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FILED
5/5/2023 4:26 PM
FELICIA PITRE
DISTRICT CLERK
DALLAS CO., TEXAS
Treva Parker-Ayodele DEPUTY
CAUSE NO. DC-22-09833
NexPoint Diversified Real Estate Trust, a IN THE DISTRICT COURT
Delaware Statutory Trust; and NexPoint Real
Estate Opportunities, LLC, a Delaware
Limited Liability Company,
Plaintiffs,
v.
192nd JUDICIAL DISTRICT
UMTH General Services, L.P.; UMTH Land
Development, L.P.; UMT Holdings, L.P.;
Hollis M. Greenlaw; Todd F. Etter; Ben L.
Wissink; Cara D. Obert; Lawrence S. Jones;
James Kenney; Philip K. Marshall;J. Heath
Malone; and Steven J. Finkle,
Defendants. DALLAS COUNTY, TEXAS
TRUSTEE DEFENDANTS’ APPENDIX IN SUPPORT OF
MOTION TO DISMISS PURSUANT TO MANDATORY FORUM-SELECTION CLAUSE
Exhibit 1 Declaration of Stacey Dwyer
Exhibit 2 United Development Funding IV’s Third Articles of Amendment and
Restatement of Declaration of Trust
Exhibit 3 United Development Funding IV’s Third Amended and Restated
Bylaws
APP. 001
Respectfully submitted,
HOLLAND & KNIGHT LLP
By: /s/ Michael W. Stockham
Michael W. Stockham
Texas State Bar No. 243038074
1722 Routh Street Suite 1500
Dallas, TX 75201
Telephone: (214) 969-1700
ATTORNEY FOR DEFENDANTS
LAWRENCE S. JONES, JAMES
KENNEY, PHILIP K. MARSHALL,
J. HEATH MALONE, AND
STEVEN J. FINKLE
CERTIFICATE OF SERVICE
Thereby certify that on May 5th, 2023, a true and correct copy of this document was
served on all counsel of record pursuant to the Texas Rules of Civil Procedure.
s/ Michael W. Stockham
Michael W. Stockham
APP. 002
Exhibit 1
APP. 003
CAUSE NO. DC-22-09833
NexPoint Diversified Real Estate Trust, a IN THE DISTRICT COURT
Delaware Statutory Trust; and NexPoint Real
Estate Opportunities, LLC, a Delaware
Limited Liability Company,
Plaintiffs,
v.
192nd JUDICIAL DISTRICT
UMTH General Services, L.P.; UMTH Land
Development, L.P.; UMT Holdings, L.P.;
Hollis M. Greenlaw; Todd F. Etter; Ben L.
Wissink, Cara D. Obert; Lawrence S. Jones;
James Kenney; Philip K. Marshall; J. Heath
Malone; and StevenJ. Finkle,
Defendants. DALLAS COUNTY, TEXAS
DECLARATION OF STACEY DWYER
1 My name is Stacey Dwyer. I am over 21 years old, and I am competent
to make this Declaration in all respects.
2 I am the Chief Financial Officer of United Development Funding IV
(“UDF IV”). The facts stated in this Declaration ate true and correct and within my
personal knowledge, including documents reviewed and information provided to
me, as the CFO of UDF IV.
3. Exhibit 2 is a true and correct copy of UDF IV’s Third Articles of
Amendment and Restatement of Declaration of Trust. This is the currently
operative Declaration of ‘Trust for UDF IV.
APP. 004
4. Exhibit 3 is a true and correct copy of UDF IV’s Third Amended and
Restated Bylaws (“Bylaws”). These are UDF IV’s currently operative Bylaws. The
Bylaws include a forum-selection provision that applies to certain litigation “[u]nless the
Trust consents in writing to the selection of an alternative forum.” UDF IV has not
consented in writing to the selection of an alternative forum for this or any other
litigation that is subject to the forum-selection provision.
