Exhibit 4.1


 


HRPT PROPERTIES TRUST


 


(formerly known as Health and Retirement Properties Trust)


 


Third Amendment and Restatement of Declaration of Trust


 


October 9, 1986

As Amended and Restated on July 1, 1994

and Amended July 9, 1996

and Amended March 3, 1997

and Amended May 26, 1998

and Amended July 1, 1998

and Amended June 16, 2003

and Amended January 2, 2004

and Amended March 16, 2005

and Amended September 12, 2005


and Amended May 24, 2006


and Amended December 29, 2006


and Amended May 15, 2007


and Amended October 16, 2007


and Amended May 14, 2009


 

















 


	
  ARTICLE I. THE TRUST; DEFINITIONS

  	
   

  	
  4

  
	
  1.1. Name

  	
   

  	
  4

  
	
  1.2. Places of Business

  	
   

  	
  4

  
	
  1.3. Nature of Trust

  	
   

  	
  4

  
	
  1.4. Definitions

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II. TRUSTEES

  	
   

  	
  8

  
	
  2.1. Number, Term of Office and Qualifications of Trustees

  	
   

  	
  8

  
	
  2.2. Compensation and Other Remuneration

  	
   

  	
  9

  
	
  2.3. Resignation, Removal and Death of Trustees

  	
   

  	
  9

  
	
  2.4. Vacancies

  	
   

  	
  10

  
	
  2.5. Successor and Additional Trustees

  	
   

  	
  10

  
	
  2.6. Actions by Trustees

  	
   

  	
  10

  
	
  2.7. Certification of Changes in Trustees

  	
   

  	
  11

  
	
  2.8. Committees

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE III. TRUSTEES’ POWERS

  	
   

  	
  11

  
	
  3.1. Power and Authority of Trustees

  	
   

  	
  11

  
	
  3.2. Specific Powers and Authority

  	
   

  	
  12

  
	
  3.3. Bylaws

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV. ADVISOR

  	
   

  	
  16

  
	
  4.1. Employment of Advisor

  	
   

  	
  16

  
	
  4.2. Term

  	
   

  	
  16

  
	
  4.3. Other Activities of Advisor

  	
   

  	
  16

  
	
  4.4. Advisor Compensation

  	
   

  	
  17

  
	
  4.5. Annual Total Operating Expenses

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. INVESTMENT POLICY AND
  POLICIES WITH RESPECT TO CERTAIN DISTRIBUTIONS TO SHAREHOLDERS

  	
   

  	
  18

  
	
  5.1. Statement of Policy

  	
   

  	
  18

  
	
  5.2. Prohibited Investments and Activities

  	
   

  	
  19

  
	
  5.3. Appraisals

  	
   

  	
  20

  
	
  5.4. Change in Investment Policies

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI. THE SHARES AND
  SHAREHOLDERS

  	
   

  	
  21

  
	
  6.1. Description of Shares

  	
   

  	
  21

  
	
  6.2. Certificates

  	
   

  	
  22

  
	
  6.3. Fractional Shares

  	
   

  	
  23

  
	
  6.4. Legal Ownership of Trust Estate

  	
   

  	
  23

  
	
  6.5. Shares Deemed Personal Property

  	
   

  	
  23

  
	
  6.6. Share Record; Issuance and Transferability of Shares

  	
   

  	
  23

  
	
  6.7. Dividends or Distributions to Shareholders

  	
   

  	
  24

  
	
  6.8. Transfer Agent, Dividend Disbursing Agent and Registrar

  	
   

  	
  24

  
	
  6.9. Shareholders’ Meetings

  	
   

  	
  24

  
	
  6.10. Proxies

  	
   

  	
  25

  
	
  6.11. [Reserved.]

  	
   

  	
  25

  



 


i

















 


	
  6.12. Fixing Record Date

  	
   

  	
  25

  
	
  6.13. Notice to Shareholders

  	
   

  	
  25

  
	
  6.14.
  Shareholders’ Disclosure: Trustees’ Right to Refuse to Transfer Shares;
  Limitation on Holdings; Redemption of Shares

  	
   

  	
  26

  
	
  6.15. Special Voting Requirements for Certain Business Combinations

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII. LIABILITY OF TRUSTEES,
  SHAREHOLDERS, OFFICERS, EMPLOYEES AND AGENTS, AND OTHER MATTERS

  	
   

  	
  29

  
	
  7.1.
  Limitation of Liability of Shareholders, Trustees, Officers, Employees and
  Agents for Obligations of the Trust

  	
   

  	
  29

  
	
  7.2. Express Exculpatory Clauses and Instruments

  	
   

  	
  29

  
	
  7.3.
  Limitation of Liability of Trustees Officers Employees and Agents to the
  Trust and to Shareholders for Acts and Omissions

  	
   

  	
  30

  
	
  7.4. Indemnification and Reimbursement of Trustees, Officers, Employees
  and Agents

  	
   

  	
  30

  
	
  7.5. Certain Definitions

  	
   

  	
  31

  
	
  7.6. Indemnification and Reimbursement of Shareholders

  	
   

  	
  32

  
	
  7.7.
  Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property
  and to Engage in Other Business

  	
   

  	
  32

  
	
  7.8. Transactions Between Trustees, Officers, Employees or Agents and
  the Trust

  	
   

  	
  32

  
	
  7.9. Independent Counsel

  	
   

  	
  34

  
	
  7.10. Persons Dealing with Trustees, Officers, Employees or Agents

  	
   

  	
  34

  
	
  7.11. Reliance

  	
   

  	
  34

  
	
  7.12. Indemnification of the Trust

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII. DURATION, AMENDMENT
  AND TERMINATION OF TRUST

  	
   

  	
  35

  
	
  8.1. Duration of Trust

  	
   

  	
  35

  
	
  8.2. Termination of Trust

  	
   

  	
  35

  
	
  8.3. Amendment Procedure

  	
   

  	
  35

  
	
  8.4. Amendments Effective

  	
   

  	
  36

  
	
  8.5. Transfer to Successor

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX. MISCELLANEOUS

  	
   

  	
  36

  
	
  9.1. Applicable Law

  	
   

  	
  36

  
	
  9.2. Index and Headings for Reference Only

  	
   

  	
  36

  
	
  9.3. Successors in Interest

  	
   

  	
  36

  
	
  9.4. Inspection of Records

  	
   

  	
  36

  
	
  9.5. Counterparts

  	
   

  	
  37

  
	
  9.6. Provisions of the Trust in Conflict with Law or Regulations:
  Severability

  	
   

  	
  37

  
	
  9.7. Certifications

  	
   

  	
  37

  



 


ii

















 


THIRD AMENDMENT AND RESTATEMENT OF DECLARATION OF TRUST OF HRPT
PROPERTIES TRUST


 


(formerly known as Health and Retirement Properties Trust)


 


Dated October 9, 1986

As Amended and Restated on July 1, 1994

and as Amended July 9, 1996

and Amended March 3, 1997

and Amended May 26, 1998

and Amended July 1, 1998

and Amended June 16, 2003

and Amended January 2, 2004

and Amended March 16, 2005

and Amended September 12, 2005


and Amended May 24, 2006


and Amended on December 29, 2006


and Amended May 15, 2007


and Amended October 16, 2007


and Amended May 14, 2009


 


The Declaration of
Health and Rehabilitation Properties Trust (the “Trust”), as filed with the
Maryland Department of Assessments and Taxation on October 9, 1986 and as
amended on September 27, 1987, July 23, 1992, and July 30, 1993
(the “Declaration”), is hereby amended and restated as follows:


 


DECLARATION OF
TRUST made as of the date set forth above by the undersigned Trustees.


 


WITNESSETH:


 


WHEREAS, the
Trustees desire to create a trust for the principal purpose of investing in
real property and interests therein; and


 


WHEREAS, the
Trustees desire that such trust qualify as a “real estate investment trust”
under the REIT Provisions of the Internal Revenue Code, and under Title 8 of
the Corporations and Associations Article of the Annotated Code of
Maryland; and


 


WHEREAS, in
furtherance of such purpose the Trustees intend to acquire certain real
property and interests therein and to hold, manage and dispose of all such
property as Trustees in the manner hereinafter stated; and


 


WHEREAS, it is
proposed that the beneficial interest in the Trust be divided into transferable
Shares of Beneficial Interest, evidenced by certificates therefore, as
hereinafter provided;


 


NOW, THEREFORE, it
is hereby agreed and declared that the Trustees will hold any and all property
of every type and description which they are acquiring or may hereafter acquire
as 


 


3

















 


Trustees,
together with the proceeds thereof, in trust, to manage and dispose of the same
for the benefit of the holders from time to time of the Shares of Beneficial
Interest being issued and to be issued hereunder in the manner and subject to
the stipulations contained herein.


 


ARTICLE I.


 


THE TRUST; DEFINITIONS


 


1.1.                              Name.  The name of
the Trust created by this Declaration of Trust shall be “HRPT Properties Trust”
and so far as may be practicable the Trustees shall conduct the Trust’s
activities, execute all documents and sue or be sued under that name, which
name (and the word “Trust” wherever used in this Declaration of Trust, except
where the context otherwise requires) shall refer to the Trustees collectively
but not individually or personally nor to the officers, agents, employees or
Shareholders of the Trust or of such Trustees. 
The Trustees may, at any time, without any action by the Shareholders,
amend the Declaration of Trust to change the name of the Trust.


 


1.2.                              Places of Business. 
The Trust shall maintain an office in Maryland at CT Corporation or such
other place in Maryland as the Trustees may determine from time to time. The
Resident Agent of the Trust at such office shall be The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland, 21202. The Trust may change
such Resident Agent from time to time as the Trustees shall determine. The
Trust may have such other offices or places of business within or without the
State of Maryland as the Trustees may from time to time determine.


 


1.3.                              Nature of Trust. 
The Trust shall be a real estate investment trust within the meaning of
Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland. It is also intended that the Trust shall carry on a business as a “real
estate investment trust” as described in the REIT Provisions of the Internal
Revenue Code. The Trust is not intended to be, shall not be deemed to be, and
shall not be treated as a general partnership, limited partnership, joint
venture, corporation or joint stock company (but nothing herein shall preclude
the Trust from being treated for tax purposes as an association under the
Internal Revenue Code) nor shall the Trustees or Shareholders or any of them
for any purpose be, nor be deemed to be, nor be treated in any way whatsoever
to be, liable or responsible hereunder as partners or joint venturers. The
relationship of the Shareholders to the Trustees shall be solely that of
beneficiaries of the Trust in accordance with the rights conferred upon them by
this Declaration.


 


1.4.                              Definitions. 
The terms defined in this Section 1.4., wherever used in this
Declaration, shall, unless the context otherwise requires, have the respective
meanings hereinafter specified. Whenever the singular number is used in this
Declaration and when permitted by the context, the same shall include the
plural, and the masculine gender shall include the feminine and neuter genders,
and vice versa. Where applicable, calculations to be made pursuant to any such
definition shall be made in accordance with generally accepted accounting
principles as in effect from time to time except as otherwise provided in such
definition.


 


4

















 


(a)                                  Advisor.  “Advisor”
shall mean the Person employed by the Trustees in accordance with the
provisions of Article IV.


 


(b)                                 Affiliate.  “Affiliate”
shall mean, as to any Person, (i) any other Person directly or indirectly
controlling, controlled by or under common control with such Person, (ii) any
other Person that owns beneficially, directly or indirectly, five percent (5%)
or more of the outstanding capital stock, shares or equity interests of such
Person, or (iii) any officer, director, employee, general partner or
trustee of such Person or of any Person controlling, controlled by or under
common control with such Person (excluding trustees who are not otherwise an
Affiliate of such Person).


 


(c)                                  Affiliated Trustee.  “Affiliated
Trustee” shall mean a Trustee who is not an Independent Trustee.


 


(d)                                 Annual Meeting of Shareholders.  “Annual
Meeting of Shareholders” shall mean the meeting described in the first sentence
of Section 6.9.


 


(e)                                  Annual Report.  “Annual
Report” shall have the meaning set forth in Section 6.11(a).


 


(f)                                    Average Invested Real Estate Assets.  “Average
Invested Real Estate Assets” for any period shall mean the average of the
aggregate book value of the consolidated assets of the Company invested,
directly or indirectly, in equity interests in, and loans secured by, real
estate and personal property associated with such real estate, before reserves
for depreciation or bad debt or other similar non-cash reserves, calculated by
taking the average of such values at the end of each month during such period.


 


(g)                                 Book Value. “Book Value” of an asset or assets shall
mean the value of such asset or assets of the Trust on the books of the Trust,
without deduction for depreciation or other asset valuation reserves and
without deduction for mortgages or other security interests to which such asset
or assets are subject, except that no asset shall be valued at more than its
fair market value as determined by or under procedures adopted by the Trustees,
and the underlying assets of a partnership, joint venture or other form of
indirect ownership, to the extent of the Trust’s interest therein, shall be
valued as if owned directly by the Trust.


