EX-99.other
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AMENDED AND RESTATED
TRUST AGREEMENT
by and among
X. XXXXXXX XXXXX, XXXXXX X. XXXXXX,
XXXX X. XXXXXX, XXXXXX X. XXXXX,
and
XXXXXX X. XXXXXXXXXX
as Managing Trustees,
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
and
WILMINGTON TRUST COMPANY,
as Registered Trustee
Dated June 22, 1999
Relating to:
CHARTER MAC EQUITY ISSUER TRUST
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TABLE OF CONTENTS
Page
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1. ORGANIZATION.............................................................1
2. DEFINITIONS AND GLOSSARY OF TERMS........................................2
3. TRUSTEES; LEGAL TITLE....................................................10
4. PURPOSES; CONDUCT OF BUSINESS............................................11
5. SHARES GENERALLY.........................................................14
6. SERIES A PREFERRED SHARES................................................15
7. LIABILITY OF THE SHAREHOLDERS; REGISTERED TRUSTEE; MANAGING
TRUSTEES; EMPLOYEES; MANAGER..........................................19
8. COVENANTS................................................................20
9. ALLOCATION, CAPITAL ACCOUNTS AND OTHER TAX MATTERS.......................25
10. BOARD OF TRUSTEES; POWERS AND LIMITATIONS................................28
11. RIGHTS AND POWERS OF SHAREHOLDERS........................................32
12. DISSOLUTION OF THE TRUST.................................................33
13. SPECIAL POWER OF ATTORNEY................................................33
14. INDEMNIFICATION..........................................................34
15. CONCERNING THE REGISTERED TRUSTEE........................................35
16. CERTAIN TRANSACTIONS.....................................................37
17. MISCELLANEOUS............................................................37
ACCEPTANCE OF MANAGER........................................................43
EXHIBIT A.FORM OF PREFERRED SHARE CERTIFICATE................................44
i
TRUST AGREEMENT
This AMENDED AND RESTATED TRUST AGREEMENT is entered into on June 22,
1999 by and among Charter Municipal Mortgage Acceptance Company ("CHARTER") and
the undersigned Trustees, and consented and agreed to by CM Holding Trust
("HOLDING")), for the benefit of those persons who become Shareholders pursuant
to the terms hereof. Capitalized terms used but not defined shall have the
meanings assigned to such terms in Article 2.
R E C I T A L S
WHEREAS, Charter is the sole shareholder of Charter MAC Origination
Trust I (the "ORIGINATION TRUST");
WHEREAS, Xxxxxxx has determined to raise additional capital through the
sale of preferred equity ownership interests;
WHEREAS, to facilitate such transaction Charter has heretofore caused
to be established this Trust;
WHEREAS, a trust agreement of the Trust, dated May 6, 1999 and amended
June 9, 1999 and June 10, 1999 (the "ORIGINAL TRUST AGREEMENT")) was previously
executed; and
WHEREAS, in connection with its contribution of property to the Trust,
Charter desires that the Original Trust Agreement be amended and restated in its
entirety;
NOW, THEREFORE, all money and property contributed to or otherwise
owned or held by or on behalf of the Trust, together with the proceeds thereof,
shall be held and managed in trust for the benefit of the Shareholders, subject
to the provisions hereof. The Original Trust Agreement is hereby amended and
restated in its entirety to read as follows:
1. ORGANIZATION
1.1. NAME. The trust continued hereby shall be known as CHARTER MAC
EQUITY ISSUER TRUST, in which name the Board of Trustees, the Manager and the
Trust shall conduct business.
1.2. BUSINESS OFFICES. The principal office of the Trust, and such
additional offices as the Board of Trustees may determine to establish, shall be
located at such place or places inside or outside the State of Delaware as the
Board of Trustees may designate from time to time.
1.3. CONTRIBUTION OF TRUST PROPERTY. The Trust acknowledges receipt
of the property now or hereafter transferred to the Trust pursuant to the
Charter Preferred Trust Contribution Agreement, including all the beneficial
interests represented by shares in the Origination Trust now owned by Charter,
which shall constitute the Trust Property. Charter shall pay or cause to be paid
organizational expenses of the Trust as they may arise or shall, upon the
request of the Registered Trustee, promptly reimburse the Registered Trustee for
any such expenses paid by the Registered Trustee.
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1.4. DECLARATION OF TRUST. The Board of Trustees hereby declares that
they will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the use and benefit of the Shareholders. It is the
intention of the parties hereto that this Trust Agreement and the By-laws shall
constitute the governing instruments of the Trust. It is the intention of the
parties hereto that the Trust constitute a business trust under the Trust Act.
It is the intention of the parties hereto that, for income tax purposes, the
Trust shall be treated as a partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with such characterization of the Trust.
2. DEFINITIONS AND GLOSSARY OF TERMS
2.1. DEFINITIONS. For all purposes of this Trust Agreement, except
as otherwise expressly provided herein or unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
"AFFILIATE" of a Person shall mean (i) any officer, director, trustee,
partner, employee or controlling shareholder of such Person; (ii) any Person
controlling, controlled by or under common control with any Person or any
individual described in (i) above; (iii) any officer, director, trustee, general
partner or employee of any Person described in (ii) above; and (iv) any Person
who is a member, other than as limited partner, with any individual described in
(i) and (ii) above in relationship of joint venture, general partnership, or
similar form of unincorporated business association; provided however, that a
partner in a partnership or joint venture with (a) Charter or (b) an Affiliate
of a Related Manager, shall not by virtue of such relationship be deemed an
Affiliate of a Related Manager. For purposes of this definition, the term
"control" shall mean the control or ownership of 10% or more of the outstanding
voting securities of the Person referred to.
"AFFILIATE TRANSACTION" shall mean the Trust or any of its
Subsidiaries, directly or indirectly, conducting any business or entering into
or permitting to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or investment or the rendering of any service) with or for the benefit
of any Affiliate of the Trust or any Subsidiary of the Trust.
"AMT" shall mean the federal alternative minimum tax.
"ANNUAL ORDINARY INCOME" shall mean the sum of the Trust's Quarterly
Net Income for each of the fiscal quarters of a particular fiscal year.
"BOARD OF TRUSTEES" shall mean, collectively, the Managing Trustees
named in Section 3.1(b) so long as they continue in office, and all other
individuals who have been duly elected and qualify as Managing Trustees.
"BOOK AMORTIZATION" shall have the meaning ascribed thereto in Section
9.5.
"BOOK DEPRECIATION" shall have the meaning ascribed thereto in Section
9.5.
"BOOK DISPARITY" shall have the meaning ascribed thereto in Section
9.5.
"BOOK GAIN" shall have the meaning ascribed thereto in Section 9.5.
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"BOOK LOSS" shall have the meaning ascribed thereto in Section 9.5.
"BY-LAWS" shall mean the By-laws of the Trust as adopted, and as
amended or restated from time to time, by the Board of Trustees pursuant to
Section 10.2(b), which By-laws are incorporated herein by reference and shall
form a part of the governing instrument of the Trust.
"CAPITAL ACCOUNT" shall have the meaning ascribed thereto in Section
9.4(a).
"CAPITAL GAIN DISTRIBUTION" shall mean the distribution of any net
capital gain reported for tax purposes by the Trust for any fiscal year.
"CEDE" shall mean Cede & Co.
"CHARTER" shall have the meaning ascribed thereto in the Recitals.
"CHARTER PREFERRED TRUST CONTRIBUTION AGREEMENT" shall mean that
certain Contribution Agreement dated as of June 22, 1999 by and between Charter
and the Trust, as the same may be amended or supplemented from time to time.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
"COMMON DISTRIBUTION" shall mean a distribution of cash to Common
Shareholders, other than a Capital Gain Distribution.
"COMMON SHARES" shall mean those beneficial interests issued by the
Trust authorized by and described in Article 5.
"COMMON SHAREHOLDER" shall mean any Person who owns Common Shares.
"CONSOLIDATED NET INCOME" shall mean, with respect to any period, the
net income of the Trust and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, adjusted, to the extent included in
calculating such net income, by excluding the net income of any Subsidiary to
the extent that the declaration of distributions by that Subsidiary of that
income is not at the time (regardless of any waiver) permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Subsidiary or the holders of its Equity Interests.
"COVERED BONDS" shall mean the following bonds transferred by
Charter to the Trust or its Subsidiaries: East Ridge, Xxxxxx'x Creek, Bay Club,
Players Club and Suntree.
"COVERED PERSON" shall have the meaning ascribed thereto in Section
10.8.
"DTC" means The Depository Trust Company.
"DISTRIBUTABLE CASH FLOW" shall mean, with respect to any period,
Consolidated Net Income for such period, PLUS depreciation, amortization and any
other non-cash items for such period (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash items or charges (excluding any such
non-cash charge to the extent that it represents an accrual of, or a reserve
for, cash charges for any future period or amortization of cash income received
in a period) of the Trust and its Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash items or charges were
deducted in computing such Consolidated Net Income and
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LESS all non-cash income for such period (excluding any such non-cash income to
the extent it represents an accrual of cash income in any future period or
amortization of cash income received in a period). Notwithstanding the
foregoing, the depreciation and amortization and other non-cash items and
charges of a Subsidiary of the Trust shall be added to Consolidated Net Income
to compute Distributable Cash Flow only to the same extent that such Subsidiary
could have paid such amount at the date of determination as a distribution to
the Trust by such Subsidiary without prior governmental approval (that has not
been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that subsidiary or the holders of its Equity
Interests.
"DISTRIBUTIONS" shall mean Common Distributions, Preferred
Distributions and Capital Gain Distributions.
"EQUITY INTERESTS" in any Person shall mean any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) corporate stock or other
equity participation, including partnership interests, whether general or
limited, in such Person, including any Preferred Equity Interests.
"FAILED REMARKETING" shall mean any remarketing date on which the
remarketing agent is not able to sell all of the tendered Series A Preferred
Shares.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of this Trust Agreement.
"HOLDING" shall have the meaning ascribed thereto in the Recitals.
"INDEMNIFIED PARTY(IES)" shall have the meaning ascribed thereto in
Section 14.1.
"INDEPENDENT TRUSTEES" shall mean those Managing Trustees who are not,
and have not been at any time during the preceding five (5) years, an employee,
Affiliate, or family member of an employee or Affiliate of the Trust, Charter,
the Manager, Related or their respective Affiliates.
"INVESTMENT" means, with respect to any Person, (i) all investments by
such Person in any other Person in the form of any direct or indirect loan,
advance, guarantee or other extension of credit or capital contribution (by
means of transfers of cash or other property or investments to others, payments
for property or services for the account or use of others, the execution of an
interest rate swap, put agreement or other similar notional principal contract
or otherwise); (ii) any purchase or other acquisition of capital stock, bonds,
notes, debentures, residual investments, subordinate investments or other
securities or evidences of indebtedness issued by any other Person; and (iii)
all other items that would be classified as an asset on a balance sheet of such
Person prepared in accordance with GAAP. For purposes of the foregoing, the
substitution of an Investment for another Investment shall be deemed an
Investment as of such date.
"INVESTMENT VALUE" means (without duplication) the aggregate value in
U.S. dollars of the cash and investments of the Trust and its Subsidiaries. For
purposes of determining the Investment Value, the following principles shall be
applied: (i) unless otherwise indicated, all amounts and values shall be
determined in accordance with GAAP and will be based upon the amount thereof
reflected on the financial statements of the Trust and its Subsidiaries for the
quarter end immediately preceding the determination date (except that, if the
latest quarterly financial statements are not available, the financial
statements for the prior quarter end shall be
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used); (ii) all investments acquired since the date of such quarterly financial
statements shall be valued at the purchase price therefor; (iii) the amount of
all Senior Investment Interests owned by the Trust or one of its Subsidiaries
purchased since the date of such quarterly financial statements shall be the
face or par value thereof; and (iv) the value of each Investment shall be
further adjusted by (A) adding the cost of all additions thereto and (B)
subtracting the amount of any portion of such Investment repaid to the Trust or
a Subsidiary of the Trust in cash as repayment of principal or a return of
capital, as the case may be, from the end of the previous quarter or date of
acquisition, as appropriate, through the determination date.
"IRS" shall mean the Internal Revenue Service.
"JUNIOR EQUITY INTERESTS" shall mean the Common Shares and each other
class of Equity Interests or series of Preferred Shares established hereafter by
the Board of Trustees the terms of which provide that it ranks junior to the
Series A Preferred Shares in the right to the payment of Distributions or
amounts payable in liquidation, dissolution or winding up of the Trust.
"LEVERAGE RATIO" means, as of any determination date, the ratio of (A)
the then-outstanding Obligations of the Trust and its Subsidiaries to (B)
(without duplication) the sum of (i) the Proportionate Amount of the outstanding
par amount of any Unsecured Senior Investment Interests not otherwise included
in the Investment Value, directly or indirectly PLUS (ii) the outstanding par
amount of any Secured Senior Investment Interests not otherwise included in the
Investment Value, directly or indirectly, on account of the inclusion in the
Investment Value of the underlying bonds, PROVIDED that the Trust or one of its
Subsidiaries owns all of the related Subordinated Investment Interests PLUS
(iii) the Investment Value. The Leverage Ratio shall be calculated taking into
account any Obligations and Senior Investment Interests created, purchased or
generated by the transactions giving rise to the need to calculate the Leverage
Ratio.