JURAT
My name is Stacey H. Dwyet, my date of bitth is June 11, 1966, and my business
address is 2201 W. Royal Lane, Suite 240, Irving, ‘TX 75063. I declare under penalty of
petjury that the foregoing is true and correct.
Executed in Dallas County, Texas, on the 5th day of May 2023.
Stacey D r
APP. 005
Exhibit 2
APP. 006
CORPORATE CHARTER APPROVAL SHEET
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Expedite Fee: Change of Resident Agent
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State Recordation Tax: Resignation of Resident Agent
State Transfer Tax: Designation of Resident Agent
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Copy Fee: oa
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Change of Business Code
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APP. 007
UNITED DEVELOPMENT FUNDING IV
THIRD ARTICLES OF AMENDMENT AND RESTATEMENT OF
DECLARATION OF TRUST
FIRST: United Development Funding IV, a Maryland real estate investment
trust (the “Trust”), desires to amend and restate its declaration of trust.
SECOND: The following provisions are all the provisions of the declaration of
trust as hereby amended and restated:
ARTICLE T
FORMATION
The Trust is a real estate investment trust within the meaning of the Maryland
REIT Law (the “MRL”). The Trust shall not be deemed to be a general partnership, limited
partnership, joint venture, joint stock company or a corporation but nothing herein shal! preclude
the Trust from being treated for tax purposes as an association under the Internal Revenue Code
of 1986, as amended (the “Code”).
ARTICLE II
NAME
The name of the trust (which is hereinafter called the “Trust”) is:
United Development Funding IV
Under circumstances in which the Board of Trustees of the Trust (the “Board of
Trustees” or “Board”) determines that the use of the name of the Trust is not practicable, the
Trust may use any other designation or name for the Trust.
ARTICLE III
PURPOSES AND POWERS
Section 3.1 Purposes. The purposes for which the Trust is formed are to invest
in and to acquire, hold, manage, administer, control and dispose of loans and real property,
including, without limitation or obligation, engaging in business as a real estate investment trust
under the Code.
Section 3.2 Powers. The Trust shall have all of the powers granted to real
estate investment trusts by the MRL and all other powers set forth herein which are not
inconsistent with law and are appropriate to promote and attain the purposes set forth herein.
APP. 008
ARTICLE IV
RESIDENT AGENT
The name of the resident agent of the Trust in the State of Maryland is The
4
Corporation Trust Incorporated, whose post office address is 351 West Camden Street,
Baltimore, Maryland 21202. The resident agent is a Maryland corporation. The Trust may have
such offices or places of business within or outside the State of Maryland as the Board of
Trustees may from time to time determine.
ARTICLE V
DEFINITIONS
As used in the Declaration of Trust, the following terms shall have the following
meanings unless the context otherwise requires:
Advisor or Advisors, The term “Advisor” or “Advisors” shall mean the Person or
Persons, if any, appointed, employed or contracted with by the Trust pursuant to Article IX
hereof and responsible for directing or performing the day-to-day business affairs of the Trust,
including any Person to whom the Advisor subcontracts all or substantially all of such functions.
Affiliate. The term “Affiliate” or “Affiliated” shall mean, with respect to any
Person, (a) any Person directly or indirectly owning, controlling or holding, with the power to
vote, ten percent or more of the outstanding voting securities of such other Person; (b) any
Person ten percent or more of whose outstanding voting securities are directly or indirectly
owned, controlled or held, with the power to vote, by such.other Person; (c) any Person directly
or indirectly controlling, controlled by or under common control with such other Person; (d) any
executive officer, director, trustee or general partner of such other Person; and (e) any legal
entity for which such Person acts as an executive officer, director, trustee or general partner.
Aggregate Share Ownership Limit. The term “Aggregate Share Ownership
Limit” shall mean 9.8% in value of the aggregate of the outstanding Shares or such other
percentage determined by the Board of Trustees in accordance with Section 7.1.8 of the
Declaration of Trust.