 


(h)                                 Bylaws.  “Bylaws” shall
have the meaning set forth in Section 3.3.


 


(i)                                     Declaration.  “Declaration”
or “this Declaration” shall mean this Declaration of Trust, as amended,
restated or modified from time to time. References in this Declaration to “herein”
and “hereunder” shall be deemed to refer to this Declaration and shall not be
limited to the particular text, article or section in which such words appear.


 


(j)                                     [Intentionally left blank].


 


(k)                                  Independent Trustee.  “Independent
Trustee” shall mean a Trustee who, in his individual capacity, (i) is
neither an Affiliate of, nor has any material business or professional
relationship with, the Advisor or any other Person whom the Trustees may
pursuant to Section 6.14(c) hereof permit to purchase in excess of
9.8% of the Trust’s Shares (provided, however, 


 


5

















 


that any Trustee
affiliated with an underwriter shall not cease to be an Independent Trustee
solely on the basis of such underwriter’s purchase of Shares in connection with
any public offering of the Trust’s Shares), and (ii) does not perform any
services for the Trust except as Trustee.


 


(l)                                     Internal Revenue Code.  “Internal
Revenue Code” shall mean the Internal Revenue Code of 1954, as now enacted or
hereafter amended, or successor statutes and applicable rules and
regulations thereunder.


 


(m)      Invested Assets.  “Invested
Assets” shall mean the Book Value of all the Real Estate Investments of the


 


(n)                                 Mortgage Loans.  “Mortgage
Loans” shall mean notes, debentures, bonds and other evidences of indebtedness
or obligations, whether negotiable or non-negotiable, and which are secured or
collateralized by Mortgages.


 


(o)                                 Mortgages.  “Mortgages” shall mean mortgages, deeds of trust or
other security interests in Real Property.


 


(p)                                 Net Assets.  “Net
Assets” shall mean the total assets (other than intangibles) at cost before
deducting depreciation or other non-cash reserves less total liabilities,
calculated at least quarterly on a basis consistently applied.


 


(q)                                 Net Income.  “Net
Income” for any period shall be calculated on the basis of the Trust’s audited
financial statements and shall mean total revenues applicable to such period,
less the expenses applicable to such period, other than additions to reserves
for depreciation or bad debts or other similar non-cash reserves.


 


(r)                                    Person.  “Person” shall
mean and include individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts and other entities and governments and agencies and political
subdivisions thereof.


 


(s)                                  Real Estate Investment.  “Real
Estate Investment” shall mean any direct or indirect investment in any interest
in Real Property or in any Mortgage Loan, or in any Person whose principal
purpose is to make any such investment.


 


(t)                                    Real Property.  “Real
Property” shall mean and include land leasehold interests (including but not
limited to interests of a lessor or lessee therein), rights and interests in
land, and in any buildings, structures, improvements, furnishings and fixtures
located on or used in connection with land or interests therein, but does not
include investments in Mortgages, Mortgage Loans or interests therein.


 


(u)                                 REIT.  “REIT” shall
mean a real estate investment trust as defined in the REIT Provisions of the
Internal Revenue Code.


 


6

















 


(v)                                 REIT Provisions of the Internal Revenue
Code.  “REIT Provisions of the Internal Revenue Code”
shall mean Parts II and III of Subchapter M of Chapter 1 of Subtitle A of the
Internal Revenue Code or any successor provision.


 


(w)                               Securities.  “Securities”
shall mean any stock, shares, voting trust certificates, bonds, debentures,
notes or other evidences of indebtedness or in general any instruments commonly
known as “securities” or any certificates of interest, shares or participations
in, temporary or interim certificates for, receipts for, guarantees of, or
warrants, options or rights to subscribe to, purchase or acquire any of the
foregoing.


 


(x)                                   Shareholders.  “Shareholders”
shall mean as of any particular time all holders of record of outstanding
Shares at such time.


 


(y)                                 Shares.  “Shares” or,
as the context may require, “shares” shall mean the shares of beneficial
interest of the Trust as described in Section 6.1 hereof.


 


(z)                                   Total Assets.  “Total
Assets” shall mean the Book Value of all the assets of the Trust, as such Book
Value appears on the most recent quarterly balance sheet of the Trust.


 


(aa)                            Total Operating Expenses.  “Total
Operating Expenses” shall be calculated on the basis of the Trust’s annual
audited financial statements and shall mean the aggregate annual expenses
regarded as ordinary operating expenses (including any compensation payable to
the Advisor), exclusive of the following:


 


(i)                                     interest payments and any other cost of
borrowed money;


 


(ii)                                  taxes on income and taxes and assessments
on real property, if any, and all other taxes applicable to the Trust;


 


(iii)                               legal, auditing, accounting,
underwriting, brokerage, listing, reporting, registration and other fees, and
printing, engraving and other expenses and taxes incurred in connection with
the issuance, distribution, transfer, trading, registration and stock exchange
listing of the Trust’s securities, including transfer agent’s, registrar’s and
indenture trustee’s fees and charges;


 


(A)                              expenses of organizing, restructuring,
reorganizing or terminating the Trust, or of revising, amending, converting or
modifying the Trust’s organizational documents;


 


(B)                                Expenses directly connected with the
acquisition, disposition and ownership of real estate interests or other
property (including the costs of foreclosure, insurance premiums, legal
services, brokerage and sales commissions, maintenance, repair, improvement and
local management of property), other than expenses with respect thereto of
employees of the Advisor, to the extent that such expenses are to be borne by
the Advisor pursuant to the terms of the advisory contract;


 


(iv)                              non-cash provisions for depreciation,
depletion and amortization;


 


7

















 


(v)                                 losses on the disposition of assets and
provisions for such losses; and


 


(vi)                              other extraordinary charges including,
without limitation, litigation costs.


 


(bb)                          Trust.  “Trust” shall
mean the Trust created by this Declaration.


 


(cc)                            Trustees.  “Trustees”
shall mean, as of any particular time, the original signatories hereto as long
as they hold office hereunder and additional and successor Trustees, and shall
not include the officers, employees or agents of the Trust or the Shareholders.
Nothing herein shall be deemed to preclude the Trustees from also serving as
officers, employees or agents of the Trust or owning Shares.


 


(dd)                          Trust Estate.  “Trust
Estate” shall mean as of any particular time any and all property, real,
personal or otherwise, tangible or intangible, which is transferred, conveyed
or paid to or purchased by the Trust or Trustees and all rents, income, profits
and gains therefrom and which at such time is owned or held by or for the Trust
or the Trustees.


 


ARTICLE II.


 


TRUSTEES


 


2.1.                              Number, Term of Office and Qualifications
of Trustees.  There shall be no fewer than three (3) nor
more than twelve (12) Trustees. The exact number of Trustees shall be five (5) until
changed by a two-thirds (2/3) vote of the Trustees or by an amendment of this
Declaration duly adopted by the Shareholders. The Board of Trustees shall be
classified into three groups, with two (2) Trustees in Group I, two (2) Trustees
in Group II, and one (1) Trustee in Group III. Each Trustee in Group I
shall serve for a term ending at the annual meeting of Shareholders in 1996;
each Trustee in Group II shall serve for a term ending at the annual meeting of
Shareholders in 1997; and the Trustee in Group III shall serve for a term
ending at the annual meeting of Shareholders in 1995. After the respective
terms of the groups indicated, each such group of Trustees shall be elected for
successive terms ending at the annual meeting of Shareholders held during the
third year after election.


 


The names and
business addresses of the current Trustees who will serve as Trustees until the
expiration of their respective terms and until their successors are elected and
qualify are as follows:


 


	
   

  	
   

  	
  Name

  	
   

  	
  Address

  
	
  Group I:

  	
   

  	
  Barry M. Portnoy

  	
   

  	
  Sullivan & Worcester

  
	
   

  	
   

  	
   

  	
   

  	
  One Post Office Square

  
	
   

  	
   

  	
   

  	
   

  	
  Boston, MA 02109

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  John L. Harrington

  	
   

  	
  990 Washington Street

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 315

  
	
   

  	
   

  	
   

  	
   

  	
  Dedham, MA 02026

  



 


8

















 


	
  Group II:

  	
   

  	
  Rev. Justinian

  	
   

  	
  St. Gabriel’s Parish

  
	
   

  	
   

  	
   

  	
   

  	
  Manning, C.P. Rectory

  
	
   

  	
   

  	
   

  	
   

  	
  139 Washington Street

  
	
   

  	
   

  	
   

  	
   

  	
  Brighton, MA 02135

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gerard M. Martin

  	
   

  	
  M & P Partners Limited

  
	
   

  	
   

  	
   

  	
   

  	
  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
  400 Centre Street

  
	
   

  	
   

  	
   

  	
   

  	
  Newton, MA 02158

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Group III:

  	
   

  	
  Arthur G. Koumantzelis

  	
   

  	
  Cumberland Farms, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  777 Dedham Street

  
	
   

  	
   

  	
   

  	
   

  	
  Canton, MA 02021-9118

  



 


The current
Trustees shall be the signatories hereto. No reduction in the number of
Trustees shall have the effect of removing any Trustee from office prior to the
expiration of term. Subject to the provisions of Section 2.3, each Trustee
shall hold office until the election and qualification of his successor. There
shall be no cumulative voting in the election of Trustees. A Trustee shall be
an individual at least twenty-one (21) years of age who is not under legal
disability. A majority of the Trustees shall at all times be persons who are
Independent Trustees; provided, however, that upon a failure to comply with
this requirement because of the resignation, removal or death of a Trustee who
is an Independent Trustee, such requirement shall not be applicable for a
period of ninety (90) days. Nominees to serve as Independent Trustees shall be
nominated by the then current Independent Trustees, if any. Unless otherwise
required by law, no Trustee shall be required to give bond, surety or security
in any jurisdiction for the performance of any duties or obligations hereunder.
The Trustees in their capacity as Trustees shall not be required to devote
their entire time to the business and affairs of the Trust.


 


2.2.                              Compensation and Other Remuneration. 
The Trustees shall be entitled to receive such reasonable compensation
for their services as Trustees as the Trustees may determine from time to time.
The Trustees and Trust officers shall be entitled to receive remuneration for
services rendered to the Trust in any other capacity. Subject to Sections 7.7
and 7.8, such services may include, without limitation, services as an officer
of the Trust, legal, accounting or other professional services, or services as
a broker, transfer agent or underwriter, whether performed by a Trustee or any
person affiliated with a Trustee.


 


2.3.                              Resignation, Removal and Death of
Trustees.  A Trustee may resign at any time by giving
written notice to the remaining Trustees at the principal office of the Trust.
Such resignation shall take effect on the date specified in such notice,
without need for prior accounting. A Trustee may be removed at any time with or
without cause by vote or consent of holders of Shares representing two-thirds
of the total votes authorized to be cast by Shares then outstanding and
entitled to vote thereon, or with cause by all remaining Trustees. A Trustee
judged incompetent or bankrupt, or for whom a guardian or conservator has been
appointed, shall be deemed to have resigned as of the date of such adjudication
or appointment. Upon the resignation or removal of any Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the conveyance of any


 


9














 


Trust property
held in his name, shall account to the remaining Trustees as they require for
all property which he holds as Trustee and shall thereupon be discharged as
Trustee. Upon the incapacity or death of any Trustee, his legal representative
shall perform the acts set forth in the preceding sentence and the discharge
mentioned therein shall run to such legal representative and to the
incapacitated Trustee or the estate of the deceased Trustee, as the case may
be.


 


2.4.                              Vacancies.  If any or all the Trustees cease to be
Trustees hereunder, whether by reason of resignation, removal, incapacity,
death or otherwise, such event shall not terminate the Trust or affect its
continuity. Until vacancies are filled, the remaining Trustee or Trustees (even
though fewer than three (3)) may exercise the powers of the Trustees hereunder.
Vacancies (including vacancies created by increases in number) may be filled by
the remaining Trustee or by a majority of the remaining Trustees (or a majority
of the remaining Independent Trustees, if any, if the vacant position was
formerly held by an Independent Trustee or is required to be held by an
Independent Trustee) or by vote of holders of Shares representing a majority of
the total number of votes authorized to be cast by Shares then outstanding and
entitled to vote thereon. If at any time there shall be no Trustees in office,
successor Trustees shall be elected by the Shareholders as provided in Section 6.9.
Any Trustee elected to fill a vacancy created by the resignation, removal or
death of a former Trustee shall hold office for the unexpired term of such
former Trustee.


 


2.5.                              Successor
and Additional Trustees.  The right,
title and interest of the Trustees in and to the Trust Estate shall also vest
in successor and additional Trustees upon their qualification, and they shall
thereupon have all the rights and obligations of Trustees hereunder. Such
right, title and interest shall vest in the Trustees whether or not
conveyancing documents have been executed and delivered pursuant to Section 2.3
or otherwise. Appropriate written evidence of the election and qualification of
successor and additional Trustees shall be filed with the records of the Trust
and in such other offices or places as the Trustees may deem necessary, appropriate
or desirable.


