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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No.1 to
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999 Commission file number 0-7589
USP REAL ESTATE INVESTMENT TRUST
(Exact name of registrant as specified in its charter)
Iowa
(State or other jurisdiction of 42-6149662
incorporation or organization) (I.R.S. Employer Identification No.)
4333 Edgewood Road N.E., Cedar Rapids, IA 52499
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 398-8975
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest, $1 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the voting shares of the registrant held by
non-affiliates at March 15, 2000 was $12,288,920.
The number of shares of beneficial interest of the registrant outstanding at
March 15, 2000 was 3,880,000.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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This Amendment No. 1 to Form 10-K is filed for the sole purpose of amending
Item 14(a)(3) and filing the exhibits attached hereto.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) List of Documents
3. Exhibits.
(2) Real Estate Sale and Purchase Contract, dated January 20,
2000, by and between the Trust and AEGON USA Realty
Advisors, Inc. Filed herewith.
(2.1) Plan of Liquidation, adopted by the Board of Trustees on
October 21, 1999. Filed herewith.
(3) Second Amended and Restated Declaration of Trust currently
in effect, dated October 5, 1972, as amended December 18,
1972, March 3, 1975, April 23, 1984 and April 22, 1986.
Filed herewith.
(3.1) By-Laws currently in effect, dated November 19, 1997,
incorporated herein by reference to Item 14(a)3, Exhibit
(3.1) of Form 10-K for the year ended December 31, 1997.
(4) Articles II and III of the Second Amended and Restated
Declaration of Trust currently in effect, dated October 5,
1972, as amended December 18, 1972, March 3, 1975, April 23,
1984 and April 22, 1986. Filed herewith.
(10) Administrative Agreement currently in effect, dated January
1, 1984. Filed herewith.
(10.1) Property Management Agreement currently in effect, dated
July 1, 1981, as amended November 4, 1982. Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
USP REAL ESTATE INVESTMENT TRUST
/s/ Patrick E. Falconio /s/ Alan F. Fletcher
- --------------------------------- -----------------------------------
Patrick E. Falconio Alan F. Fletcher
Chairman of the Board Vice President and Treasurer
(principal executive (principal financial officer)
officer)
/s/ Roger L. Schulz
-----------------------------------
Roger L. Schulz
Controller
(principal accounting officer)
May 3, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and as of the date indicated.
/s/ Patrick E. Falconio /s/ Samuel L. Kaplan
- --------------------------------- -----------------------------------
Patrick E. Falconio Samuel L. Kaplan
Trustee Trustee
/s/ Edwin L. Ingraham /S/ Richard M. Osborne
- --------------------------------- -----------------------------------
Edwin L. Ingraham Richard M. Osborne
Trustee Trustee
May 3, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Item Title or Description
------- --------------------
<S> <C>
(2) Real Estate Sale and Purchase Contract, dated January 20,
2000, by and between the Trust and AEGON USA Realty
Advisors, Inc. Filed herewith.
(2.1) Plan of Liquidation, adopted by the Board of Trustees on
October 21, 1999. Filed herewith.
(3) Second Amended and Restated Declaration of Trust currently
in effect, dated October 5, 1972, as amended December 18,
1972, March 3, 1975, April 23, 1984 and April 22, 1986.
Filed herewith.
(3.1) By-Laws currently in effect, dated November 19, 1997,
incorporated herein by reference to Item 14(a)3, Exhibit
(3.1) of Form 10-K for the year ended December 31, 1997.
(4) Articles II and III of the Second Amended and Restated
Declaration of Trust currently in effect, dated October 5,
1972, as amended December 18, 1972, March 3, 1975, April 23,
1984 and April 22, 1986. Filed herewith.
(10) Administrative Agreement currently in effect, dated January
1, 1984. Filed herewith.
(10.1) Property Management Agreement currently in effect, dated
July 1, 1981, as amended November 4, 1982. Filed herewith.
</TABLE>
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EXHIBIT 2
REAL ESTATE SALE AND PURCHASE CONTRACT
THIS CONTRACT ("Contract") is made and entered into as of the 20th day
of January, 2000 (hereinafter referred to as the date hereof), by and between
USP Real Estate Investment Trust, an Iowa common law business trust (hereinafter
referred to as "Seller"), and AEGON USA Realty Advisors, Inc., an Iowa
corporation (hereinafter referred to as "Purchaser").
The parties hereto agree as follows:
1. AGREEMENT TO PURCHASE AND SELL.
A. Seller agrees to sell to Purchaser and Purchaser agrees to
purchase from Seller, subject to the terms and conditions of this Contract, the
six properties (the "Properties") described as follows:
(i) Kingsley Square Shopping Center located in Orange
Park, Florida, and legally described on Exhibit "A-1" attached hereto;
(ii) First Tuesday Mall located in Carrollton, Georgia,
and legally described on Exhibit "A-2" attached hereto;
(iii) Mendenhall Commons Shopping Center located in
Memphis, Tennessee, and legally described on Exhibit "A-3" attached hereto;
(iv) North Park Plaza Shopping Center located in Phoenix,
Arizona, and legally described on Exhibit "A-4" attached hereto;
(v) Presidential Drive Office Building located in
Atlanta, Georgia, and legally described on Exhibit "A-5" attached hereto;
(vi) Yamaha Warehouse located in Cudahy, Wisconsin, and
legally described on Exhibit "A-6" attached hereto.
The Properties are being sold together with:
(vii) All buildings, improvements, structures and fixtures,
placed, constructed, installed, or located on the Properties, together with the
parking facilities related thereto, and all other improvements situated on, over
and under the lands legally described above (the "Improvements");
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(viii) All of the furniture, furnishings, fixtures,
fittings, appliances, apparatus, equipment, tools, supplies and machinery, if
any, owned by Seller and located on the Properties (the "Personal Property");
(ix) Seller's interest as landlord under all leases of
space of and within any part of the Properties, including, without limitation,
any renewals thereof and any options to renew the same, together with any and
all third party guarantees of the obligations of tenants under such leases
(hereinafter referred to as the "Tenant Leases:");
(x) All contract agreements, if any, affecting the
operation of the Improvements as fully developed commercial properties,
including without limitation, all service contracts, maintenance agreements,
equipment leases, advertising contracts, and the like, to the extent assignable,
(hereinafter together referred to as the "Operating Agreements");
(xi) To the extent assignable, all guarantees and
warranties given, made, or issued by any contractors, subcontractors, servicers,
suppliers, manufacturers, installers, and the like, relating to or with respect
to the construction, repair, or maintenance of the Improvements or Personal
Property and the workmanship, materials, components, appliances, and equipment
forming a part of or installed on or included within or upon the Improvements
(hereinafter referred to as the "Warranties");
(xii) All development, construction, and engineering plans,
specifications, drawings, survey materials or other written materials or matters
in the possession of Seller which pertain to the planning, development,
construction, maintenance and repair of the Improvements, including, without
limitation all "working" drawings and all "as-built" drawings and surveys,
compliance reports, engineering reports, soil, geological, and environmental
reports (hereinafter referred to as the "Plans and Specifications");
(xiii) All licenses, permits, authorizations, and
certificates of occupancy affecting the Improvements as fully operational
commercial rental properties (hereinafter referred to as the "Licenses"),
including without limitation the right to use the names of the Properties set
forth above, to the extent Seller has any ownership or proprietary rights to use
such names; and
(xiv) All rents, issues, royalties, and profits of the
Properties, whether coming due before or after the Closing Date, including all
refunds or rebates of any nature concerning the Property which are made on or
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after the Closing Date and including all rights to insurance proceeds or other
recoveries for damage to the Properties (or any part thereof) which is not
repaired by the date of Closing.
The Properties, together with all other rights and properties set forth
in (i) through (xiv) above are collectively sometimes referred to herein as the
"Property".
2. PURCHASE PRICE AND METHOD OF PAYMENT.
A. The total purchase price for the Property to be paid by
Purchaser is Thirty-Three Million Five Hundred Thousand Dollars
($33,500,000.00), payable in cash by Purchaser at Closing. The purchase price
will be reduced in accordance with paragraph 10C hereof if the mortgage on the
Yamaha Warehouse is assumed by Purchaser. The allocation of purchase price
between the Properties for purposes of title insurance coverage and transfer tax
or other legally required declarations shall be as set forth on Exhibit "B".
B. Within three (3) business days after the date hereof,
Purchaser shall deliver to American Title Company, 3131 Turtle Creek Blvd.,
Suite 101, Dallas, TX 75219 Attention: Bo Feagin (hereinafter referred to as the
"Title Company") earnest money (the "Deposit") in the amount of Two Hundred
Thousand Dollars ($200,000.00). The Deposit shall be placed by the Title Company
in an interest bearing account with all interest earned thereon to be for the
benefit of the Purchaser. The Deposit shall be held during the pendency of this
Contract and disbursed in accordance with the terms hereof. In the event the
transactions covered hereby shall close, at Closing the Deposit shall be
credited towards the Purchase Price.
3. PERMITTED TITLE EXCEPTIONS.
The Properties are being sold in fee simple title, subject to the
following exceptions:
A. Zoning and building laws or ordinances;
B. The liens of real estate taxes which are not yet due and
payable;
C. Those matters set forth on the Seller's title polices
concerning the Properties which are identified on Exhibit "C" attached hereto,
except for liens or encumbrances (subject to subparagraph F below) and expired
Tenant Leases or other expired exceptions, which shall be discharged by Seller
at or prior to Closing;
D. Rights of tenants in possession;
E. Those matters set forth on the existing surveys of the
Properties identified on Exhibit "D" attached hereto; and
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F. Subject to paragraph 10C, the lien of the first mortgage and
related security instruments encumbering the Yamaha Warehouse in the current
principal amount of approximately One Million Three Hundred Ninety-Six Thousand
One Hundred Seventy-Three Dollars ($1,396,173.00) held by Wisconsin National
Life Insurance Company (hereinafter referred to as the "Yamaha Lender").
G. Such other easements or reservations of title as shall be
approved by Purchaser after Purchaser's examination of the title binders and
updated surveys for the Property as hereinafter required.
(A through G above are hereinafter collectively referred to as
"Permitted Exceptions").
4. CLOSING.
Consummation of the transactions contemplated by this Contract (the
"Closing") will be held at or closed in escrow through the offices of the Title
Company on a day and at a time mutually agreeable to the parties, after all
conditions precedent have been satisfied, but in any case on or before June 30,
2000. In the absence of a different specified date in accordance with this
paragraph, the Closing shall take place at 9:00 A.M., March 30, 2000
(hereinafter referred to as the "Closing Date").
5. PURCHASER'S CONDITIONS PRECEDENT.
Purchaser's obligations to purchase the Property hereunder are
contingent upon satisfaction of the following conditions precedent ("Purchaser's
Conditions Precedent") within forty-five (45) days of the date hereof (the
"Purchaser's Condition Period"):
A. Unless this Condition is waived by Purchaser within the
Purchaser's Condition Period, Purchaser agrees to obtain a preliminary title
report and commitment to insure title covering each Property issued by the Title
Company. It is a condition precedent to Purchaser's obligations to purchase the
Property that the Title Company agree to issue an owner's policy of title
insurance to Purchaser for each Property in an amount equal to the purchase
price set forth on Exhibit "B" and in ALTA Extended Owner's Form B-1970 or the
equivalent thereof as used in the applicable state. The Title Company shall
agree to delete from the final policies any exceptions for mechanic's or
materialman's liens, and for discrepancies, conflicts in boundary lines, lack of
access, shortages in area, encroachments, or other facts a current survey or
inspection of the Property would disclose. Seller agrees to execute those
affidavits and/or furnish other documentation reasonably requested by the Title
Company to make such deletions and to reflect the current status of rights
pursuant to Tenant Leases as of the Closing Date. Purchaser shall
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have until expiration of its Conditions Period to examine the title to the
Properties and to notify Seller in writing of any defects in or encumbrances
upon Seller's title to the Properties (other than the Permitted Exceptions)
that are unacceptable to Purchaser. Any objection not timely made by
Purchaser shall be deemed to be waived, and all such matters shown as
exceptions to title in the commitments (but not including items shown in
requirements sections) shall be Permitted Exceptions.
Seller shall have until Closing to cure all such defects. If any
defects (other than Permitted Title Exceptions) are not cured or otherwise
removed in a manner reasonably satisfactory to Purchaser by the scheduled date
of Closing, Purchaser shall have the remedies set forth in subparagraph F below.
B. Unless this Condition is waived by Purchaser within the
Purchaser's Condition Period, Purchaser agrees to obtain certified surveys of
the Properties certified by the surveyor to Purchaser and to the Title Company.
It is a Condition Precedent to Purchaser's obligations hereunder that the
surveys reveal no new exceptions to title that are unacceptable to Purchaser.
Any such matters shall be reported to Seller and dealt with in accordance with
the procedure for other title exceptions as set forth in subparagraph 5A above.
C. Purchaser acknowledges receipt of the environmental reports on
the Properties identified in Exhibit "E" attached hereto and agrees to accept
the Properties in the environmental condition as reflected therein, provided,
however, any new or additional information concerning the environmental
condition of any Property shall be subject to Purchaser's approval, in
Purchaser's sole discretion and except that, prior to Closing, Purchaser shall
receive evidence of proper closure or removal of underground tanks as noted in
the report concerning Northpark Shopping Center.
D. The Mutual Representations as set forth herein in paragraph 7
hereof and Seller's representations as set forth in paragraph 8 hereof shall be
true and correct as of the Closing Date without any change in the rent rolls or
the status of defaults of tenants which would be detrimental to the value of any
Property. Each party agrees to promptly notify the other of any matter coming to
the knowledge of such party which would render any of the Mutual Representations
or Seller's Representations untrue in any material respect. Seller agrees to use
reasonable efforts to correct any such matter prior to Closing, but shall not be
obligated to expend any money or to incur any liability to effect any such cure.
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E. The parties acknowledge that Purchaser is the asset manager
for the Properties pursuant to a Management Agreement dated July 1, 1981 and an
Administrative Agreement dated January 1, 1984 (together the "Advisory
Agreements"). Purchaser shall continue to manage the Property in the best
interests of the Seller pursuant to the Advisory Agreements in the same manner
as prior to this Contract. All actions taken by Seller in regard to the Property
at the recommendation of Purchaser as Advisor shall be considered consented to
by Purchaser pursuant to this Contract. Seller hereby directs Purchaser to
conduct operations at the Properties in accordance with any applicable terms and
conditions of this Contract. Seller agrees that Purchaser shall have access to
the Property pending Closing to perform its due diligence and inspections
allowed by this Contract in addition to Purchaser's access to the Property in
its capacity as Advisor. Purchaser agrees to indemnify and hold Seller harmless
from any loss, cost, damage, or liability caused by Purchaser's conduct of the
due diligence set forth herein. This indemnity shall survive the Closing or
earlier termination of this Contract.
F. If the Purchaser's Conditions Precedent set forth in this
paragraph 5 are not timely satisfied, then Purchaser may elect to (i) waive such
condition(s) and close, by giving written notice to Seller such that Seller
receives the notice no later than sixty (60) days after the date hereof in the
event of a failure of conditions to be satisfied within Purchaser's Condition
Period, or no later than the date scheduled for Closing in the event of a
failure of the conditions to be met prior to Closing (hereinafter referred to in
this paragraph as "Timely Notice"), or (ii) terminate this Contract by Timely
Notice to Seller. Upon a termination of this Contract in accordance herewith,
Purchaser's Deposit shall be promptly refunded and neither party shall have any
further rights or obligations hereunder. In the absence of any written notice
from Purchaser, Purchaser shall be deemed to have elected to terminate this
Contract.
6. ADDITIONAL CONDITIONS PRECEDENT.
The parties obligations to purchase and sell the Property hereunder are
conditioned upon the following:
A. Seller obtaining a favorable vote for this transaction from
its holders of beneficial interest in accordance with Seller's Declaration of
Trust. Seller agrees to hold a special meeting for such purpose on or before
June 15, 2000 and to comply with its Declaration of Trust and all applicable
laws, codes, ordinances, and regulations in the holding of such meeting and
vote.
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B. Seller agrees to recommend the sale contemplated by this
Contract for shareholder approval at or prior to the special meeting held for
such purpose. It is a condition precedent to Purchaser's obligations hereunder
that the shareholder approval of this transaction contain a further mandatory
provision satisfactory to Purchaser that the Trust be liquidated and that the
proceeds of this sale, together with other liquid assets of the Trust, less
costs and reserves, be promptly distributed to the holders of beneficial
interests of Seller.
C. Seller's obligations hereunder are subject to the Purchaser's
representations as set forth in paragraph 9 hereof being true and correct on the
Closing Date. Each party agrees to notify the other of any matter which would
render any of Purchaser's representations and warranties untrue in any material
respect. Purchaser agrees to utilize its best efforts to cure such matters, but
shall not be obligated to expend any money or incur any liability to effect such
cure.
E. If any of the Additional Conditions Precedent are not timely
satisfied, unless the parties mutually agree to extend the time for satisfaction
of the conditions, this Contract shall be terminated, the Purchaser's Deposit
shall be promptly returned, and neither party shall have any further rights or
obligations hereunder.
7. MUTUAL REPRESENTATIONS.
The parties, to their actual knowledge, each make to the other the
following statements concerning the condition of the Property (hereinafter
referred to as the "Mutual Representations"):
A. Attached hereto as Exhibits "F-1" through "F-6" are true and
complete rent rolls of the Properties as of the date set forth thereon, and
except as set forth on Exhibits "F-1" through "F-6", no tenant is in material
default under its lease, nor has Seller received any notice that it is in
default as landlord thereunder.
B. All of the Property is, or on the Closing Date will be, owned
by Seller free and clear of liens and encumbrances, other than the Permitted
Title Exceptions.
C. Each of the Properties is in material compliance with all
applicable laws, codes, and ordinances including those regulating zoning,
building, health, fire, or other safety and environmental condition.
D. The Properties are insured against fire and other hazards as
described in Exhibit "G" attached hereto.
E. There are no plans for condemnation of all or any part of the
Properties.
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F. There are no planned street or other improvements which may
result in special assessments against the Properties or any part thereof, or
which may alter or disrupt ingress and egress from the Properties.
G. There are no claims, actions, suits, or proceedings pending,
threatened against, or affecting the Property.
H. There are, and on the date of Closing there will be no damage
to the Property which has not been repaired. Subject to the provisions of
paragraph 15, all damage occurring to the Property prior to Closing shall be
repaired by Seller at Seller's expense. All mechanical equipment for which
Seller is responsible pursuant to the terms of Tenant Leases, including, but not
limited to the plumbing, air conditioning and heating and electrical systems
will be in good and serviceable operating condition.
I. At the time of Closing, any work required to be performed by
the Seller under the terms of the Tenant Leases or the Operating Agreements or
other agreements in connection with the Property will have been completed in
accordance with the plans and specifications therefor, if any, and fully paid
for by Seller, except for tenant finish work incident to new leases entered into
between the date hereof and Closing, which shall be governed by the provisions
of paragraph 10.
