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. )
Filed by the registrant <CHECKED-BOX>
Filed by a party other than the registrant / /
Check the appropriate box:
<CHECKED-BOX> Preliminary proxy statement
/ / Confidential, For Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
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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.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to which transaction applies:
- ---------------------------------------------------------------------------
(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:<F1>
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<F1>Set forth the amount on which the filing fee is calculated and state how
it was determined.
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WINDSOR REAL ESTATE INVESTMENT TRUST 8
6430 South Quebec Street
Englewood, CO 80111
NOTICE OF ANNUAL MEETING
May __, 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 June __, 1998 at 6430 South Quebec Street,
Englewood, CO 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
FAIR TO, AND IN THE BEST INTERESTS OF, THE TRUST AND ITS SHAREHOLDERS. THE
BOARD HAS UNANIMOUSLY APPROVED THE ORGANIZATIONAL AMENDMENTS AND RECOMMENDS
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THAT YOU 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
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE __, 1998
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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 June __, 1998 at 6430 South Quebec
Street, Englewood, CO 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
May __, 1998
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WINDSOR REAL ESTATE INVESTMENT TRUST 8
PROXY STATEMENT
This Proxy Statement is being furnished to the holders 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 (the
"Shareholders"), 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, CO 80111, on June __,
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" and/or "Proposal 2."
This Proxy Statement and the accompanying forms of proxy are first being
mailed to the respective Shareholders of the Trust on or about May __, 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 JUNE __, 1998.
This Proxy Statement is dated May __, 1998.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE THE
SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN SUCH JURISDICTION.
NEITHER THE PROPOSALS NOR THIS PROXY STATEMENT HAVE BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THE PROPOSALS OR
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUST OR THE TRUSTEES.
AVAILABLE INFORMATION
The Trust is subject to certain informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission at 7 World Trade Center, New York, New York
10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Commission maintains a site on the Internet at http://www.sec.gov that
contains reports, proxy and other information statements and other information
regarding registrants that file electronically with the Commission.
Statements contained herein concerning the provisions of documents are
summaries of such documents, and each statement is qualified in its entirety
by reference to the copy of the applicable document if attached as an appendix
hereto.
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SUMMARY
The following summarizes certain information contained elsewhere in this
Proxy Statement. This summary is not intended to be complete, and is
qualified in its entirety by reference to the more detailed information
contained elsewhere herein.
ORGANIZATIONAL AMENDMENTS
Proposal 1 is the approval of (a) the amendment of the Declaration of
Trust of the Trust (the "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 (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 "By-laws").
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 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 and (ii) limit the nature and types of investments that the Trust
may make. 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 Declaration of Trust and Amended Declaration and By-laws,"
for additional information concerning the Organizational Amendments.
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 be identical to 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 upon receipt of any Redemption Notice, 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. See "Comparison of Principal Terms of Declaration of Trust and Amended
Declaration and By-laws" for additional information.
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, 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 as described herein under
"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, as
described herein under "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 in the near to mid-term, 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. Chateau is also the sole shareholder of The Windsor
Corporation, the Trust's advisor. They together currently own 19,339 Common
Shares and 984 Preferred Shares representing in the aggregate a 9.8% equity
interest in the Trust
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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.
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 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 that are likely to have fewer
amenities, different locational requirements 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.
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 this Proposal. 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 herein under "RISK
FACTORS".
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 SHAREHOLDERS' INVESTMENT IN THE TRUST
The Organizational Amendments, if approved, and the changes that are
expected to be effected following any such approval, will operate to change
fundamentally the nature of the investment of the Common Shareholders and
Preferred Shareholders in the Trust, and the rights of the Common Shareholders
and Preferred Shareholders and the rights and obligations of the Trust will
differ from those existing and provided for under the Declaration of Trust.
The Trust was originally formed with certain characteristics, including (i) a
finite life, (ii) limited use of leverage, (iii) portfolio liquidation over
time, and (iv) limited, if any, potential for growth. By contrast, under the
Amended Declaration and By-laws the Trust will have (i) an infinite life, (ii)
enhanced financial flexibility, (iii) substantial use of leverage, (iv) no
specific intention to sell or liquidate some or all of its assets, over time,
or at a given point of time, and (v) a growth-oriented business plan. While
the Trustees believe that the above described changes, and other changes that
may be made or effected following the approval of the Organizational
Amendments, are likely to be beneficial to Shareholders, such changes are also
likely to increase the risks associated with such investment.
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 acquisition 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 companies, 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. 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
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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.
INDEBTEDNESS -- RISK OF FORECLOSURE
Under the 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. Neither the Amended
Declaration nor the By-laws limit the amount of indebtedness that the Trust
may incur. The Trust's incurrence of additional indebtedness 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 become 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 such properties at times which may not permit realization of
the maximum return on such investments.
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.
CONFLICTS OF INTEREST
Proposal 1 and the recommendation of certain of the Trustees set forth
herein, could be deemed to involve certain conflicts of interest between
certain of the Trustees, on the one hand, and Shareholders on the other hand,
including the following:
Relationship of The Windsor Corporation to the Trust. The Windsor
Corporation, the advisor to the Trust (the "Advisor"), is a wholly-owned
subsidiary of Chateau. Chateau and the Advisor currently collectively own
19,339 Common Shares and 984 Preferred Shares, representing a combined 9.8%
equity interest in the Trust. Gary P. McDaniel, a Trustee of the Trust, is
also the Chief Executive Officer and a shareholder of Chateau. See "Future
Control by Principal Stockholders" below for additional details relating to
Chateau's ownership of Shares and its potential to control the Trust.
Pursuant to the Advisory Agreement dated January 30, 1992 (as amended),
between the Advisor and the Trust (the "Advisory Agreement"), the Advisor is
entitled to the following fees: (i) annual subordinated advisory fees of up
to 1% of invested assets, and .05% 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
of the Trust properties equal to 15% of cash remaining from the liquidation of
the Trust 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
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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.
Potential Future Conflicts of Interest. Chateau is the largest
publicly-held real estate investment trust 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. While there are differences in the type and nature of manufactured
home community acquisitions expected to be pursued in the future by Chateau,
and the Trust, respectively, 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.
