UNITED MORTGAGE TRUST
SECOND AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST is made
at Richardson, Texas, this 18th day of February, 1997 by Xxxxxxxxx Xxxxxxx of
Dallas, Texas, Xxxx X. Xxxxxxxx of Arlington, Texas, Xxxxxxx X. Xxxxx of
Dallas, Texas, and Xxxxxxx X. X'Xxxxxx, Xx. of Dallas, Texas (such persons
and any successor to such persons and additional persons, so long as they
shall continue in or be admitted to office in accordance with the terms of
this Declaration of Trust, are hereafter together called the "Trustees"), and
by the holders of shares of beneficial interest that are and will be issued
hereunder as hereinafter provided.
The four above named Trustees of United Mortgage Trust (the "Trust")
desire to amend and restate the Declaration of Trust of the Trust that was
filed on July 12, 1996 and subsequently amended and restated on August 15,
1996. This Second Amended and Restated Declaration of Trust was approved by
the four Trustees of the Trust and the Shareholder of the Trust in accordance
with Section 8-501 of the Corporation and Associations Article of the
Annotated Code of the State of Maryland and contains the provisions of the
Declaration of Trust as previously in effect, along with amendments that were
approved by the Trustees and the Shareholder. The principal office of the
Trust is currently located at 0000 X. Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx
00000 and the name and address of its resident agent is as set forth in
Article I, Section 2 and Article XV.
WITNESSETH that
A. It is hereby expressly declared that there is created a
real estate investment trust, under the laws of the State of Maryland
for the purpose of acquiring holding, managing, controlling,
administering, investing in and disposing of Mortgage Investments.
B. The Trust has been formed with the objectives of raising
capital and utilizing such capital to invest in Mortgage Investments.
C. The Trustees desire that such Trust qualify as a "real
estate investment trust" under the REIT Provisions of the Internal
Revenue Code.
D. The Trustees may hereafter acquire, hold, invest and
dispose of Trust assets as trustees in the manner provided in this
Declaration of Trust.
E. The beneficial interest in the Trust assets shall be
divided into one or more classes of transferable shares of beneficial
interest (the "Shares"), as provided in this Declaration of Trust.
NOW, THEREFORE, the Trustees are hereby direct that this Agreement
and Declaration of Trust be filed with the Maryland State Department of
Assessments and Taxation and do hereby declare that they will hold all
property of every type and description which they may acquire as such
trustees, together with the proceeds thereof, in trust, to manage, hold and
dispose of the same for the benefit of the holders of record from time to time
of the Shares being issued and to be issued hereunder and in the manner and
subject to the provisions of this Declaration of Trust:
ARTICLE I - NAME, LOCATION AND POWERS
SECTION 1. NAME. The name of the Trust created by this Declaration of
Trust shall be "UNITED MORTGAGE TRUST" (hereinafter called the "Trust") and so
far as may be practicable the Trustees shall conduct the Trust's activities,
execute all documents and xxx or be sued under that name, which name (and the
word "Trust" whenever used in this Declaration of Trust, except where the
context otherwise requires) shall refer to the Trustees in their capacity of
Trustees, and not individually or personally, and shall not refer to the
officers or Shareholders of the Trust or to the agents or employees of the
Trust or of such Trustees. Should the Trustees determine that the use of such
name is not practicable, legal or convenient, they may use such other
designation or they may adopt such other name for the Trust as they deem
proper and the Trust may hold property and conduct its activities under such
designation or name, subject, however, to the limitations contained in the
next succeeding paragraph.
SECTION 2. LOCATION. The Trust shall maintain an office of record in
Baltimore, Maryland, initially at 00 X. Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
00000, care of CSC - Lawyers Incorporating Service Company (the Trust's
resident agent initially), and the Trust may have such other offices or places
of business as the Trustees may from time to time determine as necessary or
expedient.
SECTION 3. POWERS. The Trust shall have the powers provided to a real
estate investment trust under Section 8-301 of the Corporation and
Associations Article of the Annotated Code of the State of Maryland.
ARTICLE II - DEFINITIONS
SECTION 1. DEFINITIONS. Whenever used in this Declaration of Trust,
unless the context otherwise requires, the terms defined in this Article II
shall have the following respective meanings:
(a) Acquired Mortgage. "Acquired Mortgage" shall mean
existing Mortgages that the Trust acquires on single-family
residential property.
(b) Acquisition Expenses. "Acquisition Expenses" shall mean
expenses related to the Trust's selection of, and investment in,
Mortgage Investments, whether or not acquired or made, including but
not limited to legal fees and expenses, travel and communications
expenses, costs of appraisals, accounting fees and expenses, title
insurance and miscellaneous other expenses.
(c) Acquisition Fees. "Acquisition Fees" shall mean the
total of all fees and commissions, however designated, paid by any
party in connection with the origination or acquisition of Mortgage
Investments and other Mortgages by the Trust. Included in the
computation of such fees or commissions shall be any real estate
commission, selection fee, development fee, nonrecurring management
fee, loan fees or points or any fee of a similar nature, however
designated.
(d) Administrator. "Administrator" shall mean the President
of the Trust, who shall be an officer and employee of the Trust and
who, subject to the Trustees, shall be in general and active charge
of the day-to-day operations of the Trust.
(e) Advisor. "Advisor" shall mean the person(s) or entity
retained by the Trustees that will be responsible for using its best
efforts to seek out and present to the Company, whether through its
own efforts or those of third parties retained by it, suitable and a
sufficient number
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of investment opportunities which are consistent with the investment
policies and objectives of the Trust and consistent with such
investment programs as the Trustees may adopt from time to time in
conformity with this Declaration of Trust. Initially, the Advisor
shall be Mortgage Trust Advisors, Inc. or anyone who succeeds it in
such capacity.
(f) Advisory Agreement. "Advisory Agreement" shall mean the
agreement between the Trust and the Advisor pursuant to which the
Advisor will act as the investment advisor of the Trust.
(g) Affiliate. "Affiliate" shall mean (i) any Person
directly or indirectly controlling, controlled by or under common
control with another Person, (ii) any Person owning or controlling
10% or more of the outstanding voting securities or beneficial
interests of such other Person, (iii) any executive officer,
director, trustee or general partner of such Person and (iv) if such
other Person is an executive officer, director, trustee or partner of
another entity, then the entity for which that Person acts in any
such capacity.
(h) Affiliated Programs. "Affiliated Programs" shall mean
any and all REITs, partnerships or other entities which may in the
future be formed by the Advisor, a Sponsor or their Affiliates to
engage in businesses which may be competitive with the Trust and
which have similar investment objectives as the Trust (or programs
with dissimilar objectives for which a particular Mortgage Investment
may nevertheless be suitable). An Affiliated Program may have the
same management as the Trust.
(i) Average Invested Assets. "Average Invested Assets" shall
mean the average of the aggregate Book Value of the assets of the
Trust for any period invested, directly or indirectly, in Mortgage
Investments, before reserves for depreciation or bad debts or other
similar non-cash reserves computed by taking the average of such
values at the end of each month during such period.
(j) Book Value. "Book Value" shall mean the value of an
asset or assets of the Trust on the books of the Trust before
provision for amortization or depreciation, and before deducting any
indebtedness or other liability in respect thereto, except that no
asset shall be valued at more than its fair value as determined by
the Board of Trustees.
(k) Code. "Code" shall mean the Internal Revenue Code of
1986, as amended, or corresponding provisions of subsequent revenue
laws.
(l) Competitive Commission. "Competitive Commission" shall
have the meaning ascribed to such term in Article VII, Section 2.
(m) Xxxxxx Xxx. "Xxxxxx Xxx" shall mean the Federal National
Mortgage Association.
(n) FHA. "FHA" shall mean the Federal Housing
Administration.
(o) Final Closing Date. "Final Closing Date" shall mean the
date of the last closing of Shares sold pursuant to the initial
public offering of Shares.
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(p) Xxxxxxx Mac. "Xxxxxxx Mac" shall mean the Federal Home
Loan Mortgage Corporation.
(q) Xxxxxx Mae. "Xxxxxx Xxx" shall mean the Government
National Mortgage Association.
(r) Gross Proceeds. "Gross Proceeds" shall mean the total
proceeds from the sale of Shares during the initial public offering
period, before deductions for Organization and Offering Expenses and
without taking into account "volume discounts". For purposes of
calculating Gross Proceeds, the purchase price of all Shares shall be
deemed to be $20 per share.
(s) HUD. "HUD" shall mean the United States Department of
Housing and Urban Development.
(t) Independent Expert. "Independent Expert" shall mean a
person with no current or prior business or personal relationship
with the Advisor or the Trustees and who is engaged, to a substantial
extent, in the business of rendering opinions regarding the value of
assets of the type held by the Trust.
(u) Independent Trustees. "Independent Trustees" shall mean
the Trustees who (i) are not affiliated, directly or indirectly, with
the Advisor, a Sponsor or their Affiliates, whether by ownership of,
ownership interest in, employment by, any material business or
professional relationship with, or service as an officer or director
of the Advisor, a Sponsor or their Affiliates, (ii) do not serve as a
director or trustee for more than three other REITs organized by a
Sponsor, or advised by the Advisor and (iii) perform no other
services for the Trust except as trustees. For this purpose, an
indirect relationship shall include circumstances in which a member
of the immediate family of a Trustee has one of the foregoing
relationships with the Advisor, a Sponsor or the Trust.
(v) Initial Investment. "Initial Investment" shall mean the
$200,000 investment in Shares which the Advisor has made pursuant to
Article VI, Section 5 of this Declaration of Trust.
(w) IRS. "IRS" shall mean the Internal Revenue Service of
the United States of America.
(x) Mortgage Investments. "Mortgage Investments" shall mean
the investments of the Trust as described in the Prospectus.
(y) Mortgage Prepayments, Sales or Insurance. "Mortgage
Prepayments, Sales or Insurance" shall mean any Trust transaction
(other than the receipt of base interest, principal payments when due
on a Mortgage and the issuance of Shares), including without
limitation, prepayments, sales, exchanges, foreclosures, or other
dispositions of Mortgage Investments and other Mortgages held by the
Trust or the receipt of insurance proceeds or guarantee proceeds with
respect to any Mortgage, or any other disposition of Trust assets.
(z) Mortgages. "Mortgages" shall mean, in a broad sense,
beneficial interests or participation interests in whole mortgages,
mortgage certificates, mortgage-backed securities, participation
certificates backed by either a single mortgage or a pool of
mortgages or interests in pass-through entities which, under the REIT
Provisions of the Internal Revenue Code, would
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be considered to be qualifying real estate assets for purposes of the
Trust's qualification as a REIT (e.g. regular interests in real
estate mortgage investment conduits ("REMICs")).
(aa) Net Assets or Net Asset Value. "Net Assets or Net Asset
Value" shall mean the Total Assets of the Trust (other than
intangibles) at cost before deducting depreciation or other non-cash
reserves less total liabilities of the Trust, calculated at least
quarterly on a basis consistently applied.
(bb) Net Income. "Net Income" shall mean, for any period,
total revenues applicable to such period, less the expenses
applicable to such period other than additions to allowances or
reserves for depreciation, amortization or bad debts or other similar
non-cash reserves; provided, however, that Net Income shall not
include any gain from the sale or other disposition of the Trust's
Mortgage Investments or other assets.
(cc) Organization and Offering Expenses. "Organization and
Offering Expenses" shall mean all expenses by and to be paid from
the assets of the Trust in connection with and in preparing the
Trust for registration and subsequently offering and distributing
the Shares to the public, including, but not limited to, total
underwriting and brokerage discounts and commissions (including fees
of the underwriters' attorneys expenses for printing, engraving,
mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositaries, experts, expenses of qualification of the sale of the
securities under Federal and State laws, including taxes and fees,
accountants' and attorneys' fees.
(dd) Originated Mortgage. "Originated Mortgage" shall mean a
Mortgage originated by or on behalf of the Trust or by another lender
and sold to the Trust prior to the time it has been fully funded.
(ee) Person. "Person" shall mean and include individuals,
corporations, limited partnerships, general partnerships, limited
liability companies, joint stock companies or associations, joint
ventures, companies, trusts, banks, trust companies, land trust,
business trusts or other entities and governments and agencies and
political subdivisions thereof.
(ff) Proceeds of Mortgage Prepayments, Sales and Insurance.
