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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported):
December 31, 1997
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PHILIPS INTERNATIONAL REALTY CORP.
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(Exact name of Registrant as specified in its charter)
Maryland
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(State or other jurisdiction of incorporation)
000-23463 13-3963667
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(Commission File No.) (I.R.S. Employer
Identification No.)
417 Fifth Avenue, New York, New York 10016
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(Address of Principal Executive Offices) (Zip Code)
(212) 545-1100
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(Registrant's telephone number, including area code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On December 31, 1997, Philips International Realty Corp. (the
"Registrant"), together with its subsidiaries and affiliates, completed the
formation transactions (the "Formation Transactions") as described in the
Registrant's Registration Statement on Form S-4 (Registration No.
333-41431)which was declared effective on December 11, 1997(the "Registration
Statement"). As a result of the Formation Transactions, the Registrant owns and
operates ten shopping center properties located in metropolitan and suburban
areas in the New England, Mid-Atlantic and Southeast regions of the United
States. The foregoing description of the Formation Transactions is qualified in
its entirety by the more complete description contained in the Registration
Statement(and the Proxy Statement/Prospectus contained therein), which
description is incorporated herein by reference and made a part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit
Number Exhibit Title
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3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Articles Supplementary of Series A Preferred Stock
3.3 Amended and Restated Bylaws of the Company
10.1 Agreement of Limited Partnership of the Operating Partnership
10.2* Form of 1997 Stock Option Plan of the Company
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Exhibit
Number Exhibit Title
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10.3* Form of Agreement of Limited Partnership for Holding Partnerships
10.4* Form of Articles of Incorporation of Philips Subs
10.5* Form of Bylaws of Philips Subs
10.6* Contribution and Exchange Agreement, dated August 11, 1997, among
National, the Board of Trustees, the Company, the Operating Partnership
and certain contributing partnerships or limited liability companies
associated with a private real estate firm controlled by Philip
Pilevsky and certain partners and members thereof
10.7* Form of Registration Rights Agreement among the Company and certain
holders of limited partnership interests in the Operating Partnership
10.8* Form of Management Agreement among the Company, the Operating
Partnership and Philips International Management Corp.
10.9* Form of Non-Competition Agreement among the Company, the Operating
Partnership, Philip Pilevsky and Sheila Levine
10.10 Employment Agreement between the Company and Louis Petra
10.11 Employment Agreement between the Company and Sheila Levine
10.12* Form of Trustee Warrant
10.13 Amendment No. 1 to Contribution and Exchange Agreement, dated as of
December 29, 1997
10.14 Non-Recourse Secured Promissory Note of National Properties Investment
Trust
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* Incorporated by reference to the Exhibit of the same number filed with the
Registrant's Registration Statement on Form S-4 (Registration No. 333-41431).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Philips International Realty Corp. has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: January 9, 1998
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ Philip Pilevsky
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Philip Pilevsky
Chairman of the Board and
Chief Executive Officer
By: /s/ Louis J. Petra
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Louis J. Petra
President
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Exhibit Index
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Exhibit Exhibit Title
Number --------------
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3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Articles Supplementary of Series A Preferred Stock
3.3 Amended and Restated Bylaws of the Company
10.1 Agreement of Limited Partnership of the Operating Partnership
10.2* Form of 1997 Stock Option Plan of the Company
10.3* Form of Agreement of Limited Partnership for Holding Partnerships
10.4* Form of Articles of Incorporation of Philips Subs
10.5* Form of Bylaws of Philips Subs
10.6* Contribution and Exchange Agreement, dated August 11, 1997, among
National, the Board of Trustees, the Company, the Operating Partnership
and certain contributing partnerships or limited liability companies
associated with a private real estate firm controlled by Philip
Pilevsky and certain partners and members thereof
10.7* Form of Registration Rights Agreement among the Company and certain
holders of limited partnership interests in the Operating Partnership
10.8* Form of Management Agreement among the Company, the Operating
Partnership and Philips International Management Corp.
10.9* Form of Non-Competition Agreement among the Company, the Operating
Partnership, Philip Pilevsky and Sheila Levine
10.10 Employment Agreement between the Company and Louis Petra
10.11 Employment Agreement between the Company and Sheila Levine
10.12* Form of Trustee Warrant
10.13 Amendment No. 1 to Contribution and Exchange Agreement, dated as of
December 29, 1997
10.14 Non-Recourse Secured Promissory Note of National Properties Investment
Trust
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* Incorporated by reference to the Exhibit of the same number filed with the
Registrant's Registration Statement on Form S-4 (Registration No. 333-41431).
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ARTICLES OF AMENDMENT AND RESTATEMENT
OF
PHILIPS INTERNATIONAL REALTY CORP.
A MARYLAND CORPORATION
PHILIPS INTERNATIONAL REALTY CORP., a Maryland corporation
(the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "Department") that:
FIRST: The Corporation desires to and does hereby amend and
restate its Charter, as currently in effect, consisting of the Articles of
Incorporation filed on July 16, 1997 with the Department (the "Articles of
Incorporation"), as hereinafter provided. The provisions set forth in these
Articles of Amendment and Restatement are all of the provisions of the Charter
of the Corporation as currently in effect.
SECOND: The Charter of the Corporation is hereby amended by
striking in their entirety Articles FIRST through SIXTH of the Articles of
Incorporation and by substituting in lieu thereof the following:
ARTICLE I
NAME
The name of the corporation (the "Corporation") is:
Philips International Realty Corp.
ARTICLE II
PURPOSE
The purposes for which the Corporation is formed are to engage
in any lawful act or activity (including, without limitation or obligation,
engaging in business as a real estate investment trust under the Internal
Revenue Code of 1986, as amended, or any successor statute (the "Code")) for
which corporations may be organized under the general laws of the State of
Maryland as now or hereafter in force. For purposes of these Articles, "REIT"
means a real estate investment trust under Sections 856 through 860 of the Code.
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the
State of Maryland is c/o United Corporate Services, Inc., Suite 1200, 20 South
Charles Street, Baltimore, Maryland 21201. The name of the resident agent of the
Corporation in the State of Maryland is United Corporate Services, Inc., whose
post address is Suite 1200, 20 South Charles Street, Baltimore, Maryland 21201.
The resident agent is a Maryland corporation.
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ARTICLE IV
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 1. NUMBER AND CLASSIFICATION OF DIRECTORS. The
business and affairs of the Corporation shall be managed under the direction of
the Board of Directors of the Corporation (the "Board of Directors"). The number
of directors of the Corporation initially shall be seven, which number may be
increased or decreased pursuant to the bylaws of the Corporation (the "Bylaws),
but shall never be less than the minimum number required by the Maryland General
Corporation Law ("MGCL"). The names and classifications of the directors who
shall serve until the first annual meeting of stockholders and until their
successors are duly elected and qualify are:
Philip Pilevsky Class III
Louis J. Petra Class I
Sheila Levine Class II
A. F. Petrocelli Class II
Elise Jaffe Class I
Robert Grimes Class III
Arnold S. Penner Class III
These directors may increase the number of directors and may fill any vacancy,
whether resulting from an increase in the number of directors or otherwise, on
the Board of Directors prior to the first annual meeting of stockholders in the
manner provided in the Bylaws.
The directors shall be divided into three (3) classes
designated as Class I, Class II and Class III, as nearly equal in number as
possible, with a term of three (3) years each, and the terms of office of one
class shall expire each year. Class I directors shall hold office initially for
a term expiring at the annual meeting of stockholders in 1999, Class II
directors shall hold office initially for a term expiring at the annual meeting
of stockholders in 2000 and Class III directors shall hold office initially for
a term expiring at the annual meeting of stockholders in 2001. Beginning with
the annual meeting of stockholders in 1999 and at each succeeding annual meeting
of stockholders, the directors of the class of directors whose term expires at
such meeting will be elected to hold office for a term expiring at the
third-succeeding annual meeting. Each director will hold office for the term for
which he or she is elected and until his or her successor is duly elected and
qualifies.
Section 2. AUTHORIZATION BY BOARD OF STOCK ISSUANCE. The Board
of Directors may authorize the issuance from time to time of shares of stock of
the Corporation of any class or series, whether now or hereafter authorized, or
securities or rights convertible into shares of its stock of any class or
series, whether now or hereafter authorized, for such consideration as the Board
of Directors may deem advisable, subject to such restrictions or limitations, if
any, as may be set forth in the Charter or the Bylaws.
Section 3. PREEMPTIVE RIGHTS. Except as may be provided by the
Board of Directors in setting the terms of classified or reclassified shares of
stock pursuant to Article V, Section 4, no holder of shares of stock of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any additional shares of stock of the Corporation or any other
security of the Corporation which it may issue or sell.
Section 4. INDEMNIFICATION. The Corporation shall have the
power, to the maximum extent permitted by Maryland law in effect from time to
time, to obligate itself to indemnify, and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (a) any individual
who is a present or former director or officer of the Corporation or (b) any
individual who, while an officer or director of the Corporation and at the
request of the Corporation, serves or has served as a director, officer, partner
or trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or any other
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enterprise from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his status as a
present or former director or officer of the Corporation. The Corporation shall
have the power, with the approval of the Board of Directors, to provide such
indemnification and advancement of expenses to a person who served a predecessor
of the Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the Corporation.
Section 5. DETERMINATIONS BY BOARD. The determination as to
any of the following matters, made in good faith by or pursuant to the direction
of the Board of Directors consistent with the Charter and in the absence of
actual receipt of an improper benefit in money, property or services or active
and deliberate dishonesty established by a court, shall be final and conclusive
and shall be binding upon the Corporation and every holder of shares of its
stock: the amount of the net income of the Corporation for any period and the
amount of assets at any time legally available for the payment of dividends,
redemption of its stock or the payment of other distributions on its stock; the
amount of paid-in surplus, net assets, other surplus, annual or other net
profit, net assets in excess of capital, undivided profits or excess of profits
over losses on sales of assets; the amount, purpose, time of creation, increase
or decrease, alteration or cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
the fair value, or any sale, bid or asked price to be applied in determining the
fair value, of any asset owned or held by the Corporation; any matters relating
to the acquisition, holding and disposition of any assets by the Corporation; or
any matter relating to the construction or interpretation of the Charter or
Bylaws of the Corporation.
Section 6. REIT QUALIFICATION. If the Corporation elects to
qualify for federal income tax treatment as a REIT, the Board of Directors shall
use its reasonable best efforts to take such actions as are necessary or
appropriate to preserve the status of the Corporation as a REIT; however, if the
Board of Directors determines that it is no longer in the best interests of the
Corporation to continue to be qualified as a REIT and such determination is
approved by the affirmative vote of the holders of not less than a majority of
all votes entitled to be cast on the matter, the Board of Directors may revoke
or otherwise terminate the Corporation's REIT election pursuant to Section
856(g) of the Code. The Board of Directors may also determine that compliance
with any restriction or limitation on stock ownership and transfers set forth in
Article VI is no longer required for REIT qualification.
Section 7. REMOVAL OF DIRECTORS. Any director, or the entire
Board of Directors, may be removed from office at any time, for cause only, by
the affirmative vote of not less than two-thirds of the votes entitled to be
cast for the election of directors.
Section 8. IRREVOCABLE RESOLUTIONS. The Board of Directors may
designate any of its resolutions to be "irrevocable." Resolutions so designated
may not be revoked subsequently by the Board of Directors without the approval
of the issued and outstanding shares of Common Stock of the Corporation by the
affirmative vote of a majority of all votes entitled to be cast in respect of
such shares of Common Stock.
ARTICLE V
STOCK
Section 1. AUTHORIZED SHARES. The Corporation has authority to
issue a total of 180,000,000 shares of stock, consisting of 150,000,000 shares
of Common Stock, $0.01 par value per share ("Common Stock"), and 30,000,000
shares of Preferred Stock, $0.01 par value per share ("Preferred Stock"). The
aggregate par value of all authorized shares of stock having par value is
$1,800,000.
Section 2. COMMON STOCK. Except as may otherwise be required
by law, and subject to the provisions of Article VI and the rights of holders of
any class or series of Preferred Stock established pursuant to Section 3 of this
Article V, (i) each share of Common Stock shall entitle the holder thereof to
one vote on all matters voted upon by stockholders, (ii) the holders of Common
Stock shall be entitled to
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receive, pro rata in relation to the number of shares of Common Stock held by
them, such dividends as may be authorized from time to time by the Board of
Directors out of funds legally available therefor, and (iii) in the event of the
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, the holders of Common Stock shall be entitled to receive, pro rata
in relation to the number of shares of Common Stock held by them, all of the
remaining assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders, if any. The Common Stock shall be
subject to the express terms of the Preferred Stock or any classes thereof. The
Board of Directors may reclassify any unissued shares of Common Stock from time
to time in one or more classes or series of stock.
Section 3. PREFERRED STOCK. The Preferred Stock may be issued,
from time to time, in one or more classes or series, and each class or series
shall be known and designated by such designations, as may be stated and
expressed in a resolution or resolutions adopted by the Board of Directors and
as shall have been set forth in articles supplementary made, executed,
acknowledged, filed and recorded in the manner required by the MGCL in order to
make the same effective. The Board of Directors may classify any unissued shares
of Preferred Stock and reclassify any previously classified but unissued shares
of Preferred Stock of any series from time to time, in one or more classes or
series of stock.
Section 4. CLASSIFIED OR RECLASSIFIED SHARES. Prior to
issuance of classified or reclassified shares of any class or series, the Board
of Directors by resolution shall: (a) designate that class or series to
distinguish it from all other classes and series of stock of the Corporation;
(b) specify the number of shares to be included in the class or series; (c) set,
subject to the provisions of Article VI and subject to the express terms of any
class or series of stock of the Corporation outstanding at the time, the
preferences, conversion or other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or other
distributions, qualifications and terms and conditions of redemption for each
class or series; and (d) cause the Corporation to file articles supplementary
with the Department. Any of the terms of any class or series of stock set
pursuant to clause (c) of this Section 4 may be made dependent upon facts or
events ascertainable outside the Charter (including determinations by the Board
of Directors or other facts or events within the control of the Corporation) and
may vary among holders thereof, provided that the manner in which such facts,
events or variations shall operate upon the terms of such class or series of
stock is clearly and expressly set forth in the articles supplementary filed
with the Department.
Section 5. CHARTER AND BYLAWS. All persons who shall acquire
stock in the Corporation shall acquire such stock subject to the provisions of
the Charter and the Bylaws.
ARTICLE VI
RESTRICTION ON TRANSFER,
ACQUISITION AND REDEMPTION OF SHARES
Section 1. DEFINITIONS. For purposes of this Article VI, the
following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of shares of
Equity Stock by a Person who is or would be an actual owner, for federal income
tax purposes, of such shares of Equity Stock or who is or would be treated as a
constructive owner of such shares of Equity Stock under Section 542(a)(2) of the
Code either directly or constructively through the application of Section 544 of
the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3) of the Code. For
purposes of determining the percentage ownership of Common Stock by any Person,
shares of Common Stock that may be acquired upon conversion, exchange or
exercise of any securities of the Corporation or any debt securities of Philips
International Realty, L.P. directly or constructively held by such Person, but
not Common Stock issuable with respect to the conversion, exchange or exercise
of securities of the Corporation or debt securities of Philips International
Realty, L.P. held by other Persons, shall be deemed to be outstanding prior to
such conversion, exchange or exercise. The terms "Beneficial Owner,"
"Beneficially Owns," "Beneficially Own" and "Beneficially Owned" shall have the
correlative meanings.
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"Charitable Beneficiary" shall mean a beneficiary of the Trust
as determined pursuant to Section 14 of this Article VI.
"Effective Date" shall mean the date of filing of these
Articles of Amendment and Restatement with the Department.
"Equity Stock" shall mean Common Stock and any class or series
of Preferred Stock.
"Excess Stock" shall mean excess stock as defined in Section 3
of this Article VI.
"Market Price" as to any date shall mean the average of the
last sales price reported on the New York Stock Exchange, Inc. ("NYSE") of
Common Stock or Preferred Stock, as the case may be, on the ten trading days
immediately preceding the relevant date, or if not then traded on the New York
Stock Exchange, the average of the last reported sales price of the Common Stock
or Preferred Stock, as the case may be, on the ten trading days immediately
preceding the relevant date as reported on any exchange or quotation system over
which the Common Stock or Preferred Stock, as the case may be, may be traded, or
if not then traded over any exchange or quotation system, then the market price
of the Common Stock or Preferred Stock, as the case may be, on the relevant date
as determined in good faith by the Board of Directors.
"Ownership Limit" shall initially mean 6.5% of the lesser of
the aggregate number or value of the outstanding shares of Equity Stock of the
Corporation and, after any adjustment as set forth in Section 9 of this Article
VI, shall mean such percentage as so adjusted. The number and value of shares of
the Equity Stock of the Corporation shall be determined by the Board of
Directors in good faith, which determination shall be conclusive for all
purposes hereof.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended; but does not include an underwriter which participated in a public
offering of the Equity Stock for a period of 30 days following the purchase by
such underwriter of shares of the Equity Stock.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer which results in Excess Stock as described below in
Section 3 of this Article VI, the purported beneficial transferee for whom the
Purported Record Transferee would have acquired shares of Equity Stock, if such
Transfer had not been void under Section 2 of this Article VI.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock as described below in Section 3
of this Article VI, the record holder of the Equity Stock if such Transfer had
not been void under Section 2 of this Article VI.
"Restriction Termination Date" shall mean the first day after
the Effective Date on which the Board of Directors determines that it is no
longer in the best interests of the Corporation to attempt to, or continue to,
qualify as a REIT.
"Transfer" shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition of Equity Stock (including (i) the
granting of any option or entering into any agreement for the sale, transfer or
other disposition of Equity Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or exchangeable
for Equity Stock), whether voluntary or involuntary, whether of record or
beneficially and whether by operation of law or otherwise. The terms "Transfers"
and "Transferred" shall have the correlative meanings.
"Trust" shall mean the trust created pursuant to Section 14 of
this Article VI.
"Trustee" shall mean the Person that is appointed by the
Corporation pursuant to Section 14
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of this Article VI to serve as trustee of the Trust, and any successor thereto.
Section 2. OWNERSHIP LIMITATION. (i) Except as provided in
Section 2 of this Article VI, from the Effective Date and prior to the
Restriction Termination Date, no Person shall Beneficially Own shares of Equity
Stock in excess of the Ownership Limit.
(ii) Except as provided in Section 2 of this Article VI, from
the Effective Date and prior to the Restriction Termination Date, any Transfer
that, if effective, would result in any Person Beneficially Owning Equity Stock
in excess of the Ownership Limit shall be void ab initio as to the Transfer of
such shares of Equity Stock which would be otherwise Beneficially Owned by such
Person in excess of the Ownership Limit and the intended transferee shall
acquire no rights in such shares of Equity Stock.
(iii) From the Effective Date and prior to the Restriction
Termination Date, any Transfer that, if effective, would result in the Equity
Stock being Beneficially Owned by less than 100 Persons (determined without
reference to any rules of attribution) shall be void ab initio as to the
Transfer of such shares of Equity Stock which would be otherwise Beneficially
Owned by the transferee; and the intended transferee shall acquire no rights in
such shares of Equity Stock.
(iv) From the Effective Date and prior to the Restriction
Termination Date, any Transfer that, if effective, would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code shall be void ab initio as to the Transfer of the shares of Equity Stock
which would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code; and the intended transferee shall acquire no rights
in such shares of Equity Stock.
Section 3. EXCESS STOCK. (i) If, notwithstanding the other
provisions contained in this Article VI, at any time after the date of the
Effective Date and prior to the Restriction Termination Date, there is a
purported Transfer or other change in the capital structure of the Corporation
such that any Person would Beneficially Own Equity Stock in excess of the
applicable Ownership Limit, then, except as otherwise provided in Section II,
such shares of Equity Stock in excess of such Ownership Limit (rounded up to the
nearest whole share; "Excess Stock") shall be treated as provided in this
Article VI. Such treatment shall be effective as of the close of business on the
business day prior to the date of the purported Transfer or change in capital
structure.
(ii) If, notwithstanding the other provisions contained in
this Article VI, at any time after the date of the Effective Date and prior to
the Restriction Termination Date, there is a purported Transfer or other change
in the capital structure of the Corporation which, if effective, would cause the
Corporation to become "closely held" within the meaning of Section 856(h) of the
Code, then the shares of Equity Stock being Transferred which would cause the
Corporation to be "closely held" within the meaning of Section 856(h) of the
Code (rounded up to the nearest whole share) shall be treated as Excess Stock as
provided in this Article VI. Such treatment shall be effective as of the close
of business on the business day prior to the date of the purported Transfer or
change in capital structure.
Section 4. PREVENTION OF TRANSFER. If the Board of Directors
or its designee shall at any time determine in good faith that a Transfer has
taken place in violation of Section 2 of this Article VI or that a Person
intends to acquire or has attempted to acquire beneficial ownership (determined
without reference to any rules of attribution) or Beneficial Ownership of any
shares of stock of the Corporation in violation of Section 2 of this Article VI,
the Board of Directors or its designee shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer, including,
but not limited to, refusing to give effect to such Transfer on the books of the
Corporation or instituting proceedings to enjoin or rescind such Transfer;
provided, however, that any Transfers or attempted Transfers in violation of
subparagraphs Section 2 (ii) and (iv) of this Article VI shall automatically
result in the treatment described in Section 3, irrespective of any action (or
non-action) by the Board of Directors.
Section 5. NOTICE TO CORPORATION. Any Person who acquires or
attempts to acquire shares in violation of Section 2 of this Article VI, or any
Person who is or attempts to become a transferee such that Excess Stock results
under Section 3 of this Article VI, shall immediately give written
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notice or, in the event of a proposed or attempted Transfer, give at least 15
days prior written notice to the Corporation of such event and shall provide to
the Corporation such other information as the Corporation may request in order
to determine the effect, if any, of such Transferor's attempted Transfer on the
Corporation's status as a REIT.
Section 6. INFORMATION FOR CORPORATION. From the date of the
Effective Date and prior to the Restriction Termination Date, each Person who is
a Beneficial Owner of Equity Stock and each Person (including the stockholder of
record) who is holding Equity Stock for a Beneficial Owner shall upon demand
provide in writing to the Corporation any information with respect to the
direct, indirect and constructive ownership of Equity Stock of the Corporation
as the Board of Directors deems necessary to comply with the provisions of the
Code applicable to REITS, to comply with the requirements of any taxing
authority or governmental agency or to determine any such compliance.
Section 7. OTHER ACTION BY BOARD. Subject to the provisions of
Section 19 of this Article VI, nothing contained in this Article VI shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
stockholders by preservation of the Corporation's status as a REIT.
Section 8. AMBIGUITIES. In the case of any ambiguity in the
application of any of the provisions of this Article VI, including any
definition contained in Section 1, the Board of Directors shall have the power
to determine the application of the provisions of this Article VI with respect
to any situation based on the facts known to it.
Section 9. INCREASE IN OWNERSHIP LIMIT. Subject to the
limitations provided in Section 10 of this Article VI, the Board of Directors
may from time to time increase the Ownership Limit.
Section 10. LIMITATIONS ON CHANGES IN OWNERSHIP LIMIT. (i) The
Ownership Limit for a class or series of Equity Stock may not be increased if,
after giving effect to such increase, five or fewer Beneficial Owners of Equity
Stock would Beneficially Own, in the aggregate, more than 50.0% in value of the
outstanding shares of Equity Stock.
(ii) Prior to any modification of the Ownership Limit pursuant
to Section 9 of this Article VI, the Board of Directors may require such
opinions of counsel, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure the Corporation's status
as a REIT.
Section 11. EXEMPTIONS BY BOARD. The Board of Directors may,
in its sole discretion, waive the Ownership Limit with respect to any particular
Person or Persons if evidence satisfactory to the Board of Directors and the
Corporation's tax counsel is presented that the changes in ownership pursuant to
such waiver will not cause the Corporation not to continue to be qualified as a
REIT and are not reasonably likely to cause the Corporation not to continue to
be qualified as a REIT in the future and the Board of Directors otherwise
decides that such action is in the best interest of the Corporation.
Section 12. LEGEND. (i) In addition to any other legend
required by applicable law, each certificate for shares of Common Stock or
Preferred Stock shall bear substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A
REAL ESTATE INVESTMENT TRUST (A "REIT") UNDER THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED. EXCEPT AS OTHERWISE PROVIDED PURSUANT TO THE CHARTER OF THE
CORPORATION, NO PERSON MAY BENEFICIALLY OWN SHARES OF EQUITY STOCK IN EXCESS OF
6.5% (OR SUCH GREATER PERCENTAGE AS MAY BE DETERMINED BY THE BOARD OF DIRECTORS
OF THE CORPORATION) OF THE AGGREGATE NUMBER OR VALUE OF THE OUTSTANDING SHARES
OF EQUITY STOCK OF THE CORPORATION. ANY PERSON WHO ACQUIRES OR ATTEMPTS TO
ACQUIRE SHARES OF EQUITY STOCK IN EXCESS OF THE AFOREMENTIONED LIMITATION, OR
ANY PERSON WHO IS OR ATTEMPTS TO BECOME A TRANSFEREE SUCH THAT EXCESS STOCK
RESULTS UNDER THE PROVISIONS OF THE
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CHARTER, SHALL IMMEDIATELY GIVE WRITTEN NOTICE OR, IN THE EVENT OF A PROPOSED OR
ATTEMPTED TRANSFER, GIVE AT LEAST 15 DAYS PRIOR WRITTEN NOTICE TO THE
CORPORATION OF SUCH EVENT AND SHALL PROVIDE TO THE CORPORATION SUCH OTHER
INFORMATION AS IT MAY REQUEST IN ORDER TO DETERMINE THE EFFECT ON ANY SUCH
TRANSFER ON THE CORPORATION'S STATUS AS A REIT. ALL CAPITALIZED TERMS IN THIS
LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, A COPY OF
WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER, WILL BE SENT TO ANY STOCKHOLDER
ON REQUEST AND WITHOUT CHARGE. IF THE RESTRICTIONS ON TRANSFER ARE VIOLATED, THE
SECURITIES REPRESENTED HEREBY WILL BE TREATED AS SHARES OF EXCESS STOCK THAT
WILL BE TRANSFERRED, BY OPERATION OF LAW, TO THE TRUSTEE OF A TRUST FOR THE
EXCLUSIVE BENEFIT OF ONE OR MORE CHARITABLE ORGANIZATIONS.
(ii) In addition to the above legend and any other legend
required by applicable law, each certificate for shares of Preferred Stock shall
bear such legend as may be set forth in the articles supplementary with respect
to the transferability of such Preferred Stock.
Section 13. SEVERABILITY. If any provision of this Article VI
or any application of any such provision is determined to be void, invalid or
unenforceable by virtue of any legal decision, statute, rule or regulation, then
the Purported Record Transferee may be deemed, at the option of the Corporation,
to have acted as an agent of the Corporation in acquiring such shares of Excess
Stock and to hold such shares of Excess Stock on behalf of the Corporation and
the validity and enforceability of the remaining provisions shall not be
affected and other applications of such provision shall be affected only to the
extent necessary to comply with the determination of such court.
Section 14. TRUST FOR EXCESS STOCK. Upon any purported
Transfer that results in Excess Stock pursuant to Section 3 of this Article VI,
such Excess Stock shall be deemed to have been transferred by operation of law
to the Trustee of a trust (the "Trust") for the exclusive benefit of one or more
Charitable Beneficiaries. The Trustee shall be appointed by the Corporation, and
shall be a Person unaffiliated with the Corporation, any Purported Beneficial
Transferee or any Purported Record Transferee. By written notice to the Trustee,
the Corporation shall designate one or more non-profit organizations to be the
Charitable Beneficiary(ies) of the interest in the Trust representing the Excess
Stock such that (a) the shares of Equity Stock, from which the shares of Excess
Stock held in the Trust originated, would not violate the restrictions set forth
in Section 2 of this Article VI in the hands of such Charitable Beneficiary and
(b) each Charitable Beneficiary is an organization described in Sections
170(b)(1)(a), 170(c)(2) and 501(c)(3) of the Code. The Trustee of the Trust will
be deemed to own the Excess Stock for the benefit of the Charitable Beneficiary
on the date of the purported Transfer that results in Excess Stock pursuant to
Section 3 of this Article VI. Shares of Excess Stock so held in trust shall be
issued and outstanding stock of the Corporation. The Purported Record Transferee
shall have no rights in such Excess Stock except as expressly provided for in
this Article VI.
Section 15. DIVIDENDS ON EXCESS STOCK. Shares of Excess Stock
will be entitled to dividends and distributions authorized and declared with
respect to the class or series of Equity Stock from which the Excess Stock
originated and will be payable to the Trustee of the Trust in which such Excess
Stock is held, for the benefit of the Charitable Beneficiary. Dividends and
distributions will be authorized and declared with respect to each share of
Excess Stock in an amount equal to the dividends and distributions authorized
and declared on each share of stock of the class or series of Equity Stock from
which the Excess Stock originated. Any dividend or distribution paid to a
Purported Record Transferee of Excess Stock prior to the discovery by the
Corporation that Equity Stock has been transferred in violation of the
provisions of the Charter shall be repaid by the Purported Record Transferee to
the Trustee upon demand. The Corporation shall rescind any dividend or
distribution authorized and declared but unpaid as void ab initio with respect
to the Purported Record Transferee, and the Corporation shall pay such dividend
or distribution when due to the Trustee of the trust for the benefit of the
Charitable Beneficiary.
Section 16. LIQUIDATION DISTRIBUTIONS FOR EXCESS STOCK.
Subject to the preferential rights of the Preferred Stock, if any, as may be
determined by the Board of Directors, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any other distribution
of
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all or substantially all of the assets of the Corporation, each holder of
shares of Excess Stock shall be entitled to receive, in the case of Excess Stock
originated from Preferred Stock, ratably with each other holder of Preferred
Stock and Excess Stock originated from Preferred Stock and having the same
rights to payment upon liquidation, dissolution or winding up as such Preferred
Stock and, in the case of Excess Stock originated from Common Stock, ratably
with each other holder of Common Stock and Excess Stock originated from Common
Stock, that portion of the assets of the Corporation available for distribution
to its stockholders as the number of shares of the Excess Stock held by such
holder bears to the total number of shares of (i) Preferred Stock and Excess
Stock then outstanding (in the case of Excess Stock originated from Preferred
Stock) and (ii) Common Stock and Excess Stock then outstanding (in the case of
Excess Stock originated from Common Stock).
Any liquidation distributions to be distributed with respect
to Excess Stock shall be distributed in the same manner as proceeds from the
sale of Excess Stock are distributed as set forth in Section 18 of this Article
VI.
Section 17. VOTING RIGHTS FOR EXCESS STOCK. Any vote cast by a
Purported Record Transferee of Excess Stock prior to the discovery by the
Corporation that Equity Stock has been transferred in violation of the
provisions of the Charter shall be void ab initio. While the Excess Stock is
held in trust, the Purported Record Transferee will be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Excess Stock for the
benefit of the Charitable Beneficiary.