FUTURE CONTROL BY PRINCIPAL SHAREHOLDERS
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 it is
expected 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, which would give it an
aggregate 45% equity ownership interest in the Trust. With limited
exceptions, under the Amended Declaration, matters voted on by the
Shareholders (including the Election of Trustees) are voted on by the holders
of the Common Shares and Preferred Shares, voting as a single class.
Accordingly, assuming Chateau makes the additional above described investment,
Chateau will have substantial influence over the affairs of the Trust, and
will have the power, with limited support from the other Shareholders, to
approve or block most actions requiring the approval of the Shareholders of
the Trust, including the sale of all assets of the Trust and other
extraordinary actions.
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 of beneficial interest of the
Trust. 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.
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PROPOSAL 1 -- PROPOSED ORGANIZATIONAL AMENDMENTS
Proposal 1 involves 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 the Trust (the "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. 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 Declaration of Trust that are not
typically found in 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 of securities that the Trust may issue,
and (ii) limit the nature and types of investments that the Trust may make
(hereinafter "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 Declaration of Trust and Amended Declaration and By-laws," for
additional information concerning the Organizational Amendments.
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 be identical to 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 may redeem
such 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 allocable to such Preferred Share, which as of
December 31, 1997 was $26.82, and (iii) each holder of Preferred Shares shall
have the right, which becomes exercisable upon receipt of any Redemption
Notice, 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"). See "Comparison of
Principal Terms of Declaration of Trust and Amended Declaration and By-laws".
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.
The Trustees believe that the principal benefit that will accrue to the
Trust and the Shareholders as a result of the adoption of the Amended
Declaration and By-laws is that the new structure will enhance Shareholder
value by positioning the Trust for additional growth through a more flexible
organizational and capital structure.
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 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 capital available
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.
If Proposal 1 is approved by 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, is expected to purchase at
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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; (ii) the Trust will form the Operating Partnership in
order to facilitate tax-free and/or tax-deferred acquisitions of additional
properties, as described herein under "Organization of UPREIT; Contribution
Transaction"; (iii) the Trust will begin implementing a growth-oriented
Business Plan designed 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 near to mid-term, 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. Chateau and Windsor currently collectively own
19,339 Common Shares and 984 Preferred Shares, representing in the aggregate a
9.8% equity interest in the Trust and is also the sole shareholder of the
Advisor. See "Transactions and Changes to be Effected Upon Approval of
Proposal 1" below.
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 this Proposal.
Under the Declaration of Trust, Proposal 1 requires the approval of the
holders of a majority of the issued and outstanding Common Shares and
Preferred Shares, each voting as a separate class. See "Voting Procedures and
Miscellaneous Matters" below.
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TRANSACTIONS AND CHANGES TO BE EFFECTED UPON APPROVAL OF PROPOSAL 1
ADDITIONAL CHATEAU INVESTMENT
Effective May 11, 1998, Chateau completed its approximate $5.7 million
investment, in the Trust consisting of a purchase of 19,139 Common Shares (at
a price of $25 per Share) and the receipt by Chateau of two promissory notes
of the Trust, one secured by a mortgage on the Trust's properties and one
unsecured (together, the "Promissory Notes") in the principal aggregate amount
of approximately $5.2 million (the "Original Chateau Investment").
Chateau expects that, upon approval of Proposal 1, 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, (the "Additional Chateau Investment"). Any purchase
price will be paid through the first cancellation of all or a portion of the
indebtedness due under the Promissory Notes with the balance, if any, in cash.
The terms of the Original Chateau Investment have been, and of the
Additional Chateau Investment (together, the "Chateau Investments") will be,
approved by the Independent Trustees of the Trust. The purchase price for the
Common Shares issued in connection with the Original Chateau Investment was
based upon what the Independent Trustees believe to be the fair market value
of such Shares. 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 partner 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; FUTURE LISTING OF COMMON
SHARES ON EXCHANGE
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 not incur additional indebtedness if doing so would
result in total indebtedness of the Trust exceeding total of 80% of the value
of the Trust's assets.
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
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will focus primarily on lower profile assets that are likely to have fewer
amenities, different locational requirements 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.
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 mid-term. There can be no assurance the Trust will be successful
in this regard.
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COMPARISON OF PRINCIPAL TERMS OF DECLARATION OF TRUST AND AMENDED DECLARATION
AND BY-LAWS
Set forth below is a comparison of the principal terms of the 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 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.
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 Declaration of Trust.
The Trust would become, under the Amended Declaration, a perpetual 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
Each Common Share and each Preferred Share is entitled 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 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 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 Declaration of Trust, (iii) approval or
disapproval of contracts with Affiliates, (iv) removal of any or all Trustees,
or their Affiliates, (v) dissolution of the Trust, (vi) removal of the Advisor
or its Affiliates, or (vii) regarding any transaction between the Trust and
any of the Advisors, the Trustees or their Affiliates.
The Voting Restrictions contained in the 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; LIQUIDATION PREFERENCES
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 among the Preferred Shares and the
Common Shares as a single class 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
Under the Amended Declaration of Trust distributions from all sources will be
declared by the Trustees in accordance with the distribution provisions of the
Declaration of Trust that currently relate to operational distribution.
The Amended Declaration will not differentiate between operational
distributions and distributions of cash from sales or refinancing of
properties.
The Amended Declaration of Trust does not mandate the distribution of proceeds
from sales of refinancing of properties to Shareholders from whatever source
will be made in accordance with the provisions of the Declaration of Trust
relating to distribution of cash from operations.
DISTRIBUTIONS OF CASH FROM SALE OR REFINANCING OF PROPERTIES.
The Declaration of Trust requires that all proceeds from the sale or
refinancing of properties be promptly distributed following any such sale or
refinancing. 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
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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.
DISTRIBUTIONS OF PROCEEDS FROM A LIQUIDATION AND WINDING-UP OF THE TRUST.
Upon a liquidation of the Trust's properties and a winding-up of the Trust,
the distribution of proceeds would be the same as set forth under
"Distributions of Cash From Sale or Financing of Properties" above.