"Proceeds of Mortgage Prepayments, Sales and Insurance" shall mean
receipts from Mortgage Prepayments, Sales or Insurance less the
following: (i) the amount paid or to be paid in connection with or as
an expense of such Mortgage Prepayments, Sales or Insurance; and (ii)
the amount necessary for the payment of all debts and obligations of
the Trust including but not limited to fees to the Advisor or
Affiliates and amounts, if any, required to be paid to, arising from
or otherwise related to the particular Mortgage Prepayments, Sales or
Insurance.
(gg) Prospectus. "Prospectus" shall mean the final prospectus
of the Trust in connection with the initial registration of Shares
filed with the Securities and Exchange Commission on Form S-11, as
amended.
(hh) Real Estate Investment Trust ("REIT") Provisions of the
Internal Revenue Code. "Real Estate Investment Trust Provisions of
the Internal Revenue Code" shall mean part II, subchapter M, chapter
1 of the Code, as now enacted or hereafter amended, or successor
statutes, other sections of the Code specifically applicable to REITs
and regulations and rulings promulgated thereunder.
(ii) REIT. "REIT" shall mean a corporation or trust which
qualifies as a real estate investment trust as defined in Sections
856 to 860 of the Code.
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(jj) Rollup. "Rollup" shall mean a transaction involving the
acquisition, merger, conversion or consolidation either directly or
indirectly of the Trust and the issuance of securities of a Rollup
Entity. Such term does not include:
(i) a transaction involving securities of the Trust
that have been for at least 12 months listed on a national
securities exchange or traded through the National
Association of Securities Dealers Automated Quotation
National Market System; or
(ii) a transaction involving the conversion to
corporate or association form of only the Trust if, as a
consequence of the transaction, there will be no significant
adverse change in any of the following:
(A) Shareholders' voting rights;
(B) the term and existence of the Trust;
(C) Sponsor or Advisor compensation;
(D) the Trust's investment objectives.
(kk) Rollup Entity. "Rollup Entity" shall mean a
partnership, real estate investment trust, corporation, limited
liability company, trust or other entity that would be created or
would survive after the successful completion of a proposed Rollup
transaction.
(ll) Securities. "Securities" shall mean any instrument
commonly known as "securities", including stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or any certificates of interest, shares or participation,
or warrants, options or rights to subscribe to, purchase or acquire
any of the forgoing.
(mm) Selling Compensation. "Selling Compensation" shall mean
compensation payable by the Trust, the Advisor and any affiliates
thereof to the Selling Group Manager (or any broker-dealer designated
by the Selling Group Manager) in connection with the initial public
offering of Shares, as set forth in the Prospectus.
(nn) Shareholders. "Shareholders' shall mean holders of the
Shares.
(oo) Shares. "Shares" shall mean shares of beneficial
interest, par value $.01 per share, of the Trust.
(pp) Sponsor. "Sponsor" shall mean any Person directly or
indirectly instrumental in organizing, wholly or in part, the Trust
or any Person who will control, manage or participate in the
management of the Trust and any Affiliate of any such Person, but
does not include (i) any person whose only relationship with the
Trust is that of an independent asset manager and whose only
compensation from the Trust is as such, and (ii) wholly independent
third parties such as attorneys, accountants and underwriters whose
only compensation from the Trust is for professional services. A
Person may also be deemed a Sponsor of the Trust by: (i) taking the
initiative, directly or indirectly, in founding or organizing the
business or enterprise of the Trust; either alone or in conjunction
with one or more other Persons; (ii) receiving a material
participation in the Trust in connection with the founding or
organizing of the business of the Trust, in consideration of
services or property, or both services and property; (iii) having
a substantial number of relationships and contracts with the
Trust; (iv) possessing significant rights to control the Trust;
(v) receiving fees for providing services to the Trust which
are paid on a basis that is not customary in the industry;
or (vi) providing goods or services to the Trust on a basis
which was not negotiated at arms length with the Trust.
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(qq) Total Assets of the Trust. "Total Assets of the Trust"
shall mean the value of all assets of the Trust as shown on the books
of the Trust.
(rr) Total Operating Expenses. "Total Operating Expenses"
shall mean all operating, general and administrative expenses of the
Trust as determined by generally accepted accounting principles,
exclusive of the expenses of raising capital, interest payments,
taxes, non-cash expenditures (i.e. depreciation, amortization, bad
debt reserve), Acquisition Fees and other costs related directly to a
specific Mortgage Investment by the Trust, such as expenses for
originating, acquiring, servicing or disposing of a Mortgage.
(ss) Trust. "Trust" shall mean the real estate investment
trust created pursuant to this Declaration of Trust.
(tt) Trustees. "Trustees" shall have the meaning ascribed to
such term in the heading of this Declaration of Trust and who
collectively shall constitute the Board of Trustees of the Trust.
(uu) Unimproved Real Property. "Unimproved Real Property"
shall mean property which has the following three characteristics:
(1) the property was not acquired for the purpose of producing rental
or other operating income, (2) there is no development or
construction in process on such land, and (3) no development or
construction on such land is planned in good faith to commence on
such land within one year.
ARTICLE III - MEETING OF SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of Shareholders in 1997
and each subsequent year for the election of Trustees and for such other
business as may be stated in the notice of the meeting, shall be held at such
convenient location determined by the Trustees and at such time and date not
less than 30 days after delivery of the annual report, but in no event later
than June 30 of each such year as the Board of Trustees, by resolution, shall
determine. If the date of the annual meeting shall fall upon a legal holiday,
the meeting shall be held on the next succeeding business day. At each annual
meeting, the Shareholders entitled to vote shall elect a Board of Trustees
and may transact such other Trust business as shall be stated in the notice
of the meeting. The Independent Trustees are required to take steps to insure
that the requirements of this Section are satisfied.
SECTION 2. OTHER MEETINGS. Meetings of Shareholders for any purpose
other than the election of Trustees may be held at such time and place, as
shall be stated in the notice of the meeting.
SECTION 3. VOTING. Each Shareholder entitled to vote in accordance
with the terms and provisions of this Declaration of Trust shall be entitled
to one vote for each Share held by such Shareholder (i) at a meeting, in
person, by written proxy or by a signed writing or consent directing the
manner in which he desires that his vote be cast, which writing must be
received by the Trustees prior to such meeting or (ii) without a meeting, by a
signed writing or consent directing the manner in which he desires his vote to
be cast, which writing must be received by the Trustees prior to the date upon
which the votes of the Shareholders are to be counted. In connection with the
foregoing, no proxy shall be voted after six months from its date unless such
proxy is coupled with an interest sufficient in law to support an irrevocable
power and provides for a longer period and except that the Board of Trustees
may prohibit the holders of Excess Shares (as defined in Article XII Section
1) from voting the Excess Shares. Upon the demand of any Shareholder, the vote
for Trustees and upon any question before a meeting shall be by ballot. All
elections for Trustees shall be decided by plurality vote (at a meeting or
without a
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meeting, provided that at least a majority of the outstanding Shares shall
cast a vote in such election). Unless otherwise provided by this Declaration
of Trust, all other questions shall be decided by a majority of the votes cast
at a meeting at which a quorum is present or a majority of outstanding Shares
cast, without a meeting. Notwithstanding the foregoing, none of the Advisor,
the Trustees nor their Affiliates may vote any Shares held by them, or
consent, on matters submitted to the Shareholders regarding:
(a) the removal of the Advisor, the Trustees or their
Affiliates; or
(b) any transaction between the Trust and the Advisor, the
Trustees or their Affiliates.
Shares held by the Advisor, the Trustees and their Affiliates shall not be
included in determining the number of outstanding Shares entitled to vote on
the matters discussed in (a) and (b) above, nor in the Shares actually voted
thereon.
SECTION 4. INSPECTORS OF ELECTION. The Board of Trustees, in advance
of any Shareholders' meeting or other Shareholder vote, may appoint one or
more inspectors to act at the meeting or any adjournment thereof or in
connection with any other Shareholder vote. If inspectors are not so
appointed, the person presiding at a Shareholders' meeting or the Chairman of
the Board where there is no meeting, may, and on the request of any
Shareholder entitled to vote in connection with a particular question, shall,
appoint two inspectors. In case any person appointed fails to appear or act,
the vacancy may be filled by appointment made by the Board of Trustees in the
case of a meeting in advance of the meeting or at that meeting by the person
presiding thereat or, in the case of a vote without a meeting, in advance of
counting the vote. Each inspector, before entering upon the discharge of his
duties, shall make and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of Shares outstanding and
the voting power of each, the Shares represented at the meeting, if
applicable, the existence of a quorum, if applicable, and the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness
to all Shareholders. On request of the person presiding at the meeting, if
applicable, or any Shareholder entitled to vote thereat or in connection with
a particular solicitation, the inspectors shall make a report in writing of
any challenge, question or matter determined by them and execute a certificate
of any fact found by them. Any report or certificate made by them shall be
prima facie evidence of the facts stated and of the vote as certified by them.
SECTION 5. ACCESS TO RECORDS. Any Shareholder and any designated
representative thereof shall be permitted access to all records of the Trust
at all reasonable times, and may inspect and copy any of them. Inspection of
the Trust books and records by a state securities administrator shall be
provided upon reasonable notice and during normal business hours. In addition,
with respect to access to the list of Shareholders:
(a) An alphabetical list of the names, addresses, and
business telephone numbers of the Shareholders of the Trust along
with the number of Shares held by each of them (the "Shareholder
List") shall be maintained as a part of the books and records of the
Trust and shall be available for inspection by any Shareholder or the
Shareholder's designated agent at the home
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office of the Trust at 0000 X. Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx 00000, or such other address as may be designated by the Trust,
upon the request of the Shareholder;
(b) The Shareholder List shall be updated at least quarterly
to reflect changes in the information contained therein;
(c) A copy of the Shareholder List shall be mailed to any
Shareholder requesting the Shareholder List within ten days of the
request. The copy of the Shareholder List shall be printed in
alphabetical order, on white paper and in a readily readable type
size (in no event smaller than 10 point type). A reasonable charge
for copy work may be charged by the Trust;
(d) The purposes for which a Shareholder may request a copy
of the Shareholder List include, without limitation, matters relating
to Shareholders' voting rights under the Declaration of Trust, and
the exercise of Shareholders' rights under federal proxy laws; and
(e) If the Advisor or the officers or Trustees of the Trust
neglect or refuse to exhibit, produce, or mail a copy of the
Shareholder List as requested, the Sponsor shall be liable to any
Shareholder requesting the list for the costs, including attorney's
fees, incurred by that Shareholder for compelling the production of
the Shareholder List, and for actual damages suffered by any
Shareholder by reason of such refusal or neglect. It shall be a
defense that the actual purpose and reason for the requests for
inspection or for a copy of the Shareholder List is to secure such
list of Shareholders or other information for the purpose of selling
such list or copies thereof, or of using the same for a commercial
purpose other than in the interest of the applicant as a Shareholder
relative to the affairs of the Trust. The Trust may require the
Shareholder requesting the Shareholder List to represent that the
list is not requested for a commercial purpose unrelated to the
Shareholder's interest in the Trust. The remedies provided hereunder
to Shareholders requesting copies of the Shareholder List are in
addition to, and shall no in any way limit, other remedies available
to Shareholders under federal law, or the laws of any state.
Subject to the foregoing, with respect to certain solicitations made
by the Trust, the Trust may, with the consent of the Shareholder, mail
communications on behalf of any Shareholder at his expense who so requests in
writing and is entitled to vote on the same subject matter as the Trust's
solicitation.
SECTION 6. QUORUM. Except as otherwise required by law or by this
Declaration of Trust, the presence, in person or by proxy, of Shareholders
holding a majority of the outstanding Shares of the Trust entitled to vote,
shall constitute a quorum at all meetings of the Shareholders. In case a
quorum shall not be present at any meeting, a majority in interest of the
Shareholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of Shares entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of Shares entitled to vote shall be present, any business may be
transacted which might have been transacted at the meeting as originally
noticed, but only those Shareholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or
adjournments thereof.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Shareholders may
be called by the Chairman of the Board, by the President, by a majority of the
Trustees or by a majority of the Independent Trustees, and shall be called by
any officer of the Trust upon written request of Shareholders holding in the
aggregate not less than 10% of the outstanding Shares of the Trust entitled to
vote at such
9
meeting. The call of a special meeting shall state the nature of the business
to be transacted and that no other business shall be considered at such
meeting.