Section 18. NON-TRANSFERABILITY OF EXCESS STOCK. Excess Stock
shall not be transferable. In its sole discretion, the Trustee of the Trust may
transfer the interest in the Trust representing shares of Excess Stock to any
Person if the shares of Excess Stock would not be Excess Stock in the hands of
such Person. If such transfer is made, the interest of the Charitable
Beneficiary in the Excess Stock shall terminate and the proceeds of the sale
shall be payable by the Trustee to the Purported Record Transferee and to the
Charitable Beneficiary as herein set forth. The Purported Record Transferee
shall receive from the Trustee the lesser of (i) the price paid by the Purported
Record Transferee for its shares of Equity Stock that were treated as Excess
Stock or, if the Purported Record Transferee did not give value for such shares
(e.g., the stock was received through a gift, devise or other transaction), the
average closing price for the class of shares from which such shares of Excess
Stock originated for the ten trading days immediately preceding such sale or
gift, and (ii) the price received by the Trustee from the sale or other
disposition of the Excess Stock held in trust. The Trustee may reduce the amount
payable to the Purported Record Transferee by the amount of dividends and
distributions which have been paid to the Purported Record Transferee and are
owed by the Purported Record Transferee to the Trustee pursuant to Section 15 of
this Article VI. Any proceeds in excess of the amount payable to the Purported
Record Transferee shall be paid by the Trustee to the Charitable Beneficiary.
Upon such transfer of an interest in the Trust, the corresponding shares of
Excess Stock in the Trust shall be automatically deemed to be an equal number of
shares of Equity Stock, and such shares of Equity Stock shall be transferred of
record to the transferee of the interest in the Trust if such shares of Equity
Stock would not be Excess Stock in the hands of such transferee. Prior to any
transfer of any interest in the Trust, the Corporation must have waived in
writing its purchase rights under Section 20 of this Article VI.
Section 19. NYSE TRANSACTIONS. Nothing in this Article VI
shall preclude the settlement of any transaction entered into through the
facilities of the NYSE. The fact that the settlement of any transaction may
occur shall not negate the effect of any other provision of this Article VI and
any transferee in such a transaction shall be subject to all of the provisions
and limitations set forth in this Article VI.
Section 20. CALL BY CORPORATION ON EXCESS STOCK. Shares of
Excess Stock shall be deemed to have been offered for sale to the Corporation,
or its designee, at a price per share payable to the Purported Record Transferee
equal to the lesser of (i) the price per share in the transaction that created
such Excess Stock (or, in the case of a devise or gift, the Market Price at the
time of such devise or gift) and (ii) the Market Price of the Common Stock or
Preferred Stock from which such Excess Stock originated on the date the
Corporation, or its designee, accepts such offer. The Corporation may reduce the
amount payable to the Purported Record Transferee by the amount of dividends and
distributions which have been paid to the Purported Record Transferee and are
owed by the Purported Record Transferee to the
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Trustee pursuant to Section 15 of this Article VI. The Corporation may pay the
amount of such reductions to the Trustee for the benefit of the Charitable
Beneficiary. The Corporation shall have the right to accept such offer for a
period of 90 days after the later of (i) the date of the Corporation's receipt
of notice pursuant to Section 5 of this Article VI and (ii) if the Corporation
does not receive a notice of such Transfer pursuant to Section 5 of this Article
VI, the date that the Board of Directors determines in good faith that a
Transfer resulting in Excess Stock has occurred, but in no event later than a
permitted Transfer pursuant to and in compliance with the terms of Section 18 of
this Article VI.
Section 21. ENFORCEMENT. The Corporation is authorized
specifically to seek equitable relief, including injunctive relief, to enforce
the provisions of this Article VI.
Section 22. NON-WAIVER. No delay or failure on the part of the
Corporation or the Board of Directors in exercising any right hereunder shall
operate as a waiver of any right of the Corporation or the Board of Directors,
as the case may be, except to the extent specifically waived in writing.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right from time to time to make
any amendment to its Charter, now or hereafter authorized by law, including any
amendment altering the terms or contract rights, as expressly set forth in this
Charter, of any shares of outstanding stock. All rights and powers conferred by
the Charter on stockholders, directors and officers are granted subject to this
reservation. Any amendment to the Charter shall be valid only if approved by the
affirmative vote of the holders of not less than a majority of all the votes
entitled to be cast on the matter.
ARTICLE VIII
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to
time permits limitation of the liability of directors and officers of a
corporation, no director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages. Neither the amendment nor
repeal of this Article VIII, nor the adoption or amendment of any other
provision of the Charter or Bylaws inconsistent with this Article VIII, shall
apply to or affect in any respect the applicability of the preceding sentence
with respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
* * * * *
THIRD: These Articles of Amendment and Restatement were duly
advised by the Board of Directors of the Corporation and duly approved by the
stockholders of the Corporation in accordance with applicable law.
FOURTH: The current address of the principal office of the
Corporation in the State of Maryland and the name and address of the current
resident agent of the Corporation in the State of Maryland are set forth in
Article III of Paragraph SECOND of the Articles of Amendment and Restatement
entitled "PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT."
FIFTH: Immediately prior to the amendments contained in these
Articles of Amendment and Restatement, the number of Directors of the
Corporation was three (3) and the names of those Directors are Philip Pilevsky,
Sheila Levine and Louis J. Petra.
SIXTH: Immediately following the amendments contained in these
Articles of
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Amendment and Restatement, the number of Directors of the Corporation will be
seven (7) and the names of those Directors are Philip Pilevsky, Louis J. Petra,
Sheila Levine, A. F. Petrocelli, Elise Jaffe, Robert Grimes and Arnold S.
Penner.
SEVENTH: Immediately prior to the amendments contained in
these Articles of Amendment and Restatement, the Corporation had authority to
issue Three Thousand (3,000) shares of Common Stock, par value $.01 per share,
and the aggregate par value of all such authorized shares of stock of the
Corporation having par value was Thirty Dollars ($30.00).
EIGHTH: Immediately following the amendments contained in
these Articles of Amendment and Restatement, the Corporation will have authority
to issue One Hundred Eighty Million (180,000,000) Shares of capital stock,
consisting of One Hundred Fifty Million (150,000,000) shares of Common Stock,
par value $.01 per share, and Thirty Million (30,000,000) shares of Preferred
Stock, par value $.01 per share, and the aggregate par value of all such
authorized shares of stock of the Corporation having par value will be One
Million Eight Hundred Thousand Dollars ($1,800,000).
NINTH: A description, as amended, of each class of capital
stock of the Corporation, including the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption is set forth in Article V of Paragraph
SECOND of these Articles of Amendment and Restatement entitled "STOCK".
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, Philips International Realty Corp. has
caused these Articles of Amendment and Restatement to be executed in its name
and of its behalf by its Chairman of the Board and Chief Executive Officer and
attested to by its Chief Financial Officer and Assistant Secretary as of the
30th day of December, 1997, and its said Chairman of the Board and Chief
Executive Officer acknowledges that these Articles of Amendment and Restatement
are the corporate act of the said Corporation and further certifies, under
penalties of perjury, that to the best of his knowledge, information and belief,
matters and facts set forth herein are true in all material respects.
PHILIPS INTERNATIONAL REALTY CORP.
BY: /s/ Philip Pilevsky
---------------------------------------
Name: Philip Pilevsky
Title: Chairman of the Board and
Chief Executive Officer
ATTEST: /s/ Brian J. Gallagher
------------------------------------
Name: Brian J. Gallagher
Title: Chief Financial Officer and
Assistant Secretary
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ARTICLES SUPPLEMENTARY
CLASSIFYING 1,940 SHARES OF PREFERRED STOCK, $.01 PAR VALUE PER SHARE,
OF PHILIPS INTERNATIONAL REALTY CORP.
AS
SERIES A PREFERRED STOCK
Philips International Realty Corp., a Maryland corporation (the
"Corporation"), certifies to the Maryland State Department of Assessments and
Taxation (the "Department") that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article V of the Articles of Amendment and
Restatement of the Corporation filed with the Department on December 30, 1997
(the "Charter") and Section 2-105 of the Maryland General Corporation Law (the
"MGCL"), the Board of Directors has, by unanimous written consent in lieu of a
meeting, adopted resolutions classifying up to 1,940 shares of authorized but
unissued preferred stock of the Corporation, $0.01 par value per share
("Preferred Stock") as a separate series of Preferred Stock of the Corporation,
providing for the issuance of a maximum of 1,940 shares of such series of
Preferred Stock, and designating the aforesaid series of Preferred Stock as the
"Series A Preferred Stock", and setting the preferences, conversion and other
rights, voting powers, restrictions and limitations as to dividends,
qualifications and terms and conditions of redemption of such Series A Preferred
Stock.
SECOND: The Series A Preferred Stock created by the resolutions duly
adopted by the Board of Directors of the Corporation and referred to above shall
have the designation, number of shares, preferences, conversion and other
rights, voting powers, restrictions and limitations as to dividends,
qualifications, terms and conditions of redemption, and other terms and
conditions set forth in Annex A attached hereto and made a part hereof.
THIRD: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FOURTH: The undersigned Chairman of the Board and Chief Executive
Officer of the Corporation acknowledges these Articles Supplementary to be the
corporate act of the Corporation and, as to all matters or facts required to be
verified under oath, the undersigned Chairman of the Board and Chief Executive
Officer of the Corporation acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, PHILIPS INTERNATIONAL REALTY CORP. has caused these
Articles Supplementary to be executed under seal in its name and on its behalf
by its Chairman of the Board and Chief Executive Officer and attested to by its
Chief Financial Officer and Assistant Secretary on this 30th day of December,
1997.
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ Philip Pilevsky
Name: Philip Pilevsky
Title: Chairman of the Board and
Chief Executive Officer
Attest: /s/ Brian J. Gallagher
Name: Brian J. Gallagher
Title: Chief Financial Officer
and Assistant Secretary
<PAGE>
ANNEX A
TO AND COMPRISING A PART OF
ARTICLES SUPPLEMENTARY CLASSIFYING
1,940 SHARES OF PREFERRED STOCK,
$0.01 PAR VALUE PER SHARE,
OF PHILIPS INTERNATIONAL REALTY CORP.
AS SERIES A PREFERRED STOCK
A series of one thousand nine hundred forty (1,940) shares of Preferred
Stock, par value $0.01 per share, of Philips International Realty Corp. (the
"Corporation) shall be created and be designated "Series A Preferred Stock"
having the following rights and preferences:
DESIGNATION OF SERIES A PREFERRED STOCK. The rights, preferences,
powers, privileges and restrictions, qualifications and limitations granted to
or imposed upon the Series A Preferred Stock (referred to hereinafter sometimes
as the "Designations") shall be as set forth below. The Corporation may issue
additional series of Preferred Stock whose rights, preferences, powers,
privileges and restrictions, qualifications and limitations are either
subordinate to or pari passu with, but not senior to, the Designations of the
Series A Preferred Stock. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Articles of Amendment and
Restatement of the Corporation. The Articles of Amendment and Restatement is on
file at the principal place of business of the Corporation and copies will be
made available on request and without cost to any stockholder of the Corporation
so requesting.
1. Stated Value. The stated value of the Series A Preferred Stock
shall be one thousand dollars ($1,000.00) per share (the "Stated Value").
2. Dividends.
(a) Subject to Section 2(b) below, commencing from the date of initial
issuance of shares of Series A Preferred Stock (the "Date of Issuance"),
dividends on Series A Preferred Stock shall be payable in arrears quarterly, at
the rate per annum of nine percent (9%) of the Stated Value of each such share
of Series A Preferred Stock, on the last Business Day (as defined below) of each
calendar quarter, commencing on March 31, 1998 (each of such dates being
hereinafter called a "Dividend Payment Date"). If any dividend is not declared
or paid pursuant to the terms hereof on any Dividend Payment Date, interest
shall accrue on the amount of such accrued and unpaid dividend at the rate per
annum of nine percent (9%) until such time as such accrued and unpaid dividend
is paid in full, such interest to be paid concurrently with the payment of such
accrued and unpaid dividends (such amounts, collectively the "Unpaid
Dividends"). If, on any Dividend Payment Date, the Corporation shall not be
lawfully permitted under Maryland law to pay all or a portion of any such
declared dividends, the Corporation shall take such action as may be lawfully
permitted in order to enable the Corporation to the extent permitted by Maryland
law, lawfully to pay such dividends. Dividends shall be cumulative. The record
date for the payment of dividends on the Series A Preferred Stock shall be the
day immediately prior to each such
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Dividend Payment Date. No cash dividends shall be payable on the Common Stock
unless and until all Unpaid Dividends have been paid in full.
(b) For purposes of these Articles Supplementary, "Business Day" shall
mean any day, excluding Saturday, Sunday and any other day on which commercial
banks in New York are authorized or required by law to close.
3. Liquidation. The Series A Preferred Stock shall be preferred as to
assets over any class of Common Stock such that in the event of the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of the Series A Preferred Stock shall be entitled to have set apart for
them, or to be paid out of the assets of the Corporation, before any
distribution is made to or set apart for the holders of the Common Stock, an
amount in cash equal to the Stated Value per share plus any accrued but unpaid
dividends thereon (including interest earned thereon, if any, pursuant to
Section 2(a) hereof), plus any "Accrued Dividends" (as defined below) as of such
date of payment. "Accrued Dividends" shall mean, as of any date of
determination, an amount equal to the Unpaid Dividends plus the amount of
dividends, determined at the rate fixed for the payment of dividends on the
Series A Preferred Stock on such date as provided in Section 2 hereof which
would be paid on the Series A Preferred Stock for the period of time elapsed
from the most recent dividend payment to the date of determination, had such
date of determination been a Dividend Payment Date. If the assets or surplus
funds to be distributed to the holders of the Series A Preferred Stock are
insufficient to permit the payment to such holders of their full preferential
amount, the assets and surplus funds legally available for distribution shall be
distributed ratably among the holders of the Series A Preferred Stock in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
4. Conversion of Series A Preferred Stock.
(a) The holders of Series A Preferred Stock shall have the following
conversion rights:
(i) Right to Convert. Each share of Series A Preferred Stock shall
be convertible, on the Conversion Dates and at the Conversion Prices set forth
below, into fully paid and nonassessable shares of Common Stock.
(ii) Mechanics of Conversion. Each holder of Series A Preferred
Stock who desires to convert the same into shares of Common Stock shall provide
notice in the form of the Notice of Conversion or Exercise attached to that
certain engagement letter between National Properties Investment Trust and
Prudential Securities Incorporated, dated January 8, 1997, as amended as of
December 3, 1997 (the "Engagement Letter"; a copy of which shall be made
available to any holder of Series A Preferred Stock upon request in writing to
the Secretary of the Corporation) in the manner provided for in the Engagement
Letter (a "Conversion Notice"). The original Conversion Notice and the
certificate or certificates representing the Series A Preferred Stock for which
conversion is elected, shall be delivered to the Corporation by hand or by
overnight courier, duly endorsed. The date upon which a Conversion Notice is
properly received by the Corporation shall be a "Notice Date."
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The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after the Notice Date, to such holder of Series A
Preferred Stock at the address of the holder on the stock books of the
Corporation, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid; provided that if the
original shares of Series A Preferred Stock to be converted are received by the
Corporation within three business days after the Notice Date, the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Notice Date. If the original shares of Series
A Preferred Stock to be converted are not received by the Corporation within
three business days after the Notice Date, the Conversion Notice shall become
null and void.
(iii) Conversion Dates. The Series A Preferred Stock shall be
convertible into shares of Common Stock at any time following the six month
anniversary of the Date of Issuance, subject to subsection (v) below.
(iv) Conversion Price. Each share of Series A Preferred Stock
shall be convertible into the number of shares of Common Stock according to the
following formula:
N x 1,000 + Accrued Dividends
-------------------------------------
Conversion Price
where:
N = the number of shares of the Series A Preferred
Stock for which conversion is being elected:
and
Conversion
Price = $50.00
(v) Optional Redemption. Upon the occurrence of (i) a public or
private equity offering by the Corporation of securities of the Corporation
pursuant to which the Corporation receives gross proceeds, together with gross
proceeds from prior offerings (excluding any offering that is substantially
concurrent with the formation transactions contemplated by that certain
Contribution and Exchange Agreement, dated as of August 11, 1997, by and among
the Corporation, National Properties Investment Trust and certain affiliated and
unaffiliated parties named therein) in excess of $25 million, or (ii) any
capital reorganization or reclassification of the capital stock of the
Corporation or consolidation or merger of the Corporation (in which the
Corporation is not the surviving corporation) with, or sale of all or
substantially all of its assets to, another person or entity, the Corporation
may (by notice at least three (3) Business Days prior to such occurrence) redeem
all (but not less than all) of the shares of Series A Preferred Stock
outstanding on the date that such offering, reorganization, reclassification,
consolidation, merger or sale is consummated, at a redemption price equal to the
Stated Value per share plus any accrued but unpaid dividends thereon (including
interest earned
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thereon, if any, pursuant to Section 2(a) hereof), plus any Accrued Dividends as
of such date of payment, unless the holder elects to convert all the shares of
Series A Preferred Stock on or prior to the date fixed for redemption as
contemplated by clause (i) and (ii) above. If the date fixed for redemption is
prior to the six month anniversary of the date of issuance of the Series A
Preferred Stock, the holder may still elect to convert all of the shares of
Series A Preferred Stock prior to such date; provided, however, that the actual
Conversion Date shall not be until the six month anniversary date of the
issuance of the Series A Preferred Stock.
(vi) Fractional Shares. No fractional share shall be issued upon
the conversion of any shares, share or fractional share of Series A Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of shares (or fractions thereof) of Series A Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the Conversion Price of the Common Stock on the Notice Date
multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, the Corporation will take such corporate action
as may be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose. As soon
as practicable following such time as the Common Stock is listed on a national
securities exchange, the Corporation covenants to effect the listing of the
Common Stock underlying the Series A Preferred Stock on such national securities
exchange.
(viii) Adjustment to Conversion Price.
(A) If, prior to the conversion of all shares of Series A
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Conversion Price shall be proportionately increased.
(B) If prior to the conversion of all shares of Series A
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock of the Corporation shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Corporation or another entity, then the
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holders of Series A Preferred Stock shall thereafter have the right to purchase
and receive upon conversion of shares of Series A Preferred Stock, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
shares of stock and/or securities as may be issued or payable with respect to or
in exchange for the number of shares of Common Stock immediately theretofore
purchasable and receivable upon the conversion of shares of Series A Preferred
Stock held by such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the holders of the Series A Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series A Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall not effect any
transaction described in this subsection unless (i) the resulting successor or
acquiring entity (if not the Corporation) assumes by written instrument the
obligation to deliver to the holders of the Series A Preferred Stock such shares
of stock and/or securities as, in accordance with the foregoing provisions, the
holders of the Series A Preferred Stock may be entitled to purchase or (ii)
prior to the consummation of such transaction, the Corporation has redeemed all
of the outstanding shares of Series A Preferred Stock pursuant to Section
4(a)(v).
(C) Subject to Section 4(a)(vi) hereof), if any adjustment
under this subsection would create a fractional share of Common Stock or a right
to acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next higher number of shares.
(b) Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted or redeemed as contemplated by these Articles
Supplementary, the shares so converted or redeemed shall be canceled, shall
return to the status of authorized but unissued Preferred Stock of no designated
class or series, and shall not be issuable by the Corporation as Series A
Preferred Stock.
5. No Reissuance. Any shares of Series A Preferred Stock exchanged,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares of Series A Preferred Stock shall upon their
cancellation become authorized but unissued shares of preferred stock, par value
$.01 per share, of the Corporation and may not be reissued as shares of Series A
Preferred Stock; provided, however, that upon the filing of an appropriate
Articles Supplementary with the State of Maryland, all such shares may be
reissued as part of another series of Preferred Stock, par value $.01 per share,
of the Corporation subject to the conditions or restrictions on issuance set
forth herein and therein.
6. Voting Rights.
(a) Except as otherwise specifically provided herein, the holders of
shares of Series A Preferred Stock shall not be entitled to vote on any matters
required or permitted
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to be submitted to the stockholders of the Corporation for their approval.
(b) While any shares of Series A Preferred Stock are outstanding, the
Corporation shall not alter or change the dividend, liquidation or voting
rights, preferences, conversion or redemption provisions or amendment or consent
provisions, of the Series A Preferred Stock without the affirmative consent
(given in writing or at a meeting duly called for that purpose) of the holders
of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares
of the Series A Preferred Stock.
7. Notice of Certain Events. If at any time, to the extent permitted
hereunder:
(a) the Corporation shall declare any dividend, distribution or
subscription rights upon any class of capital stock ranking on a parity with or
junior to the Series A Preferred Stock;
(b) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation or consolidation or merger of the
Corporation with, or sale of all or substantially all of its assets to, another
person or entity; or
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation;
then, in any one or more of the foregoing cases, the Corporation shall give, by
certified or registered mail, postage prepaid, addressed to the holders of
Series A Preferred Stock at the address of such holders as shown on the stock
record books of the Corporation, (i) at least thirty (30) days' prior written
notice of the date on which the books of the Corporation shall close or of a
record date fixed for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, at least
thirty (30) days' prior written notice of the date when the same shall take
place. Any notice given in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or option rights, the
date on which the holders of any class of capital stock shall be entitled
thereto.
8. Rank and Limitations of Preferred Stock. All shares of Series A
Preferred Stock shall rank equally with each other share of Series A Preferred
Stock and shall be identical in all respects. All persons who shall acquire any
shares of Series A Preferred Stock shall acquire such stock subject to the
provisions of the Charter and Bylaws, including, without limitation, the
restrictions on transfer and ownership limits under Article VI of the Charter.
Dated: December 30, 1997
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AMENDED AND RESTATED
BYLAWS OF
PHILIPS INTERNATIONAL REALTY CORP.
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be located at such place or places as the Board of Directors may
designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional
offices at such places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the
principal office of the Corporation or at such other place within the United
States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders for
the election of directors and the transaction of any business within the powers
of the Corporation shall be held on a date and at the time set by the Board of
Directors during the month of May in each year, unless the Board of Directors
elects to hold the meeting in any other month. Failure to hold an annual meeting
does not invalidate the Corporation's existence or affect any otherwise valid
acts of the Corporation.
Section 3. SPECIAL MEETINGS. The president, chief executive officer or
Board of Directors may call special meetings of the stockholders. Special
meetings of stockholders shall also be called by the secretary of the
Corporation upon the written request of the holders of shares entitled to cast
not less than a majority of all the votes entitled to be cast at such meeting.
Such request shall state the purpose of such meeting and the matters proposed to
be acted on at such meeting. The secretary shall inform such stockholders of the
reasonably estimated cost of preparing and mailing notice of the meeting and,
upon payment to the Corporation by such stockholders of such costs, the
secretary shall give notice to each stockholder entitled to notice of the
meeting. Unless requested by the stockholders entitled to cast a majority of all
the votes entitled to be cast at such meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
on at any special meeting of the stockholders held during the preceding twelve
months.
Section 4. NOTICE. Not less than ten nor more than 90 days before each
meeting of stockholders, the secretary shall give to each stockholder entitled
to vote at such meeting and to each stockholder not entitled to vote who is
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as otherwise may
be required by any statute, the purpose for which the meeting is called, either
by mail or by presenting it to such
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stockholder personally or by leaving it at his residence or usual place of
business. If mailed, such notice shall be deemed to be given when deposited in
the United States mail addressed to the stockholder at his post office address
as it appears on the records of the Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of stockholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of stockholders, the Chairman
of the Board, if there be one, shall conduct the meeting or, in the case of
vacancy in office or absence of the Chairman of the Board, one of the following
officers present shall conduct the meeting in the order stated: the Vice
Chairman of the Board, if there be one, the President, the Vice Presidents in
their order of rank and seniority, or a Chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as Chairman, and the
Secretary, or, in his absence, an assistant secretary, or in the absence of both
the Secretary and assistant secretaries, a person appointed by the Chairman
shall act as Secretary.
Section 7. QUORUM. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute or the charter of the
Corporation for the vote necessary for the adoption of any measure. If, however,
such quorum shall not be present at any meeting of the stockholders, the
stockholders entitled to vote at such meeting, present in person or by proxy,
shall have the power to adjourn the meeting from time to time to a date not more
than 120 days after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
elect a director. Each share may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted. A majority of the votes cast at a meeting of stockholders duly called and
at which a quorum is present shall be sufficient to approve any other matter
which may properly come before the meeting, unless more than a majority of the
votes cast is required by statute or by the charter of the Corporation. Unless
otherwise provided in the charter, each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.
Section 9. PROXIES. A stockholder may vote the stock owned of record by
him, either in person or by proxy executed in writing by the stockholder or by
his duly authorized attorney in fact. Such proxy shall be filed with the
secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the
Corporation registered in the name of a corporation, partnership, trust or other
entity, if entitled to be voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such stock pursuant to a bylaw or a resolution of the
governing body of such corporation or other entity or agreement of the partners
of a partnership presents a certified copy of such bylaw, resolution or
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agreement, in which case such person may vote such stock. Any director or other
fiduciary may vote stock registered in his name as such fiduciary, either in
person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares entitled to be voted at any given time,
unless they are held by it in a fiduciary capacity, in which case they may be
voted and shall be counted in determining the total number of outstanding shares
at any given time.
The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for account of a specified
person other than the stockholder. The resolution shall set forth the class of
stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
Section 11. INSPECTORS. At any meeting of stockholders, the chairman of
the meeting may, or upon the request of any stockholder shall, appoint one or
more persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and signed by him or by
a majority of them if there is more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
Section 12. NOMINATIONS AND STOCKHOLDER BUSINESS
(a) ANNUAL MEETINGS OF STOCKHOLDERS. (1) Nominations of persons for
election to the Board of Directors and the proposal of business to be considered
by the stockholders (except for stockholder proposals included in the proxy
materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) may be made at an annual meeting of stockholders
(i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) by any stockholder of the Corporation who was
a stockholder of record at the time of giving of notice provided for in this
Section 12 (a), who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 12(a).
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of paragraph (a) (1) of
this Section 12, the stockholder must have given timely notice thereof in
writing to the secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the secretary at the principal executive offices of
the Corporation not less than 75 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting or special meeting in lieu
thereof; provided, however, that in the event that the date of the annual
meeting
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is advanced by more than seven calendar days or delayed by more than 60 days
from such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 75th day prior to such
annual meeting or the 20th day following the earlier of the day on which public
announcement of the date of such meeting is first made or notice of the meeting
is mailed to stockholders. Such stockholder's notice shall set forth (i) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected) ; (ii) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (x) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (y) the number of shares
of each class of stock of the Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)
(2) of this Section 12 to the contrary, in the event that the number of
directors to be elected to the Board of Directors is increased and there is no
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least 85
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Section 12(a) shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the principal executive
offices of the Corporation not later than the close of business on the tenth day
following the day on which such public announcement is first made by the
Corporation.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 12 (b), who is entitled to vote at the meeting and
who complied with the notice procedures set forth in this Section 12 (b) . In
the event the Corporation calls a special meeting of stockholders for the
purpose of electing one or more directors to the Board of Directors, any such
stockholder may nominate a person or persons (as the case may be) for election
to such position as specified in the Corporation's notice of meeting, if the
stockholder's notice containing the information required by paragraph (a) (2) of
this Section 12 shall be delivered to the secretary at the principal executive
offices of the Corporation not earlier than the 90th day prior to such special
meeting and not later than the close of business on the later of the 75th day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
(c) GENERAL. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 12 shall be eligible to serve as
directors and only such business shall be
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conducted at a meeting of stockholders as shall have been brought before the
meeting in accordance with the procedures set forth in this Section 12. The
presiding officer of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with the procedures set forth in this Section 12 and, if
any proposed nomination or business is not in compliance with this Section 12,
to declare that such defective nomination or proposal be disregarded.
(2) For purposes of this Section 12, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Sections 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 12, a
stockholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 12. Nothing in this Section 12 shall be deemed
to affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 13. VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order or any stockholder
shall demand that voting be by ballot.
Section 14. CONTORL SHARES. Notwithstanding any other provision of the
charter of the Corporation or these Bylaws, Title 3, Subtitle 7 of the Maryland
General Corporation Law (or any successor statute) shall not apply to any
acquisition by any person of shares of stock of the Corporation. This section
may be repealed, in whole or in part, at any time, whether before or after an
acquisition of control shares and, upon such repeal, may, to the extent provided
by any successor bylaw, apply to any prior or subsequent control share
acquisition.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS. The business and affairs of
the Corporation shall be managed under the direction of its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or
at any special meeting called for that purpose, a majority of entire Board of
Directors may establish, increase or decrease the number directors, provided
that the number thereof shall never be less than the minimum number required by
the Maryland General Corporation Law, and further provided that the tenure of
office of a director shall not be affected by any decrease in the number of
directors.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board
of Directors shall be held immediately after and at the same place as the annual
meeting of stockholders, no notice other than this Bylaw being necessary. The
Board of Directors may provide, by resolution, the time and place, either within
or without the State of Maryland, for the holding of regular meetings of the
Board of Directors without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the chairman of the board (or any
co-chairman of the board if more than one),
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president or by a majority of the directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Board of Directors called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of
Directors shall be delivered personally or by telephone, facsimile transmission,
United States mail or courier to each director at his business or residence
address. Notice by personal delivery, by telephone or a facsimile transmission
shall be given at least two days prior to the meeting. Notice by mail shall be
given at least five days prior to the meeting and shall be deemed to be given
when deposited in the United States mail properly addressed, with postage
thereon prepaid. Telephone notice shall be deemed be given when the director is
personally given such notice in a telephone call to which he is a party.
Facsimile transmission notice shall be deemed be given upon completion of the
transmission of the message to the number given to the Corporation by the
director and receipt of a completed answer-back indicating receipt. Neither the
business to be transacted at, the purpose of, any annual, regular or special
meeting of the Board of Directors need be stated in the notice, unless
specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the directors shall constitute a
quorum for transaction of business at any meeting of the Board of Directors,
provided that, if less than a majority of such directors are present at said
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice, and provided further that if, pursuant to the
charter of the Corporation or these Bylaws, the vote of a majority of a
particular group of directors is required for action, a quorum must also include
a majority of such group.
The Board of Directors present at a meeting which has been duly called
and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
Section 7. VOTING. The action of the majority of the directors present
at a meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by applicable statute.
Section 8. TELEPHONE MEETINGS. Directors may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing to such action is signed by each
director and such written consent is filed with the minutes of proceedings of
the Board of Directors.
Section 10. VACANCIES. If for any reason any or all the directors cease
to be directors, such event shall not terminate the Corporation or affect these
Bylaws or the powers of the remaining directors hereunder (even if fewer than
three directors remain) . Any vacancy on the Board of Directors for any cause
other than an increase in the number of directors shall be filled by a majority
of the remaining directors, although such majority is less than a quorum. Any
vacancy in the number of directors created by an increase in the number of
directors may be filled by a majority vote of the entire Board of Directors. Any
individual so elected as director shall hold office for the unexpired term of
the director he is replacing.
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Section 11. COMPENSATION. Directors shall not receive any stated salary
for their services as directors but, by resolution of the Board of Directors,
may receive fixed sums per year and/or per meeting and/or per visit to real
property owned or to be acquired by the Corporation and for any service or
activity they performed or engaged in as directors. Directors may be reimbursed
for expenses of attendance, if any, at each annual, regular or special meeting
of the Board of Directors or of any committee thereof and for their expenses, if
any, in connection with each property visit and any other service or activity
they performed or engaged in as directors; but nothing herein contained shall be
construed to preclude any directors from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 12. LOSS OF DEPOSITS. No director shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or stock have been
deposited.