 


2.6.                              Actions
by Trustees.  The Trustees may act
with or without a meeting. A quorum for all meetings of the Trustees shall be a
majority of the Trustees; provided, however, that, whenever pursuant to Section 7.8
or otherwise the vote of a majority of a particular group of Trustees is
required at a meeting, a quorum for such meeting shall be a majority of the
Trustees which shall include a majority of such group. Unless specifically
provided otherwise in this Declaration, any action of the Trustees may be taken
at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consents of a majority of the
Trustees, which consents shall be filed with the records of meetings of the
Trustees. Any action or actions permitted to be taken by the Trustees in
connection with the business of the Trust may be taken pursuant to authority
granted by a meeting of the Trustees conducted by a telephone conference call,
and the transaction of Trust business represented thereby shall be of the same
authority and validity as if transacted at a meeting of the Trustees held in
person or by written consent. The minutes of any Trustees’ meeting held by
telephone shall be prepared in the same manner as a meeting of the Trustees
held in person. The acquisition or disposition of any investment (other than
investments in short-term investment Securities described in Section 5.1)
shall require the approval of a majority of Trustees, except as otherwise
provided in Section 7.8. Any agreement, deed, mortgage, lease or other
instrument or writing executed by one or more of 


 


10

















 


the Trustees or by
any authorized Person shall be valid and binding upon the Trustees and upon the
Trust when authorized or ratified by action of the Trustees or as provided in
the Bylaws.


 


With
respect to the actions of the Trustees, Trustees who have, or are Affiliates of
Persons who have, any direct or indirect interest in or connection with any
matter being acted upon may be counted for all quorum purposes under this Section 2.6
and, subject to the provisions of Section 7.8, may vote on the matter as
to which they or their Affiliates have such interest or connection.


 


2.7.                              Certification
of Changes in Trustees.  No
alteration in the number of Trustees, no removal of a Trustee and no election
or appointment of any individual as Trustee (other than an individual who was
serving as a Trustee immediately prior to such election or appointment) shall become
effective unless and until there shall be delivered to the secretary of the
Trust an instrument in writing signed by a majority of the Trustees, certifying
to such alteration in the number of Trustees and/or to such removal of a
Trustee and/or naming the individual so elected or appointed as Trustee,
together with his written acceptance thereof and agreement to be bound thereby.


 


2.8.                              Committees.  The Trustees may appoint an audit committee
and such other standing committees as the Trustees determine. Each standing
committee shall consist of three or more members, provided, however, that the
Trustees may appoint a standing committee consisting of at least one Trustee
and two non- Trustees. Notwithstanding the foregoing, however, all members of
the audit committee shall be Independent Trustees. A majority of the members of
each other standing committee comprised solely of Trustees shall be Independent
Trustees; provided, however, that upon a failure to comply with this
requirement because of the resignation, removal or death of a Trustee who is an
Independent Trustee, such requirement shall not be applicable for a period of
ninety (90) days. Each committee shall have such powers, duties and obligations
as the Trustees may deem necessary or appropriate. The standing committees
shall report their activities periodically to the Trustees.


 


ARTICLE III.


 


TRUSTEES’ POWERS


 


3.1.                              Power
and Authority of Trustees.  The
Trustees, subject only to the specific limitations contained in this
Declaration, shall have, without further or other authorization, and free from
any power or control on the part of the Shareholders, full, absolute and
exclusive power, control and authority over the Trust Estate and over the
business and affairs of the Trust to the same extent as if the Trustees were
the sole owners thereof in their own right, and may do all such acts and things
as in their sole judgment and discretion are necessary for or incidental to or
desirable for the carrying out of or conducting the business of the Trust. Any
construction of this Declaration or any determination made in good faith by the
Trustees as to the purposes of the Trust or the existence of any power or
authority hereunder shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of the grant of powers and
authority to the Trustees. The enumeration of any specific power or authority
herein shall not be construed as limiting the aforesaid powers or the general
powers or authority or any other specified power or authority conferred herein
upon the Trustees.


 


11

















 


3.2.                              Specific
Powers and Authority.  Subject only
to the express limitations contained in this Declaration and in addition to any
powers and authority conferred by this Declaration or which the Trustees may
have by virtue of any present or future statute or rule or law, the
Trustees without any action or consent by the Shareholders shall have and may
exercise at any time and from time to time the following powers and authorities
which may or may not be exercised by them in their sole judgment and discretion
and in such manner and upon such terms and conditions as they may from time to
time deem proper:


 


(a)                                  to
retain, invest and reinvest the capital or other funds of the Trust in, and to
acquire, purchase, or own, real or personal property of any kind, whether
tangible or intangible, wherever located in the world, and make commitments for
such investments, all without regard to whether any such property is authorized
by law for the investment of trust funds or produces or may produce income; to
possess and exercise all the rights, powers and privileges appertaining to the
ownership of the Trust Estate; and to increase the capital of the Trust at any
time by the issuance of any additional authorized Shares (subject to Section 5.2(e))
or other Securities of the Trust for such consideration as they deem advisable;


 


(b)                                 without
limitation of the powers set forth in paragraph (a) above, to invest in,
purchase or otherwise acquire for such consideration as they deem proper, in
cash or other property or through the issuance of shares or through the
issuance of notes, debentures, bonds or other obligations of the Trust, and to
hold for investment, the entire or any participating interests in any Mortgage
Loans or interest in Real Property, including ownership of, or participations
in the ownership of, or rights to acquire, equity interests in Real Property or
in Persons owning, developing, improving, operating or managing Real Property,
which interests may be acquired independently of or in connection with other
investment activities of the Trust and, in the latter case, may include rights
to receive additional payments based on gross income or rental or other income
from the Real Property or improvements thereon; to invest in loans secured by
the pledge or transfer of Mortgage Loans;


 


(c)                                  to
sell, rent, lease, hire, exchange, release, partition, assign, mortgage,
pledge, hypothecate, grant security interests in, encumber, negotiate, convey,
transfer or otherwise dispose of any and all the Trust Estate by deeds
(including deeds in lieu of foreclosure), trust deeds, assignments, bills of
sale, transfers, leases, mortgages, financing statements, security agreements
and other instruments for any of such purposes executed and delivered for and
on behalf of the Trust or the Trustees by one or more of the Trustees or by a
duly authorized officer, employee, agent or nominee of the Trust, provided that
no disposition of a Real Estate Investment shall be accomplished without the
approval of a majority of the Trustees;


 


(d)                                 to
issue Shares, bonds, debentures, notes or other evidences of indebtedness,
which may be secured or unsecured and may be subordinated to any indebtedness
of the Trust, to such Persons for such cash, property or other consideration
(including Securities issued or created by, or interests in, any Person) at
such time or times and on such terms as the Trustees may deem advisable and to
list any of the foregoing Securities issued by the Trust on any securities
exchange and to purchase or otherwise acquire, hold, cancel, reissue, sell and
transfer any of such Securities, and to cause the instruments evidencing such
Securities to bear an actual or facsimile imprint of the seal of the Trust (if
the Trustees shall have adopted such a seal) and to be signed by manual or
facsimile signature or signatures (and to issue such Securities, whether or 


 


12

















 


not any Person
whose manual or facsimile signature shall be imprinted thereon shall have
ceased to occupy the office with respect to which such signature was
authorized), provided that, where only facsimile signatures for the Trust are
used, the instrument shall be countersigned manually by a transfer agent,
registrar or other authentication agent; and to issue any of such Securities of
different types in combinations or units with such restrictions on the separate
transferability thereof as the Trustees shall determine;


 


(e)                                  to
enter into leases of real and personal property as lessor or lessee and to
enter into contracts, obligations and other agreements for a term, and to
invest in obligations having a term, extending beyond the term of office of the
Trustees and beyond the possible termination of the Trust, or having a lesser
term;


 


(f)                                    to
borrow money and give negotiable or non negotiable instruments therefor; or
guarantee, indemnify or act as surety with respect to payment or performance of
obligations of third parties; to enter into other obligations on behalf of the
Trust; and to assign, convey, transfer, mortgage, subordinate, pledge, grant
security interest in, encumber or hypothecate the Trust Estate to secure any
indebtedness of the Trust or any other of the foregoing obligations of the
Trust;


 


(g)                                 to
lend money, whether secured or unsecured;


 


(h)                                 to
create reserve funds for any purpose;


 


(i)                                     to
incur and pay out of the Trust Estate any charges or expenses, and to disburse
any funds of the Trust, which charges, expenses or disbursements are, in the
opinion of the Trustees, necessary or incidental to or desirable for the
carrying out of any of the purposes of the Trust or conducting the business of
the Trust, including without limitation taxes and other governmental levies, charges
and assessments, of whatever kind or nature, imposed upon or against the
Trustees in connection with the Trust or the Trust Estate or upon or against
the Trust Estate or any part hereof, and for any of the purposes herein;


 


(j)                                     to
deposit funds of the Trust in banks, trust companies, savings and loan
associations and other depositories, whether or not such deposits will draw
interest, the same to be subject to withdrawal on such terms and in such manner
and by such Person or Persons (including any one or more Trustees or officers,
employees or agents, of the Trust) as the Trustees may determine;


 


(k)                                  to
possess and exercise all the rights, powers and privileges pertaining to the
ownership of all or any Mortgages or Securities issued or created by, or interests
in, any Person, forming part of the Trust Estate, to the same extent that an
individual might do so, and, without limiting the generality of the foregoing,
to vote or give any consent, request or notice, or waive any notice, either in
person or by proxy or power of attorney, with or without power of substitution,
to one or more Persons, which proxies and powers of attorney may be for
meetings or action generally or for any particular meeting or action, and may
include the exercise of discretionary powers;


 


13

















 


(l)                                     to
cause to be organized or assist in organizing any Person under the laws of any
jurisdiction to acquire the Trust Estate or any part or parts thereof or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, rent, lease, hire, convey, negotiate, assign, exchange
or transfer the Trust Estate or any part or parts thereof to or with any such
Person or any existing Person in exchange for the Securities thereof or
otherwise, and to merge or consolidate the Trust with or into any Person or
merge or consolidate any Person into the Trust, and to lend money to, subscribe
for the Securities of, and enter into any contracts with, any Person in which
the Trust holds or is about to acquire Securities or any other interest;


 


(m)                               to
enter into joint ventures, general or limited partnerships, participation or
agency arrangements and any other lawful combinations or associations, and to
act as a general or limited partner provided, however, that the Trustees may
not enter into any such joint venture or other association as aforesaid unless
it has first received from counsel an opinion to the effect that such joint
venture or other association as aforesaid will be treated for tax purposes as a
partnership;


 


(n)                                 to
elect, appoint, engage or employ such officers for the Trust as the Trustees
may determine, who may be removed or discharged at the discretion of the
Trustees, such officers to have such powers and duties, and to serve such
terms, as may be prescribed by the Trustees or by the Bylaws; to engage or
employ any Persons (including, subject to the provisions of Sections 7.7 and
7.8, any Trustee or officer, agent or employee of the Trust and any Person in
which any Trustee, officer or agent is directly or indirectly interested or
with which he is directly or indirectly connected) as agents, representatives,
employees, or independent contractors (including without limitation real estate
advisors, investment advisors, transfer agents, registrars, underwriters,
accountants, attorneys at law, real estate agents, managers, appraisers,
brokers, architects, engineers, construction managers, general contractors or
otherwise) in one or more capacities, and to pay compensation from the Trust
for services in as many capacities as such Person may be so engaged or
employed; and to delegate any of the powers and duties of the Trustees to any
one or more Trustees, agents, representatives, officers, employees, independent
contractors or other Persons; provided, however, that no such delegation shall
be made to an Affiliate of the Advisor, except with the approval of a majority
of the Independent Trustees;


 


(o)                                 to
determine or cause to be determined from time to time the value of all or any
part of the Trust Estate and of any services, Securities, property or other
consideration to be furnished to or acquired by the Trust, and from time to
time to revalue or cause to be revalued all or any part of the Trust Estate in
accordance with such appraisals or other information as are, in the Trustees’
sole judgment, necessary and/or satisfactory;


 


(p)                                 to
collect, sue for and receive all sums of money coming due to the Trust, and to
engage in, intervene in, prosecute, join, defend, compromise, abandon or
adjust, by arbitration or otherwise, any actions, suits, proceedings, disputes,
claims, controversies, demands or other litigation relating to the Trust, the
Trust Estate or the Trust’s affairs, to enter into agreements therefor, whether
or not any suit is commenced or claim accrued or asserted and, in advance of
any controversy, to enter into agreements regarding arbitration, adjudication
or settlement thereof;


 


14

















 


(q)                                 to
renew, modify, release, compromise, extend, consolidate or cancel, in whole or
in part, any obligation to or of the Trust or participate in any reorganization
of obligors to the Trust;


 


(r)                                    to
self-insure or to purchase and pay for out of the Trust Estate insurance
contracts and policies, including contracts of indemnity, insuring the Trust
Estate against any and all risks and insuring the Trust and/or all or any of
the Trustees, the Shareholders, or the officers, employees or agents of the
Trust against any and all claims and liabilities of every nature asserted by
any Person arising by reason of any action alleged to have been taken or
omitted by the Trust or by the Trustees, Shareholders, officers, employees or
agents, whether or not the Trust would have the power to indemnify such Person
or Persons against any such claim or liability;


 


(s)                                  to
cause legal title to any of the Trust Estate to be held by and/or in the name
of the Trustees, or, except as prohibited by law, by and/or in the name of the
Trust or one or more of the Trustees or any other Person, on such terms, in
such manner and with such powers in such Person as the Trustees may determine,
and with or without disclosure that the Trust or Trustees are interested
therein;


 


(t)                                    to
adopt a fiscal year for the Trust, and from time to time to change such fiscal
year;


 


(u)                                 to
adopt and use a seal (but the use of a seal shall not be required for the
execution of instruments or obligations of the Trust;


 


(v)                                 to
the extent permitted by law, to indemnify or enter into agreements with respect
to indemnification with any Person with which the Trust has dealings, including
without limitation any broker/dealer, investment bank, investment advisor or
independent contractor, to such extent as the Trustees shall determine;


 


(w)                               to
confess judgment against the Trust;


 


(x)                                   to
discontinue the operations of the Trust;


 


(y)                                 to
repurchase or redeem Shares and other Securities issued by the Trust;


 


(z)                                   to
declare and pay dividends or distributions, consisting of cash, property or
Securities, to the holders of Shares of the Trust out of any funds legally
available therefor; and


 


(aa)                            to do
all other such acts and things as are incident to the foregoing, and to
exercise all powers which are necessary or useful to carry on the business of
the Trust and to carry out the provisions of this Declaration.