DISTRIBUTIONS OF PROCEEDS FROM A LIQUIDATION AND WINDING-UP OF THE TRUST.
Provisions in the Amended Declaration relating to the distribution of proceeds
from a liquidation and winding up of the Trust remain the same as in the
Declaration of Trust.
ISSUANCE OF ADDITIONAL SECURITIES
The 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 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
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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 upon receipt of any Redemption Notice, to
convert each Preferred Share held by such holder into one Common Share, any
time prior to the Redemption Date, by the delivery of notice of such exercise
to the Trust (the "Conversion Right").
Had the Redemption Right been exercisable on December 31, 1997, the Purchase
Price for the Preferred Shares on such date would have been $26.82 per share.
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INVESTMENT RESTRICTIONS
The Declaration of Trust provides that the Trust will not engage in any of the
following investment practices or activities: (1) invest in commodities or
commodity future contracts; (2) invest more than 10% of its total assets in
unimproved real property or indebtedness secured by a deed of trust or
mortgage loan on unimproved real property; (3) invest in or make mortgage
loans; (4) invest in contracts for the sale of real estate; (5) engage in any
short sale; (6) acquire securities in any company holding investments or
engaging in activities prohibited by these restrictions; or (7) invest in the
equity securities of any non-governmental issuer, including other real estate
investment trusts or limited partnerships for a period in excess of 18 months.
The Amended Declaration does not contain any restriction on the nature or type
of investments that the Trust may make. The nature and types of investments
that the Trust may make are limited only by the requirements and restrictions
relating to the Trust's maintaining its status as a REIT.
LIMITATIONS ON BORROWING; DEBT
Under the 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 not to incur additional indebtedness if doing so
would result in total indebtedness of the Trust exceeding 80% of the value of
its assets.
MANAGEMENT CONTROL
The Trustees are, subject to certain narrow limitations, vested with all
management authority to conduct the business of the Trust, including authority
and responsibility for overseeing all executive, supervisory and
administrative services rendered to the Trust. The Trustees are not
classified, and are elected by the Shareholders annually.
The Board of Trustees will continue to direct the management of the Trust's
business and affairs. The Trustees are not classified, and will continue to
be elected by Shareholders annually.
ENGAGEMENT OF ADVISOR
The Trust is an externally advised REIT. The Windsor Corporation has been the
advisor to the Trust since the Trust's formation. The current relationship
between the Trust and the Advisor is governed by the Advisory Agreement.
Under the 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.
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ANTITAKEOVER PROVISIONS
The 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 Declaration of Trust also includes NASAA's Real Estate Investment Trust
Guideline provisions regarding Roll-Ups. These provisions which are set forth
in Article XIX of the 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.
While there are no provisions specifically relating to roll-up transactions,
the Amended Declaration and By-laws do provide for the following, among
others, (i) the authorization of the Board to issue shares of beneficial
interest that may be classified and issued as a variety of equity securities
in the discretion of the Board of 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 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 any 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 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.
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, or, if any
Independent Trustee has an actual or potential conflict, the disinterested
Trustees of the Trust, as the case may be. Transactions with Chateau and any
of its affiliates (including the Advisor) are required to be approved by a
majority of the Independent Trustees. There are no other restrictions or
limitations in the Amended Declaration or By-laws with respect to such
"affiliate" or "interested director" transactions.
LIMITATION ON TOTAL OPERATING EXPENSES
The Declaration of Trust provides that, subject to the conditions described in
the following paragraph, the Total Operating Expenses of the Trust shall not
exceed in any fiscal year the greater of 2% of the Average Invested Assets of
the Trust during such fiscal year of 25% of the Trust's Net Income during such
fiscal year.
There are no limitations in the Amended Declaration or By-laws on the total
operating expenses of the Trust.
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OWNERSHIP LIMITATIONS
Under the Declaration of Trust no entity or individual may own more than 9.8%
of the outstanding Shares. The Trustees may refuse to permit any transfer of
Shares which would violate the 9.8% ownership limit, and may redeem Shares,
subject to certain requirements, in order to remedy any violation of the 9.8%
ownership limit.
Subject to certain exceptions, the Amended Declaration provides that no holder
may own, or be deemed to own by virtue of the attribution provisions of the
Code, more than (i) 9.8% of the lesser of the number or value of Shares
outstanding or (ii) 9.8% of the lesser of the number or value of the issued
and outstanding preferred shares of any class or series of the Trust (the
"Ownership Limit"). Chateau currently owns a 9.8% ownership interest in the
Trust. Under the Amended Declaration, Chateau is excluded from the Ownership
Limit in order to enable Chateau to make the Additional Chateau Investment,
which will allow the Trust to begin promptly its implementation of the
Business Plan. The Board of 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
Board of 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.
Kenneth G. Pinder and Richard B. Ray are currently the Trust's
Independent Trustees. On April 8th, 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 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 for 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 on 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 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
mobile 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. He was also elected to the Executive
Committee of the Board.
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BOARD OF TRUSTEES
The business and affairs of the Trust are managed under the direction of
the Board of Trustees. Members of the Board keep informed of the Trust's
business and activities by reports and proposals sent to them in advance 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 AND EXECUTIVE OFFICERS
Chateau and the Advisor currently beneficially own, in the aggregate,
19,339 Common Shares and 984 Preferred Shares, representing a combined 9.8%
equity interest in the Trust. Other than these Shares, no Trustee or
executive officer owns Trust shares either of record or beneficially, directly
or indirectly, as of May __, 1998. 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.
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.
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 services incurred by the Advisor.
24
<PAGE>
Advisory Fee. Under the terms of the Advisory Agreement, the Advisor
earned advisory fees from the Trust in the amount of $54,500 in 1997. None of
this fee was paid to the Advisor. This fee is being deferred by the Advisor,
without interest, for payment at a later date. As of December 31, 1997 the
Trust owed the Advisor $112,600 for deferred payments under the terms of 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, CO 80111 on June __, 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
10-KSB for the period ended December 31, 1997, which was transmitted to you
simultaneously with this Proxy Statement.
