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. 1)
Filed by the registrant <checked-box>
Filed by a party other than the registrant <square>
Check the appropriate box:
<checked-box> Preliminary proxy statement
<square> Confidential, For Use of
the Commission Only
(as permitted by Rule 14a-6(e)(2))
<square> Definitive proxy statement
<square> Definitive additional materials
<square> Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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Windsor Real Estate Investment Trust 8
(Name of Registrant as Specified in Its Charter)
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Windsor Real Estate Investment Trust 8
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
<checked-box> No Fee Required.
<square> 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:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:{1}
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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<square> Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
<square> 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:
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(4) Date filed:
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**FOOTNOTES**
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{1}Set forth the amount on which the filing fee is calculated and state how it
was determined.
WINDSOR REAL ESTATE INVESTMENT TRUST 8
6430 South Quebec Street
Englewood, CO 80111
NOTICE OF ANNUAL MEETING
July __, 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 July __, 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
<PAGE>
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 JULY __, 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 July __, 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
July __, 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 July __, 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 July __, 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 JULY __, 1998.
This Proxy Statement is dated July __, 1998.<PAGE>
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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, 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 and to
achieve greater total returns for its Shareholders (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
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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 "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 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.
Certain 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
investments only after the Trust succeeds in listing the Common Shares on a
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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).
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.
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. 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, and accordingly, may be subject to
conflicts of interest. The approval of Proposal 1 will position the Trust for
new property acquisitions which should result in increases in the fees to be
earned by the Advisor.
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
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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; No Assurance of Available Capital or
Financing. If Proposal 1 is approved by the Shareholders, the Trust, in
implementing its Business Plan, 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 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.
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.
Indebtedness. 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. Currently,
total indebtedness of the Trust equals approximately 161% of the net asset
value of the Trust's assets, and the net asset value of the Trust's assets
equals approximately 328% 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's policy will be to limit total indebtedness of the Trust
to 80% of the value of its assets.
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.
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. Based on the amounts of the Estimated
Liquidation Payments (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 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 $5.7 million (the "Montgomery Acquisition"). In order to enable
the Trust to complete the acquisition, Chateau offered to make an investment
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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:
(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.
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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 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
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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 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
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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> <C>
1998* $ 37,304 $0.38 $ 36,800 $0.37
1997 $135,254 $1.38 $147,110 $1.50
1996 $135,254 $1.38 $147,110 $1.50
1995 $132,436 $1.35 $144,413 $1.47
1994 $104,298 $1.06 $103,687 $1.06
______________________________
* Through March 31, 1998.
</TABLE>
(1)The portion of such distribution representing a return of capital to
Shareholders is as follows: 1998 (__%); 1997 (__%); 1996 (__%); 1995 (__%);
and 1994 (__%).
(2)The portion of such distribution representing a return of capital to
Shareholders is as follows: 1998 (__%); 1997 (__%); 1996 (__%); 1995 (__%);
and 1994 (__%).
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 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.
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
Length of Investment
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.
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AMENDED DECLARATION
AND BY-LAWS
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
EXISTING DECLARATION OF TRUST
With certain lmited exceptons,each Common Share and each Preferred
Share entitles each holder to one vote on all matters submitted
to a vote of Shareholders.
Each Shareholder has the option to use cumulative voting in the
Election of Trustees.
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").
Under the Existing Declaration of Trust, Shareholders have cumulative
voting rights in the election of Trustees.
AMENDED DECLARATION AND BY-LAWS
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.
The Voting Restrictions contained in the Existing Declaration of Trust
are not included in the Amended Declaration or By-laws.
The Amended Declaration eliminates cumulative voting rights of
Shareholders.
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.
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.
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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.
Operating Distributions
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 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
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.
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.
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<PAGE>'
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.
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 Advisory Agreement will remain in full force and effect.
The Renewal and Termination Restrictions are not included in the
Amended Declaration.
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.
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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.
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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CERTAIN 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
Proposal 1 involves a fundamental change in the nature of the investment
of the Common Shareholders and Preferred Shareholders in the Trust which 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 the net proceeds from asset
sales or refinancings to Shareholders but will instead be able to reinvest the
proceeds from sales and refinancings of assets in new investments. As a
result, Shareholders can expect to have an effective avenue to liquidate their
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. There can be no assurance, however, 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 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
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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 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 $89,000 and
116,200, 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,
19,339 Common Shares and 984 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
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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.