Upon receipt of a written request either in person or by registered
mail stating the purpose(s) of the meeting requested by Shareholders, the
Trust shall provide all Shareholders, within ten (10) business days after
receipt of said request, written notice (either in person or by mail) of a
meeting and the purpose of such meeting to be held on a date not less than
twenty (20) nor more than sixty (60) days after receipt of said request (or as
soon thereafter as the applicable proxy rules may reasonably be complied with)
for such meeting, at a time and place convenient to the Shareholders.
The place, date and time of, as well as the record date for
determining the persons entitled to notice of and to vote at, any special
meeting, including any special meeting to be called at the request of the
holders of 10% or more of the Shares outstanding, shall be determined by the
Board of Trustees; provided, however, in the case of a special meeting to be
called at the request of the holders of 10% or more of the Shares outstanding,
if the Board of Trustees declines or fails to make any such determination
within ten business days of such request, then the officer calling such
special meeting shall at the time of such call designate the place, date and
time of such special meeting as well as the record date for determining
persons entitled to notice of and to vote at such meeting.
SECTION 8. NOTICE OF ANNUAL AND SPECIAL MEETINGS CALLED BY CERTAIN OR
ALL OF THE TRUSTEES AND SOLICITATION OF CONSENT WITHOUT MEETING. Written
notice, stating the place, date and time of the annual meeting or a special
meeting not called at the request of the Shareholders, and the general nature
of the business to be considered in the case of an annual meeting, or the
specific nature of the business to be considered in the case of a special
meeting, shall be given to each Shareholder entitled to vote thereat at his
address as it appears on the records of the Trust not less than twenty (20)
nor more than sixty (60) days before the date of such meeting. In the case of
a Shareholder vote without a meeting, the date for responding to such
solicitation and the counting of the votes in connection therewith must occur
no later than sixty (60) days and no sooner than twenty (20) days after notice
of such requested vote is given.
SECTION 9. BUSINESS TRANSACTED. No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the Shareholders entitled to vote thereat.
ARTICLE IV - TRUSTEES
SECTION 1. NUMBER, TERM AND QUALIFICATIONS. No later than the time
when the Trust first has public Shareholders, the number of Trustees shall be
not less than three nor more than nine, as fixed from time to time by the
Board of Trustees, a majority of whom shall at all times be Independent
Trustees (except that in the event of death, resignation or removal of an
Independent Trustee, the requirement for such majority shall not be applicable
for a period of 60 days). Unless otherwise fixed by the Board of Trustees or
the Shareholders, the number of Trustees constituting the entire board of
Trustees shall be four.
The following persons shall be the initial Trustees of the Trust to
serve until the first meeting of Shareholders and until their successors are
elected and qualify: Xxxxxxxxx Xxxxxxx, Xxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxx and
Xxxxxxx X. X'Xxxxxx, Xx.
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The Trustees shall be elected at the annual meeting of shareholders.
Each Trustee shall serve a term of one year subject to his successor being
elected and qualified.
A Trustee shall be an individual at least 21 years of age who is not
under legal disability. A Trustee shall not be required to devote his full
business time and effort to the Trust. A Trustee shall qualify as such when he
has either signed this Declaration of Trust or agreed in writing to be bound
by it. No bond shall be required to secure the performance of a Trustee unless
the Trustees so provide or as required by law.
A Trustee must have at least three years of relevant experience
demonstrating the knowledge and experience required successfully to acquire
and manage Mortgage Investments. At least one Independent Trustee must have at
least three years of relevant real estate experience.
Nominations for the election of Trustees may be made by the Board of
Trustees or a committee appointed by the Board of Trustees or by any
Shareholder entitled to vote in the election of Trustees generally. However,
any Shareholder entitled to vote in the election of Trustees generally may
nominate one or more persons for election as Trustees at a meeting only if
written notice of such Shareholders' intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Trust not later than (i) with
respect to an election to be held at an annual meeting of Shareholders, ninety
days prior to the anniversary date of the immediately preceding annual
meeting, and (ii) with respect to an election to be held at a special meeting
of Shareholders for the election of Trustees, the close of business on the
tenth day following the date on which notice of such meeting is first given to
the Shareholders. Each such notice shall set forth: (a) the name and address
of the Shareholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the Shareholder is a holder
of record of Shares of the Trust entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the Shareholder and each nominee and any other person
or persons (naming such person or person) pursuant to which the nomination or
nominations are to be made by the Shareholder; (d) such other information
regarding each nominee proposed by such Shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Trustees; and (e) the consent of
each nominee to serve as a Trustee of the Trust if so elected. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
SECTION 2. AUTHORITY OF TRUSTEES.
(a) General Responsibilities and Authority. Consistent with
the duties and obligations of, and limitations on, the Trustees as
set forth herein, and under the laws of the State of Maryland, the
Trustees are accountable to the Shareholders as fiduciaries and are
required to perform their duties in good faith and in a manner each
Trustee believes to be in the best interest of the Trust and its
Shareholders, with such care, including reasonable inquiry, as a
prudent person in a like position would use under similar
circumstances. In addition, the Trustees shall have a fiduciary duty
to the Shareholders to review the relationship of the Trust with the
Advisor.
The Trustees shall have full, absolute and exclusive power,
control, management and authority over the Trust's assets and over
the business and affairs of the Trust to the same extent as if the
Trustees were the sole owners thereof in their own right. The
enumeration of any
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specific power or authority herein shall not be construed as limiting
the aforesaid power or authority or any specific power or authority.
The Trustees shall have the power to enter into commitments to make
any investment, purchase or acquisition, or to exercise any power
authorized by this Declaration of Trust.
The Trustees shall establish written policies on investments
and borrowings and shall monitor the administrative procedures,
investment operations and performance of the Trust and the Advisor to
assure that such policies are carried out. Until modified by the
Trustees, the Trust shall follow the policies on investments and
borrowings set forth in the Prospectus.
(b) Specific Powers and Authorities. Subject only to the
express limitations contained in this Declaration of Trust and in
addition to any powers and authorities conferred by this Declaration
of Trust or which the Trustees may have by virtue of any present or
future statute or rule of law, the Trustees without any action or
consent by the Shareholders shall have and may exercise at any time
and from time to time the following powers and authorities which may
or may not be exercised by them in their sole judgment and discretion
in such manner and upon such terms and conditions as they may from
time to time deem proper:
(i) To retain, invest and reinvest the capital or
other funds of the Trust in Mortgage Investments and other
Mortgages without regard to whether any such Mortgage
Investments and other Mortgages may mature before the
possible termination of the Trust, and to possess and
exercise all the rights, powers and privileges appertaining
to the ownership of the Trust assets.
(ii) For such consideration as they deem proper to
invest in, purchase or otherwise acquire for cash or other
property and hold for investment Mortgages secured by real
property located in the United States, and, in connection
with any such investment in Mortgages, acquire (i) the
entire or any participating interest in rents, lease
payments or other income from or the entire or any
participating interest in the profits from, or the entire or
any participating interest in the equity or ownership of,
real property; and (ii) such investments, either directly
or, subject to Article VIII Section 8, through joint
ventures, partnerships, or other lawful combinations or
associations.
(iii) To sell, exchange, release, partition,
assign, mortgage, pledge, hypothecate, grant security
interests in, encumber, negotiate, convey, transfer or
otherwise dispose of any and all of the assets of the Trust
by deeds, trust deeds, assignments, bills of sale,
transfers, leases, mortgages, financing statements, security
agreements and other instruments for any of such purposes
executed and delivered for and on behalf of the Trust or the
Trustees by one or more of the Trustees or by a duly
authorized officer, employee, agent or any nominee of the
Trust.
(iv) To, subject to Article IX Section 1 and
Article VIII Section 7, issue authorized Shares or other
Securities, all without the vote of or other action by the
Shareholders, to such Persons for such cash, property or
other consideration (including Securities issued or created
by, or interests in any Person) at such time or times and on
such terms and the Trustees may deem advisable and to
purchase or otherwise acquire, hold, cancel, reissue, sell
and transfer the Shares or any of such Securities.
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(v) To enter into contracts, obligations, and other
agreement for a term extending beyond the term of office of
the Trustees and beyond the possible termination of the
Trust or for a lesser term.
(vi) To, subject to Article VIII, Section 9, borrow
money and give negotiable or non-negotiable instruments
therefor; to enter into other obligations on behalf of the
Trust; and to assign, convey, transfer, mortgage,
subordinate, pledge, grant security interests in, encumber
or hypothecate the assets of the Trust to secure any of the
foregoing.
(vii) To lend money, whether secured or unsecured.
(viii) To create reserve funds for any purpose.
(ix) To incur and pay out of the Trust assets any
charges or expenses, and disburse any funds of the Trust,
which charges, expenses or disbursements are, in the opinion
of the Trustees, necessary for or incidental to or desirable
for, and are incurred in connection with, the carrying out
of any of the purposes of the Trust or the conducting of the
business of the Trust, including without limitation taxes
and other governmental levies, charges and assessments of
whatever kind or nature, imposed upon or against the
Trustees in connection with the Trust or upon or against the
Trust assets or any part thereof, and for any of the
purposes herein.
(x) To deposit funds or securities held by the
Trust in banks, trust companies, savings and loan
associations and other depositories, whether or not such
deposits will draw interest, the same to be subject to
withdrawal on such terms and in such manner and by such
Person or Persons (including any one or more Trustees,
officers, agents or representatives) as the Trustees may
determine.
(xi) To possess and exercise all the rights, powers
and privileges appertaining to the ownership of all or any
interests in, or mortgages or securities issued or created
by, any Person, forming part of the assets of the Trust, to
the same extent that an individual might, and without
limiting the generality of the foregoing, to vote or give
any consent, request or notice, or waive any notice, either
in person or by proxy or power of attorney, with or without
power of substitution, to one or more Persons, which proxies
and powers of attorney may be for meetings or action
generally or for any particular meeting or action, and may
include the exercise of discretionary powers.
(xii) To enter into joint ventures, general or
limited partnerships and any other lawful combinations or
associations with independent third parties or, subject to
Article VIII, Section 8, with Affiliated Programs.
(xiii) To elect, appoint, engage or employ such
officers for the Trust as the Trustees may determine, who
may be removed or discharged at the discretion of the
Trustees, such officers to have such powers and duties, and
to serve such terms and at such compensation, as may be
prescribed by the Trustees; to engage or employ any Persons
as agents, representatives, employees, or independent
contractors (including, without limitation, mortgage
servicers, real estate advisors, investment advisors,
transfer agents, registrars, underwriters, accountants,
attorneys at law, real estate agents,
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managers, appraisers, brokers, architects, engineers,
construction managers, general contractors or otherwise) in
one or more capacities, and to pay compensation from the
Trust for services in as many capacities as such Person may
be so engaged or employed; and, except as prohibited by law
and subject to the supervision of the Trustees, to delegate
any of the powers and duties of the Trustees to the Advisor.
(xiv) To determine the proper accounting treatment
for Trust income, loss and capital.
(xv) To determine from time to time the value of
all or any part of the Trust assets and of any securities,
assets or other consideration to be furnished to or acquired
by the Trust, and from time to time to revalue all or any
part of the Trust assets in accordance with such appraisals
or other information as are, in the Trustees' sole judgment,
necessary and/or satisfactory.
(xvi) To collect, xxx for, and receive all sums of
money or other assets coming due to the Trust, and to engage
in, intervene in, prosecute, join, defend, compound,
compromise, abandon or adjust, by arbitration or otherwise,
any actions, suits proceedings, disputes, claims,
controversies, demands or other litigation relating to the
Trust, the assets of the Trust or the Trust's affairs, to
enter into agreements therefor, whether or not any suit is
commenced or claim accrued or asserted and, in advance of
any controversy, to enter into agreements regarding
arbitration, adjudication or settlement thereof.
(xvii) To renew, modify, release, compromise,
extend, consolidate, or cancel, in whole or in part, any
obligation to or of the Trust.
(xviii) To purchase and pay for out of the Trust
assets insurance contracts and policies insuring the Trust
assets against any and all risks and insuring the Trust
and/or any or all of the Trustees, the Shareholders,
officers, employees, agents, investment advisors or
independent contractors of the Trust against any and all
claims and liabilities of every nature asserted by any
Person arising by reason of any action alleged to have been
taken or omitted by the Trust or by any such person as
Trustee, Shareholder, officer, employee, agent, investment
advisor or independent contractor; provided, however, that
the Trustees may purchase and pay for out of Trust assets
insurance contracts and policies insuring independent
contractors or agents, only if such policies are customarily
provided to independent contractors or agents providing the
services being rendered in the locality where such services
are being rendered; provided, further, that limitations on
the acquisition of insurance contracts or policies shall not
apply to the Advisor, unless otherwise restricted as set
forth in Article XI Section 2(d).