 


3.3.                              Bylaws.  The Trustees may make or adopt and from time
to time amend or repeal Bylaws (the “Bylaws”) not inconsistent with law or with
this Declaration, containing provisions relating to the business of the Trust
and the conduct of its affairs and in such Bylaws may define the duties of the
officers, employees and agents of the Trust.


 


15

















 


ARTICLE IV.


 


ADVISOR


 


4.1.                              Employment
of Advisor.  The Trustees are responsible
for the general policies of the Trust and for the general supervision of the
business of the Trust conducted by all officers, agents, employees, advisors,
managers or independent contractors of the Trust. However, the Trustees are not
and shall not be required personally to conduct the business of the Trust, and,
consistent with their ultimate responsibility as stated above, the Trustees
shall have the power to appoint, employ or contract with any Person (including
one or more of themselves or any corporation, partnership, or trust in which
one or more of them may be directors, officers, stockholders, partners or
trustees) as the Trustees may deem necessary or proper for the transaction of
the business of the Trust. The Trustees may therefore employ or contract with
such Person (herein referred to as the “Advisor”) and, consistent with their
ultimate responsibility as set forth in this Section 4.1, the Trustees may
grant or delegate such authority to the Advisor as the Trustees may in their
sole discretion deem necessary or desirable without regard to whether such
authority is normally granted or delegated by trustees. The Advisor shall be
required to use its best efforts to supervise the operation of the Trust in a
manner consistent with the investment policies and objectives of the Trust.
Subject to the provisions of Sections 4.2 and 7.8 hereof, the Trustees shall
have the power to determine the terms and compensation of the Advisor or any
other Person whom they may employ or with whom they may contract for advisory
services. The Trustees may exercise broad discretion in allowing the Advisor to
administer and regulate the operations of the Trust, to act as agent for the
Trust, to execute documents on behalf of the Trustees and to make executive decisions
which conform to general policies and general principles previously established
by the Trustees.


 


4.2.                              Term.  The Trustees shall not enter into any
advisory contract with the Advisor unless such contract has an initial term of
not more than one year, provides for annual renewal or extension thereafter,
provides for termination thereof by the Trustees without cause at any time upon
sixty (60) days’ written notice by the Trustees, by affirmative vote or written
consent of a majority of the Independent Trustees, and provides for termination
thereof by the Advisor without cause at any time after the expiration of a
period specified in such contract (which period shall not be shorter than the
original term) without penalty upon sixty (60) days’ written notice by the
Advisor. In the event of the termination of an advisory contract, the
terminated Advisor shall be required to cooperate with the Trust and take all
reasonable steps requested to assist the Trustees in making an orderly
transition of the advisory function. It shall be the duty of the Trustees
annually to evaluate the performance of the Advisor, and the Independent
Trustees have a fiduciary duty to the Shareholders to supervise the
relationship of the Trust with the Advisor.


 


4.3.                              Other
Activities of Advisor.  The Advisor
shall not be required to administer the Trust as its sole and exclusive
function and may have other business interests and may engage in other
activities similar or in addition to those relating to the Trust, including the
rendering of advice or services of any kind to other investors or any other
Persons (including other REITs) and the management of other investments. The
Trustees may request the Advisor to engage in certain other activities which
complement the Trust’s investments, and the Advisor may receive compensation or
commissions therefor from the Trust or other Persons.


 


16

















 


Neither
the Advisor nor (subject to any applicable provisions of Section 7.7) any
Affiliate of the Advisor shall be obligated to present any particular
investment opportunities to the Trust, even if such opportunities are of a
character such that, if presented to the Trust, they could be taken by the
Trust, and, subject to the foregoing, each of them shall be protected in taking
for its own account or recommending to others any such particular investment
opportunity.


 


Notwithstanding
the foregoing, the Advisor shall be required to use its best efforts to present
the Trust with a continuing and suitable program consistent with the investment
policies and objectives of the Trust and with investments which are
representative of, comparable with and on similar terms as investments being
made by Affiliates of the Advisor, or by the Advisor for its own account or for
the account of any Person for whom the Advisor is providing advisory services.
In addition, the Advisor shall be required to, upon the request of any Trustee,
promptly furnish the Trustees with such information on a confidential basis as
to any investments within the investment policies of the Trust made by
Affiliates of the Advisor or by the Advisor for its own account or for the
account of any Person for whom the Advisor is providing advisory services.


 


4.4.                              Advisor
Compensation.  The Trustees, including
a majority of the Independent Trustees, shall at least annually review
generally the performance of the Advisor in order to determine whether the
compensation which the Trust has contracted to pay to the Advisor is reasonable
in relation to the nature and quality of services performed and whether the
provisions of the advisory contract with the Advisor are being carried out.
Each such determination shall be based on such of the following and other
factors as the Trustees (including the Independent Trustees) deem appropriate
and shall be reflected in the minutes of the meetings of the Trustees:


 


(a)                                  the
size of the advisory fee in relation to the size, composition and profitability
of the portfolio of the Trust;


 


(b)                                 the
success of the Advisor in generating opportunities that meet the investment
objectives of the Trust;


 


(c)                                  the
rates charged to other REITs and to investors other than REITs by advisors
performing similar services;


 


(d)                                 additional
revenues realized by the Advisor and its Affiliates through their relationship
with the Trust, including loan administration, underwriting or brokerage
commissions and servicing, engineering, inspection and other fees, whether paid
by the Trust or by others with whom the Trust does business;


 


(e)                                  the
quality and extent of service and advice furnished by the Advisor;


 


(f)                                    the
performance of the investment portfolio of the Trust, including income,
conservation or appreciation of capital, frequency of problem investments and
competence in dealing with distress situations; and


 


(g)                                 the
quality of the portfolio of the Trust in relationship to any investments
generated by the Advisor for its own account.


 


17

















 


4.5.                              Annual
Total Operating Expenses. Each advisory contract with an Advisor shall
provide that the Total Operating Expenses of the Trust shall not exceed in any
fiscal year the lower of:


 


(a)                                  the
greater of (i) two percent (2%) of the Average Invested Real Estate Assets
for such fiscal year or (ii) twenty-five percent (25%) of the Net Income
for such fiscal year (calculated before the deduction therefrom of such Total
Operating Expenses); or


 


(b)                                 the
lowest of any applicable operating expense limitations that may be imposed by
law or regulation in a state in which any securities of the Trust are or will
be qualified for sale or by a national securities exchange on which any
securities of the Trust are or may be listed, as such limitations may be
altered from time to time.


 


The
Independent Trustees shall at least annually determine whether the total fees
and expenses of the Trust are reasonable in light of the investment experience
of the Trust, its Net Assets, its Net Income and the fees and expenses of
comparable REITs. Each such determination shall be reflected in the minutes of
meetings of the Trustees.


 


Within
sixty (60) days after the end of any fiscal quarter of the Trust ending on or
after December 31, 1987 for which Total Operating Expenses (for the twelve
months then ended) exceed either of the expense limitations provided in
subparagraph (a) of this Section 4.5, the Trust shall send to the
Shareholders a written disclosure of such fact, together with an explanation of
the factors, if any, which the Trustees (including a majority of the
Independent Trustees) have concluded were sufficiently unanticipated, unusual
or nonrecurring to justify such higher Total Operating Expenses.


 


Each
advisory contract with the Advisor shall provide that in the event that the
Total Operating Expenses exceed any of the limitations provided in this Section 4.5,
then the Advisor shall refund to the Trust the amount by which the aggregate
annual Total Operating Expenses paid or incurred by the Trust exceed the
limitations herein provided; provided, however, that with respect to the
limitations provided in subparagraph (a) of this Section 4.5, only so
much of such excess need be refunded as the Trustees, including a majority of
the Independent Trustees, shall have found to be unjustified as provided above.


 


ARTICLE V.


 


INVESTMENT POLICY
AND POLICIES WITH RESPECT TO CERTAIN DISTRIBUTIONS TO SHAREHOLDERS


 


5.1.                              Statement
of Policy.  It shall be the general
objectives of the Trust (i) to provide current income for distribution to
Shareholders through investments in income-producing rehabilitation, health
care and related facilities and other real estate investments, (ii) to
provide Shareholders with the opportunity for additional returns through
participation in any increases in the operating revenues of investment
properties, (iii) to provide Shareholders with the opportunity to realize
income from investments in income-producing properties to be financed by the
issuance of additional Shares or debt, (iv) to provide Shareholders with
the opportunity to realize capital growth resulting from appreciation, if any,
in the residual value of investment 


 


18

















 


properties and (v) to
preserve and protect Shareholders’ capital. These general objectives shall be
pursued in a manner consistent with the investment policies specified in the
remainder of this Section 5.1.


 


While
the Trustees are authorized pursuant to Article III to invest the Trust
Estate in a wide variety of investments, it shall be the policy of the Trustees
to invest the initial portion of the Trust Estate primarily in income-producing
rehabilitation, health care and related facilities including, without
limitation, acute care and rehabilitation hospitals, skilled nursing and
intermediate care facilities, retirement centers, congregate living facilities,
medical office buildings, health care related hotels, outpatient rehabilitation
centers, community re-entry/re-training facilities and facilities housing other
health care and related products and services.


 


The
Trust may make secured borrowings to make permitted additional Real Estate
Investments and secured or unsecured borrowings for normal working capital
needs, including the repair and maintenance of properties in which it has
invested, tenant improvements and leasing commissions. The Trust may make such
borrowings from third parties or, subject to approval by a majority of the
Independent Trustees, from Affiliates of the Advisor. Interest and other
financing charges or fees to be paid on loans from such Affiliates will not
exceed the interest and other financing charges or fees which would be charged
by third party financing institutions on comparable loans for the same purpose
in the same geographic area.


 


To the
extent that the Trust Estate has assets not otherwise invested in accordance
with this Section 5.1, it shall be the policy of the Trustees to invest
such assets in (i) U.S. government Securities; (ii) Securities of
U.S. government agencies; (iii) bankers’ acceptances; (iv) bank
certificates of deposit; (v) interest-bearing deposits in commercial
banks; (vi) participations in pools of mortgages or bonds and notes (such
as Federal Home Loan Mortgage Corporation participation sale certificates,
Government National Mortgage Association modified pass-through certificates and
Federal National Mortgage Association bonds and notes; (vii) bank
repurchase agreements covering the Securities of the United States or agencies
or instrumentalities thereof; and (viii) other short-term investments
consistent with the Trust’s intention to qualify as a REIT under the Internal
Revenue Code.


 


It
shall be the policy of the Trustees to make investments in such manner as to
comply with the requirements of the Internal Revenue Code with respect to the
composition of the investments and the derivation of the income of a real
estate investment trust as defined in the REIT Provisions of the Internal
Revenue Code; provided, however, that no Trustee, officer, employee or agent of
the Trust shall be liable for any act or omission resulting in the loss of tax
benefits under the Internal Revenue Code, except for that arising from his own
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.