Indebtedness
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 161% of the
net asset value of the Trust's assets, and the net asset value of the Trust's
assets equals approximately 328% 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; No Assurance of Available Capital or
Financing
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 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's ability to successfully pursue new
growth opportunities will depend on a number of factors, including, among
others, 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.
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
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.
PROPOSAL 1 -- PROPOSED ORGANIZATIONAL AMENDMENTS
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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 and to achieve greater total returns for its
Shareholders (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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<PAGE>
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
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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<PAGE>
As of December 31, 1997, the Trust owned interests in the following
manufactured home communities:
<TABLE>
<CAPTION>
Ownership
Name of Property Percentage Date Acquired Location
<S> <C> <C> <C>
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
</TABLE>
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 (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 $5.7 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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<PAGE>
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 $0.38 and $0.34, respectively, per Share. The
Trustees believe 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.
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<PAGE>
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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<PAGE>
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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<PAGE>
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
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<PAGE>
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 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 Form 10-KSB for the year ended
December 31, 1997 and "Management's Discussion and Analysis of Financial
Condition and Results of Operation" contained in the Trust's Quarterly Report on
Form 10-QSB 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.
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.
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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.
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.
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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").
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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 commodit
ies 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.
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.
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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 By-laws 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 By-laws relating to "roll-up" transactions.
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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.
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.
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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
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business and activities by reports and proposals sent to them in advance 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.
6430 South Quebec Street
Englewood, CO 80111 19,339 Common Shares 18.9%
The Windsor Corporation
6430 South Quebec Street
Englewood, CO 80111 984 Preferred Shares 0.1%
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
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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 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. Under the terms of the Advisory Agreement, the Advisor
earned advisory fees from the Trust in the amount of $89,000 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 July __,
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 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
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person or proxy, with respect to the proposals. As of the Record Date, there
were 110,292 Common Shares outstanding held of record by a total of 180
Shareholders, and 97,079 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
19,339 Common Shares and 984 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.
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.
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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.
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)The Trust's Current Report on Form 8-K filed on January 27,
1998 and the related Form 8-KA dated February 3, 1998;
(iii)"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the the Trust's Quarterly Report on Form
10-QSB for the quarter ended March 31, 1998; and
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(iv)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;
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(j) adopt and implement employee and officer benefit plans;
(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
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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 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
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indirectly, with an advisor of the Trust, whether by ownership of, ownership
in, employment by, any material business or professional relationship 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 commissions, servicing, engineering, inspection and
other fees, whether paid by the Trust or by others with whom the Trust does
business;
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(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
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the per share amount of the Preferred Share Annual Dividend Preference for
that 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 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.
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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 Person who would have been the
record owner of Shares that the Prohibited Owner would have so owned.
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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 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.
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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
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definition contained in Section 7.1, the 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,
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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
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
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who attempts to Beneficially or Constructively Own Shares in violation of the
ownership limitations described above shall have no claim, cause of action, 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
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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 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
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per share equal to the lesser of (i) the price per share in the 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
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to vote only on the following matters: (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
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shareholder, nor shall any shareholder be subject to any 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
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Trustees, officers, employees or agents of the Trust shall be liable under any
written 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
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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 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 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.
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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 investment trust in the manner provided for mergers
of corporations under the California Corporation Code.
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(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 §
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 by§ 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
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period as may be necessitated by 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
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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 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
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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 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 of any
committee, to fill all vacancies, to designate alternate members to replace
any absent or disqualified member or to dissolve any such committee.
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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 of
ficer 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 the
Trustees in one or more books provided for that purpose; (b) see that all
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<PAGE>
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.
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<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.
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<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
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<PAGE>
procedures provided for indemnification 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.