"LIQUIDATION AMOUNT" shall mean, with respect to the Series A
Preferred Shares, an amount equal to $2,000,000 per Series A Preferred Share.
"Liquidation Amount" with respect to any other class of Preferred Shares shall
have the meaning provided in the resolution authorizing such Preferred Shares.
"LIQUIDATION PREFERENCE" shall mean, with respect to the Series A
Preferred Shares, an amount equal to the Liquidation Amount, plus, to the extent
of the Trust's Quarterly Net Income, an amount equal to all Preferred
Distributions accrued but unpaid on the Series A Preferred Shares. "Liquidation
Preference" with respect to any other class of Preferred Shares shall have the
meaning provided in the resolution authorizing such Preferred Shares.
"MANAGEMENT AGREEMENT" shall mean the Management Agreement dated as of
June 22, 1999 between the Trust and the Manager as amended or superseded from
time to time, pursuant to which the Manager will be engaged by the Trust to
conduct the business and affairs of the Trust upon the terms and conditions
therein.
"MANAGER" shall mean Related Charter LP, or any other entity retained
by the Trust to conduct the day-to-day business and affairs of the Trust.
"MANAGING TRUSTEES" shall mean the individuals named in Section 3.1(b)
so long as they continue in office, and all other individuals who have been duly
elected and qualify as
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trustees of the Trust hereunder, including the Independent Trustees but not
including the Registered Trustee.
"OBLIGATION" shall mean (without duplication), whether recourse is to
all or a portion of the assets of a Person and whether or not contingent: (i)
every obligation of a Person for money borrowed; (ii) every obligation of a
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every Reimbursement Obligation of a Person; (iv)
every obligation of a Person issued or assumed as the deferred purchase price of
property or services (excluding accrued payables and liabilities arising in the
ordinary course of business which are not overdue or which are being contested
in good faith); (v) the obligations of a Person under any lease that is required
to be classified and accounted for as capital lease obligation under GAAP; (vi)
the Proportionate Amount of any Unsecured Senior Investment Interests not owned
by the Trust or one of its Subsidiaries; (vii) any Secured Senior Investment
Interests not owned by the Trust or one of its Subsidiaries that are
attributable to the Subordinated Investment Interests owned by the Trust or one
of its Subsidiaries; (viii) every Obligation of the type referred to in clauses
(i) through (vii) above of another Person, and all distributions of another
Person, the payment of which the Trust or one of its Subsidiaries has guaranteed
or is responsible or liable for, directly or indirectly, as obligor, guarantor
or otherwise; (ix) the outstanding amount of any Preferred Equity Interests
issued by a Subsidiary of the Trust (other than the face or par amount of such
interests owned by the Trust or its other Subsidiaries); and (x) any and all
deferrals, renewals, extensions and refundings of, or amendments, modifications
or supplements to, any liability of the kind described in the preceding clauses
(i) through (ix) above. At such time as the value of any Reimbursement
Obligation or portion thereof related to any Secured Senior Investment Interests
no longer is reflected in the Investment Value of the related Subordinated
Investment Interests, whether because the Trust and its Subsidiaries have
disposed of such Subordinated Investment Interests or otherwise, such
Reimbursement Obligation or portion thereof not theretofore treated as an
Obligation shall be treated as an Obligation incurred on such date. The amount
of all outstanding Obligations shall be the face or par amount thereof;
PROVIDED, HOWEVER, (i) in the case of a Reimbursement Obligation incurred in
connection with the issuance of Senior Investment Interests with respect to
which the Trust or its Subsidiaries owns 100% of the related Subordinated
Investment Interests, the amount of outstanding Obligations related thereto
(including any Reimbursement Obligations) shall be the excess, if any, of the
face or par amount of the Senior Investment Interests in such securitization
over the value, as of the determination date, of the underlying assets in the
securitization vehicle, and (ii) the value of any Preferred Equity Interests
issued by a Subsidiary of the Trust shall be the liquidation preference thereof.
"ORIGINAL TRUST AGREEMENT" shall have the meaning ascribed thereto in
the Recitals.
"ORIGINATION TRUST" shall have the meaning ascribed thereto in the
Recitals.
"PERMITTED AFFILIATE TRANSACTIONS" shall mean: (i) the payment of
reasonable fees and compensation to, and indemnity provided on behalf of,
officers, trustees, employees or consultants of the Trust or any Subsidiary of
the Trust as determined in good faith by the Board of Trustees or the governing
body of such Subsidiary, as the case may be; and (ii) transactions exclusively
between or
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among the Trust and any of its Subsidiaries or exclusively between or among its
Subsidiaries, provided such transactions are not otherwise prohibited by this
Trust Agreement.
"PERMITTED INVESTMENT" shall mean: (i) any Obligation issued by or on
behalf of any state of the United States of America or any political subdivision
or agency thereof (whether or not backed by the full faith and credit of the
government issuer); (ii) any publicly offered investment vehicle holding
tax-exempt investments, the tax-exempt character of which is passed through to
the beneficial holders thereof; (iii) any Senior Investment Interest in an
Investment described in clauses (i) and (ii) above; (iv) shares in regulated
investment companies (as such term is used in the Code) whose stated objective
is to produce only income that is tax-exempt income; provided, that any such
Investment must pass-through the tax-exempt character of the income on its
assets to the beneficial holders thereof: (v) any Subordinated Investment
Interest in an Investment described in clause (i) and (ii) above; and (vi) any
Investment by the Trust or a wholly-owned Subsidiary of the Trust in a Person
that is or will become immediately after such investment a wholly-owned
Subsidiary of the Trust or such wholly-owned Subsidiary or that will merge or
consolidate into the Trust or a wholly-owned Subsidiary of the Trust provided
that such Person invests only in Permitted Investments described in clauses (i)
through (v) above; PROVIDED, HOWEVER, that the Trust or one of its Subsidiaries
shall be provided an opinion or opinions of nationally recognized bond counsel
to the effect that, as of the date of original issuance of the Investment, with
respect to each Permitted Investment described in clauses (i) through (iv)
above, that the interest or distributions on such Investment is excludable from
gross income for federal income tax purposes and, with respect to each
Investment described in clauses (iii) and (iv), that the tax-exempt nature of
the income on the underlying tax-exempt bonds will be passed through to the
Trust; PROVIDED FURTHER, that in the case of an opinion rendered to the original
purchaser of the Investment, the seller is not aware of any IRS audit or other
change that could adversely affect the conclusions of such opinion; and,
PROVIDED FURTHER, that none of these opinions may be qualified with respect to
whether the Investment (or the underlying investment in the case of a
pass-through vehicle) represents indebtedness for federal income tax purposes.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock trust, limited liability company, limited
liability partnership, limited partnership, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"PREFERRED DISTRIBUTION" shall mean a distribution of cash to Preferred
Shareholders other than a Capital Gain Distribution.
"PREFERRED EQUITY INTERESTS" in any Person shall mean an equity
interest (including redeemable preferred securities) of any class or classes
which is preferred as to the payment of distributions, or as to the distribution
of assets upon any voluntary or involuntary liquidation or dissolution or
winding up of such Person, over equity interests of any other class in such
Person.
"PREFERRED SHARES" shall mean the Series A Preferred Shares and any
other beneficial interests issued by the Trust in accordance with this Trust
Agreement and designated as "preferred shares."
"PREFERRED SHAREHOLDER" shall mean any holder of Preferred Shares.
"PROPORTIONATE AMOUNT" shall mean that portion of the aggregate
principal amount of the Unsecured Senior Investment Interests issued in a
securitization transaction obtained by
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multiplying such aggregate par amount of Unsecured Senior Investment Interests
by a fraction the numerator of which is the par amount of Subordinated
Investment Interests issued in such securitization transaction that are owned by
the Trust or a Subsidiary of the Trust and the denominator of which is the
aggregate par amount of such Subordinated Investment Interests issued in that
securitization transaction.
"QUARTERLY NET INCOME" means the Trust's tax-exempt income (net of
expenses) for the particular calendar quarter.
"REGISTERED TRUSTEE" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as a trustee
hereunder, or any other Person which succeeds it in such capacity pursuant to
Section 15.2 and in compliance with Section 3807 of the Trust Act.
"REGISTERED TRUSTEE PERSONS" shall have the meaning ascribed thereto in
Section 14.2.
"REIMBURSEMENT OBLIGATION" shall mean the obligation of a Person for
the reimbursement of or a provision of collateral or security for any obligor on
any letter of credit, liquidity facility, standby purchase agreement, bankers'
acceptance or other similar facilities.
"RELATED" shall mean Related Capital Company.
"RELATED MANAGER" shall mean any Manager which is an Affiliate of
Related.
"RESTRICTED PAYMENT" shall mean any direct or indirect (i) declaration
or payment of any Distribution in respect of any Junior Equity Interest (other
than, in the case of a Subsidiary, to the Trust) or (ii) redemption of any
Junior Equity Interest; PROVIDED, HOWEVER, that Distributions of Distributable
Cash Flow shall not be Restricted Payments.
"SECURED SENIOR INVESTMENT INTERESTS" shall mean any Senior Investment
Interests that are not Unsecured Senior Investment Interests and with respect to
which the Trust or one of its Subsidiaries has a Reimbursement Obligation.
"SENIOR INVESTMENT INTERESTS" shall mean: (i) the senior certificates
of participation, custodial receipts, partnership interests, or other similar
interests, whether floating or fixed rate, that were or are issued as part of a
securitization transaction in which (x) an underlying asset is deposited into a
custodial arrangement, trust, partnership or other pass-through vehicle
(including, without limitation, a "tax-exempt municipal investment conduit" if
and when such a conduit is permitted), and (y) payments on Subordinated
Investment Interests issued as part of the securitization transaction will only
be made to the extent of cash flow available after the payment of amounts owing
to the Senior Investment Interests; and (ii) any other Investment, whether or
not held by the Trust or a Subsidiary of the Trust, which is senior in right of
payment to an Investment held by the Trust or one of its Subsidiaries.
"SERIES A PREFERRED SHAREHOLDER" shall mean any Person who owns Series
A Preferred Shares.
"SERIES A PREFERRED SHARES" shall mean those beneficial interests
issued by the Trust authorized by and described in Article 6.
"SHAREHOLDER" shall mean any Common Shareholder or any Preferred
Shareholder, including the Manager to the extent it holds Shares.
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"SHARES" shall mean Common Shares and Preferred Shares.
"SUBORDINATED INVESTMENT INTEREST" shall mean any Investment held,
directly or indirectly, by the Trust or one of its Subsidiaries, that is
subordinated in right of payment to the prior payment in full of a Senior
Investment Interest, whether or not such Senior Investment Interest is held by
the Trust or any of its Subsidiaries.
"SUBSIDIARY" shall mean, with respect to any Person: (i) any other
Person of which outstanding Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person; or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
"SURVIVING PERSON" shall have the meaning ascribed thereto in Section
8.5.
"TAX MATTERS PARTNER" shall have the meaning ascribed thereto in
Section 9.7.
"TRUST" shall mean Charter Mac Equity Issuer Trust, a Delaware business
trust.
"TRUST ACT" shall mean Chapter 38 of Title 12 of the Delaware Code,
as amended from time to time, or any successor statute.
"TRUST AGREEMENT" shall mean this Amended and Restated Trust Agreement,
as amended or restated from time to time, and shall include the By-laws, as
amended or restated from time to time by the Board of Trustees.
"TRUST PROPERTY" shall mean all right, title and interest of the Trust
in and to any property contributed to the Trust by the Shareholders or otherwise
acquired by the Trust, including, without limitation, all distributions or
payments thereon or proceeds therefrom.
"TRUSTEES" shall mean, collectively, the Managing Trustees and the
Registered Trustee.
"UNSECURED SENIOR INVESTMENT INTERESTS" shall mean any Senior
Investment Interests with respect to which (i) neither the Trust nor any of its
Subsidiaries has a Reimbursement Obligation with respect to the securitization
transaction creating such Senior Investment Interests and (ii) the Trust or a
Subsidiary of the Trust acquires and holds, directly or indirectly, all or a
portion of the related Subordinated Investment Interests.
2.2. RULES OF CONSTRUCTION.
(a) All defined terms in this Trust Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Trust Agreement and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Trust Agreement or in such certificate or
other document, and accounting terms partly defined in this Trust Agreement or
in any such certificate or other document to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this Trust
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Trust Agreement or in any such certificate or
other document shall control.
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(c) The words "hereof," "herein," "hereunder"
and words of similar import when used in this Trust Agreement shall refer to
this Trust Agreement as a whole and not to any particular provision of this
Trust Agreement; Section and Exhibit references contained in this Trust
Agreement are referenced to Sections and Exhibits in or to this Trust Agreement
unless otherwise specified; and the term "including" shall mean "including
without limitation."