Beneficial Ownership. The term “Beneficial Ownership” shall mean ownership
of Shares by a Person, whether the interest in Shares is held directly or indirectly (including by a
nominee), and shall include interests that would be treated as owned through the application of
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms
“Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative
meanings.
Board or Board of Trustees. The term “Board” or “Board of Trustees” shall have
the meaning as provided in Article IT herein.
APP. 009
Business Day. The term “Business Day” shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in
New York City are authorized or required by law, regulation or executive order to close.
Bylaws. The term “Bylaws” shall mean the Bylaws of the Trust, as amended
from time to time.
Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or
more beneficiaries of the Charitable Trust as determined pursuant to Section 7.2.6, provided that
each such organization must be described in Section 501(c)(3) of the Code and contributions to
each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055
and 2522 of the Code.
Charitable Trust. The term “Charitable Trust” shall mean any trust provided for
in Section 7.1.1(b).
Charitable Trustee. The term “Charitable Trustee” shall mean the Person
unaffiliated with the Trust and a Prohibited Owner, that is appointed by the Trust to serve as
Trustee of the Charitable Trust.
Code. The term “Code” shall have the meaning as provided in Article I herein.
Common Share Ownership Limit. The term “Common Share Ownership Limit”
shall mean 9.8% (in value or in number of Common Shares, whichever is more restrictive) of the
Board
aggregate of the outstanding Common Shares or such other percentage determined by the
of Trustees in accordance with Section 7.1.8 of the Declaration of Trust.
Common Shares. The term “Common Shares” shall have the meaning as
provided in Section 6.1 herein.
Constructive Ownership. The term “Constructive Ownership” shall mean
ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly
(including by a nominee), and shall include interests that would be treated as owned through the
application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The
terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the
correlative meanings.
Declaration of Trust. The term “Declaration of Trust” shall mean the declaration
of trust of the Trust, as amended from time to time.
Distributions. The term “Distributions” shall mean any distributions (as such
term is defined in Section 2-301 of the MGCL), pursuant to Section 6.6 hereof, by the Trust to
owners of Shares, including distributions that may constitute a return of capital for federal
income tax purposes.
Excepted Holder. The term “Excepted Holder” shall mean a Shareholder for
whom an Excepted Holder Limit is created by the Board of Trustees pursuant to Section 7.1.7.
APP. 010
Excepted Holder Limit. The term “Excepted Holder Limit” shall mean, provided
that the affected Excepted Holder agrees to comply with the requirements established by the
Board of Trustees pursuant to Section 7.1.7 and subject to adjustment pursuant to Section 7.1.8,
the percentage limit established by the Board of Trustees pursuant to Section 7.1.7.
Exchange Act. The term “Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended from time to time, or any successor statute thereto.
Market Price, The term “Market Price” on any date shall mean, with respect to
any class or series of outstanding Shares, the Closing Price for such Shares on such date. The
“Closing Price” on any date shall mean the last sale price for such Shares, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, for such Shares, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the NASDAQ or, if
such Shares are not listed or admitted to trading on the NASDAQ, as reported on the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which such Shares are listed or admitted to trading or, if such
Shares are not listed or admitted to trading on any national securities exchange, the last quoted
price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the principal automated quotation system that may then be in use
or, if such Shares are not quoted by any such system, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such Shares selected by
the Board of Trustees or, in the event that no trading price is available for such Shares, the fair
market value of Shares, as determined in good faith by the Board of Trustees.
MGCL. The term “MGCL.” shall mean the Maryland General Corporation Law,
as amended from time to time.
MRL. The term “MRL.” shall have the meaning as provided in Article I herein.
NASDAQ. The term “NASDAQ” shall mean the Nasdaq Stock Market, LLC.
Person. The term “Person” shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity and also includes a group as that term is
used for purposes of Section 13(d)(3) of the Exchange Act and a group to which an Excepted
Holder Limit applies.