Section 13. SURETY BONDS. Unless required by law, no director shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 14. RELIANCE. Each director, officer, employee and agent of the
Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. The directors shall have no responsibility to devote their full time to
the affairs of the Corporation. Any director or officer, employee or agent of
the Corporation, in his personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to or in
competition with those of or relating to the Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors
may appoint from among its members an Executive Committee, an Audit Committee, a
Compensation Committee and other committees, composed of two or more directors,
to serve at the pleasure of the Board of Directors.
Section 2. POWERS. The Board of Directors may delegate to committees
appointed under Section 1 of this Article any of the powers of the Board of
Directors, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors. A majority
of the members of the committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority of the committee
members present at a meeting shall be the act of such committee. The Board
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of Directors may designate a chairman of any committee, and such chairman or any
two members of any committee may fix the time and place of its meeting unless
the Board shall otherwise provide. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another director to act in the place of such
absent member. Each committee shall keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing to such action is signed
by each member of the committee and such written consent is filed with the
minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Directors shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall
include a chief executive officer, a president, a secretary and a treasurer and
may include a chairman of the board (or one or more co-chairmen of the board), a
vice chairman of the board, one or more executive vice presidents, one or more
senior vice presidents, one or more vice presidents, a chief operating officer,
a chief financial officer, one or more assistant secretaries and one or more
assistant treasurers. In addition, the Board of Directors may from time to time
appoint such other officers with such powers and duties as they shall deem
necessary or desirable. The officers of the Corporation shall be elected
annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of stockholders, except that the chief
executive officer may appoint one or more vice presidents, assistant secretaries
and assistant treasurers. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient.
Each officer shall hold office until his successor is elected and qualifies or
until his death, resignation or removal in the manner hereinafter provided. Any
two or more offices except president and vice president may be held by the same
person. In its discretion, the Board of Directors may leave unfilled any office
except that of president, treasurer and secretary. Election of an officer or
agent shall not of itself create contract rights between the Corporation and
such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Corporation may be removed by the Board of Directors if in its judgment the best
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. Any
officer of the Corporation may resign at any time by giving written notice of
his resignation to the Board of Directors, the chairman of the board (or any
co-chairman of the board if more than one), the president or the secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. The acceptance of a resignation shall not be
necessary to make it effective unless
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<PAGE>
otherwise stated in the resignation. Such resignation shall be without prejudice
to the contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the
Board of Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may
designate a chief executive officer. In the absence of such designation, the
chairman of the board (or, if more than one, the co-chairmen of the board in the
order designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall be the chief executive
officer of the Corporation. The chief executive officer shall have general
responsibility for implementation of the policies of the Corporation, as
determined by the Board of Directors, and for the management of the business and
affairs of the Corporation.
Section 5. CHIEF OPERATING OFFICER. The Board of Directors may
designate a chief operating officer. The chief operating officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may
designate a chief financial officer. The chief financial officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall
designate a chairman of the board (or one or more co-chairmen of the board) The
chairman of the board shall preside over the meetings of the Board of Directors
and of the stockholders at which he shall be present. If there be more than one,
the co-chairmen designated by the Board of Directors will perform such duties.
The chairman of the board shall perform such other duties as may be assigned to
him or them by the Board of Directors.
Section 8. CHAIRMAN OF THE BOARD EMERITUS. The directors may elect by a
majority vote, from time to time, a chairman of the board emeritus (or one or
more co-chairmen of the board emeritus) . The chairman of the board emeritus
shall be an honorary position and shall have no vote on any matter considered by
the directors. The chairman of the board emeritus shall serve for such term as
determined by the Board of Directors and may be removed by a majority vote of
the Board of Directors with or without cause.
Section 9. PRESIDENT. The president or chief executive officer, as the
case may be, shall in general supervise and control all of the business and
affairs of the Corporation. In the absence of a designation of a chief operating
officer by the Board of Directors, the president shall be the chief operating
officer. He may execute any deed, mortgage, bond, contract or other instrument,
except in cases where the execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the Board of Directors from time to time.
Section 10. VICE PRESIDENTS. In the absence of the president or in the
event of a vacancy in such office, the vice president (or in the event there be
more than one vice president, the vice presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the president and when so acting
shall have all the powers of
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and be subject to all the restrictions upon the president; and shall perform
such other duties as from time to time may be assigned to him by the president
or by the Board of Directors. The Board of Directors may designate one or more
vice presidents as executive vice president or as vice president for particular
areas of responsibility.
Section 11. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the stockholders, the Board of Directors and committees of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation; (d) keep a register of the post office address of each
stockholder which shall be furnished to the secretary by such stockholder; (e)
have general charge of the share transfer books of the Corporation; and (f) in
general perform such other duties as from time to time may be assigned to him by
the chief executive officer, the president or by the Board of Directors.
Section 12. TREASURER. The treasurer shall have the custody of the
funds and securities of the Corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. In the absence of a designation of a chief financial officer by
the Board of Directors, the treasurer shall be the chief financial officer of
the Corporation.
The treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so require, an
account of all his transactions as treasurer and of the financial condition of
the Corporation.
If required by the Board of Directors, the treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the secretary or treasurer, respectively,
or by the president or the Board of Directors. The assistant treasurers shall,
if required by the Board of Directors, give bonds for the faithful performance
of their duties in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors.
Section 14. SALARIES. The salaries and other compensation of the
officers shall be fixed from time to time by the Board of Directors and no
officer shall be prevented from receiving such salary or other compensation by
reason of the fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer
or agent to enter into any contract or to execute and deliver any instrument in
the name of and on behalf of the Corporation and such authority may be general
or confined to specific instances. Any agreement, deed,
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mortgage, lease or other document executed by one or more of the directors or by
an authorized person shall be valid and binding upon the Board of Directors and
upon the Corporation when authorized or ratified by action of the Board of
Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or agent of the
Corporation in such manner as shall from time to time be determined by the Board
of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each class of stock held by him in the Corporation. Each certificate
shall be signed by the chief executive officer, the president or a vice
president and countersigned by the secretary or an assistant secretary or the
treasurer or an assistant treasurer and may be sealed with the seal, if any, of
the Corporation. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Corporation shall, from time to
time, issue several classes of stock, each class may have its own number series.
A certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the
Corporation, shall have a statement of such restriction, limitation, preference
or redemption provision, or a summary thereof, plainly stated on the
certificate. If the Corporation has authority to issue stock of more than one
class, the certificate shall contain on the face or back a full statement or
summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of each
class of stock and, if the Corporation is authorized to issue any preferred or
special class in series, the differences in the relative rights and preferences
between the shares of each series to the extent they have been set and the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series. In lieu of such statement or summary, the certificate may
state that the Corporation will furnish a full statement of such information to
any stockholder upon request and without charge. If any class of stock is
restricted by the Corporation as to transferability, the certificate shall
contain a full statement of the restriction or state that the Corporation will
furnish information about the restrictions to the stockholder on request and
without charge.
Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer
agent of the Corporation of a stock certificate duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the
Corporation shall issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
on the part of any other person, whether or not it shall have express or other
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notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of any class of
stock will be subject in all respects to the charter of the Corporation and all
of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board
of Directors may direct a new certificate to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate, an officer designated by the Board of Directors
may, in his discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or the owner's
legal representative to advertise the same in such manner as he shall require
and/or to give bond, with sufficient surety, to the Corporation to indemnify it
against any loss or claim which may arise as a result of the issuance of a new
certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Board of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or determining stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date is
fixed and shall be not more than 90 days and, in the case of a meeting of
stockholders, not less than ten days, before the date on which the meeting or
particular action requiring such determination of stockholders of record is to
be held or taken.
In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not longer
than 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the stock transfer books are not closed
for the determination of stockholders, (a) the record date for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day on which the notice of meeting is
mailed or the 30th day before the meeting, whichever is the closer date to the
meeting; and (b) the record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any other rights shall be
the close of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except when (i) the determination has been
made through the closing of the transfer books and the stated period of closing
has expired or (ii) the meeting is adjourned to a date more than 120 days after
the record date fixed for the original meeting, in either of which case a new
record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its
principal office or at the office of its counsel, accountants or transfer agent,
an original or duplicate share ledger containing the name and address of each
stockholder and the number of shares of each class held by such stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors
may issue
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fractional stock or provide for the issuance of scrip, all on such terms and
under such conditions as they may determine. Notwithstanding any other provision
of the charter or these Bylaws, the Board of Directors may issue units
consisting of different securities of the Corporation. Any security issued in a
unit shall have the same characteristics as any identical securities issued by
the Corporation, except that the Board of Directors may provide that for a
specified period securities of the Corporation issued in such unit may be
transferred on the books of the Corporation only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix
the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the
stock of the Corporation may be authorized and declared by the Board of
Directors, subject to the provisions of law and the charter of the Corporation.
Dividends and other distributions may be paid in cash, property or stock of the
Corporation, subject to the provisions of law and the charter of the
Corporation.
Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other distributions such sum or sums as the Board of
Directors may from time to time, in its absolute discretion, think proper as a
reserve fund for contingencies, for equalizing dividends or other distributions,
for repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall determine to be in the best interest of
the Corporation, and the Board of Directors may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the charter of the Corporation, the Board
of Directors may from time to time adopt, amend, revise or terminate any policy
or policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a
seal by the Corporation. The seal shall contain the name of the Corporation and
the year of its incorporation and the words "Corporate Seal Maryland." The Board
of Directors may authorize one or more duplicate seals and provide for the
custody thereof.
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Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or
required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the word
"(SEAL)" adjacent to the signature of the person authorized to execute the
document on behalf of the Corporation.
ARTICLE XII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation, without requiring a preliminary determination of the
ultimate entitlement to indemnification, shall indemnify and shall pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any individual who is a present or former director or officer of the
Corporation and who is made a party to the proceeding by reason of his service
in that capacity or (b) any individual who, while a director of the Corporation
and at the request of the Corporation, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is made
a party to the proceeding by reason of his service in that capacity. The
Corporation may, with the approval of its Board of Directors, provide such
indemnification and advance for expenses to a person who served a predecessor of
the Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the Corporation.
Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or charter of the Corporation
inconsistent with this Article, shall apply to or affect in any respect the
applicability of the preceding paragraph with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any person at any meeting shall
constitute a waiver of notice of such meeting, except where such person attends
a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
Subject to the rights of stockholders provided in Section 14 of Article
II of these Bylaws, the Board of Directors shall have the exclusive power to
adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
PHILIPS INTERNATIONAL REALTY, L.P.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS........................................................2
ARTICLE 2 CONTINUATION OF THE PARTNERSHIP.....................................
2.1 Continuation...........................................................
2.2 Entire Agreement.......................................................
ARTICLE 3 NAME AND OFFICES....................................................
3.1 Name...................................................................
3.2 Principal and Registered Offices.......................................
ARTICLE 4 PURPOSE.............................................................
4.1 Purpose................................................................
4.2 Powers.................................................................
ARTICLE 5 TERM AND FISCAL YEAR................................................
5.1 Term...................................................................
5.2 Fiscal Year............................................................
ARTICLE 6 CAPITAL CONTRIBUTIONS, ADDITIONAL FUNDING AND CAPITAL
ACCOUNTS......................................................................
6.1 Capital Contributions of the General Partner...........................
6.2 Capital Contributions of the Limited Partners..........................
6.3 General Partner Option to Contribute Additional Capital................
6.4 General Partner Option to Issue Additional Partnership Units
to Limited Partners............................ .....................
6.5 Capital Accounts.......................................................
6.6 Limited Liability......................................................
6.7 Return of Capital......................................................
6.8 No Interest on Capital Contributions...................................
6.9 No Third Party Beneficiary.............................................
6.10 Common Stock Option Plans.............................................
ARTICLE 7 ALLOCATION OF PROFITS AND LOSSES....................................
7.1 General Allocation of Profits and Losses...............................
7.2 Allocations with Respect to Transferred Interests......................
7.3 Regulatory Allocations.................................................
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(a) Minimum Gain Chargeback...........................................
(b) Exceptions to Section 7.3(a)......................................
(c) Qualified Income Offset...........................................
(d) Gross Income Allocation...........................................
(e) Partner Nonrecourse Debt..........................................
(f) Interpretation....................................................
(g) Curative Allocations..............................................
7.4 Special Allocations with Respect to Contributed or
Revalued Property....................................................
ARTICLE 8 DISTRIBUTIONS.......................................................
8.1 Distribution of Net Cash Flow..........................................
8.2 Distributions in Kind..................................................
8.3 Withholding............................................................
ARTICLE 9 MANAGEMENT..........................................................
9.1 Management of Partnership Affairs......................................
9.2 Powers and Authorities of the General Partner..........................
9.3 Major Decisions.......................................................
9.4 Restrictions on General Partner's Authority............................
9.5 Engagements by the Partnership.........................................
9.6 Engagement of Affiliates...............................................
9.7 Liability of the General Partner.......................................
9.8 Reimbursement of Certain Expenses of the General Partner...............
9.9 Outside Activities of the General Partner..............................
9.10 Operation in Accordance with REIT Requirements........................
9.11 Title Holder..........................................................
ARTICLE 10 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.........................
10.1 No Participation in Management of Partnership; Rights of
Limited Partners to Certain Documents...............................
10.2 Withdrawal, Retirement, Death, Incompetency, Insolvency or
Dissolution of a LimitedPartner.....................................
10.3 Redemption Rights.....................................................
(a) Grant of Rights....................................................
(b) Delivery of Exercise Notices.......................................
(c) Assumption by General Partner......................................
(d) Limitation on Exercise of Redemption Rights........................
(e) Computation of Number of Exchange Shares and/or Cash To
Be Paid......................................... ................
(f) Closing; Delivery of Election Notice...............................
(g) Closing Deliveries.................................................
(h) Term of Rights.....................................................
(i) Covenants of the General Partner...................................
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(j) Limited Partners' Covenant.........................................
ARTICLE 11 BANKING, RECORDS AND TAX MATTERS...................................
11.1 Partnership Funds.....................................................
11.2 Books and Records.....................................................
11.3 Financial Statements..................................................
11.4 Tax Returns...........................................................
11.5 Section 754 Matters...................................................
11.6 Tax Matter Partners...................................................
11.7 Other Reports.........................................................
ARTICLE 12 TRANSFER OF GENERAL PARTNER INTERESTS..............................
12.1 Transfer of Interest of the General Partner...........................
12.2 Retirement of the General Partner.....................................
12.3 Transferee of the General Partner's Interest..........................
12.4 Retirement of Last Remaining General Partner..........................
12.5 Continuation of Partnership...........................................
12.6 Merger or Consolidation of the General Partner........................
ARTICLE 13 TRANSFER OF LIMITED PARTNER INTERESTS..............................
13.1 Transfer of Interest of a Limited Partner.............................
13.2 Assignee and Substitute Limited Partners..............................
13.3 Assignment............................................................
13.4 Cost of Admission.....................................................
ARTICLE 14 DISSOLUTION AND LIQUIDATION OF PARTNERSHIP.........................
14.1 Dissolution of the Partnership........................................
14.2 Winding Up of Affairs.................................................
14.3 Accounting............................................................
14.4 Final Distribution of Partnership Property............................
14.5 Certificate of Cancellation...........................................
ARTICLE 15 POWER OF ATTORNEY..................................................
15.1 Power of Attorney.....................................................
15.2 Grant of Authority Irrevocable........................................
ARTICLE 16 AMENDMENT OF PARTNERSHIP AGREEMENT.................................
16.1 Amendments by Partners................................................
16.2 Amendment by the General Partner......................................
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16.3 Amendment of Certificate..............................................
ARTICLE 17 INDEMNIFICATION....................................................
17.1 Partnership Indemnification of Partner................................
17.2 Partner Indemnification of Partnership................................
ARTICLE 18 MISCELLANEOUS PROVISIONS...........................................
18.1 Notices...............................................................
18.2 Severability..........................................................
18.3 Parties Bound.........................................................
18.4 Applicable Law........................................................
18.5 Partition.............................................................
18.6 Computation of Accountants............................................
18.7 Headings..............................................................
18.8 Counterparts..........................................................
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
PHILIPS INTERNATIONAL REALTY, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") of PHILIPS
INTERNATIONAL REALTY, L.P., a Delaware limited partnership (the "Partnership"),
is made and entered into as of the 31st day of December, 1997, by and among
PHILIPS INTERNATIONAL REALTY CORP., a Maryland corporation, as general partner,
PHILIPS INTERNATIONAL REALTY, LLC, a Delaware limited liability company, as
interim managing general partner, and those parties who are designated as
limited partners on Exhibit A attached hereto and made a part hereof by this
reference, as limited partners.
R E C I T A L S:
WHEREAS, the parties hereto have determined that it is in the best
interests of the parties' long term strategic growth to combine their respective
properties and related assets pursuant to that certain Contribution and Exchange
Agreement, dated as of August 11, 1997, as amended by Amendment No. 1, dated as
of December 29, 1997 (the "Contribution and Exchange Agreement"), among the
Partnership, National Properties Investment Trust, a Massachusetts business
trust ("National"), Philips International Realty Corp. and the parties
designated as limited partners on Exhibit A attached hereto, whereby the
partners are contributing to the Partnership, directly or indirectly, all of the
partners' right, title and interest in and to their respective properties, on
the terms and conditions set forth therein;
WHEREAS, the Partnership was previously formed pursuant to that certain
Agreement of Limited Partnership, dated as of July 16, 1997 (the "Original
Agreement"), and that certain Certificate of Limited Partnership, dated as of
July 16, 1997, which was filed with the Secretary of State of Delaware on July
17, 1997;
WHEREAS, the parties hereto desire to continue the Partnership and
amend and restate the terms and provisions of the Original Agreement in its
entirety, all upon the terms and provisions, and subject to the conditions, set
forth herein;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
---------
<PAGE>
DEFINITIONS
-----------
As used in this Agreement, unless otherwise clearly indicated to the
contrary, the following terms have the meanings set forth below.
"Accountants" shall mean the firm or firms of independent certified
public accountants selected from time to time by the General Partner on behalf
of the Partnership to audit the books and records of the Partnership and to
prepare statements and reports in connection therewith.
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time subsequent to the date hereof.
"Additional Partnership Units" shall have the definition assigned to
such term in Section 6.3 hereof.
"Additional Limited Partner" shall have the definition assigned to such
term in Section 6.4 hereof.
"Affiliate" shall mean, with respect to any Partner (or as to any other
Person the affiliates of whom are relevant for purposes of any of the provisions
of this Agreement), (i) any member of the Immediate Family of such Partner; (ii)
any trustee or beneficiary of a Partner; (iii) any legal representative,
successor or assignee of such Partner or any Person referred to in the preceding
clauses (i) and (ii); (iv) any trustee for the benefit of such Partner or any
Person referred to in the preceding clauses (i) through (iii); or (v) any Person
which directly or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Partner or any Person
referred to in the preceding clauses (i) through (iv).
"Agreed Value" shall mean, with respect to any property contributed by
a Partner to the Partnership hereunder, an amount equal to (i) the Gross Asset
Value of the Capital Contribution determined as of the date of such
contribution, less (ii) the amount of any and all liabilities securing such
contributed property that the Partnership is considered to assume or take
subject to with respect to such property under Code Section 752 or the
Regulations promulgated thereunder.
"Board of Directors" shall mean the Board of Directors of the General
Partner.
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"Capital Account" shall have the definition assigned to such term in
Section 6.5 hereof.
"Capital Contribution" shall mean, with respect to any Partner, the
amount of money and the Agreed Value of any property (other than money)
contributed to the Partnership with respect to the Partnership Interest held by
such Partner.
"Certificate" shall mean the Partnership's Certificate of Limited
Partnership, as amended from time to time in accordance with the terms hereof
and the Act.
"Closing Price" shall mean, on any date, with respect to a share of
Common Stock, the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
for one share of Common Stock in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Common Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock as such person is selected from
time to time by the Board of Directors.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.
"Common Stock" shall mean the shares of the common stock, par value
$.01 per share, of the General Partner.
"Contribution and Exchange Agreement" shall have the meaning assigned
to such term in the Recitals set forth above.
"Control" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, or
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otherwise to select, or have the power to remove and then select, a majority of
those persons exercising governing authority over any particular entity. In the
case of a limited partnership, the sole general partner, all of the general
partners to the extent each has equal management control and authority, or the
managing general partner or managing general partners thereof shall be deemed to
have control of such partnership and, in the case of a trust, any trustee
thereof or any Person having the right to select any such trustee shall be
deemed to have control of such trust.
"Current Per Share Market Price", on any date, shall mean the average
of the Closing Price for the five (5) consecutive Trading Days ending on such
date.
"Depreciation" shall mean, with respect to any asset of the Partnership
for any fiscal year or other period, the depreciation, depletion, amortization
or other cost recovery deduction, as the case may be, allowed or allowable for
Federal income tax purposes in respect of such asset for such fiscal year or
other period; provided, however, that if there is a difference between the Gross
Asset Value and the adjusted tax basis of such asset, Depreciation shall mean
"book depreciation, depletion or amortization" as determined under Section
1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Excess Deficit Capital Account Balance" of any Partner shall be the
Capital Account balance of such Partner, adjusted as provided in the immediately
following sentence, to the extent, if any, that such balance is a deficit (after
adjustment). For purposes of determining the existence and amount of an Excess
Deficit Capital Account Balance, the Capital Account balance of a Partner shall
be adjusted by: (i) crediting thereto (A) that portion of any deficit Capital
Account balance that such Partner is required to restore under the terms of this
Agreement or any other document, and (B) the amount of such Partner's share of
Minimum Gain, including any Partner Nonrecourse Debt Minimum Gain; and (ii)
charging thereto the items described in Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) that apply to such Partner. The existence
and amount of Excess Deficit Capital Account Balance at the end of any year
shall be determined before any other allocations provided for in Article 7 for
such year have been made.
"Exercise Notice" shall mean the written notice as described in Section
10.3(b) hereof to be given by an Exercising Partner to the General Partner to
exercise Redemption Rights, the form of which Exercise Notice is attached to the
Unit Certificate as Attachment 1.
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"Exercising Partners" shall have the meaning set forth in Section
10.3(b) hereof.
"General Partner" shall mean Philips International Realty Corp., a
Maryland corporation, and any substitute or additional General Partner(s) duly
admitted pursuant to the terms of this Agreement, or, where the context so
requires, any successor General Partner(s) acting pursuant to the provisions of
this Agreement, or, where the context so requires, the Interim Managing General
Partner.
"Gross Asset Value" shall mean, with respect to any asset of the
Partnership, such asset's adjusted basis for Federal income tax purposes, except
as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Partner shall be equal to the gross fair market value of such asset
without reduction for liabilities, as determined by the General
Partner, in its reasonable discretion (as set forth on Exhibit C
attached hereto and as amended from time to time to reflect new
contributions); provided, however, that the Gross Asset Value of the
assets contributed by a Limited Partner concurrent with an Offering or
otherwise in exchange for Partnership Units shall be equal to the
product of (1) the number of Partnership Units received by such Limited
Partner multiplied by (2) (i) the offering price per share of Common
Stock in connection with the Offering, or (ii) the Current Per Share
Price (as determined on the dates specified in Article 6 of this
Agreement) in connection with Partnership Units issued subsequent to
the Offering, and increased, in both instances, by the amount of
liabilities assumed or taken subject to by the Partnership upon
contribution.
(b) If the General Partner reasonably determines that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners, the Gross Asset Values of all Partnership
assets shall be adjusted to equal their respective gross fair market
values, as reasonably determined by the General Partner, as of the
following times:
(i) a Capital Contribution (other than a de
minimis Capital Contribution) to the
Partnership by a new or existing Limited
Partner as consideration for a Partnership
Interest;
(ii) the distribution by the Partnership to a
Partner of more than a de minimis amount of
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Partnership money or property as
consideration for the redemption of a
Partnership Interest;
(iii) the liquidation of the Partnership within
the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Regulations; and
(iv) any other time that such adjustment may be
made under the Code, the Regulations or any
administrative pronouncement or ruling by
the IRS.
(c) The Gross Asset Value of any Partnership asset distributed
to a Partner shall be the gross fair market value of such asset as
reasonably determined by the General Partner as of the date of
distribution; and
(d) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Sections 734(b) or 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m)
of the Regulations; provided, however, that Gross Asset Values shall
not be adjusted pursuant to this paragraph to the extent that the
General Partner reasonably determines that an adjustment pursuant to
paragraph (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Profits and Losses. Any adjustment to the Gross Asset Values of Partnership
property shall require an adjustment to the Partners' Capital Accounts; as for
the manner in which such adjustments are allocated to the Capital Accounts, see
clause (iii) of the definition of Profits and Losses in the case of adjustment
by Depreciation, and clause (iv) of said definition in all other cases.
"Immediate Family" shall mean, with respect to any individual Person,
such individual Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.
"Indemnitee" means (i) the General Partner and the Interim Managing
General Partner (in their respective capacities as General Partner and Interim
Managing General Partner) and their
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respective Affiliates, trustees, officers, directors, employees and agents, or
their respective successors, executors, administrators or personal
representatives, or (ii) any Partner by reason of his or its liabilities,
pursuant to a loan guarantee or otherwise, for any indebtedness of the
Partnership or any Affiliate of the Partnership (including, without limitation,
any indebtedness which the Partnership or any Affiliate of the Partnership has
assumed or taken assets subject to).
"Interim Managing General Partner" shall mean Philips International
Realty, LLC, a Delaware limited liability company, and any substitute or
additional Interim Managing General Partner(s) duly admitted pursuant to the
terms of this Agreement and acting pursuant to Section 9.1(b) of this Agreement,
or, where the context so requires, any successor Interim Managing General
Partner(s), acting pursuant to the provisions of this Agreement.
"IRS" means the Internal Revenue Service, which administers the federal
tax laws of the United States.
"Limited Partners" shall mean any Person named as a Limited Partner on
the Exhibit A attached hereto as such Exhibit may be amended from time to time,
or any substituted Limited Partner or additional Limited Partner duly admitted
to the Partnership pursuant to the terms of this Agreement.
"Liquidation" shall mean the disposition of all or substantially all of
the assets of the Partnership pursuant to a complete liquidation of the
Partnership.
"Minimum Gain" shall have the meaning given such term in Treasury
Regulation Section 1.704-2(d), and shall generally mean the amount by which the
nonrecourse liabilities secured by any assets of the Partnership exceed the
adjusted tax basis of such assets as of the date of determination. A Partner's
share of Minimum Gain (and any net decrease thereof) at any time shall be
determined in accordance with Treasury Regulation Section 1.704-2(g).
"Net Cash Flow" shall mean, with respect to any fiscal period of the
Partnership, the excess, if any, of "Receipts" over "Expenditures." For purposes
hereof, the term "Receipts" means the sum of (i) all cash receipts of the
Partnership from all sources for such period, including Net Sale Proceeds and
Net Financing Proceeds but excluding Capital Contributions, and (ii) any amounts
held as reserves as of the last day of the period immediately prior to such
fiscal period that the General Partner deemed necessary for any capital or
operating expenditure permitted hereunder. The term "Expenditures" means the sum
of
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(a) all cash expenses of the Partnership for such period, (b) the amount of
all payments of principal and interest on account of any indebtedness of the
Partnership including payments of principal and interest on account of any
indebtedness owed to a Partner during such period, (c) any amounts held as
reserves as of the last day of such fiscal period as the General Partner in its
sole discretion deems necessary for any capital or operating expenditures
permitted hereunder or reserves for any other purpose that the General Partner
in its sole discretion shall determine to be appropriate and (d) any amounts
held in working capital accounts or other cash or similar balances which the
General Partner determines to be necessary or appropriate in its sole
discretion. In the event the General Partner issues additional classes of
Partnership Units other than OP Units, the General Partner may, to the extent
necessary, in its sole discretion, determine the amount of Net Cash Flow
attributable to each class of Partnership Units and the timing of payment
thereof.
"Net Financing Proceeds" shall mean the cash proceeds received by the
Partnership in connection with any borrowing or refinancing of borrowing by or
on behalf of the Partnership (whether or not secured), after deduction of all
costs and expenses incurred by the Partnership in connection with such
borrowing, and after deduction of that portion of such proceeds used to repay
any other indebtedness of the Partnership, or any interest or premium thereon.
"Net Sale Proceeds" means the cash proceeds received by the Partnership
in connection with a sale of any asset by or on behalf of the Partnership after
deduction of any costs or expenses incurred by the Partnership, or payable
specifically out of the proceeds of such sale (including, without limitation,
any repayment of any indebtedness required to be repaid as a result of such sale
or which the General Partner elects to repay out of the proceeds of such sale,
together with accrued interest and premium, if any, thereon and any sales
commissions or other costs and expenses due and payable to any Person in
connection with a sale, including to a Partner or its Affiliates).
"Offered Units" shall mean the Partnership Units of the Exercising
Partners identified in an Exercise Notice which, pursuant to the exercise of a
Redemption Right, can be acquired by the General Partner under the terms hereof.
"Offering" shall mean any public offering of the General Partner's
Common Stock under the Securities Act or private equity placement of securities
of the General Partner that occurs on or after the date hereof.
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"OP Units" shall mean those Partnership Units issued pursuant to the
terms of the Contribution and Exchange Agreement and any additional OP Units
issued by the General Partner pursuant to Article 6 hereof.
"Organizational Limited Partner" shall mean the initial limited partner
of the Partnership.
"Original Agreement" shall have the meaning assigned to such term in
the Recitals set forth above.
"Partner or Partners" shall mean, unless the context in which the term
is used requires otherwise, the General Partner, the Interim Managing General
Partner and the Limited Partners.
"Partner Nonrecourse Debt" shall have the meaning assigned to such term
in Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning assigned
to such term in Regulation Section 1.704-2(i).
"Partnership" shall mean Philips International Realty, L.P., a Delaware
limited partnership.
"Partnership Agreement" shall mean this Agreement of Limited
Partnership and the Exhibits and Schedules hereto, and any amendments hereto
from time to time.
"Partnership Interest" shall mean the ownership interest of a Partner
in the Partnership from time to time, including such Partner's Percentage
Interest and Capital Account and any and all other benefits to which the holder
of such a Partnership Interest may be entitled as provided in this Agreement and
under applicable laws, together with all obligations of such Person to comply
with the terms and provisions of this Agreement.
"Partnership Unit" shall mean a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Article 6 hereof;
provided, however, that in the event the General Partner issues classes of
Partnership Units to Limited Partners other than the OP Units pursuant to
Section 6.4 hereof, the term Partnership Unit shall mean with respect to each
class of Partnership Units, a fractional, undivided share of the Partnership
Interests of all Partners in such class. Currently, each Partnership Unit may be
redeemed for one share of Common Stock. Accordingly, if the Common Stock of the
General Partner (or any other class of stock) undergoes any split or reverse
split, then, without any further action or consent by the General Partner or any
Limited Partner, each corresponding class of Partnership Unit that is
convertible into such stock shall
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<PAGE>
similarly be split or combined by the same ratio as was used to split or combine
the stock. For example if the Common Stock under a reverse 2 for 1 split (i.e.
every two shares of old Common Stock are converted into one share of new Common
Stock) then the corresponding class of Partnership Units shall undergo a similar
reverse split (i.e. every two old Partnership Units shall be converted into one
new Partnership Unit.
"Partnership Record Date" shall mean the record date established by the
General Partner for any particular distribution of Net Cash Flow pursuant to
Article 8 hereof, which record date shall be the same as the record date
established by the General Partner for distribution to its stockholders of some
or all of its portion of such distribution.