 


5.2.                              Prohibited
Investments and Activities.  The
Trustees shall not engage in any of the following investment practices or
activities:


 


(a)                                  investing
in any junior mortgage loan unless by appraisal or other method the Independent
Trustees determine that (a) capital invested in any such loan is
adequately secured on the basis of the equity of the borrower in the property
underlying such investment and the ability of the borrower to repay the
mortgage loan or (b) such loan is a financing device entered


 


19














 


into by the Trust
to establish the priority of its capital investment over the capital invested
by others investing with the Trust in a real estate project;


 


(b)                                 investing
in commodities or commodity futures contracts (other than interest rate
futures, when used solely for hedging purposes);


 


(c)                                  investing
more than 1% of the Trust’s total assets in real estate contracts of sale
unless such contracts of sale are in recordable form and appropriately recorded
in the chain of title;


 


(d)                                 [reserved];


 


(e)                                  granting
warrants or options to purchase shares of beneficial interest of the Trust
unless such warrants or options (i) are issued at an exercise price
greater than or equal to the fair market value of the shares of beneficial
interest of the Trust on the date of the grant and for consideration (including
services) that in the judgment of a majority of the Independent Trustees has a
market value at least equal to the value of the warrant or option on the date
of grant, (ii) are exercisable within ten years from the date of grant and
(iii) when aggregated with all other outstanding options and warrants are
less than 10% of the value of the outstanding shares of beneficial interest of
the Trust on the date of grant; provided that the terms of warrants or options
that are issued ratably to all holders of shares of beneficial interest or as
part of a financing arrangement need not meet the above restrictions;


 


(f)                                    holding
equity investments in unimproved, non-income producing real property, except
such properties as are currently undergoing development or are presently
intended to be developed within one year, together with mortgage loans on such
property (other than first mortgage development loans), aggregating to more
than 10% of the Trust’s assets;


 


(g)                                 engaging
in trading (as compared with investment activities), or engaging in the
underwriting of or distributing as agent of the Securities issued by others;


 


(h)                                 making
secured and unsecured borrowings which in the aggregate exceed 300% of the Net
Assets of the Trust, unless approved by a majority of the Independent Trustees,
and disclosed to shareholders;


 


(i)                                     undertaking
any activity that would disqualify the Trust as a real estate investment trust
under the provisions of the Code as long as a real estate investment trust is
accorded substantially the same treatment or benefits under the United States
tax laws from time to time in effect as under Sections 856-860 of the Code at
the date of adoption of the Trust’s Declaration of Trust; and


 


(j)                                     using
or applying land for farming, agriculture, horticulture or similar purposes in
violation of Section 8-302(b) of the Corporations and Associations Article of
the Annotated Code of Maryland.


 


5.3.                              Appraisals.  If the Trustees shall at any time purchase
Real Property, or interests therein, the consideration paid therefor shall
generally be based upon the fair market value thereof as determined by an
appraisal by a person who is not an Affiliate of the Trust or the 


 


20

















 


Advisor and who
is, in the sole judgment of the Trustees, properly qualified to make such a
determination.


 


5.4.                              Change
in Investment Policies.  The
investment policies set out in this Article V may be changed by a vote of
a majority of the Trustees, including a majority of the Independent Trustees.


 


ARTICLE VI.


 


THE SHARES AND
SHAREHOLDERS


 


6.1.                              Description
of Shares.  The interest of the Shareholders shall be divided into 400,000,000
shares of beneficial interest which shall be known collectively as “Shares,”
all of which shall be validly issued, fully paid and non-assessable by the
Trust upon receipt of full consideration for which they have been issued or
without additional consideration if issued by way of share dividend or share
split.  There shall be two classes of
Shares:  50,000,000 shares of one such
class shall be known as “Preferred Shares” and 350,000,000 shares of the other
such class shall be known as “Common Shares,” each such class having $0.01 par
value per share.  Each holder of
Shares shall as a result thereof be deemed to have agreed to and be bound by
the terms of this Declaration. The Shares may be issued for such consideration
as the Trustees shall deem advisable. The Trustees are hereby expressly
authorized at any time, and from time to time, to provide for issuance of
Shares upon such terms and conditions and pursuant to such agreements as the
Trustees may determine. The Trustees are hereby expressly authorized at any
time, and from time to time, without Shareholder approval, to amend this
Declaration to increase or decrease the aggregate number of Shares or the
number of Shares of any class that the Trust has authority to issue.


 


The
Trustees are hereby expressly authorized at any time, and from time to time,
without Shareholder approval, to set (or change if such class has previously
been established) the par value, preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, or
terms, or conditions of redemption, of the Preferred Shares, and such Preferred
Shares may further be divided by the Trustees into classes or series.


 


Except
as otherwise determined by the Trustees with respect to any class or series of
Preferred Shares, the holders of Shares shall be entitled to the rights and powers
hereinafter set forth in this Section 6.1: The holders of Shares shall be
entitled to receive, when and as declared from time to time by the Trustees out
of any funds legally available for the purpose, such dividends or distributions
as may be declared from time to time by the Trustees. In the event of the
termination of the Trust pursuant to Section 8.1 or otherwise, or upon the
distribution of its assets, the assets of the Trust available for payment and
distribution to Shareholders shall be distributed ratably among the holders of
Shares at the time outstanding in accordance with Section 8.2. All Shares
shall have equal non-cumulative voting rights at the rate of one vote per
Share, and equal dividend, distribution, liquidation and other rights, and
shall have no preference, conversion, exchange, sinking fund or redemption
rights. Absent a contrary written agreement of the Trust authorized by the
Trustees, and notwithstanding any other determination by the Trustees with
respect to any class or series of Preferred Shares, no holder of Shares or
Preferred Shares shall be entitled as a matter of right to subscribe for or
purchase any part of any 


 


21

















 


new or additional issue of Shares of any class
whatsoever of the Trust, or of securities convertible into any shares of any
class whatsoever of the Trust, whether now or hereafter authorized and whether
issued for cash or other consideration or by way of dividend.


 


Notwithstanding
any other provision of this Declaration, the Board of Trustees may cause the
outstanding Common Shares to be reverse split in order to meet listing
requirements of the principal securities exchange on which the Common Shares
are listed for trading or for any other purpose the Board of Trustees by
unanimous vote determines to be in the best interest of the Trust. A reverse
split may be accomplished by any lawful means, including by redeeming Shares
pro rata or issuing new Shares in exchange for outstanding Shares in a manner
so that the par value of the Common Shares are adjusted pro rata; e.g., if two outstanding Common Shares are exchanged for one
new Common Share, then the par value of the new Shares shall be two times the
current par value.


 


6.2.                              Certificates.  At the election of the Trust, ownership of
Shares may be evidenced by certificates in such form as the Trustees shall from
time to time approve, specifying the number of Shares of the applicable class
held by such Shareholder.  Subject to
Sections 6.6 and 6.14(c) hereof, such certificates shall be treated as
negotiable and title thereto and to the Shares represented thereby shall be
transferred by delivery thereof to the same extent in all respects as a stock
certificate, and the Shares represented thereby, of a Maryland business
corporation.  Unless otherwise determined
by the Trustees, such certificates shall be signed by the Chairman, if any, and
the President and shall be countersigned by a transfer agent, and registered by
a registrar if any, and such signatures may be facsimile signatures in
accordance with Section 3.2(d) hereof.  There shall be filed with each transfer agent
a copy of the form of certificate so approved by the Trustees, certified by the
Chairman, President, or Secretary, and such form shall continue to be used
unless and until the Trustees approve some other form.


 


In furtherance of the
provisions of Sections 6.1 and 6.14(c) hereof, each certificate evidencing
Shares shall contain a legend imprinted thereon to substantially the following
effect or such other legend as the Trustees may from time to time adopt:


 


REFERENCE IS MADE TO THE
DECLARATION OF TRUST OF THE TRUST FOR A STATEMENT OF ALL THE DESIGNATIONS,
PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF EACH CLASS OR SERIES OF
SHARES THAT THE TRUST IS AUTHORIZED TO ISSUE, THE VARIATIONS IN THE RELATIVE
RIGHTS AND PREFERENCES OF ANY PREFERRED OR SPECIAL CLASS OF SHARES IN
SERIES, TO THE EXTENT THEY HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF
THE TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF
SUBSEQUENT SERIES.  ANY SUCH STATEMENT
SHALL BE FURNISHED WITHOUT CHARGE ON REQUEST TO THE TRUST AT ITS PRINCIPAL
PLACE OF BUSINESS OR REGISTERED OFFICE. 
IF NECESSARY TO EFFECT COMPLIANCE BY THE TRUST WITH REQUIREMENTS OF THE
INTERNAL REVENUE CODE RELATING TO REAL ESTATE INVESTMENT TRUSTS, THE SHARES
EVIDENCED BY THIS 


 


22

















 


CERTIFICATE MAY BE
REDEEMED BY THE TRUST AND/OR THE TRANSFER THEREOF MAY BE PROHIBITED ALL
UPON THE TERMS AND CONDITIONS SET FORTH IN THE DECLARATION OF TRUST.  THE TRUST WILL FURNISH A COPY OF SUCH TERMS
AND CONDITIONS TO THE REGISTERED HOLDER OF THIS CERTIFICATE UPON REQUEST AND
WITHOUT CHARGE.


 


6.3.                              Fractional
Shares.  In connection with any
issuance of Shares, the Trustees may issue fractional Shares or may adopt
provisions for the issuance of scrip including without limitation, the time
within which any such scrip must be surrendered for exchange into full Shares
and the rights, if any, of holders of scrip upon the expiration of the time so
fixed, the rights, if any, to receive proportional distributions, and the
rights, if any, to redeem scrip for cash, or the Trustees may in their
discretion, or if they see fit at the option of, each holder, provide in lieu
of scrip for the adjustment of the fractions in cash. The provisions of Section 6.2
hereof relative to certificates for Shares shall apply so far as applicable to
such scrip, except that such scrip may in the discretion of the Trustees be
signed by a transfer agent alone.


 


6.4.                              Legal
Ownership of Trust Estate.  The legal
ownership of the Trust Estate and the right to conduct the business of the
Trust are vested exclusively in the Trustees (subject to Section 3.2(s)),
and the Shareholders shall have no interest therein (other than beneficial
interest in the Trust conferred by their Shares issued hereunder) and they
shall have no right to compel any partition, division, dividend or distribution
of the Trust or any of the Trust Estate.


 


6.5.                              Shares
Deemed Personal Property.  The Shares
shall be personal property and shall confer upon the holders thereof only the
interest and rights specifically set forth or provided for in this Declaration.
The death, insolvency or incapacity of a Shareholder shall not dissolve or
terminate the Trust or affect its continuity nor give his legal representative
any rights whatsoever, whether against or in respect of other Shareholders, the
Trustees or the Trust Estate or otherwise, except the sole right to demand and,
subject to the provisions of this Declaration, the Bylaws and any requirements
of law, to receive a new certificate for Shares registered in the name of such
legal representative, in exchange for the certificate held by such Shareholder.


 


6.6.                              Share
Record; Issuance and Transferability of Shares.  Records shall be kept by or on behalf of and
under the direction of the Trustees, which shall contain the names and
addresses of the Shareholders, the number of Shares held by them respectively,
and the numbers of the certificates representing the Shares, and in which there
shall be recorded all transfers of Shares. The Trust, the Trustees and the
officers, employees and agents of the Trust shall be entitled to deem the
Persons in whose names certificates are registered on the records of the Trust
to be the absolute owners of the Shares represented thereby for all purposes of
the Trust; but nothing herein shall be deemed to preclude the Trustees or
officers, employees or agents of the Trust from inquiring as to the actual
ownership of Shares. Until a transfer is duly effected on the records of the
Trust, the Trustees shall not be affected by any notice of such transfer,
either actual or constructive.


 


Shares
shall be transferable on the records of the Trust only by the record holder
thereof or by his agent thereunto duly authorized in writing upon delivery to
the Trustees or a transfer 


 


23

















 


agent of the certificate or certificates therefor,
properly endorsed or accompanied by duly executed instruments of transfer and
accompanied by all necessary documentary stamps together with such evidence of
the genuineness of each such endorsement, execution or authorization and of
other matters as may reasonably be required by the Trustees or such transfer agent.
Upon such delivery, the transfer shall be recorded in the records of the Trust
and a new certificate for the Shares so transferred shall be issued to the
transferee and in case of a transfer of only a part of the Shares represented
by any certificate, a new certificate for the balance shall be issued to the
transferor. Any Person becoming entitled to any Shares in consequence of the
death of a Shareholder or otherwise by operation of law shall be recorded as
the holder of such Shares and shall receive a new certificate therefor but only
upon delivery to the Trustees or a transfer agent of instruments and other
evidence required by the Trustees or the transfer agent to demonstrate such
entitlement, the existing certificate for such Shares and such releases from
applicable governmental authorities as may be required by the Trustees or
transfer agent. In case of the loss, mutilation or destruction of any
certificate for shares, the Trustees may issue or cause to be issued a
replacement certificate on such terms and subject to such rules and
regulations as the Trustees may from time to time prescribe. Nothing in this
Declaration shall impose upon the Trustees or a transfer agent a duty, or limit
their rights, to inquire into adverse claims.