Preferred Shares, The term “Preferred Shares” shall have the meaning as
provided in Section 6.1 herein.
Prohibited Owner. The term “Prohibited Owner” shall mean, with respect to any
purported Transfer, any Person who, but for the provisions of Article VII herein, would
Beneficially Own or Constructively Own Shares in violation of Section 7.1.1, and, if appropriate
in the context, shall also mean any Person who would have been the record owner of Shares that
the Prohibited Owner would have so owned.
APP. 011
REIT. The term “REIT” shall mean a corporation, trust, association or other legal
entity (other than a real estate syndication) that is engaged primarily in investing in equity
interests in real estate (including fee ownership and leasehold interests) or in loans secured by
real estate or both as defined pursuant to the REIT Provisions of the Code.
REIT Provisions of the Code. The term “REIT Provisions of the Code” shall
mean Sections 856 through 860 of the Code and any successor or other provisions of the Code
relating to real estate investment trusts (including provisions as to the attribution of ownership of
beneficial interests therein) and the regulations promulgated thereunder.
Restriction Termination Date. The term “Restriction Termination Date” shall
mean the first day on which the Board of Trustees determines that it is no longer in the best
interests of the Trust to attempt to, or continue to, qualify as a REIT or that compliance with the
restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of
Shares set forth herein is no longer required in order for the Trust to qualify as a REIT.
SDAT. The term “SDAT” shall have the meaning as provided in Section 6.4
herein.
Securities. The term “Securities” shall mean any of the following issued by the
Trust, as the text requires: Shares, any other stock, shares or other evidences of equity or
beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences
of indebtedness, secured or unsecured, convertible, subordinated or otherwise, 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.
Shareholders. The term “Shareholders” shall mean the holders of record of the
Shares as maintained in the books and records of the Trust or its transfer agent.
Shares. The term “Shares” shall mean shares of beneficial interest of the Trust of
any class or series, including Common Shares or Preferred Shares.
Transfer. The term “Transfer” shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition, as well as any other event that causes any Person to
acquire Beneficial Ownership or Constructive Ownership of Shares or the right to vote or receive
dividends on Shares, or any agreement to take any such actions or cause any such events,
including (a) the granting or exercise of any option (or any disposition of any option), (b) any
disposition of any securities or rights convertible into or exchangeable for Shares or any interest
in Shares or any exercise of any such conversion or exchange right and (c) Transfers of interests
in other entities that result in changes in Beneficial Ownership or Constructive Ownership of
Shares; in each case, whether voluntary or involuntary, whether owned of record, Constructively
Owned or Beneficially Owned and whether by operation of law or otherwise. The terms
“Transferring” and “Transferred” shall have the correlative meanings.
Trust. The term “Trust” shall have the meaning as provided in Article II herein.
APP. 012
Trustee. The term “Trustee” shall have the meaning as provided in Section 8.2
herein.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1 Authorized Shares. The beneficial interest of the Trust shall be
divided into Shares. The Trust has authority to issue 400,000,000 Shares, consisting of
350,000,000 common shares of beneficial interest, $.01 par value per share (“Common Shares”),
and 50,000,000 preferred shares of beneficial interest, $.01 par value per share (“Preferred
Shares”). All Shares shall be fully paid and nonassessable when issued. If Shares of one class
classified or reclassified into Shares of another class pursuant to this Article VI, the number
of authorized Shares of the former class shall be automatically decreased and the number of
Shares of the latter class shall be automatically increased, in each case by the number of Shares
so classified or reclassified, so that the aggregate number of Shares of all classes that the Trust
has authority to issue shall not be more than the total number of Shares set forth in the second
sentence of this paragraph. The Board of Trustees, with the approval of a majority of the entire
Board and without any action by the Shareholders, may amend the Declaration of Trust from
time to time to increase or decrease the aggregate number of Shares or the number of Shares of
any class or series that the Trust has authority to issue.