(d) The definitions contained in this Trust Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified, consolidated, continued, extended or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
3. TRUSTEES; LEGAL TITLE
3.1. MANAGING TRUSTEES.
(a) NUMBER. There shall be not less than three nor
more than nine Managing Trustees, at least one of whom must be an Independent
Trustee. Initially, the Trust shall have five Managing Trustees, which number
may be increased or decreased pursuant to the By-laws but shall never be less
than the minimum number, if any, required by the Trust Act nor more than nine.
(b) INITIAL BOARD OF TRUSTEES. The names of the initial
Managing Trustees are:
J. Xxxxxxx Xxxxx
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxx (Independent Trustee)
Xxxxxx X. Xxxxxxxxxx (Independent Trustee)
(c) ELECTION AND TERM. The initial Board of Trustees
shall be as specified in Section 3.1(b). The Board of Trustees shall be elected
by the Common Shareholders pursuant to the voting procedures set forth in the
By-laws. The Managing Trustees hold their offices until their resignation or
removal. The Managing Trustees may increase the number of Managing Trustees and
may fill any vacancy, whether resulting from an increase in the number of
Managing Trustees or otherwise, on the Board of Trustees in the manner provided
in the By-laws. Written evidence of the qualification and acceptance of election
or appointment of successor and additional Managing Trustees may be filed with
the records of the Trust and in such other offices, agencies or places as the
Board of Trustees may deem necessary or desirable.
(d) REMOVAL OF MANAGING TRUSTEES. Subject to the rights
of holders of one or more classes or series of Shares to elect one or more
Managing Trustees, any Managing
10
Trustee, or the entire Board of Trustees, may be removed from office at any
time, with or without cause, but only by majority vote of the Common
Shareholders.
(e) RESIGNATION OF MANAGING TRUSTEES. Any Managing
Trustee may resign at any time by delivering his resignation in writing to the
Board of Trustees, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. No resignation of a Managing Trustee shall
become effective until such Managing Trustee's successor shall have been
elected.
3.2. REGISTERED TRUSTEE.
(a) APPOINTMENT OF REGISTERED TRUSTEE. The Registered
Trustee has been appointed as trustee and joined as a party hereunder for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Trust Act. In the event of the resignation or removal of the Registered Trustee,
the Board of Trustees shall appoint a successor Registered Trustee in accordance
with Section 15.2.
(b) POWERS OF REGISTERED TRUSTEE. The Registered Trustee
shall be responsible for performing only the following duties with respect to
the Trust: (i) to execute, deliver, acknowledge and file any certificates of
trust and any amendments thereto required to be filed pursuant to applicable
law, (ii) to execute any duly adopted amendments to this Trust Agreement and
(iii) to execute, deliver, acknowledge and file any certificates of cancellation
required to be filed pursuant to applicable law. The Registered Trustee shall
have no other authority, duties or liabilities. The Board of Trustees or the
Manager shall keep the Registered Trustee reasonably informed of any actions of
the Board of Trustees or the Manager or other circumstances that could affect
the rights, duties or liabilities of the Registered Trustee. The Registered
Trustee has no responsibility for monitoring the conduct of the Board of
Trustees or the Manager or causing the Board of Trustees or the Manager, or any
other Person to discharge their respective duties under this Trust Agreement,
the By-laws or the Management Agreement, and the Registered Trustee shall have
no liability for the acts and omissions of the Trust, the Board of Trustees or
the Manager.
(c) COMPENSATION AND EXPENSES OF REGISTERED TRUSTEE. The
Registered Trustee shall be entitled to receive from the Trust reasonable
compensation for its services hereunder, as shall be agreed to from time to time
by the Board of Trustees and the Registered Trustee, and the Registered Trustee
shall be entitled to be reimbursed by the Trust for reasonable out-of-pocket
expenses incurred by the Registered Trustee in the performance of its duties
hereunder. The parties hereto hereby approve and ratify the Trust's execution,
delivery and performance of the Fee Agreement, dated May __, 1999, by and among
the Registered Trustee, the Trust and the other parties thereto.
3.3. LEGAL TITLE. Legal title to all Trust Property shall be vested
in the Trust. To the fullest extent permitted by law, no Shareholder shall be
deemed to have a severable ownership interest in any individual asset of the
Trust or any right of partition or possession thereof.
4. PURPOSES; CONDUCT OF BUSINESS
4.1. PURPOSES. The sole purposes of the Trust shall be, to the
extent permitted under the Trust Act: (i) to accept capital contributions from
Charter pursuant to the Charter Preferred
11
Trust Contribution Agreement; (ii) to accept capital contributions in the form
of cash from Series A Preferred Shareholders; (iii) to acquire Permitted
Investments; (iv) to enter into such agreements, documents, instruments,
certificates and other writings as may be necessary or appropriate in
furtherance of the foregoing purposes and business activities; (v) to make
Distributions to the Shareholders as permitted by this Trust Agreement; and (vi)
take such other actions as may be necessary or appropriate in furtherance of the
foregoing purposes and the business activities set forth in this Trust
Agreement. The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Trust Agreement. Upon the transfer of any asset from Charter to the Trust, the
Trust shall receive an opinion of counsel to the effect that such transfer will
be respected as a valid and effectual transfer of ownership for federal
bankruptcy purposes.
4.2. CONDUCT OF BUSINESS. The Trust shall agree to conduct its
business in accordance with the following covenants:
(a) To conduct its own business in its own name;
(b) To hold itself out as a separate entity;
(c) To correct any known misunderstanding regarding its
separate identity;
(d) To use separate stationery, business forms, invoices,
checks and to allocate fairly and reasonably any office space within any shared
office building;
(e) To maintain books and records (including tax,
accounting, financial reporting, payroll, employee benefits administration, and
legal) separate from any other Person.
(f) To maintain its accounts separate from any other
Person;
(g) To maintain careful records of all transactions
(including all transactions with Affiliates);
(h) Not to commingle assets with those of any other
Person;
(i) To identify itself and its assets and liabilities
separately in any combined or consolidated financial statements;
(j) To identify itself as a separate entity in each
report, tax return and business transaction;
(k) To maintain adequate capital in light of its
contemplated business operations;
(l) To pay its own liabilities (including overhead and
employee salary and benefits) out of its own funds;
(m) To have separate employees and to pay the salaries of
its own employees and maintain a sufficient number of employees in light of its
contemplated business operations;
(n) Not to guarantee or become obligated for the debts of
any other Person or hold out its credit as being available to satisfy the
obligations of others;
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(o) Except for the obligation of Charter to indemnify the
Registered Trustee, not to permit Charter or any Affiliate of Charter (other
than the Trust itself) to guarantee or become obligated for the debts of the
Trust or hold out its credit as being available to satisfy the obligations of
the Trust; and not to accept any financing or credit from or incur any other
obligation to any Person who is looking to the assets of Charter or any
Affiliate of Charter (other than the Trust itself) to satisfy such obligations;
(p) Not to pledge its assets for the benefit of any other
Person or make any loans or advances to any Person;
(q) Not to permit Charter or any Affiliate of Charter
(other than the Trust itself) to pledge its assets for the benefit of the Trust
or make any loans or advances to the Trust;
(r) To observe all applicable trust formalities
(including separate and regular meetings and preparation of minutes of such
meetings);
(s) To maintain an arm's length relationship with its
Affiliates and other Persons (including not entering into any transaction which
is on terms which are not believed by both parties to be fair and reasonable and
comparable to those available from third parties);
(t) Not to acquire obligations or securities of the
Shareholders, its beneficiaries or its Affiliates (other than shares of
beneficial interest in the Origination Trust);
(u) To act in a limited capacity to effectuate the intent
of its limited business purpose;
(v) Not to enter into any agreement or transaction,
unless (i) it does so without any intent to defraud creditors, (ii) at the time
it does so, it is solvent, and (iii) such agreement or transactions and the
performance of its obligations thereunder or in connection therewith will not
render it insolvent;
(w) To perform its duties and obligations under, and
comply with its covenants contained in, each document or instrument to which it
is permitted by this Trust Agreement to be a party and to which it is a party;
and
(x) Not manage, control, use, sell, reinvest, dispose of
or otherwise deal with the Trust Property except as expressly permitted by this
Trust Agreement.
4.3. COVENANT NOT TO FILE A BANKRUPTCY PETITION. Each of the
Registered Trustee, the Managing Trustees and the Manager hereby agrees that
until one year and one day after the date on which the Series A Preferred Shares
are redeemed in full, it shall not (i) institute the filing of a bankruptcy
petition against the Trust based upon any claim in its favor; (ii) file a
petition or consent to a petition seeking relief on behalf of the Trust under
any bankruptcy law; (iii) consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Trust or a
substantial portion of the property of the Trust; (iv) make any assignment for
the benefit of the Trust's creditors; or (v) cause the Trust to admit its
inability to pay its debts generally as they become due.
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5. SHARES GENERALLY
5.1. COMMON SHARES. The Trust is authorized to issue one hundred
Common Shares. The rights and powers of the Common Shares shall be as provided
in this Trust Agreement. The Common Shares may be, but need not be, evidenced by
certificates in such form as the Board of Trustees may by resolution approve.
The Trust is authorized to issue the one hundred authorized Common Shares to
Holding without further approval.
5.2. PREFERRED SHARES. The terms of the Series A Preferred Shares
are set forth in this Agreement. Authority is hereby vested in the Board of
Trustees, subject to the express provisions of this Trust Agreement, to provide
for the issuance of Preferred Shares in addition to the Series A Preferred
Shares. Such issuances may include series or classes of Shares in addition to
the Series A Preferred Shares. In connection therewith, the Board of Trustees
may fix by resolution providing for the issue of such Preferred Shares, the
authorized number of Preferred Shares to be issued and the powers, designations,
preferences and relative participating, optional or other special rights and
limitations or restrictions of such Preferred Shares, including, without
limitation, rights of redemption or conversion, to the fullest extent now or
hereafter permitted by law.
5.3. SIGNATURES AND DATES. Share certificates bearing the manual
signature of an individual who was, at the time when such signature was affixed,
authorized to sign on behalf of a Managing Trustee or the Manager shall bind the
Trust, notwithstanding that such individual has ceased to be so authorized prior
to the delivery of such Shares or does not hold such office at the date of
delivery of such Shares. Each Share certificate shall be dated the date of its
issuance and shall bear such legends as are deemed appropriate by the person
executing such Share certificate.
5.4. VOTING. Each Share shall entitle the holder thereof to one
vote, in respect of matters to which such class of Shareholder is entitled to
vote.
5.5. TRANSFER RESTRICTIONS. No transfer of a Share or any interest
in the Trust shall be made to any Person unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as amended, and any
applicable state securities laws or is made in accordance with said Act and
state laws. No Shares may be transferred if as a result of a proposed transfer
the aggregate number of Shareholders would exceed 100 (as determined in
accordance with the Investment Company Act of 1940, as amended) or the Trust
would otherwise become subject to regulation under the Investment Company Act of
1940, as amended, or be treated as a publicly traded partnership taxable as a
corporation. Other than as set forth in this Section 5.5 and Section 6.5, Shares
are freely transferable.
5.6. DISTRIBUTIONS. The Shareholders shall be entitled to receive
such Distributions as the Board of Trustees may from time to declare; PROVIDED,
that no Common Distributions may be declared or paid unless all accrued and
unpaid Preferred Distributions have been paid. Notwithstanding the foregoing
proviso, to the extent that the Trust reports a net capital gain with respect to
any taxable year, the Trust shall make a Capital Gain Distribution to each
Shareholder within 90 days after the end of such year in amount equal to the net
capital gain allocated to such Shareholder pursuant to Article 9 hereof.
14
5.7. PRE-EMPTIVE RIGHTS. The Shares shall have no pre-emptive or
similar rights and when issued and delivered to the Shareholders against payment
of the purchase price therefor will be fully paid and non-assessable by the
Trust.
6. SERIES A PREFERRED SHARES
6.1. AUTHORIZATION. The Trust is authorized to issue forty-five
(45) Series A Preferred Shares. The Series A Preferred Shares shall be evidenced
by certificates substantially in the form annexed hereto as Exhibit A, as the
same may be amended from time to time by resolution of the Board of Trustees.
6.2. DISTRIBUTIONS.
(a) Series A Preferred Shareholders shall be entitled to
receive quarterly Preferred Distributions, but only to the extent declared by
the Board of Trustees. No Preferred Distributions shall be declared by the Board
of Trustees with respect to any quarter of the Trust in excess of the Quarterly
Net Income for such quarter.
(b) Preferred Distributions shall accrue with respect to
the Series A Preferred Shares at the distribution rate of 6 5/8% per annum on
the Liquidation Amount of such Shares. Preferred Distributions with respect to
any period of less than a full quarter will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Preferred Distributions with
respect to the Series A Preferred Shares shall be cumulative. No interest shall
be owed or paid by the Trust on accrued but unpaid Preferred Distributions on
the Series A Preferred Shares.
(c) No Distributions shall be paid on any Junior Equity
Interests until all accrued but unpaid Distributions on the Series A Preferred
Shares are paid or are declared and set aside for payment on the Series A
Preferred Shares.
