RMR PREFERRED DIVIDEND FUND II
AGREEMENT AND DECLARATION OF TRUST
SEPTEMBER 15, 2005
ARTICLE I NAME AND DEFINITIONS.................................................................................1
Section 1. Name......................................................................................1
Section 2. Definitions...............................................................................1
ARTICLE II PURPOSE..............................................................................................2
ARTICLE III SHARES...............................................................................................3
Section 1. Division of Beneficial Interest...........................................................3
Section 2. Ownership of Shares.......................................................................4
Section 3. Investments in the Trust..................................................................4
Section 4. Share Restrictions........................................................................4
Section 5. No Preemptive Rights......................................................................4
Section 6. Derivative Claims.........................................................................4
Section 7. Direct Claims.............................................................................5
Section 8. Status of Shares and Limitation of Personal Liability.....................................6
ARTICLE IV THE TRUSTEES.........................................................................................6
Section 1. Number and Classes of Trustees and Term of Office.........................................6
Section 2. Vacancies; Resignation; Removal...........................................................7
Section 3. Effect of Death, Resignation, etc. of a Trustee...........................................7
Section 4. Powers....................................................................................8
Section 5. Voting...................................................................................10
Section 6. Payment of Expenses by the Trust.........................................................11
Section 7. Ownership of Assets of the Trust.........................................................11
Section 8. Advisory, Management and Distribution Services...........................................11
ARTICLE V RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES.....................................................12
Section 1. Definitions..............................................................................12
Section 2. Equity Shares............................................................................14
Section 2.1 Ownership Limitations...........................................................14
Section 2.2 Remedies for Breach.............................................................16
Section 2.3 Notice of Restricted Transfer...................................................16
Section 2.4 Owners Required To Provide Information..........................................16
Section 2.5 Remedies Not Limited............................................................16
Section 2.6 Ambiguity.......................................................................17
Section 2.7 Exceptions......................................................................17
Section 2.8 Legend..........................................................................18
Section 3. Transfer of Equity Shares in Trust.......................................................19
Section 3.1 Ownership in Trust..............................................................19
Section 3.2 Status of Shares Held by the Charitable Trustee.................................19
Section 3.3 Dividend and Voting Rights......................................................19
Section 3.4 Sale of Shares by Charitable Trustee............................................19
Section 3.5 Designation of Charitable Beneficiaries.........................................20
Section 4. Enforcement..............................................................................20
Section 5. Non-Waiver...............................................................................20
Section 6. Continued Effect.........................................................................20
ARTICLE VI SHAREHOLDERS' VOTING POWERS AND MEETINGS............................................................20
Section 1. General..................................................................................20
- i -
Section 2. Voting Powers as to Certain Transactions.................................................20
Section 3. Quorum and Required Vote.................................................................21
Section 4. Advance Notice of Nominees for Trustee and Other Proposals...............................22
Section 5. Conversion to Open-End Company...........................................................26
Section 6. Shareholder Meetings.....................................................................26
Section 7. Inspection of Records....................................................................26
ARTICLE VII DISTRIBUTIONS AND DETERMINATION OF NET ASSET VALUE..................................................27
Section 1. Distributions............................................................................27
Section 2. Determination of Net Asset Value.........................................................27
ARTICLE VIII COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES................................................27
Section 1. Compensation.............................................................................27
Section 2. Limitation of Liability..................................................................27
ARTICLE IX INDEMNIFICATION, CONTRACTING WITH INTERESTED PARTIES AND IMPACT OF CORPORATE LAW....................28
Section 1. Trustees, Officers, etc..................................................................28
Section 2. Rebuttable Presumption...................................................................28
Section 3. Indemnification Not Exclusive............................................................28
Section 4. Transactions Between the Trust and its Trustees, Officers, Employees and Agents..........29
Section 5. General Corporate Law....................................................................29
Section 6. Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property
and to Engage in Other Business..........................................................30
Section 7. Shareholders.............................................................................30
ARTICLE X MISCELLANEOUS.......................................................................................31
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice...............................31
Section 2. Express Exculpatory Clauses and Instruments..............................................31
Section 3. Trustees and Officers Good Faith Action, Expert Advice, No Bond or Surety................31
Section 4. Liability of Third Persons Dealing with Trustees.........................................31
Section 5. Duration and Termination of Trust........................................................31
Section 6. Filing of Copies, References, Headings...................................................32
Section 7. Applicable Law...........................................................................32
Section 8. Trust Only...............................................................................32
Section 9. AMEX Transactions and Contracts..........................................................33
Section 10. Address of the Trust and the Trustees and Agent for Service of Process...................33
ARTICLE XI AMENDMENTS, BYLAWS AND CONSTRUCTION.................................................................33
Section 1. Amendments by Trustees...................................................................33
Section 2. Amendments by Shareholders and Trustees..................................................33
Section 3. Bylaws...................................................................................33
Section 4. Construction.............................................................................34
- ii -
RMR PREFERRED DIVIDEND FUND II
AGREEMENT AND DECLARATION OF TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made this 15th day of September,
2005, by the Trustees hereunder and by the holder of shares of beneficial
interest with the intent that it will be binding upon subsequent Trustees and
upon all subsequent holders of shares of beneficial interest hereunder.
WHEREAS, this Trust has been formed to carry on the business of an
investment company;
WHEREAS, the Trust intends for tax purposes to be treated as a "regulated
investment company" under the Code for the taxable year ending December 31
during which the Trust first sells Shares in a public offering, and for each
taxable year thereafter;
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a
Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1. NAME. This Trust shall be known as "
RMR Preferred Dividend
Fund II" and the Trustees shall conduct the business of the Trust under that
name or any other name as they may from time to time determine.
Section 2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "Trust" refers to the
Massachusetts business trust established by
this Declaration, as it may be further amended or restated from time to
time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV;
(c) "Code" shall mean the Internal Revenue Code of 1986, and the
rules and regulations thereunder, all as amended from time to time. All
references to specific sections of the Code shall include applicable
successor provisions;
(d) "Shares" means the equal proportionate transferable units into
which the beneficial interest in the Trust shall be divided from time to
time or, if more than one
- 1 -
class or series of Shares is authorized by the Trustees, the equal
proportionate transferable units into which each class or series of shares
shall be divided from time to time;
(e) "Shareholder" means a record owner of Shares;
(f) "RMR Advisors" means RMR Advisors, Inc., the Trust's investment
advisor, or any successor investment advisor to the Trust;
(g) "Person" means an individual, corporation, partnership, estate,
trust (including, but not limited to, a trust qualified under Sections
401(a) or 501(c)(17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity and also
includes a group as that term is used for purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and a
group to which an Excepted Holder Limit (as defined in Article V) applies;
(h) The "1940 Act" refers to the Investment Company Act of 1940 and
the rules and regulations thereunder, all as amended from time to time;
(i) "Declaration" shall mean this Agreement and Declaration of Trust,
as amended or restated from time to time;
(j) "Bylaws" shall mean the Bylaws of the Trust as amended or
restated from time to time;
(k) The term "class" or "class of Shares" refers to the division of
Shares into two or more classes as provided in Article III, Section 1
hereof; and
(l) The term "series" or "series of Shares" refers to the division of
Shares representing any class into two or more series as provided in
Article III, Section 1 hereof.
ARTICLE II
PURPOSE
The purpose of the Trust is to provide investors a managed investment
primarily in securities, debt instruments and other instruments and rights of a
financial character and to carry on such other business as the Trustees may from
time to time determine pursuant to their authority under this Declaration.
Nothing herein shall preclude the Trust from being treated for tax purposes as
an association under the Code.
- 2 -
ARTICLE III
SHARES
Section 1. DIVISION OF BENEFICIAL INTEREST. The Trustees may, without
Shareholder approval, authorize one or more classes of Shares (which classes may
be divided into two or more series), with Shares of each such class or series
having such par value and such preferences, voting powers, terms of redemption,
if any, and special or relative rights or privileges (including conversion
rights, if any) as the Trustees may determine. Subject to applicable law, the
Trustees may, without Shareholder approval, authorize the Trust to issue
subscription or other rights representing interests in Shares to existing
Shareholders or other persons subject to such terms and conditions as the
Trustees may determine. The number of Shares of each class or series authorized
shall be unlimited, except as the Bylaws may otherwise provide, and the Shares
so authorized may be represented in part by fractional shares. The Trustees may
without Shareholder approval from time to time divide or combine the Shares of
any class or series into a greater or lesser number without thereby changing the
proportionate beneficial interest in the class or series.
The Shares shall initially be divided into one class, a class of an
unlimited number of Common Shares, $0.001 par value (the "Common Shares"),
having the powers, preferences, rights, qualifications, limitations and
restrictions described below. The Trust may also, from time to time, issue a
class of an unlimited number of preferred shares, (the "Preferred Shares"),
having the powers, preferences, rights, qualifications, limitations and
restrictions as the Trustees may determine.
(i) Subject to the rights of the holders of the Preferred Shares, if
any, in the event of the termination of the Trust the holders of the Common
Shares shall be entitled to receive pro rata the net distributable assets of the
Trust.
(ii) The holders of the Common Shares shall not, as such holders, have
any right to acquire, purchase or subscribe for any Common Shares or securities
of the Trust which it may hereafter issue or sell, other than such right, if
any, as the Trustees in their discretion may determine.
(iii) Subject to the rights of the holders of the Preferred Shares, if
any, dividends or other distributions, when, as and if declared by the Trustees,
shall be shared equally by the holders of Common Shares on a share for share
basis. The Trustees may direct that any dividends or other distributions or any
portion thereof as declared and distributed shall be paid in cash to the holder,
or, alternatively, may direct that any such dividends be reinvested in full and
fractional Shares of the Trust.
(iv) The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration and on such terms as they may
determine, or cancel any Common Shares of any series reacquired by the Trust at
their discretion from time to time. Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust.