Section 6.2 Common Shares.
Section 6.2.1 Common Shares Subject to Terms of Preferred Shares. The
Common Shares shall be subject to the express terms of any series of Preferred Shares.
Section 6.2.2 Description. Subject to the provisions of Article VII and
except as may otherwise be specified in the Declaration of Trust, each Common Share shall
entitle the holder thereof to one vote per share on all matters upon which holders of Common
Shares are entitled to vote. The Board may classify or reclassify any unissued Common Shares
from time to time into one or more classes or series of Shares.
Section 6.2.3 Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up, or any Distribution of the assets of the Trust,
the aggregate assets available for Distribution to holders of the Common Shares shall be
determined in accordance with applicable law. Each holder of Common Shares of a particular
class shall be entitled to receive, ratably with each other holder of Common Shares of such class,
that portion of such aggregate assets available for Distribution as the number of outstanding
Common Shares of such class held by such holder bears to the total number of outstanding
Common Shares of such class then outstanding.
Section 6.2.4 Voting Rights. Except as may be provided otherwise in the
Declaration of Trust, and subject to the express terms of any class or series of Preferred Shares,
the holders of the Common Shares shall have the exclusive right to vote on all matters (as to
which a common shareholder shall be entitled to vote pursuant to applicable law) at all meetings
of the Shareholders.
APP. 013
Section 6.3 Preferred Shares. The Board may classify any unissued Preferred
Shares and reclassify any previously classified but unissued Preferred Shares of any series from
time to time, into one or more classes or series of Shares.
Section 6.4 Classified or Reclassified Shares. Prior to issuance of classified or
reclassified Shares of any class or series, the Board by resolution shall: (a) designate that class
or series to distinguish it from all other classes and series of Shares; (b) specify the number of
Shares to be included in the class or series; (c) set or change, subject to the provisions of Article
VII and subject to the express terms of any class or series of Shares outstanding at the time, the
preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or
other Distributions, qualifications and terms and conditions of redemption for each class or
series; and (d) cause the Trust to file articles supplementary with the State Department of
Assessments and Taxation of Maryland (“SDAT”). Any of the terms of any class or series of
Shares set or changed pursuant to clause (c) of this Section 6.4 may be made dependent upon
facts or events ascertainable outside the Declaration of Trust (including determinations by the
Board or other facts or events within the control of the Trust) and may vary among holders
thereof, provided that the manner in which such facts, events or variations shall operate upon the
terms of such class or series of Shares is clearly and expressly set forth in the articles
supplementary filed with the SDAT.
Section 6.5 Authorization by Board of Share Issuance. The Board of Trustees
may authorize the issuance from time to time of Shares of any class or series, whether now or
hereafter authorized, or Securities or rights convertible into Shares of any class or series, whether
now or hereafter authorized, for such consideration (whether in cash, property, past or future
services, obligation for future payment or otherwise) as the Board of Trustees may deem
to
advisable (or without consideration in the case of a Share split or Share dividend), subject
such restrictions or limitations, if any, as may be set forth in the Declaration of Trust or the
Bylaws.
Section 6.6 Distributions. The Board of Trustees may from time to time
authorize the Trust to declare and pay to Shareholders such dividends or other Distributions, in
cash or other assets of the Trust or in securities of the Trust, including Shares of one class
payable to holders of Shares of another class, or from any other source as the Board of Trustees
in its discretion shall determine. The Board of Trustees shall endeavor to authorize the Trust to
to
declare and pay such dividends and other Distributions as shall be necessary for the Trust
ers shall have no right to any
qualify as a REIT under the Code; provided, however, Sharehold
dividend or other Distribution unless and until authorized by the Board and declared by the
Trust. The exercise of the powers and rights of the Board of Trustees pursuant to this Section 6.6
The
shall be subject to the provisions of any class or series of Shares at the time outstanding.
receipt by any Person in whose name any Shares are registered on the records of the Trust or by
his or her duly authorized agent shall be a sufficient discharge for all dividends or other
Distributions payable or deliverable in respect of such Shares and from all liability to see to the
application thereof.
