment
trust party to the articles; or
(iii) By unanimous consent of the members of a limited liability
company party to the articles.
(b) If the articles have been filed with the Department,
notice of the abandonment shall be given promptly to the Department.
(c) (i) If the proposed merger is abandoned as provided in
this subsection, no legal liability arises under the articles.
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(ii) An abandonment does not prejudice the rights of any person
under any other contract made by a business trust, corporation, or
limited liability company party to the proposed articles in connection
with the proposed merger.
13.7.7 Objecting shareholders. Each shareholder of a Maryland
real estate investment trust objecting to a merger of the Maryland real estate
investment trust shall have the same rights as an objecting stockholder of a
Maryland corporation under Subtitle 2 of Title 3 of this article and under the
same procedures.
13.7.8 Certificates of merger. The Department shall prepare
certificates of merger that specify:
(i) the name of each party to the articles;
(ii) the Name of the successor and the location of its principal
office in this State or, if it has none, its principal place of
business; and
(iii) The time the articles are accepted for record by the
Department.
(a) In addition to any other provision of law with respect to
recording, the Department shall send one certificate each to the clerk of the
circuit court for each county where the articles show that a merging business
trust, corporation, or limited liability company other than the successor owns
an interest in land.
(b) On receipt of a certificate, a clerk promptly shall
record it with the land records.
13.7.9 Property certificates. In order to keep the land
assessment records current in each county, the Department shall require a
business trust, corporation, or limited liability company to submit with the
articles a property certificate for each county where a merging business trust,
corporation, or limited liability company other than the successor owns an
interest in land.
(a) A property certificate is not required with respect to any
property in which the only interest owned by the merging business trust,
corporation, or limited liability company is a security interest.
(b) The property certificate shall be in the form and number
of copies which the Department requires and may include the certificate of the
Department required by subsection (j) of this section.
(c) (i) The property certificate shall provide a deed
reference or other description sufficient to identify the property.
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(ii) The Department shall indicate on the certificate the time the
articles are accepted for record and send a copy of it to the chief
assessor of the county where the property is located.
(d) A transfer, vesting, or devolution of title to the
property is not invalidated or otherwise affected by any error or defect in the
property certificate, failure to file it, or failure by the Department to act on
it.
13.7.10 Time merger effective -- Maryland real estate
investment trust successor. If the successor in a merger is a Maryland real
estate investment trust, a merger is effective as of the later of:
(a) The time the Department accepts the articles of
merger for record; or
(b) The time established under the articles, not to exceed 30
days after the articles are accepted for record.
13.7.11 Same. Successor other than Maryland real estate
investment.
(a) If the successor in a merger is a foreign corporation, a
foreign limited liability company, or a Maryland or foreign business trust,
other than a Maryland real estate investment trust, the merger is effective as
of the later of:
(i) The time specified by the law of the place where the
successor is organized; or
(ii) The time the Department accepts the articles of merger for
record.
(b) A foreign successor in a merger shall file for record with
the Department a certificate from the place where it is organized which
certifies the date the articles of merger were files. However, the failure to
file this certificate does not invalidate the merger.
13.7.12 Effect of merger.
(a) Consummation of a merger has the effects provided in
this subsection.
(b) The separate existence of each business trust,
corporation, limited partnership, or limited liability company party to the
articles, except the successor, ceases.
(c) The shares of each business trust party to the articles
which are to be converted or exchanged under the terms of the articles cease to
exist, subject to the rights of an objecting shareholder under subsection (i) of
this section.
(d) In addition to any other purposes and powers set forth in
the articles, if the articles provide, the successor has the purposes and powers
of each party to the articles.
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(e) (i) The assets of each party to the articles, including
any legacies which it would have been capable of taking, transfer to,
vest in, and devolve on the successor without further act or deed.
(ii) Confirmatory deeds, assignments, or similar instruments to
evidence the transfer may be executed and delivered at any time in the
name of the transferring party to the articles by its last acting
officers or trustees or by the appropriate officers or trustees of the
successor.
(f) (i) The successor is liable for all the debts and
obligations of each nonsurviving party to the articles. An existing
claim, action, or proceeding pending by or against any nonsurviving
party to the articles may be prosecuted to judgment as if the merger
had not taken place, or, on motion of the successor or any party, the
successor may be substituted as a party and the judgment against the
nonsurviving party to the articles constitutes a lien on the property
of the successor.
(ii) A merger does not impair the rights of creditors or any liens
on the property of any business trust, corporation, limited
partnership, or limited liability company party to the articles.
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IN WITNESS WHEREOF, THE ARTICLES OF AMENDMENT AND RESTATEMENT
OF DECLARATION OF TRUST HAVE BEEN SIGNED ON THIS 20th DAY OF APRIL, 1998 BY ALL
OF THE TRUSTEES OF THE TRUST, EACH OF WHOM ACKNOWLEDGES, THAT THIS DOCUMENT IS
HIS FREE ACT AND DEED, AND THAT TO THE BEST OF HIS KNOWLEDGE, INFORMATION, AND
BELIEF, THE MATTERS AND FACTS SET FORTH HEREIN ARE TRUE IN ALL MATERIAL RESPECTS
AND THAT THE STATEMENT IS MADE UNDER THE PENALTIES FOR PERJURY.