"Percentage Interest" shall mean, with respect to any Partner, its
interest in the Partnership as determined by dividing the Partnership Units
owned by such Partner by the total number of Partnership Units then issued and
outstanding; provided, however, that in the event the General Partner issues
classes of Partnership Units other than OP Units, the term Percentage Interest
shall mean with respect to any Partner, its interest in the Partnership as
determined by dividing the Partnership Units of each class owned by such Partner
by the total number of Partnership Units in such class then issued and
outstanding.
"Person" shall mean a natural person, corporation, trust, partnership,
estate, unincorporated association or other entity.
"Profits or Losses" shall mean, for each fiscal year or other
applicable period, an amount equal to the Partnership's net income or loss for
such year or period as determined for Federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (i) by including as an item of
gross income any tax-exempt income received by the Partnership; (ii) by treating
as a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by treating deductions for
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
as expenditures described in Section 705(a)(2)(B) of the Code); (iii) in lieu of
depreciation, depletion, amortization and
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<PAGE>
other cost recovery deductions taken into account in computing total income or
loss, there shall be taken into account Depreciation; (iv) gain or loss
resulting from any disposition of Partnership property with respect to which
gain or loss is recognized for Federal income tax purposes shall be computed by
reference to the Gross Asset Value of such property rather than its adjusted tax
basis; and (v) in the event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of the Partnership be
adjusted pursuant to Regulation Section 1.704-1(b)(2)(iv)(e), (f) and (m), the
amount of such adjustment is to be taken into account as additional Profits or
Losses pursuant to Article 7.
"Properties" shall mean each of the following (i.e., those partnerships
or properties, as the case may be, in which, pursuant to the Contribution and
Exchange Agreement, the Partners are contributing to the Partnership, directly
or indirectly, all of their right, title and interest as partners in such
partnerships or owners of such properties, as the case may be): (i) Palm Springs
Mile Associates, Ltd., (ii) Forest Avenue Shopping Associates, (iii) Philips
Freeport Associates, L.P., (iv) Merrick Shopping Associates, (v) SP Avenue U
Associates, L.P., (vi) Foxborough Shopping, L.L.C., (vii) Enfield Shopping
L.L.C., (viii) Delran Shopping L.L.C., (ix) Branhaven Plaza LLC, and (x) The
Shoppes at Lake Mary (the "National Property").
"Redemption Rights" shall have the meaning set forth in Section 10.3(a)
hereof.
"Regulations" shall mean the Treasury regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 7.3(g) of
this Agreement.
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
"REIT Requirements" shall mean any and all requirements that must be
met to qualify as a REIT under the Code and the Regulations.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Surviving Partnership" shall have the meaning set forth in Section
12.6(b) hereof.
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"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, any day other than a
Saturday, a Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
"Unit Certificate" shall have the meaning set forth in Section 6.2
hereof.
ARTICLE 2
CONTINUATION OF THE PARTNERSHIP
2.1 Continuation. The Partners hereby continue the Partnership as a
limited partnership formed under and pursuant to the terms and provisions of the
Act, and the rights and obligations of the Partners shall be as provided therein
except as otherwise expressly provided in this Agreement. The Partners agree to
execute such certificates or documents and do such filings and recordings and
all other acts, including the filing or recording of an amendment to the
Certificate and any assumed name certificates in the appropriate offices in the
State of Delaware and any other applicable jurisdictions as may be required to
comply with applicable law. The Partners agree that immediately after the
admission of one Limited Partner, the Organizational Limited Partner shall be
deemed to have withdrawn from the Partnership.
2.2 Entire Agreement. Each and every other agreement or understanding,
oral or written, relating in any way to the formation or operation of the
Partnership including, but not limited to, the Original Agreement, is hereby
superseded in its entirety. From and after the execution of this Agreement, the
same shall constitute the only Agreement of Limited Partnership of the
Partnership except as the same may hereafter be amended pursuant to the
provisions hereof. This Agreement represents the entire agreement and
understanding of the parties hereto concerning the Partnership and their
relationship as Partners, and all prior or concurrent agreements,
understandings, representations and warranties in regard to the subject matter
hereof including, but not limited to, the Original Agreement, are and have been
merged herein.
ARTICLE 3
---------
NAME AND OFFICES
----------------
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3.1 Name. The business of the Partnership shall be conducted under the
name of "Philips International Realty, L.P.", or such other name as the General
Partner may from time to time designate upon notice to the Limited Partners.
3.2 Principal and Registered Offices. The principal place of business
of the Partnership shall be located at c/o the General Partner at 417 Fifth
Avenue, New York, New York 10016. The registered agent of the Partnership shall
be United Corporate Services, Inc. The registered office of the Partnership
shall be 15 East North Street, Dover, Kent County, Delaware 19901. The General
Partner may from time to time designate another registered agent or another
location for the registered office or principal place of business of the
Partnership upon notice to the other Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware
as the General Partner deems advisable.
ARTICLE 4
---------
PURPOSE
-------
4.1 Purpose. The purpose and nature of the business to be conducted by
the Partnership is (i) to conduct any business that may be lawfully conducted by
a limited partnership organized pursuant to the Act; provided, however, that
such business shall be limited to and conducted in such a manner as to permit
the General Partner at all times to be classified as a REIT for federal income
tax purposes, unless the General Partner has determined to cease to qualify as a
REIT, (ii) to enter into any partnership, joint venture or other similar
arrangements to engage in any of the foregoing or the ownership of interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without
limiting the General Partner's right in its sole discretion to cease qualifying
as a REIT, the Partners acknowledge that the General Partner's status as a REIT
inures to the benefit of all of the Partners and not solely the General Partner.
4.2 Powers. The Partnership is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership; provided, that the
Partnership shall not take, or shall refrain from taking, any action which, in
the judgment of the General Partner, in its sole and absolute discretion, (i)
could adversely affect the ability
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of the General Partner to continue to qualify as a REIT, (ii) could subject the
General Partner to any additional taxes under Section 857 or Section 4981 of the
Code or any successor or newly enacted provisions of the Code imposing other
additional taxes or penalties on the General Partner, or (iii) could violate any
law or regulation of any governmental body or agency having jurisdiction over
the General Partner or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented to by the
General Partner in writing.
ARTICLE 5
TERM AND FISCAL YEAR
5.1 Term. The term of the Partnership commenced on July 17, 1997, the
date the Certificate was filed in the appropriate offices in the State of
Delaware, and shall continue until terminated pursuant to the provisions of
Article 14 of this Agreement.
5.2 Fiscal Year. The first fiscal year of the Partnership shall
terminate on December 31, 1997, and succeeding fiscal years shall terminate on
December 31 of each year thereafter, or such other date as the Partnership shall
terminate as herein provided.
ARTICLE 6
---------
CAPITAL CONTRIBUTIONS, ADDITIONAL FUNDING AND CAPITAL ACCOUNTS
--------------------------------------------------------------
6.1 Capital Contributions of the General Partner and the Interim
------------------------------------------------------------
Managing General Partner.
- ------------------------
(a) Initial Capital Contribution of the General Partner. Concurrent
with the execution of this Agreement, the General Partner, pursuant to the
Contribution and Exchange Agreement, shall contribute to the Partnership,
directly or indirectly, as its initial Capital Contribution, all of such General
Partner's right, title and interest in and to National Property. The General
Partner shall initially be issued and thereafter shall own Partnership Units in
the amount set forth opposite its name on Exhibit A, which number of Partnership
Units shall be adjusted on such Exhibit A from time to time by the General
Partner to the extent necessary to reflect accurately issuances, exchanges,
redemptions, Capital Contributions, or similar events having an effect on a
Partner's Partnership Units.
(b) Capital Contribution of the General Partner Upon Completion of an
Offering. Upon completion of any Offering, the General Partner shall contribute
the proceeds of the Offering to the Partnership, which proceeds will be net of
the underwriter's
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discount and other expenses, and the General Partner shall be credited with
having made a Capital Contribution to the Partnership in the amount of the net
proceeds of the Offering. The Partners hereby acknowledge and agree that the
aggregate number of additional Partnership Units to be issued to the General
Partner upon completion of any Offering shall be exactly equal to the number of
shares of Common Stock issued in the Offering. Upon any subsequent sales of
shares of Common Stock pursuant to the exercise of the over-allotment option in
connection with the Offering, the General Partner shall, subject to and in
accordance with the terms and conditions of this Section 6.1, contribute the
proceeds of such subsequent sale to the Partnership, and shall be issued
additional Partnership Units in an amount exactly equal to the number of shares
of Common Stock subsequently sold in connection with such over-allotment option.
(c) Ownership Interest of the General Partner. The Partners acknowledge
and agree that the General Partner's ownership interest in the Partnership (and
therefore the number of Partnership Units owned by it) shall at all times be
equal to the fraction the numerator of which is the number of issued and
outstanding shares of Common Stock of the General Partner (the "G.P. Shares")
and the denominator of which is the sum of the G.P. Shares plus the number of
issued and outstanding Partnership Units held by Partners other than the General
Partner; provided, however, that the foregoing shall only apply for so long as
the only class of Partnership Units is OP Units and the only equity securities
of the General Partner is Common Stock. If the Common Stock of the General
Partner (or any other class of stock) undergoes any split or reverse split,
then, without any further action or consent by the General Partner or any
Limited Partner, each corresponding class of Partnership Unit that is
convertible into such stock shall similarly be split or combined by the same
ratio as was used to split or combine the stock. For example if the Common Stock
under a reverse 2 for 1 split (i.e. every two shares of old Common Stock are
converted into one share of new Common Stock) then the corresponding class of
Partnership Units shall undergo a similar reverse split (i.e. every two old
Partnership Units shall be converted into one new Partnership Unit).
(d) Capital Contribution of the Interim Managing General Partner.
Concurrent with the execution of this Agreement, and subject to Section 9.1 (b)
hereof, the Interim Managing General Partner shall contribute to the Partnership
as its initial Capital Contribution such amount necessary to give the Interim
Managing General Partner a 0.001% ownership interest in the Partnership. Upon
consummation of Offerings aggregating gross proceeds to the General Partner of
at least $25 million, the
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Interim Managing General Partner shall automatically be entitled to a return of
its Capital Contribution, and shall automatically be deemed to have withdrawn
from the Partnership.
6.2 Capital Contributions of the Limited Partners.
---------------------------------------------
Concurrent with the execution of this Agreement, each Limited Partner, pursuant
to the Contribution and Exchange Agreement, shall contribute to the Partnership,
directly or indirectly, as its initial Capital Contribution, all of such Limited
Partner's right, title and interest in and to the Properties. Each Limited
Partner shall initially be issued and thereafter shall own Partnership Units in
the amount set forth opposite such Limited Partner's name on Exhibit A, which
number of Partnership Units on such Exhibit A shall be adjusted from time to
time by the General Partner to the extent necessary to reflect accurately
exchanges, redemptions, Capital Contributions, capital stock changes of the
General Partner or similar events having an effect on such Partner's Partnership
Units. The Partnership Units issued to each Limited Partner shall be evidenced
by the issuance of a certificate (the "Unit Certificate") in substantially the
form of Exhibit B attached hereto, which Unit Certificate shall bear the
following legend:
"THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES
WITH THE PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP OF PHILIPS
INTERNATIONAL REALTY, L.P., DATED AS OF ______, 1997 (A COPY OF WHICH IS ON FILE
WITH THE PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR (B) IF THE PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER. IN ADDITION, THE
UNITS ARE SUBJECT TO THE PROVISIONS OF SECTION 19.1 OF A CERTAIN CONTRIBUTION
AND EXCHANGE AGREEMENT DATED AS OF AUGUST 11, 1997 (A COPY OF WHICH IS ON FILE
WITH THE PARTNERSHIP)."
On the date of admission of one or more Limited Partners to the Partnership, the
Organizational Limited Partner shall be entitled to a return of its Capital
Contribution, and shall be deemed to have withdrawn from the Partnership.
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6.3 General Partner Option to Contribute Additional Capital. If the
Partnership requires funds at any time or from time to time in excess of funds
available to the Partnership through borrowings and prior or additional Capital
Contributions, the General Partner may, but shall not be required to, borrow
such funds from a financial institution or other lender or through public debt
offerings and lend such funds to the Partnership on the same terms and
conditions as are applicable to the General Partner. If, notwithstanding the
foregoing, the Partnership requires funds for any proper Partnership purpose in
excess of any other funds anticipated by the General Partner to be available to
the Partnership (including through borrowings and prior Capital Contributions),
or if the General Partner concludes that borrowings are inappropriate, the
General Partner may, but shall not be required to, raise such additional funds
pursuant to the issuance of shares of its Common Stock (or New Securities
subject to Section 6.4(b))(any such issuance which is made for the purpose of
providing additional funds to the Partnership shall be referred to herein as an
"Additional Issuance"). In the event any such Additional Issuance is
consummated, then (i) the General Partner shall contribute the net amount of
cash raised pursuant to such Additional Issuance to the capital of the
Partnership and (ii) the Partnership shall issue additional Partnership Units
("Additional Partnership Units") to the General Partner, on the date upon which
such funds are contributed to the Partnership, in an amount equal to that number
of Partnership Units which, if such Additional Partnership Units were redeemed
as of their date of issuance by the General Partner for shares of Common Stock
pursuant to Section 10.3 hereof, would result in the General Partner receiving
that number of shares of Common Stock equal to the number of shares of Common
Stock that were issued pursuant to such Additional Issuance. In addition, in the
event that the General Partner shall issue shares of Common Stock (and/or pay
cash out of the net proceeds of any Additional Issuance) in connection with any
subsequent merger, consolidation or other acquisition, the General Partner shall
contribute the shares of stock, assets and/or other consideration received by
the General Partner in connection therewith to the capital of the Partnership in
exchange for Additional Partnership Units in an amount equal to that number of
Partnership Units which, if such Additional Partnership Units were redeemed as
of their date of issuance by the General Partner for shares of Common Stock
pursuant to Section 10.3 hereof, would result in the General Partner receiving
that number of shares of Common Stock equal to the number of shares of Common
Stock that were issued in connection with such merger, consolidation or other
acquisition and/or such Additional Issuance. Notwithstanding the foregoing
sentence, the General Partner shall have the right, in its sole discretion, to
treat a contribution to the capital of the Partnership in a manner other than as
described above if, upon
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the advice of counsel to the General Partner and/or the Partnership, such
alternative treatment will provide a more favorable federal and/or state tax
consequence to the General Partner and/or the Partnership.
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6.4 General Partner Option to Issue Additional Partnership Units to
---------------------------------------------------------------
Limited Partners.
- ----------------
(a) Issuance of Additional Partnership Units. At any time
after the date hereof without the consent of any Partner, but subject to the
provisions of Section 13.1 hereof, the General Partner may, upon its
determination, which shall be made in its sole and absolute discretion, that the
issuance of Additional Partnership Units to new or existing limited partners is
in the best commercial interests of the Partnership, cause the Partnership to
issue Additional Partnership Units to and admit as a limited partner in the
Partnership, any Person (an "Additional Limited Partner" herein) in exchange for
the contribution by such Person of cash and/or property desirable to further the
purposes of the Partnership under Article 4 hereof. In the event that Additional
Partnership Units are issued by the Partnership pursuant to this Section 6.4,
the amount of such Partnership Units issued to each Additional Limited Partner
shall, unless otherwise determined by the General Partner in the exercise of its
sole discretion but subject to its fiduciary duty to all Limited Partners (i) be
fixed by agreement between the General Partner and such Additional Limited
Partner in the General Partner's sole discretion or (ii) be equal to that number
of Partnership Units which, if such Additional Partnership Units were redeemed
as of their date of issuance by such Additional Limited Partner pursuant to
Section 10.3 hereof, would result in such Additional Limited Partner receiving
that number of shares of Common Stock equal to (x) the Agreed Value of any
property (as determined by the General Partner, in its sole and absolute
discretion), plus the amount of any cash contributed by the Additional Limited
Partner, as of the date of contribution to the Partnership divided by (y) the
Current Per Share Market Price (computed as of the Trading Day immediately
preceding the date of contribution to the Partnership or such other date or
average of Trading Days as the General Partner may agree with such Additional
Limited Partner in the exercise of its sole discretion). In addition, the
General Partner is hereby authorized to cause the Partnership from time to time
to issue to the Partners (including the General Partner) or other Persons
additional Partnership Units or such other Partnership Interests in one or more
classes, or one or more series of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties which may be senior, pari
passu or junior to OP Units, all as shall be determined by the General Partner
in its sole and absolute discretion subject to Delaware law, including, without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests; (ii)
the right of
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each such class or series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; provided that no
such additional Partnership Units or other Partnership Interests shall be issued
to the General Partner unless either (A)(1) the additional Partnership Interests
are issued in connection with the issuance of shares of Common Stock or other
shares by the General Partner, which shares have designations, preferences and
other rights such that the economic interests attributed to such shares are
substantially similar to the designations, preferences and other rights of the
additional Partnership Interests issued to the General Partner in accordance
with this Section 6.4, and (2) the General Partner shall make a Capital
Contribution to the Partnership in an amount equal to the proceeds raised in
connection with the issuance of such shares of the General Partner, or (B) the
additional Partnership Units are issued to all the Partners in proportion to
their respective Percentage Interests. Any Additional Limited Partner shall be
issued a Unit Certificate representing the amount of Partnership Units issued to
such Additional Limited Partner and, in the event the General Partner issues
Partnership Units other than OP Units, indicating the class, terms, preferences
and other restrictions or rights of such Partnership Unit. The General Partner
shall be authorized on behalf of each of the Partners to amend this Agreement to
reflect the issuance of Additional Partnership Units (including, without
limitation, the issuance of new classes of Partnership Units) and/or the
admission of any Additional Limited Partner(s) in accordance with the provisions
of this Section 6.4, and the General Partner shall promptly deliver a copy of
such amendment (which, in the event that new classes of Partnership Units are
issued, shall contain the terms of such new classes of Partnership Units) to
each Limited Partner. Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue Partnership Units for
less than fair market value, so long as the General Partner concludes in good
faith that such issuance is in the interest of the General Partner and the
Partnership (for example, and not by way of limitation, the issuance of
Partnership Units pursuant to an employee purchase plan providing for employee
purchases of Partnership Units at a discount from fair market value or employee
options that have an exercise price that is less than the fair market value of
the Partnership Units, either at the time of issuance or at the time of
exercise).
(b) Adjustments to Partnership Units. If the Common Stock (or
any other class of stock of the General Partner for which a class of Partnership
Units may be redeemed) undergoes any split or reverse split, then without
further action or consent by the General Partner or any Limited Partner, each
corresponding
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class of Partnership Units that is redeemable for such stock shall be split or
combined in accordance with the same ratio used to split or combine the stock.
For example, if the Common Stock undergoes a reverse 2 for 1 split (i.e., every
two shares of old Common Stock are converted into one share of new Common Stock)
then the corresponding class of Partnership Units that are redeemable for such
Common Stock shall undergo a similar reverse split (i.e., every two old OP Units
shall be converted into one new OP Unit). Similarly, if any class of Partnership
Units into which another class of Partnership Units is convertible undergoes any
split or reverse split, then without further action or consent by the General
Partner or any Limited Partner, the latter class of Partnership Units shall be
split or combined in accordance with the same ratio used to split or combine the
first class of Partnership Units.
(c) Fractional Units. The General Partner shall have the right
to issue fractional Partnership Units upon the conversion or exchange of one
class of Partnership Units for a second class of Partnership Units; provided,
however, that in accordance with Section 10.3(e) hereof no fractional shares of
Common Stock of the General Partner shall be issued upon the redemption of any
class of Partnership Units for Common Stock.
(d) Issuance of New Securities. Following completion of any
Offering, the General Partner shall not issue any additional shares of Common
Stock (other than shares of Common Stock issued pursuant to Section 10.3
hereof), or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of capital stock
(collectively, "New Securities"), other than to all holders of shares of Common
Stock, unless (i) the General Partner shall cause the Partnership to issue to
the General Partner Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
substantially similar to those of the New Securities, and (ii) the General
Partner contributes to the Partnership the proceeds from the issuance of such
New Securities and from the exercise of rights contained in such New Securities.
Without limiting the foregoing, the General Partner is expressly authorized to
issue New Securities for less than fair market value, and the General Partner is
expressly authorized to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, so long as (x) the General Partner
concludes in good faith that such issuance is in the interest of the General
Partner and the Partnership (for example, and not by way of limitation, the
issuance of shares of Common Stock and corresponding Units pursuant to an
employee stock purchase plan providing for employee purchases of shares of
Common Stock at a
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discount from fair market value or employee stock options that have an exercise
price that is less than the fair market value of the shares of Common Stock,
either at the time of issuance or at the time of exercise), and (y) the General
Partner contributes all proceeds from such issuance and exercise to the
Partnership.
6.5 Capital Accounts. A separate capital account (a "Capital Account")
shall be maintained for each Partner in accordance with the Code and the
Regulations promulgated thereunder including, but not limited to, the rules
regarding the maintenance of partners' Capital Accounts set forth in Regulation
Section 1.704-1. Subject to the immediately preceding sentence, there shall be
credited to each Partner's Capital Account: (i) the amount of money contributed
by the Partner to the Partnership (subject, however, in the case of a Capital
Contribution by the General Partner upon completion of any Offering or upon
Additional Issuances (as defined in Section 6.3 above) of Common Stock, pursuant
to the provisions of Sections 6.1(b) and 6.3 hereof, the net amount of Offering
proceeds contributed to the Partnership), (ii) the Agreed Value of any property
contributed by the Partner to the Partnership, (iii) the amount of any
Partnership liabilities assumed by such Partner (other than liabilities secured
by property distributed to such Partner that such Partner is considered to have
assumed or taken subject to under Section 752 of the Code), and (iv) the
Partner's share of income or gain (or items thereof), including income and gain
exempt from tax. There shall be charged against each Partner's Capital Account:
(w) the amount of money distributed to the Partner by the Partnership, (x) the
Agreed Value of any property distributed to the Partner by the Partnership, (y)
the amount of any liabilities of such Partner assumed by the Partnership (other
than liabilities secured by property contributed to the Partnership by such
Partner that the Partnership is considered to have assumed or taken subject to
pursuant to Section 752 of the Code) and (z) the Partner's share of loss and
deduction (or items thereof). To the extent a Partner's Capital Account is
greater than zero, such excess is hereinafter referred to as a "positive
balance". To the extent a Partner's Capital Account is less than zero, said
amount is hereinafter referred to as a "deficit balance".
6.6 Limited Liability. Notwithstanding anything in this Agreement to
the contrary, the personal liability of a Limited Partner arising out of or in
any manner relating to the Partnership shall be limited to and shall not exceed
such Limited Partner's Capital Contribution made or required to be made pursuant
to this Agreement plus the amount of any deficit balances in its Capital Account
such Limited Partner is obligated to restore pursuant to the provisions of
Section 7.3 hereof. No Limited Partner shall have any personal liability for
liabilities
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or obligations of the Partnership, except to the extent of its Capital
Contribution, as aforesaid or as specifically provided in Section 7.3.
6.7 Return of Capital. Except as otherwise provided herein, (i) no
Partner shall be required to make any further or additional contributions to the
capital of the Partnership or to lend or advance funds to the Partnership for
any purpose and (ii) no Partner shall be entitled to the return of its capital,
except to the extent, if any, that distributions are made or deemed to be made
to such Partner otherwise than out of Profits pursuant to this Agreement.
6.8 No Interest on Capital Contributions. No interest or additional
share of Profits shall be paid or credited to the Partners on their Capital
Accounts, or on any undistributed Profits or funds left on deposit with the
Partnership; provided, however, that nothing contained herein shall be construed
to prevent or prohibit the payment of interest on account of loans made by the
Partners to the Partnership. Any loans made to the Partnership by a Partner
shall not increase its Capital Contribution or interest in the Profits, Losses
or Net Cash Flow of the Partnership, but shall be a debt due from the
Partnership and repaid accordingly.
6.9 No Third Party Beneficiary. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed among the parties hereto that the provisions of this Agreement shall
be solely for the benefit of, and may be enforced solely by, the parties hereto
and their respective successors and assigns. None of the rights or obligations
of the Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or of any
of the Partners.
6.10 Common Stock Option Plans. The Partners hereby acknowledge that
prior to the date hereof the General Partner has adopted, and the Partners
hereby acknowledge and agree that from and after the date hereof the General
Partner may adopt, without the consent of any Limited Partner, one or more stock
option or incentive plans ("Stock Plans") pursuant to which officers, directors,
trustees, employees and/or consultants of the General Partner, the Partnership
or any Affiliate of either of them may
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acquire shares of Common Stock. On each date on which the General Partner issues
any shares of Common Stock to a person pursuant to a Stock Plan (i) the
consideration paid for each such share of Common Stock shall, as soon as
received by the General Partner, be contributed to the capital of the
Partnership and (ii) the General Partner shall be issued Partnership Units in an
amount equal to that number of Partnership Units which, if such Partnership
Units were redeemed as of their date of issuance by the General Partner for
shares of Common Stock pursuant to Section 10.3 hereof, would result in the
General Partner receiving that number of shares of Common Stock which are being
issued to any such person pursuant to the Stock Plan. For purposes of this
Section 6.10 only, shares of Common Stock issued subject to forfeiture or other
similar restrictions shall be deemed issued upon the lapse of such restrictions.
Notwithstanding anything herein to the contrary, the mere grant of options to
purchase shares of Common Stock pursuant to any Stock Plan shall not constitute
the grant or issuance of shares of Common Stock for purposes of this Section
6.10.
ARTICLE 7
---------
ALLOCATION OF PROFITS AND LOSSES
--------------------------------
7.1 General Allocation of Profits and Losses. Except as otherwise
provided in this Article 7, after giving effect to any and all allocations set
forth in Section 7.4 below, all Profits and Losses of the Partnership (including
all items of income and expense entering into the determination of such Profits
and Losses), as finally determined for Federal income tax purposes for each
fiscal year of the Partnership, shall be allocated to and among the Partners in
accordance with their respective Percentage Interests.
7.2 Allocations with Respect to Transferred Interests. Unless otherwise
required by the Code and/or the Regulations or as determined by the General
Partner, in its sole and absolute discretion, any Profits or Losses allocable to
an additional Partnership Interest issued during any year or any fiscal quarter
or to a Partnership Interest which has been transferred during any year shall be
allocated among the Persons who were holders of such Partnership Interest during
such year in the manner described in Section 13.3(c) below.
7.3 Deficit Restoration Obligation. In the event that any Limited
Partner hereto enters into a "deficit restoration obligation" to the Partnership
pursuant to this Section 7.3, and such Limited Partner has a deficit balance in
its Capital Account following the liquidation of its interest in the
Partnership, as determined after taking into account all Capital Account
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adjustments for the Partnership's taxable year during which the liquidation
occurs, such Limited Partner shall be unconditionally obligated to restore the
amount of such deficit balance to the Partnership by the later of (i) the end of
such taxable year, or (ii) 90 days after the date of the liquidation of the
Limited Partner's interest in the Partnership, which amount shall, upon
liquidation of the Partnership, be paid to creditors of the Partnership or
distributed to other Partners in accordance with their positive Capital Account
balances. For purposes hereof, a "deficit restoration obligation" shall mean an
unconditional agreement by a Limited Partner to restore a deficit balance in its
Capital Account (which may be limited in amount) in the form thereof used by the
Partnership. Any Limited Partner may, but is not obligated to, enter into such
an agreement at any time during the term hereof but not more often than
annually.
7.4 Regulatory Allocations.
----------------------
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Agreement (except as provided in Section 7.4(b) below), if
there is a net decrease in Minimum Gain for a Partnership taxable year, each
Partner shall be allocated, before any other allocation of Partnership items for
such taxable year, items of income and gain for such year (and, if necessary,
for subsequent years) in proportion to, and to the extent of, the amount of such
Partner's share of the net decrease in Minimum Gain during such year. The income
allocated pursuant to this Section 7.4(a) in any taxable year shall consist
first of gains recognized from the disposition of property subject to one or
more nonrecourse liabilities of the Partnership, and any remainder shall consist
of a pro rata portion of other items of income or gain of the Partnership.
(b) Exceptions to Section 7.4(a). The allocation otherwise
required pursuant to Section 7.4(a) shall not apply to a Partner to the extent
that: (a) such Partner's share of the net decrease in Minimum Gain is caused by
a guarantee, refinancing or other change in the instrument evidencing a
nonrecourse debt of the Partnership which causes such debt to become a partially
or wholly recourse debt or a Partner Nonrecourse Debt, and such Partner bears
the economic risk of loss (within the meaning of Treasury Regulation Section
1.752-2) for such changed debt; (b) such Partner's share of the net decrease in
Minimum Gain results from the repayment of a nonrecourse liability of the
Partnership, which repayment is made using funds contributed by such Partner to
the capital of the Partnership; (iii) the IRS, pursuant to Treasury Regulation
Section 1.704-2(f)(4), waives the requirement of such allocation in response to
a request for such waiver made by the General Partner on behalf of the
Partnership (which request the General Partner may or may not make, in its sole
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discretion, if it determines that the Partnership would be eligible therefor);
or (iv) additional exceptions to the requirement of such allocation are
established by revenue rulings issued by the IRS pursuant to Treasury Regulation
Section 1.704-2(f)(5), which exceptions apply to such Partner, as determined by
the General Partner in its sole discretion.
(c) Qualified Income Offset. Notwithstanding any other
provision of this Agreement, if a Partner unexpectedly receives an adjustment,
allocation or distribution described in Regulation Section
1.704-1(b)(2)(ii)(d)(4),(5) or (6) that causes or increases an Excess Deficit
Capital Account Balance with respect to such Partner, items of Partnership gross
income and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate such Excess Deficit Capital Account Balance as
quickly as possible.
(d) Gross Income Allocation. If at the end of any Partnership
taxable year, a Partner has an Excess Deficit Capital Account Balance, such
Partner shall be specially allocated items of Partnership gross income or gain
in an amount and manner sufficient to eliminate such Excess Deficit Capital
Account Balance as quickly as possible, until all Excess Deficit Capital Account
Balances have been eliminated. To the extent that any class of Partnership Units
that are convertible into OP Units has received distributions at the end of any
Partnership taxable year (including any prior taxable year) in excess of the
amounts such class of Partnership Units would have received during such taxable
year or years if all of the Partnership Units of such class had been converted
into OP Units (such excess being referred to hereinafter as "Excess Amounts"),
such items of gross income or gain shall then be allocated proportionately to
and among the holders of such class Partnership Units until such holders have
been allocated an amount equal to all Excess Amounts.
(e) Partner Nonrecourse Debt. Notwithstanding any other
provision of this Agreement, any item of Partnership Loss, deduction or
expenditures described in Code Section 705(a)(2)(B) that is attributable to a
Partner Nonrecourse Debt shall be allocated to those Partners that bear the
economic risk of loss for such Partner Nonrecourse Debt, and among such Partners
in accordance with the ratios in which they share such economic risk, determined
in accordance with Treasury Regulation Section 1.704-2(i). If there is a net
decrease for a Partnership taxable year in any Partner Nonrecourse Debt Minimum
Gain of the Partnership, each Partner with a share of such Partner Nonrecourse
Debt Minimum Gain as of the beginning of such year shall be allocated items of
gross income and gain in the manner
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and to the extent provided in Treasury Regulation Section 1.704-2(i)(4).
(f) Interpretation. The foregoing provisions of this Section
7.4 are intended to comply with Treasury Regulation Sections 1.704-1(b) and
1.704-2 and shall be interpreted consistently with this intention. Any terms
used in such provisions that are not specifically defined in this Agreement
shall have the meaning, if any, given such terms in the Regulations cited above.