 


6.7.                              Dividends
or Distributions to Shareholders. 
Subject to Section 5.1, the Trustees may from time to time declare
and pay to Shareholders such dividends or distributions in cash, property or
assets of the Trust or Securities issued by the Trust, out of current or accumulated
income, capital, capital gains, principal, interest, surplus, proceeds from the
increase or financing or refinancing of Trust obligations, or from the sale of
portions of the Trust Estate or from any other source as the Trustees in their
discretion shall determine. Shareholders shall have no right to any dividend or
distribution unless and until declared by the Trustees. The Trustees shall
furnish the Shareholders with a statement in writing advising as to the source
of the funds so distributed not later than ninety (90) days after the close of
the fiscal year in which the distribution was made.


 


6.8.                              Transfer
Agent, Dividend Disbursing Agent and Registrar.  The Trustees shall have power to employ one
or more transfer agents, dividend disbursing agents and registrars (including
the Advisor or its Affiliates) and to authorize them on behalf of the Trust to
keep records to hold and to disburse any dividends or distributions and to have
and perform, in respect of all original issues and transfers of Shares,
dividends and distributions and reports and communications to Shareholders, the
powers and duties usually had and performed by transfer agents, dividend
disbursing agents and registrars of a Maryland business corporation.


 


6.9.                              Shareholders’
Meetings.  There shall be an annual
meeting of the Shareholders, at such time and place as shall be determined by
or in the manner prescribed in the Bylaws, at which the Trustees shall be
elected and any other proper business may be conducted. The Annual Meeting of Shareholders
shall be held no fewer than 30 days after delivery to the Shareholders of the
Annual Report and within six (6) months after the end of each fiscal year,
commencing with the fiscal year ending December 31, 1986. Special meetings
of Shareholders may be called by the chief executive officer of the Trust or by
a majority of the Trustees or of the Independent Trustees and shall be called
by the chief executive officer of the Trust upon the written request of
Shareholders holding in the aggregate not less than ten percent (10%) of the
total votes authorized to be cast by the outstanding Shares of the Trust
entitled to vote at such meeting in the 


 


24

















 


manner provided in
the Bylaws. If there shall be no Trustees, the officers of the Trust shall
promptly call a special meeting of the Shareholders entitled to vote for the
election of successor Trustees. Notice of any special meeting shall state the
purposes of the meeting.


 


The
holders of Shares entitled to vote at the meeting representing a majority of
the total number of votes authorized to be cast by Shares then outstanding and
entitled to vote on any question present in person or by proxy shall constitute
a quorum at any such meeting for action on such question. Any meeting may be
adjourned from time to time by a majority of the votes properly cast upon the
question, without regard to class, whether or not a quorum is present, and,
except as otherwise provided in the Bylaws, the meeting may be reconvened without
further notice. At any reconvened session of the meeting at which there shall
be a quorum, any business may be transacted at the meeting as originally
noticed.


 


Except
as otherwise clearly indicated in this Declaration or the Bylaws, whenever any
action is to be taken by the Shareholders, it shall be authorized by the
affirmative vote of the holders of Shares representing a majority of the total
number of votes authorized to be cast by shares then outstanding and entitled
to vote thereon. At all elections of Trustees, voting by Shareholders shall be
conducted under the non-cumulative method and the election of Trustees shall be
by the affirmative vote of the holders of Shares representing a majority of the
total number of votes authorized to be cast by shares then outstanding and
entitled to vote thereon.


 


Whenever
Shareholders are required or permitted to take any action (unless a vote at a
meeting is specifically required as in Sections 8.1, 8.3 and 8.5), such action
may be taken without a meeting by written consents setting forth the action so
taken, signed by the holders of a majority (or such higher percentage as may be
specified elsewhere in this Declaration) of the total number of votes
authorized to be cast by shares then outstanding and entitled to vote thereon.


 


6.10.                        Proxies.  Whenever the vote or consent of a Shareholder
entitled to vote is required or permitted under this Declaration, such vote or
consent may be given either directly by such Shareholder or by a proxy in the
form prescribed in, and subject to the provisions of, the Bylaws. The Trustees
may solicit such proxies from the Shareholders or any of them entitled to vote
in any matter requiring or permitting the Shareholders’ vote or consent.


 


6.11.                        [Reserved.]


 


6.12.                        Fixing
Record Date.  The Bylaws may provide
for fixing or, in the absence of such provision, the Trustees may fix, in
advance, a date as the record date for determining the Shareholders entitled to
notice of or to vote at any meeting of Shareholders or to express consent to
any proposal without a meeting or for the purpose of determining Shareholders
entitled to receive payment of any dividend or distribution (whether before or
after termination of the Trust) or any Annual Report or other communication
from the Trustees, or for any other purpose. The record date so fixed shall be
not less than ten (10) days nor more than sixty (60) days prior to the
date of the meeting or event for the purposes of which it is fixed.


 


6.13.                        Notice
to Shareholders.  Any notice of
meeting or other notice, communication or report to any Shareholder shall be
deemed duly delivered to such Shareholder when such notice, 


 


25

















 


communication or
report is deposited, with postage thereon prepaid, in the United States mail,
addressed to such Shareholder at his address as it appears on the records of
the Trust or is delivered in person to such Shareholder.


 


6.14.                        Shareholders’
Disclosure: Trustees’ Right to Refuse to Transfer Shares; Limitation on
Holdings; Redemption of Shares.


 


(a)                                  The
Shareholders shall upon demand disclose to the Trustees in writing such
information with respect to direct and indirect ownership of the Shares as the
Trustees deem necessary or appropriate to comply with the REIT provisions of the
Internal Revenue Code or to comply with the requirements of any taxing
authority or governmental agency.


 


(b)                                 Whenever
in good faith the Trustees deem it reasonably necessary to protect the status
of the Trust as a REIT they may require a statement or affidavit from each
Shareholder or proposed transferee of Shares setting forth the number of Shares
already owned, directly or indirectly, by him and any related Person specified
in the form prescribed by the Trustees for that purpose. If, in the opinion of
the Trustees, which shall be binding upon any proposed transferee of Shares,
any proposed transfer would jeopardize the status of the Trust as a REIT, the
Trustees shall have the right, but not the duty, to refuse to permit such
transfer.


 


(c)                                  The
Trustees, by notice to the holder thereof, may purchase any or all Shares that
have been transferred pursuant to a transfer which, in the opinion of the
Trustees, would jeopardize the status of the Trust as a REIT. Without limiting
the generality of the foregoing, as a condition to the transfer and/or
registration of transfer of any Shares which could result in direct or indirect
ownership (as hereafter defined) of Shares representing more than 9.8% in value
of the total Shares outstanding (the “Excess Shares”) becoming concentrated in
the hands of one owner other than an Excepted Person, such potential owner
shall file with the Trust the statement or affidavit described in subsection (b) of
this Section 6.14 no later than the fifteenth day prior to any transfer, registration
of transfer or transaction which, if consummated, would result in such
ownership. The Trustees shall have the power


 


(i)                                     by
lot or other means deemed equitable by them to call for the purchase from the
beneficial owner or the Shareholder of such Excess Shares, and (ii) to
refuse to transfer or issue Shares to any Person whose acquisition of such
Shares would, in the opinion of the Trustees, result in the direct or indirect
beneficial ownership of any Excess Shares by a person other than any of the
Excepted Persons. The purchase price for any Excess Shares shall be equal to
the fair market value of the Shares reflected in the closing sale price for the
Shares, if then listed on a national securities exchange, or such price for the
Shares on the principal exchange if then listed on more than one national
securities exchange, or if the Shares are not then listed on a national
securities exchange, the latest bid quotation for the Shares if then traded
over-the-counter, on the last trading day immediately preceding the day on
which notices of such acquisition are sent, or, if no such closing sales prices
or quotations are available, then the purchase price shall be equal to the net
asset value of such Shares as determined by the Trustees in accordance with the
provisions of applicable law. Prompt payment of the purchase price shall be
made in cash by the Trust in such manner as may be determined by the Trustees.
From and after the date fixed for purchase by the Trustees, and so long as
payment of the purchase price for the Shares to be so redeemed shall have been
made or duly provided for, the holder of any 


 


26

















 


Excess Shares so
called for purchase shall cease to be entitled to distributions, voting rights
and other benefits with respect to such Shares, excepting only the right to
payment of the purchase price fixed as aforesaid. Any transfer of Shares,
options, warrants or other securities convertible into Shares that would create
a direct or indirect beneficial owner of Excess Shares other than any of the
Excepted Persons shall be deemed void ab initio and the intended transferee
shall be deemed never to have an interest therein. If the foregoing provision
is determined to be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the transferee of such Shares, options, warrants or other
securities convertible into Shares shall be deemed, at the option of the Trust,
to have acted as agent on behalf of the Trust in acquiring such Shares and to
hold such Shares on behalf of the Trust.


 


The
following persons are “Excepted Persons”: (i) the Advisor, (ii) persons
to whom the Advisor’s Share ownership is attributed or whose Share ownership is
attributed to the Advisor, or (iii) other persons approved by the
Trustees, at their option and in their sole discretion, provided only that such
approval shall not be granted to any person whose ownership of more than 9.8%
in value of the total Shares outstanding would result, directly, indirectly or
as a result of attribution of ownership, in termination of the status of the
Trust as a REIT.


 


(d)                                 Notwithstanding
any other provision in this Declaration of Trust or the Bylaws, the foregoing
provision may not be amended or repealed without the affirmative vote of 75% of
the Shares entitled to vote.


 


(e)                                  Notwithstanding
any other provision of this Declaration of Trust to the contrary, any purported
acquisition of Shares of the Trust (whether such purported acquisition results
from the direct or indirect acquisition or ownership (as hereafter defined) of
Shares) which would result in the disqualification of the Trust as a REIT shall
be null and void. Any such Shares may be treated by the Trustees in the manner
prescribed for Excess Shares in subsection (c) of this Section 6.14.


 


(f)                                    Nothing
contained in this Section 6.14 or in any other provision of this
Declaration of Trust shall limit the authority of the Trustees to take such
other action as they deem necessary or advisable to protect the Trust and the interests
of the Shareholders by preservation of the Trust’s status as a REIT.


 


(g)                                 If
any provision of this Section 6.14 or any application of any such
provision is determined to be invalid by any federal or state court having
jurisdiction over the issues, the validity of the remaining provision shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court. To the
extent this Section 6.14 may be inconsistent with any other provision of
this Declaration of Trust, this Section 6.14 shall be controlling.


 


(h)                                 It
shall be the policy of the Trustees to consult with the appropriate officials
of any stock exchange on which the relevant Shares of the Trust are listed as
far as reasonably possible in advance of the final exercise (at any time when
the Shares are listed on such exchange) of any powers granted by subsections (b) or
(c) of this Section 6.14.


 


27

















 


(i)                                     For
purposes of this Declaration of Trust, Shares not owned directly shall be
deemed to be owned indirectly by a person if that person or a group of which he
is a member would be the beneficial owner of such Shares, as defined as of September 1,
1986 in Rule 13d-3 under the Securities Exchange Act of 1934 and/or would
be considered to own such Shares by reason of the attribution rules of Section 544
or Section 856(d)(5) of the Internal Revenue Code.


 


(j)                                     The
Trustees may, in their sole discretion, adopt, amend or repeal Bylaws providing
additional alternative measures to enforce the ownership limitations set forth
in paragraphs (b) and (c) above, including, without limitation,
alternative powers to those set forth in paragraph (c)(i) above.


 


6.15.                        Special
Voting Requirements for Certain Business Combinations.


 


(a)                                  The
affirmative vote of the holders of not less than 75% of the Shares then
outstanding and entitled to vote thereon shall be required for the approval or
authorization of any “Business Combination” (as hereinafter defined) of the
Trust with any “Related Person” (as hereinafter defined). However, such 75%
voting requirement shall not be applicable if: (1) the Board of Trustees
by unanimous vote or written consent shall have expressly approved in advance
the acquisition of the outstanding Shares of the Trust that caused the Related
Person to become a Related Person or shall have approved the Business
Combination prior to the Related Person involved in the Business Combination
having become a Related Person; or (2) the Business Combination is solely
between the Trust and another limited partnership, partnership, trust or
corporation, 100% of the voting securities of which is owned directly or
indirectly by the Trust.


 


(b)                                 For
purposes of this Section 6.15:


 


(i)                                     The
term “Business Combination” shall mean (a) any merger or consolidation of
the Trust with or into a Related Person, (b) any sale, lease, exchange,
transfer or other disposition, including without limitation a mortgage or any
other security device, of all or any “Substantial Part” (as hereinafter
defined) of the assets of the Trust (including without limitation any voting
securities of a subsidiary) to a Related Person, (c) any merger or
consolidation of a Related Person with or into the Trust, (d) any sale, lease,
exchange, transfer or other disposition of assets of a Related Person to the
Trust having a book value equal to more than 10% of the Invested Assets of the
Trust as of the end of the Trust’s most recent fiscal year ending prior to the
time the determination is made, (e) the issuance of any Securities (other
than by way of pro rata distribution to all Shareholders) of the Trust to a
Related Person, and (f) any agreement, contract or other arrangement
providing for any of the transactions described in this definition of Business
Combination.