- 3 -
(v) Common Shares may be issued from time to time, without the vote of
the Shareholders (or, if the Trustees in their sole discretion deem advisable,
with a vote of Shareholders), either for cash or for such other consideration
(which may be in any one or more instances a certain specified consideration or
certain specified considerations) and on such terms as the Trustees, from time
to time, may deem advisable, and the Trust may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with
the assumption of liabilities).
(vi) The Trust may issue Common Shares in fractional denominations to
the same extent as its whole Shares, and Shares in fractional denominations
shall be Common Shares having proportionately to the respective fractions
represented thereby all the rights of whole Shares, including, without
limitation, the right to vote, the right to receive dividends and distributions
and the right to participate upon termination of the Trust, but excluding the
right to receive a certificate representing fractional Shares.
Section 2. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent. Except as
provided in the Bylaws or as the Trustees may otherwise determine from time to
time, no certificates certifying the ownership of Shares shall be issued. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the transfer of Shares and similar matters. The record books
of the Trust as kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the Shareholders of each class and
series and as to the number of Shares of each class and series held from time to
time by each Shareholder.
Section 3. INVESTMENTS IN THE TRUST. The Trustees shall accept
investments in the Trust from such persons and on such terms and, subject to any
requirements of law, for such consideration, which may consist of cash or
tangible or intangible property or a combination thereof, as the Trustees may
from time to time determine.
Section 4. SHARE RESTRICTIONS. Notwithstanding any provision herein to
the contrary, but subject to the principles of Section 9 of Article X, any
purchase or transfer or purported purchase or transfer of Shares to any person
whose holding of the Shares of the Trust may cause the Trust to incur a
liability for any tax imposed under the Code that would not otherwise be imposed
but for the purchase or transfer of the Shares to such person, shall be void ab
initio. Any Shares purportedly transferred to or retained by such a person may,
at the option of the Trust, be repurchased by the Trust at the lesser of market
value or net asset value at the time of repurchase. A legend describing the
foregoing restrictions may be placed on share certificates if certificates are
issued.
Section 5. NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive
or other right to receive, purchase or subscribe for any additional Shares or
other securities issued by the Trust.
Section 6. DERIVATIVE CLAIMS. No Shareholder shall have the right to
bring or maintain any court action, proceeding or claim on behalf of the Trust
or any series or class of Shares or Shareholders without first making demand on
the Trustees requesting the Trustees to
- 4 -
bring or maintain such action, proceeding or claim. Such demand shall not be
excused under any circumstances, including claims of alleged interest on the
part of the Trustees, unless the plaintiff makes a specific showing that
irreparable non-monetary injury to the Trust or series or class of Shares or
Shareholders would otherwise result. Such demand shall be mailed to the
Secretary of the Trust at the Trust's principal office and shall set forth with
particularity the nature of the proposed court action, proceeding or claim and
the essential facts relied upon by the Shareholder to support the allegations
made in the demand. The Trustees shall consider such demand. In their sole
discretion, the Trustees may submit the matter to a vote of Shareholders of the
Trust or a series or class of Shares, as appropriate. Any decision by the
Trustees to bring, maintain or settle such court action, proceeding or claim, or
to submit the matter to a vote of Shareholders, shall be binding upon all
Shareholders who will be prohibited from maintaining separate competing court
actions, proceedings or suits on the same subject matter. Any decision by the
Trustees not to bring or maintain a court action, proceeding or suit on behalf
of the Trust or a series or class of Shares shall be subject to the right of the
Shareholders to vote on whether or not such court action, proceeding or suit
should or should not be brought or maintained as a matter presented for
Shareholder consideration under Section 4 of Article VI of this Declaration; and
the vote of Shareholders required to override the Trustees decision and to
permit the Shareholder(s) to proceed with the proposed court action, proceeding
or suit shall be a majority of the outstanding shares, series or class or group
which are affected by the proposed court action, proceeding or suit.
Section 7. DIRECT CLAIMS. No series or class or group of Shareholders
shall have the right to bring or maintain a direct action or claim for monetary
damages against the Trust or the Trustees predicated upon an express or implied
right of action under this Declaration or the 1940 Act, nor shall any single
Shareholder, who is similarly situated to one or more other Shareholders with
respect to the alleged injury, have the right to bring such an action, unless
the series or class or group of Shareholders or Shareholder has obtained
authorization from the Trustees to bring the action. The requirement of
authorization shall not be excused under any circumstances, including claims of
alleged interest on the part of the Trustees except only rights of action by
Shareholders specifically authorized by Section 36(b) of the 1940 Act or other
applicable law. A request for authorization shall be mailed to the Secretary of
the Trust at the Trust's principal office and shall set forth with particularity
the nature of the proposed court action, proceeding or claim and the essential
facts relied upon by the series or class or group of Shareholders or Shareholder
to support the allegations made in the request. The Trustees shall consider such
request. In their sole discretion, the Trustees may submit the matter to a vote
of Shareholders of the Trust or series or class or group of Shares, as
appropriate. Any decision by the Trustees to settle or to authorize such court
action, proceeding or claim, or to submit the matter to a vote of Shareholders,
shall be binding upon the series or class or group of Shareholders or
Shareholder seeking authorization who will be prohibited from maintaining
separate competing court actions, proceedings or suits on the same subject
matter. Any decision by the Trustees not to authorize a court action, proceeding
or suit by a series or class or group of Shareholders shall be subject to the
right of the Shareholders to vote on whether such court action, proceeding or
suit should or should not be brought or maintained as a matter presented for
Shareholder consideration under Section 4 of Article VI of this Declaration; and
the vote of Shareholders required to override the Trustees decision and to
permit the Shareholder(s) to proceed with the proposed court action,
- 5 -
proceeding or suit shall be a majority of the outstanding Shares, series or
class or group which are affected by the proposed court action, proceeding or
suit. For purposes of this Section 7, the term "Shareholder" or "Shareholders"
includes a former Shareholder or former Shareholders.
Section 8. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this Declaration and the Bylaws. Every Shareholder by virtue of having become
a Shareholder shall be held to have expressly assented and agreed to the terms
of this Declaration and the Bylaws and to have become a party hereto and
thereto. The death of a Shareholder during the continuance of the Trust shall
not operate to terminate the Trust nor entitle the representative of any
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares afford Shareholders the status of partners of the Trust.
Neither the Trust nor the Trustees, nor any officer, employee or agent of the
Trust, shall have any power to bind personally any Shareholder, nor except as
specifically provided herein to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay.
ARTICLE IV
THE TRUSTEES
Section 1. NUMBER AND CLASSES OF TRUSTEES AND TERM OF OFFICE. The
Trustees who are signatories to this Declaration on the date hereof, and such
other persons as the Trustee or Trustees then in office shall (prior to any sale
of Shares pursuant to a public offering) elect, shall serve until the first
meeting of Shareholders at which Trustees of his or her Class (as defined below)
are elected and until his or her successor is elected and qualified, or until he
or she sooner dies, resigns, retires, or is disqualified or removed from office.
Subject to the voting powers of one or more classes or series of Shares as set
forth in the Bylaws, the number of Trustees shall be such number as shall be
fixed from time to time by the Trustees; provided, however, that the number of
Trustees shall in no event be less than three (3) from and after the date when
Shares are first sold pursuant to a public offering.
An initial annual meeting of Shareholders or special meeting in lieu
thereof shall be called to be held not more than eighteen months after Shares
are first sold pursuant to a public offering; subsequent annual meetings of
Shareholders or special meetings in lieu thereof (each an "annual meeting")
shall be held as specified in the Bylaws. Prior to any sale of Shares pursuant
to a public offering, the Trustees shall be classified, with respect to the time
for which they severally hold office, into the following three classes (each a
"Class"): Class I, whose term expires at the initial annual meeting; Class II,
whose term expires at the next succeeding annual meeting after the initial
annual meeting (the "second annual meeting"); and Class III, whose term expires
at the next succeeding annual meeting after the second annual meeting. Each
Class shall consist of at least one Trustee. At each annual meeting beginning
with the initial annual meeting, the successors of the Class of Trustees whose
term expires at that meeting shall be elected to
- 6 -
hold office for a term expiring at the annual meeting held in the third year
following the year of their election, with each Trustee holding office until the
expiration of the term of the relevant Class and the election and qualification
of his or her successor, or until he or she sooner dies, resigns, retires, or is
disqualified or removed from office.
The Trustees shall assign by resolution Trustees to each of the three
Classes. The Trustees also may determine by resolution those Trustees in each
Class that shall be elected by Shareholders of a particular class or series of
Shares. If the number of Trustees is changed, any increase or decrease shall be
apportioned among the Classes by resolution of the Trustees. No reduction in the
number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his or her term unless the Trustee is specifically
removed pursuant to Section 2 of this Article IV at the time of the decrease.
Except as provided in this Section 1 or Section 2 of this Article IV, Trustees
shall be elected only at an annual meeting of Shareholders.
Section 2. VACANCIES; RESIGNATION; REMOVAL. From and after the date
when Shares are first sold in a public offering and subject to any voting powers
of one or more classes or series of Shares as set forth in the Bylaws, any
vacancies occurring in the Trustees may be filled by the Trustees as set forth
below.
Subject to any limitations imposed by the 1940 Act or other applicable law,
any vacancy occurring in the Trustees, including a vacancy that results from an
increase in the number of Trustees, may be filled by a majority vote of the
Trustees then in office, whether or not sufficient to constitute a quorum, or by
a sole remaining Trustee; provided, however, that if the Shareholders of any
class or series of Shares are entitled separately to elect one or more Trustees,
a majority of the remaining Trustees elected by that class or series or the sole
remaining Trustee elected by that class or series may fill any vacancy among the
number of Trustees elected by that class or series. A Trustee elected by the
Trustees to fill any vacancy occurring in the Trustees shall serve until the
next annual meeting of Shareholders at which such Trustee's Class shall be
elected, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any Trustee elected by Shareholders at
an annual meeting to fill any vacancy occurring in the Trustees that has arisen
since the preceding annual meeting of Shareholders (which vacancy has not been
filled by election of a new Trustee by the Trustees) shall hold office for a
term which coincides with the remaining term of the Class of Trustee to which
such office was previously assigned.