J. Neither the execution and delivery of this Contract or the
other documents called for hereunder, nor the consummation of any of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof, or with the terms and provisions thereof, will contravene any
provision of law, statute, rule, or regulation to which Seller is subject, or
will conflict to be inconsistent with, or result in any breach of any of the
terms, conditions, covenants, or provisions of, or constitute a default under or
result in the creation or imposition of any lien, security interest, charge, or
encumbrance upon the Property pursuant to the terms of any indenture, mortgage,
deed of trust, lease, or other instrument to which Seller is a party, or by
which Seller or any Property may be bound. Except as set forth in Exhibit "L",
no person or entity has any right to acquire the Property or any interest or
part thereof.
K. There are no Operating Agreements that are either not
assignable or non-cancelable on thirty (30) days prior notice.
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L. Except for the Permitted Exceptions and except as otherwise
disclosed herein and in Exhibits "C" and "D" attached hereto, there are no
material liens or encumbrances against the Properties or other exceptions to fee
simple title which would materially adversely affect the value of the
Properties.
M. For purposes of this Contract, the actual knowledge of Seller
shall mean the actual knowledge of the Trustees, and the actual knowledge of
Purchaser shall mean the actual knowledge of David Blankenship, Alan Fletcher,
Roger Schulz, Dennis Roland, and Maureen DeWald.
8. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants the following:
A. Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate as defined in the Internal Revenue
Code and Regulations.
B. The execution and delivery of this Contract and each
instrument or document required to be executed and delivered by Seller pursuant
hereto and the consummation of the transactions contemplated hereby, upon
execution, delivery, and consummation thereof, will be duly authorized and
approved by all requisite Trust actions and no other authorization or approval,
whether of governmental bodies or otherwise, will be necessary in order to
enable Seller to enter into or to perform this Contract, subject to the
Conditions Precedent. Seller is not a party to any contract or agreement, other
than through Purchaser as Advisor, which would violate the representations
contained in subparagraph J above.
9. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants that it has taken all necessary
action to authorize the execution and delivery of this Contract and to
consummate the purchase of the Property as herein contemplated. The officer
executing this Contract on behalf of Purchaser has been duly authorized to do so
pursuant to proper action by Purchaser's Board of Directors. Purchaser is not
subject to any governmental or other regulations that would restrict this
purchase, nor is this purchase in contravention of any term or provision of
Purchaser's Articles of Incorporation or By-Laws.
10. COVENANTS AND AGREEMENTS.
Between the date hereof and the Closing:
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A. Seller shall not enter into any agreements or contracts
affecting the Properties which survive Closing, nor shall Seller enter into any
new lease or modify or terminate any existing Tenant Lease without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing, Seller may enter the pending lease
transactions described on Exhibit "H" ("Permitted Lease Transactions"). The
parties agree to pursue, approve, and enter new leases in the ordinary course of
business. The parties shall pay for the tenant improvement costs or allowances
and leasing commissions in Permitted or hereafter approved Lease Transactions
entered between the date hereof and Closing in accordance with Exhibit "H".
Nothing in this Contract shall be deemed to require Seller to enter into any new
lease, lease modification, or operating agreement. Any contracts for tenant
improvements for the Permitted Lease Transactions which are not completed prior
to Closing shall be assigned to and assumed by Purchaser as an Operating
Contract pursuant to paragraph 11A(2) hereof, subject to any appropriate
prorations for the costs thereof in accordance with this paragraph.
B. Seller shall operate the Property in the ordinary course of
business, including without limitation, compliance with the terms of all leases,
mortgages, or other contractual obligations relating to the Property and doing
regular, scheduled, or necessary maintenance and repair of the Properties, and
of the fixtures, furniture, and equipment, so that the Property will be in the
condition required herein on the Closing Date. Discretionary repairs and
maintenance shall be performed in accordance with the budget for such matters as
approved by the Seller.
C. The Purchaser shall use reasonable efforts to obtain the
Yamaha Lender's consent to the Purchaser's purchase of Yamaha Warehouse subject
to its mortgage. If such consent is obtained, the purchase price shall be
reduced by the principal balance of the mortgage at Closing and accrued interest
on the mortgage debt will be pro rated between the parties with Purchaser
responsible for interest on and after the date of Closing. Seller agrees to pay
the assumption fee to the Yamaha Lender in the amount of one percent (1%) of the
principal balance of the loan. If the Yamaha Lender refuses to consent to the
sale, then the purchase price will not be reduced, Seller will pay off the
Yamaha mortgage at Closing and deliver the Property free and clear of the
mortgage and related liens.
11. ITEMS TO BE DELIVERED AT THE CLOSING.
A. At Closing, Seller shall cause to be delivered the following:
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(1) A Special Warranty Deed for each Property in the form attached
hereto as Exhibit "I" (modified as necessary to comply with state, local law, or
recording requirements), conveying to Purchaser fee simple title to the
Properties, subject only to the Permitted Exceptions.
(2) A blanket conveyance, bill of sale and assignment for each
Property (the "Bill of Sale"), conveying and assigning title with covenants of
general warranty to Purchaser, free and clear of all liens and encumbrances,
(other than the Permitted Exceptions); the Personal Property and the Tenant
Leases, the Operating Agreements, the Warranties, and the Licenses, such
instrument to be in form attached hereto as Exhibit "J".
(3) A rent roll (the "Rent Roll") for each Property, certified by
Seller and Purchaser to be true, complete and correct as of the Closing Date and
reflecting the status of tenant delinquencies, if any, existing as of the
Closing Date.
(4) All keys in Seller's possession or control to all locks on the
Property.
(5) To the extent they are in Seller's possession, the executed
originals of all Tenant Leases, together with copies of all correspondence
relating to the Leases and such accounting information relating to the Leases as
Purchaser may reasonably require.
(6) A certificate in the form attached hereto as Exhibit "K",
certifying that Seller is a non-foreign entity.
(7) Possession of the Property subject to the Permitted
Exceptions.
(8) Notices to Tenants of sale, in a form acceptable to Purchaser
and Seller.
(9) To the extent they are in Seller's possession, all original
Operating Agreements, Warranties, and Plans and Specifications.
(10) Proper documentation showing the good standing or other
authorization of Seller and the authorization of all persons executing documents
on behalf of Seller. Seller shall also execute and/or deliver all documents
required by the Title Company to issue the title policies in the form required
by this Contract, provided that disclosures, if any, required to be certified by
the Trust shall be either (i) certified to the knowledge of the Trustees, or
(ii) Purchaser as Advisor shall give the same certifications to Seller, which
certifications may be limited to the officers of USP.
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B. Action at the Closing by Purchaser.
On the date of Closing, Purchaser shall deliver the purchase
price to Seller by wire transfer in the amount required by paragraph 2 hereof,
subject to prorations and credits as contemplated herein. Purchaser shall
execute and deliver to Seller at Closing the Bills of Sale evidencing
Purchaser's assumption of the Tenant Leases and Operating Agreements. The
parties shall execute "Notices to Tenants" advising tenants of the sale and
Purchaser agrees to deliver, or cause to be delivered, such notices to each
tenant after Closing.
12. CLOSING PRORATIONS.
Purchaser shall obtain its own insurance coverage for the Property at
Closing. Property expenses, including charges under the continuing Operating
Agreements assumed by Purchaser, collected rents, and ad valorem taxes on the
Property shall be prorated at the Closing, effective as of the Closing date,
using the latest available computations of such items. Utilities shall be
prorated between the parties at Closing. Purchaser shall have all utilities in
Seller's name transferred to Purchaser's name promptly following the Closing.
All expenses which are prorated at Closing (exclusive of any unknown claims
related thereto, which shall remain the responsibility of Seller) shall be
deemed a final proration and Purchaser shall be responsible for payment of such
items when due. Except as prorated between the parties at Closing or as
otherwise agreed by the parties in accordance with this paragraph and paragraph
10A, Seller shall be responsible for all property expenses incurred, undertaken,
or contracted for prior to Closing, and agrees to indemnify and hold Purchaser
harmless from any claim, cost, or cause of action arising from any such expenses
and liabilities, including court costs and attorney's fees in the defense
thereof or in the enforcement of this indemnity. Tenant security deposits in the
possession of Seller and prepaid rents shall be credited to Purchaser. Included
in this sale are all delinquent rental accounts and all rents, issues, and
profits of the Properties due or which may become due after Closing relating to
periods occurring prior to Closing. In addition to the purchase price, Purchaser
shall pay Seller for Seller's prorata share of delinquent tenant rental
accounts, exclusive of late charges and/or interest, at face value, but
specifically excluding payment for delinquent accounts of tenants in Material
Default (hereinafter defined), as of the Closing Date. Purchaser shall also pay
Seller at Closing for Seller's prorata share of tenant reimbursements for CAM
and real estate taxes due after Closing based upon the most recent estimate of
such amounts as used in Seller's ledgers to accrue for such items, specifically
excluding any payment for reimbursables of tenants in Material Default as of the
Closing Date. As used in this paragraph, Material Default
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shall mean any tenant (i) whose rental account is more than ninety (90) days
delinquent, (ii) who is in bankruptcy or insolvency proceedings, (iii) has
vacated the Property and is delinquent in payment of rent for more than thirty
(30) days, or (iv) has indicated in writing its inability or refusal to pay its
account. Subject only to the payments and prorations set forth in this
paragraph, all rent issues and profits of the Properties of every nature due or
paid after Closing shall be the property of Purchaser.
13. CLOSING COSTS.
Purchaser shall pay the cost of the title policies, surveys, and
environmental reports. Seller shall pay for the applicable transfer taxes. The
parties shall each pay one-half of the Title Company escrow fees, if any. Each
party shall bear its own attorney's fees.
14. REMEDIES UPON DEFAULT.
IF PURCHASER SHALL DEFAULT IN ITS PERFORMANCE OF THIS CONTRACT,
PURCHASER AND SELLER AGREE IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO
FIX THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, PURCHASER AND SELLER HEREBY
AGREE A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT SELLER WOULD SUFFER IN
THE EVENT PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE
PROPERTIES ARE AND SHALL BE, AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT
LAW OR IN EQUITY), AN AMOUNT EQUAL TO THE EARNEST MONEY. SAID AMOUNT SHALL BE
THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE BREACH OF THIS CONTRACT BY
PURCHASER, ALL OTHER CLAIMS TO DAMAGES OR REMEDIES BEING HEREIN EXPRESSLY WAIVED
BY SELLER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
SELLER. UPON SUCH DEFAULT BY PURCHASER, THIS AGREEMENT SHALL BE TERMINATED AND
NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO
THE OTHER EXCEPT FOR THE RIGHT OF SELLER TO RECEIVE SUCH LIQUIDATED DAMAGES FROM
THE TITLE COMPANY.
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If Seller shall default in its performance of this Contract, the
Purchaser may, as its sole and exclusive remedies elect to either (i) terminate
this Contract and receive a refund of the Deposit, or (ii) sue Seller for
damages, which damages the parties agree shall be limited to an amount not to
exceed the Deposit.
Except for failure to close on the specified Closing Date, for which
default no notice or cure period is required, prior to a declaration of default,
the declaring party shall give the defaulting party written notice specifying
the default. The defaulting party shall have five (5) business days from receipt
of such notice to cure the default. If the cure period extends beyond the
scheduled date of Closing, the Closing Date shall be postponed to the last day
of the cure period.
In the event either party hereto employs an attorney and commences
legal action because of the other party's default, then the non-prevailing party
shall pay to the prevailing party reasonable attorney's fees incurred in the
enforcement of this Contract.
15. RISK OF LOSS.
Until Closing, all risk of loss of the Property is on the Seller and
if, prior to Closing, the Property, or any part thereof, shall become damaged by
fire or other casualty or become the object of any condemnation proceedings,
Purchaser may, as its sole and exclusive remedy, elect to either (i) terminate
this Contract, or (ii) proceed with the Closing and receive an assignment in
form acceptable to Purchaser of all insurance proceeds or awards for such
taking, free and clear of all liens, claims and encumbrances, and in the case of
casualty, together with a cash payment by Seller to Purchaser in the amount of
the lesser of (a) any deductible under Seller's insurance, or (b) the cost of
the repair of the damage. If the estimated cost of repair is less than One
Million Dollars ($1,000,000.00), Purchaser agrees to proceed to Closing in
accordance with (ii) above. Any election allowed hereunder shall be made in
writing no later than the earlier of (i) the scheduled date of Closing, or (ii)
ten (10) days after a party's receipt of notice of such damage or proceeding.
16. NOTICES.
All notices and demands herein required shall be in writing. Whenever
any notice, demand or request is required or permitted hereunder, such notice,
demand or request shall be hand-delivered personally or by express mail, courier
service (both with delivery receipt), or electronically verifiable facsimile
transmission or sent by United States Mail (registered or certified) postage
prepaid, to the addresses set forth below.
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As to Seller: Patrick E. Falconio, Chairman of the Board
of Trustees
USP Real Estate Investment Trust
111 Cottage Grove SE, #501
Cedar Rapids, IA 52403
Fax: 319/298-1910
With a copy to: Timothy Hearn
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Fax Number: (612) 340-2868
As to Purchaser: AEGON USA Realty Advisors, Inc.
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499
Attention: Maureen DeWald
Fax Number (319) 369-2188
Any notice, demand or request which shall be given in the manner
aforesaid shall be deemed sufficiently given for all purposes hereunder (1) at
the time such notices, demands or requests are hand-delivered (which shall be
deemed to include delivery by express mail or courier service or transmission by
telefax facsimile) or (2) the day such notices, demands or requests are posted,
postage prepaid, in the United States Mail in accordance with the preceding
portion of this paragraph, provided however, time for response to any such
notice shall commence upon receipt at the address specified. Notice by telefax
transmission shall be given on a non-banking holiday weekday between the hours
of 9:00 a.m. to 5:00 p.m. (at the destination) or shall be deemed received on
the next such day and time.
17. TIME OF ESSENCE.
Time is of the essence of this Contract.
18. REAL ESTATE BROKERS.
Purchaser and Seller covenant and represent to each other that, there
is no party entitled to a real estate commission, finder's fee, cooperation fee,
or brokerage-type fee or similar compensation in connection with this Contract
and the transactions contemplated herein, except for a fee due Raymond James &
Associates, Inc. for rendering the fairness opinion requested by Seller herein,
and whose fee shall be paid by Seller pursuant to a separate agreement. Each
party agrees to hold the other harmless from and against any claim for a
commission or fee from
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any other broker or agent claiming by or through the indemnifying party. Seller
warrants that Raymond James & Associates, Inc. has waived any right to claim a
commission or transaction fee on this sale.
19. ENTIRE AGREEMENT.
This Contract contains all of the agreements, representations and
warranties of the parties hereto and supersedes all other discussions,
understandings or agreements in respect to the subject matter hereof. All prior
discussions, understandings and agreements are merged into this Contract, which
alone fully and completely expresses the agreements and understandings of the
parties hereto. This Contract may be amended, superseded, extended or modified
only by an instrument in writing referring hereto signed by both parties.
20. EXHIBITS A PART OF THIS CONTRACT.
All Exhibits referred to in this Contract and attached hereto are
incorporated into this Contract by reference and are hereby made a part hereof.
21. NO BENEFIT TO OTHER PARTIES.
Except as otherwise provided herein, none of the provisions hereof
shall inure to the benefit of any party other than the parties hereto and their
respective successors and permitted assigns, or be deemed to create any rights,
benefits or privileges in favor of any other party except the parties hereto.
22. NO AGENCY, PARTNERSHIP OR JOINT VENTURE.
Nothing herein shall be construed to establish an agency relationship,
a partnership or a joint venture between Seller and Purchaser for any purpose.
23. CAPTIONS.
The captions and headings contained in this Contract are for reference
purposes only and shall not in any way affect the meaning or interpretation
hereof.
24. GOVERNING LAW.
This Contract shall be governed, construed and enforced in accordance
with the laws of the State of Iowa.
25. NO WAIVER.
The waiver by one party of the performance of any covenant or condition
herein shall not invalidate this Contract, nor shall it be considered to be a
waiver by such party of any other covenant or condition herein. The waiver by
either or both parties of the time for
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performing any act shall not constitute a waiver of the time for performing any
other act or an identical act required to be performed at a later time. Except
as otherwise specifically restricted herein, the exercise of any remedy
provided by law and the provisions of this Contract shall not exclude other
available remedies.
26. AS-IS CONDITION.
Purchaser acknowledges that it is purchasing the Property on an AS-IS
condition, based upon its own inspections thereof and without benefit of any
representation, warranty or disclosure from Seller, either express or implied or
in the nature of fitness for any particular purpose, except as specifically set
forth herein. Seller agrees to maintain the Properties in their current physical
condition to the Closing Date, normal wear and tear excepted.
27. SURVIVAL OF REPRESENTATIONS.
The representations and warranties made by Seller in paragraph 8 of
this Contract and by Purchaser in paragraph 9 (the parties "Separate
Representations and Warranties") shall survive the Closing and delivery of deeds
and other conveyance documents. Each party agrees to indemnify and hold the
other harmless from and against any loss, cost, liability, claim, or cause of
action arising from the inaccuracy of such parties Separate Representations and
Warranties, including court costs and attorney's fees incurred by such
indemnified party in the defense of any such claim and in the enforcement of
this indemnity. All indemnities contained in this Contract shall survive the
Closing. The Mutual Representations in paragraph 7 are given for the sole
purpose of establishing the Purchaser's Conditions Precedent to Closing
contained in paragraph 5D and shall not survive the Closing; the sole remedy for
breach of the Mutual Representations being as set forth in paragraph 5F.
Provided, however, notwithstanding the provisions of the prior sentence to the
contrary, the breach of any of the Mutual Representations by Purchaser that
results in a claim against Seller by Purchaser under or pursuant to any
representations or warranties of Seller contained in the conveyance documents
delivered by Seller at Closing, shall survive for the sole benefit of Seller and
for the sole use as a defense against any such claim by Purchaser and/or its
successors or assigns in interest to the Properties.
28. ACCESS TO FILES.
For a period of three (3) years after Closing, Purchaser agrees to
grant to Seller, its successors or assigns, access to Tenant Lease and Property
files delivered to Purchaser at Closing, subject to reasonable advance written
notice.
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29. PACKAGE SALE.
The purchase price provided herein is based upon a group sale of the
Properties, and except as provided in paragraph 5F, no Property or Properties
may be purchased or sold individually hereunder without the prior written
consent of Purchaser and Seller, which consent may be withheld in the sole
discretion of either party.
30. ASSIGNMENT.
Purchaser shall have the right to assign this Contract, in whole or in
part, to one or more affiliated entities, provided written notice shall be given
to Seller of such assignment no later than ten (10) days prior to Closing. Any
such assignment shall not terminate any liability hereunder unless so released
in writing by Seller.