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"), administer
the delivery of information to the Shareholders and 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
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 to one vote on all matters
submitted to a vote of Shareholders. With certain limited exceptions, none of
which will be considered at this Annual Meeting, Common shares and Preferred
Shares vote as one class.
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.
Under the 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.
25
<PAGE>
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 of each class 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. The candidates
receiving the highest number of votes up to the number of Trustees to be
elected shall be elected.
Under the 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) 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 on the Organizational Amendments, and the
election of the Independent Trustees, and (ii) For the election of Gary P.
McDaniel as a Trustee.
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 will vote as instructed by a
Shareholder with respect to the Proposals and will have authority, as a result
of holding such Proxy, to vote in their discretion as to procedural matters
relating to the Annual Meeting including, without limitation, with respect to
the adjournment of the Annual Meeting from time to time.
Any Shareholder who fails to vote or "abstains" will be deemed to have
voted "against" the Proposals. A Shareholder who submits a signed Proxy but
fails to indicate any vote on a question presented on the Proxy will be deemed
to have voted "for" the question not voted upon.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal (if permitted) of the Proxies will be
determined by the Trustees, whose determination will be final and binding.
The Trust reserves the right to reject any or all Proxies that are not in
proper form or the acceptance of which, in the opinion of counsel, would be
unlawful. The Trust also reserves the right to waive any irregularities or
conditions of the Proxy. Unless waived, any irregularities in connection with
the Proxies must be cured within such time as the Trust shall determine. The
Trust shall not be under any duty to give notification of defects in such
Proxies nor shall it incur liabilities for failure to give such notification.
The delivery of the Proxies will not be deemed to have been made until such
irregularities have been cured or waived.
COMPLETION INSTRUCTIONS
Each Shareholder is requested to complete and execute the Proxy in
accordance with the instructions contained therein. For the Proxy to be
effective, each Shareholder must deliver its Proxy at any time prior to the
Annual Meeting or any adjournment thereof to:
Arlen Capital, LLC
1650 Hotel Circle North
Suite 200
San Diego, CA 92108
Attention: Mr. Lynn Wells
Telephone:
A self-addressed envelope for return of the Proxy has been included with this
26
<PAGE>
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
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.
27
<PAGE>
Appendix A
AMENDED AND RESTATED DECLARATION OF TRUST
28
<PAGE>
Appendix B
BY-LAWS OF THE TRUST
B-1
<PAGE>
TABLE OF CONTENTS
Page
PROXY STATEMENT 4
AVAILABLE INFORMATION 5
SUMMARY 6
CERTAIN RISK FACTORS AND OTHER CONSIDERATIONS 8
Fundamental Change in Nature of Shareholders' Investment in the Trust 8
Constraints on Growth Opportunities; No Assurance of Available Capital or
Financing 8
Acquisition and Development Risks 8
Mortgage Indebtedness -- Risk of Foreclosure 9
Environmental Matters 9
Conflicts of Interest 9
Future Control by Principal Shareholders 10
PROPOSAL 1 -- PROPOSED ORGANIZATIONAL AMENDMENTS 11
TRANSACTIONS AND CHANGES TO BE EFFECTED UPON APPROVAL OF PROPOSAL 1 13
Additional Chateau Investment 13
Organization of UPREIT; Contribution Transaction 13
Implementation of Business Plan; Growth Strategy; Future Listing of Common
Shares on Exchange 13
COMPARISON OF PRINCIPAL TERMS OF DECLARATION OF TRUST AND AMENDED DECLARATION
AND BY-LAWS 15
Organization 15
Length of Investment 15
Voting Rights 15
Distributions; Liquidation Preferences 16
Issuance of Additional Securities 17
Redemption and Conversion Rights 17
Investment Restrictions 19
Limitations on Borrowing; Debt 19
Management Control 19
Engagement of Advisor 19
Antitakeover Provisions 20
Transactions with Affiliates 21
Limitation on Total Operating Expenses 21
Ownership Limitations 22
PROPOSAL 2: ANNUAL ELECTION OF TRUSTEES 23
Election of Trustees 23
Board of Trustees 24
Committees of the Board 24
Advisor 24
Share Ownership of Directors and Executive Officers 24
Independent Trustees Compensation 24
Executive Compensation 24
Related Party Compensation and Expense Reimbursement 24
VOTING PROCEDURES AND MISCELLANEOUS MATTERS 25
The Annual Meeting 25
Change in Accountants 25
Solicitation of Proxies, Administrative Agent 25
Record Date; Vote Required 25
Voting Procedures and Powers 26
Completion Instructions 26
Withdrawal or Change of Vote 27
Appendix A 28
AMENDED AND RESTATED DECLARATION OF TRUSTS 28
Appendix B B-1
BY-LAWS OF THE TRUST B-1
<PAGE>
PROXY CARD
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 June , 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.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
* FOLD AND DETACH HERE *
...............................................................................
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF WINDSOR REAL ESTATE INVESTMENT TRUST 8 PLEASE MARK
YOUR VOTE
AS
INDICATED
IN
THE EXAMPLE X
<TABLE>
<CAPTION>
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, AND PLEASE FILL OUT A OR B BELOW
ADOPT BY-LAWS FOR THE TRUST
A. REGULAR VOTING
<S> <C> <C> <C> <C> <C>
FOR (INSTRUCTION TO WITHHOLD AUTHORITY TO VOTE
ALL NOMINEES WITHHOLD FOR ANY INDIVIDUAL NOMINEE WRITE THE NAME(S)
LISTED AUTHORITY 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
Each of the above-named proxies present at
said meeting either in person or by substitute, shall Please allocate available votes among candidates (see below for details):
have and exercise all the powers of said proxies
hereunder. This proxy shall be voted in accordance ________________________ Gary P. McDaniel
with the choices specified by the undersigned on
this proxy. IF NO INSTRUCTIONS TO THE ________________________ Kenneth G. Pinder
CONTRARY ARE INDICTED HEREON THIS PROXY
WILL BE TREATED AS A GRANT OF AUTHORITY ________________________ Richard B. Ray
TO VOTE FOR THE ELECTION OF TEH NOMINEES
FOR THE BOARD OF TRUSTEES NAMED ABOVE
AND AS A GRANT OF AUTHORITY TO VOTE FOR
THE PROPOSALS STATED ABOVE AND ON ANY Instructions for Cumulative Voting. Each Shareholder selecting the
OTHER MATTER TO BE VOTED UPON. Cumulative Voting Option is entitled to 3 votes per Share held, which
are to be allocated among the nominees above, in the Shareholder's
discretion.