(xix) To adopt a fiscal year for the Trust, and
from time to time to change such fiscal year.
(xx) To adopt and use a seal (but the use of a seal
shall not be required for the execution of instruments or
obligations of the Trust).
(xxi) To increase or decrease the aggregate number
of Shares that the Trust has authority to issue.
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(xxii) To make and alter bylaws to regulate the
government of the Trust and the administration of its
affairs.
(xxiii) To make, perform, and carry out, or cancel
and rescind, contracts of every kind for any lawful purpose
without limit as to amount, with any Person, firm, trust,
association, corporation, municipality, county, parish,
state, territory, government or other municipal or
governmental subdivisions. The contracts shall be for such
duration and upon such terms as the Trustees in their sole
discretion shall determine.
(xxiv) To renew, modify, extend, consolidate or
cancel, in whole or in part, the Trust's dividend
reinvestment plan, if adopted, or the Trust's redemption
plan, if adopted.
(xxv) To acquire real property (or an interest
therein) in the event of a Mortgage foreclosure and perform
all acts incidental to the ownership of real property
including, without limitation, entering into leases for
space located therein.
(xxvi) To do all other such acts and things as are
incident to the foregoing, and to exercise all powers which
are necessary or useful to carry on the business of the
Trust, to promote any of the purposes for which the Trust is
formed, and to carry out the provisions of this Declaration.
(c) Additional Powers. The Trustees shall additionally have
and exercise all the powers conferred by the laws of Maryland upon
real estate investment trusts formed under such laws, insofar as such
laws are not in conflict with the provisions of this Declaration of
Trust.
(d) Business Opportunities with Affiliated Programs. The
Trustees (including the Independent Trustees) shall periodically
monitor the allocation of Mortgage Investments among the Trust and
the Affiliated Programs to insure that the allocation method
described in the Prospectus is being applied fairly to the Trust.
(e) Suitable Investment Opportunities. Before any Trustee,
including any Independent Trustee, may take advantage of an
investment opportunity that is suitable for the Trust for their own
account or present or recommend it to others, they shall present such
investment opportunity to the Trust if (i) such opportunity is within
the Trust's investment objectives and policies, (ii) such opportunity
is of a character which could be taken by the Trust, and (iii) the
Trust has the financial resources to take advantage of such
opportunity.
(f) Ratification of Declaration of Trust. Not later than the
first issuance of Shares to the public, the Declaration of Trust
shall be reviewed and ratified by a majority of the Trustees and of
the Independent Trustees.
SECTION 3. RESIGNATIONS. Any Trustee or other officer may resign at
any time. Such resignation shall be made in writing, and shall take effect at
the time specified therein, and if no time is specified, at the time of its
receipt by the Chairman of the Board or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 4. REMOVAL OF TRUSTEES. Any one or more the Trustees may be
removed but only for cause, by action of a majority of the Board of Trustees.
Any or all of the Trustees may be
15
removed, with or without cause, by the affirmative vote of the holders of a
majority of the outstanding Shares entitled to vote, subject to the provisions
of Article III Section 3 hereof. A special meeting of the Shareholders for the
purpose of removing a Trustee shall be called by an officer of the Trust in
accordance with the provisions of Article III Section 7 hereof.
SECTION 5. NEWLY CREATED TRUSTEESHIPS AND VACANCIES. Newly created
trusteeships resulting from an increase in the number of Trustees or vacancies
occurring in the Board of Trustees for any reason except the removal of
Trustees by Shareholders may be filled by vote of a majority of the Trustees
then in office, although less than a quorum exists. Vacancies occurring as a
result of the removal of Trustees by Shareholders shall be filled by the
Shareholders. A Trustee elected to fill a vacancy shall be elected to hold
office for the unexpired term of his predecessor. The Independent Trustees
shall nominate replacements for vacancies among the Independent Trustee's
positions. Upon the resignation or removal of any Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as the
remaining Trustees shall require for the conveyance of any Trust property held
in his name, shall account to the remaining Trustee or Trustees as they
require for all property which he holds as Trustee and shall thereupon be
discharged as Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall perform the acts set forth in the preceding sentence and
the discharge mentioned therein shall run to such legal representative and to
the incapacitated Trustee, or the estate of the deceased Trustee as the case
may be. Notwithstanding anything to the contrary contained in this Article IV,
Section 5, the filling of vacancies or newly created trusteeships on the Board
of Trustees shall be subject to compliance with the requirements of Section 1
of this Article IV.
SECTION 6. SUCCESSOR AND ADDITIONAL TRUSTEES. The right, title and
interest of the Trustees in and to the assets of the Trust shall also vest in
successor and additional Trustees upon their qualification, and they shall
thereupon have all the rights and obligations of the Trustees hereunder. Such
right, title and interest shall vest in the Trustees whether or not
conveyancing documents have been executed and delivered pursuant to Section 5
of this Article IV or otherwise.
SECTION 7. ACTIONS BY TRUSTEES. The Trustees may act with or without
a meeting. A quorum for all meetings of the Trustees shall be a majority of
the number of incumbent Trustees, provided that at least a majority of such
number are Independent Trustees. Unless specifically provided otherwise in
this Declaration, any action of the Trustees may be taken at a meeting by vote
of a majority of the Trustees present at such meeting if a quorum is present.
Any action of the Trustees taken without a meeting shall be taken pursuant to
the consent procedures set forth in Section 9 of this Article IV. Any
agreement, deed, mortgage, lease or other instrument or writing executed by
any one or more of the Trustees or by any one or more authorized persons or by
mortgage servicers as agents for the Trust shall be valid and binding upon the
Trustees and upon the Trust when authorized by action of the Trustees.
SECTION 8. COMPENSATION. Each Independent Trustee shall be entitled
to receive compensation for serving as a Trustee at the rate of $1,000 per
meeting of the Board of Trustees but no more than $4,000 per year, plus
five-year options to purchase 2,500 Shares at a purchase price of $20 per
Share at the end of each year of service up to a maximum of options to
purchase 12,500 shares. Additionally, Independent Trustees shall be reimbursed
for travel expenses and other out-of-pocket disbursements incurred in
connection with attending any meetings. Non-Independent Trustees shall not
receive any compensation from the Trust. Nothing herein contained shall be
construed to preclude any non-Independent Trustee from serving the Trust in
any other capacity as an officer, agent or otherwise, and receiving
compensation therefor. Independent Trustees shall not perform any services for
the Trust except as Trustees.
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SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Trustees may be taken without a
meeting, provided prior to such action a written consent thereto is signed by
a majority of the Board of Trustees, and provided, further, at least a
majority of the consenting Trustees are Independent Trustees. Any such written
consent shall be filed with the minutes of proceedings of the Trustees.
SECTION 10. TELEPHONIC MEETING. All or any one or more Trustees may
participate in a meeting of the Trustees or any committee thereof by means of
conference telephone or similar communications equipment by means of which all
participants can hear each other and participation in a meeting pursuant to
such communication shall constitute presence in person at such meeting.
SECTION 11. EXECUTIVE AND OTHER COMMITTEES. The Trustees may appoint
an executive committee or other committee from among their number consisting
of three or more members, a majority of whom shall be Independent Trustees,
which shall have such powers, duties and obligations as the Trustees may deem
necessary and appropriate, including, without limitation, the power to conduct
the business and affairs of the Trust during periods between meetings of the
Trustees. The Executive and other Committees shall report its activities
periodically to the Trustees.
ARTICLE V - OFFICERS
SECTION 1. OFFICERS. The officers of the Trust shall consist of a
Chairman of the Board, a President, a Treasurer and a Secretary, and shall be
elected by the Board of Trustees and shall hold office until their successors
are elected and qualified. In addition, the Board of Trustees may elect one or
more Vice Presidents and such Assistant Secretaries and Assistant Treasurers
as it may deem proper. None of the officers of the Trust need be Trustees. The
officers shall be elected at the first meeting of the Board of Trustees after
each annual meeting. More than one office may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Trustees may
appoint such officers and agents as it may deem advisable, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Trustees.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Trustees shall be the chief executive officer of the Trust and shall preside
at all meetings of the Board of Trustees. She shall have and perform such
other duties as from time to time may be assigned to her by the Board of
Trustees.
SECTION 4. PRESIDENT. The President shall be the chief operating
officer of the Trust and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. The President shall also serve as the Administrator of the Trust.
She shall preside at all meetings of the shareholders if present thereat, and
in the absence of the Chairman of the Board, at all meetings of the Board of
Trustees,and shall have general supervision, direction and control of the
business of the Trust. Unless the Board of Trustees shall authorize the
execution thereof in some other manner, she shall execute bonds, mortgages,
and other contracts on behalf of the Trust, and shall cause the seal to be
affixed to any instrument requiring it and when so affixed the seal shall be
attested by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
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SECTION 5. VICE PRESIDENT. Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him by the Board of
Trustees.
SECTION 6. TREASURER. The Treasurer shall have custody of the funds
and Securities of the Trust and shall keep a full and accurate account of
receipts and disbursements in books belonging to the Trust. He shall deposit
all moneys and other valuables in the name and to the credit of the Trust in
such depositories as may be designated by the Board of Trustees.
The Treasurer shall disburse the funds of the Trust as may be ordered
by the Board of Trustees, the Chairman of the Board or the President, taking
proper vouchers for such disbursements. He shall render to the President or
Board of Trustees at the regular meetings of the Board of Trustees, or
whenever they may request it, an account of all his significant transactions
as Treasurer and of the financial condition of the Trust. If required by the
Board of Trustees, he shall give the Trust a bond, at the Trust's expense, for
the faithful discharge on his duties in such amount and with such surety as
the Board of Trustees shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of Shareholders and Trustees; and all other notices
required by law or by this Declaration of Trust, and in case of his absence or
refusal or neglect to do so, any such notice may be given by any person
thereunto directed by the Chairman of the Board, the President, or by the
Trustees or Shareholders, upon whose requisition the meeting is called as
provided in this Declaration of Trust. He shall record all the proceedings of
the meetings of the Trust and of Trustees in a book to be kept for that
purpose. He shall keep in safe custody the seal of the Trust, and when
authorized by the Board of Trustees, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of any assistant secretary.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurer and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Trustees.
ARTICLE VI - ADVISOR
SECTION 1. EMPLOYMENT OF ADVISOR. The Board of Trustees is
responsible for the general policies of the Trust and for such general
supervision and management of the business of the Trust as may be necessary
to insure that such business conforms to the provisions of this Declaration
of Trust. However, the Board of Trustees and officers shall not be required
personally to conduct all the business of the Trust and consistent with their
ultimate responsibility as stated above, the Board of Trustees shall have the
power to appoint, employ or contract with any Person (including one or more
of the directors or officers or any corporation, partnership, or trust in
which one or more of the Trustees, other than the Independent Trustees, or
officers may be directors, officers, stockholders, partners or trustees) as
the Board of Trustees may deem necessary or proper for the transaction of the
business of the Trust. The Board of Trustees, upon approval by a majority of
the Trustees (including a majority of the Independent Trustees), shall
initially employ Mortgage Trust Advisors, Inc. (herein referred to as the
"Advisor") to (i) develop underwriting criteria and a model for the Trust's
investment portfolio; (ii) acquire, retain or sell Mortgage Investments;
(iii) seek out, present and recommend investment opportunities consistent
with the Trust's investment policies and objectives, and negotiate on behalf
of the Trust with respect to potential investments or the disposition
thereof; (iv) pay the debts and fulfill the obligations of the Trust, and
handle, prosecute and settle any claims of the Trust, including foreclosing
and otherwise enforcing mortgages and other liens
18
securing investments; (v) obtain for the Trust such services as may be
required for mortgage brokerage and servicing and other activities relating to
the investment portfolio of the Trust; (vi) evaluate, structure and negotiate
prepayments or sales of Mortgage Investments; (vii) from time to time, or as
requested by the Trustees, make reports to the Trust as to its performance of
the foregoing services and (viii) to supervise other aspects of the business
of the Trust. The Trust may grant or delegate such authority to the Advisor as
the Board of Trustees may in its sole discretion deem necessary or desirable
without regard to whether such authority is normally granted or delegated by
the Board of Trustees, including, without limitation, the power to delegate to
the Advisor the authority (i) to cause the Trust to enter into, or dispose of,
investments not involving Affiliates of the Advisor, a Trustee, the Sponsor or
Affiliates thereof unless expressly permitted by Article VI Section 1 and (ii)
to defer any fees due to it under the Advisory Agreement, without the approval
of the Board of Trustees. The Board of Trustees may, upon approval by a
majority of the Trustees (including a majority of the Independent Trustees),
employ or contract with any other Person to serve as the Advisor, with the
same rights, powers and limitations described herein in substitution of
Mortgage Trust Advisors, Inc.