(g) Curative Allocations. If any allocation of gain, income,
loss, expense or any other item is made pursuant to Section 7.4(a), 7.4(c),
7.4(d) or 7.4(e) of this Agreement (the "Regulatory Allocations") with respect
to one or more Partners (the "Deficit Partners"), then the balance of such items
for the current and all subsequent fiscal years shall be allocated among the
Partners other than the Deficit Partners as if such items were allocated among
all the Partners (including the Deficit Partners) without regard to this Section
7.3, until the amount of such items that would have been allocated to the
Deficit Partners but for the Regulatory Allocations equal the amount allocated
to the Deficit Partners pursuant to the Regulatory Allocations.
7.5 Special Allocations with Respect to Contributed or Revalued
Property. Notwithstanding anything contained herein to the contrary, taxable
income, gain, loss and deduction with respect to any Partnership property that
is contributed to the Partnership by a Partner shall be shared among the
Partners for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the adjusted tax basis of the property to the Partnership and its
initial Gross Asset Value. With respect to Partnership property that is
initially contributed to the Partnership upon its formation, such variation
between the adjusted tax basis and initial Gross Asset Value shall be taken into
account under the "traditional method" as described in Treasury Regulation
Section 1.704-3(b), unless otherwise determined by the General Partner and the
contributing Partner. With respect to properties subsequently contributed to the
Partnership, the Partnership shall account for such variation under any method
approved under Section 704(c) of the Code and the applicable regulations as
chosen by the General Partner. In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (b) of the definition of
Gross Asset Value (as provided in Article 1 of this Agreement), subsequent
allocations of tax items with respect to such asset shall take account of the
variation, if any, between the adjusted tax basis of such asset and its Gross
Asset Value in the same
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manner as under Section 704(c) of the Code and the applicable regulations.
7.6 Allocations with Respect to Partnership Units other than OP Units.
In the event the General Partner issues additional classes of Partnership Units
other than OP Units, then the General Partner shall determine, in its sole
discretion, the Profits and Losses attributable to each class and shall allocate
to Profits and Losses of each class of Partnership Units among the Partners in
such class in proportion to their respective Percentage Interests in such class,
after giving effect to any and all special allocations set forth in Section 7.4
above.
ARTICLE 8
---------
DISTRIBUTIONS
-------------
8.1 Distribution of Net Cash Flow. Net Cash Flow of the Partnership, if
any, shall be distributed to and among the Partners as follows:
(a) If such Net Cash Flow has not arisen pursuant to a
Liquidation of the Partnership, such Net Cash Flow shall be distributed to and
among the Partners in accordance with their respective Percentage Interests; or
(b) If such Net Cash Flow has arisen pursuant to a Liquidation
of the Partnership, such Net Cash Flow shall be distributed to and among the
Partners having positive balances in their Capital Accounts (after taking into
account any and all Capital Account adjustments for the Partnership taxable year
during which the Liquidation occurs), in proportion to and to the extent of such
positive balances.
Net Cash Flow shall be distributed to the Partners in such amounts and at such
intervals as the General Partner, in its sole discretion, may determine, but no
less frequently than quarterly. With respect to each and every distribution of
Net Cash Flow to the Partners hereunder, the General Partner shall distribute
such Net Cash Flow only to those Partners who are Partners on the Partnership
Record Date and whose Partnership Units were outstanding during the period to
which such distribution relates and, with respect to those Partners who were
issued additional Partnership Units during such period, the General Partner
shall distribute Net Cash Flow (i) on a pro-rated basis based upon the number of
days during such period that such Partners held such additional Partnership
Units or (ii) on such other reasonable basis as determined by the General
Partner in its sole discretion; provided, however, in no event may a Partner
receive a distribution of Net Cash Flow with respect to any particular
Partnership Unit if such Partner is entitled to receive a
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distribution out of such Net Cash Flow with respect to one or more shares of
Common Stock for which such Partnership Unit has been redeemed. Notwithstanding
the foregoing, the General Partner shall take such reasonable efforts, as
determined by it in its sole and absolute discretion and consistent with its
qualification as a REIT, to cause the Partnership to distribute sufficient
amounts to enable the General Partner to pay stockholder dividends that will (i)
satisfy the REIT Requirements and (ii) avoid any federal income or excise tax
liability of the General Partner.
8.2 Distributions in Kind. No right is given to any Partner to demand
and receive property or cash. The General Partner may determine, in its sole and
absolute discretion, to make a distribution in kind to the Partners of
Partnership assets, and such assets shall be distributed in such a fashion as to
ensure that the fair market value of such assets is distributed and allocated in
accordance with Section 8.1 hereof.
8.3 Withholding. Each Limited Partner hereby authorizes the Partnership
to withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local or foreign taxes that the General Partner
determines or reasonably believes that the Partnership is required to withhold
or pay with respect to any amount distributable or allocable to such Limited
Partner pursuant to this Agreement, including, without limitation, any taxes
required to be withheld or paid by the Partnership pursuant to Code Sections
1441, 1442, 1445 or 1446. Any and all amounts withheld pursuant to this Section
8.3 with respect to any allocation, payment or distribution to any Partner
hereunder shall be treated as amounts distributed to such Partner pursuant to
Section 8.1 hereof for all purposes under this Agreement. If any amount is
withheld by the Partnership pursuant to this Section 8.3 with respect to a
particular Partner and such amount would not have been distributed to such
Partner pursuant to Section 8.1 hereof at any time on or before the date it is
withheld, then such Partner shall contribute to the capital of the Partnership
an amount equal to the amount so withheld as soon as practicable after the
delivery by the General Partner to such Partner of a notice requesting such
contribution to the Partnership. The General Partner, on behalf of the
Partnership, shall have the right to offset any obligation of a Partner to
contribute additional funds to the Partnership pursuant to the immediately
preceding sentence of this Section 8.3 against any future distributions due to
such Partner under Section 8.1 hereof.
8.4 Distributions with Respect to Partnership Units other than OP
Units. Notwithstanding the foregoing provisions of this Article 8, in the event
the General Partner issues additional
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classes of Partnership Units other than OP Units to Limited Partners, then the
General Partner shall determine, in its sole discretion, the amount of
distributions of Net Cash Flow attributable to each class and shall distribute
such Net Cash Flow to each class of Partnership Units among the Partners in such
class in proportion to their respective Percentage Interests in such class or
otherwise required pursuant to the terms of such Partner's Unit Certificates.
ARTICLE 9
---------
MANAGEMENT
----------
9.1 Management of Partnership Affairs.
---------------------------------
(a) General Partner. Except as otherwise specifically provided
in this Agreement, and subject to Section 9.1(b) below, the General Partner
shall have full, exclusive and complete responsibility and discretion in the
management and control of the business and affairs of the Partnership and shall
make all decisions affecting the Partnership's business and affairs. Subject to
the foregoing, the General Partner shall have all the rights, powers and
obligations of a general partner as provided in the Act, and, except as
otherwise provided, any action taken by the General Partner (in its capacity as
such) shall constitute the act of and serve to legally bind the Partnership.
Persons dealing with the Partnership shall be entitled to rely conclusively on
the power and authority of the General Partner as set forth in this Agreement.
(b) Interim Managing General Partner. From the date hereof
until consummation of Offerings aggregating gross proceeds to the General
Partner of at least $25 million, the Interim Managing General Partner shall,
subject to the rights accorded the Limited Partners hereunder and under the Act
and subject to the prior consent of the General Partner with respect to
transactions with Affiliates of the Interim Managing General Partner, have full,
exclusive and complete responsibility and discretion in the management and
control of the business and affairs of the Partnership and shall make all
decisions affecting the Partnership's business and affairs to the extent
otherwise granted to the General Partner hereunder, and the General Partner
shall have no such rights. Subject to the foregoing, the Interim Managing
General Partner shall have all the rights, powers and obligations of a general
partner as provided in the Act, and, except as otherwise provided, any action
taken by the Interim Managing General Partner (in its capacity as such) shall
constitute the act of and serve to legally bind the Partnership. Persons dealing
with the Partnership shall be entitled to rely conclusively on the power and
authority of the Interim Managing
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General Partner as set forth in this Agreement. The Partners agree that
immediately upon consummation of Offerings aggregating gross proceeds to the
General Partner of at least $25 million, the Interim Managing General Partner
shall automatically be deemed to have withdrawn from the Partnership, and the
General Partner shall be entitled to exercise in full the rights and
responsibilities hereunder accorded to the General Partner that it would have
received but for the rights accorded the Interim Managing General Partner under
this Section 9.1(b). Until consummation of Offerings aggregating gross proceeds
to the General Partner of at least $25 million, references to the General
Partner in this Agreement shall be deemed to be references to the Interim
Managing General Partner, unless otherwise required by the context thereof;
provided, however, that references to the General Partner herein, including,
without limitation, those set forth in Articles 6, 7 and 8 and Section 10.3
hereof, shall always refer with respect to economic issues (as opposed to
management issues) to the General Partner.
9.2 Powers and Authorities of the General Partner. Except as otherwise
specifically provided in this Agreement, and subject to Sections 9.1(b) and 9.3
hereof, the General Partner is hereby granted the right, power and authority to
do on behalf of the Partnership all things which, in its best business judgment,
are necessary, proper or desirable to carry out its duties and responsibilities,
including but not limited to, the right, power and authority:
(a) To manage, control, invest, reinvest, acquire by purchase,
lease or otherwise, develop, expand, sell, contract to purchase or sell, grant,
obtain or exercise options to purchase, options to sell or conversion rights,
assign, transfer, convey, deliver, endorse, exchange, pledge, mortgage, abandon,
improve, repair, maintain, insure, lease for any term and otherwise deal with
any and all property of whatsoever kind and nature, and wheresoever situated, in
furtherance of the purposes of the Partnership;
(b) To acquire, directly or indirectly, interests in real
estate of any kind and of any type, and any and all kinds of interests therein,
and to determine the manner in which title thereto is to be held; to manage,
insure against loss, protect and subdivide any of the real estate, interests
therein or parts thereof; to improve, develop or redevelop and expand any such
real estate; to participate in the ownership and development of any property; to
dedicate for public use, to vacate any subdivisions or parts thereof, to
resubdivide, to contract to sell, to grant options to purchase or lease, to sell
on any terms; to convey, to mortgage, pledge or otherwise encumber said
property, or any part thereof; to lease said property or any part
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thereof from time to time, upon any terms and for any period of time, and to
renew or extend leases, to amend, change or modify the terms and provisions of
any leases and to grant options to lease and options to renew leases and options
to purchase; to partition or to exchange said real property, or any part
thereof, for other real or personal property; to grant easements or charges of
any kind; to release, convey or assign any right, title or interest in or about
or easement appurtenant to said property or any part thereof; to construct and
reconstruct, remodel, alter, repair, add to or take from buildings on said
premises; to insure any Person having an interest in or responsibility for the
care, management or repair of such property; to direct the trustee of any land
trust to mortgage, lease, convey or contract to convey the real estate held in
such land trust or to execute and deliver deeds, mortgages, notes, and any and
all documents pertaining to the property subject to such land trust or in any
matter regarding such trust; to execute assignments of all or any part of the
beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss from
employment or engagement Persons to the extent deemed necessary by the General
Partner for the operation and management of the Partnership business, including
but not limited to, contractors, subcontractors, engineers, architects,
surveyors, mechanics, consultants, accountants, attorneys, insurance brokers,
real estate brokers and others;
(d) To enter into contracts on behalf of the Partnership;
(e) To borrow money, procure loans and advances from any
Person for Partnership purposes, and to apply for and secure, from any Person,
credit or accommodations; to contract liabilities and obligations, direct or
contingent and of every kind and nature with or without security; and to repay,
discharge, settle, adjust, compromise or liquidate any such loan, advance,
credit, obligation or liability;
(f) To pledge, hypothecate, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give as
security or as additional or substitute security, or for sale or other
disposition any and all Partnership property, tangible or intangible, including,
but not limited to, real estate and beneficial interests in land trusts, and to
make substitutions thereof, and to receive any proceeds thereof upon the release
or surrender thereof; to sign, execute and deliver any and all assignments,
deeds and other contracts and instruments in writing; to authorize, give, make,
procure, accept and receive moneys, payments, property, notices, demands,
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vouchers, receipts, releases, compromises and adjustments; to waive notices,
demands, protests and authorize and execute waivers of every kind and nature; to
enter into, make, execute, deliver and receive written agreements, undertakings
and instruments of every kind and nature; to give oral instructions and make
oral agreements; and generally to do any and all other acts and things
incidental to any of the foregoing or with reference to any dealings or
transactions which any attorney may deem necessary, proper or advisable;
(g) To acquire and enter into any contract of insurance which
the General Partner deems necessary or appropriate for the protection of the
Partnership, for the conservation of the Partnership's assets or for any purpose
convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on behalf of
the Partnership; to adjust and settle checking, savings, and other accounts with
such institutions as the General Partner shall deem appropriate; to draw, sign,
execute, accept, endorse, guarantee, deliver, receive and pay any checks,
drafts, bills of exchange, acceptances, notes, obligations, undertakings and
other instruments for or relating to the payment of money in, into, or from any
account in the Partnership's name; to execute, procure, consent to and authorize
extensions and renewals of the same; to make deposits and withdraw the same and
to negotiate or discount commercial paper, acceptances, negotiable instruments,
bills of exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise take steps to
collect or recover all debts, rents, proceeds, interests, dividends, goods,
chattels, income from property, damages and all other property, to which the
Partnership may be entitled or which are or may become due to the Partnership
from any Person; to commence, prosecute or enforce, or to defend answer or
oppose, contest and abandon all legal proceedings in which the Partnership is or
may hereafter be interested; and to settle, compromise or submit to arbitration
any accounts, debts, claims, disputes and matters which may arise between the
Partnership and any other Person and to grant an extension of time for the
payment or satisfaction thereof on any terms, with or without security;
(j) To make arrangements for financing, including the taking
of all action deemed necessary or appropriate by the General Partner to cause
any approved loans to be closed;
(k) To take all reasonable measures necessary to insure
compliance by the Partnership with applicable arrangements, and other
contractual obligations and arrangements
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entered into by the Partnership from time to including periodic reports as
required to lenders and using all due diligence to insure that the Partnership
is in compliance with its contractual obligations;
(l) To maintain the Partnership's books and records; and
(m) To prepare and deliver, or cause to be prepared and
delivered by the Partnership's Accountants, all financial and other reports with
respect to the operations of the Partnership, and preparation and filing of all
Federal and state tax returns and reports.
Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to authorize or require the
General Partner, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation
on behalf of the Partnership.
9.3 Major Decisions. In addition to the requirements of Sections
12.6(a) and (b), if applicable, until such time prior to the first anniversary
date hereof as the General Partner owns sixty-seven percent (67%) of the
Partnership Units, and thereafter until such time as the General Partner owns
sixty percent (60%) of the Partnership Units, the General Partner shall not,
without the prior written consent of holders of at least fifty-one percent (51%)
of the Partnership Units held by the Limited Partners, taken as a single class,
on behalf of the Partnership, undertake any of the following actions:
(a) Engage in a Termination Transaction as defined in Section
12.6(a) hereof;
(b) Dissolve, liquidate or wind-up the Partnership;
(c) Change the nature of the business of the Partnership; or
(d) Admit, remove or retain a general partner.
9.4 Restrictions on General Partner's Authority.
(a) The General Partner may not take any action in contravention of
this Agreement, including, without limitation:
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(i) Take any action that would make it impossible to
carry on the ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(ii) Admit a Person as a Partner, except as otherwise
provided in this Agreement;
(iii) Perform any act that would subject a Limited
Partner to liability as a general partner in any jurisdiction or any
other liability except as provided herein or under the Act;
(iv) Enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the effect of prohibiting
or restricting, the ability of a Limited Partner to exercise its
Redemption Rights in full, except with the written consent of such
Limited Partner; or
(v) Possess Partnership property, assign any rights
in specific Partnership property, for other than a Partnership purpose
except as otherwise provided in this Agreement.
(b) The General Partner may not, except as otherwise permitted
in Section 9.9 hereof, change its policy of holding its assets and conducting
its business substantially through the Partnership, nor may any transactions
described in Section 12.6(a) or 12.6(b), without the consent of all the Limited
Partners, be structured in a manner which will change the General Partner's
policy of holding its assets and conducting its business through the Partnership
(or the Surviving Partnership, if applicable) if the result of such transaction
is the recognition of gain by the Limited Partners.
9.5 Engagements by the Partnership. The General Partner may engage, on
behalf and at the expense of the Partnership, such professional persons, firms
or corporations as the General Partner in its reasonable judgment shall deem
advisable for the conduct and operation of the business of the Partnership,
including, without limitation, brokers, mortgage bankers, lawyers, accountants,
architects, engineers, consultants, contractors and purveyors of other such
services for the Partnership on such terms and for such compensation or costs as
the General Partner, in its reasonable judgment, shall determine.
9.6 Engagement of Affiliates. The General Partner may, on behalf and at
the expense of the Partnership, engage the General Partner or a firm in which
the General Partner, a Limited
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Partner, or a Partner, officer, director, stockholder or Affiliate of any of
them, has an interest, to render services to the Partnership and/or the assets
of the Partnership, provided that the fees or other compensation payable for
such services are specifically authorized by the terms of this Agreement or are
comparable to those prevailing in arm's-length transactions for similar services
and are approved by the Board of Directors.
9.7 Liability of the General Partner. The General Partner and its
Affiliates, officers, directors, agents and employees shall not be liable,
responsible or accountable in damages or otherwise to the Partnership or any of
the Partners or their successors or assigns for any acts or omissions performed
or omitted within the scope of its authority as General Partner, or otherwise
conferred on the General Partner and such Affiliates, officers, directors,
agents and employees by this Agreement, provided that the General Partner or
such Affiliates, officers, directors, agents or employees shall act in good
faith and shall not be guilty of willful misconduct or gross negligence.
9.8 Reimbursement of Certain Expenses of the General Partner.
--------------------------------------------------------
(a) Except as provided in this Section 9.8 and elsewhere in
this Agreement (including the provisions of Articles 7 and 8 regarding
distributions, payments and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
(b) The Partnership shall be responsible for and shall pay all
expenses relating to the Partnership's organization, the ownership of its assets
and its operations. The General Partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine in its sole and
absolute discretion, for all expenses it incurs relating to the ownership and
operation of, or for the benefit of, the Partnership (including, without
limitation, expenses relating to the management and administration of any
Affiliates of the General Partner or the Partnership such as auditing expenses
and filing fees); provided that (1) the amount of any such reimbursement shall
be reduced by (i) any interest earned by the General Partner with respect to
bank accounts or other instruments or accounts held by it as permitted in
Section 9.9 below and (ii) any amount derived by the General Partner from any
investments permitted in Section 9.9 below and (2) any expenses that are
determined by the General Partner to be unrelated to the Partnership shall not
be treated as Partnership expenses for purposes of this Section 9.8(b). The
General Partner shall determine in good faith the amount of expenses incurred by
it
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related to the ownership and operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in it's sole and absolute discretion deems fair
and reasonable. All payments and reimbursements hereunder shall be characterized
for federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner.
9.9 Outside Activities of the General Partner. Notwithstanding anything
to the contrary contained herein, except as set forth in this Section 9.9, the
General Partner shall not, directly or indirectly, without the consent of a
majority in interest of the Limited Partners (excluding the General Partner),
enter into or conduct any business other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner or
Limited Partner and the management of the business of the Partnership in such
activities as are incidental to any of the foregoing. Without the consent of a
majority in interest of the Limited Partners (excluding the General Partner),
the assets of the General Partner shall be limited to Partnership Interests and
permitted debt obligations of the Partnership, so that Common Stock and OP Units
are completely fungible except as otherwise specifically provided herein;
provided, that the General Partner shall be permitted to hold (i) interests and
entities, including "Qualified REIT Subsidiaries"(which are defined in Section
856(i)(2) of the Code, as amended, as any corporation if 100% of the stock of
such corporation is held by the REIT at all times the corporation was in
existence), that hold no material assets; (ii) interests in Qualified REIT
Subsidiaries or other entities that are not taxed as corporations for federal
income tax purposes) that own only interests in the Partnership and/or interests
in other Qualified REIT Subsidiaries (or other entities that are not taxed as
corporations for federal income tax purposes) that either hold no assets or hold
only interests in the Partnership; (iii) assets and or interests in entities,
including Qualified REIT Subsidiaries, that hold assets having an aggregate
value not greater than five percent (5%) of the total market value of the
General Partner entity (determined by reference to the value of all outstanding
equity securities of the General Partner), provided that (X) the General Partner
entity will apply the net income from such assets (other than net income derived
as a result of a Qualified REIT Subsidiary ownership of an interest in the
Partnership) to offset REIT expenses before utilizing the distribution
provisions of Section 8 hereof, (Y) the General Partner will contribute all net
income generated by such assets and or interests (other than net income derived
as a result of a
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Qualified REIT Subsidiary ownership of an interest in the Partnership) to the
Partnership (after taking into account REIT expenses as described in clause (X)
above, and (Z) the General Partner will use commercially reasonable efforts to
transfer such assets and interests (other than interests in Qualified REIT
Subsidiaries and the Partnerships) to the Partnership or an entity controlled by
the Partnership as soon as such transfer can be made without causing the General
Partner or the Partnership to incur any material expenses in connection
therewith; and (iv) such bank accounts or similar instruments or accounts in its
own name as it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents; and,
provided, further, that the General Partner shall be permitted to acquire,
directly or through a Qualified REIT Subsidiary (or other entities that are not
taxed as corporations for federal income tax purposes), up to a one percent (1%)
interest in any partnership or limited liability company at least ninety-nine
(99%) of the equity of which is owned directly or indirectly by the Partnership.
The General Partner and any of its Affiliates may acquire Limited Partner
Partnership Interests and shall be entitled to exercise all rights of a Limited
Partner relating to such Partnership Interests.
9.10 Operation in Accordance with REIT Requirements. The Partners
acknowledge and agree that the Partnership shall be operated in a manner that
will enable the General Partner to (i) satisfy the REIT Requirements and (ii)
avoid the imposition of any federal income or excise tax liability. The
Partnership shall avoid taking any action which would result in the General
Partner ceasing to satisfy the REIT Requirements or would result in the
imposition of any federal income or excise tax liability on the General Partner.
9.11 Title Holder. To the extent allowable under applicable law, title
to all or any part of the properties of the Partnership may be held in the name
of the Partnership or any other individual, corporation, partnership, trust or
otherwise, 100% of the beneficial interest in which shall at all times be vested
in the Partnership except for de minimus interests held by qualified REIT
subsidiaries. Any such title holder shall perform any and all of its respective
functions to the extent and upon such terms and conditions as may be determined
from time to time by the General Partner.
ARTICLE 10
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RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
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10.1 No Participation in Management of Partnership; Rights of Limited
----------------------------------------------------------------
Partners to Certain Documents.
- -----------------------------
(a) The Limited Partners shall have such rights as are
enumerated as rights of limited partners under the Act. The Limited Partners, in
such capacity, shall not take part in, or interfere in any manner, with the
conduct or control of the Partnership's business and shall have no right or
authority to act for or bind the Partnership, said powers being vested solely
and exclusively in the General Partner. Except as specifically set forth in
Section 9.3 or otherwise in this Agreement, the Limited Partners, in their
capacities as such, shall not have any right or power whatsoever to take any
action with respect to the conduct or control of the Partnership or its business
including, but not limited to, any right to vote on, or otherwise approve, any
matters or decisions, whether material, major or otherwise, in connection with
the business of the Partnership.
(b) In addition to any other rights provided in this Agreement
or by the Act, and except as limited by Section 10.1(c) below, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written demand
with a statement of the purpose of such demand and at such Limited Partner's own
expense:
(i) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange
Commission by the General Partner pursuant to the Securities
Exchange Act of 1934, as amended, and each report sent to the
stockholders of the General Partner;
(ii) to obtain a copy of the Partnership's federal,
state and local income tax returns for each fiscal year of the
Partnership;
(iii) to obtain a current list of the name and last
known business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments thereto have
been executed; and
(v) to obtain true and full information regarding the
amount of cash and a description and statement of any other
property or services contributed by each Partner and which
each
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Partner has agreed to contribute in the future, and the date
on which each became a Partner.
(c) Notwithstanding any other provisions of Section 10.1(b)
hereof, the General Partner may keep confidential from the Limited Partners, for
such period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or the General Partner or (ii) the Partnership
or the General Partner is required by law or by agreements with unaffiliated
third parties to keep confidential.
10.2 Withdrawal, Retirement, Death, Incompetency, Insolvency or
Dissolution of a Limited Partner. A Limited Partner shall have no right to
withdraw, retire or resign from the Partnership. The death, incompetency,
insolvency or dissolution of a Limited Partner shall not terminate the
Partnership. Upon the death of a Limited Partner, his or her executor,
administrator or successor in interest shall have all of the rights and duties
of a Limited Partner for the purpose of settling his or her estate.
10.3 Redemption Rights.
(a) Grant of Rights. The General Partner does hereby grant to
the Limited Partners and the Limited Partners do hereby accept the right, but
not the obligation (such right shall be referred to hereinafter sometimes as the
"Redemption Rights"), to require the Partnership to redeem all or part of their
Partnership Units for shares of Common Stock and/or cash, at any time or from
time to time after the date which is one (1) year after the date of the original
issuance by the Partnership to any Limited Partner of such Partnership Units, on
the terms and subject to the conditions and restrictions contained in this
Section 10.3.
(b) Delivery of Exercise Notices. Any one or more Limited
Partners ("Exercising Partners") may, subject to the limitations set forth in
this Section 10.3, deliver to the General Partner written notice in the form
attached to the Unit Certificate as Attachment 1 (the "Exercise Notice")
pursuant to which such Exercising Partners elect to exercise their Redemption
Rights with respect to all or any portion of their Partnership Units. The
Exercise Notice shall specify the specific number of Partnership Units which the
Limited Partner intends to require the Partnership to redeem for shares of
Common Stock and the specific number of Partnership Units which the Limited
Partner
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intends to require the Partnership to redeem for cash. Only whole
numbers of Partnership Units may be redeemed. Once delivered, the Exercise
Notice shall be irrevocable, subject to payment by the General Partner of shares
of Common Stock and/or cash in respect of such Partnership Units in accordance
with the terms hereof.
(c) Assumption by General Partner. Notwithstanding anything
contained herein to the contrary, the General Partner may, in its sole and
absolute discretion, assume directly the obligation with respect to and satisfy
an Exercising Partner's exercise of a Redemption Right by paying to the
Exercising Partner, at the General Partner's election, shares of Common Stock
and/or cash, as determined in accordance with the provisions of Section 10.3(e)
below, whereupon the General Partner shall acquire the Offered Units and shall
be treated for all purposes of this Agreement as the owner of such Offered
Units. In the event the General Partner shall exercise its right to satisfy the
Redemption Right in the manner described in the preceding sentence, the
Partnership shall have no obligation to pay any amount to the Exercising Partner
with respect to such Exercising Partner's exercise of the Redemption Right, and
each of the Exercising Partner, the Partnership and the General Partner shall
treat the transaction between the General Partner and the Exercising Partner as
a sale of the Offered Units to the General Partner for federal income tax
purposes. Moreover, in the event the General Partner shall exercise its right to
satisfy the Redemption Right, any such interests acquired by the General Partner
shall be automatically converted into General Partner Interests.
(d) Limitation on Exercise of Redemption Rights. Redemption
Rights may be exercised at any time and from time to time after the date which
is one (1) year after the date of the original issuance by the Partnership to
any Limited Partner of such Partnership Units, subject to the following
limitations:
(i) A Limited Partner may not exercise its Redemption
Rights pursuant to any one particular Exercise Notice for less
than One Thousand (1,000) Partnership Units or, if such
Limited Partner holds less than One Thousand (1,000)
Partnership Units, all of the Partnership Units held by such
Limited Partner;
(ii) A Limited Partner shall not have the right to
exercise its Redemption Rights hereunder if, in the opinion of
counsel selected by the General Partner, in its sole and
absolute discretion, such exercise and/or issuance of shares
of Common Stock may or would (A) violate the General Partner's
Articles of
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Incorporation, as amended from time to time, (B) cause the
General Partner to fail any one or more of the REIT
Requirements or (C) constitute a violation of applicable
securities laws; and
(iii) Each Limited Partner acknowledges and agrees
that the issuance of shares of Common Stock pursuant to the
Redemption Rights will not be registered under the Securities
Act or any state securities laws. Accordingly, shares of
Common Stock issued to such Limited Partner may be required to
be held indefinitely and the General Partner shall have no
obligation to register such shares under the Securities Act or
any state securities laws unless required to do so pursuant to
a separate written agreement entered into by the General
Partner at the time of the issuance. In addition, such Limited
Partner will be required to meet such other requirements and
to provide such other information and representations as the
General Partner may require, which are required in the opinion
of its counsel to lawfully allow it to issue such shares
without registration under the Securities Act and any
applicable state securities laws. Each Limited Partner
acknowledges that the certificates representing shares of
Common Stock issued will also bear a legend with respect to
any restrictions on transfer required in the opinion of
counsel for the General Partner. The General Partner
acknowledges that the Limited Partners have been granted the
right, in certain circumstances and subject to certain
limitations, to require the registration under the Securities
Act of the shares of Common Stock issued pursuant to the
Redemption Rights.
(e) Computation of Number of Exchange Shares and/or Cash To Be
Paid. Each Partnership Unit which is to be redeemed for shares of Common Stock
shall be redeemed for one share of Common Stock, as adjusted from time to time
as provided in Section 10.3(i). Upon an election to redeem Partnership Units for
shares of Common Stock, the General Partner shall cause the Partnership to
purchase such Common Stock for the redemption either (i) from the General
Partner, or (ii) on the open market. Each Partnership Unit which is to be
redeemed for cash shall be redeemed for an amount of cash equal to the Current
Per Share Market Price (determined as of the Trading Day immediately preceding
the date upon which the closing of the redemption of Offered Units is to occur).
Notwithstanding anything contained herein to the contrary, the General Partner,
in its sole and absolute discretion, shall have the right either (i) to deliver
shares of Common Stock to each Exercising Partner in lieu of all
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or any portion of the cash requested by such Exercising Partner, the number of
which shares of Common Stock shall be determined pursuant to the first sentence
of this Section 10.3(e) or (ii) to cause the Partnership to pay cash to each
Exercising Partner in lieu of all or any portion of the number of shares of
Common Stock requested by such Exercising Partner, the amount of such cash per
Partnership Unit shall be determined pursuant to the second sentence of this
Section 10.3(e). The General Partner shall not be required to issue fractions of
shares of Common Stock in return for Partnership Units. If more than one
Partnership Unit shall be requested to be redeemed at the same time by the same
Limited Partner, the number of full shares of Common Stock that shall be
issuable upon the redemption thereof shall be computed on the basis of the
aggregate number of shares of Common Stock represented by the Partnership Units
so presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section 10.3(e), be issuable on the redemption of any
Partnership Units (or specified portion thereof), the General Partner shall pay
an amount in cash equal to the Current Per Share Market Price (determined as of
the Trading Day immediately preceding the date upon the closing of the
Redemption of the Offered Units is to occur), multiplied by such fraction.