(d) Subject to Section 6.6 hereof, Preferred
Distributions, to the extent declared by the Board of Trustees, shall be payable
to Series A Preferred Shareholders of record at the close of business on the
last day of the calendar quarter prior to the date of payment of such Preferred
Distribution (whether or not a business day). Preferred Distributions on the
Series A Preferred Shares will be payable quarterly on each January 31, April
30, July 31 and October 31, in respect of the immediately preceding quarter
ending December 31, March 31, June 30 and September 30, respectively; provided,
that if any such Distribution payment date is not a business day, the applicable
Distribution will be made on the next business day.
6.3. REDEMPTION AND MANDATORY REPURCHASE.
(a) The Series A Preferred Shares will not be redeemable
by the Trust prior to June 30, 2009. On or after June 30, 2009, the Trust may
redeem all of the Series A Preferred Shares. The redemption price per Share will
be an amount equal to the Liquidation Preference. Each Series A Preferred
Shareholder must tender its Series A Preferred Shares to the Trust on June 30,
2049 at a price per Share equal to the Liquidation Preference, unless the Trust
decides to remarket the Series A Preferred Shares on such date, in which event
the Series A Preferred Shareholders may elect to retain their Series A Preferred
Shares in the manner hereinafter set forth.
15
(b) Redemptions prior to June 30, 2049 may only be
financed with funds derived as set forth in the following two sentences except
that redemptions during the one year following a Failed Remarketing may be
financed using funds from any source. The Trust may make partial redemptions, at
any time and from time to time, so long as it finances such redemptions with the
proceeds of (i) an offering of Junior Equity Interests, (ii) a liquidation of
assets, or (iii) payments received from bonds or other Investments, and the
Trust selects the Shares to be redeemed by lot. The Trust may finance
redemptions of all outstanding Series A Preferred Shares, at any time, from the
sources listed in the preceding sentence as well as from the proceeds of an
offering of Equity Interests ranking senior to or equal to with the Series A
Preferred Shares.
(c) The Trust will give notice of redemption by mail to
the holders of record of the Series A Preferred Shares which notice will state a
redemption date not less than 30 nor more than 60 days after the date on which
the Trust gives the notice of redemption announcing its intention to redeem the
Series A Preferred Shares.
(d) On the redemption date or mandatory repurchase date,
to the extent of its Quarterly Net Income, the Trust will pay in cash all
accrued but unpaid Preferred Distributions on each Series A Preferred Share the
Trust redeems or repurchases. In the case of a redemption date or mandatory
repurchase date falling after a Preferred Distribution record date and prior to
or on the related Preferred Distribution payment date, the holders of the Series
A Preferred Shares at the close of business on the related record date will be
entitled to receive the Preferred Distribution payable on such Shares on the
corresponding Preferred Distribution payment date, notwithstanding such
redemption or repurchase. Except as provided for in the preceding sentences, no
payment or allowance will be made for accrued and unpaid Preferred Distributions
on any Series A Preferred Shares called for redemption or which are subject to
mandatory repurchase.
(e) On and after the date fixed for redemption or
repurchase, provided that the Trust has made available at the office of the
transfer agent an amount of cash to effect the redemption or repurchase, (i)
Preferred Distributions will cease to accrue on the Series A Preferred Shares
called for redemption or repurchase, (ii) such Shares shall no longer be deemed
to be outstanding and (iii) all rights of the holders of such Series A Preferred
Shares shall cease except the right to receive cash payable upon such redemption
or repurchase, without interest from the date of such redemption or repurchase.
6.4. REMARKETING.
(a) On June 30, 2009, and on each remarketing date
thereafter, the remarketing agent shall seek to remarket the Series A Preferred
Shares at the lowest distribution rate that would result in a resale of the
Series A Preferred Shares at a price equal to the Liquidation Amount thereof,
for an additional remarketing period to be determined by the Board of Trustees
except in the event of a Failed Remarketing, in which case the Series A
Preferred Shares will be remarketed one year after such Failed Remarketing using
the same procedures. The remarketing agent will notify the holders of the new
minimum distribution rate and remarketing period no later than ten (10) business
days prior to each remarketing date.
(b) On each remarketing date, all Series A Preferred
Shares are required to be tendered to the remarketing agent for remarketing and
purchase at a price equal to the
16
Liquidation Preference unless the holder has elected to retain the Shares. If on
the remarketing date, the amount of the Liquidation Preference exceeds the
Liquidation Amount, the Trust will pay to the holder of each Series A Preferred
Share such excess, but only to the extent of the Trust's Quarterly Net Income.
Any election to retain the Series A Preferred Shares must be exercised not later
than nine (9) business days prior to the remarketing date by delivery to the
Trust and the remarketing agent of a notice of non-tender in the following form:
SERIES A PREFERRED SHAREHOLDER'S NOTICE OF NON-TENDER
Charter Mac Equity Issuer Trust
Series A Preferred Shares
The undersigned owner of the shares described below does hereby
irrevocably elect not to tender the shares for purchase in connection with the
remarketing of the shares to occur on ______________ (the "Remarketing Date").
The undersigned understands that from and after the Remarketing Date, the
distribution rate with respect to the shares will be predetermined as provided
in the Trust Agreement governing Charter Mac Equity Issuer Trust.
NON-TENDERED SHARES
LIQUIDATION AMOUNT CUSIP NUMBER(S)
Dated: Signature(s) of the Registered Owner(s)
Of the Non-Tendered Shares
-----------------------------------
Name:
-----------------------------------
Name:
Address:
Telephone:
Federal Taxpayer Identification Number:
Signature Guaranteed
---------------------------------------
(c) From and after any remarketing date (other than a
Failed Remarketing), the distribution rate on the Series A Preferred Shares and
the related remarketing period will be
17
as determined immediately prior to such remarketing date by the remarketing
agent in accordance with Section 6.4(a) hereof.
(d) If the remarketing agent shall have successfully
remarketed all of the Series A Preferred Shares (other than those for which an
election to retain the Shares has been properly made), the transfer agent shall
register the transfer of each Series A Preferred Share to the Person to whom it
has been remarketed.
(e) In the event of a Failed Remarketing, the
distribution rate on all the Series A Preferred Shares shall be set for one year
at two times the yield published on the applicable remarketing date by Municipal
Market Data for non-callable tax-exempt municipal bonds maturing 15 years after
such remarketing date (as set forth by Municipal Market Data or a successor or
similar publication if Municipal Market Data ceases to publish such information)
on the page entitled "MMD Yields 1-15 Yr." under the heading "BAA" and in the
row corresponding to the year 15 years after such remarketing date.
6.5. TRANSFER RESTRICTIONS. In addition to the other restrictions
contained in this Trust Agreement, unless the Trust causes the Series A
Preferred Shares to be registered under the Securities Act of 1933, as amended,
no fractional interest in a Series A Preferred Share may be transferred.
6.6. BOOK ENTRY SYSTEM.
(a) Except as provided in Section 6.6(c) hereof, the
registered owner of all of the Series A Preferred Shares shall be and the Series
A Preferred Shares shall be registered in the name of Cede as nominee of DTC.
(b) The Series A Preferred Shares shall be initially
issued in the form of a separate single fully registered certificate in the
amount of the aggregate Liquidation Amount of the Series A Preferred Shares. The
Trust shall make all payments with respect to the Series A Preferred Shares only
to or upon the order of DTC, and all such payments shall be valid and effective
to fully satisfy and discharge the Trust's obligations with respect to the
Series A Preferred Shares to the extent of the sum or sums so paid. Upon
delivery by DTC to the Trust of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede, and subject to the
transfer provisions hereof, the word "Cede" in this Trust Agreement shall refer
to such new nominee of DTC.
(c) DTC may determine to discontinue providing its
services with respect to the Series A Preferred Shares at any time by giving
written notice to the Trust and discharging its responsibilities with respect
thereto under applicable law. Under such circumstances (if there is not a
successor securities depository), certificates representing the Series A
Preferred Shares will be printed and delivered in such form and manner as the
Board of Trustees may by resolution provide. The Board of Trustees, in its
discretion and without the consent of any other Person, may terminate the
services of DTC with respect to the Series A Preferred Shares if the Board of
Trustees determines that: (i) DTC is unable to discharge its responsibilities
with respect to the Series A Preferred Shares, or (ii) a continuation of the
requirement that all of the Series A Preferred Shares be registered in the
registration books kept by the Trust in the name of Cede, as nominee of DTC, is
not in the best interest of the Series A Preferred Shareholders. In the event
that no successor securities depository is found by the Board of Trustees,
certificates representing
18
the Series A Preferred Shares will be printed, executed and delivered in such
form and manner as the Board of Trustees may by resolution provide.
7. LIABILITY OF THE SHAREHOLDERS; REGISTERED TRUSTEE; MANAGING
TRUSTEES; EMPLOYEES; MANAGER
7.1. SHAREHOLDERS. The Shareholders shall be entitled to the same
limitation of personal liability extended to stockholders of private for profit
corporations organized under the General Corporation Law of the State of
Delaware.
7.2. REGISTERED TRUSTEE. The Registered Trustee shall not be liable
to the Trust, Shareholders, the Trustees or any other Person or third parties
for any act, omission or obligation of the Trust, the Board of Trustees, any
Managing Trustee, any Shareholder, any employee of the Trust or the Manager,
under any circumstance, except for any loss directly attributable to the
Registered Trustee's own gross negligence or willful misconduct. In particular,
but not by way of limitation:
(a) The Registered Trustee shall not be liable for any
error of judgment made by it which did not constitute gross negligence or
willful misconduct by it;
(b) No provision of this Trust Agreement shall require
the Registered Trustee to take any action to expend or risk its personal funds
or otherwise incur any financial liability in the performance of its rights,
powers or obligations hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
action, risk or liability is not reasonably assured or provided to it;
(c) Under no circumstance shall the Registered Trustee be
personally liable for any representation, warranty, covenant or other obligation
or indebtedness of the Trust;
(d) The Registered Trustee shall not be personally
responsible for or in respect of the validity or sufficiency of this Trust
Agreement, or the form, validity, value or sufficiency of the Trust Property;
(e) The Registered Trustee shall not be personally liable
for its good faith reliance on the provisions of this Trust Agreement;
(f) Under no circumstances shall the Registered Trustee
be personally liable for (i) any action it takes or omits to take in good faith
in accordance with the instruction of the Board of Trustees or the Manager (to
the extent such Persons are entitled hereunder to deliver such instructions),
(ii) the acts or omissions of the Board of Trustees or the Manager or (iii) the
supervision of or the failure of the Board of Trustees or the Manager to
discharge their respective duties hereunder or pursuant to the Management
Agreement; and
(g) The Registered Trustee shall not incur any liability
to anyone in acting upon any document believed in good faith by it to be genuine
and believed in good faith by it to be signed by the proper party or parties and
need not investigate any fact or matter pertaining to or in any such document.
The Registered Trustee may accept a certified copy of a resolution of the board
of directors or other governing body of any Person as conclusive evidence that
such resolution has been duly adopted by such Person and that the same is in
full force and effect. As to any fact or matter, the method of the determination
of which is not specifically
19
prescribed herein, the Registered Trustee may for all purposes hereof rely on a
certificate, signed by any officer of the relevant Person, as to such fact or
matter, and such certificate shall constitute full protection to the Registered
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
7.3. MANAGING TRUSTEES; EMPLOYEE. A Managing Trustee or employee of
the Trust, when acting in such respective capacities, shall not be personally
liable to any Person other than the Trust or a Shareholder for any act, omission
or obligation of the Trust, the Registered Trustee, the Manager or any Managing
Trustee. To the maximum extent that Delaware law in effect from time to time
permits limitation of the liability of trustees of a business trust, no Managing
Trustee shall be liable to the Trust or to any Shareholder for monetary damages
for breach of any duty (including, without limitation, fiduciary duty) as a
Managing Trustee, except (i) for acts or omissions of such Managing Trustee that
involve actual fraud or willful misconduct, or (ii) for any transaction from
which such Managing Trustee derived improper personal benefit. Neither the
amendment nor repeal of this Section 7.3 nor the adoption or amendment of any
other provision of this Trust Agreement inconsistent with this Section 7.3 shall
apply to or affect in any respect the applicability of the immediately preceding
sentence with respect to any act or failure to act that occurred prior to such
amendment, repeal or adoption.
7.4. RELIANCE ON AGENTS, ATTORNEYS, ETC. In the exercise of their
rights and obligations hereunder, the Registered Trustee and the Managing
Trustees (i) may act directly, or at the expense of the Trust, through agents or
attorneys pursuant to agreements entered into with any of them, and they shall
not be liable for the default or misconduct of such agents or attorneys if such
agent or attorney shall have been selected in good faith and (ii) may, at the
expense of the Trust, consult with counsel to be selected in good faith, and
employed by them, and shall not be liable for anything done, suffered or omitted
in good faith in accordance with the advice or opinion of any such counsel.
8. COVENANTS
8.1. TAX-EXEMPT INTEREST. The Trust will only acquire or hold
Investments, other than Investments acquired pursuant to the Charter Preferred
Trust Contribution Agreement, that the Trust reasonably believes, based upon the
unqualified opinion of nationally recognized bond counsel delivered on the
original issuance (or reissuance) date of such Investment, will generate
interest and distributions excludable from the gross income of the holders
thereof for federal income tax purposes and, in the case of short-term floating
rate interests or similar equity interests in pass-through vehicles owning
tax-exempt bonds, that the tax-exempt nature of the income on the underlying
tax-exempt bonds will be passed through to the Trust. The Trust will dispose of
any Investment the interest on which becomes includable in gross income for
federal income tax purposes, for any reason, as soon commercially practicable.