WINDSOR REAL ESTATE INVESTMENT TRUST 8
----------------------------------------
TRUSTEE
----------------------------------------
TRUSTEE
----------------------------------------
TRUSTEE
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Appendix B
BY-LAWS OF THE TRUST
N' TANDEM TRUST
BY-LAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of N' Tandem
Trust, a California business trust (the "Trust") shall be located at such place
or places as the Trustees may designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional
offices at such places as the Trustees may from time to time determine or the
business of the Trust may require. ARTICLE II MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be
held at the principal office of the Trust or at such other place within the
United States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the
shareholders for the election of Trustees and the transaction of any business
within the powers of the Trust shall be held during the month of May of each
year, after the delivery of the annual report referred to in Section 12 of this
Article II, at a convenient location and on proper notice, on a date and at the
time set by the Trustees. Failure to hold an annual meeting shall not invalidate
the Trust's existence or affect any otherwise valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The chairman of the board or the
president or one-third of the Trustees may call special meetings of the
shareholders. Special meetings of shareholders shall also be called by the
secretary upon the written request of the holders of shares entitled to cast not
less than twenty-five percent (25%) of all the votes entitled to be cast at such
meeting. Such request shall state the purpose of such meeting and the matters
proposed to be acted on at such meeting. Within ten (10) days of the receipt of
such a request, the secretary shall inform such shareholders of the reasonably
estimated cost of preparing and mailing notice of the meeting (including all
proxy materials that may be required in connection therewith) and, upon payment
by such shareholders to the Trust of such costs, the secretary shall, within
thirty (30) days of such payment, or such longer period as may be necessitated
by
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compliance with any applicable statutory or regulatory requirements, give notice
to each shareholder entitled to notice of the meeting.
Unless requested by shareholders entitled to cast a majority
of all the votes entitled to be cast at such meeting, a special meeting need not
be called to consider any matter which is substantially the same as a matter
voted on at any meeting of the shareholders held during the preceding twelve
months.
Section 4. NOTICE. Not less than ten nor more than 90 days
before each meeting of shareholders, the secretary shall give to each
shareholder entitled to vote at such meeting and to each shareholder not
entitled to vote who is entitled to notice of the meeting written or printed
notice stating the time and place of the meeting and, in the case of a special
meeting or as otherwise may be required by any statute, the purpose for which
the meeting is called, either by mail or by presenting it to such shareholder
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the shareholder at his post office address as it
appears on the records of the Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be
transacted at an annual meeting of shareholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders,
the Chairman of the Board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the Chairman of the Board, one of the
Trustees, or one of the following officers present shall conduct the meeting in
the order stated: the Vice Chairman of the Board, if there be one, the
President, the Vice Presidents in their order of rank and seniority, or a
Chairman chosen by the shareholders entitled to cast a majority of the votes
which all shareholders present in person or by proxy are entitled to cast, shall
act as Chairman, and the Secretary, or, in his absence, an assistant secretary,
or in the absence of both the Secretary and assistant secretaries, a person
appointed by the Chairman shall act as Secretary.
Section 7. QUORUM. At any meeting of shareholders, the
presence in person or by proxy of shareholders entitled to cast a majority of
all the votes entitled to be cast at such meeting shall constitute a quorum; but
this section shall not affect any requirement under any statute or the
declaration of trust of the Trust, as amended from time to time ("Declaration of
Trust"), for the vote necessary for the adoption of any measure. If, however,
such quorum shall not be present at any meeting of the shareholders, the
shareholders entitled to vote at such meeting, present in person or by proxy,
shall have the power to adjourn the meeting from time to time to a date not more
than 120 days after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally notified.
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Section 8. VOTING. A plurality of all the votes cast at a
meeting of shareholders duly called and at which a quorum is present shall be
sufficient to elect a Trustee. Each share may be voted for as many individuals
as there are Trustees to be elected and for whose election the share is entitled
to be voted. A majority of the votes cast at a meeting of shareholders duly
called and at which a quorum is present shall be sufficient to approve any other
matter which may properly come before the meeting, unless more than a majority
of the votes cast is required herein or by statute or by the Declaration of
Trust. Unless otherwise provided in the Declaration of Trust, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders.
Section 9. PROXIES. A shareholder may cast the votes entitled
to be cast by the shares owned of record by him either in person or by proxy
executed in writing by the shareholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the Secretary of the Trust before or at the
time of the meeting. No proxy shall be valid after eleven months from the date
of its execution, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the
Trust registered in the name of a corporation, partnership, trust or other
entity, if entitled to be voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such shares pursuant to a bylaw or a resolution of the
governing board of such corporation or other entity or agreement of the partners
of the partnership presents a certified copy of such bylaw, resolution or
agreement, in which case such person may vote such shares. Any trustee or other
fiduciary may vote shares registered in his name as such fiduciary, either in
person or by proxy.
Shares of the Trust directly or indirectly owned by it shall
not be voted at any meeting and shall not be counted in determining the total
number of outstanding shares entitled to be voted at any given time, unless they
are held by it in a fiduciary capacity, in which case they may be voted and
shall be counted in determining the total number of outstanding shares at any
given time.
The Trustees may adopt by resolution a procedure by which a
shareholder may certify in writing to the Trust that any shares registered in
the name of the shareholder are held for the account of a specified person other
than the shareholder. The resolution shall set forth the class of shareholders
who may make the certification, the purpose for which the certification may be
made, the form of certification and the information to be contained in it; if
the certification is with respect to a record date or closing of the share
transfer books, the time after the record date or closing of the share transfer
books within which the certification must be received by the Trust; and any
other provisions with respect to the procedure which the Trustees consider
necessary or desirable. on receipt of such certification, the person specified
in the certification shall be regarded as, for the purposes set forth in the
certification, the shareholder of record of the specified shares in place of the
shareholder who makes the certification.