Any Trustee may resign or retire as a Trustee by an instrument in writing
signed by him and delivered to the Secretary of the Trust, and such resignation
or retirement shall be effective upon such delivery, or at a later date
according to the terms of the instrument. Except as required by applicable law,
a Trustee may be removed from office only for "Cause" (as hereinafter defined)
and only by action of at least seventy-five percent (75%) of the outstanding
Shares of the classes or series of Shares entitled to vote for the election of
such Trustee. "Cause" for these purposes shall require willful misconduct,
dishonesty or fraud on the part of the Trustee in the conduct of his office or
such Trustee being convicted of a felony.
Section 3. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
declination, resignation, retirement, removal, disqualification or incapacity of
the Trustees, or any one of
- 7 -
them, shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration.
Section 4. POWERS. Subject to the provisions of this Declaration, the
business of the Trust shall be managed by the Trustees, and they shall have all
powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this
Declaration providing for the conduct of the business of the Trust and may amend
and repeal them to the extent and as provided in Article XI, Section 3 of this
Declaration. Subject to the voting power of one or more classes or series of
Shares as set forth in the Bylaws, the Trustees may fill vacancies in or add to
their number, including vacancies resulting from increases in their number, and
may elect and remove such officers and appoint and terminate such agents as they
consider appropriate; they may appoint from their own number, and terminate, any
one or more committees consisting of one or more Trustees, including any one or
more executive committees which may, when the Trustees are not in session,
exercise some or all of the power and authority of the Trustees as the Trustees
may determine; they may appoint an advisory board, the members of which shall
not be Trustees and need not be Shareholders; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of the Trust's assets in a
system or systems for the central handling of securities, retain a transfer
agent or a shareholder servicing agent, or both, provide for the distribution of
Shares by the Trust through one or more underwriters or otherwise, set record
dates for the determination of Shareholders with respect to various matters, and
in general delegate such authority as they consider desirable to any officer of
the Trust, to any committee of the Trust and to any agent or employee of the
Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To elect and to revoke the status of the Trust as a "regulated
investment company" under the Code;
(b) To invest and reinvest cash, and to hold cash uninvested;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(e) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(f) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the
- 8 -
Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(g) To the extent necessary or appropriate to give effect to the
preferences, special or relative rights and privileges of any classes or
series of Shares, to allocate assets, liabilities, income and expenses of
the Trust to a particular class or classes or series of Shares or to
apportion the same among two or more classes or series;
(h) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of which
is or was held in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security held in the Trust;
(i) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(j) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust on any matter in controversy, including but not
limited to claims for taxes;
(k) To enter into joint ventures, general or limited partnerships,
limited liability companies, and any other combinations or associations;
(l) To borrow funds;
(m) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all of such
obligations;
(n) To indemnify or to purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for the
conduct of the business of the Trust, including, without limitation,
insurance policies insuring the assets of the Trust and payment of
distributions and principal on its portfolio investments, and indemnities
or insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, sub-advisers or managers,
administrator or sub-administrator, underwriters or independent contractors
of the Trust individually against all claims and liabilities of every
nature arising by reason of holding, being or having held any such office
or position, or by reason of any action alleged to have been taken or
omitted by any such person as Shareholder, Trustee, officer, employee,
agent, investment adviser, sub-adviser or manager, administrator or
sub-administrator, underwriter or
- 9 -
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have
the power to indemnify such person against such liability;
(o) To pay pensions for faithful service, as deemed appropriate by
the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including
the purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust;
(p) To purchase or otherwise acquire Shares;
(q) To engage in any other lawful act or activity in which business
corporations organized under the laws of The Commonwealth of
Massachusetts
may engage; and
(r) To change the domicile of the Trust's existence as may permitted
by applicable law.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees.
Any action to be taken by the Trustees may be taken within or without
Massachusetts.
Section 5. VOTING. Except as required or permitted by this Declaration,
the Bylaws or by applicable law:
(a) The Trustees shall only act a meeting at which quorum of Trustees
is present, and a quorum shall be a majority of Trustees in office from
time to time.
(b) The Trustees shall act on all matters which come before a meeting
by majority vote. In the event a Trustee(s) do(es) not vote on a matter,
the matter will be determined by majority vote of the voting Trustees. A
non-voting Trustee who is present at a meeting will be counted for purposes
of determining the presence of a quorum.
(c) Any action to be taken by the Trustees may be taken at a meeting
held by means of a conference telephone or other communications equipment
by means of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall constitute
presence in person at a meeting.
(d) Trustees may also act by majority written consent, which consent
shall be filed with the records of the Trust and have the same force and
effect as a vote taken at a meeting at which a quorum is present. In the
event (a) Trustee(s) is (are) unable or unwilling to vote on a matter
submitted for written consent, he (they) may execute the written consent
with the notation that he (they) is (are) not voting but consenting to
action
- 10 -
being taken by written consent, and such written consent which is approved
by all voting Trustees shall be effective as a vote taken at a meeting at
which a quorum is present.
Section 6. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are
authorized to pay, or to cause to be paid out of the principal or income of the
Trust, or partly out of principal and partly out of income, as they deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser,
sub-adviser or manager, underwriter, auditor, counsel, custodian, transfer
agent, shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 7. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the assets
of the Trust shall at all times be considered as vested in the Trustees.
Section 8. ADVISORY, MANAGEMENT AND DISTRIBUTION SERVICES. The Trustees
may, at any time and from time to time, contract for exclusive or nonexclusive
advisory and/or management services with any corporation, trust, association or
other Person (the "Manager"), every such contract to comply with such
requirements and restrictions as may be set forth in the Bylaws and applicable
law; and any such contract may provide for one or more sub-advisers or other
agents who shall perform all or part of the obligations of the Manager under
such contract and contain such other terms interpretive of or in addition to
said requirements and restrictions as the Trustees may determine, including,
without limitation, authority to determine from time to time what investments
shall be purchased, held, sold, or exchanged and what portion, if any, of the
assets of the Trust shall be held uninvested and to make changes in the Trust's
investments. The Trustees may also, at any time and from time to time, contract
with the Manager or any other corporation, trust, association or other Person,
appointing it exclusive or nonexclusive distributor or underwriter for the
Shares, every such contract to comply with such requirements and restrictions as
may be set forth in the Bylaws and applicable law; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The facts that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, sub-adviser, underwriter or distributor or agent of
or for any corporation, trust, association or other Person, or of or
for any parent or affiliate of any Person, with which an advisory,
sub-advisory or management contract, or underwriter's or distributor's
contract, or transfer, shareholder servicing or other agency contract
may have been or may hereafter be made, or that any such Person, or
any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that
(ii) any corporation, trust, association or other Person with
which an advisory, sub-advisory or management contract or
underwriter's or distributor's
- 11 -
contract or transfer, shareholder servicing or other agency contract
may have been or may hereafter be made also has an advisory,
sub-advisory or management contract, or underwriter's or distributor's
contract or transfer, shareholder servicing or other agency contract
with one or more other corporations, trusts, associations or other
Persons, or has other business or interests, including competitive
business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 1. DEFINITIONS. For the purpose of this Article V, the
following terms shall have the following meanings:
Affiliate. The term "Affiliate" shall mean, with respect to any Person,
another Person controlled by, controlling or under common control with such
Person.
Aggregate Share Ownership Limit. The term "Aggregate Share Ownership Limit"
shall mean 9.8 percent (in vote or value, whichever is more restrictive) of the
aggregate of the outstanding Equity Shares. The vote and value of the
outstanding Equity Shares shall be determined by the Trustees in good faith,
which determination shall be conclusive for all purposes of this Article V.
AMEX. The term "AMEX" shall mean the American Stock Exchange.
Beneficial Ownership. The term "Beneficial Ownership" shall mean ownership
of Equity Shares by a Person, whether the interest in Equity Shares is held
directly or indirectly (including by a nominee), and shall include, but not be
limited to, interests that would be treated as owned through the application of
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The
terms "Beneficial Owner", "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.
Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.
Charitable Beneficiary. The term "Charitable Beneficiary" shall mean one or
more beneficiaries of the Charitable Trust as determined pursuant to Section 3.5
of this Article V, provided that each such organization must be described in
Section 501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code. If the Code shall cease to so define a charitable organization,
"Charitable Beneficiary" shall mean an entity organized to do work for
charitable purposes and not for profit.
- 12 -
Charitable Trust. The term "Charitable Trust" shall mean any trust provided
for in Section 3.1 of this Article V.
Charitable Trustee. The term "Charitable Trustee" shall mean a Person
unaffiliated with the Trust and unaffiliated with the Prohibited Owner, that is
appointed by a majority of the Trustees to serve as trustee of the Charitable
Trust.
Common Share Ownership Limit. The term "Common Share Ownership Limit" shall
mean 9.8 percent (in vote or value, whichever is more restrictive) of the
outstanding common Equity Shares of the Trust, in the aggregate for all classes
and series of common shares or by each separate class or series of common shares
(whichever is more restrictive). The vote and value of outstanding common shares
shall be determined by the Trustees in good faith, which determination shall be
conclusive for all purposes of this Article V.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Equity Shares by a Person, whether the interest in Equity Shares is
held directly or indirectly (including by a nominee), and shall include, but not
be limited to, interests that would be treated as owned through the application
of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The
terms "Constructive Owner", "Constructively Owns" and "Constructively Owned"
shall have the correlative meanings.
Equity Shares. The term "Equity Shares" shall mean all Shares of all
classes and series, including, without limitation, common Shares and preferred
Shares.
Excepted Holder. The term "Excepted Holder" shall mean a shareholder of the
Trust for whom an Excepted Holder Limit is created by this Article V or by the
Trustees pursuant to Section 2.7 of this Article V.
Excepted Holder Limit. The term "Excepted Holder Limit" shall mean,
provided that the affected Excepted Holder agrees to comply with the
requirements established by the Trustees pursuant to Section 2.7 of this Article
V, the percentage limit established by the Trustees pursuant to Section 2.7 of
this Article V.