(f) Closing; Delivery of Election Notice. The closing of the
redemption of Offered Units shall, unless otherwise mutually agreed, be held at
the principal offices of the General Partner, on the date agreed to by the
General Partner and the Exercising Partners, which date shall in no event be
later than: (i) ten (10) business days after the date of delivery of the
Exercise Notice to the General Partner or (ii) the first date upon which all
legal and other conditions with respect to such redemption have been satisfied
(which shall include the expiration or termination of any applicable waiting
periods).
(g) Closing Deliveries. At the closing of the redemption of
Offered Units, (i) the Exercising Partners shall execute and deliver (A) proper
instruments of transfer and assignment of the Offered Units, (B) a Unit
Certificate or Unit Certificates representing the number of Offered Units to be
so redeemed and (C) representations and warranties with respect to their due
authority to sell all of the right, title and interest in and to such Offered
Units to the General Partner and, with respect to the status of the Offered
Units, that such Offered Units are free and clear of all liens, claims and
encumbrances whatsoever, and (ii) the General Partner shall (A) if shares of
Common Stock are to be issued, execute and deliver representations and
warranties with respect to its due authority to issue the shares of Common Stock
to be received in the exchange; deliver an opinion of counsel for the General
Partner,
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reasonably satisfactory to the Exercising Partners, to the effect that such
shares of Common Stock have been duly authorized, are validly issued, fully-paid
and non-assessable; and deliver a stock certificate or certificates evidencing
the shares of Common Stock to be issued and registered in the name(s) of the
Exercising Partner(s) or its or their designee(s), and/or (B) if cash is to be
paid for Partnership Units, deliver a check in the amount of any cash due to the
Exercising Partner(s) at such closing. If any Exercising Partner shall have
delivered a Unit Certificate or Unit Certificates representing a number of
Partnership Units in excess of the number of Offered Units, the Partnership
shall issue to such Exercising Partner, at the expense of the Partnership, a new
Unit Certificate covering the number of Partnership Units representing the
unredeemed portion of the Unit Certificate or Unit Certificates so surrendered,
which new Unit Certificate shall entitle the holder thereof to such rights of
ownership of Partnership Units to the same extent as if the Unit Certificate
covering such unredeemed Partnership Units had not been surrendered for
redemption.
(h) Term of Rights. Unless sooner terminated, the rights of
the parties with respect to the Redemption Rights shall commence as of the date
which is one (1) year after the date of this Agreement and lapse for all
purposes and in all respects upon the termination of the Partnership; provided,
however, that the parties hereto shall continue to be bound by an Exercise
Notice delivered to the General Partner prior to such termination.
(i) Covenants of the General Partner. To facilitate the
General Partner's ability to fully perform its obligations hereunder, the
General Partner covenants and agrees as follows:
(i) At all times during the pendency of the
Redemption Rights, the General Partner shall reserve for
issuance such number of shares of Common Stock as may be
necessary to enable the General Partner to issue such shares
in full exchange for all Partnership Units held by the Limited
Partners which are from time to time issued and outstanding;
(ii) During the pendency of the Redemption Rights,
each Limited Partner shall receive in a timely manner all
reports and/or other communications transmitted from time to
time by the General Partner to its stockholders generally; and
(iii) In case the General Partner shall issue rights
or warrants to all holders of shares of its Common Stock
entitling them to subscribe for or
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purchase shares of Common Stock at a price per share less than
the Current Per Share Market Price as of the date immediately
prior to the date of such issuance, the General Partner shall
also issue to each holder of a Partnership Unit such number of
rights or warrants, as the case may be, as he would have been
entitled to receive had he required the Partnership to redeem
his Partnership Units immediately prior to the record date for
such issuance by the General Partner.
(iv) In case the outstanding shares of Common Stock
shall be subdivided into a greater number of shares, the
number of shares of Common Stock for which each Partnership
Unit thereafter may be redeemed shall be increased
proportionately, and, conversely, in case outstanding shares
of Common Stock each shall be combined into a smaller number
of shares, the number of shares of Common Stock for which each
Partnership Unit thereafter may be redeemed shall be reduced
proportionately, such increase or reduction as the case may
be, to become effective immediately after the opening of
business on the Trading Day following the day upon which such
subdivision or combination becomes effective.
(v) In case shares of Common Stock shall be changed
into the same or a different number of shares of any class or
classes of shares of beneficial interest, whether by capital
reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or a stock dividend
described in Section 10.3(i)(iv) above) then and in each such
event the Limited Partners shall have the right thereafter to
require the Partnership to redeem their Partnership Units for
the kind and amount of shares and other securities and
property which would have been received upon such
reorganization, reclassification or other change by holders of
the number of shares of Common Stock for which the Partnership
Units might have been redeemed immediately prior to such
reorganization, reclassification or change.
(vi) The General Partner may, but shall not be
required to, make such adjustments to the number of shares of
Common Stock issuable upon redemption of a Partnership Unit,
in addition to those required by paragraphs (iii), (iv) and
(v) of this Section 10.3(i), as the Board of Directors
considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock
rights shall
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not be taxable to the recipients. The Board of Directors shall
have the power to resolve any ambiguity or correct any error
in the adjustments made pursuant to this Section 10.3(i) and
its actions in so doing shall be final and conclusive.
(j) Limited Partners' Covenant. Each Limited Partner covenants
and agrees with the General Partner that all Offered Units tendered to the
General Partner in accordance with the exercise of Redemption Rights herein
provided shall be delivered to the General Partner free and clear of all liens,
claims and encumbrances whatsoever and should any such liens, claims and/or
encumbrances exist or arise with respect to such Offered Units, the General
Partner shall be under no obligation to acquire the same. Each Limited Partner
further agrees that, in the event any state or local property transfer tax is
payable as a result of the transfer of its Offered Units to the General Partner
(or its designee), such Limited Partner shall assume and pay such transfer tax.
ARTICLE 11
----------
BANKING, RECORDS AND TAX MATTERS
--------------------------------
11.1 Partnership Funds. All funds of the Partnership shall be deposited
in its name in accounts (with banks, "money-market funds," or securities of the
United States government or like investment or depository media) designated by
the General Partner, and the General Partner or its designees shall have the
right to draw checks or other orders of withdrawal thereon and make, deliver,
accept and endorse negotiable instruments in connection with the Partnership
business.
11.2 Books and Records. The following books, records, and accounts
shall be maintained by the Partnership, showing its assets, liabilities,
transactions, and financial condition: a current list of the full name and last
known address of each Partner, separately identifying the General and Limited
Partners and set forth in alphabetical order and setting forth the amount of
cash or a description and statement of the Agreed Value of other property
contributed or agreed to be contributed by each partner; the date on which each
became a Partner; a copy of the Certificate and all amendments thereto; copies
of the Partnership's federal, state and local income tax returns and reports, if
any, for the six most recent years; copies of this Agreement and any amendments
thereto; and copies of any financial statements of the Partnership for the three
most recent years. The Partnership's books shall be maintained at the principal
office of the Partnership. Each Partner shall have the right to inspect and copy
such materials at all reasonable times and
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during ordinary business hours. The General Partner is not required to deliver
to any Limited Partner copies of the Certificate or any amendments thereto,
unless requested by such Limited Partner.
11.3 Financial Statements. Within ninety-five (95) days after the close
of each fiscal year of the Partnership, the General Partner shall cause to be
prepared (at the Partnership's expense) and furnished to each Person who was a
Partner during the fiscal year then ended, a balance sheet of the Partnership as
of the close of such fiscal year and statements of income or loss, and Net Cash
Flow, if any. Such statements shall be prepared in accordance with generally
accepted accounting principles and certified by the Accountants for the
Partnership, unless such certification is waived, in writing, by all of the
Partners.
11.4 Tax Returns. Within ninety (90) days following the close of each
fiscal year of the Partnership, the General Partner shall cause to be prepared
(at the Partnership's expense) a United States Partnership Return of Income and
cause to be furnished to each Person who was a Partner during the fiscal year a
schedule (a "K-1 Schedule") of each such Partner's share of income, credits, and
deductions on the form then prescribed by the IRS. All elections and options
available to, or determinations as to items of income or expense of, the
Partnership for federal or state income tax purposes shall be taken, rejected or
made by the Partnership in the sole discretion of the General Partner.
11.5 Section 754 Matters. The General Partner, on behalf of the
Partnership, shall file an election under Section 754 of the Code in accordance
with the procedures set forth in the applicable Regulations promulgated
thereunder, which shall be effective beginning with the first fiscal year of the
Partnership with respect to which the Partnership is eligible to make such
election, which election, for such fiscal year, may not be revoked for any
reason.
11.6 Tax Matter Partners. The General Partner is hereby appointed the
"tax matters partner" of the Partnership for all purposes pursuant to Sections
6221-6231 of the Code. The Partnership shall reimburse the tax matters partner
for any and all out-of-pocket costs and expenses (including attorneys' and
accountants' fees) incurred or sustained by it in its capacity as tax matters
partner. The Partnership shall indemnify, defend and hold the tax matters
partner harmless from and against any loss, liability, damage, cost or expense
(including attorneys' and accountants' fees) sustained or incurred as a result
of any act
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or decision concerning the Partnership tax matters and within the scope of its
responsibility as tax matters partner.
11.7 Other Reports. The General Partner shall deliver to each Limited
Partner, in a timely manner, all reports and/or other communications transmitted
from time to time by the General Partner to its stockholders.
ARTICLE 12
----------
TRANSFER OF GENERAL PARTNER INTERESTS
-------------------------------------
12.1 Transfer of Interest of the General Partner. Except as provided in
Section 9.3 hereof, no General Partner may at any time sell, assign, transfer,
pledge or encumber any or all of its Partnership Interest in the Partnership or
withdraw or retire from the Partnership except as otherwise provided herein.
Retirement or withdrawal from the Partnership shall not relieve the General
Partner of any obligation theretofore incurred by it hereunder. Notwithstanding
anything contained herein to the contrary, the Limited Partners shall have no
right whatsoever to remove the General Partner from the Partnership.
12.2 Retirement of the General Partner. If a General Partner other than
the Interim Managing General Partner shall liquidate or dissolve, be adjudged
bankrupt, enter into an assignment for the benefit of creditors, have a receiver
appointed to administer its interest in the Partnership, be the subject of a
voluntary or involuntary petition for bankruptcy that is not dismissed or
vacated within ninety (90) days of filing, or have its interest in the
Partnership seized by a judgment creditor, or if there shall be an individual
general partner and he shall die, be adjudicated incompetent or become
permanently disabled (each of the foregoing events is referred to hereinafter as
an "Event of Retirement"), such General Partner, without further act or notice,
immediately shall be deemed to have retired as General Partner of the
Partnership. If the General Partner retires as General Partner of the
Partnership as aforesaid, (i) such General Partner (or its administrator,
executor, personal representative or successor) (a) shall become a
nonparticipating Limited Partner (a "Nonparticipating Limited Partner")
retaining the General Partner's former interest in the Profits, Losses and Net
Cash Flow of the Partnership, but shall not acquire any right or interest in any
payment or distribution to the Limited Partners, as such, pursuant hereto, (b)
shall have no right to participate in the management of the affairs of the
Partnership, and (c) shall be disregarded in determining whether any approval,
consent, or other action has been given or taken by the Limited Partners; and
(ii) the surviving General Partner(s), if any, shall remain as such and the
Partners hereby agree and
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consent that the Partnership shall continue in effect and shall not terminate,
subject, however, to the provisions of Section 12.5 hereof.
12.3 Transferee of the General Partner's Interest. Except for a
Termination Transaction within the meaning of Section 12.6 hereof, any Person,
other than the General Partner, who acquires, in any manner whatsoever (except
as herein otherwise provided) the interest, or any portion thereof, of the
General Partner, shall not be a General Partner, but shall be entitled to become
a Nonparticipating Limited Partner upon written acceptance and adoption of all
of the terms and provisions of this Agreement and compliance with the
requirements of Section 13.3 of this Agreement. Such Person shall, to the extent
of the interest acquired, be entitled only to the transferor General Partner's
rights, if any, in the Profits, Losses and Net Cash Flow of the Partnership, but
shall not acquire any right or interest in any payment or distribution to the
Limited Partners, as such, pursuant hereto. No such Person shall have any right
to participate in the management of the affairs of the Partnership, and the
interest acquired by such Person shall be disregarded in determining whether any
approval, consent or other action has been given or taken by the Limited
Partners.
12.4 Retirement of Last Remaining General Partner. If the last
remaining General Partner shall at any time withdraw or suffer an Event of
Retirement, the Limited Partners shall have the right, within ninety (90) days
thereafter, by a written consent executed and delivered by Limited Partners
owning a majority of the issued and outstanding Partnership Interests taken as a
single class, to appoint one or more new General Partners as replacement General
Partners, unless the Act requires a greater percentage of the Limited Partners
to consent to the continuation of the Partnership, in which case such higher
percentage shall be required for the continuation of the Partnership. In such
event, the Limited Partners shall create for such replacement General Partners
such interest in the Partnership Profits, Losses and Net Cash Flow as the
Limited Partners may agree upon from among their collective interests in the
Partnership.
12.5 Continuation of Partnership. In the event of the timely
appointment of a replacement or new General Partner(s) pursuant to this Article
12, the relationship of the Partners shall be governed by the provisions of this
Agreement, the Partnership shall be continued, and the replacement or new
General Partner(s) shall have all of the management rights, duties,
responsibilities, authority and powers provided the General Partner in this
Agreement. If the Limited Partners fail to select a replacement or new General
Partner(s), whichever the
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case may be, within ninety (90) days following retirement of the last remaining
General Partner, the Partnership shall dissolve and terminate.
12.6 Merger or Consolidation of the General Partner.
----------------------------------------------
(a) Whether or not Section 9.3 hereof is applicable, the
General Partner shall not, unless Section 12.6(b) is applicable, engage in any
merger, consolidation or other combination with or into another person, sale of
all or substantially all of its assets or any reclassification, recapitalization
or similar transaction (each, a "Termination Transaction"), unless such
Termination Transaction is one in connection with which all Limited Partners
either will receive, or will have the right to elect to receive, for each
Partnership Unit, an amount of cash, securities, or other property equal to the
product of (i) the number shares of Common Stock into which each Partnership
Unit is convertible and (ii) the greatest amount of cash, securities or other
property paid to a holder of one share of Common Stock in consideration of one
share of Common Stock pursuant to the terms of the Termination Transaction;
provided that; if, in connection with the Termination Transaction, a purchase,
tender or exchange offer shall have been made to and accepted by the holders of
the outstanding Common Stock, each holder of Partnership Units shall receive, or
shall have the right to elect to receive, the greatest amount of cash,
securities, or other property which such holder would have received had it
exercised its right to Redemption (as set forth in Section 10.3) and received
Common Stock in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer and then such Termination Transaction
shall have been consummated.
(b) Whether or not Section 9.3 hereof is applicable, the
General Partner may merge, or otherwise combine its assets, with another entity
without satisfying the requirements of Section 12.6(a) hereof if: (i)
immediately after such merger or other combination, substantially all of the
assets directly or indirectly owned by the surviving entity, other than
Partnership Units held by such General Partner, are owned directly or indirectly
by the Partnership or another limited partnership or limited liability company
which is the survivor of a merger, consolidation or combination of assets with
the Partnership (in each case, the "Surviving Partnership"); (ii) the Limited
Partners own a percentage interest of the Surviving Partnership based on the
relative fair market value of the net assets of the Partnership (as determined
pursuant to Section 12.6(d)) and the relative fair market value of the other net
assets of the Surviving Partnership (as determined pursuant to
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Section 12.6(d)) immediately prior to the consummation of such transaction;
(iii) the rights, preferences and privileges of the Limited Partners in the
Surviving Partnership are at least as favorable as those in effect immediately
prior to the consummation of such transaction and as those applicable to any
other limited partners or non-managing members of the Surviving Partnership; and
(iv) such rights of the Limited Partners include the right to exchange their
interests in the Surviving Partnership for at least one of: (A) the
consideration available to such Limited Partners pursuant to Section 12.6(a), or
(B) if the ultimate controlling person of the Surviving Partnership has publicly
traded common equity securities, such common equity securities, with an exchange
ration based on the relative fair market value of such securities (as determined
pursuant to Section 12.6(d)) and the Common Stock.
(c) In connection with any transaction permitted by Section
12.6(a) or 12.6(b), the relative fair market values shall be reasonably
determined by the General Partner as of the time of such transaction and, to the
extent applicable, shall be no less favorable to the Limited Partners than the
relative values reflected in the terms of such transactions.
ARTICLE 13
----------
TRANSFER OF LIMITED PARTNER INTERESTS
-------------------------------------
13.1 Transfer of Interest of a Limited Partner. Except as otherwise
specifically provided in this Agreement, no Limited Partner may sell, assign,
transfer, pledge, encumber or in any manner dispose of all or any part of its
Partnership Interest without the prior written consent of the General Partner,
which consent may not be unreasonably withheld. Notwithstanding the foregoing,
each Limited Partner shall have the right to (i) pledge or otherwise encumber
all or any portion of its Partnership Interest to an unrelated lender as
security for a bona fide obligation (subject, however, to applicable securities
laws) and/or (ii) transfer all or any portion of its Partnership Interest to
members of the Immediate Family of such Limited Partner and to one or more
trusts for the benefit of one or more members of the Immediate Family of such
Limited Partner for estate and/or gift tax purposes, upon prior written notice
to the General Partner. Without limiting the generality of the foregoing, in no
event shall the General Partner consent to an assignment of all or any portion
of the Partnership Interest of a Limited Partner in the Partnership if, in the
opinion of the General Partner (or of counsel satisfactory to the General
Partner), such assignment (i) will result in a termination of the Partnership
for federal income tax purposes or otherwise result in adverse tax consequences
to the Partnership or any Partner,
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(ii) will result in the Partnership failing to qualify for an exemption from the
registration requirements of the federal or any applicable state securities
laws, (iii) will result in the imposition of fiduciary responsibility on the
Partnership or any Partner under the Employee Retirement Income Security Act of
1974, as amended from time to time, (iv) will result in a violation of any
provision of any mortgage or trust deed (or the note or bond secured thereby)
constituting a lien against any assets of the Partnership, or other instrument,
document or agreement to which the Partnership is a party or otherwise bound,
(v) represents a transfer of any component portion of a Partnership Interest,
such as the Capital Account, or rights to Net Cash Flow, separate and apart from
all other components of a Partnership Interest, or (vi) will cause the General
Partner to cease to comply with any and all REIT Requirements. Subject to
satisfaction of the conditions therefor set forth or referred to herein, each
Limited Partner hereby consents to the substitution or admission of any assignee
of a Limited Partner. Any sale, assignment, transfer, pledge, encumbrance,
hypothecation or other disposition by a Limited Partner of all or any part of
its Partnership Interest in violation of the provisions hereof shall be void ab
initio and of no force or effect whatsoever.
13.2 Assignee and Substitute Limited Partners. No Person shall be
admitted as an assignee or substituted Limited Partner under this Agreement
unless and until:
(a) An assignment is made in writing, signed by the assigning
Partner and accepted in writing by the assignee, and a duplicate original of
such assignment has been delivered to and approved by the General Partner;
(b) The General Partner has received an opinion of counsel
favorably covering the matters described in clauses (i) through (vi) of Section
13.1 above, or waived all or any portion of this requirement;
(c) The prospective admittee executes and delivers to the
General Partner a written agreement in form reasonably satisfactory to the
General Partner pursuant to which said Person agrees to be bound by and confirms
the obligations, representations, warranties and power of attorney contained in
this Agreement; and
(d) An appropriate amendment to this Agreement is executed.
13.3 Assignment. In the event an assignment is made in accordance with
the terms hereof, unless otherwise required by the Code:
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(a) The effective date of such assignment shall be the date
the written instrument of assignment is delivered to the Partnership and
approved by the General Partner;
(b) The Partnership and the General Partner shall be entitled
to treat the assignor of the assigned interest as the absolute owner thereof in
all respects and shall incur no liability for allocations of Profits or Losses
and distributions of Net Cash Flow made in good faith to such assignor until
such time as the written instrument of assignment has been actually received and
approved by the General Partner, and recorded in the books of the Partnership;
and
(c) The division and allocation of Profits or Losses, other
than Profits or Losses arising from a Liquidation of the Partnership,
attributable to the applicable Partnership Interests between the assignor and
assignee during any fiscal year of the Partnership shall be based upon the
length of time during such fiscal year, as measured by the effective date of
such assignment, that the assigned Partnership Interest was owned by each of
them and shall not be based upon the date or dates during such fiscal year in
which income was earned or losses were sustained by the Partnership; provided,
however, that the division and allocation of Profits or Losses resulting from a
Liquidation of the Partnership shall be based upon the date or dates such income
was earned or losses were sustained.
13.4 Cost of Admission. The cost of processing and perfecting an
admission contemplated by this Article 13 (including reasonable attorney's fees
incurred by the Partnership) shall be borne by the party seeking admission as a
Partner to the Partnership.
ARTICLE 14
----------
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
------------------------------------------
14.1 Dissolution of the Partnership. The Partnership shall be dissolved
upon the happening of any of the following:
(a) An election to dissolve and wind up the affairs of the
Partnership by the General Partner (subject to Section 9.3 hereof);
(b) The occurrence of an Event of Retirement to the last
remaining General Partner, unless the Limited Partners elect to continue the
business of the Partnership pursuant to the provisions of Sections 12.4 and 12.5
hereof;
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(c) Any event that makes it unlawful for the Partnership
business to be continued;
(d) The sale, disposition, or abandonment of all or
substantially all of the assets of the Partnership unless the General Partner,
in compliance with Section 9.3 hereof, elects to continue the Partnership
business for the purpose of the receipt and the collection of indebtedness or
the collection of any other consideration to be received in exchange for the
assets of the Partnership (which activities shall be deemed to be part of the
winding up of the affairs of the Partnership);
(e) Dissolution required by operation of law; or
(f) December 31, 2097, unless a majority in interest of the
Partnership elects to continue the Partnership.
14.2 Winding Up of Affairs. In the event of the dissolution and
liquidation of the Partnership for any reason, the General Partner shall
commence to wind up the affairs of the Partnership and shall convert all of the
Partnership's assets to cash or cash equivalents within such reasonable period
of time as may be required to receive fair value therefor. All items of income,
gain, loss, deduction and credit during the period of liquidation shall be
allocated among the Partners in the same manner as before the dissolution. If
there is no General Partner to effect such Liquidation, then the Limited
Partners, pursuant to a vote of Limited Partners owning a majority of the issued
and outstanding Partnership Units owned by all Limited Partners, may designate
any person, firm or corporation, as a Liquidating Trustee, for that purpose who
shall have all of the rights, powers and authority of a General Partner stated
herein in connection therewith.
14.3 Accounting. In the case of the dissolution and termination of the
Partnership, prior to any distributions to Partners pursuant to Section 14.4(c)
below, a proper accounting shall be made of the Capital Accounts of the Partners
and of each item of income, gain, loss, deduction and credit of the Partnership
from the date of the last previous accounting to the date of dissolution. The
General Partner shall provide a copy of such accounting to all Partners.
14.4 Final Distribution of Partnership Property. Upon termination of
the Partnership, the General Partner shall apply and distribute the remaining
property of the Partnership, together with the proceeds of any sales of same, as
follows:
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(a) first, all Partnership debts and liabilities shall be paid
and discharged, including debts owed to Partners and any Affiliates of Partners;
(b) second, to establish any reserve for any contingent or
unforeseen liabilities or obligations of the Partnership. Such funds shall be
placed in escrow by the General Partner for the purposes of disbursing such
funds in payment of any of the contingencies, liabilities or obligations, and,
at the expiration of such period as the General Partner shall deem advisable,
the balance then remaining shall be distributed pursuant to subsection (c) of
this Section 14.4; and
(c) third, to distribute the balance to the Partners in the
manner and priority set forth in Article 8 hereof, with any and all Net Cash
Flow arising pursuant to the sale and/or other liquidation of Partnership
property being distributed pursuant to Section 8.1(b) hereof.
Distributions upon liquidation of the Partnership (or any
Partner's interest in the Partnership) and related adjustments shall be made by
the end of the taxable year of such liquidation (or, if later, within 90 days
after the date of such liquidation) or as otherwise permitted by the
Regulations.
14.5 Certificate of Cancellation. Upon completion of the liquidation of
the Partnership and the distribution of all Partnership property, the
Partnership shall terminate and the General Partner shall have the authority to
execute and record one or more Certificates of Cancellation of the Partnership
as well as any and all other documents required or considered advisable by the
General Partner to effectuate the dissolution and termination of the
Partnership.
ARTICLE 15
----------
POWER OF ATTORNEY
-----------------
15.1 Power of Attorney. Each Partner, by its execution hereof,
irrevocably constitutes and appoints the General Partner, or any substitute or
replacement General Partner, with full power of substitution, as such Partner's
true and lawful attorney-in-fact, in its name, place and stead to make, execute,
sign, acknowledge, certify, deliver, file and record on its behalf and on behalf
of the Partnership, the following:
(a) This Agreement, all Certificates of Limited Partnership,
Certificates of Doing Business under an Assumed Name, amendments to any or all
of the foregoing, and any other certificates or instruments which may be
required to be filed by
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the Partnership or the Partners under the laws of the State of Delaware or any
other jurisdiction;
(b) One or more Certificates of Cancellation of the
Partnership and such other instruments or documents as may be deemed necessary
or desirable by the General Partner upon termination of the Partnership
business;
(c) Any and all amendments to this Agreement and to the
instruments described in subsections (a) and (b) above, provided such amendments
are either required by law or have been authorized by the Partner(s) in
accordance with Article 16 and/or any other provision of this Agreement
(including, without limitation, any amendment to this Agreement and to the
Certificate to reflect the substitution or admission of a Limited Partner
pursuant to this Agreement); and
(d) Any and all such other documents and instruments as may be
deemed necessary or desirable by said attorney to carry out fully the provisions
of this Agreement in accordance with its terms.
15.2 Grant of Authority Irrevocable. The foregoing grant of authority
(a) is a special power of attorney coupled with an interest, is irrevocable and
shall survive the death or incapacity of a Partner who is a natural person or,
in the case of a Partner that is not a natural person, the merger, dissolution
or other termination of its existence of the Partner, (b) may be exercised by
the General Partner on behalf of each Partner, by a facsimile signature or by
listing all of the Partners executing any instrument with a single signature as
attorney-in-fact for all of them, and (c) shall survive the assignment by a
Partner of the whole or any portion of his or its interest in the Partnership.
ARTICLE 16
----------
AMENDMENT OF PARTNERSHIP AGREEMENT
----------------------------------
16.1 Amendments by Partners. Except as may be specifically provided
below in this Section 16.1 and in Section 16.2 hereof, this Agreement may only
be amended with the written concurrence of the General Partner and the written
consent of holders of at least fifty-one percent (51%) of the Partnership Units
held by the Limited Partners, taken as a single class; provided, that if at any
time prior to the first anniversary date hereof the General Partner owns
sixty-seven percent (67%) of the Partnership Units, and thereafter if at any
time as the General Partner owns sixty percent (60%) of the Partnership Units,
then in either case from such time and thereafter the amendment may be
effectuated
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only by the General Partner and the Limited Partners need not be
solicited but shall be informed of the amendment,; provided, further, however,
that absent the concurrence of the General Partner and the approval of all of
the Limited Partners no amendment shall:
(a) increase the obligation of any Limited Partner to make
contributions to the capital of the Partnership;
(b) modify the order of allocation of distributions of the Net
Cash Flow or liquidating distributions, or the allocation of Profits and Losses
among the Partners (other than as specifically provided for herein, including
without limitation, modifications pursuant to Section 6.4 hereof);
(c) change the Partnership to a general partnership;
(d) reduce the percentage of Limited Partners required to
consent to any matter in this Agreement;
(e) amend Section 9.4(a)(iv) or 9.4(b) hereof or amend Section
10.3 hereof in any manner that prohibits or restricts, or has the effect of
prohibiting or restricting, the ability of a Limited Partner to exercise its
Redemption Rights in full;
(f) amend Section 12.6(a), (b) or (c) hereof; or
(g) amend this Article 16.
16.2 Amendment by the General Partner. Notwithstanding anything
contained in this Agreement to the contrary, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(a) To add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(b) To reflect the admission, substitution, termination or
withdrawal of Partners in accordance with this Agreement, including without
limitation, the issuance of additional classes of Partnership Units to Limited
Partners pursuant to Section 6.4 hereof;
(c) To reflect a change that is of an inconsequential nature
and does not adversely affect the Limited Partners in any material respect, or
to cure any ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with
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other provisions, or make other changes with respect to matters arising under
this Agreement that will not be inconsistent with law or with the provisions of
this Agreement;
(d) To satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal or
state agency or contained in federal or state law; and
(e) To amend the provisions of this Agreement that protect the
qualification of the General Partner as a REIT if such provisions are no longer
necessary because of a change in applicable law (or an authoritative
interpretation thereof), a ruling of the IRS, or if the General Partner has
determined to cease qualifying as a REIT.
The General Partner will provide notice to the Limited Partners when any action
under this Section 16.2 is taken.
16.3 Amendment of Certificate. If this Agreement shall be amended
pursuant to this Article 16, the General Partner shall cause the Certificate to
be amended, to the extent required by applicable law, to reflect such change.
The Partners shall be promptly notified of any amendments made under this
Article 16.
ARTICLE 17
----------
INDEMNIFICATION
---------------
17.1 Indemnification.
---------------
(a) Except as provided in Section 17.1(c) hereof, the
Partnership shall indemnify, defend and hold harmless each Indemnitee from and
against any and all loss, damage, liability, cost or expense (including
reasonable attorneys' fees and expenses) sustained or incurred as a result of
any act or omission concerning the business or activities of the Partnership,
the General Partner or the Interim Managing General Partner; provided, that such
act or omission of the Indemnitee was not in violation of any term or provision
of this Agreement or any provision of law. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise for any indebtedness of the Partnership or any Affiliate
of the Partnership (including without limitation, any indebtedness which the
Partnership or any Affiliate of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 17.1 in favor of any Indemnitee having or
potentially having liability
58
<PAGE>
for any such indebtedness. Any indemnification pursuant to this Section 17.1
shall be made only out of the assets of the Partnership, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds, to enable the Partnership
to fund its obligations under this Section 17.1. The foregoing indemnity shall
not be enforceable against any Limited Partner personally but solely from such
Limited Partner's interest in the Partnership.
(b) The provisions of this Section 17.1 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 17.1 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 17.1 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
(c) The Partners hereby acknowledge that, in conjunction with
the financing and the refinancing of any of the property owned by the
Partnership, the General Partner may agree to guarantee part or all of such
debt. The Partners understand that, pursuant to Regulation Section
l.752-(2)(b)(3)(i), such guaranty obligation would, absent the indemnification
provided hereinafter, serve to increase the General Partner's share of such debt
pursuant to Regulation Section 1.752-2(a). Inasmuch as, notwithstanding such
guaranty obligation, each of the Limited Partners desires to increase his share
of such debt and the General Partner desires to decrease its share of such debt
(for purposes of Regulations Section 1.752-2(a)), each of the Limited Partners,
to the extent provided in Exhibit D attached hereto, hereby agrees to indemnify
the General Partner in the event and to the extent that the General Partner both
is required to make a payment to the lender under any such guaranty obligation
and is unable to sell any or all of the assets of the Partnership for money or
moneys worth to make the General Partner whole on account of such payment. This
indemnification is effective only at the time, in the event and to the extent
that upon a dissolution and liquidation of the Partnership, the General Partner
is a creditor of the Partnership due to its guaranty of Partnership debt and the
proceeds of sale in such dissolution and liquidation are insufficient to
reimburse the General Partner for any amounts paid on such guaranty obligation
as contemplated in this Section 17.1(c). As provided in Exhibit D, this
indemnification is limited on a per Unit basis to Units owned by
59
<PAGE>
an indemnifying Limited Partner at the time an indemnification is due to the
General Partner as provided by this Section 17.1(c), such that each Limited
Partner's obligation is reduced upon a redemption of Units as provided at
Section 10.3 or upon any other transfer or disposition of Units. In addition,
any and all indemnification as provided by this Section 17.1(c) shall terminate
in full as to each and every Limited Partner in the event that both (i) the
General Partner receives from tax counsel an opinion that the Outside Limited
Partners will be allocated an amount of excess nonrecourse liabilities under the
provisions of Regulation Section 1.752-3(a)(3) equal to or greater than the
amount of the indemnification requirement indicated on Exhibit D, and (ii) upon
the Consent of the Outside Limited Partners to terminate the indemnification
required by this Section 17.1(c).