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Section 11. INSPECTORS. At any meeting of shareholders, the
chairman of the meeting may appoint one or more persons as inspectors for such
meeting. Such inspectors shall ascertain and report the number of shares
represented at the meeting based upon their determination of the validity and
effect of proxies, count all votes, report the results and perform such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by
him or by a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS. The Trustees shall submit
to the shareholders at or before the annual meeting of shareholders a report of
the business and operations of the Trust during such fiscal year, containing a
balance sheet and a statement of income and surplus of the Trust, accompanied by
the certification of an independent certified public accountant, and such
further information as the Trustees may determine is required pursuant to any
law or regulation to which the Trust is subject. Within the earlier of 20 days
after the annual meeting of shareholders or 120 days after the end of the fiscal
year of the Trust, the Trustees shall place the annual report on file at the
principal office of the Trust and with any governmental agencies as may be
required by law and as the Trustees may deem appropriate.
Section 13. NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.
(a) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board of Trustees
and the proposal of business to be considered by the shareholders may be made at
an annual meeting of shareholders (i) pursuant to the Trust's notice of meeting,
(ii) by or at the direction of the Trustees or (iii) by any shareholder of the
Trust who was a shareholder of record both at the time of giving of notice
provided for in this Section 13 (a) and at the time of the annual meeting, who
is entitled to vote at the meeting and who complied with the notice procedures
set forth in this Section 13(a).
(2) For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (iii) of paragraph
(a) (1) of this Section 13, the shareholder must have given timely notice
thereof in writing to the Secretary of the Trust and such other business must
otherwise be a proper matter for action by shareholders. To be timely, a
shareholder's notice shall be delivered to the Secretary at the principal
executive offices of the Trust not later than the close of business on the 60th
day nor earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date or if the Trust has
not previously held an annual meeting, notice by the shareholder to be timely
must be so delivered not earlier than the close of business on the 90th day
prior to such annual meeting and
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not later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made by the Trust. In no event shall the
public announcement of a postponement or adjournment of an annual meeting to a
later date or time commence a new time period for the giving of a shareholder's
notice as described above. Such shareholder's notice shall set forth as to each
person whom the shareholder proposes to nominate for election or reelection as a
Trustee all information relating to such person that is required to be disclosed
in solicitations of proxies for election of Trustees in an election contest, or
is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a Trustee if elected); (ii) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
shareholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such shareholder, as they appear on the Trust's books, and of
such beneficial owner and (y) the number of each class of shares of the Trust
which are owned beneficially and of record by such shareholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(a) (2) of this Section 13 to the contrary, in the event that the number of
Trustees to be elected to the Board of Trustees is increased and there is no
public announcement by the Trust naming all of the nominees for Trustee or
specifying the size of the increased Board of Trustees at least 70 days prior to
the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by this Section 13(a) shall also be considered timely, but only
with respect to nominees for any new positions created by such increase, if it
shall be delivered to the secretary at the principal executive offices of the
Trust not later than the close of business on the tenth day following the day on
which such public announcement is first made by the Trust.
(b) Special Meetings of Shareholders. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Trust's notice of meeting. Nominations of persons
for election to the Board of Trustees may be made at a special meeting of
shareholders at which Trustees are to be elected (i) pursuant to the Trusts
notice of meeting (ii) by or at the direction of the Board of Trustees or (iii)
provided that the Board of Trustees has determined that Trustees shall be
elected at such special meeting, by any shareholder of the Trust who was a
shareholder of record both at the time of giving of notice provided for in this
Section 13(b) and at the time of the special meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 13 (b). In the event the Trust calls a special meeting of shareholders
for the purpose of electing one or more Trustees to the Board of Trustees, any
such shareholder may nominate a person or persons (as the case may be) for
election to such position as specified in the Trust's notice of meeting, if the
shareholder's notice containing the information required by paragraph (a) (2) of
this Section 13 shall be delivered to the Secretary at the principal executive
offices of the Trust not earlier than the close of business on the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special
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meeting or the tenth day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Trustees to be elected at such meeting. In no event shall the public
announcement of a postponement or adjournment of a special meeting to a later
date or time commence a new time period for the giving of a shareholder's notice
as described above.
(c) General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 13 shall be eligible to serve as Trustees
and only such business shall be conducted at a meeting of shareholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 13. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this Section 13 and, if any proposed nomination or
business is not in compliance with this Section 13, to declare that such
nomination or proposal shall be disregarded.
(2) For purposes of this Section 13, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or in a document publicly filed by
the Trust with the Securities and Exchange Commission pursuant to Section 13, 14
or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 13,
a shareholder shall also comply with all applicable requirements of state law
and of the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this Section 13. Nothing in this Section 13 shall be
deemed to affect any rights of shareholders to request inclusion of proposals
in, nor any of the rights of the Trust to omit a proposal from, the Trust's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS. Notwithstanding
the provisions of Section 13 of this Article II, any action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by
shareholders entitled to cast a sufficient number of votes to approve the
matter, as required by statute, the Declaration of Trust of the Trust or these
By-laws, and such consent is filed with the minutes of proceedings of the
shareholders.
Section 15. VOTING BY BALLOT. Voting on any question or in
any election may be viva voce unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
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ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING
OVER. The business and affairs of the Trust shall be managed under the direction
of its Board of Trustees. A Trustee shall be an individual at least 21 years of
age who is not under legal disability. In case of failure to elect Trustees at
an annual meeting of the shareholders, the Trustees holding over shall continue
to direct the management of the business and affairs of the Trust until their
successors are elected and qualify.
Section 2. NUMBER. At any regular meeting or at any special
meeting called for that purpose, a majority of the entire Board of Trustees may
establish, increase or decrease the number of Trustees, subject to any
limitations on the number of Trustees set forth in the Declaration of Trust.