Initial Date. The term "Initial Date" shall mean the date upon which this
Declaration containing this Article V is filed with the Secretary of the
Commonwealth of
Massachusetts.
Investee. The term "Investee" shall mean a Person whose shares or other
equity are owned by the Trust.
Market Price. The term "Market Price" on any date shall mean, with respect
to any class or series of outstanding Equity Shares, the Closing Price for such
Equity Shares on such date. The "Closing Price" on any date shall mean the last
sale price for such Equity Shares, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
for such Equity Shares, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the AMEX or, if such Equity Shares are not listed or admitted to
trading on the AMEX, as reported on the principal consolidated transaction
reporting system with respect to securities
- 13 -
listed on the principal national securities exchange on which such Equity Shares
are listed or admitted to trading or, if such Equity Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price,
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotation system that may then be in use or, if
such Equity Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such Equity Shares selected by the Trustees or, in the event that no
trading price is available for such Equity Shares, the fair market value of
Equity Shares, as determined in good faith by the Trustees.
Prohibited Owner. The term "Prohibited Owner" shall mean, with respect to
any purported Transfer, any Person who, but for the provisions of Section 2.1 of
this Article V, would Beneficially Own or Constructively Own Equity Shares in
violation of the limits of such Section 2.1, and if appropriate in the context,
shall also mean any Person who would have been the record owner of Equity Shares
that the Prohibited Owner would have so owned.
REIT. The term "REIT" shall mean a "real estate investment trust" within
the meaning of Section 856 of the Code.
Transfer. The term "Transfer" shall mean any issuance, sale, transfer,
gift, assignment, devise or other disposition, as well as any other event that
causes any Person to acquire Beneficial Ownership or Constructive Ownership, or
any agreement to take any such actions or cause any such events, of Equity
Shares or the right to vote or receive dividends on Equity Shares, including (a)
the granting or exercise of any option (or any disposition of any option), (b)
any disposition of any securities or rights convertible into or exchangeable for
Equity Shares or any interest in Equity Shares or any exercise of any such
conversion or exchange right and (c) Transfers of interests in other entities
that result in changes in Beneficial Ownership or Constructive Ownership of
Equity Shares; in each case, whether voluntary or involuntary, whether owned of
record, Constructively Owned or Beneficially Owned and whether by operation of
law or otherwise. The terms "Transferring" and "Transferred" shall have the
correlative meanings.
Section 2. EQUITY SHARES.
Section 2.1 OWNERSHIP LIMITATIONS. From and after the Initial Date:
(a) BASIC RESTRICTIONS.
(i) (1) No Person, other than an Excepted Holder and other
than RMR Advisors or its Affiliates, shall Beneficially Own or
Constructively Own Equity Shares in excess of the Aggregate Share
Ownership Limit, (2) no Person, other than an Excepted Holder and
other than RMR Advisors or its Affiliates, shall Beneficially Own or
Constructively Own common Equity Shares in excess of the Common Share
Ownership Limit and (3) no Excepted Holder shall Beneficially
- 14 -
Own or Constructively Own Equity Shares in excess of the Excepted
Holder Limit for such Excepted Holder.
(ii) No Person, other than an Excepted Holder and other than
RMR Advisors or its Affiliates, shall Beneficially Own or
Constructively Own Equity Shares to the extent that such Beneficial
Ownership or Constructive Ownership of Equity Shares would result in
(1) the Trust being "closely held" within the meaning of Section
856(h) of the Code (without regard to whether the ownership interest
is held during the last half of a taxable year), or (2) any Investees
that are otherwise REITs failing to qualify as a REIT (including, but
not limited to, Beneficial Ownership or Constructive Ownership that
would result in the Trust or any Investees that are otherwise REITs,
as the case may be, owning (actually or Constructively) an interest in
a tenant that is described in Section 856(d)(2)(B) of the Code if the
income derived by such Investees that are otherwise REITs or any of
their respective Affiliates, as the case may be, from such tenant
would cause any such Investees that are otherwise REITs to fail to
satisfy any of the gross income requirements of Section 856(c) of the
Code).
(iii) Subject to Section 9 of Article X, notwithstanding any
other provisions contained herein, any Transfer of Equity Shares
(whether or not such Transfer is the result of a transaction entered
into through the facilities of the AMEX or any other national
securities exchange or automated inter-dealer quotation system) that,
if effective, would result in Equity Shares being Beneficially Owned
by less than 100 Persons (determined under the principles of Section
856(a)(5) of the Code) shall be void AB INITIO, and the intended
transferee shall acquire no rights in such Equity Shares.
(b) TRANSFER IN TRUST. If any Transfer of Equity Shares occurs which,
if effective, would result in any Person Beneficially Owning or
Constructively Owning Equity Shares in violation of Section 2.1(a)(i), (ii)
or (iii) of this Article V,
(i) then that number of Equity Shares the Beneficial Ownership
or Constructive Ownership of which otherwise would cause such Person
to violate Section 2.1(a)(i), (ii) or (iii) of this Article V (rounded
up to the nearest whole share) shall be automatically transferred to a
Charitable Trust for the benefit of a Charitable Beneficiary, as
described in Section 3 of this Article V, effective as of the close of
business on the Business Day prior to the date of such Transfer, and
such Person shall acquire no rights in such Equity Shares; or
(ii) if the transfer to the Charitable Trust described in
clause (i) of this sentence would not be effective for any reason to
prevent the violation of Section 2.1(a)(i), (ii) or (iii) of this
Article V, then the Transfer of that number of Equity Shares that
otherwise would cause any Person to violate Section 2.1(a)(i), (ii) or
(iii) of this Article V shall be void AB INITIO, and the intended
transferee shall acquire no rights in such Equity Shares.
- 15 -
Section 2.2 REMEDIES FOR BREACH. If the Trustees or any duly
authorized committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place that results in a violation of Section
2.1 of this Article V or that a Person intends to acquire or has attempted to
acquire Beneficial Ownership or Constructive Ownership of any Equity Shares in
violation of Section 2.1 of this Article V (whether or not such violation is
intended), the Trustees or a committee thereof shall take such action as it
deems advisable to refuse to give effect to or to prevent such Transfer or other
event, including, without limitation, causing the Trust to redeem Equity Shares,
refusing to give effect to such Transfer on the books of the Trust or
instituting proceedings to enjoin such Transfer or other event; PROVIDED,
HOWEVER, that any Transfers or attempted Transfers or other events in violation
of Section 2.1 of this Article V shall automatically result in the transfer to
the Charitable Trust described above, and, where applicable, such Transfer (or
other event) shall be void AB INITIO as provided above irrespective of any
action (or non-action) by the Trustees or a committee thereof.
Section 2.3 NOTICE OF RESTRICTED TRANSFER. Any Person who acquires
or attempts or intends to acquire Beneficial Ownership or Constructive Ownership
of Equity Shares that will or may violate Section 2.1(a) of this Article V, or
any Person who would have owned Equity Shares that resulted in a transfer to the
Charitable Trust pursuant to the provisions of Section 2.1(b) of this Article V,
shall immediately give written notice to the Trust of such event, or in the case
of such a proposed or attempted transaction, give at least 15 days prior written
notice, and shall provide to the Trust such other information as the Trust may
request in order to determine the effect, if any, of such Transfer.
Section 2.4 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after
the Initial Date:
(a) every owner (through actual ownership, Beneficial Ownership, and
Constructive Ownership) of more than five percent (or such lower percentage
as required by the Code or the treasury regulations promulgated thereunder)
of any series or any class of outstanding Equity Shares shall, within 30
days after the end of each taxable year, give written notice to the Trust
stating the name and address of such owner, the number of Equity Shares
actually owned and the number of Equity Shares Beneficially Owned or
Constructively Owned, and a description of the manner in which such shares
are held. Each such owner shall provide to the Trust such additional
information as the Trust may request in order to determine the effect, if
any, of such Beneficial Ownership or Constructive Ownership on the status
of any Investee as a REIT and to ensure compliance with the Aggregate Share
Ownership Limit and the Common Share Ownership Limit.
(b) each Person who is a Beneficial Owner or Constructive Owner of
Equity Shares and each Person (including the Shareholder of record) who is
holding Equity Shares for a Beneficial Owner or Constructive Owner shall
provide to the Trust such information as the Trust may request, in good
faith, in order to comply with requirements of any taxing authority or
governmental authority or to determine such compliance.
Section 2.5 REMEDIES NOT LIMITED. Nothing contained in this
Section 2 of this Article V shall limit the authority of the Trustees to take
such other action as they deem
- 16 -
necessary or advisable to protect the Trust and the interests of its
shareholders in preserving any Investee's status as a REIT or to enforce the
limitation in Section 2.1 of this Article V for other purposes which the
Trustees deem advisable.
Section 2.6 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of this Section 2, Section 3 of this
Article V or any definition contained in Section 1 of this Article V, the
Trustees shall have the power to determine the application of the provisions of
this Section 2 or Sections 1 or 3 of this Article V with respect to any
situation based on the facts known to them. In the event Sections 1, 2 or 3 of
this Article V require an action by the Trustees and this Declaration fails to
provide specific guidance with respect to such action, the Trustees with the
advice of counsel shall have the power to determine the action to be taken so
long as such action is not contrary to the provisions of Sections 1, 2 or 3 of
this Article V.
Section 2.7 EXCEPTIONS.
(a) The Trustees, in their sole discretion, may exempt a Person from
one or more of the Aggregate Share Ownership Limit, the Common Share
Ownership Limit or the limitations in Section 2.1(a)(ii) of this Article V,
as the case may be, and may (but are not required to) establish or increase
an Excepted Holder Limit for such Person. As part of establishing or
increasing such Excepted Holder Limit, the Trustees may (but are not
required to) obtain from such person:
(i) an agreement that any violation or attempted violation of
its Excepted Holder Limit (or other action which is contrary to the
restrictions contained in Sections 2.1 through 2.6 of this Article V)
will result in such Equity Shares being automatically transferred to a
Charitable Trust in accordance with Sections 2.1(b) and 3 of this
Article V; and,
(ii) a voting trust or other undertakings which satisfy the
Trustees that such Person will not attempt to exert undue influence or
control over the Trust.