The Board of Trustees (subject to the provisions of Sections 2, 3, 4,
and 5 of this Article) shall have the power to determine the terms of any
agreement with, and compensation of, the Advisor or any other person whom they
may employ or with whom they may contract, provided, however, that any
decision to employ or contract with any Trustee or any Person of which a
Trustee is an Affiliate, shall be valid only if made, approved or ratified by
a majority of the Trustees (including a majority of Independent Trustees) not
otherwise interested in such transaction as being fair and reasonable to the
Trust and on terms and conditions not less favorable to the Trust than those
that could be obtained from independent third parties. The Trustees may
exercise broad discretion in allowing the Advisor to administer and regulate
the operations of the Trust, to act as agent for the Trust, to execute
documents on behalf of the Board of Trustees, and to make executive decisions
which conform to the general policies and general principles previously
established by the Board of Trustees.
SECTION 2. TERM. The Board of Trustees shall not enter into any
Advisory Agreement with the Advisor unless such contract has a term of no more
than one year; except that the original term of the first Advisory Agreement
shall terminate one year from the first closing of Shares sold pursuant to the
initial public offering of Shares. It shall be the duty of the Board of
Trustees to evaluate the performance of the Advisor before entering into or
renewing any Advisory Agreement with the Advisor. The criteria used by the
Board of Trustees in its evaluation of the Advisor shall be reflected in the
minutes of the meeting of Trustees. The Advisory Agreement with the Advisor
shall be terminable (i) without cause by the Advisor or (ii) with or without
cause by a majority of the Independent Trustees, each without penalty, and
each upon 50 days' prior written notice to the non-terminating party. In the
event of the termination of the Advisory Agreement with the Advisor, the
Advisor will cooperate with the Trust and take all reasonable steps requested
to assist the Board of Trustees in making an orderly transition of the
advisory function. The Trustees shall determine that any successor Advisor
possess sufficient qualifications (a) to perform the advisory function for the
Trust and (b) to justify the compensation provided for in its Advisory
Agreement.
SECTION 3. COMPENSATION. The Independent Trustees shall determine
from time to time but at least annually that the compensation which the Trust
contracts to pay to the Advisor is reasonable in relation to the nature and
quality of the services performed. Each determination made by the Independent
Trustees concerning the reasonableness of the compensation paid to the Advisor
shall be recorded in the minutes of the meeting of Trustees and shall be based
on the factors set forth below and such other factors as the Independent
Trustees deem relevant:
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(a) the size of the advisory fee in relation to the size,
composition and profitability of the portfolio of the
Trust;
(b) the success of the Advisor in generating opportunities
that meet the investment objectives of the Trust;
(c the rates charged to other REITs and to investors other
than REITS by advisors performing similar services; and
(d) additional revenues realized by the Advisor and its
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;
(e) the quality and extent of service and advice furnished
by the Advisor;
(f) the performance of the investment portfolio of the
Trust, including income, conservation or
appreciation of capital, frequency of problem
investment and competence in dealing with distress
situations; and
(g) the quality of the portfolio of the Trust in
relationship to the investments generated by the Advisor
for its own account.
The Independent Trustees shall review the performance of the Advisor
and the compensation paid to it by the Trust to determine that the provisions
of the contract with the Advisor are being carried out.
In the case of multiple Advisors, incentive fees paid to such
Advisors and Affiliates thereof shall be distributed by a proportional method
reasonably designed to reflect the value added to the Trust's assets by each
respective Advisor or Affiliates.
The Independent Trustees shall determine from time to time but at
least annually that the total fees and expenses of the Trust are reasonable in
light of the investment experience of the Trust, its Net Asset Value, its Net
Income, and the fees and expenses of other comparable advisors in real estate.
Each such determination shall be recorded in the minutes of the meeting of
Trustees.
SECTION 4. OTHER ACTIVITIES OF ADVISOR. The Advisor shall not be
required to administer the investment activities of the Trust as its sole and
exclusive function. The Advisor may have other business interests and may
engage in other activities similar or in addition to those relating to the
Trust, including the rendering of services and advice to other Persons
(including REITs) and the management of other investments (including
investments of the Advisor and its Affiliates). The Board of Trustees may
request the Advisor to engage in other activities which complement the Trust's
investments and to provide services requested by the borrowers or prospective
borrowers from the Trust, and the Advisor may receive compensation or
commissions therefor from the Trust or other Persons.
The Advisor shall seek out and present to the Trust whether through
its own efforts or those of third parties retained by it, investment
opportunities consistent with the investment policies and objectives of the
Trust and such investment policies as the Trustees may adopt from time to
time. Except for the allocation of investment opportunities between the Trust
and the Affiliated Programs as set forth in the
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Prospectus, the Advisor shall be obligated to present an investment
opportunity to the Trust if (i) such opportunity is of a character which could
be taken by the Trust, (ii) such opportunity is compatible when the Trust's
investment objectives and policies and (iii) the Trust has the financial
resources to take advantage of such opportunity before the Advisor may take
advantage of such opportunity for its own account or present or recommend it
to others. Subject to the limitations contained in this paragraph, the Advisor
shall be protected in taking for its own account or recommending to others any
such particular investment opportunity.
SECTION 5. INITIAL INVESTMENT BY AFFILIATES OF THE ADVISOR. Prior to
the initial public offering of Shares pursuant to the Prospectus, the Advisor
shall make an Initial Investment of $200,000 in the Trust by acquiring 10,000
Shares. The Advisor, Sponsors or any Affiliates may not sell that initial
investment while the Sponsor remains a Sponsor but may transfer the Shares
represented by this initial investment to other Affiliates.
ARTICLE VII - LIMITATIONS ON EXPENSES AND COMMISSIONS
SECTION 1. LIMITATION ON TOTAL OPERATING EXPENSES. The annual Total
Operating Expenses of the Trust may not exceed the greater of: (i) 2% of the
Average Invested Assets of the Trust or (ii) 25% of the Trust's Net Income.
The Independent Trustees have the fiduciary responsibility of limiting the
Trust's annual Total Operating Expenses to amounts that do not exceed the
limitations described above. Within 60 days after the end of any fiscal year
of the Trust for which Total Operating Expenses for the 12 months then ended
exceed 2% of the Average Invested Assets of the Trust or 25% of the Trust's
Net Income, whichever is greater, the Advisor will reimburse the Trust for the
excess amount.
SECTION 2. LIMITATION ON REAL ESTATE COMMISSIONS. If the Trust
forecloses on a property securing a Mortgage and sells such property, the
Trust may pay real estate brokerage fees which are reasonable, customary and
competitive, taking into consideration the size, type and location of the
property ("Competitive Commission"). The aggregate of all real estate
brokerage commissions paid to all parties with respect to the sale of a
property shall not exceed the lesser of the Competitive Commission or an
amount equal to 6% of the gross sales price of the property. The amount of
such fees payable to the Advisor, a Trustee, a Sponsor or an Affiliate thereof
shall not exceed the lesser of (i) one-half of the Competitive Commission or
(ii) three percent of the gross sales price of a property and, shall be paid
only if such person provides a substantial amount of services in the sales
effort.
SECTION 3. LIMITATION ON ACQUISITION FEES AND EXPENSES. The total of
Acquisition Fees and Acquisition Expenses shall be reasonable, and shall not
exceed an amount equal to 6% of the purchase price of any Mortgage Investment.
Notwithstanding the above, a majority of the Trustees (including a majority of
the Independent Trustees) not otherwise interested in the transaction may
approve fees in excess of these limits if they determine the transaction to be
commercially competitive, fair and reasonable to the Trust. However,
notwithstanding the foregoing, the Acquisition Fees to be paid to the Advisor
or its Affiliates for sourcing, evaluating, structuring and negotiating the
acquisition terms of Mortgage Investments shall not exceed 3% of the principal
amount of each Mortgage Investment.
ARTICLE VIII - INVESTMENT POLICY
SECTION 1. GENERAL STATEMENT OF POLICY. The Trust intends to invest
in Originated Mortgages and Acquired Mortgages which will be secured directly
by first mortgage liens on
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residential real estate. The Trust shall have the right to acquire or
originate Mortgages without first obtaining a real property appraisal, unless
a majority of the Independent Trustees determine that such an appraisal is
necessary; if obtained, any real property appraisals will be maintained in the
Trust's books and records for at least five years. The foregoing investments
are intended to be structured to comply with the Real Estate Investment Trust
Provisions of the Code. In addition to the investments referred to above, the
Trust may, in the discretion of the Board of Trustees or the Advisor, make the
investments described in Section 2 below or such other investments that the
Board of Trustees or the Advisor deem in good faith to be consistent with the
Investment objectives and policies of the Trust as set forth in the
Prospectus.
The Trust may make commitments to make investments consistent with
the foregoing policies. The Trust may also participate in investments with
other unaffiliated investors, including unaffiliated investors having
investment policies similar to those of the Trust, on the same or different
terms. The Advisor may act as advisor to other investors, including investors
who have the same investment policies as the Trust.
The Independent Trustees shall review the investment policies of the
Trust with sufficient frequency and at least annually to determine that the
policies being followed by the Trust are in the best interests of its
Shareholders. Such determination by the Independent Trustees and the basis
therefor shall be recorded in the minutes of the meeting of Trustees.
The Trust may not enter into transactions with a Sponsor, the
Advisor, a Trustee or an Affiliate thereof, except as otherwise permitted by
Sections 7 and 8 of this Article VIII.
The general purpose of the Trust is to acquire assets and to seek
income which qualifies under the Real Estate Investment Trust ("REIT")
Provisions of the Code. The Board of Trustees shall endeavor to make Mortgage
Investments (including investments yielding "qualified temporary investment
income" within the meaning of Section 856(c)(6)(D) of the Code) in such a
manner as to comply with the requirements of the REIT Provisions of the Code
with respect to the composition of the Trust's investments and the derivation
of its income; provided, however, that for a period of time during which the
portfolio of investments is being developed, the Trust's assets may be
invested in investments which income which does not qualify under the REIT
Provisions of the Code.
The investment objectives of the Trust are to invest in first lien
Originated Mortgages and existing Acquired Mortgages secured by single family
residential real estate, which investments are expected to:
(1) produce net interest income on its mortgage portfolio;
and
(2) provide monthly Distributions from, among other things,
interest on Mortgage Investments.
(3) permit the reinvestment of payments of principal on
Mortgage Investments, payments of penalties and
premiums on Mortgages and the proceeds of Mortgage
Prepayments, Sales and Insurance net of expenses
received by the Trust.
SECTION 2. SPECIFIC INVESTMENTS. In addition to the types of
investments described above, the Trust may invest (through a cash management
account maintained at a trust company or otherwise) its assets in investments
such as: (a) securities issued, insured or guaranteed by the United
22
States government or government agencies, (b) savings accounts, (c)
certificates of deposit, (d) bank money market accounts, (e) bankers'
acceptances or commercial paper rated A-1 or better by Xxxxx'x Investors
Service, Inc., (f) money market funds having assets in excess of $50 million,
(g) other short-term highly liquid investments with banks having assets of at
least $50 million, (h) investments which yield "qualified temporary investment
income" within the meaning of Section 856(c)(6)(D) of the Code (i) interim
mortgages having a maturity of less than twelve (12) months that otherwise
meet the Trust's investment criteria and (ii) any combination of the foregoing
investments.
SECTION 3. REAL PROPERTY. To the extent the Trust invests in real
property, a majority of the Trustees shall determine the consideration paid
for such real property based on the fair market value of the property. If a
majority of the Independent Trustees request, or if the real property is
acquired from the Advisor, a Trustee, the Sponsors, or Affiliates thereof,
such fair market value shall be determined by a qualified independent real
estate appraiser selected by the Independent Trustees.