Except during the period when a vacancy exists, at least two-thirds of the
Trustees shall be persons who are not executive officers of the Trust or persons
affiliated with any affiliate of the Trust ("Independent Trustees"). For
purposes of this Section, the terms "executive officers", "affiliate" and
"affiliated" shall have the definitions set forth in Rule 405 under the
Securities Act of 1933, as amended.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of
the Trustees shall be held immediately after and at the same place as the annual
meeting of shareholders, no notice other than this Bylaw being necessary. The
Trustees may provide, by resolution, the time and place, either within or
without the State of California, for the holding of regular meetings of the
Trustees without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Trustees
may be called by or at the request of the chairman of the board or the president
or by a majority of the Trustees then in office. The person or persons
authorized to call special meetings of the Trustees may fix any place, either
within or without the State of California, as the place for holding any special
meeting of the Trustees called by them.
Section 5. NOTICE. Notice of any special meeting shall be
given by written notice delivered personally, telegraphed, facsimile-
transmitted or mailed to each Trustee at his business or residence address.
Personally delivered or telegraphed notices shall be given at least two days
prior to the meeting. Notice by mail shall be given at least five days prior to
the meeting. Telephone or facsimile- transmission notice shall be given at least
24 hours prior to the meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail properly addressed, with postage
thereon prepaid. If given by telegram, such notice shall be deemed to be given
when the telegram is delivered to the telegraph company. Telephone notice shall
be deemed given when the Trustee is personally given such notice in a telephone
call to which he is a party. Facsimile-transmission notice shall be deemed given
upon completion of the transmission of the message to the number given to the
Trust by the Trustee and receipt of a completed answer-back indicating receipt.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the Trustees need be stated in the notice, unless
specifically required by statute or these By-laws.
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Section 6. QUORUM. A majority of the Trustees shall constitute
a quorum for transaction of business at any meeting of the Trustees, provided
that, if less than a majority of such Trustees are present at said meeting, a
majority of the Trustees present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the
Declaration of Trust or these By-laws, the vote of a majority of a particular
group of Trustees is required for action, a quorum must also include a majority
of such group.
The Trustees present at a meeting which has been duly called
and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Trustees to leave less than a quorum.
Section 7. VOTING. The action of the majority of the Trustees
present at a meeting at which a quorum is present shall be the action of the
Trustees, unless the concurrence of a greater proportion is required for such
action by applicable statute.
Section 8. TELEPHONE MEETINGS. Trustees may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.
Section 9. INFORMAL ACTION BY TRUSTEES. Any action required or
permitted to be taken at any meeting of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each Trustee and
such written consent is filed with the minutes of proceedings of the Trustees.
Section 10. VACANCIES. If for any reason any or all of the
Trustees cease to be Trustees, such event shall not terminate the Trust or
affect these By-laws or the powers of the remaining Trustees hereunder (even if
fewer than two Trustees remain). Any vacancy (including a vacancy created by an
increase in the number of Trustees) shall be filled, at any regular meeting or
at any special meeting called for that purpose, by a majority of the Trustees.
Any individual so elected as Trustee shall hold office until the next annual
meeting of shareholders.
Section 11. COMPENSATION; FINANCIAL ASSISTANCE.
(a) Compensation. Trustees shall not receive any stated salary for their
services as Trustees but, by resolution of the Trustees, may receive fixed sums
per year and/or per meeting and/or per visit to real property owned or to be
acquired by the Trust and for any service or activity they performed or engaged
in as Trustees. Such fixed sums may be paid either in cash or in shares of the
Trust. Trustees may be reimbursed for expenses of attendance, if any, at each
annual, regular or special meeting of the Trustees or of any committee thereof;
and for their expenses, if any, in connection with each property visit and any
other service or activity performed or engaged in as Trustees; but nothing
herein contained shall be construed to preclude any Trustees from serving the
Trust in any other capacity and receiving compensation therefor.
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(b) Financial Assistance to Trustees. The Trust may lend money to,
guarantee an obligation of or otherwise assist a Trustee or a trustee or
director of a direct or indirect subsidiary of the Trust; provided, however,
that such Trustee or other person is also an executive officer of the Trust or
of such subsidiary, or the loan, guarantee or other assistance is in connection
with the purchase of Shares. The loan, guarantee or other assistance may be with
or without interest, unsecured, or secured in any manner that the Board of
Trustees approves, including a pledge of shares.
Section 12. REMOVAL OF TRUSTEES. The shareholders may, at
any time, remove any Trustee in the manner provided in the Declaration of Trust.
Section 13. LOSS OF DEPOSITS. No Trustee shall be liable for
any loss which may occur by reason of the failure of the bank, trust company,
savings and loan association, or other institution with whom moneys or shares
have been deposited.
Section 14. SURETY BONDS. Unless required by law, no Trustee
shall be obligated to give any bond or surety or other security for the
performance of any of his duties.
Section 15. RELIANCE. Each Trustee, officer, employee and
agent of the Trust shall, in the performance of his duties with respect to the
Trust, be fully justified and protected with regard to any act or failure to act
in reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel or upon reports made to the Trust by any of
its officers or employees or by the adviser, accountants, appraisers or other
experts or consultants selected by the Trustees or officers of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
Section 16. INTERESTED TRUSTEE TRANSACTIONS. Transactions
involving any actual or potential conflict of interest with a Trustee or
Advisor, or an affiliate of such persons, shall be approved by a majority of the
Independent Trustees of the Trust, or if any Independent Trustee has an actual
or potential conflict, the disinterested Trustees of the Trust.
Section 17. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES
AND AGENTS. The Trustees shall have no responsibility to devote their full time
to the affairs of the Trust. Any Trustee or officer, employee or agent of the
Trust (other than a full-time officer, employee or agent of the Trust), in his
personal capacity or in a capacity as an affiliate, employee, or agent of any
other person, or otherwise, may have business interests and engage in business
activities similar or in addition to those of or relating to the Trust.)
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ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATION. The Trustees may
appoint from among its members an Audit Committee, a Compensation Committee and
other committees, each composed of at least three Trustees, to serve at the
pleasure of the Trustees. A majority of the Trustees on the Compensation
Committee and all of the Trustees on the Audit Committee shall be Independent
Trustees.