8.2. LEVERAGE. The Trust will not, and will not permit any of its
Subsidiaries to, directly or indirectly, incur any Obligation except if (i) the
Trust is not in default under this Trust Agreement, (ii) the Trust has paid or
declared and set aside for payment all accrued and unpaid Distributions on the
Series A Preferred Shares, and (iii) after giving effect to the incurrence of
the Obligation, the Leverage Ratio is less than .6 to 1.0.
20
For purposes of determining whether a Senior Investment Interest is an
Obligation and the date of incurrence, any Senior Investment Interest treated as
an Obligation that is purchased by the Trust or one of its Subsidiaries shall
cease to be treated as an Obligation as of the date of its acquisition. At such
time as all or any part of any Senior Investment Interest is sold or otherwise
transferred for value to any Person other than the Trust or one of its
Subsidiaries, such Senior Investment Interest sold or transferred shall be
treated as an Obligation incurred on the date of such sale or transfer, PROVIDED
that if such Senior Investment Interest sold or transferred is an Unsecured
Senior Investment Interest, only the Proportionate Amount of the par amount of
such Unsecured Senior Investment Interests shall be treated as an Obligation
incurred on the date of such sale or transfer.
8.3. LIMITATION ON ISSUANCE OF PREFERRED EQUITY INTERESTS. The
Trust will not issue any Preferred Equity Interests that are senior to the
Series A Preferred Shares in the right to the payment of Distributions or
amounts payable in liquidation, dissolution or winding up of the Trust without
the consent of the holders of a majority of the Series A Preferred Shares. The
Trust will not issue any Preferred Equity Interests that are equal in rank to
the Series A Preferred Shares in the right to the payment of Distributions or
amounts payable in liquidation, dissolution or winding up of the Trust unless:
(i) after giving effect to such new issuance, the aggregate Liquidation
Preference of the Trust's Preferred Equity Interests that are equal or senior in
rank to the Series A Preferred Shares (including the Preferred Equity Interests
to be issued if they are equal or senior in rank to the Series A Preferred
Shares) shall not be in excess of 25% of the sum of (without duplication) (A)
the Investment Value (including in such assets the net proceeds the Trust
expects to receive from any proposed issuance of preferred equity interests),
(B) the par amount of any Secured Senior Investment Interests not included in
the Investment Value with respect to which the Trust or its Subsidiaries own all
of the Subordinated Investment Interests, and (C) the Proportionate Amount of
any Unsecured Senior Investment Interests not included in the Investment Value,
LESS the Trust's Obligations; (ii) the Trust has paid or declared and set aside
for payment all accrued and unpaid Distributions on the Series A Preferred
Shares; and (iii) the Trust is not in default under this Trust Agreement. This
covenant shall not prohibit, however, the issuance by the Trust of Preferred
Equity Interests that rank equal with or senior to the Series A Preferred Shares
to the extent that all of the proceeds thereof are used to redeem or repurchase
Preferred Equity Interests that rank equal with or senior to the Series A
Preferred Shares at a price not in excess of the Liquidation Preference thereof.
8.4. LIMITATION ON RESTRICTED PAYMENTS. The Trust will not make any
Restricted Payment unless immediately after such Restricted Payment the Trust
would be permitted to otherwise incur $1.00 of additional Obligations and issue
$1.00 of additional Preferred Equity Interests ranking equal with or senior to
the Series A Preferred Shares under Sections 8.2 and 8.3 hereof.
8.5. MERGER, CONSOLIDATION AND SALE. The Trust will not, in a
single transaction or series of related transactions, consolidate or merge with
or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Subsidiary of the Trust to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of the
property and assets of the Trust and its Subsidiaries, taken as a whole, to any
Person or Persons, unless:
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(a) either (i) the Trust shall be the surviving or
continuing Person or (ii) the Person (if other than the Trust) formed by such
consolidation or into which the Trust is merged or consolidated or the Person
which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Trust and of the Trust's
subsidiaries as an entirety or substantially as an entirety (the "SURVIVING
PERSON") shall be a Person organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and shall
expressly assume the performance and observance of every obligation and covenant
of the Trust under this Trust Agreement to be performed or observed on the part
of the Trust;
(b) immediately after giving effect to such transaction,
the Trust or the Surviving Person, as the case may be, could incur at least
$1.00 of additional Obligations (PROVIDED, HOWEVER, that if the Trust is not the
Surviving Person, all references to the Trust and its Subsidiaries in the
definitions used to determine the Leverage Ratio shall be to the Surviving
Person and its Subsidiaries after giving effect to such transaction);
(c) immediately before and immediately after giving
effect to such transaction, no default or event of default under this Trust
Agreement shall have occurred or be continuing; and
(d) the Trust receives an opinion from tax counsel to the
effect that, after giving effect to such transaction, the Trust or the Surviving
Person, as the case may be, will be classified as a partnership other than a
publicly traded partnership within the meaning of Section 7704 of the Code, and
not as an association taxable as a corporation, for federal income tax purposes.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of the Trust the equity interests of which constitute all or
substantially all of the properties and assets of the Trust shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Trust. Any consolidation, merger or disposition of assets of the Trust permitted
by this Section 8.5 shall not require the approval of any class of Preferred
Shareholders.
8.6. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Trust will
not, and will not permit any of its Subsidiaries to engage in any Affiliate
Transactions, other than (i) Permitted Affiliate Transactions, (ii) pursuant to
the Charter Preferred Trust Contribution Agreement and (iii) Affiliate
Transactions on terms that are no less favorable to the Trust or such
Subsidiary, as the case may be, than could reasonably be obtained at such time
in a comparable transaction on an arm's-length basis from an unaffiliated third
party. Any Affiliate Transaction, whether direct or indirect, involving
aggregate payments or other property with a fair market value in excess of $10
million shall be approved by the Independent Trustees of the Trust, such
approval to be evidenced by a resolution stating that such transaction complies
with the foregoing provisions.
8.7. LIMITATIONS ON DISTRIBUTIONS FROM SUBSIDIARIES. The Trust will
not, and will not cause or permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary of the Trust to: (a)
pay or make Distributions on or in respect of its Equity Interests; (b) make
loans or advances or pay any Obligation owed to the Trust or any other
Subsidiary of
22
the Trust; or (c) transfer any of its property or assets to the Trust or any
other Subsidiary of the Trust, except for such encumbrances or restrictions
existing under or by reason of: (i) applicable law; (ii) this Trust Agreement
as it exists on the date hereof; or (iii) the Private Label Tender Option
Program, and any similar programs permitted under this Trust Agreement.
8.8. LIMITATION ON INVESTMENTS. The Trust will not, and will not
permit any of its Subsidiaries to, directly or indirectly, acquire any
Investment other than the Investments it or they now own, the Investments to be
contributed pursuant to the Charter Preferred Trust Contribution Agreement and
Permitted Investments.
8.9. FAILURE TO PAY DISTRIBUTIONS. If the Trust has not paid in
full six consecutive quarterly Preferred Distributions on the Series A Preferred
Shares, the Trust shall be required to reconstitute the Board of Trustees so
that a majority of the Board of Trustees consists of Independent Trustees. The
Trust's Board of Trustees shall be reconstituted within 45 days of the date on
which the sixth consecutive quarterly unpaid Preferred Distribution would be
payable.
8.10. BOND DEFAULTS. In the event of a default on any bond owned
directly or indirectly by the Trust or its Subsidiaries, the Trust and its
Subsidiaries will not modify any such bond without an opinion of counsel to the
effect that such modification will not adversely affect the excludability from
gross income of interest on such defaulted bond. Any failure to enforce any
remedies for payment defaults under the documents underlying the bonds for more
than two years shall be considered a modification of a bond for purposes of this
Section 8.10.
8.11. INTEREST SUBJECT TO THE AMT. Prior to the end of each fiscal
quarter the Trust will provide a good faith estimate of the maximum percentage
of income expected to be subject to the AMT during the next calendar quarter.
8.12. REASONABLE BEST EFFORTS TO SETTLE CLAIMS ON COVERED BONDS WITH
THE IRS. In the event the IRS investigates the tax-exempt status of a Covered
Bond owned directly or indirectly by the Trust, the Trust will use its
reasonable best efforts to settle any claims with the IRS to avoid recognition
by Series A Preferred Shareholders of taxable income on such bond retroactive to
the date they acquitted such Series A Preferred Shares.
8.13. INFORMATION AND REPORTING.
(a) The Trust will notify the holders of Series A
Preferred Shares of the occurrence of any default or event of default under this
Trust Agreement within five business days after becoming aware of it and will
from time to time on reasonable request deliver to the holders of Series A
Preferred Shares a certificate confirming that no such default or event of
default has occurred or setting out details of any such default or event of
default and the action taken or proposed to be taken to remedy it.
(b) The Trust will keep, and ensure that each of its
Subsidiaries will keep, proper books of account relating to its business.
(c) The Trust will deliver to holders of Series A Preferred
Shares the following:
(i) within 100 days after the end of each calendar
year, its consolidated balance sheet and related statements of
operations, shareholder's
23
equity and cash flows showing the financial condition of the
Trust and its consolidated Subsidiaries as of the close of
such calendar year and the results of its operations and the
operations of the Trust and its consolidated Subsidiaries
during such year, all audited by auditors or other independent
public accountants of recognized national standing and
accompanied by an opinion of such accountants (which shall not
be qualified in any material respect) to the effect that such
consolidated financial statements fairly present the financial
condition, results of operations and cash flows of the Trust
and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP;
(ii) within 55 days after the end of each of the
first three calendar quarters of each calendar year, its
consolidated balance sheet and related statements of
operations, shareholders' equity and cash flows showing the
financial condition of the Trust and its consolidated
Subsidiaries as of the close of such calendar quarter and the
results of its operations and cash flows of the Trust and its
consolidated Subsidiaries during such calendar quarter and the
then elapsed portion of the calendar year, all certified by
one of its financial officers as fairly presenting the
financial condition and results of operations of the Trust and
its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit
adjustments;
(iii) concurrently with any delivery of financial
statements under subparagraph (i) or (ii) above, a certificate
of the accounting firm or financial officer of the Trust
opining on or certifying such statements (which certificate,
when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) certifying that no event of default or
default under this Trust Agreement has occurred or, if such an
event of default or default has occurred, specifying the
nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto;
(iv) to the extent information is available to the
Trust from the underlying property owners, within 55 days
after the end of each calendar quarter, a report identifying
each of the Trust's bonds and bond related Investments, the
value of each such Investment (and the method of valuation),
any Investment that was more than 30 days in default at the
end of such calendar quarter, the allocations by state of
interest from each Investment, the average rent per unit for
property underlying each Investment and the percentage of the
Trust's income for the preceding quarter that was subject to
the AMT;
(v) within 55 days of the end of the Trust's
calendar year, a report detailing by state the tax-exempt
income earned during such calendar year; and within 55 days of
the end of the calendar year, to the extent information is
available to the Trust from the underlying property owners, a
summary of the net operating income for such calendar year for
those properties which collateralize the Trust's direct and
indirect Investments in fixed rate bonds; and
(vi) within 60 days of the end Trust's calendar
year, a Form K-1 that shall, among other things, indicate the
holder's amount of net capital gains.
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8.14. WAIVER OF CERTAIN COVENANTS. The Trust will not be required to
comply with any term, provision or condition of the covenants, and with any
other term, provision or condition with respect to the Series A Preferred
Shares, if before or after the time for such compliance, the holders of a
majority of the Series A Preferred Shares waive compliance with the covenant or
condition in that instance or generally. Except to the extent waived, and until
the waiver is effective, the obligations of the Trust in respect of such term,
provision or condition, shall remain in full force and effect.
8.15. TIME PERIOD TO CURE BREACHES OF COVENANTS. The Trust will have
60 days to correct any breach of the covenants described in this Article 8
before any holder of Series A Preferred Shares will have any claim against the
Trust. Upon any uncured breach, the Series A Series A Preferred Shareholders
will have a claim against the Trust for violating this Trust Agreement.
8.16. REMEDIES FOR BREACHES OF COVENANTS. In addition to any
remedies available at law, the distribution rate for any quarter in which the
Trust has breached a covenant and has not timely cured such breach shall
increase .5% from the previous quarter; PROVIDED, HOWEVER, the distribution rate
for the Series A Preferred Shares shall never exceed the initial distribution
rate at issuance (or the distribution rate then in effect as a result of any
remarketing) by more than 2%.
9. ALLOCATION, CAPITAL ACCOUNTS AND OTHER TAX MATTERS
9.1. PARTNERSHIP STATUS. It is the intent of the Trustees and all
other parties hereto that the Trust be treated as a partnership for purposes of
federal income taxation. None of the Trustees, Shareholders, the Tax Matters
Partner, or any other Person shall file an election pursuant to Treasury
Regulation ss.301.7701-3(c) to have the Trust treated as other than a
partnership for purposes of federal income taxation. By purchasing Shares each
Shareholder agrees not to file an election as provided in the preceding sentence
or to take any other action or position inconsistent with the Trust's being
treated as a partnership for federal income tax purposes.