(b) Prior to granting any exception pursuant to Section 2.7(a) of
this Article V, the Trustees may require a ruling from the Internal Revenue
Service, or an opinion of counsel, in either case in form and substance
satisfactory to the Trustees in their sole discretion, as they may deem
necessary or advisable in order to determine or ensure any Investee's
status as a REIT. Notwithstanding the receipt of any ruling or opinion, the
Trustees may impose such conditions or restrictions as they deem
appropriate in connection with granting such exception.
(c) In determining whether to grant any exemption pursuant to Section
2.7(a) of this Article V, the Trustees may consider, among other factors,
(i) the general reputation and moral character of the Person requesting an
exemption, (ii) whether ownership of shares would be direct or through
ownership attribution, (iii) whether the Person's ownership of shares would
adversely affect any Investee's ability to acquire additional properties or
additional investments in other issuers, (iv) whether granting an
- 17 -
exemption for the Person requesting an exemption would adversely affect any
of the Trust's existing contractual arrangements, and (v) whether the
Person to whom the exemption would apply is attempting to change control of
the Trust or affect its policies in a way which the Trustees consider
adverse to the best interest of the Trust or its Shareholders.
(d) An underwriter which participates in a public offering or a
private placement of Equity Shares (or securities convertible into or
exchangeable for Equity Shares) may Beneficially Own or Constructively Own
Equity Shares (or securities convertible into or exchangeable for Equity
Shares) in excess of one or more of the Aggregate Share Ownership Limit,
the Common Share Ownership Limit or the limitations in Section 2.1(a)(ii)
of this Article V, but only to the extent necessary to facilitate such
public offering or private placement.
(e) The Trustees may only reduce the Excepted Holder Limit for an
Excepted Holder: (1) with the written consent of such Excepted Holder at
any time, or (2) pursuant to the terms and conditions of the agreements and
undertakings entered into with such Excepted Holder in connection with the
establishment of the Excepted Holder Limit for that Excepted Holder.
Section 2.8 LEGEND. If certificates for Equity Shares are issued,
each such certificate shall bear substantially the following legend:
The shares evidenced by this certificate are subject to restrictions
on Beneficial Ownership, Constructive Ownership and Transfer. Subject to
certain further restrictions and except as expressly provided in the
Trust's Declaration of Trust, no Person may Beneficially Own or
Constructively Own Equity Shares of the Trust in excess of 9.8 percent (in
vote or value) of the total outstanding Equity Shares or total outstanding
common Shares of the Trust, unless such Person is an Excepted Holder (in
which case the Excepted Holder Limit shall be applicable). If any of the
restrictions on transfer or ownership are violated, the Equity Shares
represented hereby will be automatically transferred to a Trustee of a
Charitable Trust for the benefit of one or more Charitable Beneficiaries.
In addition, upon the occurrence of certain events, attempted Transfers in
violation of the restrictions described above may be void AB INITIO. All
capitalized terms in this legend have the meanings defined in the Trust's
Declaration of Trust, as the same may be amended from time to time, a copy
of which, including the restrictions on transfer and ownership, will be
furnished to each holder of Equity Shares of the Trust upon request.
Instead of the foregoing legend, the certificate may contain an alternate legend
providing notice of the restrictions on ownership and transfer as in effect and
as may be approved by the Trustees.
- 18 -
Section 3. TRANSFER OF EQUITY SHARES IN TRUST.
Section 3.1 OWNERSHIP IN TRUST. Upon any purported Transfer or
other event described in Section 2.1(b) of this Article V that would result in a
transfer of Equity Shares to a Charitable Trust, such Equity Shares shall be
deemed to have been transferred to the Charitable Trustee for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Charitable
Trustee shall be deemed to be effective as of the close of business on the
Business Day prior to the purported Transfer or other event that results in the
transfer to the Charitable Trust pursuant to Section 2.1(b) of this Article V.
Each Charitable Beneficiary shall be designated as provided in Section 3.5 of
this Article V.
Section 3.2 STATUS OF SHARES HELD BY THE CHARITABLE TRUSTEE. Equity
Shares held by the Charitable Trustee shall be issued and outstanding Equity
Shares of the Trust. The Prohibited Owner shall have no rights in the shares
held by the Charitable Trustee. The Prohibited Owner shall not benefit
economically from ownership of any shares or other property held in trust by the
Charitable Trustee, shall have no rights to dividends or other distributions and
shall not possess any rights to vote or other rights attributable to the shares
held in the Charitable Trust.
Section 3.3 DIVIDEND AND VOTING RIGHTS. The Charitable Trustee
shall have all voting rights and rights to dividends or other distributions with
respect to Equity Shares held in the Charitable Trust, which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend
or other distribution paid prior to the discovery by the Trust that Equity
Shares have been deemed transferred to the Charitable Trustee shall be paid by
such Prohibited Owner with respect to such Equity Shares to the Charitable
Trustee upon demand and any dividend or other distribution declared but unpaid
shall be paid by the Trust when due to the Charitable Trustee. Any dividends or
distributions so paid over to the Charitable Trustee shall be held in trust for
the Charitable Beneficiary. The Prohibited Owner shall have no voting rights
with respect to shares held in the Charitable Trust and effective as of the date
that Equity Shares have been deemed transferred to the Charitable Trustee, the
Charitable Trustee shall have the authority (at the Charitable Trustee's sole
discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to
the discovery by the Trust that Equity Shares have been deemed transferred to
the Charitable Trustee and (ii) to recast such vote in accordance with the
desires of the Charitable Trustee acting for the benefit of the Charitable
Beneficiary; provided, however, that if the Trust has already taken irreversible
trust action, then the Charitable Trustee shall not have the authority to
rescind and recast such vote. Notwithstanding the provisions of this Article V,
until the Trust has received notification that Equity Shares have been deemed
transferred into a Charitable Trust, the Trust shall be entitled to rely on its
share transfer and other shareholder records for purposes of preparing lists of
shareholders entitled to vote at meetings, determining the validity and
authority of proxies and otherwise conducting votes of shareholders.
Section 3.4 SALE OF SHARES BY CHARITABLE TRUSTEE. Within 20 days of
receiving notice from the Trust that Equity Shares have been transferred to the
Charitable Trust, the Charitable Trustee shall sell the shares held in the
Charitable Trust to a Person, designated by the Charitable Trustee, whose
ownership of the shares will not violate the ownership limitations set forth in
Section 2.1(a) of this Article V. Upon such sale, the interest of the Charitable
- 19 -
Beneficiary in the shares sold shall terminate and the Charitable Trustee shall
distribute the net proceeds of the sale to the Prohibited Owner and to the
Charitable Beneficiary as provided in this Section 3.4. The Prohibited Owner
shall receive the lesser of (1) the price paid by the Prohibited Owner for the
shares or, if the Prohibited Owner did not give value for the shares in
connection with the event causing the shares to be held in the Charitable Trust
(e.g., in the case of a gift, devise or other such transaction), the Market
Price of the shares on the day of the event causing the shares to be held in the
Charitable Trust and (2) the net sale proceeds received by the Charitable
Trustee from the sale or other disposition of the shares held in the Charitable
Trust. Any net sales proceeds in excess of the amount payable to the Prohibited
Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the
discovery by the Trust that Equity Shares have been transferred to the
Charitable Trustee, such shares are sold by a Prohibited Owner, then (i) such
shares shall be deemed to have been sold on behalf of the Charitable Trust and
(ii) to the extent that the Prohibited Owner received an amount for such shares
that exceeds the amount that such Prohibited Owner was entitled to receive
pursuant to this Section 3.4, such excess shall be paid to the Charitable
Trustee upon demand.
Section 3.5 DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Charitable Trustee, the Trustees shall designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Charitable Trust such that Equity Shares held in the Charitable Trust would not
violate the restrictions set forth in Section 2.1(a) of this Article V in the
hands of such Charitable Beneficiary.
Section 4. ENFORCEMENT. The Trust or the Trustees are authorized
specifically to seek equitable relief, including injunctive relief, to enforce
the provisions of this Article V.
Section 5. NON-WAIVER. No delay or failure on the part of the Trust or
the Trustees in exercising any right hereunder shall operate as a waiver of any
right of the Trust or the Trustees, as the case may be, except to the extent
specifically waived in writing.
Section 6. CONTINUED EFFECT. The provisions of this Article V shall
continue in full force and effect indefinitely, regardless of whether or not the
Trust qualifies as a REIT.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. GENERAL. Except as otherwise provided in this Article VI or
elsewhere in this Declaration, Shareholders shall have such power to vote as is
provided for in, and shall and may hold meetings and take actions pursuant to,
the provisions of the Bylaws.
Section 2. VOTING POWERS AS TO CERTAIN TRANSACTIONS. (a) Except as
otherwise provided in paragraph (b) of this Section 2, the affirmative vote or
consent of at least a majority of the Trustees of the Trust then in office and
at least seventy-five percent (75%) of the Shares outstanding and entitled to
vote (by class or series or in combination as may be established in the Bylaws
or by the Trustees) shall be necessary to authorize any of the following
actions:
- 20 -
(i) the merger or consolidation or share exchange of the Trust
or any series or class of Shares with or into any other Person or
company (including, without limitation, a partnership, corporation,
joint venture, business trust, common law trust or any other business
organization) or of any such Person or company with or into the Trust
or any series or class of Shares;
(ii) the sale, lease or transfer of all or substantially all of
the Trust's assets; or
(iii) the liquidation or termination of the Trust.