The undersigned acknowledges receipt of PLEASE SIGN, DATE AND RETURN
the Notice of Annual Meeting and Proxy YOUR PROXY PROMPTLY IN THE
Statement relating to the 1998 Annual POSTAGE PREPAID ENVELOPE
Meeting of Shareholders. PROVIDED.
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>
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 1
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 2
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 3
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.
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.
<PAGE>
In furtherance of the foregoing, to the extent the same is
permitted under California and federal law, the Trust shall have the power
to:
(a) have perpetual existence unaffected by any rule against
perpetuities;
(b) sue, be sued, complain, and defend in all courts;
(c) transact its business, carry on its operations, and exercise
the powers granted by this article in any state, territory district, or
possession of the United States and in any foreign country;
(d) make contracts, incur liabilities, and borrow money;
(e) sell, mortgage, lease, pledge, exchange, convey, transfer,
and otherwise dispose of all or any part of its assets;
(f) issue bonds, notes, and other obligations and secure them by
mortgage or deed of trust of all or any part of its assets;
(g) acquire by purchase or in any other manner and take,
receive, own, hold, use, employ, improve, encumber, and otherwise deal with
any interest in real and personal property, wherever located;
(h) purchase, take, receive, subscribe for, or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, loan, pledge, or
otherwise dispose of and deal in and with:
(i) securities, shares, and other interests in any
obligations of domestic and foreign corporations, other real estate
investment trusts, associations, partnerships, and individuals; and
(ii) direct and indirect obligations of the United
States, any other government, state, territory, government district,
and municipality, and any instrumentality of them;
(i) elect or appoint trustees, officers, and agents of the Trust
for the period of time this declaration of trust or the Trust's bylaws
provide, define their duties, and determine their compensation;
(j) adopt and implement employee and officer benefit plans;
(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;
2
<PAGE>
(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 4
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 5
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
3
<PAGE>
Trustees included in the Declaration of Trust or in the Bylaws shall in no
way be limited or restricted by reference to or inference from the terms of
this or any other provision of the Declaration of Trust or the Bylaws or
construed or deemed by inference or otherwise in any manner to exclude or
limit the powers conferred upon the Board or the Trustees under the general
laws of the State of California or any other applicable laws.
The Board, without any action by the shareholders of the Trust,
shall have and may exercise, on behalf of the Trust, without limitation,
the power to determine that compliance with any restriction or limitations
on ownership and transfers of shares of the Trust's beneficial interest set
forth in Article VII of the Declaration of Trust is no longer required in
order for the Trust to qualify as a REIT; to adopt Bylaws of the Trust,
which may thereafter be amended or repealed as provided therein; to elect
officers in the manner prescribed in the Bylaws; to solicit proxies from
holders of shares of beneficial interest of the Trust; and to do any other
acts and deliver any other documents necessary or appropriate to the
foregoing powers.
Section 5.2 Number. The number of Trustees (hereinafter the
"Trustees") shall initially be three, and shall not be decreased, but may
be increased to a maximum of [fifteen] pursuant to the Bylaws of the Trust.
Notwithstanding the foregoing, if for any reason any or all of the Trustees
cease to be Trustees, such event shall not terminate the Trust or affect
the Declaration of Trust or the powers of the remaining Trustees. The
Trustees shall be elected by the shareholders at every annual meeting
thereof in the manner provided in the Bylaws or, in order to fill any
vacancy on the Board of Trustees, in the manner provided in the Bylaws.
The names and addresses of the initial three Trustees, who shall serve
until the first annual meeting of shareholders and until their successors
are duly elected and qualify, or until such later time as determined by the
Board of Trustees as hereinafter provided, are:
NAME ADDRESS
Gary P. McDaniel _________________________
Richard B. Ray _________________________
Kenneth G. Pinder _________________________
The Board of Trustees may at its option increase the number of Trustees and
fill any vacancy, whether resulting from an increase in the number of
Trustees or otherwise, on the Board of Trustees, with the Trustees of each
class to hold office until their successors are duly elected and qualify.
Election of Trustees by shareholders shall require the vote and be in
accordance with the procedures set forth in the Bylaws.
It shall not be necessary to list in the Declaration of Trust the
names and addresses of any Trustees hereinafter elected.
Section 5.3 Independent Trustees. A majority of the trustees
shall be Independent Trustees. As used in this Declaration of Trust
"Independent Trustee" means a Trustee who is not affiliated, directly or
indirectly, with an advisor of the Trust, whether by ownership of,
ownership in, employment by, any material business or professional
relationship 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.
4
<PAGE>
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;
5
<PAGE>
(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 6
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:
(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
6
<PAGE>
exclusive voting power for all purposes shall be vested in the holders
of the Common Shares. Common Shares shall not have cumulative voting
rights or preemptive rights;
(2) Subject to the provisions of law and any preferences of the
Preferred Shares described below or any other class of shares of
beneficial interest hereafter classified or reclassified, dividends or
other distributions, including dividends or other distributions
payable in shares of another class beneficial interest of the Trust,
may be paid ratably on the Common Shares at such time and in such
amounts as the Board of Trustees may deem advisable;
(3) Subject to provisions described below with regard to the
Preferred Shares or any payments due to the Advisor of the Trust
described below, or any other class of shares of beneficial interest
hereafter classified or reclassified having preference on
distributions in the liquidation, in the event of any liquidation,
dissolution or winding up of the Trust, whether voluntary or
involuntary, the holders of the Common Shares shall be entitled,
together with the holders of Excess Shares and any other class of
stock hereafter classified or reclassified not having a preference on
distributions in liquidation, to share ratably in the net assets of
the Trust remaining, after payment or provision for payment of the
debts and other liabilities of the Trust; and
(4) Each Common Share is convertible into Excess Shares as
provided in Article VII.