Section 6.7 General Nature of Shares. All Shares shall be personal property
entitling the Shareholders only to those rights provided in the Declaration of Trust. The
Shareholders shall have no interest in the assets of the Trust and shall have no right to compel
APP. 014
any partition, division, dividend or Distribution of the Trust or of its assets. The death of a
Shareholder shall not terminate the Trust. The Trust is entitled to treat as Shareholders only
those persons in whose names Shares are registered as holders of Shares on the share ledger of
the Trust.
Section 6.8 Fractional Shares. The Trust may, without the consent or approval
of any Shareholder, issue fractional Shares, eliminate a fraction of a Share by rounding up to a
full Share, arrange for the disposition of a fraction of a Share by the person entitled to it, or pay
cash for the fair value of a fraction of a Share.
Section 6.9 Declaration and Bylaws. The rights of all Shareholders and the
terms of all Shares are subject to the provisions of the Declaration of Trust and the Bylaws.
Section 6.10 Divisions and Combinations of Shares. Subject to an express
provision to the contrary in the terms of any class or series of Shares hereafter authorized, the
Board of Trustees shall have the power to divide or combine the outstanding Shares of any class
or series, without a vote of Shareholders, so long as the number of Shares combined into one
Share in any such combination or series of combinations within any period of twelve months is
not greater than ten.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1 Shares.
Section 7.1.1 Ownership Limitations. Prior to the Restriction
Termination Date, but subject to Section 7.3:
(@ Basic Restrictions.
@ (1) No Person, other than an Excepted Holder, shal!
Beneficially Own or Constructively Own Shares in excess of the Aggregate Share Ownership
Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or Constructively
Own Common Shares in excess of the Common Share Ownership Limit and (3) no Excepted
Holder shall Beneficially Own or Constructively Own Shares in excess of the Excepted Holder
Limit for such Excepted Holder.
Gi) No Person shall Beneficially Own or Constructively
Own Shares to the extent that such Beneficial Ownership or Constructive Ownership of Shares
would result in the Trust being “closely held” within the meaning of Section 856(h) of the Code
(without regard to whether the ownership interest is held during the last half of a taxable year), or
otherwise failing to qualify as a REIT (including, but not limited to, Beneficial Ownership or
Constructive Ownership that would result in the Trust owning (actually or Constructively) an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Trust from such tenant would cause the Trust to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code).
APP. 015
(iii) Any Transfer of Shares that, if effective, would
result in Shares being Beneficially Owned by fewer than 100 Persons (determined under the
principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee
shall acquire no rights in such Shares.
(b) Transfer in Trust. If any Transfer of Shares occurs which,
if effective, would result in any Person Beneficially Owning or Constructively Owning Shares in
violation of Section 7.1.1(a)(i) or (ii),
@ then that number of Shares the Beneficial
Ownership or Constructive Ownership of which otherwise would cause such Person to violate
Section 7.1.1(a)(i) or (ii) (rounded up to the nearest whole share) shall be automatically
Transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in
Section 7.2, effective as of the close of business on the Business Day prior to the date of such
Transfer, and such Person shall acquire no rights in such Shares; or
Gi) if the Transfer to the Charitable Trust described in
clause (i) of this sentence would not be effective for any reason to prevent the violation of
Section 7.1.1(a)(i) or (ii), then the Transfer of that number of Shares that otherwise would cause
any Person to violate Section 7.1.1(a)(i) or (ii) shall be void ab initio, and the intended transferee
shall acquire no rights in such Shares.
To the extent that, upon a transfer of Shares pursuant to this
Section 7.1.1(b), a violation of any provision of this Article VII would nonetheless be continuing
(for example where the ownership of Shares by a single Charitable Trust would violate the 100
shareholder requirement applicable to REITs), then Shares shall be Transferred to that number of
Charitable Trusts, each having a distinct Charitable Trustee and a Charitable Beneficiary or
Beneficiaries that are distinct from those of each other Charitable Trust, such that there is no
violation of any provision of this Article VII.