(b) Notwithstanding anything to the contrary in paragraph (a) of this
Section 2: (i) the granting of a pledge or security interest in all or
substantially all of the Trust's assets may be done by majority vote of the
Trustees then in office and without Shareholder approval even if such
pledge may result in sale or transfer of all or substantially all of the
Trust's assets in the event that the Trust defaults upon obligations which
are secured by such security interest or pledge; and (ii) if any of the
actions described in paragraph (a) of this Section 2 are approved by
seventy-five percent (75%) of the Trustees then in office, then no
Shareholder approval will be required for such actions except to the extent
Shareholder approval is required by applicable law, and, if approval by
Shareholders is required by applicable law, the vote required shall be a
majority (or the least amount legally permitted if higher than the
majority) of voting Shareholders or, if applicable law does not permit
approval by a percentage of voting Shareholders, the vote required shall be
a majority (or the least amount legally permitted if higher than the
majority) of Shareholders.
Section 3. QUORUM AND REQUIRED VOTE. Except when a larger vote or
quorum is required by any provision of law (including, without limitation, the
rules of the American Stock Exchange), this Declaration, the Bylaws or the
notice of meeting forwarded to the Shareholders by the Trustees, thirty-three
and one-third percent (33.333%) of the Shares entitled to vote on a particular
matter shall constitute a quorum for voting on a particular matter or the
transaction of business at a Shareholders' meeting, except that where any
provision of law (including, without limitation, the rules of the American Stock
Exchange), this Declaration, the Bylaws or the notice of meeting forwarded to
the Shareholders by the Trustees, requires that holders of any class or series
of Shares shall vote as an individual class or series, then thirty-three and
one-third percent (33.333%) (unless a larger quorum is required as specified
above) of Shares of that class or series entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that class or series. Any
lesser number shall be sufficient for adjournments. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting, without the necessity of further notice. Except when a
different vote is required by any provision of law (including, without
limitation, the rules of the American Stock Exchange), this Declaration, the
Bylaws or the notice of meeting forwarded to the Shareholders by the Trustees, a
plurality of the quorum of Shares necessary for the transaction of business at a
Shareholders' meeting shall decide any questions and a plurality of Shares voted
shall elect a Trustee, provided that where any provision of law (including,
without limitation, the rules of the American Stock Exchange), this Declaration,
the Bylaws or the notice of meeting forwarded to the Shareholders by the
- 21 -
Trustees, requires that the holders of any class or series of Shares shall vote
as an individual class or series, then a plurality of the quorum of Shares of
that class or series necessary for the transaction of business by that class or
series at a Shareholders' meeting shall decide that matter insofar as that class
or series is concerned.
Section 4. ADVANCE NOTICE OF NOMINEES FOR TRUSTEE AND OTHER PROPOSALS.
(a) NOMINATIONS AND PROPOSALS TO BE CONSIDERED AT MEETING OF
SHAREHOLDERS. Nominations of persons for election to the Board of Trustees
and the proposal of other business to be considered by the shareholders at
an annual or special meeting of shareholders may be properly brought before
the meeting only as set forth in this Section 4. All judgments and
determinations made by the Board of Trustees or the chairman of the
meeting, as applicable, under this Section 4 (including without limitation
judgments as to whether any matter or thing is satisfactory to the Board of
Trustees and determinations as to the propriety of a proposed nomination or
a proposal of other business) shall be made in good faith.
(b) ANNUAL MEETINGS OF SHAREHOLDERS. (1) Nominations of persons
for election to the Board of Trustees and the proposal of other business to
be considered by the shareholders at an annual meeting of shareholders may
be properly brought before the meeting (i) pursuant to the Trust's notice
of meeting by or at the direction of the trustees or (ii) by any
shareholder of the Trust who is a shareholder of record both at the time of
giving of notice provided for in this Section 4(b) and at the time of the
annual meeting, who is entitled to vote at the meeting and who complies
with the terms and provisions set forth in this Section 4.
(2) For nominations for election to the Board of Trustees or other
business to be properly brought before an annual meeting by a shareholder
pursuant to clause (ii) of Section 4(b)(1), the shareholder must have given
timely notice thereof in writing to the secretary of the Trust and such
other business must otherwise be a proper matter for action by
shareholders. To be timely, a shareholder's notice shall set forth all
information required under this Section 4 and shall be delivered to the
secretary at the principal executive offices of the Trust not later than
the close of business on the 90th day nor earlier than the 120th day prior
to the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting; provided, however, that in the event that
the date of mailing of the notice for the annual meeting is advanced or
delayed by more than 30 days from the anniversary date of the date of
mailing of the notice for the preceding year's annual meeting, notice by
the shareholder to be timely must be so delivered not earlier than the
120th day prior to the date of mailing of the notice for such annual
meeting and not later than the close of business on the later of: (i) the
90th day prior to the date of mailing of the notice for such annual meeting
or (ii) the 10th day following the day on which public announcement of the
date of mailing of the notice for such meeting is first made by the Trust.
In no event shall the public announcement of a postponement of the mailing
of the notice for such annual meeting or of an adjournment or
- 22 -
postponement of an annual meeting to a later date or time commence a new
time period for the giving of a shareholder's notice as described above.
A shareholder's notice shall set forth:
(i) as to each person whom the shareholder proposes to
nominate for election or reelection as a trustee, (1) such person's
name, age, business address and residence address, (2) the class,
series and number of shares of capital stock of the Trust that are
beneficially owned or owned of record by such person, (3) the date
such shares were acquired and the investment intent of such
acquisition, (4) the record of all purchases and sales of securities
of the Trust by such person during the previous 12 month period
including the date of the transactions, the class, series and number
of securities involved in the transactions and the consideration
involved and (5) all other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
trustees in an election contest (even if an election contest is not
involved), or is otherwise required, in each case pursuant to
Regulation 14A (or any successor provision) under the Exchange Act,
including such person's written consent to being named in the proxy
statement as a nominee and to serving as a trustee if elected;
(ii) as to any other business that the shareholder proposes to
bring before the meeting, a description of such business, the reasons
for proposing such business at the meeting and any material interest
in such business of such shareholder and any Shareholder Associated
Person (as defined below), including any anticipated benefit
therefrom;
(iii) as to the shareholder giving the notice and any
Shareholder Associated Person, the class, series and number of shares
of the Trust which are owned of record by such shareholder and by such
Shareholder Associated Person, if any, and the class, series and
number of, and the nominee holder for, shares owned beneficially but
not of record by such shareholder and by any such Shareholder
Associated Person;
(iv) as to the shareholder giving the notice and any
Shareholder Associated Person, the name and address of such
shareholder, as they appear on the Trust's stock ledger and current
name and address, if different, of such Shareholder Associated Person;
(v) as to the shareholder giving the notice and any
Shareholder Associated Person, the record of all purchases and sales
of securities of the Trust by such shareholder or Shareholder
Associated Person during the previous 12 month period including the
date of the transactions, the class, series and number of securities
involved in the transactions and the consideration involved; and
(vi) to the extent known by the shareholder giving the notice,
the name and address of any other shareholder supporting the nominee
for election or
- 23 -
reelection as a trustee or the proposal of other business on the date
of such shareholder's notice.
(3) Notwithstanding anything in the second sentence of Section 4(b)(2) to
the contrary, in the event that the number of trustees to be elected to the
Board of Trustees is increased and there is no public announcement of such
action at least 130 days prior to the first anniversary of the date of
mailing of notice for the preceding year's annual meeting, a shareholder's
notice required by this Section 4(b) also shall be considered timely, but
only with respect to nominees for any new positions created by such
increase, if the notice is delivered to the secretary at the principal
executive offices of the Trust not later than the close of business on the
10th day immediately following the day on which such public announcement is
first made by the Trust.
(4) For purposes of this Section 4, "Shareholder Associated Person" of any
shareholder shall mean (i) any person controlling, directly or indirectly,
or acting in concert with, such shareholder, (ii) any beneficial owner of
shares of capital stock of the Trust owned of record or beneficially by
such shareholder and (iii) any person controlling, controlled by or under
common control with such shareholder or Shareholder Associated Person.
(c) SHAREHOLDER NOMINATIONS OR PROPOSALS CAUSING COVENANT BREACHES.
At the same time as or prior to the submission of any shareholder
nomination or proposal of business to be considered at an annual or special
meeting that, if approved and implemented by the Trust, would cause the
Trust to be in breach of any covenant of the Trust in any existing or
proposed debt instrument or agreement of the Trust, the proponent
shareholder or shareholders must submit to the secretary of the Trust at
the principal executive offices of the Trust (i) evidence satisfactory to
the Board of Trustees of the lender's or contracting party's willingness to
waive the breach of covenant or (ii) a plan for repayment of the
indebtedness to the lender or correcting the contractual default,
specifically identifying the actions to be taken or the source of funds to
be used in the repayment, which plan must be satisfactory to the Board of
Trustees in its discretion.
(d) SHAREHOLDER NOMINATIONS OR PROPOSALS REQUIRING REGULATORY NOTICE,
CONSENT OR APPROVAL. At the same time or prior to the submission of any
shareholder nominations or proposal of business to be considered at an
annual or special meeting that, if approved, could not be implemented by
the Trust without notifying or obtaining the consent or approval of any
federal, state, municipal or other regulatory body, the proponent
shareholder or shareholders must submit to the secretary of the Trust at
the principal executive offices of the Trust (i) evidence satisfactory to
the Board of Trustees that any and all required notices, consents or
approvals have been given or obtained or (ii) a plan, for making the
requisite notices or obtaining the requisite consents or approvals, as
applicable, prior to the implementation of the proposal or election, which
plan must be satisfactory to the Board of Trustees in its discretion.
- 24 -
(e) SPECIAL MEETINGS OF SHAREHOLDERS. As set forth in Section 4 of
this Article VI, only business brought before the meeting pursuant to a
proper notice of meeting shall be conducted at a special meeting of
shareholders. Nominations of persons for election to the Board of Trustees
only may be made at a special meeting of shareholders at which trustees are
to be elected: (i) pursuant to the Trust's notice of meeting by or at the
direction of the Board of Trustees; or (ii) provided that the Board of
Trustees has determined that trustees shall be elected at such special
meeting, by any shareholder of the Trust who is a shareholder of record
both at the time of giving of notice provided for in this Section 4(e) and
at the time of the special meeting, who is entitled to vote at the meeting
and who complies with the notice procedures set forth in this Section 4(e).