(c) Upon the effectiveness of this Amended and Restated Declaration
of Trust, each outstanding preferred share, $.01 par value, of beneficial
interest in the Trust shall be exchanged for a new Preferred Share which,
subject to Article VII below, shall have the following preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemptions:
(1) Each Preferred Share shall have one vote and, except as
otherwise required by law, shall vote together with the holders of
Common Shares as a single class on all matters. Preferred Shares
shall not have cumulative voting rights or preemptive rights;
(2) Holders of Preferred Shares shall be entitled to a Preferred
Shares Annual Dividend Preference, fixed annually by the Trustees, of
not less than 6%, nor more than 7%, of $___ per Share. Preferred
Shares shall be paid their Preferred Share Annual Dividend Preference
cumulative (non compounded) each year before (subject to the
provisions in the last sentence of this paragraph) any dividends may
be paid on Common Shares. After the Preferred Share Annual Dividend
Preference has been declared and either paid or funds therefor have
been set aside, then dividends may be declared and paid on Common
Shares non cumulative up to an amount per Common Share that is equal
to the per share amount of the Preferred Share Annual Dividend
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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
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the power to divide or combine the outstanding shares of any class or
series of beneficial interest, without a vote of shareholders.
ARTICLE 7
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
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been the record owner of Shares that the Prohibited Owner would have so
owned.
REIT. The term "REIT" shall mean a real estate investment trust
within the meaning of Section 856 of the Code.
Restriction Termination Date. The term "Restriction Termination
Date" shall mean the first day after the Initial Date on which the Board of
Trustees determines that it is no longer in the best interests of the Trust
to attempt to, or continue to, qualify as a REIT or that compliance with
the restrictions and limitations on Beneficial Ownership, Constructive
Ownership and Transfers of Shares set forth herein is no longer required in
order for the Trust to qualify as a REIT.
Transfer. The term "Transfer" shall mean any issuance, sale,
transfer, gift, assignment, devise or other disposition, as well as any
other event that causes any Person to acquire Beneficial Ownership or
Constructive Ownership, or any agreement to take any such actions or cause
any such events, of Shares or the right to vote or receive dividends on
Shares, including (a) a change in the capital structure of the Trust, (b) a
change in the relationship between two or more Persons which causes a
change in ownership of Shares by application of Section 544 of the Code, as
modified by Section 856(h), (c) the granting or exercise of any option or
warrant (or any disposition of any option or warrant), pledge, security
interest, or similar right to acquire Shares, (d) any disposition of any
securities or rights convertible into or exchangeable for Shares or any
interest in Shares or any exercise of any such conversion or exchange right
and (e) Transfers of interests in other entities that result in changes in
Beneficial or Constructive Ownership of Shares; in each case, whether
voluntary or involuntary, whether owned of record, Constructively Owned or
Beneficially Owned and whether by operation of law or otherwise. (For
purposes of this Article VII, the right of a limited partner in 'N Tandem
Operating Partnership, L.P., a Delaware limited partnership, to require the
partnership to redeem such limited partner's units of partnership interest
pursuant to Section 8.6 of the Agreement of Limited Partnership of 'N
Tandem Operating Partnership, L.P. shall not be considered to be an option
or similar right to acquire Shares of the Trust.) The terms "Transferring"
and "Transferred" shall have the correlative meanings.
Section 7.2 Shares.
Section 7.2.1 Ownership Limitations. During the period
commencing on the Initial Date and prior to the Restriction
Termination Date:
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder,
shall Beneficially Own or Constructively Own Shares in excess of the
Ownership Limit and (2) no Excepted Holder shall Beneficially Own or
Constructively Own Shares in excess of the Excepted Holder Limit for
such Excepted Holder.
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(ii) No Person shall Beneficially or Constructively Own
Shares to the extent that (1) such Beneficial Ownership of Shares
would result in the Trust being "closely held" within the meaning of
Section 856(h) of the Code (without regard to whether the ownership
interest is held during the last half of a taxable year), or (2) such
Beneficial or Constructive Ownership of Shares would result in the
Trust otherwise failing to qualify as a REIT (including, but not
limited to, Constructive Ownership that would result in the Trust
owning (actually or Constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by
the Trust from such tenant would cause the Trust to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code).
(iii) No Person shall Transfer any Shares if, as a
result of the Transfer, the Shares would be beneficially owned by less
than 100 Persons (determined without reference to the rules of
attribution under Section 544 of the Code). Notwithstanding any other
provisions contained herein, any Transfer of Shares (whether or not
such Transfer is the result of a transaction entered into through the
facilities of the NYSE or any other national securities exchange or
automated inter-dealer quotation system) that, if effective, would
result in Shares being beneficially owned by less than 100 Persons
(determined under the principles of Section 856(a)(5) of the Code)
shall be void ab initio, and the intended transferee shall acquire no
rights in such Shares.
(b) Transfer in Trust. If any Transfer of Shares (whether
or not such Transfer is the result of a transaction entered into through
the facilities of the NYSE or any other national securities exchange or
automated inter-dealer quotation system) occurs which, if effective, would
result in any Person Beneficially Owning or Constructively Owning Shares in
violation of Section 7.2.1(a)(i) or (ii),
(i) then that number of Shares the Beneficial or
Constructive Ownership of which otherwise would cause such Person to
violate Section 7.2.1(a)(i) or (ii)(rounded to the nearest whole
share) shall be automatically transferred to a Charitable Trust for
the benefit of a Charitable Beneficiary, as described in Section 7.3,
effective as of the close of business on the Business Day prior to the
date of such Transfer, and such Person shall acquire no rights in such
Shares; or
(ii) if the transfer to the Charitable Trust described
in clause (i) of this sentence would not be effective for any reason
to prevent the violation of Section 7.2.1(a)(i) or (ii), then the
Transfer of that number of Shares that otherwise would cause any
Person to violate Section 7.2.1(a)(i) or (ii) shall be void ab initio,
and the intended transferee shall acquire no rights in such Shares.