Section 2. POWERS. The Trustees may delegate to committees
appointed under Section 1 of this Article IV any of the powers of the Trustees,
except as prohibited by law.
Section 3. MEETINGS. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another Trustee to act in the place of such
absent member. Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Trustees.
One-third, but not less than two (except for one-member
committees), of the members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of
such committee. The Board of Trustees may designate a chairman of any committee,
and such chairman or any two members of any committee (except for one-member
committees) may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any such
committee, the members thereof present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
Trustee to act at the meeting in the place of such absent or disqualified
members.
Each committee shall keep minutes of its proceedings and shall
report the same to the Board of Trustees at the next succeeding meeting, and any
action by the committee shall be subject to revision and alteration by the Board
of Trustees, provided that no rights of third persons shall be affected by any
such revision or alteration.
Section 4. TELEPHONE MEETINGS. Members of a committee of the
Trustees may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required
or permitted to be taken at any meeting of a committee of the Trustees may be
taken without a meeting, if a consent in writing to such action is signed by
each member of the committee and such written consent is filed with the minutes
of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof,
the Board of Trustees shall have the power at any time to change the membership
B-10
<PAGE>
of any committee, to fill all vacancies, to designate alternate members to
replace any absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust shall
include a president, a secretary and a treasurer and may include a chairman of
the board, a vice chairman of the board, a chief executive officer, a chief
operating officer, a chief financial officer, a chief legal counsel, one or more
vice presidents, one or more assistant secretaries and one or more assistant
treasurers. In addition, the Trustees may from time to time appoint such other
officers with such powers and duties as they shall deem necessary or desirable.
The officers of the Trust shall be elected annually by the Trustees at the first
meeting of the Trustees held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as may be convenient. Each officer shall hold office
until his successor is elected and qualifies or until his death, resignation or
removal in the manner hereinafter provided. Any two or more offices except
president and vice president may be held by the same person. In their
discretion, the Trustees may leave unfilled any office except that of president
and secretary. Election of an officer or agent shall not of itself create
contract rights between the Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of
the Trust may be removed by the Trustees if in their judgment the best interests
of the Trust would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any officer
of the Trust may resign at any time by giving written notice of his resignation
to the Trustees, the chairman of the board, the president or the secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. The acceptance of a resignation shall not be
necessary to make it effective unless otherwise stated in the resignation. Such
resignation shall be without prejudice to the contract rights, if any, of the
Trust.
Section 3. VACANCIES. A vacancy in any office may be filled
by the Trustees for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate
a chief executive officer from among the elected officers. The chief executive
officer shall have responsibility for implementation of the policies of the
Trust, as determined by the Trustees, and for the administration of the business
affairs of the Trust. In the absence of both the chairman and vice chairman of
the board, the chief executive officer shall preside over the meetings of the
Trustees and of the shareholders at which he shall be present.
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<PAGE>
Section 5. CHIEF OPERATING OFFICER. The Trustees may designate
a chief operating officer from among the elected officers. Said officer will
have the responsibilities and duties as set forth by the Trustees or the chief
executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Trustees may designate
a chief financial officer from among the elected officers. Said officer will
have the responsibilities and duties as set forth by the Trustees or the chief
executive officer.
Section 7. CHIEF LEGAL COUNSEL. The Trustees may designate a
chief legal counsel from among the elected officers. Said officer will have the
responsibilities and duties as set forth by the trustees or the chief executive
officer.
Section 8. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The
chairman of the board shall preside over the meetings of the Trustees and of the
shareholders at which he shall be present and shall in general oversee all of
the business and affairs of the Trust. In the absence of the chairman of the
board, the vice chairman of the board shall preside at such meetings at which he
shall be present. The chairman and the vice chairman of the board may execute
any deed, mortgage, bond, contract or other instrument, except in cases where
the execution thereof shall be expressly delegated by the Trustees or by these
By-laws to some other officer or agent of the Trust or shall be required by law
to be otherwise executed. The chairman of the board and the vice chairman of the
board shall perform such other duties as may be assigned to him or them by the
Trustees.
Section 9. PRESIDENT. In the absence of the chairman, the vice
chairman of the board and the chief executive officer, the president shall
preside over the meetings of the Trustees and of the shareholders at which he
shall be present. In the absence of a designation of a chief executive officer
by the Trustees, the president shall be the chief executive officer and shall be
ex officio a member of all committees that may, from time to time, be
constituted by the Trustees. The president may execute any deed, mortgage, bond,
contract or other instrument, except in cases where the execution thereof shall
be expressly delegated by the Trustees or by these By-laws to some other officer
or agent of the Trust or shall be required by law to be otherwise executed; and
in general shall perform all duties incident to the office of president and such
other duties as may be prescribed by the Trustees from time to time.
Section 10. VICE PRESIDENTS. In the absence of the president
or in the event of a vacancy in such office, the vice president (or in the event
there be more than one vice president, the vice presidents in the order
designated at the time of their election or, in the absence of any designation,
then in the order of their election) shall perform the duties of the president
and when so acting shall have all the powers of and be subject to all the
restrictions upon the president; and shall perform such other duties as from
time to time may be assigned to him by the president or by the Trustees. The
Trustees may designate one or more vice presidents as executive vice president,
senior vice president or as vice president for particular areas of
responsibility.