In the event the Trust calls a special meeting of shareholders for the
purpose of electing one or more trustees to the Board of Trustees, any such
shareholder may nominate a person or persons (as the case may be) for
election to such position as specified in the Trust's notice of meeting, if
the shareholder's notice contains the information required by Section 4(b)
and the shareholder has given timely notice thereof in writing to the
secretary of the Trust at the principal executive offices of the Trust. To
be timely, a shareholder's notice shall be delivered to the secretary of
the Trust at the principal executive offices of the Trust not earlier than
the 120th day prior to such special meeting and not later than the close of
business on the later of (i) the 90th day prior to such special meeting or
(ii) the 10th day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
trustees to be elected at such meeting. In no event shall the public
announcement of a postponement or adjournment of a special meeting to a
later date or time commence a new time period for the giving of a
shareholder's notice as described above.
(f) GENERAL. (1) Upon written request by the secretary or the Board
of Trustees or any committee thereof, any shareholder proposing a nominee
for election as a trustee or any proposal for other business at a meeting
of shareholders shall provide, within three business days of delivery of
such request (or such other period as may be specified in such request),
written verification, satisfactory to the secretary or the Board or any
committee thereof, in his, her or its sole discretion, of the accuracy of
any information submitted by the shareholder pursuant to this Section 4. If
a shareholder fails to provide such written verification within such
period, the secretary or the Board of Trustees or any committee thereof may
treat the information as to which written verification was requested as not
having been provided in accordance with the procedures set forth in this
Section 4.
(2) Only such persons who are nominated in accordance with the procedures
set forth in this Section 4 shall be eligible to serve as trustees and only
such business as shall have been brought before the meeting in accordance
with the procedures set forth in this Section 4 shall be transacted at a
meeting of shareholders. The chairman of the meeting shall have the power
and duty to determine whether a nomination or any other business proposed
to be brought before the meeting was made or proposed, as the case may be,
in accordance with this Section 4 and, if any proposed nomination or other
business is not in
- 25 -
compliance with this Section 4, to declare that such defective nomination
or proposal be disregarded.
(3) For purposes of this Section 4, (i) the "date of mailing of the
notice" shall mean the date of the proxy statement for the solicitation of
proxies for the election of trustees and (ii) "public announcement" shall
mean disclosure in (A) a press release reported by the Dow Xxxxx News
Service, Associated Press or comparable news service or (B) a document
publicly filed by the Trust with the United States Securities and Exchange
Commission pursuant to the Exchange Act.
(4) Notwithstanding the foregoing provisions of this Declaration, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to
matters set forth in Sections 4(a) through 4(f). Nothing in this Section 4
shall be deemed to require that a shareholder nomination of a person for
election to the Board of Trustees or a shareholder proposal relating to
other business be included in the Trust's proxy statement except as may be
required by law.
Section 5. CONVERSION TO OPEN-END COMPANY. Notwithstanding any other
provisions in this Declaration or the Bylaws, the conversion of the Trust or any
class or series of Shares from a "closed-end company" to an "open-end company",
as those terms are defined in Sections 5(a)(2) and 5(a)(1), respectively, of the
Investment Company Act of 1940 (as in effect on the date of this Declaration),
together with any necessary amendments to this Declaration to permit such a
conversion, shall require the affirmative vote or consent of at least
seventy-five percent (75%) of each class of Shares outstanding and entitled to
vote on the matter and seventy-five percent (75%) of the Trustees then in
office.
Section 6. SHAREHOLDER MEETINGS. Except as required by applicable law,
actions by Shareholders which are required or permitted may only be taken at a
meeting, and Shareholder meetings may only be called by the Trustees.
Section 7. INSPECTION OF RECORDS. All Shareholders' requests to inspect
the records of the Trust shall be submitted by Shareholders to the Trustees in
writing. Upon receipt of such requests, the Trustees may establish procedures
for such inspections. To preserve the integrity of the Trust's records, the
Trustees may provide certified copies of Trust records rather than originals.
The Trustees shall not be required to create records or obtain records from
third parties to satisfy Shareholders' requests. The Trustees may require
Shareholders to pay in advance or otherwise indemnify the Trust for the costs
and expenses of Shareholders' inspection of records. Nothing in this Section 7
is intended nor shall be construed to permit Shareholders to inspect the records
of the Trust except as may be permitted by the Trustees or as may be required by
applicable law.
- 26 -
ARTICLE VII
DISTRIBUTIONS AND DETERMINATION OF NET ASSET VALUE
Section 1. DISTRIBUTIONS. The Trustees may each year, or more
frequently if they so desire, but need not, distribute to the Shareholders of
any or all classes or series of Shares such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities (including such reserves as the Trustees may establish)
determined in accordance with good accounting practices and subject to the
preferences, special or relative rights and privileges of the various classes or
series of Shares. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Distributions of income
for each year or other period, if any be made, may be made in one or more
payments, which shall be in Shares, in cash or otherwise and on a date or dates
and as of a record date or dates determined by the Trustees. At any time and
from time to time in their discretion, the Trustees may distribute to the
Shareholders as of a record date or dates determined by the Trustees, in Shares,
in cash or otherwise, all or part of any gains realized on the sale or
disposition of property or otherwise, or all or part of any other principal of
the Trust. Each distribution pursuant to this Section 1 to the Shareholders of a
particular class or series shall be made ratably according to the number of
Shares of such class or series held by the several Shareholders on the
applicable record date thereof, provided that no distribution need be made on
Shares purchased pursuant to orders received, or for which payment is made,
after such time or times as the Trustees may determine. Any such distribution
paid in Shares will be paid at the net asset value thereof as determined in
accordance with Section 2 of this Article VII, or at such other value as may be
specified by the Bylaws or as the Trustees may from time to time determine,
subject to applicable laws and regulations then in effect.
Section 2. DETERMINATION OF NET ASSET VALUE. The net asset value per
share of each class and each series of Shares of the Trust shall be determined
in accordance with the 1940 Act and any related procedures adopted by the
Trustees from time to time. Determinations made under and pursuant to this
Section 2 in good faith shall be binding on all parties concerned.
ARTICLE VIII
COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES
Section 1. COMPENSATION. The Trustees as such shall be entitled to
reasonable compensation from the Trust; and they may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking,
underwriting, brokerage or other services and payment for the same by the Trust.
Section 2. LIMITATION OF LIABILITY. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, adviser, sub-adviser, manager or underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission
- 27 -
of any other Trustee, but nothing herein contained shall protect any Trustee
against any liability to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE IX
INDEMNIFICATION, CONTRACTING WITH INTERESTED PARTIES
AND IMPACT OF CORPORATE LAW
Section 1. TRUSTEES, OFFICERS, ETC. The Trust shall indemnify each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Covered Person, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in a decision on the merits
in any such action, suit or other proceeding not to have acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust and except that no Covered Person shall be indemnified
against any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees incurred by any
such Covered Person, may be paid from time to time by the Trust in advance of
the final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article IX.
Section 2. REBUTTABLE PRESUMPTION. For purposes of the determination as
to whether indemnification is available under this Article IX, the court or
other authority making the determination, as the case may be, shall rely upon a
rebuttable presumption that the Covered Person has not engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
Section 3. INDEMNIFICATION NOT EXCLUSIVE. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
any such Covered Person may be entitled. As used in this Article IX, the term
"Covered Person" shall include such
- 28 -
person's heirs, executors and administrators. Nothing contained in this Article
IX shall affect any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of such person; provided, however, that the Trust
shall not purchase or maintain any such liability insurance in contravention of
applicable law.
Section 4. TRANSACTIONS BETWEEN THE TRUST AND ITS TRUSTEES, OFFICERS,
EMPLOYEES AND AGENTS. (a) Subject to any express restrictions adopted by the
Trustees in the Bylaws or by resolution, the Trust may enter into any contract
or transaction of any kind, whether or not any of its Trustees, officers,
employees or agents has a financial interest in such transaction, with any
person, including any Trustee, officer, employee or agent of the Trust or any
person affiliated with a Trustee, officer, employee or agent of the Trust or in
which a Trustee, officer, employee or agent of the Trust has a material
financial interest. To the extent permitted by applicable law, a contract or
other transaction between the Trust and any Trustee or between the Trust and RMR
Advisors or any other corporation, trust, firm, or other entity in which any
Trustee is a director or trustee or has a material financial interest shall not
be void or voidable if:
(i) The fact of the common directorship, trusteeship or
interest is disclosed or known to the Trustees or a proper committee
thereof, and the Trustees or such committee authorizes, approves or
ratifies the contract or transaction by the affirmative vote of a
majority of disinterested Trustees, even if the disinterested Trustees
constitute less than a quorum; or
(ii) The contract or transaction is authorized, approved, or
ratified by a majority of the votes cast by shareholders voting on
such matter; or, if applicable law specifies a greater majority vote,
then by a majority vote of the Shareholders legally required; or
(iii) The contract or transaction is fair and reasonable to the
Trust.
(b) Whether or not they may be legally entitled to vote on the matters
described in this Section 4, interested Trustees or the Shares owned by them or
by an interested corporation, trust, firm or other entity may be counted in
determining the presence of a quorum at a meeting of the Trustees or a committee
thereof or at a meeting of the Shareholders, as the case may be, at which the
contract or transaction is authorized, approved or ratified.
(c) The failure of a contract or other transaction between the Trust and
any Trustee or between the Trust and RMR Advisors or any other corporation,
trust, firm, or other entity in which any Trustee is a director or trustee or
has a material financial interest to satisfy the criteria set forth in Section
4(a) of this Article IX shall not create any presumption that such contract or
other transaction is void, voidable or otherwise invalid, and any such contract
or other transaction shall be valid to the fullest extent permitted by
applicable law.