31. BUSINESS DAYS.
In the event that any time period under this Contract expires on a day
that is not a business day, such time period shall be deemed extended to the
first business day following such date. "Business day" as used herein shall mean
any day other than Saturday, Sunday or a legal holiday on which business is
transacted by federally insured national banking institutions in Cedar Rapids,
Iowa.
32. COUNTERPARTS.
This Contract may be signed in counterparts, each of which is deemed an
original. This Contract shall be null and void unless it shall be executed by
Purchaser and one copy returned to Seller on or before January 20, 2000.
WHEREFORE, the parties have hereunto affixed their hands and seals as of the
date set hereof.
SELLER: PURCHASER:
USP Real Estate Investment Trust AEGON USA Realty Advisors, Inc.
By: /s/ Patrick E. Falconio By: /s/ David L. Blankenship
---------------------------- ------------------------------
Patrick E. Falconio, Trustee David L. Blankenship, President
Chairman of the Board of Trustees
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LIST OF EXHIBITS
A Legal Descriptions
A-1 Kingsley Square Shopping Center, Orange Park, Florida
A-2 First Tuesday Mall, Carrollton Georgia
A-3 Mendenhall Commons, Memphis, Tennessee
A-4 North Park Plaza Shopping Center, Phoenix, Arizona
A-5 Presidential Drive, Atlanta, Georgia
A-6 Yamaha Warehouse, Cudahy, Wisconsin
B Purchase Price Allocation Between Properties
C Current Title Policies of the Properties
D Current Surveys of the Properties
E Environmental Reports on the Properties
F Rent Rolls
F-1 Kingsley Square Shopping Center, Orange Park, Florida
F-2 First Tuesday Mall, Carrollton Georgia
F-3 Mendenhall Commons, Memphis, Tennessee
F-4 North Park Plaza Shopping Center, Phoenix, Arizona
F-5 Presidential Drive, Atlanta, Georgia
F-6 Yamaha Warehouse, Cudahy, Wisconsin
G Property Insurance
H Permitted Leasing Transactions
I Deed
J Bill of Sale
K Non-Foreign Affidavit
L Yamaha Motor Corporation USA
Right of First Refusal
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Exhibit 2.1
PLAN OF LIQUIDATION
OF
USP REAL ESTATE INVESTMENT TRUST
1. Upon approval of the liquidation and termination of the Trust by the
shareholders of the Trust, the Trust shall cease to carry on business except to
the extent necessary for the beneficial winding up of the business and affairs
of the Trust and the liquidation of the Trust's assets.
2. The officers of the Trust shall be authorized to sell or otherwise
liquidate any or all of the properties of the Trust which, in their judgment,
should be sold or liquidated in order to facilitate the liquidation of the
Trust, and such officers shall make payment of, or provide for the payment or
settlement of, all debts and obligations of the Trust.
3. The officers of the Trust or their designees are authorized, directed
and empowered to distribute to the shareholders, in proportion to their
respective shareholdings, the assets of the Trust, in whatever form they may
then be, not needed for the payment of the liabilities of the Trust, in whatever
form they may be, as liquidating distributions of the Trust, such distributions
to be made on or before December 31, 2000.
4. Upon termination of the Trust and distribution to the Shareholders as
herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of such
termination, which instrument shall also be recorded in the Office of the
Recorder of Linn County, Iowa. A copy of such instrument shall also be sent to
each Shareholder and each State Administrator.
5. This Plan of Liquidation shall be a plan of complete
liquidation within the meaning of Section 331 of the Code, and this Plan
shall be deemed to authorize, empower and direct the officers of the Trust to
file the appropriate forms with the Internal Revenue Service, file final tax
returns for the Trust, and do all such other things as, in their opinion, may
be necessary to conform with the provisions of Section 331 of the Code or
advisable to carry out the purposes of this Plan
<PAGE>
Exhibit 3
SECOND AMENDED AND RESTATED
DECLARATION OF TRUST
OF
USP REAL ESTATE INVESTMENT TRUST
This Second Amended and Restated Declaration of Trust is made this 5th
day of October, 1972, at Cedar Rapids, Iowa by John F. Hodson, Dale C. Tinstman
and John H. Chapman, Jr. (such persons, together with their successors who have
been duly elected or appointed as trustees in accordance with the provisions of
this Declaration of Trust and are then in office, being hereinafter collectively
called the "Trustees"). This Second Amended and Restated Declaration of Trust
amends and restates the First Amended and Restated Declaration of Trust of
"Equity Security Investment" made on the 1st day of September, 1970 with First
Amendment made on the 29th day of October 1970, and the Declaration of Trust of
"Security First Investment Trust" made the 10th day of March, 1970 by the duly
elected Trustees, which Documents are hereby amended and restated in their
entirety pursuant to Section 8.2 thereof and hereof to read as hereinafter
provided.
Now, therefore, the Trustees do hereby make and declare that all real
estate or other property now held or hereafter acquired by them or their
successors as Trustees, or acquired with funds, other assets or shares in this
Trust, and all rents and other income therefrom and the proceeds thereof, shall
be held by them in trust and shall be received, managed and disposed of for the
benefit of the holders of shares of beneficial interest in this Trust from time
to time in the manner herein provided and subject to the terms and conditions
set forth in this instrument and any amendments hereto (which instrument, as
amended from time to time, shall hereinafter be designated as the "Declaration
of Trust").
ARTICLE I
The Trust
Section 1.1. NAME OF TRUST. This Trust shall be known as "USP REAL
ESTATE INVESTMENT TRUST", in which name the Trustees shall, so far as possible,
conduct all business, make and execute deeds, mortgages, leases, contracts, and
other instruments, acquire, mortgage, lease, convey and transfer real estate and
other property, and sue and be sued in trust capacity. In the event that the
Trustees determine that the use of such name is not practicable, legal or
convenient, they may use such other designation or may adopt such other name as
they deem proper and the Trust may hold some or all of its properties or conduct
some or all of its activities under such name or designation.
Section 1.2. ORGANIZATION. This Declaration of Trust is executed and
delivered by the Trustees in Linn County, State of Iowa, and the laws of the
State of Iowa shall govern the construction, validity and effect of this
Declaration of Trust and the administration of the Trust hereby created.
Section 1.3. LOCATION. The principal office of the Trust shall be in
such city, town or locality either within or without the State of Iowa as the
Trustees shall from time to time determine. The Trust may have such other
offices or places of business as the Trustees may from time to time determine.
<PAGE>
Section 1.4. NATURE OF TRUST. The Trust shall be of the type commonly
known as a common law business trust and shall not be a general partnership,
limited partnership, partnership association or corporation.
Section 1.5. PURPOSE. The purpose of the Trust shall be to engage
primarily in the investment and reinvestment of its assets in real property and
interests therein and to conduct the business of a "real estate investment
trust" as defined in Part II, subchapter M of Chapter I of the Federal Internal
Revenue Code of 1954, as now enacted and as it may hereafter be amended and
comply with sections 856, 857 and 858 of such code, as amended, or such section
or sections of any subsequent Internal Revenue Code as may be applicable to
organizations described in Public Law No. 86-779 (which statutory provisions
shall hereinafter be referred to as the "Real Estate Investment Trust
Provisions"). The Trustees may, if they deem it advisable and in the best
interest of the Trust, elect not to qualify the Trust under such provision of
the Internal Revenue Code or, if they deem it advisable, may conduct the
business of the Trust from time to time in such manner that it will not then
qualify as a "real estate investment trust".
ARTICLE II
Shares
Section 2.1. SHARES; TRUST CERTIFICATES; SHAREHOLDERS. The units into
which the beneficial interest in the Trust will be divided shall be designated
as "Shares." The certificates evidencing ownership of Shares in the Trust shall
be designated as Certificates of Beneficial Interest or Share certificates, and
shall be in such form as the Trustees may prescribe. The registered holders
thereof shall be designated as "Shareholders." The shares shall be personal
property. The shareholders shall have no legal title or interest in the property
of the Trust and no right to a partition thereof or to an accounting during the
continuance of the Trust. They shall have only the rights expressly provided in
this Declaration.
Section 2.2. AMOUNT AND CLASS OF SHARES. The Trust shall be divided in
20,000,000 Shares and each Share shall be of the par value of $1.00. All shares
shall be of the same class and shall have equal voting, distribution,
liquidation and other rights.
Section 2.3. SALE OF SHARES. The Trustees may from time to time issue,
sell by private or public offering, or exchange Shares in such number, for such
sums of money, real estate, or other consideration (not less than par value) as
they deem proper. Shareholders shall have no pre-emptive rights to acquire
additional Shares. The Trustees shall upon the request of a Shareholder cause
share certificates to be issued to evidence the ownership of Shares in the
Trust.
Section 2.4. ACQUISITION OF SHARES BY TRUST. The Trustees may, on
behalf of the Trust, at any time, purchase or otherwise acquire outstanding
Shares for such consideration and on such terms as they may deem proper. Shares
so acquired shall not participate in distributions from the Trust so long as
they belong to the Trust. Such Shares may, in the discretion of the Trustees, be
cancelled and no longer be deemed to be outstanding or may be held in the
treasury and be disposed of by the Trustees at such time or times, to such party
or parties, and for such consideration, as the Trustees may deem appropriate.
Section 2.5. TRANSFERABILITY OF SHARES. Shares shall be
transferable in the same manner and to the same extent as a "security" under
Article 8 of the Iowa Uniform Commercial Code. The persons in
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whose names the Shares are registered on the books of the Trust shall be deemed
the absolute owners thereof, and, until a transfer is effected on the books of
the Trust, the Trustees shall not be affected by any notice, actual or
constructive, of any transfer.
Section 2.6. PERCENTAGE OF OWNERSHIP. Notwithstanding the provisions of
Section 2.5 hereof, any Shareholder or proposed Shareholder shall be obligated,
upon demand of the Trustees, or their agents, to furnish to the Trust such
information as is necessary to determine whether any transfer or issuance of
Shares on the books of the Trust will result, under the applicable Federal laws
and regulations concerning attribution of ownership, in such person acquiring
more than ten (10) percent of the beneficial interest in the Trust, or in five
(5) or less persons acquiring more than fifty (50) percent of the beneficial
interest in the Trust. In the event that the Trustees determine from such
information that such a transfer or issuance of Shares would result in such a
person or persons owning such percentage of the beneficial interest, the
Trustees may refuse to make any such transfer or issuance.
Section 2.7. EFFECT OF TRANSFER OF SHARES OR DEATH, INSOLVENCY, OR
INCAPACITY OF SHAREHOLDERS. Neither the transfer of Shares, nor the death,
insolvency or incapacity of any Shareholder shall operate to dissolve or
terminate the Trust, nor shall it entitle any transferee, legal representative
or other person to a partition of the property of the Trust or to an accounting.
Section 2.8. NONASSESSABILITY OF SHARES. When payment of the
consideration for which shares are to be issued shall have been received by the
Trust, such Shares shall be deemed to be fully paid and nonassessable. In the
absence of actual fraud in the transaction, the judgment of the Board of
Trustees as to the value of the consideration received for Shares shall be
conclusive.
ARTICLE III
Shareholders
Section 3.1. LIMITED LIABILITY. Shareholders shall be under no
obligation to the Trust or its creditors with respect to their ownership of
Shares other than the obligation to pay to the Trust the full consideration for
which said Shares were issued, and the Trustees shall have no power to bind the
Shareholders personally. Upon any debt, claim, demand, judgment, decree or
obligation of any nature whatsoever against or incurred by the Trust, or by the
Trustees, officers or other representatives or agents of the Trust in their
capacities as such, whether founded upon contract, tort or otherwise, resort of
the creditors shall be had solely against the funds and property of the Trust
and the Shareholders shall not be personally liable therefor.
Section 3.2. NOTICE OF LIMITED LIABILITY. In any written order,
contract, note, mortgage, instrument or obligation given or executed by the
Trustees or with their authority, the Trustees shall cause to be inserted a
provision substantially as follows:
"It is understood and agreed upon by the parties hereto (1)
that the USP Real Estate Investment Trust is a common law trust
organized under the laws of Iowa pursuant to a Declaration of Trust
dated March 10, 1970, as amended, and recorded in the office of the
Recorder of Linn County, Iowa, (2) that the holders of shares of
beneficial interest in the Trust
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shall not be personally liable thereon, and (3) that the other party
hereto shall look solely to the funds and property of the Trust for the
payment of any claim arising hereunder."
However, no failure of the Trustees, representatives of agents of the Trust to
place such notice in any document or instrument shall have the effect of
rendering any Shareholder personally liable thereon.
Section 3.3. ANNUAL MEETING OF SHAREHOLDERS. The Shareholders shall
meet annually following the delivery of the certified annual report to
Shareholders at such time and place as may be prescribed in the by-laws of the
Trust, or as may be fixed by the Board of Trustees in accordance with the
provisions thereof.
Section 3.4. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the
Shareholders may be called by the Chairman of the Board of Trustees, by a
majority of the Trustees or by any officer of the Trust upon the written request
of Shareholders holding together not less than twenty-five (25) percent of the
outstanding Shares which would be entitled to vote at such special meeting. The
call and notice of a special meeting shall state the nature of the business to
be transacted thereat, together with the time, date and place of said meeting.
If the special meeting is called upon the written request of Shareholders, such
request of the Shareholders shall also state the specific purpose of such call
and no other business shall be considered.
Section 3.5. QUORUM OF SHAREHOLDERS. One-third (1/3) of the outstanding
Shares, represented in person or by proxy, shall constitute a quorum at any
meeting of Shareholders. If a quorum is present, the affirmative vote of the
majority of Shares represented at the meeting shall be the act of the
Shareholders, unless the vote of a greater number of Shares is required by this
Declaration of Trust.
Section 3.6. ANNUAL REPORT. Within one hundred twenty (120) days after
the close of the Trust's fiscal year, the Trustees shall cause an annual report
to be prepared and distributed to each Shareholder and to each Trustee, to the
Commissioner of Insurance of the State of Iowa and to the Blue Sky or securities
law administrator of such other States as the Trustees or officers of the Trust
may deem advisable. Such annual report shall contain a statement of the
activities of the Trust during the fiscal year as well as a balance sheet,
statement of income and surplus of the Trust, together with an opinion by an
independent certified public accountant based on an examination of the books and
records of the Trust not materially limited in scope, and made in accordance
with generally accepted auditing procedures applied on a consistent basis. The
copies delivered to the Trustees and administrators shall be manually signed.
Section 3.7. PERIODIC REPORTS. No less often than quarterly (except at
the time of the annual report), the Trustees shall furnish to the Shareholders,
to the Commissioner of Insurance of the State of Iowa, and to the Blue Sky or
securities law administrator of such other States as the Trustees or officers of
the Trust may deem advisable, unaudited reports containing a current balance
sheet and other pertinent information regarding the Trust and its activities for
the respective period. Such reports shall be distributed within sixty (60) days
after the end of the period covered by the report.
Section 3.8. REPORTS ON DISTRIBUTIONS. Distributions to Shareholders
shall be accompanied to the extent possible by a statement in writing advising
Shareholders of the extent to which the distribution represents ordinary income,
a capital gains distribution or a return of capital. In the event of doubt as to
the taxable status of a distribution at the time it is made, the taxable nature
of the funds so distributed shall
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<PAGE>
be reported to Shareholders no later than sixty (60) days after the close of the
fiscal year in which the distribution was made.
Section 3.9. INSPECTION OF RECORDS. The records of the Trust shall be
subject to inspection at reasonable times by the Commissioner of Insurance of
the State of Iowa and by the Shareholders to the same extent as it permitted to
shareholders of a corporation under the Iowa Business Corporation Act.
Section 3.10. INDEMNIFICATION OF SHAREHOLDERS. Upon reasonable written
notice to the Trust and upon unequivocal cooperation by a Shareholder with the
Trust, the Trust shall indemnify and hold each Shareholder harmless from and
against all claims and liabilities (other than those caused by the negligence or
misconduct of the Shareholder), whether they proceed to judgment, or are
settled, or otherwise brought to a conclusion, to which such Shareholder may
become subject by reason of his being or having been a Shareholder of the Trust.
The Trust shall further furnish legal counsel and shall reimburse a Shareholder
for reasonable expenses incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 3.10 shall
not exclude any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust to indemnify
or reimburse a Shareholder in an appropriate situation even though not
specifically provided herein; provided, however, that the Trust shall have no
liability to reimburse Shareholders for taxes assessed against them by reason of
their ownership of Shares, nor for any losses suffered by reason of changes in
the market value of the Shares or any other securities of the Trust.
Section 3.11. INSURANCE. In order to protect the Trust assets, the
Trustees shall at all times maintain or cause to be carried adequate insurance,
as determined by their sound business judgment, against all customary types of
liabilities and hazards.
Section 3.12. INFORMAL ACTION BY SHAREHOLDERS. Any action required by
this Declaration of Trust to be taken at a meeting of the Shareholders, or any
action which may be taken at a meeting of the Shareholders, may be taken without
a meeting if a consent in writing setting forth the action so taken shall be
signed by all of the Shareholders entitled to vote with respect to the subject
matter thereof. Such consent shall have the same force and effect as a unanimous
vote and may be stated as such in any document filed pursuant hereto.
Section 3.13. DIVIDENDS OR DISTRIBUTIONS. The Trustees may from time to
time declare and pay to the Shareholders, in proportion to their respective
ownership of Shares, out of the earnings, profits or surplus (including paid-in
capital), or assets in the hands of the Trustees, such dividends or other
distributions as they see fit. The declaration and payment of such dividends or
other distributions and the determination of earnings, profits, surplus
(including paid-in capital) available for dividends and other purposes shall lie
wholly in the discretion of the Trustees and no Shareholder shall be entitled to
receive or be paid any dividends or to receive any distribution except as
determined by the Trustees in the exercise of said discretion.
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ARTICLE IV
Trustees
Section 4.1. BOARD OF TRUSTEES. The Board of Trustees shall consist of
not less than three (3) nor more than nine (9) Trustees, as may from time to
time be established in the by-laws. A majority of the Trustees shall not be
affiliated with any person performing investment advisory services (pursuant to
Section 5.6(t) hereof) or acquisition services for the Trust or any organization
affiliated with any person performing investment advisory services for the
Trust. "Affiliated," for purposes of this Section 4.1 and Section 6.3(j) and 6.4
hereof, shall mean as to any corporation or partnership, any person who holds
beneficially, directly or indirectly, 1% or more of the outstanding capital
stock, shares or equity interests of such corporation or partnership, or is an
officer, director, employee, partner or trustee of such corporation or
partnership or of any person which controls, is controlled by or under common
control with, such corporation, partnership or trust. If at any time by reason
of the death or resignation of a Trustee, a majority of the Trustees are
affiliated with any person performing investment advisory or acquisition
services for the Trust or any organization affiliated therewith, then within 60
days after such vacancy occurs, the Trustee or Trustees then in office shall
appoint pursuant to Section 4.6 hereof a sufficient number of other persons as
Trustees so that there is again a majority of the Trustees who are not so
affiliated.