Section 11. SECRETARY. The secretary shall (a) keep the
minutes of the proceedings of the shareholders, the Trustees and committees of
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<PAGE>
the Trustees in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these By-laws or as
required by law; (c) be custodian of the trust records and of the seal of the
Trust; (d) keep a register of the post office address of each shareholder which
shall be furnished to the secretary by such shareholder; (e) have general charge
of the share transfer books of the Trust; and (f) in general perform such other
duties as from time to time may be assigned to him by the chief executive
officer, the president or by the Trustees. Section 12. TREASURER. The treasurer
shall have the custody of the funds and securities of the Trust and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Trust and shall deposit all moneys and other valuable effects in the name
and to the credit of the Trust in such depositories as may be designated by the
Trustees.
He shall disburse the funds of the Trust as may be ordered by
the Trustees, taking proper vouchers for such disbursements, and shall render to
the president and Trustees, at the regular meetings of the Trustees or whenever
they may require it, an account of all his transactions as treasurer and of the
financial condition of the Trust.
If required by the Trustees, he shall give the Trust a bond in
such sum and with such surety or sureties as shall be satisfactory to the
Trustees for the faithful performance of the duties of his office and for the
restoration to the Trust, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, moneys and other property
of whatever kind in his possession or under his control belonging to the Trust.
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The assistant secretaries and assistant treasurers, in general, shall perform
such duties as shall be assigned to them by the secretary or treasurer,
respectively, or by the president or the Trustees. The assistant treasurers
shall, if required by the Trustees, give bonds for the faithful performance of
their duties in such sums and with such surety or sureties as shall be
satisfactory to the Trustees.
Section 14. SALARIES. The salaries and other compensation of
the officers shall be fixed from time to time by the Trustees and no officer
shall be prevented from receiving such salary or other compensation by reason of
the fact that he is also a Trustee.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer
or agent to enter into any contract or to execute and deliver any instrument in
the name of and on behalf of the Trust and such authority may be general or
confined to specific instances. Any agreement, deed, mortgage, lease or other
document executed by one or more of the Trustees or by an authorized person
shall be valid and binding upon the Trustees and upon the Trust when authorized
or ratified by action of the Trustees.
B-13
<PAGE>
Section 2. CHECKS AND DRAFTS. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Trust shall be signed by such officer or agent of the Trust
in such manner as shall from time to time be determined by the Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise
employed shall be deposited from time to time to the credit of the Trust in such
banks, trust companies or other depositories as the Trustees may designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Each shareholder shall be entitled to
a certificate or certificates which shall represent and certify the number of
shares of each class of beneficial interest held by him in the Trust. Each
certificate shall be signed by the chief executive officer, the president or a
vice president and countersigned by the secretary or an assistant secretary or
the treasurer or an assistant treasurer and may be sealed with the seal, if any,
of the Trust. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Trust shall, from time to time,
issue several classes of shares, each class may have its own number series. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the Trust,
shall have a statement of such restriction, limitation, preference or redemption
provision, or a summary thereof, plainly stated on the certificate. In lieu of
such statement or summary, the Trust may set forth upon the face or back of the
certificate a statement that the Trust will furnish to any shareholder, upon
request and without charge, a full statement of such information.
Section 2. TRANSFERS. Upon surrender to the Trust or the
transfer agent of the Trust of a share certificate duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, the Trust
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
The Trust shall be entitled to treat the holder of record of
any share or shares as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
California.
Notwithstanding the foregoing, transfers of shares of
beneficial interest of the Trust will be subject in all respects to the
Declaration of Trust and all of the terms and conditions contained therein.
B-14
<PAGE>
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by
the Trustees may direct a new certificate to be issued in place of any
certificate previously issued by the Trust alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing the issuance
of a new certificate, an officer designated by the Trustees may, in his
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or the owner's legal
representative to advertise the same in such manner as he shall require and/or
to give bond, with sufficient surety, to the Trust to indemnify it against any
loss or claim which may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
The Trustees may set, in advance, a record date for the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
determining shareholders entitled to receive payment of any dividend or the
allotment of any other rights, or in order to make a determination of
shareholders for any other proper purpose. Such date, in any case, shall not be
prior to the close of business on the day the record date is fixed and shall be
not more than 90 days and, in the case of a meeting of shareholders not less
than ten days, before the date on which the meeting or particular action
requiring such determination of shareholders of record is to be held or taken.
In lieu of fixing a record date, the Trustees may provide that
the share transfer books shall be closed for a stated period but not longer than
20 days. If the share transfer books are closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days before the date of such meeting.
If no record date is fixed and the share transfer books are
not closed for the determination of shareholders, (a) the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day on which the notice of
meeting is mailed or the 30th day before the meeting, whichever is the closer
date to the meeting; and (b) the record date for the determination of
shareholders entitled to receive payment of a dividend or an allotment of any
other rights shall be the close of business on the day on which the resolution
of the Trustees, declaring the dividend or allotment of rights, is adopted.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except when (i) the
determination has been made through the closing of the transfer books and the
stated period of closing has expired or (ii) the meeting is adjourned to a date
more than 120 days after the record date fixed for the original meeting, in
either of which case a new record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Trust shall maintain at its
principal office or at the office of its counsel, accountants or transfer agent,
an original or duplicate share ledger containing the name and address of each
shareholder and the number of shares of each class held by such shareholder.
B-15
<PAGE>
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Trustees
may issue fractional shares or provide for the issuance of scrip, all on such
terms and under such conditions as they may determine. Notwithstanding any other
provision of the Declaration of Trust or these By-laws, the Trustees may issue
units consisting of different securities of the Trust. Any security issued in a
unit shall have the same characteristics as any identical securities issued by
the Trust, except that the Trustees may provide that for a specified period
securities of the Trust issued in such unit may be transferred on the books of
the Trust only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Trustees shall have the power, from time to time, to fix
the fiscal year of the Trust by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions
upon the shares of beneficial interest of the Trust may be authorized and
declared by the Trustees, subject to the provisions of law and the Declaration
of Trust. Dividends and other distributions may be paid in cash, property or
shares of the Trust, subject to the provisions of law and the Declaration of
Trust.