Section 5. GENERAL CORPORATE LAW. To the fullest extent permitted by
applicable law, the establishment of Trustees compensation and limitation of
liability as set forth in Article VIII
- 29 -
and the providing of indemnity or contracting with related parties described in
this Article IX in accordance with terms and procedures not materially less
favorable to the Trust than the maximum discretion and maximum indemnification
permitted by the
Massachusetts General Corporation Law (as in effect at the time
such provision was adopted or such contract or transaction was entered into or
as it may thereafter be in effect) shall be deemed to have satisfied the
criteria set forth in Article VIII and this Article IX; but nothing herein is
intended to require that the terms and procedures established by the
Massachusetts General Corporation Law shall be required to establish
compensation, to limit liability, to provide indemnification or for contracting
as set forth in Articles VIII and IX.
Section 6. RIGHT OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS TO OWN
SHARES OR OTHER PROPERTY AND TO ENGAGE IN OTHER BUSINESS. Subject to any
restrictions which may be adopted by the Trustees in the Bylaws or otherwise,
any Trustee or officer, employee or agent of the Trust may acquire, own, hold
and dispose of Shares in the Trust, for his or her individual account, and may
exercise all rights of a Shareholder to the same extent and in the same manner
as if he or she were not a Trustee or officer, employee or agent of the Trust.
Any Trustee or officer, employee or agent of the Trust may, in his or her
personal capacity or in the capacity of trustee, officer, director, stockholder,
partner, member, advisor or employee of any Person or otherwise, have business
interests and engage in business activities similar to or in addition to those
relating to the Trust, which interests and activities may be similar to and
competitive with those of the Trust and may include the investing in securities
of real estate or other companies or in other interests in Persons engaged in
real estate or other businesses. Each Trustee, officer, employee and agent of
the Trust shall be free of any obligation to present to the Trust any investment
opportunity which comes to him or her in any capacity other than solely as
Trustee, officer, employee or agent of the Trust even if such opportunity is of
a character which, if presented to the Trust, could be taken by the Trust. Any
Trustee or officer, employee or agent of the Trust may be interested as trustee,
officer, director, stockholder, partner, member, advisor or employee of, or
otherwise have a direct or indirect interest in: (i) any Person who may be
engaged to render advice or services to the Trust, (ii) any Person in which the
Trust has invested or may invest, (iii) any Person from which the Trust has
purchased or may purchase securities or other property and (iv) any Person to
which the Trust has sold or may sell securities or other property; and such
Trustee, officer, employee or agent of the Trust may receive compensation from
such other Person as well as compensation as Trustee, officer, employee or agent
or otherwise hereunder. None of these activities shall be deemed to conflict
with his or her duties and powers as Trustee or officer, employee or agent of
the Trust.
Section 7. SHAREHOLDERS. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
indemnified by the Trust out of the Trust's property against all loss and
expense arising from such liability.
- 30 -
ARTICLE X
MISCELLANEOUS
Section 1. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust or a particular series or class of Shares shall look only to the
assets of the Trust or the assets of that particular series or class of Shares
for payment under such credit, contract or claim; and neither the Shareholders
nor the Trustees, nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor.
Section 2. EXPRESS EXCULPATORY CLAUSES AND INSTRUMENTS. Any written
instrument creating an obligation of the Trust shall, to the extent practicable,
include a reference to this Declaration, recite that this Declaration is on file
with the Secretary of State of The Commonwealth of
Massachusetts, and provide
that such written instrument was executed or made by or on behalf of the Trust,
by the Trustee or Trustees or by an officer or officers of the Trust in their
capacity as such and not individually, and further that neither the Shareholders
nor the Trustees nor any officers, employees or agents (including the Trust's
advisor, the "Advisor") of the Trust shall be liable thereunder and that all
persons shall look solely to the Trust estate for the payment of any claim
thereunder or for the performance thereof. However, the omission of such
provision from any such instrument shall not render the Shareholders, any
Trustee, or any officer, employee or agent (including the Advisor) of the Trust
liable, nor shall the Shareholders, any Trustee or any officer, employee or
agent (including the Advisor) of the Trust be liable to anyone for such
omission.
Section 3. TRUSTEES AND OFFICERS GOOD FAITH ACTION, EXPERT ADVICE, NO
BOND OR SURETY. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee or officer shall
be liable for his or her own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee or officer, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees or officers may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The Trustees
and officers shall not be required to give any bond as such, nor any surety if a
bond is required.
Section 4. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 5. DURATION AND TERMINATION OF TRUST. Unless terminated as
provided in Article VI, the Trust shall continue without limitation of time.
Upon termination of the Trust, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or anticipated
of the Trust, as may be determined by the Trustees, the Trust shall in
accordance with such procedures as the Trustees consider appropriate reduce the
remaining
- 31 -
assets to distributable form in cash or shares or other property, and distribute
the proceeds to the Shareholders ratably according to the number of Shares and
according to the series or class held by the several Shareholders on the date of
termination. Any series or class of Shares other than common Shares may be
terminated or redeemed by the Trust pursuant to terms established by the
Trustees or in the Bylaws. A termination or redemption of common Shares shall be
considered a liquidation or termination of the Trust and shall only be
accomplished pursuant to the terms established in Article VI, provided, however,
a partial redemption or termination of common Shares of up to ten percent (10%)
of the number of common Shares outstanding in any twelve (12) month period (the
ten percent (10%) amount being determined on the day before the first redemption
or termination in each such twelve (12) month period) may be accomplished by the
Trust pursuant to a vote of seventy-five percent (75%) of the Trustees then in
office.
Section 6. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust, where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of State of The Commonwealth of
Massachusetts and with the Xxxxxx City
Clerk, as well as any other governmental office where such filing may from time
to time be required, and shall become effective when filed unless a later date
is specified. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been made and
as to any matters in connection with the Trust hereunder; and, with the same
effect as if it were the original, may rely on a copy certified by an officer of
the Trust to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument, and all
expressions like "herein", "hereof", and "hereunder", shall be deemed to refer
to this instrument as amended or affected by any such amendments. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts, each
of which shall be deemed an original.
Section 7. APPLICABLE LAW. This Declaration is made in The Commonwealth
of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type referred to in Section 1 of Chapter 182 of the Massachusetts General
Corporation Laws, commonly called a Massachusetts business trust, and, without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust and the Trustees may excise all powers
which are ordinarily exercised by trustees of such a trust.
Section 8. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association. Nothing in this Declaration, however, shall prevent the Trust from
being a corporation or association for tax purposes.
- 32 -
Section 9. AMEX TRANSACTIONS AND CONTRACTS. Nothing in Article V shall
preclude the settlement of any transaction entered into through the facilities
of the AMEX or any other national securities exchange or automated inter-dealer
quotation system. The fact that the settlement of any transaction occurs shall
not negate the effect of any other provision of Article V and any transferee in
such a transaction shall be subject to all of the provisions and limitations set
forth in Article V. Any affirmative vote or consent of the Trustees or
Shareholders required by this Declaration shall be in addition to the vote or
consent of Trustees or Shareholder required by law or by any agreement between
the Trust and the AMEX or any other national securities exchange.
Section 10. ADDRESS OF THE TRUST AND THE TRUSTEES AND AGENT FOR SERVICE
OF PROCESS. The principal address of the Trust and of the Trustees is 000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. The Trust and the Trustees may have other
offices and may change its principal office address by vote of its Trustees. The
offices of the Trust and the Trustees, including the principal office, may be
located within or outside Massachusetts. The Registered Agent is RMR Advisors,
Inc., and the address of RMR Advisors, Inc. is 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000.
ARTICLE XI
AMENDMENTS, BYLAWS AND CONSTRUCTION
Section 1. AMENDMENTS BY TRUSTEES. Amendments to this Declaration for
the purpose of: (i) changing the name of the Trust, (ii) changing the domicile
of the Trust without changing the substance of this Declaration, or (iii)
supplying any omission, curing any ambiguity, correcting any defective or
inconsistent provision or clarifying the meaning and intent of this Declaration;
may be made at any time by the Trustees without Shareholder approval.
Section 2. AMENDMENTS BY SHAREHOLDERS AND TRUSTEES. (a) Except as
otherwise provided in Section 1 and in paragraph (b) of this Section 2, the
affirmative vote of a majority of Trustees then in office and at least
seventy-five percent (75%) of the Shares outstanding and entitled to vote (by
class or series or in combination as may be established in the Bylaws or by the
Trustees) shall be required to amend, alter, change or repeal any provision of
this Declaration.
(b) Notwithstanding anything to the contrary in paragraph (a) of this
Section 2, if an amendment to this Declaration is approved by seventy-five
percent (75%) of the Trustees then in office, no Shareholder approval will be
required for that amendment to be effective, except to the extent a Shareholder
approval is required by applicable law; and, if applicable law requires a
Shareholder approval, the vote required shall be the lesser of a majority of
voting Shareholders or the least amount legally required.
Section 3. BYLAWS. The Trustees may adopt, amend, change or repeal
Bylaws which shall govern the conduct of business by this Trust. Except as they
may directly contradict provisions of this Declaration, the Bylaws may implement
and interpret this Declaration.
- 33 -
Section 4. CONSTRUCTION. If any provision of this Declaration is
determined to be unlawful by a court or regulatory body of competent
jurisdiction, the remainder of this Declaration shall remain in full force and
effect and the offending provision shall be construed to achieve the purpose of
the offending provision to the extent legally possible. The re-construction of
an unlawful provision shall be made by the Trustees, or, in the absence of
action by the Trustees, by the court or regulatory body which determined the
provision to be unlawful.
- 34 -
IN WITNESS HEREOF, at least a majority of the Trustees and the Shareholder
do hereto set their hands and seals this 15th day of September, 2005.
TRUSTEES:
/s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
SHAREHOLDER:
RMR Advisors, Inc.
By: /s/ Xxxxxx X. X'Xxxxx
---------------------
Xxxxxx X. X'Xxxxx
President