SECTION 4. RESERVES. The Trust may retain, as a permanent reserve,
any amounts which the Board of Trustees deems reasonable, in cash and in the
types of investments described above in Section 2 of this Article.
SECTION 5. CHANGES IN INVESTMENT POLICIES AND OBJECTIVES. Subject to
the investment restrictions in Sections 6 and 7 of this Article, any or all
the above described investment objectives and policies may be altered by the
vote of the holders of a majority of the Shares.
SECTION 6. UNINVESTED ASSETS. To the extent that the Trust has assets
not otherwise invested in accordance with Section 1 of this Article, the Board
of Trustees may invest such assets in the types of investments in which the
Trust is permitted to invest pursuant to Section 2 of this Article.
SECTION 7. RESTRICTIONS. The Board of Trustees shall not:
(a) invest in any foreign currency or bullion;
(b) invest in commodities or commodities futures contracts
other than interest rate futures, when used solely for hedging
purposes;
(c) invest in real estate contracts of sale, unless such
contracts of sale are in recordable form and are appropriately
recorded in the chain of title and unless such investment is held as
security for Mortgages made or acquired by the Trust;
(d) engage in any short sale;
(e) invest in any security in any entity holding investments
or engaging in activities prohibited by this Declaration of Trust;
(f) issue "redeemable equity securities" (as defined in
Section 2(a)(32) of the Investment Company Act of 1940), "face amount
certificates of the installment type" as defined in Section 2(a)(15)
thereof, or "periodic payment plan certificates" as defined in
Section 2(a)(27) thereof;
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(g) invest more than 10% of its Total Assets in Unimproved
Real Property or mortgage loans on Unimproved Real Property;
(h) except as set forth in (i) below, issue options or
warrants to purchase its Shares to any Person unless (i) issued to
all of its security holders ratably or (ii) as part of a financing
arrangement.
(i) issue options or warrants to purchase its Shares to the
Advisor, a Trustee, a Sponsor or an Affiliate thereof, unless such
options or warrants: (A) (i) are issued on the same terms as such
options or warrants are sold to the general public, (ii) do not
exceed an amount equal to 10% of the outstanding Shares of the Trust
on the date of grant, and (iii) are issued pursuant to a plan
approved by the Shareholders, or (B) are described in the Prospectus
for the initial sale of Shares to the public;
(j) commingle the Trust funds with those of any other person
or entity, except that the use of a zero balance or clearing account
shall not constitute a commingling of trust funds and that funds of
the Trust and funds of other entities sponsored by a Sponsor or its
Affiliates may be held in an account or accounts established and
maintained for the purpose of making computerized disbursements
and/or short-term investments provided the Trust funds are protected
from claims of such other entities and creditors of such other
entities;
(k) except for investments permitted by the Prospectus,
invest in equity securities unless a majority of Trustees, including
a majority of Independent Trustees, not otherwise interested in such
transaction approve the transaction as being fair, competitive and
commercially reasonable;
(l) issue its Shares on a deferred payment basis or other
similar arrangement;
(m) issue debt securities to the public;
(n) except for the Initial Investment by Affiliates of the
Advisor under Section 5 of Article VI hereof, issue Shares in a
private offering, unless (i) the consideration received per Share
equals or exceeds the Book Value of the Shares issued pursuant to the
Prospectus, (ii) the Shares are issued pursuant to a dividend
reinvestment plan, if subsequently adopted by the Trust or (iii) the
Shares are issued to the Advisor pursuant to the Advisory Agreement
for services rendered to the Trust;
(o) make or invest in any mortgage loans that are
subordinate to any mortgage or equity interest of the Advisor,
Sponsor, a Trustee or Affiliates thereof;
(p) sell property to the Sponsor, the Advisor, a Trustee or
Affiliate thereof, except as permitted under Article VIII, Section 8;
(q) the Trust may not invest in interest only strip
securities, principal only strip securities, CMO residual interest or
similar securities or securities derivatives that are highly volatile
or that are highly sensitive to prepayment rates and other market
factors. The Trust may not purchase CMO securities at a significant
premium;
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(r) use or apply land for farming, horticulture or similar
purposes;
(s) Invest in indebtedness (herein called "junior debt")
secured by a mortgage on real property which is subordinate to the
lien of other indebtedness (herein called "senior debt"), except
where the amount of such junior debt, plus the outstanding amount of
the senior debt, does not exceed 90% of the appraised value of such
property, if after giving effect thereto, the value of all such
investments of the Trust (as shown on the books of the Trust in
accordance with generally accepted accounting principles after all
reasonable reserves but before provision for depreciation) would not
then exceed 25% of the Trust's tangible assets.
(t) Engage in trading, as compared with investment
activities; or
(u) Engage in underwriting or the agency distribution of
securities issued by others.
SECTION 8. TRANSACTIONS BETWEEN THE TRUST AND AFFILIATED PERSONS.
The Trust shall not engage in transactions with any Sponsor, the Advisor, a
Trustee or Affiliates thereof, except to the extent that each such
transaction has, after disclosure of such affiliation, been approved or
ratified by the affirmative vote of a majority of the Independent Trustees,
not otherwise interested in such transaction, who have determined that (a)
the transaction is fair and reasonable to the Trust and its shareholders; (b)
the terms of such transaction are at least as favorable as the terms of any
comparable transactions made on arms length basis and known to the Trustees;
and (c) the total consideration is not in excess of the appraised value of
the property being acquired, if an acquisition is involved. As a result of
the foregoing a majority of the Independent Trustees, not otherwise
interested in such transaction, must approve the purchase of each Mortgage
Investment that is purchased from a Sponsor, the Advisor or an affiliate
thereof after determining that those purchases are made on terms and
conditions that are no less favorable than those that could be obtained from
independent third parties for mortgages with comparable terms, rates, credit
risks and seasoning.
Payments to the Advisor, the Trustees and their Affiliates for
services rendered in a capacity other than that as the Advisor or Trustees may
only be made upon a determination of a majority of the Independent Trustees,
not otherwise interested in such transaction that: (1) the compensation is not
in excess of their compensation paid for any comparable services; and (2) 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.
In the absence of fraud, no contract, act or other transaction
between the Trust and any other Person, or in which the Trust is interested,
that is described in this Section 8, shall be invalid, void or voidable even
though (a) one or more of the Trustees or officers are directly or indirectly
interested in, or connected with, or are trustees, partners, directors,
officers or retired officers of such other Person, or (b) one or more of the
Trustees or officers of the Trust, individually or jointly with others,is a
party or are parties to or directly or indirectly interested in, or connected
with, such contract, act or transaction.
SECTION 9. TRUST'S RIGHT TO BORROW FUNDS. The Trust may not incur
indebtedness unless (i) such indebtedness is not in excess of 50% of the Net
Asset Value of the Trust; or (ii) a majority of the Independent Trustees have
determined that such indebtedness is otherwise necessary to satisfy the
requirement that the Trust distribute at least 95% of the REIT Taxable Income
or is advisable to assure that the Trust maintains its qualification as a
REIT. The aggregate borrowings of the Trust, secured and unsecured, shall be
reasonable in relation to the Net Asset Value of the Trust and shall be
reviewed by the Trustees at least quarterly. The maximum amount of such
borrowings in relation to the Net Asset Value of the Trust shall, in the
absence of a satisfactory showing that a higher level of borrowing is
appropriate, not exceed 50%. Any excess in borrowing over such 50% level
shall be approved by a majority of the Independent Trustees and disclosed to
Shareholders in the next quarterly report of the Trust, along with
justification for such excess.
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The Trust shall not borrow funds from the Sponsor, the Advisor, a
Trustee or Affiliate thereof unless a majority of the Trustees, including a
majority of the Independent Trustees, not otherwise interested in such
transaction approve the transaction as being fair and reasonable and no less
favorable to the Trust than loans between unaffiliated lenders and borrowers
under the same circumstances.
SECTION 10. REPORTS. The Trust will mail or deliver, within 120 days
after the end of each fiscal year, to Shareholders as of a record date after
the end of the Trust's fiscal year and to each other Person who becomes a
Shareholder between such record date and the date of mailing or delivery, an
annual report of the affairs of the Trust, including annual financial
statements of the Trust (balance sheet, statement of income or loss,
statement of Shareholders' equity, statement of cash flows and a statement of
surplus) accompanied by a report containing an opinion of independent
certified public accountants. Such information will be prepared on an accrual
basis in accordance with generally accepted accounting principles. The Trust
shall also include in its annual report (i) the ratio of the costs of raising
capital during the period to the capital raised, (ii) the total Operating
Expenses as a percentage of Average Invested Assets and as a percentage of
Net Income, (iii) full disclosure of all material terms, factors and
circumstances describing any and all transactions with the Advisor, a
Trustee, a Sponsor or Affiliates thereof and of fees, commissions,
compensation and other benefits paid or accrued to the Advisor, a Trustee, a
Sponsor or Affiliates thereof for the fiscal year completed, showing the
aggregate amount paid or accrued to each recipient and the services performed
for such year (including fees or charges paid or accrued to the Advisor, a
Trustee, the Sponsor or Affiliates thereof by third parties doing business
with the Trust) (iv) a statement of distributions to the Shareholders and
their sources, and (v) a report from the Independent Trustees that the
policies being followed by the Trust are in the best interests of its
Shareholders and teh basis for that determination. The Independent Trustees
shall have the duty to examine and comment in the annual report on the
fairness of any such transactions with the Advisor, a Trustee, the Sponsor or
Affiliates thereof.
Any distribution to Shareholders of income or capital assets of the
Trust will be accompanied by a written statement disclosing the source of the
funds distributed. If, at the time of distribution, this information is not
available, a written explanation of the relevant circumstances will accompany
the distribution and the written statement disclosing the source of the funds
distributed will be sent to the Shareholders not later than 60 days after the
close of the fiscal year in which the distribution was made.
The Trustees, including the Independent Trustees, shall take
reasonable steps to insure that the requirements of this Section 10 are
satisfied on a timely basis.
ARTICLE IX - THE SHARES AND SHAREHOLDERS
SECTION 1. SHARES. The units into which the beneficial interest in
the Trust will be divided shall be designated as Shares, which Shares shall,
except as they may be Excess Shares as described in Article XII hereof, be
Shares of a single class of beneficial interest, each having a par value of
$.01 per
26
Share. The total number of authorized Shares of the Trust is 100,000,000. The
Trust is authorized to sell and issue as many Shares (including fractional
shares) as the Trustees shall determine in their sole discretion. A majority
of the Trustees,including a majority of the Independent Trustees, are
authorized to determine from time to time the number of such authorized Shares
that will be sold and issued to the public or others. The ownership of Shares
shall be recorded on the books of the Trust as its own transfer agent or of an
outside transfer or similar agent for the Trust. Certificates evidencing the
Shares shall be issued to Shareholders within a reasonable time after a
written request for such certificate is received by the Trust. The Trustees
may make such rules as they consider appropriate for the issuance of Share
certificates, including requiring the Shareholder requesting such issuance to
pay the reasonable expenses incurred in connection therewith, the use of
facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent shall
be conclusive as to who are the Shareholders and as to the number of Shares of
the Trust held from time to time by each such Shareholder. Except as
prohibited by Article VIII Section 7, the Shares may be issued for such
consideration as the Trustees shall determine, including upon the conversion
of convertible debt, or by way of share dividend or share split in the
discretion of the Trustees. Except as otherwise provided herein, all Shares
shall have equal voting, dividend, distribution, liquidation, redemption and
other rights. Shares reacquired by the Trust may be canceled by action of the
Trustees. All Shares shall be fully paid and non-assessable by or on behalf of
the Trust upon receipt of full consideration for which they have been issued
or without additional consideration if issued by way of share dividend, share
split, or upon the conversion of convertible debt. The Shares shall not
entitle the holder to preference, preemptive, appraisal, conversion, or
exchange rights of any kind.
No certificates for Shares shall be issued in place of any
certificate alleged to have been lost, destroyed or wrongfully taken, except,
if and to the extent required by the Board of Trustees, upon:
(i) production of evidence of loss, destruction or wrongful
taking;
(ii) delivery of a bond indemnifying the Trust and its
agents against any claim that may be made against it or them on
account of the alleged loss, destruction or wrongful taking of the
replaced certificate or the issuance of the new certificate;
(iii) payment of the expenses of the Trust and its agents
incurred in connection with the issuance of the new certificate; and
(iv) compliance with such other reasonable requirements as
may be imposed.