The original Board of Trustees shall consist of three (3) members and
shall be those Trustees executing this Declaration of Trust. Hereafter, the
Trustees shall be those duly elected or appointed as provided in this
Declaration of Trust. The term "Trustees" shall apply to the Trustees
collectively in their fiduciary capacity and shall not apply to them severally
or as individuals.
Section 4.2. QUALIFICATIONS. The Trustees shall be individuals of full
age, residing within or without the State of Iowa, and shall be required to have
signed this Declaration of Trust, or have agreed in writing to be bound in all
respects by said Declaration before assuming office. Ownership of Shares shall
not be a qualification for election or appointment as a Trustee. The Trustees
shall not be required to devote their entire time to the business and affairs of
the Trust.
Section 4.3. TERM OF OFFICE; ELECTION OF TRUSTEES. The
Trustees executing this Declaration of Trust shall hold office until the
annual meeting of the Shareholders in 1973 at which time the Trustees shall
be elected by the Shareholders for annual terms. The Shares shall not vote
cumulatively in the election of Trustees. Each Trustee shall hold office
until the next annual meeting of Shareholders or until his successor shall
have been elected and qualified. There shall be no limitation upon the terms
to which any Trustee may succeed himself.
Section 4.4. RESIGNATIONS. A Trustee may resign at any time by giving
notice in writing to the Trustees at the principal office of the Trust. Such
resignation shall take effect on the date it is received or at such later date
as is specified. Unless otherwise specified therein, the acceptance of a
resignation shall not be necessary to make it effective.
Section 4.5. REMOVAL. A Trustee may be removed, with or without cause,
by the vote or written consent of the holders of a majority of the outstanding
Shares, and a Trustee may be removed for cause by the vote of a majority of the
Trustees.
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Section 4.6. VACANCIES. The resignation, incompetency, death or removal
of any or all of the Trustees shall not affect the validity of the Trust or
cause its termination. During a vacancy, the remaining Trustee or Trustees may
exercise the powers of the Trustees hereunder. Such Trustee or Trustees may fill
the resulting vacancies by appointment of a successor Trustee or Trustees who
shall serve as Trustee until the next annual meeting of the Shareholders. The
determination of a vacancy among the Trustees by reason of resignation,
incompetency or death, or for any other reason, when made by a majority of the
remaining Trustees and stated in the instrument filling such vacancy, shall be
final and conclusive for all purposes. If at any time, by reason of
resignations, incompetencies or deaths, there shall be no remaining Trustees, a
meeting of the Shareholders shall be forthwith called for the election of
successor Trustees. Any Shareholder or Shareholders owning of record an
aggregate of ten (10) percent of the issued and outstanding Shares shall be
entitled to call such meeting and to nominate candidates for election as
successor Trustees at any such election.
Section 4.7. SUCCESSOR TRUSTEES. Successor Trustees shall have the same
powers as the original Trustees under this Declaration of Trust. Title to all
forms of property held by the Trustees or any of them on behalf of the Trust or
in the name of a nominee in behalf of the Trust shall be vested in successor
Trustees upon their election or appointment without any further action. A
certificate signed by a majority of the Trustees as to who are or were Trustees
at any time shall be conclusive and binding for all purposes.
Section 4.8. MEETINGS OF TRUSTEES. Meetings of the Board of Trustees,
regular or special, may be held either within or without the State of Iowa and
shall be held upon such notice as the by-laws may prescribe. Attendance of a
Trustee at any meeting shall constitute a waiver of notice of such meeting
except where a Trustee attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Trustees needs be specified in the
notice or waiver of notice of such meeting. The Trustees (or the members of any
board or committee appointed by the Trustees in accordance with Section 5.4
hereof) may participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
sentence shall constitute presence in person at such meeting. The minutes of any
Trustees' meeting held by telephone or similar communications equipment shall be
prepared in the same manner as a meeting of the Trustees held in person.
Section 4.9. COMPENSATION. The Trustees shall be entitled to receive
such reasonable compensation for their services as Trustees as they may
determine from time to time subject to the limitations of Section 5.2 hereof.
Section 4.10. OFFICERS AND AGENTS. The officers of the Trust shall
consist of a Chairman, Vice Chairman, Secretary and Treasurer, each of whom
shall be elected by the Board of Trustees at such time and in such manner as may
be prescribed by the by-laws. Such other officers and assistant officers and
agents as may be deemed necessary may be elected or appointed by the Board or
chosen in such other manner as may be prescribed by the by-laws. Any act of the
Trustees purporting to be done in their capacity as such, or by agents or
representatives of the Trustees under authority from the Trustees shall, as to
other persons dealing with such Trustees, agents or representatives, be
conclusively deemed to be
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within the purposes of the Trust and within the powers of the Trustees. Any two
or more offices may be held by the same person; only the Chairman and Vice
Chairman shall be required to be Trustees.
Section 4.11. EXCULPATION AND LIMITATION ON LIABILITIES. No Trustee,
officer, employee or agent of the Trust shall be liable to the Trust 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 or his not having acted in
good faith in the reasonable belief that his action was in the best interests of
the Trust.
The Trustees, officers, employees and agents of the Trust in incurring
any debts, liabilities or obligations, or in taking or omitting any other action
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 to the extent hereinabove provided in this Section
4.11, no Trustee, officer, employee or agent 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,
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
funds and properties of the Trust for the payment or performance thereof.
Section 4.12. INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND
AGENTS. The Trust shall indemnify each of its Trustees, officers, employees and
agents (including any person who serves at its request as director, officer,
partner, Trustee or the like of another organization in which it has any
interest as a shareholder, creditor or otherwise), against all liabilities and
expenses, including amounts paid in satisfaction of judgments, in compromise or
as fines and penalties, and counsel fees, reasonably incurred by him in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he may be involved or with which
he may be threatened, while acting as Trustee or as an officer, employee or
agent of the Trust or the Trustees, as the case may be, or thereafter, by reason
of his being of having been such a Trustee, officer, employee or agent, except
with respect to any matter as to which he shall have been adjudicated to have
acted in bad faith or with willful misconduct or reckless disregard of his
duties or gross negligence or not to have acted in good faith in the reasonable
belief that his action was in the best interests of the Trust; provided,
however, that as to any matter disposed of by a compromise payment by such
Trustee, officer, employee or agent, pursuant to a consent decree or otherwise,
no indemnification either for said payment or for any other expenses shall be
provided unless such compromise shall be approved as in the best interests of
the Trust by a majority of the disinterested Trustees or the Trust shall have
received a written opinion of independent legal counsel to the effect that such
Trustee, officer, employee or agent appears to have acted in good faith in the
reasonable belief that his action was in the best interests of the Trust. The
rights accruing to any Trustee, officer, employee or agent under these
provisions shall not exclude any other right in which he may be lawfully
entitled; provided, however, that no Trustee, officer, employee or agent may
satisfy any right of indemnity or reimbursement granted herein or to which he
may be otherwise entitled except out of the funds and properties of the Trust,
and no Shareholder shall be personally liable to any person with respect to any
claim for indemnity or reimbursement or otherwise. The Trustees may make advance
payments in connection with indemnification under this Section 4.12, provided
that the indemnified Trustee, officer, employee or agent 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 a Trustee, officer,
employee or agent of the Trust in conformity with or in good faith reliance upon
the provisions of Section 6.4 hereof shall not, for the
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purposes of this Trust, constitute bad faith, willful misconduct, gross
negligence or reckless disregard of his duties, or failure to act in good faith
in the reasonable belief that his action was in the best interests of the Trust.
Section 4.13. APPARENT AUTHORITY. No purchaser, lender, transfer agent
or other person dealing with the Trustees or any officer, employee or agent of
the Trust shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by such officer, employee
or agent or make inquiry concerning or be liable for the application of money or
property paid, loaned or delivered to or on the order of the Trustees or of such
officer, employee or agent.
Section 4.14. QUORUM OF TRUSTEES. A majority of the number of Trustees
fixed by the by-laws shall constitute a quorum for the transaction of business
unless a greater number is required by the by-laws. The act of the majority of
the Trustees present at a meeting at which a quorum is present shall be the act
of the Board of Trustees, unless the act of a greater number is required by this
Declaration of Trust or the by-laws.
Section 4.15. INFORMAL ACTION BY TRUSTEES. Any action required by this
Declaration of Trust to be taken at a meeting of the Board of Trustees, or any
other action which may be taken at a meeting of the Board of Trustees, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Trustees; any such consent signed by all
the Trustees shall have the same effect as a unanimous vote.
Section 4.16. ADMINISTRATIVE POWER OF TRUSTEES. The Trustees shall have
power to pay the expenses of organization and administration of the Trust,
including all legal and other expenses in connection with the preparation and
carrying out of the plan for the formation of the Trust, the acquisition of
properties thereunder and the issuance of Shares thereunder.
Section 4.17. RELIANCE OF TRUSTEES. A Trustee shall in the performance
of his duties be fully protected in relying in good faith upon the books of
account or reports made to the Trust by any of its officers or agents, or by an
independent certified public accountant, or by an appraiser selected by the
Trustees in accordance with Section 6.2 hereof, or in relying in good faith upon
other records of the Trust.
ARTICLE V
Powers and Limitations of the Trust
Section 5.1. TITLE AND DISPOSITION OF PROPERTY. The Trustees shall hold
the legal title to all property belonging to the Trust in the name of the Trust,
or in the name of one or more of the Trustees, as Trustees for the Trust, or in
the name of one or more nominees for the Trust provided that each such nominee
shall execute an instrument in recordable form recognizing the interest of the
Trust in the property so held. The Trustees shall have absolute and exclusive
control, management, and disposition over the property of the Trust, and
absolute and exclusive control over the management and conduct of the business
affairs of the Trust, free from any power or control on the part of the
Shareholders, in the same manner as if they were the absolute owners thereof,
subject only to the express limitations in this Declaration of Trust. Any deed,
mortgage, lease, or other written instrument of conveyance executed by
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an officer of the Trust in accordance with the by-laws or authorization of the
Board shall be valid and binding upon the Trustees and upon the Trust.
Section 5.2. LIMITATION ON OPERATING EXPENSES. "Net assets" shall mean
total invested assets at cost before deducting depreciation reserves, less total
liabilities, calculated at least quarterly on a basis consistently applied.
There shall be a reasonable limitation on selling and promotional
expenses, based on requirements of local law. Selling and promotional expenses
shall not be included in the annual expense limitation, and shall include
printing costs for the prospectus and other advertising material, initial issue
securities sales commissions, legal costs and filing fees related to
registration of the securities.
"Operating Expenses" shall include the aggregate annual expenses of
every character, exclusive of interest, taxes, maintenance and upkeep of trust
assets, payments to independent contractors, compensation to investment adviser,
reasonable sales commissions in the disposition of properties, legal and
appraisal fees relating to acquisition of real estate, and title insurance or
abstract expenses, shall not exceed $5,000 or 1% of the average net assets of
the trust calculated on a semi-annual or more frequent basis, consistently
applied, whichever is greater. In the event the Trust has no investment advisor,
or if the compensation of the advisor is 1/2 of 1% or less than 1/2 of 1%, the
expenses, including such compensation to the advisor, if any, may not exceed
1-1/2% annually. The maximum amount of such expenses shall be stated in the
prospectus.
The aggregate borrowings of the Trust, secured and unsecured, shall not
be unreasonable in relation to the net assets of the Trust, as defined in this
section, and the maximum amount of such borrowings in relation to the net assets
shall be stated in the prospectus. This type of borrowing is commonly called
leverage.
Any investment advisor appointed pursuant to Section 5.6(t) hereof by
the Trustees shall reimburse the Trust at least annually for any amount by which
the Trust's operating expenses paid or incurred for such year exceed the
limitations herein provided for aggregate annual operating expenses.
Section 5.3. INDEPENDENT CONTRACTORS. The Trustees may enter into
contracts with one or more independent contractors providing for the management
or operation of, or the furnishing of services to, the properties owned by the
Trust. "Independent contractor," for the purposes hereof, shall mean an
"independent contractor" as defined in Section 856(d)(3) of the Internal Revenue
Code which furnishes or renders services to tenants of or manages or operates
real property owned by the Trust.
Section 5.4. BOARDS AND COMMITTEES. The Trustees may appoint such
boards and committees, including advisory boards, of persons who are not
Trustees, as the Trustees may from time to time determine by resolution or
pursuant to the by-laws. Such a board or committee shall, however, have no power
of authority to make any contract, incur any liability of any nature whatsoever,
or take any action binding upon the Shareholders or the Trustees. Remuneration,
if any, for the services of such a board or committee shall be provided only by
the express resolution of the Trustees and within the expense limitation as
outlined herein, and members of such a board or committee shall serve at the
discretion of the Trustees.
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Section 5.5. INVESTMENT ADVISOR. Any investment advisory contract
entered into by the Trust prior to December 31, 1972 shall be for a period
not longer than two years, and any such contract entered into thereafter
shall be for a period not longer than one year. Any such investment advisory
contract shall provide that it may be terminated at any time without penalty,
by the Trustees or a majority of the holders of outstanding Shares, upon not
less than 60 days' written notice to the investment advisor. The total
compensation of the investment advisor shall not exceed 1/2 of 1% annually,
of the net assets of the trust managed. In the case of real property it shall
be calculated on the basis of cost less depreciation or, in the judgment of
the Trustees, fair market value of the net assets of the Trust, whichever is
less.
Section 5.6. GENERAL POWERS OF THE TRUST. The Trustees shall have all
of the powers necessary, convenient or appropriate to effectuate the purpose of
the Trust and may take any action which they deem necessary or desirable and
proper to carry out such purposes not inconsistent with this Declaration of
Trust. Any determination of the purposes of the Trust and any construction of
the provisions of this Declaration of Trust made by the Trustees in good faith
shall be conclusive for all purposes. In construing the provisions of this
Declaration of Trust the presumption shall be in favor of the grant of powers to
the Trustees.
Without limiting the generality of the powers of the Trustees conferred
in this Section 5.6 or elsewhere in this Declaration of Trust or otherwise
conferred by law, the powers of the Trustees, except where specifically limited
elsewhere in this Declaration of Trust, shall include the following:
(a) To purchase, acquire through the issuance of Shares, obligations of
the Trust or otherwise, and to mortgage, sell for cash or notes or on
conditional sales contract, acquire on lease, hold, manage, lease to
others (without limitation as to the term of such lease, which may
extend beyond the termination of the Trust), option, exchange for real
or personal property, release and partition real estate of every
nature, including freehold, leasehold, mortgage, ground rent and other
interests therein, and to erect, improve, construct, alter, repair,
demolish or otherwise change buildings and structures of every nature.
(b) To purchase, acquire through the issuance of Shares, obligations of
the Trust or otherwise, option, sell and exchange stocks, bonds, notes,
certificates of indebtedness and securities of every nature.
(c) To purchase, acquire through the issuance of shares of the Trust,
obligations of the Trust, or otherwise, mortgage, sell, acquire or
lease, hold, manage, improve, lease to others, option and exchange
personal property and real property of every nature.
(d) To lend money on behalf of the Trust, but not to individuals unless
secured by a real estate mortgage, and to invest and reinvest the funds
of the Trust.
(e) To make contracts and incur liabilities; to borrow money for the
purposes of the Trust and to give notes and other negotiable or
non-negotiable instruments of the Trust therefor, provided that upon
and after giving effect to any proposed borrowing the amount of
outstanding indebtedness of the Trust for money borrowed from others
would not exceed 400% of the net assets of the Trust (determined in
accordance with Section 5.2 hereof); to enter into other obligations on
behalf of and for the purposes of the Trust; and to mortgage or pledge
or cause to
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be mortgaged or pledged real and personal property of the Trust to
secure such notes or other obligations; and to subordinate the
interests of the Trust in real and personal property, or interests
therein to such other persons and on such conditions as is deemed
desirable.
(f) To create reserve funds for such purposes as the Trustees deem
advisable.
(g) To deposit funds of the Trust in banks and other depositories
without regard to whether such accounts will draw interest.
(h) To pay taxes and assessments imposed upon or chargeable against the
Trust or the Trustees by virtue of or arising out of the existence,
property, business or activities of the Trust.
(i) To issue, sell or exchange Shares or any other type of security of
the Trust (such as bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or
otherwise) as in this Declaration of Trust provides without the vote of
or other action by, the Shareholders.
(j) To adopt and from time to time amend by-laws for the administration
and regulation of the affairs of the Trust which may include, but shall
not be limited to, provisions relating to the time, place and notice of
meetings of the Trustees and of the Shareholders; record dates,
designation, appointment and compensation of representatives and agents
and their number, duties and qualifications, the form of Trust
Certificates, and the condition for replacing lost, mutilated or stolen
Trust Certificates, and the procedure for amendment of the by-laws.
(k) To exercise with respect to property of the Trust, all options,
privileges and rights, whether to vote, assent, subscribe or convert,
or of any other nature; to grant proxies; and to participate in and
accept securities issued under any voting trust agreement.
(l) To participate in any reorganization, readjustment, consolidation,
merger, dissolution, sale or purchase of assets, lease, or similar
proceedings of any corporation, partnership, or other organization in
which the Trust shall have an interest and in connection therewith to
delegate discretionary powers to any reorganization, protective or
similar committee and to pay assessments and other expenses in
connection therewith.
(m) To determine conclusively the allocation between capital and income
of the receipts, holdings, expenses and disbursements of the Trust,
regardless of the allocation which might be considered and appropriate
in the absence of this provision.
(n) To determine conclusively the value from time to time and to
revalue the real estate, securities and other property of the Trust, in
accordance with such appraisals or other information as they deem
satisfactory, and in accordance with methods of valuation consistently
applied.
(o) To sue and be sued, complain and defend, in the name of the Trust.
(p) To compromise or settle claims, questions, disputes and
controversies by, against, or affecting the Trust.
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(q) To adopt a fiscal year for the Trust and to amend or change such
fiscal year.
(r) To adopt a common seal, which may be altered at pleasure, but such
seal may or may not be affixed to instruments executed by the Trustees
or officers or representatives or agents of the Trust, and the absence
of such seal shall in no way affect the validity of such instrument.
(s) To solicit proxies of the Shareholders.
(t) To appoint an investment advisor and enter into an investment
advisory contract meeting the provisions of Section 5.5 hereof.
(u) To deal with the Trust property in every way that it would be
lawful for an individual to deal with the same, whether similar to or
different from the ways above specified.
(v) 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 in the by-laws; to engage or employ any persons (including, subject
to the provisions of Section 6.4, any Trustee, officer or agent 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, subject to Section 5.1, to delegate any of
the powers and duties of the Trustees (other than the approval of
investments in real property or interests therein) to any one or more
Trustees, agents, representatives, officers, employees, independent
contractors or other persons.