 


(ii)                                  The
term “Related Person” shall mean and include any individual, corporation,
partnership, limited partnership or other person or entity other than the
Advisor or any wholly owned subsidiary of the Advisor which, together with its “affiliates”
and “associates” (as defined as of September 1, 1986, in Rule 12b-2
under the Securities Exchange Act of (iii) “beneficially owns” (as defined
as of September 1, 1986, in Rule 13d-3 under the Securities Exchange
Act of 1934) in the aggregate 10% or more of the outstanding Shares of the
Trust.


 


28

















 


(iii)                               The
term “Substantial Part” shall mean an amount equal to more than 10% of the
Invested Assets of the Trust as of the end of its most recent fiscal year
ending prior to the time the determination is being made.


 


(iv)                              Without
limitation, any Shares that any Related Person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, shall be deemed beneficially owned by the Related
Person.


 


(c)                                  The
Trust elects not to be governed by the provisions of Subtitle 6 of Title 3 of
the Corporations and Associations Article of the Annotated Code of
Maryland, and the provisions of subparagraphs (a) and (b) of this Section 6.15
shall be in substitution for and to the exclusion of said Subtitle 6 of Title
3.


 


(d)                                 Except
as otherwise provided in this Section 6.15, the Trust may effect any
merger or consolidation in accordance with applicable law.


 


ARTICLE VII.


 


LIABILITY OF
TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES AND AGENTS, AND OTHER MATTERS


 


7.1.                              Limitation
of Liability of Shareholders, Trustees, Officers, Employees and Agents for
Obligations of the Trust.  The
Trustees and the officers, employees and agents (including the Advisor) of the
Trust, in incurring any debts, liabilities or obligations or in taking or
omitting any other actions for or in connection with the Trust, are, and shall
be deemed to be, acting as trustees, officers, employees or agents of the Trust
and not in their own individual capacities. Except as otherwise provided in
Sections 7.3 hereof with respect to liability of Trustees or officers, agents
or employees of the Trust to the Trust or to Shareholders, no Shareholder,
Trustee or officer, employee or agent (including the Advisor) of the Trust
shall be liable for any debt, claim, demand, judgment decree, liability or
obligation of any kind (in tort, contract or otherwise) of, against or with
respect to the Trust or arising out of any action taken or omitted for or on
behalf of the Trust, and the Trust shall be solely liable therefor and resort
shall be had solely to the Trust Estate for the payment or performance thereof,
and no Shareholder, Trustee or officer, employee or agent (including the
Advisor) of the Trust shall be subject to any personal liability whatsoever, in
tort, contract or otherwise, to any other Person or Persons in connection with
the Trust Estate or the affairs of the Trust (or any actions taken or omitted
for or on behalf of the Trust), and all such other Persons shall look solely to
the Trust Estate for satisfaction of claims of any nature arising in connection
with the Trust Estate or the affairs of the Trust (or any action taken or omitted
for or on behalf of the Trust).


 


7.2.                              Express
Exculpatory Clauses and Instruments. 
Any written instrument creating an obligation of the Trust shall include
a reference to this Declaration and provide that neither the Shareholders nor
the Trustees nor any officers, employees or agents (including the Advisor) of
the Trust shall be liable thereunder and that all Persons shall look solely to
the Trust Estate for the payment of any claim thereunder or for the performance
thereof; however, the omission of such provision from any such instrument shall
not render the Shareholders, any Trustee, or any officer, employee or agent
(including the Advisor) of the Trust liable nor shall the Shareholders,


 


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any Trustee or any
officer, employee or agent (including the Advisor) of the Trust be liable to
any one for such omission.


 


7.3.                              Limitation of Liability of Trustees
Officers Employees and Agents to the Trust and to Shareholders for Acts and
Omissions.  (a)  No Independent Trustee or officer,
employee or agent of the Trust shall have any greater duties than those
established by this Declaration of Trust or, in cases as to which such duties
are not so established, than those of the directors, officers, employees and
agents of a Maryland business corporation in effect from time to time. No
Independent Trustee, officer, employee or agent of the Trust shall be liable to
the Trust, Shareholders or to any other Person for any act or omission except
for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.


 


(b)                                 No Affiliated Trustee shall have
liability to the Trust, Shareholders or any other Person for any loss suffered
by the Trust which arises out of any action or inaction of such Affiliated
Trustee if such Affiliated Trustee in good faith had determined that such
course of conduct was in the best interest of the Trust and if such course of
conduct did not constitute negligence or misconduct of such Affiliated Trustee.


 


7.4.                              Indemnification and Reimbursement of
Trustees, Officers, Employees and Agents.


 


(a)                                  Except as otherwise provided in paragraph
(b) of this Section 7.4, any Person made a party to any action, suit
or proceeding or against whom a claim or liability is asserted by reason of the
fact that he, his testator or intestate was or is a Independent Trustee,
officer, employee or agent of the Trust shall be indemnified and held harmless
by the Trust against judgments, fines, amounts paid on account thereof (whether
in settlement or otherwise) and reasonable expenses, including attorneys’ fees,
actually and reasonably incurred by him in connection with the defense of such
action, suit, proceeding, claim or alleged liability or in connection with any
appeal therein, whether or not the same proceeds to judgment or is settled or
otherwise brought to a conclusion; provided, however, that no such Person shall
be so indemnified or reimbursed for any claim, obligation or liability which
shall have been adjudicated to have arisen out of or been based upon his
willful misfeasance, bad faith, gross negligence or reckless disregard of duty;
and provided, further, that such Person gives prompt notice thereof, executes
such documents and takes such action as will permit the Trust to conduct the
defense or settlement thereof and cooperates therein. In the event of a
settlement approved by the Trustees of any such claim, alleged liability,
action, suit or proceeding, indemnification and reimbursement shall be provided
except as to such matters covered by the settlement which the Trust is advised
by its counsel would, if adjudicated, likely be adjudicated to have arisen out
of or been based upon such Person’s willful misfeasance, bad faith, gross
negligence or reckless disregard of duty. Such rights of indemnification and
reimbursement shall be satisfied only out of the Trust Estate. The rights
accruing to any Person under these provisions shall not exclude any other right
to which he may be lawfully entitled, nor shall anything contained herein restrict
such Person’s right to contribution as may be available under applicable law.
The Trustees may make advance payments in connection with indemnification under
this Section 7.4, provided that the indemnified Person shall have given a
written undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification. Any action taken by
or conduct on the part of an Independent Trustee, officer, employee or agent of
the Trust in 


 


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conformity with or
in good faith reliance upon the provisions of this Declaration (including
without limitation any provision in Article VII hereof) shall not
constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.


 


(b)                                 Each Affiliated Trustee and any
Affiliates (as defined in Section 7.5 hereof) of such Affiliated Trustee
shall be indemnified by the Trust against any losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained by them in
connection with any action or inaction of such Affiliated Trustee or Affiliate
if such Affiliated Trustee or Affiliate, in good faith, determined that such
course of conduct was in the best interest of the Trust and if such conduct did
not constitute negligence or misconduct on the part of such Affiliated Trustee
or Affiliate. Notwithstanding the foregoing, Affiliated Trustees and their
Affiliates and any person acting for the Trust as a broker/dealer shall not be
indemnified for any losses, liabilities or expenses arising from or out of an
alleged violation of federal or state securities laws unless (i) there has
been a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee, or (ii) such
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee or (iii) a court of competent
jurisdiction approves a settlement of the claim against the particular
indemnitee. In any claim for indemnification for federal or state securities
law violations, the party seeking indemnification shall place before the court
the position of the Securities and Exchange Commission and the Massachusetts
Securities Division (and any other state securities commissioner or
administrator who may so require) with respect to the issue of indemnification
for securities law violations. The Trust shall not incur the cost of that
portion of any insurance, other than public liability insurance, which insures
any party against any liability the indemnification of which is prohibited by
this Section 7.4(b). The provision of advances from Trust funds to the
Affiliated Trustees and any Affiliates for legal expenses and other costs incurred
as a result of any legal action initiated against the Affiliated Trustees by
Shareholders of the Trust is prohibited.


 


(c)                                  Notwithstanding anything herein to the
contrary, and to the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no Trustee or officer of the Trust
shall be personally liable to the Trust or its shareholders for money damages.
No amendment of this Declaration or repeal of any of its provisions shall limit
or eliminate the limitation on liability provided to Trustees and officers
hereunder with respect to any act or omission occurring prior to such amendment
or repeal.


 


7.5.                              Certain Definitions. 
For the purposes of Section 7.4(b) hereof, the term “Affiliate,”
when used in connection with the term “Affiliated Trustee,” shall mean any
person performing services on behalf of the Trust who (i) directly or
indirectly controls, is controlled by, or is under common control with such
Affiliated Trustee; (ii) owns or controls ten percent (10%) or more of the
outstanding voting securities of such Affiliated Trustee; (iii) is an
officer, director, partner or trustee of such Affiliated Trustee; or (iv) is
a company for which such Affiliated Trustee acts as an officer, director,
partner or trustee. For the purposes of the above definition, the terms “control,”
“controlling,” “controlled by,” and “under common control with” refer to the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise.


 


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7.6.                              Indemnification and Reimbursement of
Shareholders.  Any Shareholder made a party to any action,
suit or proceeding or against him a claim or liabilities asserted by reason of
the fact that he, his testate or intestate was or is a Shareholder shall be
indemnified and held harmless by the Trust against judgments, fines, amounts
paid on account thereof (whether in settlement or otherwise) and reasonable
expenses, including attorneys’ fees, actually and reasonably incurred by him in
connection with the defense of such action, suit, proceeding, claim or alleged
liability or in connection with any appeal therein, whether or not the same
proceeds to judgment or is settled or otherwise brought to a conclusion;
provided however, that such Shareholder gives prompt notice thereof, executes
such documents and takes such action as will permit the Trust to conduct the
defense or settlement thereof and cooperates therein. In the event that the
assets of the Trust Estate are insufficient to satisfy the Trust’s indemnity
obligations hereunder, each Shareholder shall be entitled to such
indemnification pro rata from the Trust Estate.


 


7.7.                              Right of Trustees, Officers, Employees
and Agents to Own Shares or Other Property and to Engage in Other Business. 
Any Trustee or officer, employee or agent of the Trust may acquire, own,
hold and dispose of Shares in the Trust, for his individual account, and may
exercise all rights of a Shareholder to the same extent and in the same manner
as if he were not a Trustee or officer, employee or agent of the Trust. Any
Trustee or officer, employee or agent of the Trust may, in his personal
capacity or in the capacity of trustee, officer, director, stockholder,
partner, member, advisor or employee of any Person or otherwise, have business
interests and engage in business activities similar to or in addition to those
relating to the Trust, which interests and activities may be similar to and
competitive with those of the Trust and may include the acquisition,
syndication, holding, management, development, operation or disposition, for
his own account, or for the account of such Person or others, of interests in
Mortgages, interests in Real Property, or interests in Persons engaged in the
real estate business. Each Trustee, officer, employee and agent of the Trust
shall be free of any obligation to present to the Trust any investment
opportunity which comes to him in any capacity other than solely as Trustee,
officer, employee or agent of the Trust even if such opportunity is of a
character which, if presented to the Trust, could be taken by the Trust.
Subject to the provisions of Article IV and Section 7.8, any Trustee
or officer, employee or agent of the Trust may be interested as trustee,
officer, director, stockholder, partner, member, advisor or employee of, or
otherwise have a direct or indirect interest in, any Person who may be engaged
to render advice or services to the Trust, and may receive compensation from
such Person as well as compensation as Trustee, officer, employee or agent or
otherwise hereunder. None of these activities shall be deemed to conflict with
his duties and powers as Trustee or officer, employee or agent of the Trust.


 


7.8.                              Transactions Between Trustees, Officers,
Employees or Agents and the Trust.  Except as
otherwise provided by this Declaration, and in the absence of fraud, a
contract, act or other transaction between the Trust and any other Person in
which the Trust is interested, shall be valid, and no Trustee or officer,
employee or agent of the Trust shall have any liability as a result of entering
into any such contract, act or transaction, even though (a) one or more of
the Trustees or officers, employees or agents of the Trust are directly or
indirectly interested in or connected with or are trustees, partners,
directors, employees, officers or agents of such other Person, or (b) one
or more of the Trustees or officers, employees or agents of the Trust
individually or jointly with others, is a party or are parties to, or are
directly or indirectly interested in or connected with, such contract, act or
transaction; provided that in each such case (i) such interest or 


 


32

















 


connection is
disclosed or known to the Trustees and thereafter the Trustees authorize or
ratify such contract, act or other transaction by affirmative vote of a
majority of the Trustees who are not so interested or (ii) such interest
or connection is disclosed or known to the Shareholders, and thereafter such
contract, act or transaction is approved by Shareholders holding a majority of
the Shares then outstanding and entitled to vote thereon.