SECTION 2. TRANSFERS OF SHARES. Except as otherwise provided herein,
Shares shall be transferable on the records of the Trust upon presentment to
the Trust or a transfer agent for the Trust of such evidence of the payment of
transfer taxes and compliance with other provisions of law as the Trust or
such transfer agent may require.
SECTION 3. SHAREHOLDERS' DISCLOSURES; REDEMPTION OF SHARES. The
Shareholders shall upon demand disclose to the Trust in writing such
information with respect to direct and indirect ownership of the Shares as the
Board of Trustees deems necessary to comply with the provisions of the Code
and the regulations thereunder or to comply with the requirements of any other
taxing authority,including the provisions relating to qualification of the
Trust as a REIT. If the Board of Trustees shall at any time be of the opinion
that direct or indirect ownership of Shares of the Trust has or may become
concentrated to an extent which would prevent the Trust from qualifying as a
REIT under
27
the Real Estate Investment Trust Provisions of the Code, and whether or not
any Shares are or may become Excess Shares under Article XII, the Board of
Trustees shall have the power by lot or other means deemed equitable by them
to prevent the transfer of Shares of the Trust and/or call for redemption a
number of such Shares sufficient in the opinion of the Board of Trustees to
maintain or bring the direct or indirect ownership of Shares of the Trust into
conformity with the requirements for REITs. The redemption price shall be (i)
the last reported sale price of the Shares on the last business day prior to
the redemption date on the principal national securities exchange on which the
Shares are listed or admitted to trading, or (ii) if the Shares are not so
listed or admitted to trading, the average of the highest bid and lowest asked
prices on such last business day as reported by the national Quotation Bureau
Incorporated, the NASDAQ National Quotation System or a similar organization
selected by the Trust for such purpose, or (iii) if not determinable as
aforesaid, as determined in good faith by the Board of Trustees. From and
after the date fixed for redemption by the Board of Trustees, the holder of
any Shares so called for redemption shall cease to be entitled to dividends,
distributions, voting rights and other benefits with respect to such Shares,
except for the right to payment of the redemption price fixed as aforesaid.
For the purpose of this Section 3, the term "ownership" of Shares shall be
determined as provided in Section 544 of the Code or any successor provision.
SECTION 4. RIGHT TO REFUSE TO TRANSFER SHARES. Whenever it is deemed
by them to be reasonably necessary to protect the tax status of the Trust, the
Board of Trustees may require a statement or affidavit from each Shareholder
or proposed transferee of Shares setting forth the number of Shares already
owned by him and any related person specified in the form prescribed by the
Board of Trustees for that purpose. If, in the opinion of the Board of
Trustees, which shall be conclusive, any proposed transfer would jeopardize
the status of the Trust as a REIT under the Real Estate Investment Trust
Provisions of the Internal Revenue Code, whether or not any Shares are or may
become Excess Shares under Article XII, the Trustees may refuse to permit such
transfer. Any attempted transfer for which the Trustees have refused their
permission shall be void and of no effect to transfer any legal or beneficial
interest in the Shares. All contracts for the sale or other transfer of Shares
shall be subject to this provision.
SECTION 5. LEGAL OWNERSHIP OF ASSETS OF THE TRUST. The legal
ownership of the assets of the Trust and the right to conduct the business of
the Trust are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than beneficial interest in the Trust conferred
by their Shares issued hereunder and they shall have no right to compel any
partition, division, dividend, dividend or distribution of the Trust or any of
the assets of the Trust.
SECTION 6. SHARES DEEMED PERSONAL PROPERTY. The Shares shall be
personal property and shall confer upon the holders thereof only the interest
and rights specifically set forth in this Declaration of Trust. The death,
insolvency or incapacity of a Shareholder shall not dissolve or terminate the
Trust or affect its continuity nor give his legal representative any rights
whatsoever, whether against or in respect of other Shareholders, the Trustees
or the assets of the Trust or otherwise.
SECTION 7. SHAREHOLDERS RECORD DATE. In order that the Trust may
determine the Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or to express consent to Trust action
in writing without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Trustees may fix, in advance,
a record date, which shall not be more than sixty nor less than ten days
before the date of such meeting or other action. A determination of
Shareholders of record entitled to
28
notice or to vote at a meeting of Shareholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Trustees may fix a new
record date for the adjourned meeting.
SECTION 8. DIVIDENDS. Subject to the provisions of this Declaration
of Trust, the Board of Trustees may, out of funds legally available therefor,
declare dividends, including deficiency dividends, if necessary, upon the
Shares of the Trust as and when it deems expedient. Before declaring any
dividends there may be set apart out of any funds of the Trust available for
dividends, such sum or sums as the Board of Trustees, from time to time in its
discretion, deems proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Trustees shall deem conducive to the interests of the Trust. The Board of
Trustees may declare a consent dividend as long as the form of the actual and
consent dividends for the taxable year do not constitute a preferential
distribution.
ARTICLE X - DURATION AND AMENDMENT OF TRUST
SECTION 1. DURATION OF TRUST. The Trust shall continue without
limitation of time but shall be subject to termination at any time by the vote
or written consent of the holders of a majority of the Shares.
SECTION 2. AMENDMENT PROCEDURE. This Declaration of Trust may be
amended by a majority of the Trustees, including a majority of the Independent
Trustees, with the approval of the holders of a majority of the holders of a
majority of the outstanding Shares entitled to vote, except that: (i) the
amendment of the provision regarding super-majority Shareholder approval of
certain conversion ("rollup") transactions requires the vote of the holders of
eighty percent (80%) of the outstanding Shares and (ii) any amendment which
would change any rights with respect to any outstanding class of securities of
the Trust, by reducing the amount payable thereon upon liquidation of the
Trust, or by diminishing or eliminating any voting rights pertaining thereto,
requires the vote or written consent of the holders of two-thirds of the
outstanding securities of such class. Notwithstanding the foregoing,
two-thirds of the Trustees, including a majority of the Independent Trustees,
are authorized to alter or repeal any provision of this Declaration of Trust,
without the consent of the Shareholders, (i) to the minimum extent necessary,
based on an opinion of counsel, to comply with the requirements of the
provisions of the Internal Revenue Code applicable to REITs, the regulations
issued thereunder, and any ruling on or interpretation of the Internal Revenue
Code or the regulations thereunder, (ii) to delete or add any provision of
this Declaration of Trust required to be so deleted or added by the staff of
the Securities and Exchange Commission or a state "blue sky" commissioner or
such similar official, which addition or deletion is deemed by such
commissioner or official to be for the benefit or protection of Shareholders,
or (iii) to clarify any ambiguities or correct any inconsistencies.
ARTICLE XI - EXCULPATION AND INDEMNIFICATION AND OTHER MATTERS
SECTION 1. LIMITATION OF LIABILITY OF SHAREHOLDERS. Shareholders of
the Trust shall have the fullest limitation on liability permitted under the
laws of the State of Maryland and no Shareholder shall be liable for any of
the obligations of the Trust. Each Shareholder shall be entitled to pro rata
indemnity against all claims and liabilities and related reasonable expenses
from the Trust estate if, contrary to the provision hereof, such Shareholder
shall be held to any such personal liability. All contracts to which the Trust
is a party shall include a provision that the Shareholders shall not be
personally liable on such contract.
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SECTION 2. LIMITATION OF LIABILITY OF TRUSTEES AND OFFICERS. The
Trustees and officers of the Trust shall have the fullest limitation on
liability permitted by the laws of the State of Maryland. No Trustee or
officer shall be liable to the Trust or the Shareholders except as
specifically provided for herein.
Trustees and officers shall have no liability for breach of the duty
of loyalty, unless such breach of duty results in an improper personal benefit
or was the result of active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding. In all situations in which the
limitations of liability contained herein apply, the remedies available to the
Trust or its Shareholders shall be limited to equitable remedies, such as
injunctive relief or recision, and shall not include the right to recover
money damages. The Trustees and the officers shall be liable to the Trust or
the Shareholders only (i) to the extent the Trustee or officer actually
received an improper benefit or profit in money, property or services, in
which case any such liability shall not exceed the amount of the benefit or
profit in money, property or services actually received; or (ii) to the extent
that a judgment or other final adjudication adverse to such Trustee or officer
is entered in a proceeding based on a finding in the proceeding that such
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 3. INDEMNIFICATION. (a) Subject to any limitations contained
herein, the Trust shall indemnify and hold harmless the Trustees, the
Administrator, the Advisor, and their Affiliates and the employees of each who
are performing services on behalf of the Trust (all of the foregoing being
referred to as "Indemnified Parties" and each being referred to as
"Indemnified Party") against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorneys' fees and disbursements), and other amounts paid and reasonably
incurred by them in connection with or by reason of any act performed or
omitted to be performed by them in connection with the operation or business
of the Trust to the fullest extent allowed by the State of Maryland provided,
that (i) the Trustees, the Administrator, or the Advisor has determined, in
good faith, that the course and conduct which caused the loss or liability was
in the best interests of the Trust, (ii) such liability or loss was not the
result of negligence or misconduct with respect to the affiliated Trustee, the
Administrator, the Advisor and its Affiliates or the result of bad faith,
willful misfeasance, gross negligence or reckless disregard of the Trustee's
duties, and (iii) such indemnification or agreement to hold harmless is
recoverable only out of the assets of the Trust and not from the Shareholders.
The Trust shall not indemnify the Indemnified Parties for any
liability imposed by judgment, and costs associated therewith, including
attorneys' fees, arising from or out of a violation of state or federal
securities laws. Notwithstanding anything to the contrary in the preceding
paragraph, the Trust may indemnify the Indemnified Parties for settlements and
related expenses of lawsuits alleging securities law violations, and for
expenses incurred in successfully defending such lawsuits, only if: (a) a
court either (i) approves the settlement and finds that indemnification of the
settlement and related costs should be made, or (ii) approves indemnification
of litigation costs if there has been a successful defense, or (b) there has
been a dismissal with prejudice on the merits (without a settlement). Any
person seeking indemnification shall apprise the court of the published
position of the Securities and Exchange Commission with respect to
indemnification for securities law violations, before seeking court approval
for indemnification.
(b) The indemnification provided by the provisions of this Article XI
shall continue for the period of time of service or for any matter arising out
of the term of service as to an Indemnified Party and shall inure to the
benefit of the heirs, executors and administrators of such a person.
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(c) The Trust shall have the power to purchase and maintain insurance
on behalf of any person who is or was an Indemnified Party who performs
services on behalf of the Trust or is or was serving at the request of the
Trust as a director, trustee or officer of another corporation, partnership,
joint venture, trust or other enterprise in which the Trust has an interest
against any liability asserted against him or it and incurred by him or it in
any such capacity, or arising out of his or its status as such.
(d) In the event a particular state holds a Shareholder personally
liable for claims against the Trust (such as tort claims, contract claims
where the underlying agreement does not specifically exclude Shareholder
liability, claims for taxes and certain statutory liability), the Shareholder
will, upon payment of any such liability, and in the absence of willful
misconduct on his part, be entitled to reimbursement from the general assets
of the Trust, to the extent such assets are sufficient to satisfy the claim.
(e) The provision of advances from the Trust to the Indemnified
Parties for legal expenses and other costs incurred as a result of a legal
action is permissible only if the following three conditions are satisfied:
(i) the legal action relates to acts or omissions with
respect to the performance of duties or services by the Indemnified
Party on behalf of the Trust;
(ii) the legal action is initiated by a third party who is
not a Shareholder or the legal action is initiated by a Shareholder
acting in his or her capacity as such and a court of competent
jurisdiction specifically approves such advancement, and
(iii) the Indemnified Party undertakes to repay the advanced
funds to the Trust, together with applicable interest thereon, in
cases in which such Indemnified Party would not be entitled to
indemnification hereunder.