In the exercise of their powers, the Trustees shall not be limited to
investing in obligations maturing before the possible termination of the
Trust, nor shall the Trustees be limited by any law now or hereafter in
effect limiting the investments which may be held or retained by trustees or
other fiduciaries, but they shall have full authority and power to make any
and all investments within the limitations of this Declaration of Trust, that
they, in their absolute discretion, shall determine, and without liability
for loss, even though such investments shall be of a character or in an
amount not considered proper for the investment of trust funds or which do
not or may not produce income.
ARTICLE VI
Investment Policy
Section 6.1. INVESTMENT GENERALLY. The policy of the Trust will be to
invest principally in real property and mortgages thereon to the maximum
extent permitted to a real estate investment trust under the Internal Revenue
Code, as now enacted or as it may hereafter be amended. No arbitrary
percentage of capital need to earmarked by the Trust for particular
categories of investment nor locations of investments. The Trustees shall use
their best efforts to obtain through any person a
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continuing and suitable investment program consistent with the investment
policies and objectives of the Trust, and the Trustees shall be responsible
for reviewing and approving or rejecting the investment opportunities so
presented. So long as there is such an investment program so presented, the
Trustees shall have no responsibility for the origination of investment
opportunities for the Trust.
Section 6.2. ACQUISITION OF INVESTMENTS; APPRAISALS. The consideration
paid for investments by the Trust shall generally be based upon the fair
market value thereof as determined by an appraisal, except that an appraisal
shall not be required with respect to (a) the acquisition of any mortgage,
(b) the acquisition of any full or participating interest in real property in
connection with any investment, purchase or acquisition of the full or any
participating interest in securities which are secured by mortgages or (c)
any acquisition of any interest in real property acquired by the Trust as a
result of or in connection with the foreclosure of any mortgage or conveyed
to the Trust in full or partial satisfaction of indebtedness to the Trust, or
(d) if there is a record of uninterrupted payment of principal and interest
for the preceding five (5) years on any encumbrance which may exist on the
property and the earnings of the property, before depreciation, during the
preceding five (5) years are such that when capitalized annually at an 8%
rate the capitalized figure approximates the purchase price paid or to be
paid for the property. For the purpose of the foregoing, such fair market
value as determined by an appraisal shall be as determined by any person
which makes appraisals in connection with its lending or servicing activities
or by a disinterested person having no economic interest in the real
property, provided any such person is, in the sole judgment of the Trustees,
properly qualified to make such a determination. The Trustees may in good
faith rely on a previous appraisal made on behalf of other persons provided
it meets the aforesaid standards and was made in connection with an
investment in which the Trust acquires an entire or participating interest or
which was prepared not earlier than two years prior to the acquisition by the
Trust of its interest in the real property.
Section 6.3. PROHIBITED INVESTMENTS. The Trust shall be
prohibited from making the following investments or engaging in the following
activities:
(a) Investing in any indebtedness secured by a deed of trust or a
mortgage on non-income producing property.
(b) Investing more than 10% of its total assets in unimproved real
property or mortgages on unimproved real property, excluding property
which is being developed or will be developed within a reasonable
period.
(c) Investing in any indebtedness secured by a deed of trust or a
mortgage which is other than a first encumbrance excluding so-called
"wrap-around" type junior mortgages.
(d) Investing in any real property which is subject to a mortgage or
trust deed or other encumbrance to other than a bank, insurance
company, pension fund or other institutional lender, or corporation
engaged in the business of mortgage investments, except in the case of
a purchase money mortgage.
(e) Engaging in any short sale, or borrowing on an unsecured basis, if
such borrowing will result in an asset coverage of less than three
hundred percent, except that such borrowing limitation shall not apply
to a first mortgage trust. "Asset coverage," for the purpose of this
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Section, means the ratio which the value of the total assets of the
issuer, less all liabilities and indebtedness except indebtedness for
unsecured borrowings, bears to the aggregate amount of all unsecured
borrowings of such issuer.
(f) Engaging in any material trading activities with respect to its
properties as compared with investment activities therein.
(g) Issuing redeemable equity securities (as defined in Section
2(a)(31) of the Investment Company Act of 1940, as amended) or equity
securities of more than one class (other than debt securities
convertible into Shares).
(h) Issuing debt securities to the public unless the historical "cash
flow" of the Trust (that is, the net income of the Trust, plus
depreciation, less mortgage amortization), or the substantiated future
cash flow of the Trust as determined by the Board of Trustees,
excluding extraordinary items, is sufficient to cover the interest to
be due and payable from time to time on the debt securities.
(i) Investing in commodities.
(j) Issuing options or warrants to purchase its Shares to any
investment advisor of the Trust appointed pursuant to Section 5.6(t)
hereof or any person affiliated with such advisor, or to any other
persons, at exercise prices less than the fair market value of the
Shares on the date of grant as determined by the Trustees.
(k) Investing in contracts for sale of real estate.
(l) Holding property primarily for sale to customers in the ordinary
course of the trade or business of the Trust, but this prohibition
shall not be construed to deprive the Trust of the power to sell any
property which it owns at any time.
(m) Engaging in the business of underwriting or agency distribution of
securities issued by others, but this prohibition shall not prevent the
Trustees from selling participations in mortgage loans or interests in
real property.
(n) Holding securities in any company holding investments or engaging
in activities prohibited by this Section.
Section 6.4. RELATIONSHIPS WITH AFFILIATED PERSONS. No Trustee, officer
or investment advisor of the Trust appointed pursuant to Section 5.6(t)
hereof, or any person affiliated with any of such persons (herein
collectively called an "affiliated person"), shall sell any property or
assets to the Trust or purchase any property or assets from the Trust,
directly or indirectly, nor shall any affiliated person receive any
commission or other remuneration, directly or indirectly, in connection with
the purchase or sale of Trust assets, except pursuant to transactions that
are fair and reasonable to the Shareholders of the Trust and that relate to:
15
<PAGE>
(a) The acquisition of property or assets within ninety (90)
days after the effective date of the Trust's first Registration
Statement filed with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933, as amended, provided
such acquisition(s) are disclosed in the Trust's prospectus included
therein;
(b) The acquisition by the Trust of federally insured or
guaranteed mortgages at prices not exceeding the currently quoted
prices at which the Federal National Mortgage Association is purchasing
comparable mortgages;
(c) The acquisition of other mortgages on terms not less
favorable to the Trust than similar transactions involving unaffiliated
parties; or
(d) The acquisition by the Trust at any time and from time to
time of property or assets at prices not exceeding the fair market
value thereof as determined by an appraisal in accordance with Section
6.2 hereof.
All transactions in which any affiliated persons have any direct or
indirect interest shall be approved, after full disclosure of such
affiliation, by a majority of the Trustees, including a majority of the
Trustees who are not affiliated with any person (other than the Trust) that
is a party to the transaction. In the event that an affiliated person
receiving a commission or other remuneration in connection with any such
transaction is an investment advisor to the Trust appointed pursuant to
Section 5.6(t) hereof, or is otherwise compensated by the Trust for services
where such payment constitute operating expenses of the Trust as defined in
Section 5.2 hereof, then all commissions of other remuneration received by
any such affiliated person in connection with any such transactions shall be
deducted from any investment advisory or service fee otherwise payable to
such person by the Trust.
Any Trustee or officer, employee or agent of the Trust, may acquire,
own, hold and dispose of Shares of the Trust, for his individual account, and
may exercise all rights of a holder of such Shares to the same extent and in
the same manner as if he were not such a Trustee or officer, employee or
agent. Any Trustee or officer, employee, or agent of the Trust may, in his
personal capacity, or in a capacity of trustee, officer, director,
stockholder, partner, member, advisor or employee of any person, have
business interests and engage in business activities in addition to those
relating to the Trust, which interests and activities may be similar to those
of the Trust and include the acquisition, holding, management, operation or
disposition, for his own account or for the account of such person, of
interests in real property or in persons engaged in the real estate business,
and 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. None of the activities
referred to in this paragraph shall be deemed to conflict with his duties and
powers as Trustee, officer, employee or agent of the Trust.
16
<PAGE>
ARTICLE VII
Duration and Termination of Trust
Section 7.1. DURATION OF TRUST. The Trust shall, unless sooner
terminated as provided hereinafter in this Article VII, have perpetual
succession and existence until such time as all of its assets have been
liquidated and distributed to the Shareholders.
In the event that it shall be finally determined by a court of
competent jurisdiction in any state in which the Trust shall own property
that the holding of such property is or shall be in contravention of a law,
whether statutory or otherwise, similar to the common law "rule against
perpetuities," then with respect to property affected thereby, unless this
Trust shall be earlier terminated, it shall continue only until the
expiration of 20 years after the death of the last survivor of the Trustees
executing this Declaration of Trust and the following named persons:
<TABLE>
<S> <C> <C>
Brigid K. Barry Richard Bogart Ray Fluharty
Marion, Iowa Cedar Rapids, Iowa Cedar Rapids, Iowa
Erin E. Barry Carrie T. Cooperstock Jamie J. Jensen
Marion, Iowa Cedar Rapids, Iowa Cedar Rapids, Iowa
Leo C. Barry Willard Cooperstock Jim J. Jensen
Marion, Iowa Cedar Rapids, Iowa Cedar Rapids, Iowa
Patricia Barry Matthew R. Fluharty Ronald L. Jensen
Marion, Iowa Cedar Rapids, Iowa Cedar Rapids, Iowa
Elizabeth R. Bogart Sheryl Kay Proctor
Cedar Rapids, Iowa Cedar Rapids, Iowa
</TABLE>
Section 7.2. TERMINATION OF TRUST. The Trust may be terminated at any
time by the two-thirds vote of the outstanding Shares.
Section 7.3. DISPOSITION OF ASSETS. In connection with any
termination of the Trust, the Trustees, upon receipt of such releases or
indemnity as they deem necessary for their protection, may
(a) Sell and convert into cash the property of the Trust
and distribute the net proceeds among the Shareholders
ratably; or
(b) Convey the property of the Trust to one or more
persons, entities, trusts, or corporations for consideration
consisting in whole or in part of cash, shares of stock, or
other property of any kind, and distribute the net proceeds
among the Shareholders ratably, at valuations fixed by the
Trustees, in cash or in kind, or partly in cash and partly
in kind.
17
<PAGE>
Upon termination of the Trust and distribution to the Shareholders as
herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of such
termination, which instrument shall also be recorded in the Office of the
Recorder of Linn County, Iowa. A copy of such instrument shall also be sent
to each Shareholder and each State Administrator. The Trustees shall
thereupon be discharged from all further liabilities and duties hereunder,
and the right, title, and interest of all Shareholders shall cease and be
cancelled and discharged.
ARTICLE VIII
Amendments to the Trust
Section 8.1 WHEN NO SHARES ARE OUTSTANDING. At any time when no Shares
are outstanding, the Trustees may amend any provisions of this Declaration of
Trust. A certificate signed by a majority of the Trustees, setting forth such
amendment and reciting that it was duly adopted by the Trustees, shall be
lodged among the records of the Trust and shall be conclusive evidence of
such amendment.
Section 8.2. WHEN SHARES ARE OUTSTANDING. At any time when Shares are
outstanding, the Trustees may amend the Declaration of Trust in any
particular (except with respect to the limitations provided in Section 8.3
hereof) with the approval of the owners of two-thirds of all Shares.
Section 8.3. LIMITATIONS UPON AMENDMENTS. In the following specific
respects, the Trust may be amended only upon the unanimous consent of the
owners of all outstanding Shares:
(a) Provisions relating to the non-assessability of
Shareholders.
(b) Provisions negating liability of Shareholders or Trustees for
Trust obligations.
Section 8.4. CHANGE OF FORM OF TRUST. The Trustees may at any time with
the approval of two-thirds of all the outstanding shares cause a corporation
or other entity to be organized if, in the opinion of the Trustees and
counsel for the Trust, such new corporation or other entity and its
shareholders would then enjoy Federal income tax treatment substantially
equivalent to that granted a qualified real estate investment trust and the
holders of shares of beneficial interest therein. Upon the organization of
such a corporation or other entity, (i) the assets of the Trust may then be
transferred to it in exchange for its shares or other securities, (ii) such
shares or other securities may then be distributed to the Shareholders of the
Trust, and (iii) the Trust may then be terminated. This provision shall be in
addition to the provision of Section 7.2 hereof relating to termination.
Section 8.5. AMENDMENT BY TRUSTEES IN CERTAIN CIRCUMSTANCES. The
Trustees by a two thirds vote may at any time amend this Declaration of Trust
without the assent of the Shareholders (a) to the extent that the Trustees
deem it necessary to bring this Declaration of Trust into conformity with the
applicable requirements of the Internal Revenue Code and any interpretations
of the statutory provisions of regulations made by the Internal Revenue
Service or any court, (b) in connection with any sale of shares in any
jurisdiction to include any limitations or restrictions on the investment
policies or operations of the Trust as may be required by the laws, rules or
regulations of such jurisdiction, or (c) to the extent that the Trustees deem
it necessary to bring this Declaration of Trust into conformity with the law
of
18
<PAGE>
Iowa or any other jurisdiction in which the Trust owns property or has other
substantial contacts regarding the exemption from personal liability of
holders of beneficial interest and trustees of a business trust and the
non-assessability of the shares thereof.
Section 8.6. CERTIFICATE OF AMENDMENT. In the event of amendment to the
Declaration of Trust as provided in this Articles VIII, a certificate signed
by the Secretary of the Trust setting forth the amendment and reciting that
it was duly adopted by the Trustees and approved (if necessary) by the
Shareholders shall be lodged among the records of the Trust and shall be
conclusive evidence of such amendment.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. RECORDING . The Declaration of Trust shall be filed for
record in the office of the recorder in every other county or comparable
office where real estate owned by the Trust is located; provided, however,
that provision is made in such county for such recording and further provided
that this Declaration of Trust is accepted by such recorder for recording.
Any amendments adopted to the Declaration of Trust in accordance with Article
VIII hereof, or otherwise, shall also be filed for record in the Office of
the Recorder of Linn County, Iowa.
Section 9.2. MINIMUM CAPITAL. The Trust shall have a net capital of
not less than $100,000 as represented by outstanding Shares before beginning
operations.
Section 9.3. SAVINGS CLAUSE. The provisions of this Declaration of
Trust giving the Shareholders the right to elect and remove Trustees and the
right to amend and terminate this Declaration of Trust shall be subject (a)
to the requirements of the real estate investment trust provisions of the
Internal Revenue Code of 1954, as amended, and the rules and regulations
promulgated thereunder, and (b) to the statutes and common law of the State
of Iowa or any other jurisdiction where the Trust owns property or has other
contacts with respect to business trusts. If any provision in the Declaration
of Trust granting such a right to Shareholders shall conflict with the
requirements of such provisions of the Internal Revenue Code of 1954 or the
law of Iowa or such other jurisdiction regarding business trusts, such Trust
provision shall be deemed to be null and void without force and effect. In
the event that the provisions relating to the election of Trustees by the
Shareholders shall be deemed to be without force and effect, the Trustees in
office shall be deemed to be the qualified and acting Trustees until such
time as a successor Trustee (or Trustees) has been named by the Board of
Trustees and has qualified. On or before the next meeting of the
Shareholders, after the Trustees shall have notified the Shareholders that
any or all of the aforementioned Shareholders' rights create such a conflict
and therefore shall be deemed to be without force and effect, there shall be
submitted to the Shareholders for their approval or disapproval, by a
majority of those voting, the question as to whether such Shareholder right
or rights shall be reinstated.
Section 9.4. SEVERABILITY CLAUSE. Whenever possible each provision of
this Declaration of Trust shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Declaration of Trust shall be prohibited by or invalid under applicable law,
such provision shall be
19
<PAGE>
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Declaration of Trust.
Section 9.5. HEADINGS FOR REFERENCE ONLY. Headings preceding the text,
articles and sections hereof have been inserted solely for convenience and
reference and shall not be construed to affect the meaning, construction or
effect of this Declaration of Trust.
Section 9.6. COUNTERPARTS. This Declaration of Trust 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 but one and the same instruments, which shall be
sufficiently evidenced by any such original counterpart.
IN WITNESS WHEREOF, the undersigned individuals have caused this
Amended and Restated Declaration of Trust to be executed and acknowledged as
Trustees of the Trust herein made and declared all as of the day and year
first above written.
USP REAL ESTATE INVESTMENT TRUST
/s/ John F. Hodson
-------------------------------------
John F. Hodson, Trustee
/s/ Dale C. Tintsman
-------------------------------------
Dale C. Tinstman, Trustee
/s/ John H. Chapman, Jr.
-------------------------------------
John H. Chapman, Jr., Trustee
20
<PAGE>
ACKNOWELDGMENT
STATE OF IOWA )
) SS.
COUNTY OF LINN )
I, Harvey L. Clark, a notary public, do hereby certify that on the 5th
day of October, 1972, John F. Hodson, Dale C. Tinstman, and John H. Chapman, Jr.
personally appeared before me and being first duly sworn by me severally
acknowledged that they signed the foregoing Second Amended and Restated
Declaration of Trust as their free and voluntary act for the uses and purposes
therein set forth.
/s/ Harvey L. Clark
---------------------------
Notary Public
SEAL
21
<PAGE>
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED DECLARATION OF TRUST
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DECLARATION OF
TRUST is made this 18th day of December, 1972, by John F. Hodson, Dale C.
Tinstman and John H. Chapman, Jr., being all the Trustees of USP Real Estate
Investment Trust.
W I T N E S S E T H:
WHEREAS, the Second Amended and Restated Declaration of Trust was
executed by John F. Hodson, Dale C. Tinstman and John H. Chapman, Jr. on October
5, 1972 pursuant to shareholder approval;
WHEREAS, Article VIII of the Second Amended and Restated Declaration of
Trust provides that an amendment to the Declaration of Trust may be made by the
Trustees with the approval of the owners of two-thirds of all the shares
outstanding;
WHEREAS, the Trustees have secured the required approval to amend the
Second Amended and Restated Declaration of Trust in the manner provided herein.
NOW THEREFORE, the Trustees do hereby amend the Second Amended and
Restated Declaration of Trust as follows:
Section 5.2 of the Second Amended and Restated Declaration of
Trust is hereby amended in its entirety to provide as follows:
Section 5.2. LIMITATION ON OPERATING EXPENSES. There
shall be a reasonable limitation on selling and promotional
expenses, based on requirements of local law. Selling and
promotional expenses shall not be included in the annual
expense limitation, and shall include printing costs for the
prospectus and other advertising material, initial issue
securities sales commissions, legal costs and filing fees
related to registration of the securities.