17.2 Partner Indemnification of Partnership. In the event the
Partnership is made a party to any litigation or otherwise incurs any loss or
expense as a result of or in connection with any Partner's personal obligations
or liabilities unrelated to Partnership business, such Partner shall indemnify
and reimburse the Partnership for all such loss and expense incurred, including
reasonable attorneys' fees, and the interest of such Partner in the Partnership
may be charged therefor. The liability of a Partner under this Section 17.2
shall not be limited to such Partner's interest in the Partnership, but shall be
enforceable against such Partner personally.
ARTICLE 18
----------
MISCELLANEOUS PROVISIONS
------------------------
18.1 Notices. All notices and demands required or permitted under this
Agreement shall be in writing and may be delivered personally to the Person to
whom it is authorized to be given, or sent by registered, certified or first
class mail, or by overnight delivery, postage prepaid, and if intended for the
Partnership, addressed to the Partnership at the principal office of the
Partnership, and if intended for a Partner, addressed to the Partner at its
address on the signature pages hereof, or to such other person or at such other
address designated by written notice given to the Partnership. Any notice or
demand mailed as aforesaid shall be deemed to have been delivered two (2) days
after the date that such notice or demand is deposited in the mails.
18.2 Severability. If any provision of this Agreement or the
application of such provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid
shall not be affected.
60
<PAGE>
18.3 Parties Bound. Any Person acquiring or claiming an interest in the
Partnership, in any manner whatsoever, shall be subject to and bound by all
terms, conditions and obligations of this Agreement to which his or its
predecessor in interest was subject or bound, without regard to whether such
Person has executed a counterpart hereof or any other document contemplated
hereby. No Person, including the legal representative, heir or legatee of a
deceased Partner, shall have any rights or obligations greater than those set
forth in this Agreement and no Person shall acquire an interest in the
Partnership or become a Partner thereof except as permitted by the terms of this
Agreement. This Agreement shall be binding upon the parties hereto, their
successors, heirs, devisees, assigns, legal representatives, executors and
administrators.
18.4 Applicable Law. The Partnership and this Agreement shall be
governed by the laws of the State of Delaware.
18.5 Partition. Each Partner hereby irrevocably waives during the term
of the Partnership any right that he or it may have to maintain any action for
partition with respect to any property of the Partnership.
18.6 Computation of Accountants. Except with respect to matters as to
which the General Partner is granted discretion under this Agreement, the
opinion of the Accountants shall be final and binding with respect to all
allocations made under Article 7 or distributions made under Article 8 or
Section 14.4 hereof.
18.7 Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision.
18.8 Counterparts. This Agreement may be executed in multiple
counterparts with separate signature pages, each such counterpart shall be
considered an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first set forth above, confirms his or its agreement to become a
General Partner, Interim Managing General Partner or Limited Partner, as the
case may be, of the Partnership, agrees to be bound by this Agreement and
acknowledges the appointment of attorneys-in-fact as set forth herein, and
swears that the statements set forth herein are true and correct.
61
<PAGE>
GENERAL PARTNER:
PHILIPS INTERNATIONAL REALTY CORP.
a Maryland corporation
By: /s/ Louis J. Petra
-------------------------------
Its: President
62
<PAGE>
INTERIM MANAGING GENERAL PARTNER:
PHILIPS INTERNATIONAL REALTY, LLC
a Delaware limited liability company
By: /s/ Philip Pilevsky
--------------------------------
Its: Sole Member
LIMITED PARTNERS:
PHILIP PILEVSKY
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky
SHEILA LEVINE
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
NORMAN STARK
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
ALFRED S. FRIEDMAN
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
MAURICE FRIEDMAN
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
63
<PAGE>
FRED PILEVSKY
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
ALLEN PILEVSKY
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
GREGG SAUNDERS
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
BARAKA REALTY CO.
/s/ Philip Pilevsky
-------------------------------
By: Philip Pilevsky, attorney-in-fact
JOSEPH WILF
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
ESTATE OF HARRY WILF
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
CENTURY REALTY INC.
/s/ Philip Pilevsky
-----------------------------------
By: Philip Pilevsky, attorney-in-fact
64
<PAGE>
EXHIBIT A
---------
Partners and Partnership Units
------------------------------
Name and Address of Partner Partnership Units**
- --------------------------- -------------------
General Partner:
- ---------------
Philips International Realty Corp.
417 Fifth Avenue
New York, New York 10016
Interim Managing General Partner:
- --------------------------------
Philips International Realty, LLC
417 Fifth Avenue
New York, New York 10016
Limited Partners:
- ----------------
Philip Pilevsky 964,640
417 Fifth Avenue
New York, NY 10016
Sheila Levine 115,137
417 Fifth Avenue
New York, NY 10016
Norman Stark 179,538
757 Third Avenue
New York, NY 10017
Fred Pilevsky 22,573
2555 Ocean Avenue
Brooklyn, NY 11229
**TEMPORARY: SUBJECT TO ADJUSTMENT
i
<PAGE>
Name and Address of Partner Partnership Units**
- --------------------------- -------------------
Allen Pilevsky 62,331
2555 Ocean Avenue
Brooklyn, NY 11229
Baraka Realty Co. 26,744
1000 Pennsylvania Avenue
Brooklyn, NY 11207
Century Realty Inc. 13,372
12 Cortland Street
New York, NY 10007
Joseph Wilf 6,686
820 Morris Turnpike
Short Hills, NJ 07078
Estate of Harry Wilf 6,686
820 Morris Turnpike
Short Hills, NJ 07078
Gregg Saunders 18,070
417 Fifth Avenue
New York, NY 10016
Alfred S. Friedman 28,967
736 Bryant Street
Woodmere, NY 11598
Maurice Friedman 5,256
548 Barnard Avenue
Woodmere, NY 11598
**TEMPORARY: SUBJECT TO ADJUSTMENT
ii
<PAGE>
EXHIBIT B
---------
PHILIPS INTERNATIONAL REALTY, L.P. UNIT CERTIFICATE
---------------------------------------------------
* SEE RESTRICTIVE LEGENDS ON REVERSE *
PHILIPS INTERNATIONAL REALTY, L.P.
A DELAWARE LIMITED PARTNERSHIP
Number: ______ Units: ______
This is to certify that ____________________ is the owner of
______________________________________________________ fully paid limited
Partnership Units of Philips International Realty, L.P., a Delaware limited
partnership (the "Partnership"), transferable only on the books of the
Partnership by the holder hereof in person or by the duly authorized Attorney
upon surrender of this Certificate properly endorsed.
WITNESS, the seal of the General Partner of the Partnership
and the signatures of its duly authorized officers.
Dated: ______________
- -------------------- ---------------------
President Secretary
- -SEAL-
i
<PAGE>
REVERSE OF
PHILIPS INTERNATIONAL REALTY, L.P. UNIT CERTIFICATE
---------------------------------------------------
THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
AGREEMENT OF LIMITED PARTNERSHIP OF PHILIPS INTERNATIONAL REALTY, L.P.,
DATED AS OF JULY __, 1997 (A COPY OF WHICH IS ON FILE WITH THE
PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND
THE RULES AND REGULATIONS IN EFFECT THEREUNDER. IN ADDITION, THE UNITS
ARE SUBJECT TO THE PROVISIONS OF SECTION 19.1 OF A CERTAIN CONTRIBUTION
AND EXCHANGE AGREEMENT DATED AS OF August 11, 1997 (A COPY OF WHICH IS
ON FILE WITH THE PARTNERSHIP).
FOR VALUE RECEIVED, _________________ hereby sell, assign and transfer
unto __________________________________ _________________ limited Partnership
Units represented by the within Certificate, and do hereby irrevocably
constitute and appoint ________________________ Attorney to transfer the said
limited Partnership Units on the books of the within named Partnership with full
power of substitution in the premises.
Dated: ________________ ___________________________
In presence of:
- ----------------------
ii
<PAGE>
Attachment 1 to Unit Certificate
--------------------------------
EXERCISE NOTICE
---------------
To:
Reference is made to that certain Agreement of Limited Partnership of
Philips International Realty, L.P. dated as of July ___, 1997 (the "Partnership
Agreement"), pursuant to which Philips International Realty Corporation, a
Maryland corporation, and certain other persons, including the undersigned,
continued the Delaware limited partnership known as Philips International
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Partnership Agreement. Pursuant to
Section 10.3 of the Partnership Agreement, each of the undersigned, being a
limited partner of the Partnership (an "Exercising Partner"), hereby elects to
exercise its Redemption Rights as to a portion or portions of its Partnership
Units, as all specified opposite its signature below (notwithstanding the
foregoing, each of the undersigned hereby acknowledges and agrees that the
General Partner has the right, in its sole and absolute discretion, to deliver
shares of Common Stock to the undersigned in lieu of all or any portion of the
cash requested below by the undersigned, all in accordance with Section 10.3 of
the Partnership Agreement):
Dated:
================================================================================
Number of Number of
Offered Units to Offered Units to
Exercising be Redeemed for be Redeemed for
Partner Shares Cash
- ------- ------ ----
- --------------------------------------------------------------------------------
- ----------------
- --------------------------------------------------------------------------------
- ----------------
- --------------------------------------------------------------------------------
- ----------------
================================================================================
<PAGE>
EMPLOYMENT AGREEMENT
FOR
LOUIS J. PETRA
<PAGE>
TABLE OF CONTENTS
PAGE
1. EMPLOYMENT. 2
2. SERVICES. 3
3. COMPENSATION AND BENEFITS. 3
4. TERMINATION OF EMPLOYMENT. 9
5. CONFIDENTIAL INFORMATION AND NON-SOLICITATION. 18
6. RETURN OF DOCUMENTS. 19
7. NONCOMPETE. 20
8. REMEDIES. 21
9. SUCCESSORS AND ASSIGNS. 21
10. TIMING OF AND NO DUPLICATION OF PAYMENTS. 22
11. MODIFICATION OR WAIVER. 23
12. NOTICES. 24
13. EXECUTIVE REPRESENTATION. 24
14. TAX LIABILITY. 24
15. GOVERNING LAW AND RESOLUTION OF DISPUTES. 24
16. SEVERABILITY. 25
17. COUNTERPARTS. 25
18. HEADINGS. 26
19. ENTIRE AGREEMENT. 26
20. SURVIVAL OF AGREEMENTS. 26
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
September 2, 1997 by and between Louis J. Petra, an individual residing at 4
Pembroke Drive, North Massapequa, New York 11758 ("Executive"), and Philips
International Realty Corp., a Maryland corporation with offices at c/o Philips
International, 417 Fifth Avenue, New York, New York 10016 ("New Reit").
RECITALS
WHEREAS, as set forth in the Contribution and Exchange Agreement by and
between the Property Partnerships (as defined therein), National Properties
Investment Trust, a Massachusetts business trust ("National"), Philips
International Realty, L.P., a Delaware limited partnership ("PRLP") and New Reit
dated August 11, 1997, the Property Partnerships, National and PRLP have
determined that it is in the best interests of the parties' long term strategic
growth to combine their respective properties and related assets;
WHEREAS, in order to effectuate this combination, the Property
Partnerships and National have agreed to contribute certain properties and other
assets located throughout the States of New York, New Jersey, Connecticut,
Massachusetts and Florida and owned or controlled by the Property Partnerships
or National (the "Property") to New Reit and New Reit has agreed to contribute
such Property to PRLP in exchange for a general partnership interest therein,
all as of the closing (the "Closing");
2
<PAGE>
WHEREAS, it is anticipated that the Closing shall occur and New Reit
shall begin operations in December 1997; and
WHEREAS, it is anticipated that New Reit will raise $100,000,000 in
equity on or before June 1, 1998, through the initial sale to the public of its
Common Stock par value $.01 per share (the "New Reit Common Stock") for cash,
with such level, timing and manner of equity raise collectively considered for
purposes of this Agreement to constitute and hereinafter are referred to as, the
initial public offering (the "IPO"); and
WHEREAS, New Reit desires to employ Executive, and Executive desires to
be employed by New Reit, pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment.
New Reit hereby agrees to employ Executive, and Executive hereby
agrees to be employed by New Reit, on a full-time basis for a term commencing
September 2, 1997 and expiring on December 31, 2002, unless this Agreement shall
be either (i) extended thereafter by mutual agreement of the parties, or (ii)
terminated earlier pursuant to the terms hereof. The term of this Agreement
during which Executive shall be employed on a full-time basis is referred to
herein as the "Employment Period."
2
<PAGE>
2. Services.
During the Employment Period, Executive shall hold the position
of President and shall serve as a member of the Board of Directors of New Reit
(the "Board"). Executive shall devote his best efforts and substantially all of
his business time, skill and attention to the business of New Reit, and shall
perform such duties and have such powers as are customarily performed by similar
executive officers and/or as set forth on Exhibit A, and as may be more
specifically enumerated from time to time by the Board or the Executive
Committee of the Board, if any; provided, however, that the foregoing is not
intended to preclude Executive from (a) owning and managing personal
investments, including real estate investments, subject to the restrictions set
forth in Paragraph 7 hereof or (b) engaging in charitable activities and
community affairs, provided that the performance of these activities referred to
in clauses (a) and (b) does not prevent Executive from devoting substantially
all of his business time to New Reit.
Executive shall be based in New York, New York, subject to
reasonable travel requirements.
3. Compensation and Benefits.
During the Employment Period, New Reit shall pay Executive the
following annual base salary which shall be payable in accordance with New
Reit's normal payroll practices ("Annual Base Salary): $175,000 beginning
September 2, 1997 through December 31, 2000; $200,000 beginning on January 1,
2001 through December 31, 2001; and $225,000 beginning on January 1, 2002
through December 31, 2002 and thereafter, if applicable, as may be mutually
agreed by the parties.
3
<PAGE>
Executive shall be eligible to participate in the annual bonus
program for key executives pursuant to which Executive shall receive a bonus
based upon a formula and subject to certain performance goals having been
achieved, with such formula and performance goals to be determined by the Board,
in its sole discretion, and provided to Executive by the end of the first
quarter of each year. It is anticipated, but not guaranteed, that the bonus
program hurdle will be a fifteen (15%) percent year-to-year increase in the
Funds from Operations of New Reit.
New Reit shall deduct and withhold from compensation payments all
social security and other federal, state and local taxes and charges in the
minimum amounts (or such greater amounts as the Executive may from time to time
request) which currently are or which hereafter may be required by law to be so
deducted and withheld, including withholding pursuant to bonus withholding
rates, as applicable. In addition to the compensation specified above, Executive
shall be entitled to the following benefits:
(a) health and hospitalization (family), life insurance,
disability, business travel accident, paid vacation and
any other compensated absences and any other plans made
generally available to other similarly situated executive
officers of New Reit; provided, however that during the
months of August, 1997 through February, 1998 (or such
later month during which Executive first becomes eligible
for enrollment in New Reit's health and hospitalization
programs), Executive shall be reimbursed for the cost of
his COBRA premium;
(b) a $500 monthly reimbursement for local travel expenses;
and
(c) reimbursement for substantiated reasonable business
expenses including out-of-town travel expenses incurred by
Executive in furtherance of the interests of New Reit.
In addition, the Board, in its sole discretion, may (i) grant Executive
restricted share awards and options to purchase shares of New Reit Common Stock,
in addition to the
4
<PAGE>
Options discussed hereinafter and (ii) offer Executive participation in any
other bonus, stock based compensation or other executive compensation plans or
programs made generally available to executives of New Reit.
As further consideration for Executive agreeing to serve as
President and entering into this Agreement upon the terms set forth herein,
including, without limitation, the terms relating to non-competition set forth
in Paragraph 7 below, New Reit shall:
(d) at the Closing, issue to Executive options to purchase
40,000 shares of Common Stock pursuant to the New Reit
1997 Stock Option and Long-Term Incentive Plan (the
"Plan") which Plan will be adopted by New Reit and
approved by shareholders concurrently with the Closing) at
an exercise price equal to $50 per share of Common Stock
which is the price of Common Stock at the Closing (the
"Options") provided, however, that after taking into
account the Options and any adjustment in the number or
exercise price of such Options which may occur as a result
of the IPO with respect to the underlying shares of Common
Stock, upon the consummation of the IPO, Executive shall
have an option to purchase at least 100,000 shares of New
Reit Common Stock at an exercise price equal to the price
to the public for shares of New Reit Common Stock sold in
the IPO. Executive's Options shall be evidenced by an
option grant agreement dated as of the date of the Closing
which agreement shall include, but not be limited to, the
following provisions: vesting, subject to Executive's
continued employment with New Reit and the provisions of
Paragraphs 4(c), 4(e) and 4(f) below, over a five (5) year
period with twenty-five (25%) percent of the Options
vesting on each of December 31, 1999, December 31, 2000,
December 31, 2001 and December 31, 2002 (unless vesting is
otherwise accelerated pursuant to the terms and conditions
of this Agreement or the option grant agreement);
non-transferability and anti-dilution provisions; and,
provisions relating to the use of the Options together
with the underlying stock to collateralize any funds
necessary for exercise; and
(e) concurrently with the IPO or as soon as practicable
thereafter, loan on a non-recourse basis to Executive
$1,000,000 (the "Stock Acquisition Loan"), with the loan
proceeds to be used by Executive simultaneously to
purchase as many newly issued shares of New
5
<PAGE>
Reit Common Stock, at the price to the public for shares
of New Reit Common Stock sold in the IPO, as such Stock
Acquisition Loan amount will permit. Interest shall accrue
on the Stock Acquisition Loan at six (6%) percent per
annum and shall be payable, on the outstanding balance
thereof from time to time, quarterly in arrears. Dividends
on the New Reit Common Stock acquired by Executive,
subject to reduction for interest repayment (interest
payments shall first be made by the withholding of
dividends), shall be payable to Executive at such times
and in such amounts as may generally be declared by the
Board with respect to all shares of New Reit Common Stock
then outstanding without regard to whether the Stock
Acquisition Loan has been repaid or forgiven and shall not
serve as collateral. The Stock Acquisition Loan is being
granted and secured pursuant to the terms and conditions
of this Agreement, with the New Reit Common Stock
purchased with the proceeds of the Stock Acquisition Loan
and a Secured Non-Recourse Promissory Note and Stock
Pledge Agreement evidencing and securing such Stock
Acquisition Loan as executed between New Reit and
Executive. In the event of a conflict between the
aforementioned documents and this Agreement, the terms of
this Agreement shall control.
Notwithstanding any other provision of this Section 3(e),
in the event a tax is imposed on Executive with respect to
the principal of the Stock Acquisition Loan including,
without limitation, any tax liability which may arise with
respect to the forgiveness in whole or in part of the
Stock Acquisition Loan, Executive shall be entitled to
sell shares of New Reit Common Stock which otherwise
secure the Stock Acquisition Loan in an amount necessary
to satisfy such tax liability or in such greater amount as
Executive in his sole discretion desires to sell (with
excess proceeds, if any, to be held by New Reit as
security for the Stock Acquisition Loan and invested, with
such earnings to be credited to Executive). Proceeds in
excess of Executive's tax liability and Collateral Value
(defined below) shall be released to Executive. The
Secured Non-Recourse Promissory Note and the Stock Pledge
Agreement shall reflect this right of Executive. It is the
intention of the parties that New Reit Common Stock
purchased with the Stock Acquisition Loan constitute the
sole asset of Executive from which Executive's tax
liability shall be paid, and in recognition of this
intent, New Reit shall assist Executive in any manner
Executive reasonably requests to effectuate such sale.
Executive shall be entitled to direct that the shares of
New Reit Common Stock or cash, if applicable, held as
collateral for the Stock Acquisition Loan shall be used to
satisfy the amount owed
6
<PAGE>
with respect to such loan on or after notice of his
termination of employment. In the event the Executive's
employment terminates for any reason other than Cause (as
defined in Section 4(g) below), and Executive incurs
cancellation of indebtedness income with respect to the
principal amount due on such loan as a result of such
directed sale, New Reit shall pay Executive an amount on
an after-tax basis equal to the tax liability incurred by
Executive as a result of such cancellation of indebtedness
income and such payment.
It is the intention of the parties that the dividends
received by Executive on the New Reit Common Stock
purchased with the proceeds of the Stock Acquisition Loan
will equal or exceed the interest payable thereon.
Accordingly, New Reit hereby agrees to timely pay
Executive such additional cash compensation as may be
necessary for Executive to maintain cash neutrality,
giving appropriate consideration to the taxability of any
such additional cash compensation, should the timing
and/or amount of dividends received by the Executive be
insufficient to fund interest payable on the Stock
Acquisition Loan.
The Stock Acquisition Loan shall be forgiven as follows:
subject to the provisions of either Paragraph 4(e) or 4(f)
below, $500,000 of the principal shall be forgiven on
December 31, 2000 provided Executive is employed by New
Reit on the day immediately preceding that date, and the
other $500,000 of the principal shall be forgiven ratably
pursuant to the provisions of Paragraph 4(c) below, and
subject to the provisions of Paragraph 4(f) below, with
the entire outstanding balance forgiven as of December 31,
2002 (the "Forgiven Amount") provided Executive is
employed by New Reit on the day immediately preceding that
date.
The Stock Acquisition Loan shall be initially secured by
the shares of New Reit Common Stock purchased by Executive
from New Reit with the proceeds of the Stock Acquisition
Loan. On December 31, 2000, the outstanding balance of the
Stock Acquisition Loan shall be secured only by shares of
New Reit Common Stock having a ten (10) day Fair Market
Value of one hundred twenty-five (125%) percent of the
outstanding principal amount of the Stock Acquisition
Loan. On December 31, 2000 ( the "Determination Date"),
New Reit shall determine the aggregate Fair Market Value
of the collateral (the "Collateral Value") being held by
averaging the Fair Market Value for the ten (10) business
days immediately preceding the Determination Date (the
"Ten Day Fair Market Value"). If on such Determination
Date the Collateral Value exceeds one hundred twenty-five
(125%) percent of the outstanding balance of
7
<PAGE>
the Stock Acquisition Loan on such Determination Date
after giving effect to any loan forgiveness, as applicable
(the "Secured Loan Amount "), New Reit shall automatically
release to Executive such portion of the collateral the
aggregate Ten Day Fair Market Value of which equals the
Collateral Value less the Secured Loan Amount, free and
clear of any and all encumbrances under the Stock Pledge
Agreement.
Executive shall be required to execute the aforementioned
Stock Pledge Agreement and Secured Non-Recourse Promissory
Note. New Reit shall then issue shares of New Reit Common
Stock to Executive in exchange for the Stock Acquisition
Loan. New Reit shall, upon receipt from Executive of the
Stock Pledge Agreement and Secured Non-Recourse Promissory
Note for New Reit Common Stock purchased with the proceeds
of the Stock Acquisition Loan, make prompt delivery of the
certificates evidencing ownership of the shares of New
Reit Common Stock to Executive, subject to any
requirements set forth in the Stock Pledge Agreement;
provided, however, that if any law or regulation requires
New Reit to take any action with respect to such shares
prior to the delivery thereof, then the date of the
delivery of the shares shall be extended for the period
necessary to complete such action. As soon as practicable
following such time as New Reit is eligible to use Form
S-3 (or any successor form thereof) to register such
shares of New Reit Common Stock, New Reit shall register
the resale of such shares through a shelf registration
statement under the Securities Act of 1933, as amended
(the "Act") which shall be filed by December 31 1998,
unless prohibited by applicable law, in which case, New
Reit shall use its reasonable best efforts to file as soon
as practicable thereafter but in any event shall register
such shares no later than June 30, 1999 and shall keep
such registration effective all times thereafter at which
Executive owns any such shares. The Company agrees that if
at any time after the IPO and prior to such registration,
the Company authorizes the filing of a registration
statement under the Act in connection with the proposed
offer of any of its securities by the Company or any of
its shareholders or to facilitate the conversion of Units
in PRLP into New Reit Common Stock ("Subsequent
Registration Statement"), New Reit shall use its
reasonable best efforts to register the shares of New Reit
Common Stock purchased by Executive with the proceeds of
the Stock Acquisition Loan via the Subsequent Registration
Statement. Certificates for shares of New Reit Common
Stock, when released to Executive, shall have restrictive
legends applicable to the Stock Pledge Agreement and any
statements of other applicable restrictions with respect
thereto removed.
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<PAGE>
4. Termination of Employment.
(a) Either New Reit or Executive may terminate this Agreement
after June 1, 1998 and before September 1, 1998 if the IPO has not occurred,
provided, however, that if New Reit is currently marketing a preliminary
prospectus or "red herring" with respect to a public offering by June 1, 1998,
the June 1, 1998 termination date shall be extended to July 1, 1998 for purposes
of this Paragraph. Regardless of the party electing termination of this
Agreement, New Reit shall pay Executive a single-sum payment on date of
termination equal to the product of $7,500 multiplied by each month which has
elapsed from August 1, 1997 through the date of termination, pro-rated for any
portion of a month. Except as otherwise required by law, in the event of a
termination of Executive's employment under this Paragraph, neither New Reit nor
Executive shall have any further obligations under this Agreement or otherwise.
(b) In the event New Reit terminates Executive's employment for
any reason other than Cause, prior to June 1, 1998 and the IPO occurs prior to
June 1, 1998, in lieu of any payment under Paragraph 4(a) above, New Reit shall
pay Executive a single sum payment of $350,000 on June 1, 1998. In the event
Executive's employment terminates prior to June 1, 1998 for any reason other
than Cause, and the IPO does not occur prior to June 1, 1998, New Reit shall pay
Executive the amount to which Executive would be entitled had termination
occurred pursuant to Paragraph 4(a) above. Except as otherwise required by law,
in the event of a termination of Executive's employment under this paragraph,
neither New Reit nor Executive shall have any further obligation under this
Agreement or otherwise.
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<PAGE>
(c) Either New Reit or Executive may terminate this Agreement
effective December 31, 2000 or at any time thereafter. Regardless of the party
electing termination, the balance of the Options issued hereunder shall
immediately vest and may be exercised within the Option Exercise Period
described in Section 4(e) below. In the event this Agreement is terminated at
any time after December 31, 2000 and prior to December 31, 2002, an additional
principal amount of the Stock Acquisition Loan shall be forgiven, which amount
will be equal to the outstanding principal balance of the Stock Acquisition Loan
multiplied by a fraction, the numerator of which shall be the number of days
Executive is employed by New Reit after December 31, 2000 and the denominator of
which shall be 730. The balance of the Stock Acquisition Loan shall be
accelerated and all amounts outstanding thereunder (both principal and interest)
shall become due and owing on Executive's date of termination. In the event
Executive does not pay the full balance due under the Stock Acquisition Loan on
date of termination of this Agreement, and the Collateral Value equals or
exceeds the unpaid balance due, that portion of the collateral necessary to
repay the Stock Acquisition Loan shall be sold by New Reit and the proceeds of
such sales shall be used to satisfy the balance due thereon. Any remaining
shares of New Reit Common Stock ("the Excess Collateral") shall be released to
Executive as soon as practicable after Executive's date of termination and such
sales. New Reit shall pay Executive any unpaid salary accrued through and
including the date of termination (the "Accrued Amount"). In addition, Executive
shall be entitled (i) to exercise any warrants and options, including the
Options granted hereunder, which have vested and are exercisable in accordance
with the terms of this Agreement, any applicable stock option plan or agreement,
or warrant
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<PAGE>
agreement, and (ii) to retain any shares awarded to Executive which are fully
vested on the date of termination. Except for any rights Executive may have
under this Paragraph 4(c) or as otherwise required by law, New Reit shall have
no further obligations hereunder following such termination.
(d) In the event after June 1, 1998 but before December 31, 2000
(i) New Reit terminates Executive's employment for Cause (as hereinafter
defined) or (ii) Executive terminates his employment without Good Reason (as
hereinafter defined), New Reit shall pay Executive the Accrued Amount
immediately upon termination of employment. In addition, in such event,
Executive shall be entitled (i) to exercise any warrants and options, including
the Options granted hereunder, which have vested and are exercisable in
accordance with the terms of this Agreement and within the Option Exercise
Period described in Section 4(e) below, any applicable stock option plan or
agreement, or warrant agreement, and (ii) to retain any shares awarded to
Executive which are fully vested on the date of termination. Except as provided
in Paragraph 4(f) below, the Stock Acquisition Loan shall be accelerated and all
amounts outstanding thereunder (both principal and interest) shall become due
and owing on Executive's date of termination. In the event Executive does not
pay the full balance due under the Stock Acquisition Loan on date of termination
of this Agreement, and the Collateral Value equals or exceeds the unpaid balance
due, that portion of the collateral necessary to pay the Stock Acquisition Loan
shall be sold by New Reit and the proceeds of such sales shall be used to
satisfy the balance due thereon. Any Excess Collateral shall be released to
Executive as soon as practicable following the Executive's date of termination
and such sales. Except for any rights which Executive
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<PAGE>
may have under this Paragraph 4(d) or as otherwise required by law, New Reit
shall have no further obligations hereunder following such termination.
(e) In the event of termination of Executive's employment after
June 1, 1998 but before December 31, 2000 as a result of either (i) Executive's
death or Disability (as hereinafter defined), (ii) termination by New Reit for
any reason other than Cause or (iii) termination by Executive of his employment
for Good Reason, New Reit shall pay to Executive (A) the Accrued Amount (B) any
unpaid salary, at the rate then in effect without reduction, from the date of
termination through December 31, 2000 (as if no such termination occurred) and
(C) a pro-rata portion, based upon the number of days of employment in the
period beginning with January 1 of the calendar year in which such termination
occurred divided by the full calendar year multiplied by the cash bonus payments
paid to Executive for the immediately preceding calendar year (the "Pro-Rata
Bonus"). The aforesaid amounts shall be payable in full immediately upon such
termination. In addition, Executive shall have a fully-vested non-forfeitable
right to the Options , and any options or restricted stock awards previously
granted to him as of the date the applicable event listed in the first sentence
of this Paragraph 4(e) occurs. Furthermore, and except as provided in Paragraph
4(f) below, $500,000 of the principal of the Stock Acquisition Loan shall be
forgiven on the date of termination and all other amounts outstanding under the
Stock Acquisition Loan shall become due and owing on the date of termination. In
the event Executive does not pay the full balance due under the Stock
Acquisition Loan on date of termination of this Agreement, and the Collateral
Value equals or exceeds the unpaid balance due, that portion of the collateral
necessary to repay the Stock Acquisition Loan shall be sold by New Reit and the
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<PAGE>
proceeds of such sales shall be used to satisfy the balance due thereon. Any
Excess Collateral shall be released to Executive as soon as practicable
following the Executive's date of termination and such sales. Executive shall be
entitled, at the option of Executive, his estate or his personal representative,
within ninety (90) days (one (1) year in the case of termination as a result of
Executive's death or Disability) of the date of such termination, (i) to
exercise any options including the Options granted herein, to purchase shares of
New Reit Common Stock that have vested (including, without limitation, by
acceleration in accordance with the terms of this Agreement) ("Option Exercise
Period") and are exercisable in accordance with the terms of either this
Agreement, any stock option plan or agreement, and (ii) to retain any shares of
New Reit Common Stock awarded to Executive which are vested on the date of
termination. Except for any rights which Executive may have under this Paragraph
4(e) or as otherwise required by law, New Reit shall have no further obligations
hereunder following such termination.