SECTION 4. RIGHT OF TRUSTEES AND OFFICERS TO OWN SHARES OR OTHER
PROPERTY AND TO ENGAGE IN OTHER BUSINESS. Except as provided for in this
Declaration of Trust, any Trustee or officer may acquire, own, hold and
dispose of Shares in the Trust, for his individual account, and may exercise
all rights of a shareholder to the same extent and in the same manner as if he
were not a Trustee or officer. Subject to Article IV Section 2(v), any Trustee
or officer may have personal business interests and may engage in personal
business activities, which interests and activities may include the
acquisition, syndication, holding, management, operation or disposition, for
his own account or for the account of others, of interests in Mortgage
Investments or real property or Persons engaged in the real estate business,
even if the same directly compete with the actual business being conducted by
the Trust; provided such interests or activities do not have a material
adverse effect on the business of the Trust. Subject to the provisions of
Article IV Section 8, any Trustee or officer may be interested as trustee,
officer, director, stockholder, partner, member, advisor or employee, or
otherwise have a direct or indirect interest in any Person who may be engaged
to render advice or services to the Trust, and may receive compensation from
such Person as well as compensation as Trustee, officer or otherwise hereunder
and no such activities shall be deemed to conflict with his duties and powers
as Trustee or officer. Notwithstanding anything to the contrary contained in
this Section 3, Independent Trustees shall at all times limit their activities
so that they at all times satisfy the definition of Independent Trustees as
set forth in Article II Section 1 hereof.
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ARTICLE XII - EXCESS SHARES
SECTION 1. EXCESS SHARES. (A) If, at any time, a person (as defined
in (C) below only for purposes of this Article XII) shall be or become an
Owner (as defined in (C) below) of Shares of the Trust in excess of 9.8% of
the outstanding Shares entitled to vote (the "Limit"), those Shares of the
Trust most recently acquired by such Person which are in excess of the Limit,
including for this purpose Shares deemed owned through attribution, shall
constitute "Excess Shares". Excess Shares shall have the following
characteristics:
(1) holders of Excess Shares shall not be entitled to
exercise any voting rights with respect to such Excess Shares;
(2) Excess Shares shall not be deemed to be outstanding for
the purpose of determining a quorum at the annual meeting or any
special meeting of Shareholders or for determining the number of
outstanding Shares for purposes of determining a "majority of the
outstanding Shares" in connection with a Shareholders' vote without a
meeting;
(3) any dividends or other distributions with respect to
Excess Shares which would have been payable in respect of Shares had
they not constituted "Excess Shares" shall be accumulated by the
Trust and deposited in a savings account in a bank (which may be the
Trust's dividend disbursing agent) for the benefit of, and be payable
to, the holder or holders of such Shares at such time as such Excess
Shares shall cease to be Excess Shares;
(4) Excess Shares shall be deemed to have been offered for
sale to the Trust or its designee at their fair market value for a
period of one hundred twenty (120) days from the date of (i) the
transfer of Shares which made the Shares Excess Shares if the Trust
has actual knowledge that such transfer creates Excess Shares or (ii)
if such transfer is not actually known to the Trust, the
determination by the Trustees in good faith by resolution duly
adopted that a transfer creating Excess Shares has taken place (the
"Offer Period"). Fair market value shall be determined as of the date
of (i) or (ii) above, and shall be the price as determined in good
faith by the Trustees, provided, however, (y) if the Shares are
listed on a national stock exchange, the fair market value shall be
the closing price on that national stock exchange, or, (z) if the
Shares are not listed on a national stock exchange but publicly
quoted on the National Quotation Bureau Incorporated's "pink sheets"
or the NASDAQ National Quotation System, then the fair market value
shall be the closing bid price on the applicable system.
The Trust may accept the deemed offer for Excess Shares by mailing by
registered or certified mail (return receipt requested) a written notice to
the record holder of Excess Shares at the address appearing on the Trust's
stock transfer records stating the Trust's acceptance of the offer within the
Offer Period. Payment for Excess Shares shall be made by the Trust by check,
subject to collection, within 30 days after acknowledgement of receipt of the
above described notice. After notice has been sent, Excess Shares shall have
no further rights beyond the right to receive payment pursuant to this
paragraph.
(B) Each Person who becomes the Owner of Excess Shares is obliged
immediately to give or cause to be given written notice thereof to the Trust
and to give to the Trust such other information as the Trust may reasonably
require of such person (1) with respect to identifying all Owners and amount
of ownership of its outstanding Shares held directly or by distribution by
such Person, and (2) such other information as may be necessary to determine
the Trust's status under the Code.
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(C) For the purpose of determination to be made under this Article,
(a) A Person shall be considered to "Own", be the "Owner" or
have "Ownership" of Shares if he is treated as owner of such Shares
for purposes of part 11, subchapter M of the Code, including the
attribution of ownership provisions of Sections 542 and 544 of the
Code, or if such Person would have beneficial ownership of such
Shares as defined under Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "Act") (all as in effect on the date of the
formation of the Trust);
(b) "Person" includes an individual, corporation,
partnership, estate, trust, association, 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 Act (as in effect on the date of the
formation of the Trust); and
(c) In the case of an ambiguity in the application of any of
the provisions of (a) and (b) above, the Trustees shall have the
power to determine for the purposes of this Article XII on the basis
of information known to them (i) whether any Person Owns Shares, (ii)
whether any two or more individuals, corporations, partnership,
estates, trusts, associations or joint stock companies or other
entities constitute a Person, and (iii) whether any of the entities
of (ii) above constitute a group.
(D) If any provision of this Article XII or any application of any
such provision is determined to be invalid by any federal or state court
having jurisdiction over the issues, the validity of the remaining provisions
shall not be affected.
(E) Nothing contained in this Article XII shall limit the authority
of the Trustees to take such other action as they deem necessary or advisable
to protect the Trust and the interests of its Shareholders by preservation of
the Trust's status as a REIT under the Code, including, without limitation,
those provided in Sections 3 and 4 of Article IX.
(F) All references in this Declaration of Trust to the vote of Shares
shall be deemed to include all Shares other than Excess Shares.
(G) Excess Shares shall be deemed to be of a class separate from the
class of Shares of beneficial interest provided in Article IX Section 1
hereof, and upon any such Share of beneficial interest becoming an Excess
Share, it shall be deemed to have been automatically converted into a Share of
such class of Excess Shares; and upon a share ceasing to be held by a person
in whose hands it is no longer deemed to be an Excess Share, such share shall
be deemed to have been automatically converted into a share of class of Shares
of beneficial interest described in Article IX Section 1 hereof.
ARTICLE XIII - CONVERSION TRANSACTIONS
SECTION 1. APPROVAL OF CONVERSION TRANSACTIONS. Notwithstanding any
provision to the contrary in this Declaration of Trust, and subject to the
restrictions on Rollups described in Article XIV Section 3 below, the approval
of the holders of eighty percent (80%) of the Shares and the unanimous
approval of the Independent Trustees shall be required for any exchange offer,
merger, consolidation or similar transaction involving the Trust in which the
Shareholders receive securities in a surviving entity having a different
duration, materially different investment objectives and policies, or
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a management compensation structure that is anticipated to provide
significantly greater management compensation, from that described in the
Prospectus, except for any such transaction affected because of changes in
applicable law, or to preserve tax advantages for a majority in interest of
the Shareholders.
ARTICLE XIV - ROLLUPS
SECTION 1. APPRAISALS. An appraisal of all the Trust's assets shall
be obtained from a competent Independent Expert in connection with a proposed
Rollup.
If the appraisal will be included in a prospectus used to offer the
securities of a Rollup Entity, the appraisal shall be filed with the
Securities and Exchange Commission and the states as an exhibit to the
registration statement for the offering of the Rollup Entity's Shares. The
issuer of the Rollup Entity's Shares shall be subject to liability for
violation of Section 11 of the Securities Act of 1933 and comparable
provisions under state laws for any material misrepresentations or material
omissions in the appraisal.
The Trust's assets shall be appraised on a consistent basis. The
appraisal shall:
(a) be based on an evaluation of all relevant information;
(b) indicate the value of the Trust's assets as of a date
immediately prior to the announcement of the proposed rollup, and
(c) assume an orderly liquidation of the Trust's assets over
a 12 month period.
The terms of the engagement of the Independent Expert shall clearly
state that the engagement is for the benefit of the Trust and its
Shareholders. A summary of the appraisal shall be included in a report to the
Shareholders in connection with the proposed Rollup.
SECTION 2. SHAREHOLDER OPTIONS. The person sponsoring the Rollup
shall offer to Shareholders who vote "no" on the proposed Rollup the choice
of:
(a) accepting the securities of the Rollup Entity offered in
the proposed Rollup; or
(b) one of the following choices:
(i) remaining as Shareholders of the Trust and
preserving their interests therein on the same terms and
conditions as existed previously; or
(ii) receiving cash in an amount equal to the
Shareholders' pro rata share of the appraised value of the
net assets of the Trust.
SECTION 3. RESTRICTIONS. The Trust shall not participate in any
proposed Rollup which would:
(a) result in the Shareholders having voting rights that are
less than those provided in this Declaration of Trust;
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(b) result in Shareholders having rights to receive reports
that are less than those provided in Article VIII Section 10 hereof;
(c) include provisions which would operate to materially
impede or frustrate the accumulation of shares by any purchaser of
the securities of the Rollup Entity (except to the minimum extent
necessary to preserve the tax status of the Rollup Entity);
(d) limit the ability of an investor to exercise the voting
rights of its securities in the Rollup Entity on the basis of the
number of the Trust's Shares held by that investor;
(e) result in investors in the Rollup Entity having rights
of access to the records of the Rollup Entity that are less than
those provided in Article III Section 5 hereof; or
(f) place the cost of the transaction on the Trust if the
Rollup is not approved by the Shareholders; provided, however, that
nothing shall be construed to prevent participation in any proposed
Rollup which would result in Shareholders having rights and
restrictions comparable to those contained herein.
ARTICLE XV - STATUTORY AGENT
SECTION 1. STATUTORY AGENT. At all times that Trust shall have a
resident agent in Maryland which may be a natural person or a business entity
doing business in Maryland. Until otherwise designated by the Trustees, the
statutory resident agent shall be CSC - Lawyers Incorporating Service Company.
ARTICLE XVI - ELECTION TO BE GOVERNED BY
SPECIAL VOTING REQUIREMENT LAW
SECTION 1. ELECTION. The Trust elects to be governed by the special
voting requirement of the Maryland Corporations and Associations Article of
the Annotated Code of Maryland.
ARTICLE XVII - MISCELLANEOUS
SECTION 1. SEAL. The Trust seal, if adopted by the Trustees, shall be
circular in form and shall contain the name of the Trust, the year of its
creation and the words "MARYLAND REAL ESTATE INVESTMENT TRUST" or such other
words to such effect. Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or otherwise produced.
SECTION 2. FISCAL YEAR. The fiscal year of the Trust shall be
determined by resolution of the Board of Trustees.
SECTION 3. CHECKS. 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 officers, or agent or agents of the
Trust, and in such manner, as shall be determined from time to time by
resolution of the Board of Trustees.
SECTION 4. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required by this Declaration of Trust to be given, except as otherwise set
forth herein, personal notice is not meant unless
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expressly stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the Trust, and such notice shall be deemed to have been given on
the day of such mailing. Shareholders not entitled to vote shall not be
entitled to receive notice of any meetings or solicitation of Shareholder
consent without a meeting except as otherwise provided by statute.
Whenever any notice is required to be given under the provisions of
any law, or under the provisions of this Declaration of Trust, a waiver
thereon in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed proper
notice.
SECTION 5. SUCCESSORS IN INTEREST. This Declaration of Trust shall be
binding upon and inure to the benefit of the undersigned Trustees and their
successors, assigns, heirs, distributees and legal representatives, and every
Shareholder and his successors, assigns, heirs, distributees and legal
representatives.
SECTION 6. INSPECTION OF RECORDS. Inspection of books and records
shall be permitted to the same extent as permitted under law applicable to
shareholders of a corporation organized in the State of Maryland, unless
broader inspection rights have been granted to the Shareholders in Article
III, Section 5, in which event the Shareholders shall be entitled to such
broader inspection rights.
SECTION 7. SEVERABILITY. If any provision of this Declaration of
Trust shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such jurisdiction and
shall not in any manner affect or render invalid or unenforceable such
provision in any other jurisdiction or any other provision of this Declaration
of Trust in any jurisdiction.
SECTION 8. APPLICABLE LAW. This Declaration has been
executed,acknowledged and delivered by the Trustees with reference to the
statutes and laws of the State of Maryland, and the rights of all parties and
the construction and effect of any provision hereof shall e subject to and
construed according to the statutes and laws of said State of Maryland.
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IN WITNESS WHEREOF, the undersigned Trustees of UNITED MORTGAGE
TRUST, have signed this Declaration of Trust as Trustees as of the date first
above written.
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Xxxxxxxxx X. Xxxxxxx
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Xxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxx
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Xxxxxxx X. X'Xxxxxx, Xx.
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