The aggregate annual expenses of every character paid
or incurred by the Trust, excluding interest, taxes, expenses
in connection with the issuance of securities, stockholder
relations and acquisition, operation, maintenance, protection
and disposition of Trust properties, but including management
and advisory fees and mortgage servicing fees, and all other
expenses, shall not exceed:
(a) 1 1/2% of the average net assets of
the Trust, net assets being defined as total invested
assets at cost less total liabilities excluding
depreciation reserves, calculated at least quarterly
on a basis consistently applied, or
22
<PAGE>
(b) 25% of the net income of the Trust,
excluding realized capital gains before deducting
advisory and servicing fees and expenses, whichever
is greater, calculated at least quarterly on a basis
consistently applied, but in no event shall aggregate
annual expenses exceed 1-1/2% of the total invested
assets of the Trust.
The investment advisor shall reimburse the Trust at
least annually for the amount by which aggregate annual
expenses paid or incurred by the Trust exceed the amounts
herein provided.
The aggregate borrowings of the Trust, secured and
unsecured, shall not be unreasonable in relation to the net
assets of the Trust, as defined herein, and the maximum amount
of such borrowing shall be stated in the prospectus and
Declaration of Trust (see Section 5.6). This type of borrowing
is commonly called leverage.
IN WITNESS WHEREOF, the Trustees have caused this First Amendment to
the Second Amended and Restated Declaration of Trust to be executed and
acknowledged all on the day and year first above written.
USP REAL ESTATE INVESTMENT TRUST
/s/ John F. Hodson
---------------------------------------
John F. Hodson, Trustee
/s/ Dale C. Tinstman
---------------------------------------
Dale C. Tinstman
/s/ John H. Chapman, Jr.
---------------------------------------
John H. Chapman, Jr., Trustee
23
<PAGE>
STATE OF IOWA )
) SS.
COUNTY OF LINN )
ACKNOWLEDGMENT
I, Judy K. Neve, a notary public, do hereby certify that on the 18th
day of December, 1972, John F. Hodson, Dale C. Tinstman, and John H. Chapman,
Jr. personally appeared before me and being first duly sworn by me severally
acknowledged that they signed the foregoing First Amendment to Second Amended
and Restated Declaration of Trust as their free and voluntary act for the uses
and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Judy K. Neve
----------------------------------
Judy K. Neve, Notary Public
24
<PAGE>
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED DECLARATION OF TRUST
This SECOND AMENDMENT TO SECOND AMENDED AND RESTATED DECLARATION OF
TRUST is made as of the 3rd day of March, 1975, by Norman G. Lipsky, John H.
Chapman, Jr. and James A. Davidson, being a majority of the Trustees of USP Real
Estate Investment Trust.
W I T N E S S E T H
WHEREAS, the Second Amended and Restated Declaration of Trust was
executed by John F. Hodson, Dale C. Tinstman and John H. Chapman, Jr. on October
5, 1972 and amended by a First Amendment to the Second Amended and Restated
Declaration of Trust by John F. Hodson, Dale C. Tinstman and John H. Chapman,
Jr. on December 18, 1972, pursuant to shareholder approval;
WHEREAS, Article VIII of the Second Amended and Restated Declaration of
Trust provides that an amendment to the Declaration of Trust may be made by the
Trustees with the approval of the owners of two-thirds of all the shares
outstanding;
WHEREAS, the Trustees have secured the required approval to amend the
First Amendment to the Second Amended and Restated Declaration of Trust in the
manner provided herein:
NOW THEREFORE, the Trustees do hereby amend the First Amendment to the
Second Amended and Restated Declaration of Trust as follows:
Section 5.2 of the First Amendment to the Second Amended and Restated
Declaration of Trust is hereby amended, in part, to provide as follows:
Section 5.2 LIMITATION ON OPERATING EXPENSES.
(a) 1-1/2% of the average net assets of the Trust, net
assets being defined as total invested assets at cost less
depreciation, or in the judgment of the Trustees, fair market value of
the net assets of the Trust, whichever is less, calculated at least
quarterly on a basis consistently applied, or
IN WITNESS WHEREOF, the Trustees have cause this Second Amendment to
the Second Amended and Restated Declaration of Trust to be executed and
acknowledged all on the day and year first above written.
USP REAL ESTATE INVESTMENT TRUST
/s/ Norman G. Lipsky
-------------------------------------
Norman G. Lipsky, Trustee
25
<PAGE>
/s/ John J. Chapman
-------------------------------------
John J. Chapman, Trustee
/s/ James A. Davidson
-------------------------------------
James A. Davidson, Trustee
STATE OF IOWA )
) SS.
COUNTY OF LINN )
ACKNOWLEDGMENT
I, Judy K. Nave, a Notary Public, do hereby certify that on the 3rd day
of March, 1975, Norman G. Lipsky, John H. Chapman, Jr., and James A. Davidson
personally appeared before me and being first duly sworn by me severally
acknowledged that they signed the foregoing Second Amendment to Second Amended
and Restated Declaration of Trust as their free and voluntary act for the uses
and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Judy K. Nave
------------------------------
Notary Public
26
<PAGE>
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED DECLARATION OF TRUST
This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED DECLARATION OF
TRUST is made as of the 23rd day of April, 1984, by Edwin L. Ingraham, Robert E.
Johnson, Norman G. Lipsky, Maurice T. Breen, Robert O. Daniel and James M.
Davidson, being a majority of the Trustees of USP Real Estate Investment Trust.
W I T N E S S E T H
WHEREAS, the Seconded Amended and Restated Declaration of Trust was
executed by John F. Hodson, Dale C. Tinstman and John H. Chapman, Jr., on
October 5, 1972, amended by a First Amendment to the Second Amended and Restated
Declaration of Trust by John F. Hodson, Dale C. Tinstman and John H. Chapman,
Jr., on December 18, 1972, pursuant to shareholder approval; and amended by a
Second Amendment to the Second Amended and Restated Declaration of Trust by
Norman G. Lipsky, John H. Chapman, Jr., and James M. Davidson on March 3, 1975,
pursuant to shareholder approval; and
WHEREAS, Article VIII of the Second amended and Restated Declaration of
Trust provides that an amendment to the Declaration of Trust may be made by the
Trustees with the approval of the owners of two-thirds of all the shares
outstanding;
WHEREAS, the Trustees have secured the required approval to further
amend the Second Amended and Restated Declaration of Trust in the manner
provided herein;
NOW, THEREFORE, the Trustees does hereby amend the first sentence of
Section 4.1 of the Second Amended and Restated Declaration of Trust to read as
follows:
"The Board of Trustees shall consist of no less than three (3) nor more
than ten (10) Trustees, as may from time to time be established in the
By-Laws."
The rest of said Section 4.1 and the Second Amended and Restated
Declaration of Trust as amended by the First and Second Amendments shall remain
the same.
IN WITNESS WHEREOF, the Trustees have caused this Third Amendment to
the Second Amended and Restated Declaration of Trust to be executed and
acknowledged all on the day and year first above written.
USP REAL ESTATE INVESTMENT TRUST
/s/ Edwin L. Ingraham
-----------------------------------
Edwin L. Ingraham, Trustee
27
<PAGE>
/s/ Robert E. Johnson
-----------------------------------
Robert E. Johnson, Trustee
/s/ Norman G. Lipsky
-----------------------------------
Norman G. Lipsky, Trustee
/s/ Maurice T. Breen
-----------------------------------
Maurice T. Breen, Trustee
/s/ Robert O. Daniel
-----------------------------------
Robert O. Daniel, Trustee
/s/ James M. Davidson
-----------------------------------
James M. Davison, Trustee
STATE OF IOWA )
) SS.
COUNTY OF LINN )
ACKNOWLEDGMENT
I, Carolyn K. Fisher, a Notary Public, do hereby certify that on the
23rd day of April, 1984, Edwin L. Ingraham, Robert E. Johnson, Norman G. Lipsky,
Maurice T. Breen, Robert O. Daniel and James M. Davison personally appeared
before me and being first duly sworn by me severally acknowledged that they
signed the foregoing Third Amendment of Second Amended and Restated Declaration
of Trust as their free and voluntary act for the uses and purposes therein set
forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Carolyn K. Fisher
------------------------------------------
Notary Public in and for the State of Iowa
28
<PAGE>
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED
DECLARATION OF TRUST
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED DECLARATION OF
TRUST is made as of the 22nd day of April, 1986, by James M. Davidson, J. Thomas
Hoegen, Edwin L. Ingraham, Robert E. Johnson, Samuel L. Kaplan and Darrell M. R.
Schumacher, being all the Trustees of USP Real Estate Investment Trust.
W I T N E S S E T H
WHEREAS, the Second Amended and Restated Declaration of Trust was
executed by John F. Hodson, Dale C. Tinstman and John H. Chapman, Jr., on
October 5, 1972, amended by a First Amendment to the Second Amended and Restated
Declaration of Trust by John F. Hodson, Dale C. Tinstman and John H. Chapman,
Jr., on December 18, 1972, pursuant to shareholder approval; and amended by a
Second Amendment to the Second Amended and Restated Declaration of Trust by
Norman G. Lipsky, John H. Chapman Jr., and James M. Davidson on March 3, 1975,
pursuant to shareholder approval; and amended by a Third Amendment to the Second
Amended and Restated Declaration of Trust by James M. Davidson, J. Thomas
Hoegen, Edwin L. Ingraham, Robert E. Johnson, Samuel L. Kaplan and Darrell M. R.
Schumacher on April 23, 1984, pursuant to shareholder approval, and
WHEREAS, Article VIII of the Second Amended and Restated Declaration of
Trust provides that an amendment to the Declaration of Trust may be made by the
Trustees with the approval of the owners of two-thirds of all the shares
outstanding;
WHEREAS, the Trustees have secured the required approval to further
amend the Second Amended and Restated Declaration of Trust in the manner
provided herein;
NOW THEREFORE, the Trustees do hereby amend paragraph (c) of Section
6.3 of the Second Amended and Restated Declaration of Trust to read as follows:
"Investing in any indebtedness secured by a deed of trust or a mortgage
which is other than a first encumbrance or wraparound type instrument,
unless such indebtedness is adequately secured on the basis of the
equity of the borrower in the property underlying such investment, as
determined by appraisal or other satisfactory method, and the ability
of the borrower to repay the debt; provided, however, in no event shall
the Trust invest in junior debt (except for wraparound type debt) which
is subordinate to the lien of other indebtedness where (1) the amount
of such junior debt, together with all other debt secured by the
property, exceeds a 90% of the value of such property and (2) the
amount of all investments in junior debt exceeds 25% of the Trust's
total invested assets."
The rest of said Section 6.3 and the Second Amended and Restated
Declaration of Trust as amended by the First, Second and Third Amendments shall
remain the same.
29
<PAGE>
IN WITNESS WHEREOF, the Trustees have caused this Fourth Amendment to
the Second Amended and Restated Declaration of Trust to be executed and
acknowledged all on the day and year first above written.
USP REAL ESTATE INVESTMENT TRUST
/s/ James M. Davidson
-----------------------------------
JAMES M. DAVIDSON, TRUSTEE
/s/ J. Thomas Hoegen
-----------------------------------
J. THOMAS HOEGEN, TRUSTEE
/s/ Edwin L. Ingraham
-----------------------------------
EDWIN L. INGRAHAM, TRUSTEE
/s/ Robert E. Johnson
-----------------------------------
ROBERT E. JOHNSON, TRUSTEE
/s/ Samuel L. Kaplan
-----------------------------------
SAMUEL L. KAPLAN, TRUSTEE
/s/ Darrell M. R. Schumacher
------------------------------------
DARRELL M. R. SCHUMACHER, TRUSTEE
30
<PAGE>
STATE OF IOWA )
)ss.
COUNTY OF LINN )
I, Susan J. Dotson, Notary Public, do certify that on the 22nd day of
April, 1986, James M. Davidson, J. Thomas Hoegen, Edwin L. Ingraham, Robert E.
Johnson, Samuel L. Kaplan and Darrell M. R. Schumacher personally appeared
before me and being first duly sworn by me severally acknowledged that they
signed the foregoing Fourth Amendment of Second Amended and Restated Declaration
of Trust as their free and voluntary act for the uses and purposes therein set
forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Susan J. Dotson
-------------------------------------------
Susan J. Dotson
Notary Public in and for the State of Iowa
31
<PAGE>
Exhibit 4
ARTICLE II
Shares
Section 2.1. SHARES; TRUST CERTIFICATES; SHAREHOLDERS. The units into
which the beneficial interest in the Trust will be divided shall be designated
as "Shares." The certificates evidencing ownership of Shares in the Trust shall
be designated as Certificates of Beneficial Interest or Share certificates, and
shall be in such form as the Trustees may prescribe. The registered holders
thereof shall be designated as "Shareholders." The shares shall be personal
property. The shareholders shall have no legal title or interest in the property
of the Trust and no right to a partition thereof or to an accounting during the
continuance of the Trust. They shall have only the rights expressly provided in
this Declaration.
Section 2.2. AMOUNT AND CLASS OF SHARES. The Trust shall be divided in
20,000,000 Shares and each Share shall be of the par value of $1.00. All shares
shall be of the same class and shall have equal voting, distribution,
liquidation and other rights.
Section 2.3. SALE OF SHARES. The Trustees may from time to time issue,
sell by private or public offering, or exchange Shares in such number, for such
sums of money, real estate, or other consideration (not less than par value) as
they deem proper. Shareholders shall have no pre-emptive rights to acquire
additional Shares. The Trustees shall upon the request of a Shareholder cause
share certificates to be issued to evidence the ownership of Shares in the
Trust.
Section 2.4. ACQUISITION OF SHARES BY TRUST. The Trustees may, on
behalf of the Trust, at any time, purchase or otherwise acquire outstanding
Shares for such consideration and on such terms as they may deem proper. Shares
so acquired shall not participate in distributions from the Trust so long as
they belong to the Trust. Such Shares may, in the discretion of the Trustees, be
cancelled and no longer be deemed to be outstanding or may be held in the
treasury and be disposed of by the Trustees at such time or times, to such party
or parties, and for such consideration, as the Trustees may deem appropriate.
Section 2.5. TRANSFERABILITY OF SHARES. Shares shall be transferable in
the same manner and to the same extent as a "security" under Article 8 of the
Iowa Uniform Commercial Code. The persons in whose names the Shares are
registered on the books of the Trust shall be deemed the absolute owners
thereof, and, until a transfer is effected on the books of the Trust, the
Trustees shall not be affected by any notice, actual or constructive, of any
transfer.
Section 2.6. PERCENTAGE OF OWNERSHIP. Notwithstanding the provisions of
Section 2.5 hereof, any Shareholder or proposed Shareholder shall be obligated,
upon demand of the Trustees, or their agents, to furnish to the Trust such
information as is necessary to determine whether any transfer or issuance of
Shares on the books of the Trust will result, under the applicable Federal laws
and regulations concerning attribution of ownership, in such person acquiring
more than ten (10) percent of the beneficial interest in the Trust, or in five
(5) or less persons acquiring more than fifty (50) percent of the beneficial
interest in the Trust. In the event that the Trustees determine from such
information that such a transfer or issuance of Shares would result in such a
person or persons owning such percentage of the beneficial interest, the
Trustees may refuse to make any such transfer or issuance.
Section 2.7. EFFECT OF TRANSFER OF SHARES OR DEATH, INSOLVENCY, OR
INCAPACITY OF SHAREHOLDERS. Neither the transfer of Shares, nor the death,
insolvency or incapacity of any Shareholder shall operate to
<PAGE>
dissolve or terminate the Trust, nor shall it entitle any transferee, legal
representative or other person to a partition of the property of the Trust or to
an accounting.
Section 2.8. NONASSESSABILITY OF SHARES. When payment of the
consideration for which shares are to be issued shall have been received by the
Trust, such Shares shall be deemed to be fully paid and nonassessable. In the
absence of actual fraud in the transaction, the judgment of the Board of
Trustees as to the value of the consideration received for Shares shall be
conclusive.
ARTICLE III
Shareholders
Section 3.1. LIMITED LIABILITY. Shareholders shall be under no
obligation to the Trust or its creditors with respect to their ownership of
Shares other than the obligation to pay to the Trust the full consideration for
which said Shares were issued, and the Trustees shall have no power to bind the
Shareholders personally. Upon any debt, claim, demand, judgment, decree or
obligation of any nature whatsoever against or incurred by the Trust, or by the
Trustees, officers or other representatives or agents of the Trust in their
capacities as such, whether founded upon contract, tort or otherwise, resort of
the creditors shall be had solely against the funds and property of the Trust
and the Shareholders shall not be personally liable therefor.
Section 3.2. NOTICE OF LIMITED LIABILITY. In any written order,
contract, note, mortgage, instrument or obligation given or executed by the
Trustees or with their authority, the Trustees shall cause to be inserted a
provision substantially as follows:
"It is understood and agreed upon by the parties hereto (1)
that the USP Real Estate Investment Trust is a common law trust
organized under the laws of Iowa pursuant to a Declaration of Trust
dated March 10, 1970, as amended, and recorded in the office of the
Recorder of Linn County, Iowa, (2) that the holders of shares of
beneficial interest in the Trust shall not be personally liable
thereon, and (3) that the other party hereto shall look solely to the
funds and property of the Trust for the payment of any claim arising
hereunder."
However, no failure of the Trustees, representatives of agents of the Trust to
place such notice in any document or instrument shall have the effect of
rendering any Shareholder personally liable thereon.
Section 3.3. ANNUAL MEETING OF SHAREHOLDERS. The Shareholders shall
meet annually following the delivery of the certified annual report to
Shareholders at such time and place as may be prescribed in the by-laws of the
Trust, or as may be fixed by the Board of Trustees in accordance with the
provisions thereof.
Section 3.4. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the
Shareholders may be called by the Chairman of the Board of Trustees, by a
majority of the Trustees or by any officer of the Trust upon the written request
of Shareholders holding together not less than twenty-five (25) percent of the
outstanding Shares which would be entitled to vote at such special meeting. The
call and notice of a special meeting shall state the nature of the business to
be transacted thereat, together with the time, date and place of said meeting.
If the special meeting is called upon the written request of Shareholders, such
request of the Shareholders shall also state the specific purpose of such call
and no other business shall be considered.
<PAGE>
Section 3.5. QUORUM OF SHAREHOLDERS. One-third (1/3) of the outstanding
Shares, represented in person or by proxy, shall constitute a quorum at any
meeting of Shareholders. If a quorum is present, the affirmative vote of the
majority of Shares represented at the meeting shall be the act of the
Shareholders, unless the vote of a greater number of Shares is required by this
Declaration of Trust.
Section 3.6. ANNUAL REPORT. Within one hundred twenty (120) days after
the close of the Trust's fiscal year, the Trustees shall cause an annual report
to be prepared and distributed to each Shareholder and to each Trustee, to the
Commissioner of Insurance of the State of Iowa and to the Blue Sky or securities
law administrator of such other States as the Trustees or officers of the Trust
may deem advisable. Such annual report shall contain a statement of the
activities of the Trust during the fiscal year as well as a balance sheet,
statement of income and surplus of the Trust, together with an opinion by an
independent certified public accountant based on an examination of the books and
records of the Trust not materially limited in scope, and made in accordance
with generally accepted auditing procedures applied on a consistent basis. The
copies delivered to the Trustees and administrators shall be manually signed.