Section 7.1.2 Remedies for Breach. If the Board of Trustees or its
designee (including any duly authorized committee of the Board) shall at any time determine in
good faith that a Transfer or other event has taken place that results in a violation of Section
7.1.1 or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or
Constructive Ownership of any Shares in violation of Section 7.1.1 (whether or not such
violation is intended), the Board of Trustees or its designee shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or other event, including, without
limitation, causing the Trust to redeem Shares, refusing to give effect to such Transfer on the
books of the Trust or instituting proceedings to enjoin such Transfer or other event, provided,
however, that any Transfers or attempted Transfers or other events in violation of Section 7.1.1
shall automatically result in the Transfer to the Charitable Trust described above, and, where
applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of
any action (or non-action) by the Board of Trustees or its designee.
Section 7.1.3 Notice of Restricted Transfer. Any Person who acquires or
attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Shares that
will or may violate Section 7.1.1(a), or any Person who would have owned Shares that resulted
APP. 016
in a Transfer to the Charitable Trust pursuant to the provisions of Section 7.1.1(b), shall
immediately give written notice to the Trust of such event, or in the case of such a proposed or
attempted transaction, give at least 15 days prior written notice, and shall provide to the Trust
such other information as the Trust may request in order to determine the effect, if any, of such
Transfer on the Trust’s status as a REIT.
Section 7.1.4 Owners Required To Provide Information. Prior to the
Restriction Termination Date:
(a) every owner of more than five percent (or such lower
percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the
outstanding Shares, within 30 days after the end of each taxable year, shall give written notice to
the Trust stating the name and address of such owner, the number of Shares Beneficially Owned
and a description of the manner in which such Shares are held. Each such owner shall provide to
the Trust such additional information as the Trust may request in order to determine the effect, if
any, of such Beneficial Ownership on the Trust’s status as a REIT and to ensure compliance with
the Aggregate Share Ownership Limit, the Common Share Ownership Limit and the other
restrictions set forth herein; and
each Person who is a Beneficial Owner or Constructive
(b)
Owner of Shares and each Person (including the Shareholder of record) who is holding Shares
for a Beneficial Owner or Constructive Owner shall provide to the Trust such information as the
Trust may request, in good faith, in order to determine the Trust’s status as a REIT and to
comply with requirements of any taxing authority or governmental authority or to determine
such compliance.
Section 7.1.5 Remedies Not Limited. Subject to Section 8.1 of the
Declaration of Trust, nothing contained in this Section 7.1 shall limit the authority of the Board
of Trustees to take such other action as it deems necessary or advisable to protect the Trust and
the interests of its Shareholders in preserving the Trust’s status as a REIT.
Section 7.1.6 Ambiguity. In the case of an ambiguity in the application
of any of the provisions of this Section 7.1, Section 7.2 or any definition contained in Article V,
the Board of Trustees shall have the power to determine the application of the provisions of this
Section 7.1, Section 7.2 or Article V with respect to any situation based on the facts known to it.
In the event Section 7.1 or 7.2 requires an action by the Board of Trustees and the Declaration of
Trust fails to provide specific guidance with respect to such action, the Board of Trustees shall
have the power to determine the action to be taken so long as such action is not contrary to the
provisions of Article V, this Section 7.1 or Section 7.2. Absent a decision to the contrary by the
Board of Trustees (which the Board may make in its sole and absolute discretion), if a Person
would have (but for the remedies set forth in Section 7.1.2) acquired Beneficial Ownership or
Constructive Ownership of Shares in violation of Section 7.1.1, such remedies (as applicable)
shall apply first to the Shares which, but for such remedies, would have been Beneficially
Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the
Persons who actually own such Shares based upon the relative number of the Shares held by
each such Person.