9.2. ALLOCATIONS.
(a) With respect to each taxable year of the Trust, to
the extent of the Trust's Annual Ordinary Income, each Series A Preferred
Shareholder shall be allocated an amount of Annual Ordinary Income equal to the
Preferred Distributions declared and paid to such Series A Preferred
Shareholder. Each such allocation shall comprise a ratable allocation of each
item entering into the calculation of Annual Ordinary Income.
(b) With respect to each taxable year of the Trust, ten
percent of the Trust's net capital gain shall be allocated to the Series A
Preferred Shareholders in proportion to each such Shareholder's ownership of
Series A Preferred Shares.
(c) All items of income, gain, loss, deduction or credit
of the Trust, as computed for federal income tax purposes, not allocated to the
Series A Preferred Shareholders in accordance with Sections 9.2(a) and 9.2(b)
hereof, including any taxable income other than net
25
capital gain of the Trust, shall be allocated to the Common Shareholders in
proportion to each such Shareholder's ownership of Common Shares.
9.3. CONSENT TO METHODS. The methods set forth in this Article 9 by
which allocations of income, gain, loss, deduction or credit are made and
apportioned are hereby expressly consented to by each Shareholder as an express
condition to becoming a Shareholder.
9.4. CAPITAL ACCOUNTS.
(a) GENERAL. A separate capital account ("CAPITAL
ACCOUNT") shall be maintained by the Trust for each Shareholder in accordance
with this Section 9.4. Neither the Board of Trustees nor the Registered Trustee
shall have any responsibility for the establishment, maintenance or adjustment
of Capital Accounts. Each Shareholder's Capital Account shall be increased by
(i) the amount of money contributed, or deemed contributed, by such Shareholder
to the capital of the Trust and (ii) the amount of income or gain allocated to
such Shareholder for federal income tax purposes. Each Shareholder's Capital
Account shall be decreased by (i) the amount of Distributions to such
Shareholder and (ii) the amount of loss or deduction allocated to such
Shareholder for federal income tax purposes.
(b) MULTIPLE CLASS OR SERIES OF INTERESTS. If a
Shareholder owns Shares which represent more than one class or series of
interests in the Trust, the Shareholder shall have a single Capital Account that
reflects all such interests, regardless of the class of interests owned by the
Shareholder and regardless of the time or manner in which such interests were
acquired.
(c) CONTRIBUTIONS OF PROPERTY. In the event that property
(other than cash) is contributed by a Shareholder to the Trust, the computation
of Capital Accounts, as set forth in this Section 9.4, shall be adjusted as
follows:
(i) the contributing Shareholder's Capital Account
shall be increased by the fair market value of the property
contributed to the Trust by the Shareholder (net of
liabilities securing such contributed property that the Trust
is considered to assume or take subject to under Section 752
of the Code); and
(ii) as and if required by Treas. Reg. xx.xx.
1.704-l(b)(2)(iv)(g) and 1.704-l(b)(4)(i), if a Shareholder's
Capital Account reflects a fair market value for property
which differs from such property's adjusted basis, such
Shareholder's Capital Account thereafter shall be adjusted to
take account of the amount of Book Gain and Book Loss
allocated to such Shareholder pursuant to Section 9.5 hereof
and shall not thereafter take into account the net income, net
gain and net loss for tax purposes allocated to such
Shareholder pursuant to this Article 9.
(d) DISTRIBUTIONS OF PROPERTY. In the event that property
is distributed by the Trust to a Shareholder, the following special rules shall
apply:
(i) the Capital Account of the Shareholder
receiving the distribution first shall be adjusted to the
extent required (as provided in Treas. Reg. ss.
1.704-l(b)(2)(iv)(e)) to reflect the manner in which the
unrealized income, gain, loss and deduction inherent in such
property (that has not already been reflected in such
Shareholder's Capital Account) would be allocated to such
Shareholder if
26
there were a taxable disposition of such property for its fair
market value on the date of distribution; and
(ii) the Capital Account of the Shareholder who is
receiving the distribution of property from the Trust shall be
charged with the fair market value of the property at the time
of distribution (net of liabilities secured by such property
that such Shareholder is considered to assume or take subject
to under Section 752 of the Code).
(e) INTENTION. The foregoing provisions are intended to
satisfy the capital account maintenance requirements of Treas. Reg. xx.xx.
1.704-l(b) and 1.704-2 and such provisions shall be modified to the extent
required by such section or any successor provision thereto.
9.5. ALLOCATION OF BOOK ITEMS. In cases where property of the Trust
is, under Treas. Reg. ss. 1.704-1(b)(2)(iv)(g), properly reflected in the
Capital Accounts of a Shareholder at a fair market value that differs from the
adjusted tax basis of such property (such difference is hereinafter referred to
as the "BOOK DISPARITY"), then depreciation, amortization and gain or loss as
computed for book purposes with respect to such property ("BOOK DEPRECIATION,"
"BOOK AMORTIZATION," "BOOK GAIN," and "BOOK LOSS," respectively) will be greater
or less than the depreciation, amortization or gain or loss as computed for tax
purposes. The Manager shall adopt, pursuant to Treas. Reg. ss.
1.704-l(b)(2)(iv)(g), a reasonable method of computing Book Depreciation and
Book Amortization. Such Book Depreciation and Book Amortization shall be
allocated to such Shareholder and reflected in such Shareholder's Capital
Account under Section 9.4 hereof in a manner so as to eliminate, to the extent
possible, the Book Disparity.
9.6. MANDATORY ALLOCATIONS. Notwithstanding the provision of
Section 9.2 hereof, any allocation of net income, net gain or net loss for tax
purposes which is required to be allocated to a Shareholder to take into account
the disparity between the fair market value of a Trust asset and its adjusted
basis (e.g., allocations under Section 704(c) of the Code for contributed
property) shall be allocated to such Shareholder in accordance with the
requirements of the Code and the regulations promulgated thereunder.
9.7. TAX-MATTERS PARTNER.
(a) The Manager is hereby designated as the "Tax Matters
Partner" in accordance with Section 6231(a)(7) of the Code and, in connection
therewith and in addition to all other powers given thereunder, shall have all
other powers needed fully to perform hereunder including, without limitation,
the power to retain all attorneys and accountants of its choice and the right to
settle any audits without the consent of the Series A Preferred Shareholders.
The designation made in this Section 9.7 is hereby expressly consented to by the
Series A Preferred Shareholders as an express condition to acquiring Series A
Preferred Shares. The Tax Matters Partner shall be responsible for the
establishment, maintenance and adjustments to Capital Accounts pursuant to
Section 9.4.
(b) The Tax Matters Partner shall prepare and timely file
and the Tax Matters Partner shall execute the partnership tax returns for the
Trust and any required annual partnership income information returns for the
Trust and any other required federal, state or local tax returns or reports. To
the extent required by applicable law or regulations, the Tax Matters
27
Partner shall promptly provide each Series A Preferred Shareholder with copies
of any such tax returns or reports.
(c) The Tax Matters Partner may, in its sole and absolute
discretion, make or refrain from making any election which the Trust may be
permitted to make for any federal, state or local tax purpose, including without
limitation an election under Section 754 of the Code to adjust the income tax
basis of the Trust Property upon the occurrence of certain events.
10. BOARD OF TRUSTEES; POWERS AND LIMITATIONS
10.1. GENERAL. Subject to the express limitations herein or in the
By-laws, (a) the business and affairs of the Trust shall be managed by or under
the direction of the Board of Trustees, and (b) the Board of Trustees shall have
full, exclusive and absolute power, control and authority over the Trust
Property and over the business of the Trust. The Board of Trustees may take any
actions consistent with the Trust's powers and in compliance with the covenants
of this Trust contained herein as in its sole judgment and discretion are
necessary or desirable to conduct the business of the Trust. Any Managing
Trustee, upon direction of the Board of Trustees, shall be authorized to execute
a Management Agreement. The Manager, as authorized herein or otherwise upon the
direction of the Board of Trustees, shall be authorized to execute documents on
behalf of the Trust.
10.2. POWERS OF THE BOARD OF TRUSTEES. The conduct of the Trust's
business shall be controlled solely by the Board of Trustees in accordance with
this Trust Agreement and the By-laws. The Board of Trustees shall have all
authority, rights and powers conferred by law and those required or appropriate
to the management of the Trust's business which, by way of illustration but not
by way of limitation, shall, subject only to the provisions of Sections 4.1,
4.2, 4.3, 10.3 and 10.4, include the right, authority and power, without the
vote of Shareholders, or any other Person to:
(a) make all filings as may be necessary or proper in
order to create the Trust and to maintain its valid existence under the Trust
Act or to provide that this Trust Agreement shall constitute, for all purposes,
an agreement of trust under the laws of the State of Delaware as in effect from
time to time;
(b) adopt and implement the By-laws;
(c) cause the Trust to accept contributions of Permitted
Investments, or pursuant to the Charter Preferred Trust Contribution Agreement,
from Charter, contribute assets to Subsidiaries, accept capital contributions
from Preferred Shareholders and acquire Permitted Investments;
(d) cause the Trust to enter into and perform the
Management Agreement and the agreement or undertaking to which it is a party;
(e) open accounts and deposit and maintain funds in the
name of the Trust in banks or savings and loan associations, provided, however,
that the Trust's funds shall not be commingled with the funds of any other
Person;
28
(f) change the Trust's accounting year from a calendar
year to such fiscal year as approved by the Internal Revenue Service;
(g) require in all Trust obligations that the Board of
Trustees, the Manager or any Shareholder shall not have any personal liability
thereon and that the Person contracting with the Trust is to look solely to the
Trust and its assets for satisfaction; provided, however, that the Board of
Trustees' failure to so require such limitation on personal liability of the
Manager or any Shareholder shall not be construed to imply that the Manager or
any Shareholder has personal liability for any such Trust obligations;
(h) prepare or cause to be prepared reports, statements
and other relevant information for distribution to Shareholders including annual
and quarterly reports;
(i) cause the Trust to make or revoke any of the
elections permitted by the Code;
(j) determine the appropriate accounting method or
methods to be used by the Trust in maintaining its books and records;
(k) assure any Person dealing with the Trust or the
Manager that he may rely upon a certificate signed by the Manager as authority
with respect to: (i) the identity of the Registered Trustee, the Managing
Trustees, the Manager or any Shareholder; (ii) the existence or nonexistence of
any fact or facts which constitute a condition precedent to acts by the Manager
or in any other manner germane to the affairs of the Trust, (iii) the Persons
who are authorized to execute and deliver any instrument or document of the
Trust; or (iv) any act or failure to act by the Trust or as to any other matter
whatsoever involving the Trust, the Managing Trustees, the Manager, or any
Shareholder,
(l) remove the Registered Trustee at any time for any
reason or no reason in its sole discretion and in the event of such removal or
the resignation of the Registered Trustee, to appoint a successor Registered
Trustee in accordance with Section 15.2;
(m) establish reserves or increase or decrease reserves
as it deems necessary, appropriate, convenient or advisable for the proper
operation of the business of the Trust;
(n) declare and pay Distributions;
(o) pay, collect, compromise, litigate, arbitrate, or
otherwise adjust or settle any and all other claims or demands of or against the
Trust or to hold such proceeds against the payment of contingent liabilities; or
(p) qualify the Trust to do business in any state, territory,
dependency or foreign country.
10.3. LIMITATIONS.
(a) Except as provided in Section 10.5, the Board of
Trustees shall amend this Trust Agreement only upon a majority vote of the
Common Shareholders. Notwithstanding the foregoing, the Board of Trustees must
also obtain a majority vote of the Series A Preferred Shareholders to amend,
alter or repeal the terms of the Series A Preferred Shares or of any provision
of this Trust Agreement that would adversely affect the powers, preferences,
privileges
29
or rights of the Series A Preferred Shareholders. The consent of each
Independent Trustees is required to adopt any change to this Trust Agreement
relating to the Independent Trustees.
(b) The Board of Trustees shall not issue, authorize or
increase the amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of Shares ranking senior to the Series A Preferred Shares as to
distributions or upon liquidation, or to reclassify any outstanding Shares of
the Trust into such senior Shares except upon the majority vote of the Series A
Preferred Shareholders. No such majority vote will be required for the Board of
Trustees to take any such actions with respect to any Shares ranking on a parity
with or junior to the Series A Preferred Shares.
(c) The Board of Trustees shall not have the authority to:
(i) do any act in contravention of this Trust
Agreement or which would make it impossible to carry on the
ordinary business of the Trust;
(ii) confess a judgment against the Trust in
connection with any threatened or pending legal action;
(iii) possess any Trust asset or assign the rights of
the Trust in specific Trust assets for other than a Trust
purpose;
(iv) perform any act (other than an act required by
this Trust Agreement or any act taken in good faith reliance
upon counsel's opinion) which would, at the time such act
occurred, subject any Shareholders to liability in any
jurisdiction;
(v) commingle the Trust funds with those of any
other Person; or
(vi) operate the Trust in such a manner as to have
the Trust classified as (1) an "investment company" or under
the "control" of an "investment company" for purposes of the
Investment Company Act of 1940, or (2) other than as an entity
not regarded as separate from its owner for purposes of the
Code.