Section 3.7. PERIODIC REPORTS. No less often than quarterly (except at
the time of the annual report), the Trustees shall furnish to the Shareholders,
to the Commissioner of Insurance of the State of Iowa, and to the Blue Sky or
securities law administrator of such other States as the Trustees or officers of
the Trust may deem advisable, unaudited reports containing a current balance
sheet and other pertinent information regarding the Trust and its activities for
the respective period. Such reports shall be distributed within sixty (60) days
after the end of the period covered by the report.
Section 3.8. REPORTS ON DISTRIBUTIONS. Distributions to Shareholders
shall be accompanied to the extent possible by a statement in writing advising
Shareholders of the extent to which the distribution represents ordinary income,
a capital gains distribution or a return of capital. In the event of doubt as to
the taxable status of a distribution at the time it is made, the taxable nature
of the funds so distributed shall be reported to Shareholders no later than
sixty (60) days after the close of the fiscal year in which the distribution was
made.
Section 3.9. INSPECTION OF RECORDS. The records of the Trust shall be
subject to inspection at reasonable times by the Commissioner of Insurance of
the State of Iowa and by the Shareholders to the same extent as it permitted to
shareholders of a corporation under the Iowa Business Corporation Act.
Section 3.10. INDEMNIFICATION OF SHAREHOLDERS. Upon reasonable written
notice to the Trust and upon unequivocal cooperation by a Shareholder with the
Trust, the Trust shall indemnify and hold each Shareholder harmless from and
against all claims and liabilities (other than those caused by the negligence or
misconduct of the Shareholder), whether they proceed to judgment, or are
settled, or otherwise brought to a conclusion, to which such Shareholder may
become subject by reason of his being or having been a Shareholder of the Trust.
The Trust shall further furnish legal counsel and shall reimburse a Shareholder
for reasonable expenses incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 3.10 shall
not exclude any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust to indemnify
or reimburse a Shareholder in an appropriate situation even though not
specifically provided herein; provided, however, that the Trust shall have no
liability to reimburse Shareholders for taxes assessed against them by reason of
their ownership of Shares, nor for any losses suffered by reason of changes in
the market value of the Shares or any other securities of the Trust.
<PAGE>
Section 3.11. INSURANCE. In order to protect the Trust assets, the
Trustees shall at all times maintain or cause to be carried adequate insurance,
as determined by their sound business judgment, against all customary types of
liabilities and hazards.
Section 3.12. INFORMAL ACTION BY SHAREHOLDERS. Any action required by
this Declaration of Trust to be taken at a meeting of the Shareholders, or any
action which may be taken at a meeting of the Shareholders, may be taken without
a meeting if a consent in writing setting forth the action so taken shall be
signed by all of the Shareholders entitled to vote with respect to the subject
matter thereof. Such consent shall have the same force and effect as a unanimous
vote and may be stated as such in any document filed pursuant hereto.
Section 3.13. DIVIDENDS OR DISTRIBUTIONS. The Trustees may from time to
time declare and pay to the Shareholders, in proportion to their respective
ownership of Shares, out of the earnings, profits or surplus (including paid-in
capital), or assets in the hands of the Trustees, such dividends or other
distributions as they see fit. The declaration and payment of such dividends or
other distributions and the determination of earnings, profits, surplus
(including paid-in capital) available for dividends and other purposes shall lie
wholly in the discretion of the Trustees and no Shareholder shall be entitled to
receive or be paid any dividends or to receive any distribution except as
determined by the Trustees in the exercise of said discretion.
<PAGE>
Exhibit 10
USP ADMINISTRATIVE AGREEMENT
THIS AGREEMENT is made and entered into effective as of January 1,
1984, by and between USP REAL ESTATE INVESTMENT TRUST, a common law trust
organized under the laws of the State of Iowa, with its principal. place of
business at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (hereinafter
referred to as the "Trust") and REALAMERICA INVESTORS, INC., (a wholly owned
subsidiary of Life Investors Inc.) with its principal place of business at 4333
Edgewood Road N.E., Cedar Rapids, Iowa 52499 (hereinafter referred to as
"RealAmerica"), and supersedes all prior administrative agreements. In
consideration of the mutual covenants, promises and agreements herein contained,
the Trust and RealAmerica do hereby covenant, promise and agree to and with each
other as follows:
W I T N E S S E T H
1. PARTIES AND INTEREST:
The Trust is a common law trust organized under the laws of
the State of Iowa, operating as a Real Estate Investment Trust under the
provisions of Section 856 ET SEQ. of the Internal Revenue Code. The Trust has no
employees, and therefore, must hire an administrator to perform the day-to-day
administrative functions of the Trust. RealAmerica has the experience and
employees necessary and suitable for the administration of the Trust's business
and desires to undertake the administration of the Trust's day-to-day
operations. RealAmerica is an independent contractor and the Trust shall have no
voice in the selection or discharge of RealAmerica's employees, representatives
or subcontractors, and no control over the specific manner in which the work
shall be done, but RealAmerica shall be responsible for the quality of work
done.
2. TERM:
The Trust does hereby designate RealAmerica as the
administrator for the Trust's operations for the term of one (1) year commencing
on the effective date hereof. This designation shall be automatically renewed
annually on each anniversary of the effective date hereof for an additional one
(1) year period, subject to the right of either party to cancel this Agreement
at any time by giving the other party not less than ninety (90) days written
notice of its intention to so terminate.
3. DUTIES OF ADMINISTRATOR.
Real America shall administer the day-to-day operations of the
Trust, which shall include the following services:
(1) Clerical, administrative and data processing
services, office space and equipment and other general office services necessary
for the Trust's day-to-day operations.
<PAGE>
(2) Legal, tax and accounting services to maintain all
necessary books and records of the Trust and to ensure Trust compliance with all
applicable federal, state and local laws, regulatory reporting requirements and
tax codes.
(3) Arrangement of financing for the Trust, including but
not limited to mortgage financing for property acquisition.
(4) Arrangement for property management services for the
Trust's properties and supervision of the activities of persons performing such
services.
(5) Preparation of monthly reports summarizing the
results of operations and financial condition of the Trust.
(6) Preparation of annual audit workpapers requested by
the independent certified public accountants.
(7) Preparation and filing of all financial accounting
reports to shareholders and to regulatory authorities, including the Securities
and Exchange Commission ("SEC"). Such reports shall include the quarterly and
annual reports to shareholders and the quarterly and annual reports to the SEC
on Forms 10-Q and 10-K, respectively, and any other reports required pursuant to
the regulatory authorities.
(8) Preparation and filing of all federal, state and
local tax returns and reports to taxing authorities, including the Internal
Revenue Service.
(9) Provision of property acquisition and divestiture
services.
RealAmerica may perform additional services which are of an
extraordinary nature requiring time, resources and expertise beyond that
reasonably expected of the administrator for a separately negotiated fee or
expense reimbursement on such other terms and conditions as are agreed to
between RealAmerica and the Trust.
The parties agree that RealAmerica may subcontract to related and
unrelated entities, firms and organizations for those services necessary to
accomplish the duties specified above.
4. TRUST EXPENSES.
The Trust shall bear the cost of the following expenditures:
(1) Audit, legal and other professional services provided
by third parties to the extent such services are not considered duties of
RealAmerica.
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(2) Supplies, printing, postage and related expenses
incurred in the preparation and filing of regulatory reports and reports to
shareholders and trustees.
(3) Fees and other compensation of Trustees.
(4) Expenses of Trustee meetings and travel.
(5) All such other expenses related to Trust activities
considered to be appropriate or advisable by the Trustees.
5. COMPENSATION OF ADMINISTRATOR:
A. For the services provided hereunder, RealAmerica
shall be paid the following administrative fee:
(1) A base fee, payable monthly, of 5/8% per annum of the
average monthly gross real estate investments of the Trust, plus 1/4% per annum
of the monthly outstanding principal balance of mortgage loans receivable.
(2) An incentive fee, payable annually, of 20% of the
annual adjusted cash flow from operations in excess of $.72 per share.
(3) If annual adjusted cash flow from operations is less
than $.72 per share, then so much of the base fee shall be deferred so that
revised cash flow from operations will be $.72 per share; provided however, in
no event shall the amount deferred exceed 20% of the previously determined base
fee. Any base fee deferred is not considered to be due and payable as a
liability of the Trust; however, in any subsequent year, any unpaid previously
deferred fees shall be paid up to a maximum of 30% of the revised cash flow from
operations in excess of $.72 per share.
(4) If this Agreement is terminated at any time other
than calendar year end, all earned fees, including any outstanding deferred
fees, shall be prorated and paid on the termination date in accordance with the
terms of subparagraph (3) above. Any remaining unpaid deferred fees will be
forfeited.
Anything in the Agreement to the contrary notwithstanding, the
maximum fee payable to RealAmerica hereunder for any year shall not exceed the
maximum amount which is permitted by the limitation on operating expenses in
Section 5.2 (or any successor section) of the USP Declaration of Trust.
3
<PAGE>
B. RealAmerica shall also be paid an acquisition fee
equal to 2% to 4% of the cost of each property acquired by the Trust during the
term of this Agreement, such fee to be agreed upon between the parties prior to
any acquisition.
C. For purposes of this paragraph the following
definitions shall apply:
(1) Gross real estate investments - the total investment
in real estate, including land, buildings, improvements, furniture and
equipment, as stated at original cost, and investment in partnerships as stated
at original net capital invested, all as recorded for federal income tax
purposes. The original cost of real estate acquired in an exchange will include
the addition of any depreciation previously taken on real estate disposed of in
the exchange.
(2) Mortgage loans receivable - the face amount, as
recorded for federal income tax purposes, of any mortgage, note, or contract
receivable secured by real estate, including Government National Mortgage
Association guaranteed pass-through mortgage certificates.
(3) Annual adjusted cash flow from operations - earnings
from operations, minus the base fee, plus depreciation and amortization expense,
minus amortization income, minus principal payments on mortgage loans payable
(excluding principal payments on underlying mortgages of wraparound mortgage
loans receivable) and plus (or minus) the total net realized capital gain (or
loss) for the year.
(4) Net realized capital gain (or loss) - the total sales
or exchange value for federal income tax purposes, including cash, notes, or
other consideration, minus the gross real estate investment and all closing
costs for property sold or exchanged during the year. Also defined as the
realized, but not necessarily recognized, gain (or loss) decreased (or
increased) by accumulated depreciation. Installment gains for this purpose shall
be determined accordingly and a pro rata amount included, but if any installment
sale results in a loss for this purpose, the entire loss shall be included.
(5) Revised cash flow from operations - annual adjusted
cash flow from operations minus the incentive fee.
(6) Per Share - per share amounts shall be based upon the
number of issued and outstanding shares of the Trust and the end of the calendar
year.
6. AMENDMENTS:
This Agreement may be amended only in writing with the mutual
consent of the parties. However, no amendment shall become effective unless it
specifically refers to this Agreement and is signed by the parties.
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<PAGE>
7. LIABILITY OF REALAMERICA:
RealAmerica shall give the Trust the benefit of its best
judgment and efforts in rendering services hereunder. RealAmerica shall not be
liable for any act or omission whatsoever of any employee, agent or
representative, or for negligence or error in judgment, except its willful
misfeasance, bad faith or gross negligence in the conduct of its duties. The
Trust shall indemnify and save harmless RealAmerica from and against any and all
liabilities, claims, and damages, costs and expenses (including reasonable
attorney's fees) to which RealAmerica may become subject by reason of or arising
out of the performance or nonperformance of its duties as administrator;
provided, however, that there shall be no such reimbursement paid RealAmerica
for damages, costs or expenses incurred by RealAmerica by reason of its willful
misfeasance, bad faith or gross negligence in the conduct of its duties. This
provision shall survive the termination of this Agreement, but this shall not be
construed to mean that the Trust's liabilities or obligations hereunder do not
survive as to the other provisions of this Agreement.
8. STATUS OF TRUST:
In the event that the terms of this Agreement at any time
shall, in the opinion of counsel for the Trust, impair the status of the Trust
as a "Real Estate Investment Trust" within the meaning of Part II, subchapter M
of the Internal Revenue Code of 1954 as amended, the parties shall, within 30
days after the Trust shall have given to RealAmerica written notice of such
impairment, negotiate such amendments as may be necessary to restore, in the
opinion of counsel for the Trust, such status of the Trust.
9. INDEMNIFICATION:
If either party shall default hereunder, the other party shall
be reimbursed by the defaulting party for all costs and expenses incurred in the
enforcement of the provisions of this Agreement, including reasonable attorney's
fees.
10. REPRESENTATIONS:
RealAmerica covenants, represents and warrants that it will
not directly or indirectly create, assume, incur or suffer to exist any
mortgage, pledge, encumbrance, lien or charge of any kind upon this Agreement or
upon any income or fees therefrom except as provided in this Agreement.
11. NOTICE:
Whenever, under the terms of this Agreement, any notice is
required to be served upon the other party, said notice may be served upon the
other party by personal service or certified mail. Notices shall be in writing
and until further notification in writing, shall be delivered to the following
addresses:
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<PAGE>
To the Trust:
Chairman of the Board of Trustees
USP Real Estate Investment Trust
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
To RealAmerica:
RealAmerica Investors, Inc.
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
12. CUMULATIVE RIGHTS:
The various rights, powers, objects, elections and remedies of
the Trust and RealAmerica provided in this Agreement shall be construed as
cumulative and no one of them is exclusive of the other or exclusive of any
rights or remedies allowed the Trust and RealAmerica by law.
13. CONSENT:
Neither the Trust nor RealAmerica shall unreasonably withhold
its consent whenever such consent shall be required under the terms of this
Agreement.
14. PARAGRAPH HEADINGS:
The paragraph headings contained herein are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope or intent of this Agreement or in any way affect the terms and
provisions hereof.
15. RULES OF CONSTRUCTION:
Where necessary herein, the terms the "Trust" or "RealAmerica"
shall apply to the plural or the agents of the Trust, or RealAmerica, and all
terms used in the singular or in the masculine shall apply to the plural or to
the feminine or neuter gender.
16. SUCCESSORS AND ASSIGNS:
The provisions of this Agreement shall apply to and bind the
immediate parties and their successors and assigns. Neither party may assign
this Agreement without the prior consent of the other party.
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<PAGE>
17. TRUST:
It is understood and agreed by the parties hereto that (i) the
Trust is a common law Trust organized under the laws of the State of Iowa
pursuant to a Declaration of Trust dated October 5, 1972, as amended and
restated, and recorded in the office of the Recorder of Linn County, Iowa;
(ii) the holders of shares of beneficial interest in the Trust shall not be
personally liable hereon; and (iii) the other party hereto shall look solely
to the funds and property of the Trust for the payment of any claim arising
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective as of the date first above written.
USP REAL ESTATE INVESTMENT TRUST REALAMERICA INVESTORS, INC.
BY /s/ James M. Davidson /s/ Edwin L. Ingraham
---------------------------------- ------------------------------------
JAMES M. DAVIDSON EDWIN L. INGRAHAM
Title: Chairman of the Board Title: President
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<PAGE>
Exhibit 10.1
USP PROPERTY MANAGEMENT AGREEMENT
This Agreement is made and entered into, effective as of July 1, 1981,
by and between USP Real Estate Investment Trust, a common law trust organized
under the laws of the State of Iowa, with its principal place of business at
4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (hereinafter referred to as
"Owner") and AEGON USA Realty Management, Inc., with its principal place of
business at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499 (hereinafter
referred to as "Manager"). In consideration of the mutual covenants, promises
and agreements herein contained, Owner and Manager do hereby covenant, promise
and agree to and with each other as follows:
WITNESSETH
1. PARTIES AND INTEREST:
Owner is the owner of commercial real property located throughout the
continental United States (hereinafter referred to collectively as the
"Premises"). Manager has the experience and staff necessary and suitable for the
management and operation of real estate properties in the United States and
desires to undertake the management and operation of the real estate properties
of Owner. Manager is an independent contractor and Owner shall have no voice in
the selection or discharge of Manager's servants, representatives, or
sub-contractors, or in their number or in the compensation to be received by
them or in the period of hours of their employment, and no control over the
specific manner in which the work shall be done, but Manager shall be
responsible for the quality of work done and of the materials furnished, and
warrants that they shall conform to the terms of this Agreement.
2. TERM:
Owner does hereby designate Manager the exclusive manager of all of
Owner's real estate interests for the term of one (1) year commencing on the
effective date hereof. This designation shall be automatically renewed annually
on each anniversary of the effective date hereof for an additional one (1) year
period, subject to the right of either party to cancel this Agreement at any
time by giving the other party not less than thirty (30) days written notice of
its intention to so terminate.
3. DUTIES OF MANAGER:
Manager shall serve as an independent contractor, as Owner's sole and
exclusive agent for the management of the Premises. Both parties acknowledge
that certain individual properties owned by Owner are presently operated
pursuant to "net leases" and other similar arrangements with third parties.
These individual properties will not be covered by this Agreement until any such
net leases are terminated, at which time operation of these properties shall be
turned over to Manager pursuant to this Agreement. Owner and Manager agree, upon
the request of either party at any time during the term of this Agreement, to
acknowledge a schedule of properties covered hereby, including the legal
description thereof if desired.
<PAGE>
4. SERVICES OF MANAGER:
Subject to such express restrictions or limitations on its authority
and to such written instructions as may from time be imposed or given by Owner,
Manager shall, on behalf and for the account of Owner:
A. Use its best efforts to lease and keep leased to desirable
tenants all space held for lease. Manager shall lease the
Premises with each lease identifying Owner (or the trade name
of the Premises) as the title holder of the Premises and owner
of the lease.
Without the prior approval of Owner, no lease, including
renewal options, shall exceed (i) one year for apartment
leases, (ii) ten years for office or warehouse leases or (iii)
twenty years for shopping center leases. In the event that a
lease contract contemplated to be entered into by Manager in
the name of the Owner is not within the limitations set forth
in the preceding sentence, such lease contract shall be first
subject to the written approval of Owner, which approval shall
not be unreasonably withheld. Manager shall advise Owner
personally or by certified mail of any such proposed lease or
amendment thereto. If Owner fails to advise Manager within ten
(10) days after receipt of such notice, it shall be presumed
that Owner granted Owner's written approval thereto and,
accordingly, Manager shall be authorized to execute such lease
contract in the name of Owner without being in violation of
Manager's duties hereunder. All leases of the Premises shall
remain the property of Owner and, regardless of their terms,
copies shall be promptly provided to Owner. Manager shall have
the right, without prior consent, at Owner's expense, to
repair, alter, modify and improve (as distinguished from
expansion) the existing structures, in connection with any
such lease; prior approval, however, of Owner to be secured by
Manager on all such matters involving costs in excess of
Twenty-Five Thousand Dollars ($25,000.00) for any one item.