Section 2. CONTINGENCIES. Before payment of any dividends or
other distributions, there may be set aside out of any funds of the Trust
available for dividends or other distributions such sum or sums as the Trustees
may from time to time, in their absolute discretion, think proper as a reserve
fund for contingencies, for equalizing dividends or other distributions, for
repairing or maintaining any property of the Trust or for such other purpose as
the Trustees shall determine to be in the best interest of the Trust, and the
Trustees may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE X
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of
a seal by the Trust. The seal shall have inscribed thereon the name of the
Trust and the year of its formation. The Trustees may authorize one or more
duplicate seals and provide for the custody thereof.
B-16
<PAGE>
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or
required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the word
"(SEAL)" adjacent to the signature of the person authorized to execute the
document on behalf of the Trust.
ARTICLE XI
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by California law in effect
from time to time, the Trust shall indemnify (a) any Trustee, officer or
shareholder or any former Trustee, officer or shareholder (including among the
foregoing, for all purposes of this Article XI and without limitation, any
individual who, while a Trustee, officer or shareholder and at the express
request of the Trust, serves or has served another corporation, partnership,
joint venture, trust, employee benefit plan or any other enterprise as a
director, officer, shareholder, partner or trustee of such corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise)
who has been successful, on the merits or otherwise, in the defense of a
proceeding to which he was made a party by reason of service in such capacity,
against reasonable expenses incurred by him in connection with the proceeding,
(b) any Trustee or officer or any former Trustee or officer against any claim or
liability to which he may become subject by reason of such status unless it is
established that (i) his act or omission was material to the matter giving rise
to the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty, (ii) he actually received an improper personal benefit in
money, property or services or (iii) in the case of a criminal proceeding, he
had reasonable cause to believe that his act or omission was unlawful and (c)
each shareholder or former shareholder against any claim or liability to which
he may become subject by reason of such status. In addition, the Trust shall,
without requiring a preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse, in advance of final disposition of a
proceeding, reasonable expenses incurred by a Trustee, officer or shareholder or
former Trustee, officer or shareholder made a party to a proceeding by reason
such status, provided that, in the case of a Trustee or officer, the Trust shall
have received (i) a written affirmation by the Trustee or officer of his good
faith belief that he has met the applicable standard of conduct necessary for
indemnification by the Trust as authorized by these By-laws and (ii) a written
undertaking by or on his behalf to repay the amount paid or reimbursed by the
Trust if it shall ultimately be determined that the applicable standard of
conduct was not met. The Trust may, with the approval of its Trustees, provide
such indemnification or payment or reimbursement of expenses to any Trustee,
officer or shareholder or any former Trustee, officer or shareholder who served
a predecessor of the Trust and to any employee or agent of the Trust or a
predecessor of the Trust. Neither the amendment nor repeal of this Article, nor
the adoption or amendment of any other provision of the Declaration of Trust or
these By-laws inconsistent with this Article, shall apply to or affect in any
respect the applicability of this Article with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
Any indemnification or payment or reimbursement of the
expenses permitted by these By-laws shall be furnished in accordance with the
procedures provided for indemnification
B-17
<PAGE>
or payment or reimbursement of expenses, as the case may be, under the
California Corporations Code. The Trust may provide to Trustees, officers and
shareholders such other and further indemnification or payment or reimbursement
of expenses, as the case may be, to the fullest extent permitted by the
California Law, as in effect from time to time, for directors of California
corporations.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the
Declaration of Trust or By-laws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any person at any meeting shall
constitute a waiver of notice of such meeting, except where such person attends
a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE XIII
AMENDMENT OF BY-LAWS
The Trustees shall have the power to adopt, alter or repeal
any provision of these By-laws and to make new By-laws; provided, however, that
Article II, Section 2 of Article III and this Article XIII of these By-laws
shall not be amended without the consent of shareholders by a vote of a majority
of the votes cast at a meeting of shareholders duly called and at which a quorum
is present.
ARTICLE XIV
MISCELLANEOUS
All references to the Declaration of Trust shall include any
amendments thereto.