 


Notwithstanding
any other provision of this Declaration, the Trust shall not engage in a
transaction with (a) any Trustee, officer, employee or agent of the Trust
(acting in his individual capacity), (b) any director, trustee, partner,
officer, employee or agent (acting in his individual capacity) of the Advisor
or any other investment advisor of the Trust, (c) the Advisor or any other
investment advisor of the Trust or (d) an Affiliate of any of the
foregoing, except to the extent that such transaction has, after disclosure of
such affiliation, been approved or ratified by the affirmative vote of a
majority of the Trustees including a majority of the Independent Trustees (or,
if the transaction is with a Person other than the Advisor or its Affiliates, a
majority of the Trustees not having any interest in such transaction and not
Affiliates of any party to the transaction) after a determination by them that
to the extent applicable:


 


(A)                              such transaction is fair and reasonable
to the Trust and the Shareholders;


 


(B)                                based upon an appraisal by a qualified
independent real estate appraiser, such qualification to be determined in each
instance by a majority of the Independent Trustees who shall, in each case,
have been approved by a majority of the Independent Trustees (or, if the
transaction is with a Person other than the Advisor its Affiliates, a majority
of the Trustees not having any interest in such transaction and not Affiliates
of any party to the transaction), the total consideration is not in excess of
the appraised value of the interest in Real Property being acquired, if an
acquisition is involved, or not less than the appraised value of the interest
in Real Property being disposed of, if a disposition is involved; and


 


(C)                                if such transaction involves payment by
the Trust for services rendered to the Trust by a Person in a capacity other
than that of Advisor, Trustee or Trust officer, (1) the compensation is
not in excess of the compensation, if any, paid to such Person by any other
Person who is not an Affiliate of such Person, for any comparable services in
the same geographic area, and (2) the compensation is not greater than the
charges for comparable services generally available in the same geographic area
from other Persons who are competent and not affiliated with any of the parties
involved.


 


This Section 7.8
shall not prevent any sale of Shares issued by the Trust for the public
offering thereof in accordance with a registration statement filed with the
Securities and Exchange Commission under the Securities Act of 1933. The
Trustees are not restricted by this Section 7.8 from forming a
corporation, partnership, trust or other business association owned by any
Trustee, officer, employee or agent or by their nominees for the purpose of
holding title to property of the Trust or managing property of the Trust,
provided that the Trustees make a determination that the creation of such
entity for such purpose is in the best interest of the Trust.


 


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7.9.                              Independent Counsel. 
In the event of a dispute between the Trust and the Advisor or its
Affiliates, or should it be necessary for the Trust to prepare and negotiate
contracts and agreements between the Trust and the Advisor or its Affiliates
which in the good faith judgment of a majority of the Independent Trustees
require the advice or assistance of separate counsel or accountants from that
of the Advisor or its Affiliates, the Trust will retain such separate counsel
or accountants for such matters, the choice of which shall be made by a
majority of the Independent Trustees.


 


7.10.                        Persons Dealing with Trustees, Officers,
Employees or Agents.  Any act of the Trustees or of the officers,
employees or agents of the Trust purporting to be done in their capacity as
such, shall, as to any Persons dealing with such Trustees, officers, employees
or agents, be conclusively deemed to be within the purposes of this Trust and
within the powers of such Trustees or officers, employees or agents. No Person
dealing with the Trustees or any of them or with the officers, employees or
agents of the Trust shall be bound to see to the application of any funds or
property passing into their hands or control. The receipt of the Trustees or
any of them, or of authorized officers, employees or agents of the Trust, for
moneys or other consideration, shall be binding upon the Trust.


 


7.11.                        Reliance.  The Trustees
and the officers, employees and agents of the Trust may consult with counsel
(which may be a firm in which one or more of the Trustees or the officers, employees
or agents of the Trust is or are members) and the advice or opinion of such
counsel shall be full and complete personal protection to all the Trustees and
the officers, employees and agents of the Trust in respect of any action taken
or suffered by them in good faith and in reliance on or in accordance with such
advice or opinion. In discharging their duties, Trustees or officers, employees
or agents of the Trust, when acting in good faith, may rely upon financial
statements of the Trust represented to them to fairly present the financial
position or results of operations of the Trust by the chief financial officer
of the Trust or the officer of the Trust having charge of its books of account,
or stated in a written report by an independent certified public accountant
fairly to present the financial position or results of operations of the Trust.
The Trustees and the officers, employees and agents of the Trust may rely, and
shall be personally protected in acting, upon any instrument or other document
believed by them to be genuine.


 


7.12.                        Indemnification of the Trust. 
Each shareholder will indemnify and hold harmless the Trust from and
against all costs, expenses, penalties, fines and other amounts, including,
without limitation, attorneys’ and other professional fees, whether third party
or internal, arising from such shareholder’s violation of any provision of this
Declaration or the Bylaws, including, without limitation, Section 6.14,
and shall pay such sums to the Trust upon demand, together with interest on
such amounts, which interest will accrue at the lesser of 15% per annum and the
maximum amount permitted by law, from the date such costs or the like are
incurred until the receipt of repayment by the Trust.  Nothing in this Section shall create or
increase the liability of any shareholders, trustees, officers, employees or
agents of the Trust for actions taken on behalf of the Trust.


 


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ARTICLE VIII.


 


DURATION,
AMENDMENT AND TERMINATION OF TRUST


 


8.1.                              Duration of Trust. 
The duration of the Trust shall be perpetual; provided, however, the
Trust may be terminated at any time by the affirmative vote at a meeting of
Shareholders of the holders of Shares representing two-thirds of the total
number of Shares then outstanding and entitled to vote thereon.


 


8.2.                              Termination of Trust.


 


(a)                                  Upon the termination of the Trust:


 


(i)                                     the Trust shall carry on no business
except for the purpose of winding up its affairs;


 


(ii)                                  the Trustees shall proceed to wind up the
affairs of the Trust and all the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust, collect
its assets, sell, convey, assign, exchange, transfer or otherwise dispose of
all or any part of the remaining Trust Estate to one or more persons at public
or private sale (for consideration which may consist in whole or in part of
cash, Securities or other property of any kind), discharge or pay its
liabilities, and do all other acts appropriate to liquidate its business; and


 


(iii)                               after paying or adequately providing for
the payment of all liabilities, and upon receipt of such releases, indemnities
and refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Estate (in cash or in kind or
partly each) among the Shareholders according to their respective rights.


 


(b)                                 After termination of the Trust and
distribution of the Trust Estate to the Shareholders as herein provided, the
Trustees shall execute and lodge among the records of the Trust an instrument
in writing setting forth the fact of such termination and such distribution, a
copy of which instrument shall be filed with the Maryland Department of
Assessments and Taxation, and the Trustees shall thereupon be discharged from
all further liabilities and duties hereunder and the rights and interests of
all Shareholders shall thereupon cease.


 


8.3.                              Amendment Procedure. 
This Declaration may be amended (except that the provisions governing
the personal liability of the Shareholders, Trustees and of the officers,
employees and agents of the Trust and the prohibition of assessments upon
Shareholders may not be amended in any respect that could increase the personal
liability of such Shareholders, Trustees or officers, employees and agents of
the Trust) at a meeting of Shareholders by holders of Shares representing a
majority (or, with respect to amendments of Article V, amendments to the
provisions of Section 8.1, amendments to this Section 8.3 that would
reduce the percentage vote required to approve any amendments to this
Declaration, and with respect to amendments inconsistent with Sections 2.1,
6.14 and 6.15, seventy-five percent (75%)) of the total number of votes
authorized to be cast in respect of Shares then outstanding and entitled to
vote thereon.  The approval of a majority
of the Trustees (including a majority of the Independent Trustees) 


 


35

















 


shall also be
required for any such amendment. 
Two-thirds (2/3)
of the Trustees may, after fifteen (15) days written notice to the
Shareholders, also amend this Declaration without the vote or consent of
Shareholders if in good faith they deem it necessary to conform this
Declaration to the requirements of the REIT Provisions of the Internal Revenue
Code, but the Trustees shall not be liable for failing to do so.  Actions by the Trustees pursuant to Section 1.1,
Section 6.1, or Section 9.6(a) that result in an amendment to
this Declaration shall be effected without the vote or consent of Shareholders.


 


8.4.                              Amendments Effective. 
Any amendment pursuant to any Section of this Declaration shall not
become effective until it is duly filed with the Maryland Department of
Assessments and Taxation.


 


8.5.                              Transfer to Successor. 
The Trustees, with the approval of a majority of the Trustees (including
a majority of the Independent Trustees) and the affirmative vote, at a meeting
approving a plan for this purpose, of the holders of Shares representing a
majority of all votes cast at a meeting at which a quorum is present, may (a) cause
the organization of a limited partnership, partnership, corporation,
association, trust or other organization to take over the Trust Estate and
carry on the affairs of the Trust, (b) merge the Trust into, or sell,
convey and transfer the Trust Estate to, any such limited partnership,
partnership, corporation, association, trust or organization in exchange for
Securities thereof, or beneficial interests therein, and the assumption by such
transferee of the liabilities of the Trust and (c) thereupon terminate
this Declaration and deliver such shares, Securities or beneficial interests
among the Shareholders in accordance with such plan.


 


ARTICLE IX.


 


MISCELLANEOUS


 


9.1.                              Applicable Law. 
This Declaration is executed and acknowledged by the Trustees with
reference to the statutes and laws of the State of Maryland, and the rights of
all parties and the construction and effect of every provision hereof shall be
subject to and construed according to the statutes and laws of such State.


 


9.2.                              Index and Headings for Reference Only. 
The index and headings preceding the text, articles and sections hereof
have been inserted for convenience and reference only and shall not be
construed to affect the meaning, construction or effect of this Declaration.


 


9.3.                              Successors in Interest. 
This Declaration and the Bylaws shall be binding upon and inure to the
benefit of the undersigned Trustees and their successors, assigns, heirs,
distributees and legal representatives, and every Shareholder and his
successors, assigns, heirs, distributees and legal representatives.


 


9.4.                              Inspection of Records. 
Trust records shall be available for inspection by Shareholders at the
same time and in the same manner and to the extent that comparable records of a
Maryland business corporation would be available for inspection by shareholders
under the laws of the State of Maryland. Except as specifically provided for in
this Declaration or in Title 8 of the Annotated Code of Maryland, Shareholders
shall have no greater right than shareholders 


 


36

















 


of a Maryland
business corporation to require financial or other information from the Trust,
Trustees or officers of the Trust. Any Federal or state securities
administrator or the Maryland Department of Assessments and Taxation shall have
the right, at reasonable times during business hours and for proper purposes,
to inspect the books and records of the Trust.


 


9.5.                              Counterparts. 
This Declaration may be simultaneously executed in several counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument, which shall
be sufficiently evidenced by any such original counterpart.


 


9.6.                              Provisions of the Trust in Conflict with
Law or Regulations: Severability.


 


(a)                                  The provisions of this Declaration are
severable, and if the Trustees shall determine, with the advice of counsel,
that any one or more of such provisions (the “Conflicting Provisions”) are in
conflict with the REIT Provisions of the Internal Revenue Code, the Conflicting
Provisions shall be deemed never to have constituted a part of the Declaration;
provided, however, that such determination by the Trustees shall not affect or
impair any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted (including but not limited to the election
of Trustees) prior to such determination. An amendment in recordable form
signed by a majority of the Trustees setting forth any such determination and
reciting that it was duly adopted by the Trustees, or a copy of this
Declaration, with the Conflicting Provisions removed pursuant to such a
determination, in recordable form, signed by a majority of the Trustees, shall
be conclusive evidence of such determination when filed with the Maryland
Department of Assessments and Taxation. The Trustees shall not be liable for
failure to make any determination under this Section 9.6(a). Nothing in
this Section 9.6(a) shall in any way limit or affect the right of the
Trustees to amend this Declaration as provided in Section 8.3.


 


(b)                                 If any provision of this Declaration
shall be held invalid or unenforceable, such invalidity or unenforceability
shall attach only to such provision and shall not in any manner affect or
render invalid or unenforceable any other provision of this Declaration, and
this Declaration shall be carried out as if any such invalid or unenforceable
provision were not contained herein.


 


9.7.                              Certifications. 
The following certifications shall be final and conclusive as to any
Persons dealing with the Trust:


 


(a)                                  a certification of a vacancy among the
Trustees by reason of resignation, removal, increase in the number of Trustees,
incapacity, death or otherwise, when made in writing by a majority of the
remaining Trustees;


 


(b)                                 a certification as to the individuals
holding office as Trustees or officers at any particular time, when made in
writing by the secretary of the Trust;


 


(c)                                  a certification that a copy of this
Declaration or of the Bylaws is a true and correct copy thereof as then in
force, when made in writing by the secretary of the Trust;


 


(d)                                 the certifications referred to in
Sections 2.7, 8.4 and 9.6(a); and


 


37

















 


(e)                                  a certification as to any actions by
Trustees, other than the above, when made in writing by the secretary of the
Trust or by any Trustee.


 


38