Manager may collect from lessees, security deposits as
deposits for the performance under the leases, the amount of
such security deposits to be for such sum as is customary in
the locality of said real estate. Failure by Manager to obtain
any security deposit shall not constitute any nature of
default by Manager hereunder. The security deposits, as
collected, shall be paid over each month to Owner following
the month of collection by Manager.
B. BOOKS AND RECORDS:
The term "Agreement Year" as used herein shall mean the
calendar year ending December 31st each year. The first
Agreement Year shall be the period beginning on the date
hereof and ending on the next December 31st, and the last
Agreement Year shall be the period beginning January 1st of
the last year of the term of this Agreement and ending with
the last day of the term of this Agreement.
Manager shall maintain, in a manner and form consistent with
generally accepted methods of accounting, at its office,
during each Agreement Year and retain such for a period of
three (3) consecutive years thereafter, complete and accurate
general books of account, which will reflect all receipts
derived from the operation of the Premises by
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<PAGE>
Manager during such Agreement Year, including but not limited
to, original invoices, sales and other records pertaining to
the business of operating the Premises and other pertinent
papers and documents which will enable Owner to determine the
gross receipts derived by Manager from the Premises. All of
the aforementioned records shall be open to inspection and
audit by Owner or its agents at all reasonable times during
ordinary business hours. On termination of this Agreement, all
records shall be delivered to Owner at the Premises. Owner and
Manager recognize that Owner, itself, may have records
pertaining to the Premises as to which Manager does not have
actual knowledge; and nothing in this paragraph shall be
interpreted to impose any duty on Manager with respect to such
records or any other records of a type which would not be kept
by a reasonably prudent business manager.
Manager shall establish a bank account into which receipts
relating to the Premises of the Owner transmitted to Manager
or collected by Manager shall be deposited. From the funds in
such bank account, Manager shall pay the following types of
expenses associated with operation of the Premises (it being
understood that nothing herein shall be interpreted to impose
on Manager liability for the payment of any such expenses from
Manager's own funds): on-site salary expenses of every kind
and nature, utility charges, custodial service, management
fees hereunder to Manager and all other recurring-type charges
relating to the operation of the Premises (all of the
aforesaid being herein sometimes referred to as "Premises
Operating Expenses"). Manager shall submit to Owner on or
before the tenth (10th) day of each month during the term
hereof (including the tenth (10th) day of the month following
the end of the term) at the place then fixed for the payments
hereunder, a check in a sum equal to all funds in the bank
account for the Premises except a nominal sum to pay
obligations due prior to receipt of additional rentals, and a
written statement, certified by Manager to be true and correct
to the best of his knowledge and belief, showing in reasonably
accurate detail, the amount of aforesaid receipts and the
amount of Premises Operating Expenses disbursed from such bank
account and the resulting difference for the preceding month
accompanied by copies of invoices or statements paid, if
applicable. Manager shall submit to the Owner on or before the
thirtieth (30th) day following the end of each Agreement Year,
at the place then fixed for payments, a complete statement of
the aforesaid annual figures for the preceding Agreement Year
in reasonable detail certified by Manager. Relative to the
authority of Manager to pay from the bank account Premises
Operating Expenses (as hereinabove referred to), such
authority of Manager shall be limited as stated in
subparagraph 4(C) hereof.
C. MAINTENANCE:
(1) Manager shall, at Owner's expense (but subject to the
limitations hereinafter set forth), at all times
during the term of this Agreement, keep the Premises,
both exterior and interior, structural and otherwise,
in good repair, and shall make all repairs and
replacements, both exterior and interior, structural
and otherwise; and Manager shall, at Owner's expense
(subject, however, to the limitations hereinafter set
forth) satisfy each and every obligation, duty or
payment required of the lessor on the leases or any
substitute leases entered into during the term of
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this Agreement. Manager shall also, at Owner's
expense (subject, however, to the limitations
hereinafter set forth), keep the Premises in a clean
condition, free from noxious odors, and shall not
permit or allow any refuse or debris of Manager to
accumulate thereon, or upon the sidewalks, alleys or
streets adjoining the same, and shall remove any
obstruction from the sidewalks adjoining the
Premises. Manager shall exercise reasonable efforts
to see that no article deemed extra hazardous on
account of fire or other dangerous properties, nor
any explosive shall be brought on or into the
Premises, except that this provision shall not apply
to articles usually held for storage in substantially
similar buildings.
(2) The funds of Owner shall be utilized by Manager for
the purpose of fulfilling the foregoing
responsibilities subject, however, to the following
limitations:
(a) Manager is authorized to enter into any
agreement, verbal or written, for
performance of its responsibilities only if
the consideration payable by Owner pursuant
to such agreement is Twenty-Five Thousand
Dollars ($25,000) or less (however, Manager
may enter into such agreements where the
consideration payable pursuant thereto is
more than Twenty-Five Thousand Dollars
($25,000) if, in Manager's sole opinion,
such repairs are necessary to protect the
Premises, fulfill obligations of Owner under
leases or rental agreements or prevent
bodily injury).
(b) If any written contract for the performance
of such responsibilities is in the name of
Owner, then irrespective of the amount
payable pursuant thereto, only an authorized
agent of Owner shall be authorized to
execute any such contract (and for these
purposes Manager shall not be deemed to be
an authorized agent of Owner).
(c) If any contract for the performance of the
aforesaid duties is not cancellable by
Manager on sixty (60) days' notice or less,
then Manager shall not enter into such
contract without the prior written approval
of Owner, notwithstanding that the
consideration payable thereunder may be
Twenty-Five Thousand Dollars ($25,000) or
less. The preceding provisions do not
relate to the contractual authority of
Manager as to signing leases of building
space and such authority shall be restricted
only as specifically provided in paragraph
4(A) hereof.
(d) Notwithstanding Paragraph 4(C)(2)(a), if any
contract for performance of the aforesaid
duties is cancellable by Manager on sixty
(60) days' notice or less, then Manager may
enter into such contract without the prior
written approval of Owner so long as the
maximum consideration payable, upon the
giving of notice of cancellation, does not
exceed Twenty-Five Thousand Dollars
($25,000).
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D. Employees:
Manager shall engage such employees as it deems necessary for
the operation and maintenance of the Premises. Such employees
shall be deemed employees of Manager, or such local agent or
agents as may be retained by Manager and not in the employ of
Owner. Manager, at its expense, shall maintain adequate
fidelity insurance on those of its home office employees who
handle funds or assets of Owner. Owner shall reimburse Manager
for all direct and indirect salary, moving and traveling
expenses of those personnel of Manager performing on-site
property management and maintenance functions, but Manager
shall not be reimbursed for such expenses incurred with
respect to its off-site supervisor and administrative
personnel.
E. Workmen's Compensation:
Manager agrees to provide and Owner agrees to reimburse
Manager for all premiums, contributions and taxes for
Workmen's Compensation insurance, unemployment insurance, and
for old age pensions, annuities and retirements benefits, now
or hereafter imposed by or pursuant to federal and state laws,
which are measured by the wages, salaries or other
remuneration paid to persons employed by Manager in connection
with the performance of the Management Agreement except as
related to personnel of Manager performing property management
functions operating out of the home office of Manager. Manager
agrees to carry Workmen's Compensation Insurance and
Employer's Liability Insurance in accordance with the laws of
the states in which Owner owns real estate to be at all times
in force and Owner agrees to reimburse Manager for the cost
thereof.
F. Code Requirements:
Manager shall use its best efforts to comply with all building
costs, zoning and licensing requirements, and other
requirements of the duly constituted federal, state and local
governmental authorities with respect to the Premises. Manager
may, in its discretion and at Owner's expense, appeal from any
requirement it deems unwarranted and it may compromise or
settle any dispute regarding such requirements.
G. Condemnation Proceedings:
Manager may act on behalf of Owner in any eminent domain
proceedings for the condemnation of the Premises and may, if
Manager deems it advisable, at Owner's expense, employ
independent real estate experts for appraisal and testimony in
connection with any such proceedings. Manager will make
recommendations as to the advisability of compromise or
settlement of any such proceedings.
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H. Real Estate Experts:
Manager may enlist the services of other real estate brokers
or agents in the performance of its duties hereunder to the
extent deemed necessary or appropriate. The expense of the
services will be paid by Owner.
I. Rent Collection:
Use its best efforts to collect rent and other income relating
to the Premises. Manager may, in its discretion, compromise
claims for such rent and other income and, at the expense of
Owner, institute legal proceedings in its own name or in the
name of Owner to collect the same, to oust or dispossess
tenants or others occupying such real estate interests, and
otherwise to enforce the rights of Owner with respect thereto
and in its discretion may compromise or settle such
proceedings.
J. Public Liability Insurance:
Manager, at Owner's expense, shall at all times during the
term of this Agreement carry general liability, accident and
property damage insurance and such other insurance as shall be
carried for the protection of Owner and Manager as
contemplated in this paragraph. Such liability, accident and
property damage insurance shall be to protect Owner and
Manager against any claims for injuries to person or persons
or property arising or growing out of the use of the Premises,
and the amount of liability insurance shall not be less than
the sum of One Hundred Thousand ($100,000) per person and
Three Hundred Thousand ($300,000) per accident, and the amount
of public liability property damage insurance shall not be
less than the sum of Fifty Thousand ($50,000) per accident.
K. Fire Insurance:
Manager, at Owner's expense, at all times during the term of
this Agreement shall carry fire, extended coverage, vandalism
and malicious mischief insurance in an amount equal to not
less than ninety percent (90%) of the replacement value of all
buildings and improvements on the Premises without deduction
for depreciation, in good and solvent insurance companies
authorized to do business in the state and approved by Owner.
All insurance policies shall contain a replacement cost
endorsement and be in the name of Owner as the insured.
L. Rent Insurance:
Manager, at Owner's expense, shall carry rental insurance in
an amount equal to fifty percent (50%) or more of the annual
gross receipts from the lessees of the Premises in good and
solvent insurance companies authorized to do business in the
state and approved by Owner. All such policies shall be in the
name of and made payable to Owner.
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5. COMPENSATION:
Owner hereby agrees to pay Manager compensation in the amount of five
percent (5%) of gross income derived from the operation of the Premises. "Gross
Income" shall mean any and all income from the Premises including: rents,
percentage rents, overage rents, expense participation rents and all rents or
payment from tenants of any nature, income from services rendered to tenants
(i.e., maid service, janitorial or cleaning service, trash collection, elevator
service, etc.), and all income from concessions of any kind, including all
coin-operated facilities on the Premises. Also included in gross income shall be
any amounts collected in lieu of the above-enumerated items such as forfeited
security deposits and judgments or awards collected in the enforcement of any
lease or rental agreement. In addition, Manager shall be entitled to
reimbursement of expenses incurred by Manager in attending meetings at the
request of Owner.
6. LIABILITY OF MANAGER:
Manager will give Owner the benefit of its best judgment and efforts in
rendering the foregoing services to Owner. Manager shall not be liable for any
act or omission whatsoever of any agent or representative, or for Manager's
negligence or error in judgment except its willful misfeasance, bad faith or
gross negligence in the conduct of its duties; and Owner shall indemnify and
save harmless Manager from and against any and all liabilities, claims and
damages, costs and expenses (including reasonable attorney's fees) to which
Manager may become subject by reason or arising out of the performance or
non-performance of its duties as Manager; provided, however, that no such return
will be made of damages, costs or expenses which may be incurred by Manager by
reason of its willful misfeasance, bad faith or gross negligence in the conduct
of its duties. The foregoing provisions of this paragraph shall survive the
termination of this Agreement, but this shall not be construed to mean that
Owner's liabilities or obligations hereunder do not survive as to the other
provisions of this Agreement.
7. STATUS OF TRUST:
In the event that the terms of this Agreement at any time shall, in the
opinion of the counsel for Owner, impair the status of Owner as a "Real Estate
Investment Trust" within the meaning of Part II, subcharacter M of the Internal
Revenue Code of 1954, as now enacted or hereafter amended, the parties shall,
within 30 days after Owner shall have given to Manager written notice of such
impairment, negotiate such amendments as may be necessary to restore, in the
opinion of counsel for Owner, such status of Owner.
8. MECHANIC'S LIENS:
Manager shall not have nor shall anyone claiming by, through or under
Manager have the right to file or place any mechanic's liens or other lien of
any kind or character whatsoever upon the Premises, or upon the interest of
Manager therein, and notice is hereby given that no contractor, subcontractor or
anyone else who may furnish any material, service or labor for any building,
improvements, alternations, repairs or any part thereof shall at any time be or
become entitled to any lien thereon.
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9. CONFORMITY OF LAW:
Manager covenants, with respect to the Premises, fixtures and
appurtenances, that at Owner's expense (subject to the limitations on Manager's
contractual authority as herein set forth), Manager shall use due diligence to
cause them to conform to every applicable requirement of law or duly constituted
authority, and to the applicable requirements of all carriers of insurance on
the Premises, any Board of Underwriters, Rating Bureau or similar organization
including, but not limited to, requirements pertaining to the health, welfare or
safety of employees or the public, such as adequate toilet facilities, fire
exits, exit signs, safe electrical wiring and elevators. Manager shall, at
Owner's cost and expense (but subject to the herein set forth limitations on
Manager's contractual authority), make such improvements or installations as may
be necessary to satisfy this requirement and shall, at all times during the
term, promptly comply with all such requirements whether now or hereafter in
effect and whether now or hereafter applicable for any reason whatsoever.
Anything contained herein to the contrary notwithstanding, should Manager use
the Premises for any purpose other than the purposes as are normally incidental
to such uses, or should Manager permit any area of the Premises to remain vacant
while they are usable for such purposes, Manager shall, at Owner's expense (but
subject to the herein set forth limitations of Manager's contractual authority),
cause the Premises to conform to any additional requirements of law, duly
constituted authorities, carriers of insurance on the Premises and any Rating
Bureau, Board of Underwriters or similar organization applicable to the Premises
solely because of such other use, or such non-use of the Premises.
10. STATE AND LOCAL LAW:
Manager shall use due diligence to prevent the Premises from being used
for any unlawful purpose and shall at all times comply with the laws and the
rules and regulations of the applicable governmental bodies and fire inspection
and rating bureaus relating to the use of the Premises, including sidewalks,
alleys and streets adjoining, the cost and expense of such compliance to be the
responsibility of Owner (but Manager's contractual authority with respect
thereto shall be limited as herein set forth).
11. INSURANCE CLAIMS:
Manager shall settle and adjust any claims against any insurance
company under the fire or extended coverage policies of insurance as described
in paragraph 4(K) hereof, but before making final settlement of all claims over
Ten Thousand Dollars ($10,000), the written approval of Owner shall be had.
12. SUBORDINATION:
Owner and Manager agree that this Agreement is and shall be
subordinated to any mortgages or trust deeds held by or for any bank, insurance
company, seller or other lending institution that may be now on or hereafter
placed upon the Premises, and to any and all advances to be made thereunder, and
to the interests thereon and all renewals, replacements and extensions thereof.
The preceding sentence shall not be interpreted to enlarge the duties of Manager
hereunder or to diminish the rights of Manager hereunder, the sole purpose of
the preceding sentence being to indicate the agreement of Owner and Manager that
a
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foreclosure of any such mortgage or trust deed shall terminate this Management
Agreement (but shall not release the then accrued obligations of the parties
hereunder).
13. CONDEMNATION:
In the event of any condemnation or taking, all damages shall be the
exclusive property of Owner, provided, however, Manager shall be entitled to any
proceeds recovered by Manager in its own right on account of any and all damage
to Manager's business by reason of condemnation.
14. INDEMNIFICATION:
If either party shall default, the successful party shall be reimbursed
by the other for all costs and expenses incurred in the enforcement of any of
the provisions of this Agreement, including reasonable attorney's fees.
15. REPRESENTATIONS:
The following covenants, representations, warranties and restrictions
are made by Manager:
A. Manager will not assign, sell or otherwise dispose of or
permit any other person to acquire any title to its interest
in this Agreement.
B. Manager will not directly or indirectly create, assume, incur
or suffer to exist any mortgage, pledge, encumbrance, lien or
charge of any kind upon this Agreement or upon any income or
fees therefrom except as provided in this Agreement.
16. NOTICE:
Whenever, under the terms of this Agreement, any notice is required to
be served upon the other party, said notice shall be served upon the other party
by personal service or by sending said notice by certified mail to the other
party. Notice to each party shall be in writing, and until further notification
in writing, shall be mailed as follows:
Notice to Owner shall be mailed as follows:
USP Real Estate Investment Trust
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
Notice to Manager shall be mailed as follows:
AEGON USA Realty Management, Inc.\
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
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17. CUMULATIVE RIGHTS:
The various rights, powers, objects, elections and remedies of Owner
and Manager provided in this Agreement shall be construed as cumulative and no
one of them is exclusive of the others or exclusive of any rights or remedies
allowed Owner and Manager by law.
18. CONSENT:
Owner and Manager shall not unreasonably withhold their consent
whenever such consent shall be required under the terms of this Agreement.
19. PARAGRAPH HEADINGS:
The paragraph headings contained herein are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope or intent of this Agreement or in any way affect the terms and provisions
hereof.
20. RULES OF CONSTRUCTION:
Where necessary herein, the terms "Owner" and "Manager" shall apply to
the plural or the agents or employees of Owner, or Manager, and all terms used
in the singular or in the masculine shall apply to the plural or to the feminine
or neuter gender.
21. AMENDMENTS:
This Agreement may be amended only by the mutual consent of the
parties. However, no such amendment shall become effective unless it be reduced
to an instrument in writing specifically referring to this Agreement, is signed
by both parties and dated.
22. SUCCESSORS AND ASSIGNS:
The provisions of this Agreement shall apply to and bind the immediate
parties and the heirs, executors, administrators, successors and assigns of the
respective parties. Owner may assign this Agreement without the consent of
Manager, however, Manager may only assign this Agreement with the prior written
consent of Owner. Until such time, however, as Manager has received written
notice from Owner of the party to which Owner has assigned this Agreement,
Manager shall continue to tender performance hereunder to Owner as herein
provided. This Agreement supersedes any and all prior agreements or
understandings, oral or written, by and between the parties hereto relating to
leasing or managing the Premises.
23. TRUST:
It is understood and agreed by the parties hereto:
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A. That Owner is a common law trust organized under the laws of
the State of Iowa pursuant to a Declaration of Trust dated
October 5, 1972, as amended, and recorded in the Office of the
Recorder of Linn County, Iowa.
B. That the holders of shares of beneficial interest in
Owner shall not be personally liable hereon, and,
C. That the other party hereto shall look solely to the funds and
property of Owner for the payment of any claim arising
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
OWNER: MANAGER:
USP REAL ESTATE INVESTMENT TRUST AEGON USA REALTY MANAGEMENT, INC.
By: /s/ Patrick E. Falconio By: /s/ Dennis Roland
---------------------------------------- ------------------------------
Patrick E. Falconio Dennis Roland, President
Chairman of the Board of Trustees
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