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<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
PROXY STATEMENT................................................ 4
AVAILABLE INFORMATION ........................................ 5
SUMMARY ...................................................... 6
CERTAIN RISK FACTORS AND OTHER CONSIDERATIONS................... 18
Fundamental Change in Nature of Investment ......................18
Changes in Shareholders' Rights .................................18
Possible Mandatory Redemption of Preferred Shares ...............18
Conflicts of Interest ...........................................18
Control By Chateau ..............................................19
No Fairness Opinion Sought with Respect to Organizational
Amendments ....................................................20
Indebtedness ....................................................20
Risks Related to Removal of Investment Restrictions .............20
Constraints on Growth Opportunities; No Assurance of Available
Capital or Financing ............................................21
Acquisition and Development Risks ...............................21
Environmental Matters ...........................................21
PROPOSAL 1 -- PROPOSED ORGANIZATIONAL AMENDMENTS ................22
Introduction ....................................................22
Background of the Transaction ...................................23
Recommendation of the Trustees ..................................25
Certain Alternatives ............................................27
TRANSACTIONS AND CHANGES TO BE EFFECTED UPON APPROVAL OF
PROPOSAL 1 ....................................................29
Additional Chateau Investment ...................................29
Organization of UPREIT; Contribution Transaction ................29
Implementation of Business Plan; Growth Strategy ................29
Future Listing of Common Shares on Exchange; Redemption of
Preferred Shares ................................................30
COMPARISON OF PRINCIPAL TERMS OF EXISTING DECLARATION
OF TRUST AND AMENDED DECLARATION AND BY-LAWS ....................31
Organization ....................................................31
Length of Investment ............................................31
Voting Rights ...................................................31
Distributions; Liquidating Proceeds .............................32
Issuance of Additional Securities ...............................33
Redemption and Conversion Rights ................................33
Investment Restrictions .........................................34
Limitations on Borrowing; Debt ..................................34
Management Control ..............................................35
Engagement of Advisor ...........................................35
Antitakeover Provisions .........................................35
Transactions with Affiliates ....................................36
Limitation on Total Operating Expenses ..........................36
Ownership Limitations ...........................................36
PROPOSAL 2: ANNUAL ELECTION OF TRUSTEES ........................38
Election of Trustees ............................................38
Board of Trustees ...............................................38
Committees of the Board .........................................39
Advisor .........................................................39
Share Ownership of Directors, Executive Officers and Certain
Shareholders ....................................................39
Section 16(a) Beneficial Ownership Reporting Compliance .........39
Independent Trustees Compensation ...............................40
Executive Compensation ..........................................40
Related Party Compensation and Expense Reimbursement ............40
VOTING PROCEDURES AND MISCELLANEOUS MATTERS .....................40
The Annual Meeting ..............................................40
Change in Accountants ...........................................40
Solicitation of Proxies; Administrative Agent ...................40
Record Date; Vote Required ......................................40
No Dissenters' or Appraisal Rights ..............................41
Voting Procedures and Powers ....................................41
Completion Instructions .........................................42
Withdrawal or Change of Vote ....................................42
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .................42
Appendix A -- AMENDED AND RESTATED DECLARATION OF TRUSTA-1
Appendix B -- BY-LAWS OF THE TRUSTB-1
i
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 July __, 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.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
* FOLD AND DETACH HERE *
...............................................................................
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF WINDSOR REAL ESTATE INVESTMENT TRUST 8 PLEASE MARK <CHECKED BOX>
YOUR VOTE AS
INDICATED IN
THE EXAMPLE
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. PROPOSAL TO AMEND AND 2. ELECTION OF TRUSTEES NOMINEES: GARY P. MCDANIEL, KENNETH G.
RESTATE THE TRUST'S PINDER, RICHARD B. RAY
DECLARATION OF TRUST, PLEASE FILL OUT A OR B below
ADOPT BY-LAWS FOR THE TRUST --
A. REGULAR VOTING
<S> <C> <C> <C> <C> <C> <C> <C>
FOR INSTRUCTION TO WITHHOLD AUTHORITY TO
ALL NOMINEES WITHHOLD VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
LISTED AUTHORITY THE NAME(S) OF SUCH NOMINEE(S) BELOW)
(except as FOR ALL
FOR AGAINST ABSTAIN listed to right) NOMINEES -------------------------------------
-------------------------------------
<square> <square> <square> <square> <square>
B. CUMULATIVE VOTING OPTION
The undersigned acknowledges receipt Please allocate available votes among candidates (see below for details):
of the Notice of Annual Meeting and Proxy
Statement relating to the 1998 Annual
Meeting of Shareholders. ____________________ Gary P. McDaniel
____________________ Kenneth G. Pinder
____________________ Richard B. Ray
PLEASE SIGN, DATE AND RETURN YOUR Instructions for Cumulative Voting. Each Shareholder selecting the Cumulative
PROXY PROMPTLY IN THE POSTAGE Voting Option is entitled to 3 votes per Share held, which are to be
PREPAID ENVELOPE PROVIDED. 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>
NG119171.2