Section 7.2.2 Remedies for Breach. If the Board of Trustees or
any duly authorized committee thereof shall at any time determine in good
faith that a Transfer or other event has taken place that results in a
violation of Section 7.2.1 or that a Person intends to acquire or has
attempted to acquire Beneficial or Constructive Ownership of any Shares in
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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.
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.
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Section 7.2.6 Ambiguity. In the case of an ambiguity in the
application of any of the provisions of this Section 7.2, Section 7.3 or
any definition contained in Section 7.1, the 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 Sections 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
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individual for purposes of Section 542(a)(2) of the Code (determined taking
into account Section 856(h)(3)(A) of the Code); (ii) such Person submits to
the Board information satisfactory to the Board, in its reasonable
discretion, demonstrating that no Person who is an individual for purposes
of Section 542(a)(2) of the Code (determined taking into account Section
856(h)(3)(A) of the Code) would be considered to Beneficially Own Shares in
excess of the 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
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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.
(b) Prior to the modification of the Ownership Limit
pursuant to this Section 7.2.8, the Board may require such opinions of
counsel, affidavits, undertakings or agreements as it may deem necessary or
advisable in order to determine or ensure the Trust's status as a REIT if
the modification in the Ownership Limit were to be made.
Section 7.2.9 Legend. Each certificate for Shares shall bear
substantially the following legend:
The shares represented by this certificate are subject
to restrictions on Beneficial and Constructive
Ownership and Transfer for the purpose of the Trust's
maintenance of its status as a Real Estate Investment
Trust (a "REIT") under the Internal Revenue Code of
1986, as amended (the "Code"). Subject to certain
further restrictions and except as expressly provided
in the Trust's Declaration of Trust, and subject to the
exception granted to Chateau Communities Inc., a
Maryland real estate investment trust ("Chateau")
pursuant to Chateau's application for such exception
pursuant to Section 7.2.7 of the Declaration of Trust
(i) no Person may Beneficially or Constructively Own
Common Shares of the Trust in excess of 9.9 percent (in
value or number of shares) of the outstanding Common
Shares of the Trust unless such Person is an Excepted
Holder (in which case the Excepted Holder Limit shall
be applicable); (ii) with respect to any class or
series of Preferred Shares, no Person may Beneficially
or Constructively Own more than 9.9 percent (in value
or number of shares) of the outstanding shares of such
class or series of Preferred Shares of the Trust,
unless such Person is an Excepted Holder (in which case
the Excepted Holder Limit shall be applicable); (iii)
no Person may Beneficially or Constructively Own Shares
that would result in the Trust being "closely held"
under Section 856(h) of the Code or otherwise cause the
Trust to fail to qualify as a REIT; and (iv) no Person
may Transfer Shares if such Transfer would result in
Shares of the Trust being owned by fewer than 100
Persons. Any Person who Beneficially or Constructively
Owns or attempts to Beneficially or Constructively Own
Shares which cause or will cause a Person to
Beneficially or Constructively Own Shares in excess or
in violation of the above limitations must immediately
notify the Trust. If any of the restrictions on
transfer or ownership are violated, the Shares
represented hereby will be automatically transferred to
a Charitable Trustee of a Charitable Trust for the
benefit of one or more Charitable beneficiaries. In
addition, upon the occurrence of certain events,
attempted Transfers in violation of the restrictions
described above may be void ab initio. A Person who
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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
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shall be paid when due to the Charitable Trustee. Any dividends or
distributions so paid over to the Charitable Trustee shall be held in trust
for the Charitable Beneficiary. The Prohibited Owner shall have no voting
rights with respect to Shares held in the Charitable Trust and, subject to
Maryland law, effective as of the date that Shares have been transferred to
the Charitable Trustee, the Charitable Trustee shall have the authority (at
the Charitable Trustee's sole discretion) (i) to rescind as void any vote
cast by a Prohibited Owner prior to the discovery by the Trust that Shares
have been transferred to the Charitable Trustee and (ii) to recast such
vote in accordance with the desires of the Charitable Trustee acting for
the benefit of the 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
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Trustee from the sale or other disposition of the Shares held in the
Charitable Trust. Any net sales proceeds in excess of the amount payable
to the Prohibited Owner shall be immediately paid to the Charitable
Beneficiary. If, prior to the discovery by the Trust that Shares have been
transferred to the Charitable Trustee, such Shares are sold by a Prohibited
Owner, then (i) such Shares shall be deemed to have been sold on behalf of
the Charitable Trust and (ii) to the extent that the Prohibited Owner
received an amount for such Shares that exceeds the amount that such
Prohibited Owner was entitled to receive pursuant to this Section 7.3.5,
such excess shall be paid to the Charitable Trustee upon demand. The
Charitable Trustee shall have the right and power (but not the obligation)
to offer any Equity Share held in trust for sale to the Trust on such terms
and conditions as the Charitable Trustee shall deem appropriate.
Section 7.3.6 Purchase Right in Shares Transferred to the
Charitable Trustee. Shares transferred to the Charitable Trustee shall be
deemed to have been offered for sale to the Trust, or its designee, at a
price per share equal to the lesser of (i) the price per share in the
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 8
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,
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if required, and for the transaction of any other business within the
powers of the Trust. Except as otherwise provided in the Declaration of
Trust, special meetings of shareholders may be called in the manner
provided in the Bylaws. If there are no Trustees, the officers of the
Trust shall promptly call a special meeting of the shareholders entitled to
vote for the election of successor Trustees. Any meeting may be adjourned
and reconvened as the Trustees determine or as provided in the Bylaws.
Section 8.2 Voting Rights. Subject to the provisions of any
class or series of Shares then outstanding, the shareholders shall be
entitled to vote only on the following matters: (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.
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ARTICLE 9
LIABILITY LIMITATION, INDEMNIFICATION
AND TRANSACTIONS WITH THE TRUST
Section 9.1 Limitation of Shareholder Liability. No shareholder
shall be liable for any debt, claim, demand, judgment or obligation of any
kind of, against or with respect to the Trust by reason of his being a
shareholder, nor shall any shareholder be subject to any 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
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Declaration of Trust or adopted by the Trustees in the Bylaws or by
resolution, the Trust may enter into any contract or transaction of any
kind with any person, including any Trustee, officer, employee or agent of
the Trust or any person affiliated with a Trustee, officer, employee or
agent of the Trust, whether or not any of them has a financial interest in
such transaction.