B-18
<PAGE>
TABLE OF CONTENTS
Page
PROXY STATEMENT......................................................... 4
AVAILABLE INFORMATION................................................... 5
SUMMARY................................................................. 6
RISK FACTORS AND OTHER
CONSIDERATIONS...................................................... 20
Fundamental Change in Nature of Investment.......................... 20
Changes in Shareholders' Rights..................................... 20
Possible Mandatory Redemption of Preferred
Shares......................................................... 20
Conflicts of Interest............................................... 20
Control by Chateau.................................................. 21
No Fairness Opinion Sought with Respect to
Organizational Amendments...................................... 22
Potential Increase in Indebtedness; Additional
Use of Leverage................................................ 22
Risks Related to Removal of Investment
Restrictions................................................... 22
Constraints on Growth Opportunities................................. 23
Acquisition and Development Risks................................... 23
Environmental Matters............................................... 23
PROPOSAL 1 -- PROPOSED
ORGANIZATIONAL AMENDMENTS........................................... 25
Introduction........................................................ 25
Background of the Transaction....................................... 26
Recommendation of the Trustees...................................... 28
Certain Alternatives................................................ 30
TRANSACTIONS AND CHANGES TO BE
EFFECTED UPON APPROVAL OF
PROPOSAL 1.......................................................... 32
Additional Chateau Investment....................................... 32
Organization of UPREIT; Contribution
Transaction.................................................... 32
Implementation of Business Plan; Growth
Strategy....................................................... 32
Future Listing of Common Shares on
Exchange; Redemption of Preferred
Shares......................................................... 33
COMPARISON OF PRINCIPAL TERMS OF
EXISTING DECLARATION OF TRUST
AND AMENDED DECLARATION AND
BY-LAWS............................................................. 34
Organization........................................................ 34
Length of Investment................................................ 34
Voting Rights....................................................... 34
Distributions; Liquidating Proceeds................................. 35
Issuance of Additional Securities................................... 36
Redemption and Conversion Rights.................................... 36
Investment Restrictions............................................. 37
Limitations on Borrowing; Debt...................................... 38
Management Control.................................................. 38
Engagement of Advisor............................................... 38
Antitakeover Provisions............................................. 38
Transactions with Affiliates........................................ 39
Limitation on Total Operating Expenses.............................. 39
Ownership Limitations............................................... 40
PROPOSAL 2 -- ANNUAL ELECTION OF
TRUSTEES............................................................ 41
Election of Trustees................................................ 41
Board of Trustees................................................... 41
Committees of the Board............................................. 42
Advisor............................................................. 42
Share Ownership of Directors, Executive
Officers and Certain Shareholders.............................. 42
Section 16(a) Beneficial Ownership Reporting
Compliance..................................................... 42
Independent Trustees Compensation................................... 43
Executive Compensation.............................................. 43
Related Party Compensation and Expense
Reimbursement.................................................. 43
VOTING PROCEDURES AND
MISCELLANEOUS MATTERS............................................... 43
The Annual Meeting.................................................. 43
Change in Accountants............................................... 43
Solicitation of Proxies; Administrative Agent....................... 43
Record Date; Vote Required.......................................... 43
No Dissenters' or Appraisal Rights.................................. 44
Voting Procedures and Powers........................................ 44
Completion Instructions............................................. 45
Withdrawal or Change of Vote........................................ 45
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE.............................................. 45
Appendix A -- AMENDED AND RESTATED
DECLARATION OF TRUST................................................ A-1
Appendix B -- BY-LAWS OF THE TRUST...................................... B-1
<PAGE>
ii
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned holder of Shares of beneficial interest of Windsor Real
Estate Investment Trust 8, a California business trust (the "Trust"), acting
under the laws of the State of California, hereby constitutes and appoints
Steven G. Waite and Cynthia Chase, and each of them, the attorneys and proxies
of the undersigned, each with the power of substitution, to attend and act for
the undersigned at the 1998 Annual Meeting of Shareholders of the Trust to be
held on ________, 1998 at 10:00 a.m., MDT, at 6430 South Quebec Street,
Englewood, Colorado 80111, and at any adjournments thereof, and in connection
therewith to vote all of the Shares which the undersigned would be entitled to
vote, as follows on the reverse side of this proxy.
Said attorneys and proxies, and each of them, shall have all the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at such meeting and hereby ratifies and confirms
all that said attorneys and proxies and each of them, may lawfully do by virtue
hereof. Said proxies, without hereby limiting their general authority, are
specifically authorized to vote in accordance with their best judgment with
respect to all matters incident to the conduct of the meeting, all matters
presented at the meeting but which are not known to the Board of Trustees at the
time of the solicitation of this proxy and, with respect to the election of any
person as a Trustee, if a bona fide nominee for the office is named in the Proxy
Statement and such nominee is unable to serve or will not serve, to vote for any
other person.
Each of the above-named proxies present at said meeting either in
person or by substitute, shall have and exercise all the powers of said proxies
hereunder. This proxy shall be voted in accordance with the choices specified by
the undersigned on this proxy. IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED
ON THE PROXY THE PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
ELECTION OF THE NOMINEES FOR THE BOARD OF TRUSTEES NAMED ABOVE AND AS A GRANT OF
AUTHORITY TO VOTE FOR THE PROPOSALS STATED ABOVE AND ON ANY OTHER MATTER TO BE
VOTED UPON.
<TABLE>
<CAPTION>
(Continued and to be signed on the reverse side)
FOLD AND DETACH HERE
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF WINDSOR REAL ESTATE INVESTMENT TRUST 8 Please mark
your vote as
indicated in
the example
-----------
X
-----------
1. PROPOSAL TO AMEND AND 2. ELECTION OF TRUSTEES Nominees: Gary P. McDaniel,
<S> <C> <C>
RESTATE THE TRUST'S Please fill out A or B below Kenneth G. Pinder,
DECLARATION OF TRUST, Richard B. Ray
AND ADOPT BY-LAWS FOR
THE TRUST A. Regular Voting (INSTRUCTION TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
FOR INDIVIDUAL NOMINEE WRITE
ALL NOMINEES WITHHOLD THE NAME(S) OF SUCH
LISTED AUTHORITY NOMINEE(S) BELOW)
(except as FOR ALL _________________________
FOR AGAINST ABSTAIN listed to right) NOMINEES _________________________
|_| |_| |_| |_| |_|
B. Cumulative Voting Option
The undersigned acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement Please allocate available votes among
relating to the 1998 Annual Meeting of candidates (see below for details):
Shareholders.
Gary P. McDaniel
---------------
Kenneth G. Pinder
_______________
Richard B. Ray
_______________
PLEASE SIGN, DATE AND RETURN YOUR Instructions for Cumulative Voting. Each
PROXY PROMPTLY IN THE POSTAGE Shareholder selecting the Cumulative Voting
PREPAID ENVELOPE PROVIDED. Option is entitled to 3 votes per Share
held, which are to be allocated among the
nominees above, in the Shareholder's discretion.
Signature(s) _________________________________________________Date__________________
IMPORTANT: In signing this proxy, please sign your name or names on the
signature line in the same manner as it appears on your stock certificate. When
signing as an attorney, executor, administrator, trustee or guardian, please
give your full title as such. EACH JOINT TENANT SHOULD SIGN.
FOLD AND DETACH HERE
</TABLE>