10.4. UNANIMOUS CONSENT OF BOARD OF TRUSTEES. The unanimous consent
of the Board of Trustees, including the affirmative vote of each Independent
Trustee, shall be required for any of the following actions:
(a) subject to the limitations contained in Section 4.3,
filing or consenting to the filing of a bankruptcy petition or otherwise
instituting an insolvency proceeding;
(b) dissolving, liquidating, converting, consolidating,
merging or selling assets (except as permitted in Article 12);
(c) acquiring any assets or engaging in any business
other than as described in Article 4 hereof or amending, modifying or
supplementing Article 4 hereof; or
(d) failing to engage in activities in furtherance of the
stated purpose of the Trust.
10.5. AMENDMENTS WITHOUT CONSENT. In addition to any amendments
otherwise authorized herein (but subject to the limitations contained in
Sections 10.3 and 10.4), this Trust Agreement and the By-Laws may be amended
from time to time by the Board of Trustees, but
30
without the consent of the Shareholders or the Registered Trustee (subject to
the provisions in this Section 10.5):
(a) to add to the representations, duties or obligations
of the Board of Trustees or the Registered Trustee or their respective
Affiliates or surrender any right or power granted to the Board of Trustees or
the Registered Trustee or their respective Affiliates herein, for the benefit of
the Shareholders; provided, that no representations, duties or obligations of
the Registered Trustee shall be added or right or power granted to the
Registered Trustee or its Affiliates surrendered without the Registered
Trustee's consent;
(b) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with law applicable to the Trust as
in effect at the time the amendment is adopted, or judicial or administrative
interpretations thereof, or with any other provision herein, as long as any such
change will not adversely affect the rights of the Shareholders, the Manager or
the Registered Trustee;
(c) to delete or add any provision of this Trust
Agreement required to be so deleted or added by the staff of the Securities and
Exchange Commission or by a State "Blue Sky" Commissioner or similar such
official, which addition or deletion is deemed by such Commission or state
official to be for the benefit or protection of the Shareholders;
(d) to reflect the substitution of Shareholders;
(e) to change the name of the Trust to any lawful name
which it may select (in which case the Trust shall notify the Registered Trustee
of such change in name);
(f) to take such steps as the Board of Trustees or the
Manager determines are advisable or necessary in order to preserve the tax
status of the Trust as an entity taxable as a partnership and not as an
association for federal income tax purposes, in each case to the minimum extent
necessary or desirable in accordance with the advice of the accountants and/or
counsel to comply with any applicable federal or state legislation, rules or
regulations enacted or promulgated administrative pronouncements or
interpretations and/or judicial interpretations thereof after the date of this
Trust Agreement.
Notwithstanding the foregoing, no amendment of this Trust
Agreement or the By-laws which adversely affects the Registered Trustee may be
made without the prior written consent of the Registered Trustee. Written notice
of any amendments to the Trust Agreement shall be provided to the Registered
Trustee within ten days of their adoption.
10.6. NOTICE OF LIMITATION OF LIABILITY. The Board of Trustees or
the Manager shall use its best efforts, in the conduct of the Trust's business,
to put all Persons with whom the Trust does business on notice that the
Shareholders, the Trustees, and the Manager are not liable for the Trust's
obligations and that such Persons shall look solely to the assets of the Trust
for payment, and all agreements to which the Trust is a party shall include a
statement to the effect that the Trust is a business trust created under the
Trust Act; but the Board of Trustees or the Manager shall not be liable for any
failure to give such notice to such Persons and any failure in giving such
notice shall not imply that the Shareholders, the Managing Trustees, the Manager
and the Registered Trustee are liable for the Trust's obligations.
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10.7. ACCOUNTING MATTERS. The Board of Trustees or the Manager shall
make all decisions as to accounting matters in accordance with the accounting
methods adopted by the Trust in accordance with generally accepted accounting
principles and procedures applied on a consistent basis. Such party may rely on
the Trust's independent certified public accountants to determine whether such
decisions are in accordance with generally accepted accounting principles.
10.8. DUTIES OF BOARD OF TRUSTEES AND MANAGER AND REGISTERED
TRUSTEE. The Board of Trustees and the Manager shall have a fiduciary
responsibility for the safekeeping and use of all funds and assets of the Trust,
whether or not in their immediate possession or control and shall not employ, or
permit another to employ, such funds or assets in any manner except for the
exclusive benefit of the Trust. In addition and subject to the limitations
contained in Section 4.3, the Managing Trustees shall have a fiduciary duty to
creditors and will be required to consider the interests of creditors in
connection with any decision or action with respect to the filing of a petition
in bankruptcy for the Trust or any other action described in Section 10.4. To
the extent that, at law or in equity, the Board of Trustees or the Manager or
the Registered Trustee or any Affiliate thereof (each, a "COVERED PERSON") has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to the Shareholders, the Covered Person acting in connection with the
Trust's business or affairs shall not be liable to the Trust or to any
Shareholder for its good faith reliance on the provisions of this Trust
Agreement. The provisions of this Trust Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, are agreed by the Trust and the Shareholders to replace such
other duties and liabilities of such Covered Person.
11. RIGHTS AND POWERS OF SHAREHOLDERS
11.1. CONTROL. Other than as expressly set forth in this Trust
Agreement, Shareholders shall have no voting rights and Shareholders shall take
no part in any manner in the control, conduct or operation of the Trust and
shall have no right or authority to act for or bind the Trust.
11.2. VOTING RIGHTS. The Series A Preferred Shareholders shall have
no voting rights except as provided in Sections 10.3 and 12.2(a) or expressly
required by law. The Common Shareholders have the right by majority vote (voting
in the manner set forth in the By-laws) and, to vote upon:
(a) without the consent and recommendation of the Board
of Trustees:
(i) subject to the provisions of Section 3.1(d),
the removal of Managing Trustees;
(ii) the election of Managing Trustees;
(b) with the prior consent and recommendation of the Board of
Trustees:
(i) the merger, consolidation or conversion of the
Trust with or into another entity;
(ii) the determination to dissolve the Trust,
subject to the provisions of Article 12; and
32
(c) amendment of the Trust Agreement, provided such
amendment is not otherwise permissible without Shareholder vote under Section
10.5.
12. TERM AND DISSOLUTION OF THE TRUST
12.1. DURATION. The Trust shall continue perpetually unless
dissolved pursuant to Section 12.2 or pursuant to any applicable provision of
the Trust Act.
12.2. DISSOLUTION. The Trust may be dissolved as follows:
(a) The Trust may be dissolved upon the recommendation of
the Board of Trustees and the approval of Common Shareholders by majority vote;
provided, however, that the Trust may not be dissolved prior to June 1, 2009,
without also obtaining the majority vote of the Series A Preferred Shareholders;
or
(b) The Trust may be dissolved by order of a court of
competent jurisdiction to judicially dissolve the Trust if it is no longer
reasonably practicable to continue the business and affairs of the Trust as
contemplated by this Trust Agreement.
12.3. LIQUIDATION AND DISTRIBUTION OF ASSETS. Upon a dissolution of
the Trust for any reason, the Board of Trustees or the Manager shall take full
account of the Trust's assets and liabilities, shall liquidate the assets as
promptly as is consistent with obtaining the Trust fair value thereof, and shall
apply and distribute the proceeds therefrom in the following order:
(a) first, to the satisfaction to the extent permitted by
law (whether by payment or reasonable provision for payment thereof) of
obligations of the Trust to creditors of the Trust (other than as set forth in
paragraphs (b) and (c) below);
(b) second, to the repayment of any outstanding loans
made by the Manager or its Affiliates to the Trust;
(c) third, to the Series A Preferred Shareholders in an
amount equal to each Series A Preferred Shareholder's Liquidation Preference and
in accordance with, and to the extent of, the positive balances in their Capital
Accounts after net income or net loss (or each item thereof) has been allocated
pursuant to the provisions of Article 9; and
(d) fourth, to the Common Shareholders in proportion to
their ownership of Common Shares and in accordance with, and to the extent of,
the positive balances in their Capital Accounts after net income or net loss (or
items thereof) has been allocated pursuant to the provisions of Article 9.
12.4. TERMINATION OF THE TRUST. Upon dissolution and the completion
of the winding up of the affairs of the Trust, the Trust shall be terminated by
the executing and filing with the Secretary of State of the State of Delaware by
one or more Managing Trustees of a certificate of cancellation of the
certificate of trust of the Trust.
13. SPECIAL POWER OF ATTORNEY
13.1. XXXXX OF POWER OF ATTORNEY. By subscribing and paying for
Shares, each Shareholder is hereby granting to the Board of Trustees and the
Manager a special power of attorney irrevocably making, constituting and
appointing the Board of Trustees and the Manager,
33
acting singly or collectively, as the attorney-in-fact for such Shareholder,
with power and authority to act in his name and on his behalf to execute,
acknowledge and swear to the execution, acknowledgment and filing of documents,
which shall include, by way of illustration but not of limitation, the
following:
(a) this Trust Agreement, any separate certificates of
trust of the Trust, as well as any amendments to or restatements of the
foregoing which, under the laws of the State of Delaware or the laws of any
other state, are required to be filed or which the Board of Trustees or the
Manager deems to be advisable to file;
(b) any duly adopted amendments or restatements of this
Trust Agreement;
(c) any other instrument or document which may be
required to be filed by the Trust under the laws of any state or by any
governmental agency, or which the Board of Trustees or Manager deems advisable
to file; and
(d) any instrument or document which may be required to
effect the continuation of the Trust, the admission of an additional or
substituted Shareholder, or the dissolution and termination of the Trust
(provided such continuation, admission or dissolution and termination are in
accordance with the terms of this Trust Agreement), or to reflect any reductions
in amount of contributions of Shareholders.
13.2. CHARACTER OF POWER OF ATTORNEY. The special power of attorney
being hereby granted by each Shareholder:
(a) is a special power of attorney coupled with an
interest, is irrevocable, shall survive the death, legal incapacity, disability,
dissolution, bankruptcy or termination of the granting Shareholder, and is
limited to those matters herein set forth;
(b) may be exercised by the Board of Trustees or the
Manager acting for each Shareholder by a facsimile signature of a Managing
Trustee, or the Manager or one of its officers, or by listing all of the
Shareholders executing any instrument with a signature of a Managing Trustee,
the Manager or one of its officers acting as its attorney-in-fact; and
(c) shall survive a transfer by a Shareholder of all or
any portion of his Shares for the sole purpose of enabling the Board of Trustees
or the Manager to execute, acknowledge and file any instrument or document
necessary to effect such transfer.
13.3. RELIANCE. Each Shareholder has executed this special power of
attorney, and each Shareholder will rely on the effectiveness of such powers
with a view to the orderly administration of the Trust's affairs.
14. INDEMNIFICATION
14.1. MANAGING TRUSTEES; EMPLOYEES. To the fullest extent permitted
by law, the Trust shall indemnify its present and former Managing Trustees, the
Manager and its officers, directors, members, partners and employees and agents
(the "Indemnified Part(y)(ies)") against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the Indemnified
34
Party was material to the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and deliberate
dishonesty, (b) the Indemnified Party actually received an improper personal
benefit in money, property or services, or (c) in the case of any criminal
proceeding, the Indemnified Party had reasonable cause to believe that the act
or omission was unlawful. In addition, the Trust shall pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to any
present or former Indemnified Party, provided that the Trust first obtains (i) a
written affirmation by the Indemnified Party of his or its good-faith belief
that he or it has met the standard of conduct necessary for indemnification by
the Trust as authorized by the Trust Agreement and (ii) a written statement by
him or it or on his or its behalf to repay the amount paid or reimbursed by the
Trust if it shall ultimately be determined that the standard of conduct was not
met. The Trust shall also provide indemnification and advance expenses to any
present or former Indemnified Party who served a predecessor of the Trust in
such capacity.
14.2. THE REGISTERED TRUSTEE. To the fullest extent permitted by
law, the Trust shall indemnify and hold harmless the Registered Trustee and its
Affiliates, and their respective officers, directors, employees, agents and
representatives (collectively, the "Registered Trustee Persons") from and
against any and all claims or liabilities (including any environmental
liabilities) for which any such Person may become liable by reason of the
Registered Trustee's acting in such capacity under this Trust Agreement or
arising out of or connected with (i) the Trust, (ii) this Trust Agreement or the
By-laws, (iii) any breach of duty owed to the Trust or the Shareholders by a
third party or (iv) any violation or alleged violation of federal or state
securities laws. The Trust shall not indemnify such Persons for liabilities
resulting from such Persons' own fraud, gross negligence or willful misconduct.
In addition, the Trust shall pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to any present or former Registered Trustee
Person, provided that the Trust first obtains (i) a written affirmation by the
Registered Trustee Person of his or its good-faith belief that he or it has met
the standard of conduct necessary for indemnification by the Trust as authorized
by this Trust Agreement and (ii) a written statement by him or it or on his or
its behalf to repay the amount paid or reimbursed by the Trust if it shall
ultimately be determined that the standard of conduct was not met. The Trust
shall also provide indemnification and advance expenses to any present or former
Registered Trustee Person who served a predecessor of the Trust in such
capacity. The provisions of this Section 14.2 shall survive termination of this
Trust Agreement and the Trust.