Section 9.5 Express Exculpatory Clauses in Instruments. The
Board of Trustees shall cause to be inserted in every written agreement,
undertaking or obligation made or issued on behalf of the Trust, an
appropriate provision to the effect that neither the Shareholders nor the
Trustees, officers, employees or agents of the Trust shall be liable under
any written 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 10
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.
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ARTICLE 11
MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY
Section 11.1 Subject to the provisions of any class or series of
Shares at the time outstanding, the Trust shall have the power to engage in
any merger or consolidation or other business combination or other
extraordinary transaction permitted under the California REIT Statute
including without limitation (a) a merger of the Trust with or into another
entity, (b) the consolidation of the Trust with one or more other entities
into a new entity or otherwise, or (c) the sale, lease, exchange or other
transfer of all or substantially all of the property of the Trust. Any
such action must be approved by the Board of Trustees and, after notice to
all shareholders 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 12
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
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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.
ARTICLE 13
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.
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(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.
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.
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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.
(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
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(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.
(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
<section> 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<section> 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;
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(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.
(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
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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.
(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.
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(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.
(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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N' TANDEM TRUST
BY-LAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of N' Tandem
Trust, a California business trust (the "Trust") shall be located at such
place or places as the Trustees may designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional
offices at such places as the Trustees may from time to time determine or the
business of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at
the principal office of the Trust or at such other place within the United
States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders
for the election of Trustees and the transaction of any business within the
powers of the Trust shall be held during the month of May of each year, after
the delivery of the annual report referred to in Section 12 of this Article
II, at a convenient location and on proper notice, on a date and at the time
set by the Trustees. Failure to hold an annual meeting shall not invalidate
the Trust's existence or affect any otherwise valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The chairman of the board or the
president or one-third of the Trustees may call special meetings of the
shareholders. Special meetings of shareholders shall also be called by the
secretary upon the written request of the holders of shares entitled to cast
not less than twenty-five percent (25%) of all the votes entitled to be cast
at such meeting. Such request shall state the purpose of such meeting and the
matters proposed to be acted on at such meeting. Within ten (10) days of the
receipt of such a request, the secretary shall inform such shareholders of the
reasonably estimated cost of preparing and mailing notice of the meeting
(including all proxy materials that may be required in connection therewith)
and, upon payment by such shareholders to the Trust of such costs, the
secretary shall, within thirty (30) days of such payment, or such longer
period as may be necessitated by compliance with any applicable statutory or
<PAGE>
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
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the Trust's notice of meeting, if the shareholder's notice containing the
information required by paragraph (a) (2) of this Section 13 shall be
delivered to the Secretary at the principal executive offices of the Trust not
earlier than the close of business on the 90th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special 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
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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.
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
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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.
(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.
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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.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust shall
include a president, a secretary and a treasurer and may include a chairman of
the board, a vice chairman of the board, a chief executive officer, a chief
operating officer, a chief financial officer, a chief legal counsel, one or
more vice presidents, one or more assistant secretaries and one or more
assistant treasurers. In addition, the Trustees may from time to time appoint
such other officers with such powers and duties as they shall deem necessary
or desirable. The officers of the Trust shall be elected annually by the
Trustees at the first meeting of the Trustees held after each annual meeting
of shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient.
Each officer shall hold office until his successor is elected and qualifies or
until his death, resignation or removal in the manner hereinafter provided.
Any two or more offices except president and vice president may be held by the
same person. In their discretion, the Trustees may leave unfilled any office
except that of president and secretary. Election of an officer or agent shall
not of itself create contract rights between the Trust and such officer or
agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Trust may be removed by the Trustees if in their judgment the best interests
of the Trust would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any
officer of the Trust may resign at any time by giving written notice of his
resignation to the Trustees, the chairman of the board, the president or the
secretary. Any resignation shall take effect at any time subsequent to the
time specified therein or, if the time when it shall become effective is not
specified therein, immediately upon its receipt. The acceptance of a
resignation shall not be necessary to make it effective unless otherwise
stated in the resignation. Such resignation shall be without prejudice to the
contract rights, if any, of the Trust.
Section 3. VACANCIES. A vacancy in any office may be filled by the
Trustees for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate a
chief executive officer from among the elected officers. The chief executive
officer shall have responsibility for implementation of the policies of the
Trust, as determined by the Trustees, and for the administration of the
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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.
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
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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
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.
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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.
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
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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.
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
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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.
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.
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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.
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
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such status. In addition, the Trust shall, without requiring a preliminary
determination of the ultimate entitlement to indemnification, pay or
reimburse, in advance of final disposition of a proceeding, reasonable
expenses incurred by a Trustee, officer or shareholder or former Trustee,
officer or shareholder made a party to a proceeding by reason such status,
provided that, in the case of a Trustee or officer, the Trust shall have
received (i) a written affirmation by the Trustee or officer of his good faith
belief that he has met the applicable standard of conduct necessary for
indemnification by the Trust as authorized by these By-laws and (ii) a written
undertaking by or on his behalf to repay the amount paid or reimbursed by the
Trust if it shall ultimately be determined that the applicable standard of
conduct was not met. The Trust may, with the approval of its Trustees,
provide such indemnification or payment or reimbursement of expenses to any
Trustee, officer or shareholder or any former Trustee, officer or shareholder
who served a predecessor of the Trust and to any employee or agent of the
Trust or a predecessor of the Trust. Neither the amendment nor repeal of this
Article, nor the adoption or amendment of any other provision of the
Declaration of Trust or these By-laws inconsistent with this Article, shall
apply to or affect in any respect the applicability of this Article with
respect to any act or failure to act which occurred prior to such amendment,
repeal or adoption.
Any indemnification or payment or reimbursement of the expenses
permitted by these By-laws shall be furnished in accordance with the
procedures provided for indemnification 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.
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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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