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Section 7.1.7 Exceptions.
(a) Subject to Section 7.1.1(a)(ii), the Board of Trustees, in its
sole discretion, may exempt (prospectively or retroactively) a Person from the Aggregate Share
Ownership Limit and the Common Share Ownership Limit, as the case may be, and may
establish or increase an Excepted Holder Limit for such Person if:
@) the Board of Trustees obtains such representations
and undertakings from such Person as are reasonably necessary to ascertain that no individual’s
Beneficial Ownership or Constructive Ownership of such Shares will violate Section 7.1.1(a)(ii);
(ii) such Person does not and represents that it will not
own, actually or Constructively, an interest in a tenant of the Trust (or a tenant of any entity
owned or controlled by the Trust) that would cause the Trust to own, actually or Constructively,
more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant and
the Board of Trustees obtains such representations and undertakings from such Person as are
reasonably necessary to ascertain this fact (for this purpose, a tenant from whom the Trust (or an
entity owned or controlled by the Trust) derives (and is expected to continue to derive) a
sufficiently small amount of revenue such that, in the opinion of the Board of Trustees, rent from
such tenant would not adversely affect the Trust’s ability to qualify as a REIT, shall not be
treated as a tenant of the Trust); and
(iii)such Person agrees that any violation or attempted
violation of such representations or undertakings (or other action which is contrary to the
restrictions contained in Sections 7.1.1 through 7.1.6) will result in such Shares being
automatically Transferred to a Charitable Trust in accordance with Sections 7.1.1(b) and 7.2.
(b) Prior to granting any exception pursuant to Section
7.1.7(a), the Board of Trustees may require a ruling from the Internal Revenue Service, or an
opinion of counsel, in either case in form and substance satisfactory to the Board of Trustees in
its sole discretion, as it may deem necessary or advisable in order to determine or ensure the
Trust’s status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of
Trustees may impose such conditions or restrictions as it deems appropriate in connection with
granting such exception.
() Subject to Section 7.1.1(a)(ii), an underwriter which
participates in a public offering or a private placement of Shares (or securities convertible into or
exchangeable for Shares) may Beneficially Own or Constructively Own Shares (or securities
convertible into or exchangeable for Shares) in excess of the Aggregate Share Ownership Limit,
the Common Share Ownership Limit or both such limits, but only to the extent necessary to
facilitate such public offering or private placement.
(d) The Board of Trustees may only reduce the Excepted
Holder Limit for an Excepted Holder: (i) with the written consent of such Excepted Holder at
any time, or (ii) pursuant to the terms and conditions of the agreements and undertakings entered
into with such Excepted Holder in connection with the establishment of the Excepted Holder
il
APP. 018
Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that
is less than the Common Share Ownership Limit.
Section 7.1.8 Increase or Decrease in Aggregate Share Ownership Limit
and Common Share Ownership Limit. Subject to Section 7.1.1(a)(ii), the Board of Trustees may
from time to time increase the Common Share Ownership Limit and the Aggregate Share
Ownership Limit for one or more Persons and decrease the Common Share Ownership Limit and
the Aggregate Share Ownership Limit for all other Persons; provided, however, that the
decreased Common Share Ownership Limit and/or Aggregate Share Ownership Limit will not be
effective for any Person whose percentage ownership in Shares is in excess of such decreased
Common Share Ownership Limit and/or Aggregate Share Ownership Limit until such time as
such Person’s percentage of Shares equals or falls below the decreased Common Share
Ownership Limit and/or Aggregate Share Ownership Limit, but any further acquisition of Shares
in excess of such percentage ownership of Shares will be in violation of the Common Share
Ownership Limit and/or Aggregate Share Ownership Limit and, provided further, that the new
Common Share Ownership Limit and/or Aggregate Share Ownership Limit would not allow five
or fewer Persons to Beneficially Own more than 49.9% in value of the ou