15. CONCERNING THE REGISTERED TRUSTEE
15.1. AUTHORITY AND DUTIES OF THE REGISTERED TRUSTEE.
(a) GENERAL. The Registered Trustee shall have only those
rights, authority, powers, responsibilities and duties as set forth in Section
3.2.
(b) LIMITATIONS. Without limiting the generality of
Section 15.1, the Registered Trustee shall have no duty or liability (i) as to
any document contemplated by this Trust Agreement, (ii) to see to any recording
or filing of this Trust Agreement, the By-laws or any document contemplated
hereby or any security interest or lien or to see to the maintenance of any such
documentation, recording or filing, (iii) to see to any maintenance of or
insurance on the Trust Property, (iv) to see to the payment or discharge of any
tax assessment or other
35
governmental charge or any lien assessed or levied against the Trust or any part
of the Trust Property or to make or prepare any reports or returns related
thereto, (v) to confirm, verify or inquire into the failure of the Board of
Trustees, any Managing Trustee or the Manager to exercise or perform any of
their respective rights or duties under this Trust Agreement, or (vi) to approve
as satisfactory to it or consent to any matter contemplated by this Trust
Agreement or any document contemplated hereby.
15.2. RESIGNATION AND REMOVAL OF THE REGISTERED TRUSTEE.
(a) GENERAL. The Registered Trustee may resign as of the
last business day of any month by giving 60 days' prior notice to the Board of
Trustees or the Manager, and the Board of Trustees or the Manager may remove the
Registered Trustee as of the last business day of any month on 60 days' prior
notice to the Registered Trustee. In the case of the resignation or removal of
the Registered Trustee, the Board of Trustees or the Manager shall, without the
consent of any Shareholder, appoint a successor Registered Trustee, provided
that such successor Registered Trustee shall in all respects satisfy the
requirements of Section 3807 of the Trust Act, or any successor provision. The
appointment of the successor Registered Trustee shall take effect concurrently
with the resignation or removal of the former Registered Trustee, and,
thereupon, the Registered Trustee so resigned or removed shall be fully
discharged of its duties and liabilities hereunder, if any. The Registered
Trustee shall not be liable for the acts or omissions to act of any successor
Registered Trustee.
(b) FAILURE TO APPOINT SUCCESSOR. If a successor
Registered Trustee shall not have been appointed within 60 days after such
notice of resignation or removal, the Registered Trustee, the Board of Trustees,
the Manager or any Shareholder may apply to any court of competent jurisdiction
to appoint a successor Registered Trustee to act until such time, if any, as a
successor shall have been appointed as above provided. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
successor Registered Trustee.
(c) SUCCESSOR BY MERGER. Any Person into which the
Registered Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Registered Trustee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Registered Trustee may be transferred, shall, subject to such Person satisfying
in all respects the requirements of Section 3807 of the Trust Act, be the
Registered Trustee hereunder without further act.
(d) AMENDMENT OF CERTIFICATE OF TRUST. Upon the
substitution of the successor Registered Trustee, the Board of Trustees or the
Manager shall file an amendment along with the successor Registered Trustee to
the certificate of trust with the Secretary of State of the State of Delaware in
accordance with the provisions of the Trust Act, indicating the change in the
Registered Trustee.
(e) LIMITATION OF LIABILITY OF REGISTERED TRUSTEE. Except
as expressly provided above, all Persons having any claim against the Registered
Trustee by reason of the transactions contemplated by this Trust Agreement,
shall look only to the property and assets of the Trust for payment or
satisfaction thereof.
36
16. CERTAIN TRANSACTIONS
The Trustees, any Shareholder, the Manager and any Affiliate thereof,
and any shareholder, officer, director, trustee, partner or employee thereof, or
any Person owning a legal or beneficial interest therein, may engage in or
possess an interest in any other business or venture of every nature and
description, independently or with or for the account of others including, but
not limited to, investments in revenue bonds or mortgages of any type or
instruments backed by or representing a participation interest in revenue bonds
or mortgages, and the ownership, financing, leasing, operation, management,
brokerage and development of real property. Neither the Trustees, any
Shareholder, the Manager nor their Affiliates shall be obligated to present to
the Trust any particular investment opportunity, regardless of whether such
opportunity might be suitable for investment by the Trust, and each Trustee, the
Shareholders, the Manager and each Affiliate shall have the right to take for
its own account (individually or otherwise) or to recommend to others any such
investment opportunity.
17. MISCELLANEOUS
17.1. COUNTERPARTS. This Trust Agreement may be executed in several
counterparts and all so executed shall constitute one Trust Agreement, binding
on all of the parties hereto, notwithstanding that all of the parties are not
signatory to the original or the same counterpart.
17.2. BINDING PROVISIONS. The terms and provisions of this Trust
Agreement shall be binding upon and shall inure to the benefit of the successors
and assigns of the respective parties.
17.3. SEVERABILITY. In the event any sentence or section of this
Trust Agreement is declared by a court of competent jurisdiction to be void,
such sentence or section shall be deemed severed from the remainder of the Trust
Agreement and the balance of the Trust Agreement shall remain in effect.
17.4. NOTICES. All notices under this Trust Agreement shall be in
writing and shall be given to the party entitled thereto, by personal service or
by mail, posted to the address maintained by the Trust for such Person or at
such other address as he may specify in writing.
17.5. HEADINGS. Paragraph titles or captions contained in this Trust
Agreement are inserted only as a matter of convenience and for reference. Such
titles and captions in no way define, limit, extend or describe the scope of
this Trust Agreement or the intent of any provision hereof.
17.6. GOVERNING LAW. This Trust Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
(including the Trust Act) applicable to agreements to be made and performed
entirely in said State, and the Shares shall be construed in accordance with the
laws of the State of Delaware, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws; provided,
however, that nothing herein shall affect the obligations of the Trust to comply
with federal or state securities laws, and provided further, however, that there
shall not be applicable to the Trust, the Board of Trustees, the Registered
Trustee or this Trust Agreement any provisions of the laws (statutory or common)
of the State of Delaware pertaining to trusts (other than the Trust Act) that
relate to or regulate, in a manner inconsistent with the terms hereof (i) the
filing with
37
any court or governmental body or agency of trustee accounts or schedules of
trustee fees and charges, (ii) affirmative requirements to post bonds for
trustees, officers, agents or employees of a trust, (iii) the necessity for
obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (iv) fees or other sums
payable to trustees, officers, agents or employees of a trust, (v) the
allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding or investing trust assets, or (vii) the establishment of
fiduciary or other standards or responsibilities or limitations on the acts or
powers of trustees, which are inconsistent with the limitations or liabilities
or authorities and powers of trustees as set forth or referenced in this Trust
Agreement. Section 3540 of Title 12 of the Delaware Code shall not apply to the
Trust.
17.7. OTHER JURISDICTIONS. In the event the business of the Trust is
carried on or conducted in states in addition to the State of Delaware, then the
Board of Trustees and the Shareholders agree that this Trust shall be qualified
under the laws of each state in which business is actually conducted by the
Trust, and they severally agree to execute such other and further documents as
may be required or requested in order that the Board of Trustees or the Manager
legally may qualify this Trust to do business in such states. The power of
attorney granted to the Board of Trustees and the Manager by each Shareholder in
Article 13 shall constitute the authority of the Board of Trustees and the
Manager to perform the ministerial duty of qualifying this Trust under the laws
of any state in which it is necessary to file documents or instruments of
qualification. A Trust office or principal place of business in any jurisdiction
(within or without the State of Delaware) may be designated from time to time by
the Board of Trustees.
17.8. POWER TO RECONSTITUTE. In the event that the State of Delaware
amends the Trust Act in any manner which precludes the Trust, at any time, from
obtaining an opinion of tax counsel to the effect that the Trust will be treated
as a partnership for federal income tax purposes and not as an association
taxable as a corporation, then the Board of Trustee or the Manager may,
notwithstanding the provisions of Section 10.4(b) and Section 11.2(b) hereof, in
its sole discretion, reconstitute the Trust under the laws of another state.
17.9. AGREEMENT TO BE BOUND. EVERY PERSON, BY VIRTUE OF HAVING
BECOME A SHAREHOLDER IN ACCORDANCE WITH THE TERMS OF THIS TRUST AGREEMENT, SHALL
BE DEEMED TO HAVE EXPRESSLY ASSENTED AND AGREED TO THE TERMS OF, AND SHALL BE
BOUND BY, THIS TRUST AGREEMENT.
38
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
CHARTER: MANAGING TRUSTEES:
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY, a Delaware /s/ X. Xxxxxxx Xxxxx
business trust ----------------------------------
Name: X. Xxxxxxx Xxxxx
By: Related Charter, LP, a Delaware limited
partnership, its manager /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
By: Related Charter, LLC, a Delaware limited
liability company, its general partner
/s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
By: /s/ X. Xxxxxxx Xxxxx
----------------------------------
Name: X. Xxxxxxx Xxxxx /s/ Xxxxxx X. Xxxxx
Title: Chairman & CEO ----------------------------------
Name: Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
REGISTERED TRUSTEE:
WILMINGTON TRUST COMPANY
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Name: Xxxxxx X. Xxxx
Title: Financial Services Officer
39
CONSENT AND AGREEMENT
The undersigned, as owner of the beneficial interest in
Charter Mac Equity Issuer Trust (the "Trust"), consents and agrees to the
Amended and Restated Trust Agreement of the Trust, dated June 22, 1999, to which
this Consent and Agreement is annexed.
CM HOLDING TRUST
By: Wilmington Trust Company,
as Registered Trustee
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
Title: SVP & CFO
42
ACCEPTANCE OF MANAGER
Subject to the provisions of the Management Agreement, the Manager
hereby acknowledges the foregoing Trust Agreement, accepts and agrees to perform
the duties of the "Manager" thereunder and accepts the special power of attorney
granted under Article 13 thereof.
RELATED CHARTER, LP, a Delaware
limited partnership
By: Related Charter, LLC, a Delaware
limited liability company, its
general partner
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Financial Officer
43
EXHIBIT A
THE SERIES A PREFERRED SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS AND THE
ISSUER HAS NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "INVESTMENT COMPANY ACT"). NEITHER SUCH SERIES A PREFERRED SHARES
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION,
INCLUDING THE EXEMPTION PROVIDED BY RULE 144A PROMULGATED UNDER THE SECURITIES
ACT ("RULE 144A"). UNTIL THE SERIES A PREFERRED SHARES REPRESENTED HEREBY HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT, SUCH SERIES A PREFERRED SHARES WILL BE
ISSUED AND MAY BE TRANSFERRED ONLY IN WHOLE SHARES.
THE HOLDER BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER THE SERIES A PREFERRED SHARES REPRESENTED HEREBY, PRIOR TO THE DATE
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE
LAST DAT ON WHICH THE ISSUER OR ANY "AFFILIATE" OF THE ISSUER WAS THE OWNER OF
SUCH SERIES A PREFERRED SHARES (OR ANY PREDECESSOR HEREOF), ONLY IN A TRANSFER
(A) TO THE ISSUER OR AN INITIAL PURCHASER OR BY, THROUGH, OR IN A TRANSACTION
APPROVED BY AN INITIAL PURCHASER, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THE SERIES
A PREFERRED SHARES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 UNDER THE SECURITIES ACT) THAT IS ACQUIRING SUCH SERIES A
PREFERRED SHARES FOR THEIR OWN ACCOUNT OR AS FIDUCIARY OR AGENT FOR OTHERS (EACH
OF WHICH MUST BE SUCH AN INSTITUTIONAL ACCREDITED INVESTOR UNLESS THE PURCHASER
IS A BANK ACTING IN ITS FIDUCIARY CAPACITY) FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH PURCHASER OF A
SERIES A PREFERRED SHARE WILL BE DEEMED TO HAVE MADE THE REPRESENTATIONS AND
AGREEMENTS SET FORTH IN THE TRUST AGREEMENT.
NO TRANSFER OF THE SERIES A PREFERRED SHARES WILL BE PERMITTED IF SUCH
TRANSFER WOULD RESULT IN THERE BEING IN EXCESS OF 100 HOLDERS OF THE ISSUER'S
SECURITIES OR OTHERWISE CAUSE THE ISSUER TO BE SUBJECT TO REGULATION UNDER THE
INVESTMENT COMPANY ACT. IN ANY EVENT, ONLY TRANSFERS WHICH MAY BE EFFECTED
WITHOUT LOSS OF ANY APPLICABLE INVESTMENT COMPANY ACT EXEMPTION TO A BUYER THAT
CONSTITUTES ONE "BENEFICIAL OWNER" WITHIN THE MEANING OF THE INVESTMENT COMPANY
ACT WILL BE PERMITTED.
ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND
EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO
THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTION TO THE CONTRARY TO THE ISSUER,
THE TRANSFER AGENT OR ANY INTERMEDIARY.
44