(f) In the event a Change in Control occurs during the Employment
Period, and the Executive is actively employed on the day immediately preceding
the date of a Change in Control, notwithstanding any other provision of this
Agreement the entire outstanding balance of the Stock Acquisition Loan shall be
forgiven, Executive shall have a fully vested non-forfeitable right to the
Options and any options or restricted stock awards previously granted to him as
of the date of the Change in Control and the Excise Tax Gross-Up, if applicable,
pursuant to the provisions of Paragraph 4(j) below. In addition, the provisions
of Paragraph 7 of this Agreement shall no longer apply to Executive after the
date of the Change in Control. In the event a
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Change in Control occurs after June 1, 1998 but before December 31, 2000 and the
Executive's employment is terminated by New Reit or any successor thereto for
any reason on or after the date a Change in Control occurs, Executive shall also
be entitled to receive payment of (i) the Accrued Amount, (ii) any unpaid
salary, at the rate then in effect without reduction, through December 31, 2000,
if applicable (as if no such termination occurred) and (iii) the Pro-Rata Bonus.
The aforesaid amounts shall be payable in full immediately upon such
termination.
(g) For purposes of this Agreement:
(i) "Cause" shall mean (A) the willful and continued
failure by Executive to substantially perform his
duties hereunder (other than any such failure
resulting from Executive's incapacity due to
physical or mental illness) for a period of thirty
(30) days after written demand for substantial
performance is delivered by New Reit specifically
identifying the manner in which New Reit believes
Executive has not substantially performed his
duties, or (B) willful misconduct by Executive
which is materially injurious to New Reit,
monetarily or otherwise, or (C) the willful
violation by Executive of the provisions of
Paragraph 5 or 7 hereof. For purposes of this
Paragraph 4(e)(i), no act, or failure to act, on
Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his
action or omission was in furtherance of the
interests of New Reit.
(ii) "Disability" shall mean the determination by New
Reit, upon the advice of an independent qualified
physician, reasonably acceptable to Executive, that
Executive has become physically or mentally
incapable of performing his duties under this
Agreement and such disability has disabled
Executive for a cumulative period of one hundred
eighty (180) days within a twelve (12) month
period.
(iii) "Fair Market Value" shall mean the closing price on
the New York Stock Exchange of the New Reit Common
Stock (or such other exchange on which the New Reit
Common Stock is traded) on the trading day
immediately preceding the date
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<PAGE>
for which there is to be a determination of value
under this Agreement;
(iv) "Good Reason" shall mean (A) any assignment to
Executive of any duties materially different from
those contemplated by Paragraph 2 hereof, or any
limitation on the powers of Executive in any
respect not contemplated by Paragraph 2 hereof or
other material breach of this Agreement by New
Reit, (B) a reduction in Executive's Annual Base
Salary as in effect at the time in question, or any
other material failure by New Reit to comply with
Paragraph 3 hereof, provided, however, that in the
event Executive is not awarded a bonus as a result
of the Board not approving a bonus pool for a
particular year or Executive is not awarded any
other discretionary payment or award described in
Paragraph 3 it shall not be deemed a failure, or
(C) failure of New Reit to obtain the assumption of
the obligation to perform this Agreement by any
successor as contemplated in Paragraph 9(a) hereof.
(v) "Change in Control" shall mean, exclusive of the
IPO that any of the following events has occurred:
(a) any "person" or "group" of persons, as such
terms are used in Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than any employee benefit
plan sponsored by New Reit, becomes the "beneficial
owner", as such term is used in Section 13 of the
Exchange Act, of thirty (30%) percent or more of
either (i) the New Reit Common Stock or (ii) the
units of limited partnership interests in PRLP
("Units") issued and outstanding immediately prior
to such acquisition; (b) any New Reit Common Stock
is purchased pursuant to a tender or exchange offer
other than an offer by New Reit; or (c) the
dissolution or liquidation of New Reit or the
consummation of any merger or consolidation of New
Reit or any sale or other disposition of all or
substantially all of its assets, if the
shareholders of New Reit immediately before such
transaction own, immediately after consummation of
such transaction, equity securities (other than
options and other rights to acquire equity
securities) possessing less than thirty (30%)
percent of the voting power of the surviving or
acquiring company.
(h) In connection with any sale of New Reit Common Stock
necessary to satisfy the Stock Acquisition Loan, in the event the sale price
which New Reit can
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<PAGE>
obtain on any day is less than ninety-five (95%) percent of the average closing
price of the Common Stock for the ten (10) business days immediately preceding
Executive's termination of employment, New Reit shall not cause New Reit Common
Stock which serves as collateral for the Stock Acquisition Loan with an
aggregate market value in excess of $50,000 to be sold on any one (1) day.
(i) Any termination of Executive's employment by New Reit or any
such termination by Executive (other than on account of death) shall be
communicated by written Notice of Termination to the other party hereto. Prior
to the IPO, for purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated. After the IPO, (i) New Reit must
give Executive thirty (30) days advance notice in writing of his termination and
(ii) Executive must give New Reit ninety (90) days advance notice in writing of
his termination. Upon receipt of notice from Executive under (ii) above, New
Reit, in its sole discretion, may establish an earlier date of termination which
shall not be less than thirty (30) days after the date of Executive's notice.
New Reit must pay Executive for the applicable thirty (30) day period, but, in
its sole discretion, may require that Executive no longer actively work,
provided however, that for purposes of this Agreement the date of termination
under (i) or (ii) above shall be the thirtieth (30th) day immediately following
the date of notice.
(j) Excise Tax Gross Up. In addition, if it is determined by an
independent accountant mutually acceptable to New Reit and Executive (a
"Determination") that as a
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<PAGE>
result of any payment in the nature of compensation made by New Reit to (or for
the benefit of) Executive pursuant to this Agreement or otherwise, an excise tax
may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions) or in the event such determination is not made and the
Internal Revenue Service ("IRS") subsequently issues a notice imposing such
excise tax on Executive ("Subsequent IRS Assessment"), New Reit shall pay
Executive in cash an amount equal to X determined under the following formula:
(the "Excise Tax Gross Up"):
E x P
X = ----------------------------------
1-[(FI x (1-SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
Section 4999 of the Code (or any successor
provisions);
P = the amount with respect to which such excise tax is
assessed, determined without regard to the Excise
Tax Gross Up;
FI = the highest effective marginal rate of income tax
applicable to Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal
exemptions or other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to Executive under all
applicable state and local laws for the taxable
year in question (taking into account any phase-out
or loss of deductions, personal exemptions and
other similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to Executive under the Code for the
taxable year in question.
In the event a Determination is made, with respect to any payment in the nature
of compensation that is made to (or for the benefit of) Executive under the
terms of this Agreement or otherwise and on which an excise tax under Section
4999 of the Code (or
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<PAGE>
any successor provisions) may be assessed, the payment determined under this
Paragraph 4(j) shall be paid to Executive at the time of the Change in Control
but prior to the consummation of the transaction with any successor. In the
event of a Subsequent IRS Assessment, the payment determined under this
Paragraph 4(j) shall be paid to Executive as such time as Executive provides New
Reit with a copy of the Subsequent IRS Assessment. It is the intention of the
parties that New Reit provide Executive with a full tax gross-up under the
provisions of this Paragraph, so that on a net after-tax basis, the result to
Executive shall be the same as if the excise tax under Section 4999 of the Code
(or any successor provisions) had not been imposed. The Excise Tax Gross Up
shall be adjusted to achieve a full gross up if alternative minimum tax rules
are applicable to Executive.
5. Confidential Information and Non-Solicitation.
(a) Executive understands and acknowledges that during his
employment with New Reit, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
New Reit. Executive shall hold in a fiduciary capacity for the benefit of New
Reit such Confidential Information obtained by Executive during his employment
with New Reit and shall not, directly or indirectly, at any time, either during
or after his employment with New Reit, without New Reit's prior written consent,
use any of such Confidential Information or disclose any of such Confidential
Information to any individual or entity other than New Reit or its employees,
except as required in the performance of his duties for New Reit or as otherwise
required by law. Executive shall take all reasonable steps to safeguard
18
<PAGE>
such Confidential Information and to protect such Confidential Information
against disclosure, misuse, loss or theft.
(b) The term "Confidential Information" shall mean any
information not generally known in the relevant trade or industry or otherwise
not generally available to the public, which was obtained by Executive from New
Reit, the Partnership Properties, National or PRLP, or which was learned,
discovered, developed, conceived, originated or prepared by Executive during or
as a result of the performance of any services by Executive on behalf of New
Reit. For purposes of this Paragraph 5, New Reit shall be deemed to include any
entity which is controlled, directly or indirectly, by New Reit and any entity
of which a majority of the economic interest is owned, directly or indirectly,
by New Reit.
(c) The Executives agrees that for a period of two (2) years
following his termination of employment with New Reit, the Executive will not
directly or indirectly, solicit, recruit, hire or cause to be hired for
employment, any individual or individuals who are employed by New Reit or its
subsidiaries/affiliates on or after his date of termination.
6. Return of Documents.
Except for such items which are of a personal nature to Executive
(e.g., daily business planner), all writings, records, and other documents and
things containing any Confidential Information shall be the exclusive property
of New Reit, shall not be copied, summarized, extracted from, or removed from
the premises of New Reit, except in pursuit of the business of New Reit or at
the direction of New Reit, and
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<PAGE>
shall be delivered to New Reit, without retaining any copies, upon the
termination of Executive's employment or at any time thereafter as requested by
New Reit.
7. Noncompete.
Executive agrees that:
(a) During the Employment Period and in the event (i) New Reit
terminates Executive's employment for Cause, or (ii) Executive terminates his
employment hereunder without Good Reason, for a one (1) year period thereafter,
Executive shall not, directly or indirectly, within the States of New York, New
Jersey, Connecticut, Massachusetts or Florida engage in, or own, invest in,
manage, control, derive any compensation, or provide consulting services either
directly or indirectly with respect to any venture or enterprise engaged in any
development, acquisition or management activities with respect to retail
shopping center properties, without regard to whether or not such activities
compete with New Reit. Nothing herein shall prohibit Executive from being a
passive owner of not more than one (1%) percent of the outstanding stock of any
class of securities of a corporation or other entity engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 7, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable, the parties agree that without further action on their parts
reasonable maximum duration, scope, area or other restrictions shall be
substituted by such court for the stated duration, scope, area or other
restrictions.
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(c) For purposes of this Paragraph 7, New Reit shall be deemed to
include any entity which is controlled, directly or indirectly, by New Reit and
any entity of which a majority of the economic interest is owned, directly or
indirectly, by New Reit.
8. Remedies.
The parties hereto agree that New Reit would suffer irreparable
harm from a breach by Executive of any of the covenants or agreements contained
in Paragraph 5, 6 or 7 of this Agreement. Therefore, in the event of the actual
or threatened breach by Executive of any of the provisions of Paragraph 5, 6 or
7 of this Agreement, New Reit may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions thereof.
9. Successors and Assigns.
(a) Prior to December 31, 2000, New Reit shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of New
Reit, by agreement in form and substance reasonably satisfactory to Executive,
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that New Reit would be required to perform it if no such
succession had taken place. Failure of New Reit to obtain such agreement prior
to the effectiveness of a succession shall be a breach of this Agreement and
shall entitle Executive to compensation from New Reit in the same amount and on
the same terms as he would be entitled to hereunder if he
21
<PAGE>
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date of termination. In the event of such a breach
of this Agreement, the Notice of Termination shall specify such date as the date
of termination. As used in this Paragraph, "New Reit" shall mean New Reit as
hereinbefore defined and any successor to all or substantially all of its
business and/or its assets as aforesaid which executes and delivers the
agreement provided for in this Paragraph 9 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law. Any cash
payments owed to Executive pursuant to this Paragraph 9 shall be paid to
Executive in a single sum, without discount for early payment, immediately prior
to the consummation of the transaction with such successor.
(b) This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee or, if there be no
such designee, to Executive's estate.
10. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement
shall be paid as soon as practicable after such amounts have become fully vested
and determinable. In the event any amount becomes vested or payable under more
than
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<PAGE>
one provision of this Agreement, Executive shall not be entitled to receive a
duplicate payment of any such amount.
11. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation
of this Agreement shall be binding or effective for any purpose unless it is
made in a writing signed by the party against whom enforcement of such
amendment, modification, waiver, termination or cancellation is sought. No
course of dealing between or among the parties to this Agreement shall be deemed
to affect or to modify, amend or discharge any provision or term of this
Agreement. No delay on the part of New Reit or Executive in the exercise of any
of their respective rights or remedies shall operate as a waiver thereof, and no
single or partial exercise by New Reit or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
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<PAGE>
12. Notices.
All notices or other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
if delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to New Reit or Executive, as applicable, at the address
set forth above (or to such other address as shall have been previously provided
in accordance with this Paragraph 12).
13. Executive Representation.
By executing this Agreement, Executive hereby warrants and
represents that he is not bound by any other agreement or subject to any other
restriction which would either prevent him from entering into this Agreement or
from performing his duties as contemplated hereunder.
14. Tax Liability.
Each party to this Agreement shall be responsible for their own
tax liability with respect to any payments made, forgiveness of debt or
otherwise pursuant to the terms of this Agreement.
15. Governing Law and Resolution of Disputes.
This agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of laws thereunder. Any claim for damages arising out of or related to
this Agreement except for any claims arising out of or related to Paragraphs 5,
6 and 7 hereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American
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Arbitration Association, provided, however, that the arbitration shall take
place in New York and the arbitrators shall apply New York law. Each party to
the Agreement may select one arbitrator. The selected arbitrators shall in turn
appoint a third arbitrator, and the three so chosen shall comprise the
arbitration panel. All arbitrators shall be independent third parties. The
decision of the arbitration panel shall be final and binding on the parties, and
judgment upon the award rendered by the arbitration panel may be entered by any
court having jurisdiction thereof. This Paragraph shall not be construed to
prevent New Reit from seeking injunctive relief as provided in Paragraph 8
hereof with respect to any and all disputes arising out of or related to
Paragraphs 5, 6 and 7 which shall be adjudicated by a court of competent
jurisdiction.
16. Severability.
Whenever possible, each provision and term of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then, subject to the
provisions of Paragraph 7(b) above, such provision or term shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating or
affecting in any manner whatsoever the remainder of such provisions or term or
the remaining provisions or terms of this Agreement.
17. Counterparts.
This Agreement may be executed in separate counterparts, each of
which is deemed to be an original and both of which taken together shall
constitute one and the same agreement.
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18. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
19. Entire Agreement.
This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
20. Survival of Agreements.
The covenants made in Paragraphs 4, 5, 6 and 7 each shall survive
the termination of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ Philip Pilevsky
--------------------------------
Name: Philip Pilevsky
Title: Chairman of the Board
and Chief Executive Officer
EXECUTIVE
/s/ Louis J. Petra
--------------------------------
Louis J. Petra
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================================================================================
EMPLOYMENT AGREEMENT
FOR
SHEILA LEVINE
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
1. EMPLOYMENT. 2
2. SERVICES. 2
3. COMPENSATION AND BENEFITS. 3
4. TERMINATION OF EMPLOYMENT / CHANGE IN CONTROL. 5
5. CONFIDENTIAL INFORMATION / RETURN OF DOCUMENTS / NONCOMPETE. 11
6. SUCCESSORS AND ASSIGNS. 11
7. TIMING OF AND NO DUPLICATION OF PAYMENTS. 13
8. MODIFICATION OR WAIVER. 13
9. NOTICES. 13
10. GOVERNING LAW AND RESOLUTION OF DISPUTES. 14
11. SEVERABILITY. 14
12. COUNTERPARTS. 15
13. HEADINGS. 15
14. ENTIRE AGREEMENT. 15
15. SURVIVAL OF AGREEMENTS. 16
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
December 31, 1997 by and between Sheila Levine, an individual residing at 8 East
83rd Street, Apartment 6F, New York, New York 10028 ("Executive"), and Philips
International Realty Corp., a Maryland corporation with offices at c/o Philips
International, 417 Fifth Avenue, New York, New York 10016 ("New Reit").
RECITALS
WHEREAS, as set forth in the Contribution and Exchange Agreement by and
between the Property Partnerships (as defined therein), National Properties
Investment Trust, a Massachusetts business trust ("National"), Philips
International Realty, L.P., a Delaware limited partnership ("PRLP") and New Reit
dated August 11, 1997 (the "Contribution and Exchange Agreement"), the Property
Partnerships, National and PRLP have determined that it is in the best interests
of the parties' long term strategic growth to combine their respective
properties and related assets;
WHEREAS, in order to effectuate this combination, the Property
Partnerships and National have agreed to contribute certain properties and other
assets located throughout the States of New York, New Jersey, Connecticut,
Massachusetts and Florida and owned or controlled by the Property Partnerships
or National (the "Property") to New Reit and New Reit has agreed to contribute
such Property to PRLP, all as of the closing (the "Closing Date");
<PAGE>
WHEREAS, Executive has served as a key executive of Philips
International and, through such service, has acquired special and unique
knowledge, abilities and expertise; and
WHEREAS, New Reit desires to employ Executive, and Executive desires to
be employed by New Reit, pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment.
New Reit hereby agrees to employ Executive, and Executive
hereby agrees to be employed by New Reit, for a term commencing on the date
hereof and expiring on December 31, 2000; provided, however, that commencing on
December 31, 2000, and each anniversary of that date thereafter, the term of
this Agreement shall be extended automatically for one (1) additional year
unless at least ninety (90) days prior to the applicable expiration date either
New Reit or Executive shall have given written notice that such party does not
wish to extend this Agreement. The term of this Agreement, as it may be extended
from time to time in accordance with this Paragraph 1, is referred to herein as
the "Employment Period."
2. Services.
During the Employment Period, Executive shall hold the
position of Chief Operating Officer and shall serve as a member of the Board of
Directors of New Reit
2
<PAGE>
(the "Board"). Executive shall devote her best efforts and substantially all of
her business time, skill and attention to the business of New Reit, and shall
perform such duties as are customarily performed by similar executive officers
and as may be more specifically enumerated from time to time by the Board or the
Executive Committee of the Board, if any; provided, however, that the foregoing
is not intended to preclude Executive from (a) owning and managing personal
investments, including real estate investments, subject to the restrictions set
forth in the Non-Competition Agreement by and among PRLP, New Reit, Philips
International Holding Corp., Philip Pilevsky and Executive dated as of December
31, 1997 (the "Non-Competition Agreement"), including without limitation
conducting the real estate development, acquisition or management activities
related to the properties listed in Exhibit A attached to the Non-Competition
Agreement (the "Excluded Properties") or (b) engaging in charitable activities
and community affairs, provided that the performance of these activities
referred to in clauses (a) and (b) does not prevent Executive from devoting
substantially all of her business time to New Reit.
Executive shall be based in New York, NY, subject to
reasonable travel requirements, in an office comparable to the office previously
provided to Executive by Philips International.
3. Compensation and Benefits.
During the Employment Period, New Reit shall pay Executive a
minimum annual base salary in the amount of $175,000 (which may be increased but
not decreased from time to time, (the "Annual Base Salary")), payable in
accordance with New Reit's normal payroll practices. In addition, Executive
shall receive a minimum of
3
<PAGE>
twenty-five (25%) percent of the annual bonus pool, with the annual bonus pool
to be determined by the Board each year. Executive's Annual Base Salary shall be
reviewed annually in accordance with the policy of New Reit from time to time
and may be increased based on, among other things, Executive's performance, as
determined in the sole discretion of the Board or compensation committee of the
Board ("Compensation Committee"), as applicable. New Reit shall have the right
to deduct and withhold from such compensation all social security and other
federal, state and local taxes and charges which currently are or which
hereafter may be required by law to be so deducted and withheld. In addition to
the compensation specified above, Executive shall be entitled to the following
benefits:
(a) participation in the any bonus, stock based
compensation or other executive compensation plans or
programs made generally available to executives of
New Reit;
(b) medical, life insurance, disability, business travel
accident, paid vacation and any other compensated
absences and any other plans made generally available
to employees of New Reit;
(c) use of a car; and
(d) reimbursement for reasonable business expenses
incurred by Executive in furtherance of the interests
of New Reit.
In addition, Executive shall be entitled to receive restricted share awards and
options to purchase shares of common stock, par value $0.01per share, of New
Reit (the "Common Stock") as the Board shall approve, in its sole discretion.
As further consideration for Executive agreeing to serve as an
officer and entering into this Agreement upon the terms set forth herein,
including, without limitation, the terms relating to non-competition set forth
in the Non-Competition Agreement, subject to shareholder approval of the New
Reit 1997 Stock Option and
4
<PAGE>
Long Term Incentive Plan (the "Plan") New Reit is issuing to Executive options
to purchase 40,000 shares of Common Stock at a purchase price equal to $50 per
share which is fair market value on the Closing Date ("Options") provided,
however, that after taking into account the Options and any dilution which may
occur with respect to the underlying shares of Common Stock, as a result of the
initial sale to the public of Common Stock for cash, with such level, timing,
and manner of equity raise collectively considered for purposes of this
Agreement to constitute an initial public offering (the "IPO"), upon the
consummation of the IPO, Executive shall have an option to purchase at least
100,000 shares of Common Stock at an exercise price equal to the price paid for
shares of Common Stock by the public in the IPO. Executive's Options shall be
evidenced by the option agreement dated as of the Closing Date which shall
include, but not be limited to, the following provisions: vesting over a three
year period, subject to Executive's continued employment with New Reit and the
provisions of Paragraphs 4(b) and 4(c) below, with one third (1/3) of the
Options vesting on each of the first, second and third anniversaries of the date
hereof and non-transferability and anti-dilution provisions.
4. Termination of Employment / Change in Control.
(a) In the event (i) New Reit terminates Executive's
employment for Cause (as hereinafter defined) or (ii) Executive terminates her
employment without Good Reason (as hereinafter defined), New Reit shall pay
Executive any unpaid salary accrued through and including the date of
termination (the "Accrued Amount"). In addition, in such event, Executive shall
be entitled (i) to exercise any options, including the Options granted
hereunder, which have vested and are exercisable in accordance
5
<PAGE>
with the terms of this Agreement, the applicable stock option agreement or the
Plan, and (ii) to retain any shares awarded to Executive which are fully vested
on the date of termination. Except for any rights which Executive may have to
the Accrued Amount, vested options and vested share awards and as otherwise
required by law, New Reit shall have no further obligations hereunder following
such termination.
(b) In the event of termination of Executive's employment as a
result of either (i) Executive's death or Disability (as hereinafter defined),
(ii) termination by New Reit for any reason other than Cause or (iii)
termination by Executive of her employment for Good Reason, New Reit shall pay
to Executive (A) the Accrued Amount, (B) the unpaid salary, at the rate then in
effect without reduction, from the date of termination through the end of the
Employment Period remaining (assuming no such termination occurred) and (C) a
pro-rata portion, based upon the number of days in the period beginning with
January 1 of the calendar year in which such termination occurred and ending
with the date the Employment Period ends (assuming such termination did not
occur), of the average annual amount of bonus pool payments paid to Executive
during each year of Executive's employment hereunder. In the event the Executive
is terminated in the first year of employment, Executive shall receive her
pro-rata portion of the amount that would have otherwise been payable to
Executive in such year had her employment not terminated. The aforesaid amount
shall be payable, at the option of Executive, her estate or her personal
representative, either (i) in full immediately upon such termination without
discount for early payment or (ii) monthly over the remainder of the Employment
Period. In addition, Executive shall have a fully-vested non-forfeitable right
to the Options and any other options or restricted stock
6
<PAGE>
awards previously granted to her as of the date the applicable event listed in
the first sentence of this Paragraph 4(b) occurs. Executive shall be entitled,
at the option of Executive, her estate or her personal representative, within
ninety (90) days (one (1) year in the case of termination as a result of
Executive's death or Disability) of the date of such termination, (i) to
exercise any options to purchase shares of Common Stock that have vested
(including, without limitation, by acceleration in accordance with the terms of
this Agreement) and are exercisable in accordance with the terms of either this
Agreement, any stock option agreement or the Plan, (ii) to retain any shares of
Common Stock awarded to Executive which are vested on the date of termination,
and (iii) to require New Reit (upon written notice delivered within one hundred
eighty (180) days following the date of Executive's termination) to repurchase
all or any portion of Executive's vested options (including without limitation
options, if any, which have vested by acceleration in accordance with the terms
of this Agreement the Plan or stock option agreement) to purchase shares of
Common Stock at a price equal to the difference between the Fair Market Value
(as hereinafter defined) of the shares of Common Stock for which the options to
be repurchased are exercisable and the exercise price of such option as of the
date of Executive's termination of employment.
(c) (i) In the event of a Change in Control (as hereinafter
defined) and irrespective of whether Executive's employment terminates in
connection with such Change in Control, New Reit shall pay Executive and
Executive shall be entitled to all the payments and rights Executive would have
had if Executive's employment had been terminated on the date of the Change in
Control due to Disability as set forth in sub-paragraph 4(b) (including vesting
in the Options and all other options and restricted
7
<PAGE>
stock awards and all benefits under this Agreement) except that Executive must
exercise any options which have vested within ninety (90) days (one (1) year in
the case of termination as a result of Executive's death or Disability) of her
actual termination of employment. Furthermore, all cash payments owed to
Executive pursuant to this Paragraph 4(c)(i) shall be paid to Executive in a
single sum without discount for early payment on or immediately prior to the
date of the Change in Control but prior to the consummation of the transaction
with any successor.
(ii) If the Change in Control is a change "in the ownership or
effective control" of New Reit or "in the ownership of a substantial portion of
the assets" of New Reit within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "Code") and the Executive is then, in any
taxable year, liable for the payment of an excise tax under Section 4999 of the
Code (or any successor provisions thereto), with respect to any payment in the
nature of compensation made by New Reit to (or for the benefit of) Executive,
New Reit shall pay Executive an amount equal to X determined under the following
formula:
X = E x P
------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is
assessed under Section 4999 of the Code
P = the amount with respect to which such
excise tax is assessed, determined without
regard to this Section 4(c)(ii)
FI = the highest effective marginal rate of
income tax applicable to Executive under the
Code for the taxable year in question
(taking into account any phase-out or loss
of deductions, personal exemptions and other
similar adjustments);
8
<PAGE>
SLI = the sum of the highest marginal rates of
income tax applicable to Executive under all
applicable state and local laws for the
taxable year in question (taking into
account any phase-out or loss of deductions,
personal exemptions and other similar
adjustments); and
M = the highest marginal rate of Medicare Tax
applicable to Executive under the Code for
the taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 4(c)(ii) shall be made of the earlier of
the date New Reit is required to withhold such tax, or the date the tax is
required to be paid by Executive. It is the intention of the parties that New
Reit provide Executive with a full tax gross-up under the provisions of this
Paragraph, so that on a net after-tax basis, the result to Executive shall be
the same as if the excise tax under Section 4999 of the Code (or any successor
provisions) had not been imposed. The Excise Tax Gross Up shall be adjusted to
achieve a full gross-up if alternative minimum tax rules are applicable to
Executive.
(d) For purposes of this Agreement:
(i) "Cause" shall mean (A) the willful and
continued failure by Executive to
substantially perform her duties hereunder
(other than any such failure resulting from
Executive's incapacity due to physical or
mental illness) for a period of thirty (30)
days after written demand for substantial
performance is delivered by New Reit
specifically identifying the manner in which
New Reit believes Executive has not
substantially performed her duties, or (B)
willful misconduct by Executive which is
materially injurious to New Reit, monetarily
or otherwise, or (C) the willful violation
by Executive of the provisions of the
Non-Competition Agreement. For purposes of
this Paragraph 4(d)(i), no act, or failure
to act, on Executive's part shall be
considered
9
<PAGE>
"willful" unless done, or omitted to be
done, by her not in good faith and without
reasonable belief that her action or
omission was in furtherance of the interests
of New Reit.
(ii) "Disability" shall mean the determination by
New Reit, upon the advice of an independent
qualified physician, reasonably acceptable
to Executive, that Executive has become
physically or mentally incapable of
performing her duties under this Agreement
and such disability has disabled Executive
for a cumulative period of one hundred
eighty (180) days within a twelve (12) month
period.
(iii) "Fair Market Value" shall mean the average
of the closing price on the New York Stock
Exchange of the Common Stock on each of the
trading days within the thirty (30) days
immediately preceding the date of
termination of Executive's employment;
(iv) "Good Reason" shall mean (A) any assignment
to Executive of any duties materially
different from those contemplated by
Paragraph 2 hereof, or any limitation of the
powers of Executive in any respect not
contemplated by Paragraph 2 hereof or other
material breach of this Agreement by New
Reit, (B) a reduction in Executive's Annual
Base Salary as in effect at the time in
question, or any other material failure by
New Reit to comply with Paragraph 3 hereof,
provided, however, that in the event
Executive is not awarded a bonus as a result
of the Board not approving a bonus pool for
a particular year or other discretionary
payment or discretionary award described in
Paragraph 3, it shall not be deemed a
failure, (C) New Reit shall have given
notice pursuant to Paragraph 1 hereof that
it does not wish to extend this Agreement,
except in connection with termination of
Executive's employment for Cause or by
reason of death or Disability, or (D)
failure of New Reit to obtain the assumption
of the obligation to perform this Agreement
by any successor as contemplated in
Paragraph 6(a) hereof.
(v) "Change in Control" shall mean, exclusive of
the IPO, that any of the following events
has occurred: (a) any "person" or "group" of
persons, as such terms are used in Sections
13 and 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other
than any employee benefit plan sponsored by
New Reit, becomes the "beneficial owner", as
such term is used in Section 13 of the
Exchange Act, of
10
<PAGE>
thirty (30%) percent or more of either (i)
the Common Stock or (ii) the units of
limited partnership interests in PRLP
("Units") issued and outstanding immediately
prior to such acquisition; (b) any Common
Stock is purchased pursuant to a tender or
exchange offer other than an offer by New
Reit; or (c) the dissolution or liquidation
of New Reit or the consummation of any
merger or consolidation of New Reit or any
sale or other disposition of all or
substantially all of its assets, if the
shareholders of New Reit immediately before
such transaction own, immediately after
consummation of such transaction, equity
securities (other than options and other
rights to acquire equity securities)
possessing less than thirty (30%) percent of
the voting power of the surviving or
acquiring company.
(e) Any termination of Executive's employment by New Reit or
any such termination by Executive (other than on account of death) shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
5. Confidential Information / Return of Documents / Noncompete.
The Non-Competition Agreement is hereby incorporated by
reference and made a part hereof. The provisions of the Non-Competition
Agreement including without limitation those related to confidential
information, return of documents, non-competition and non-solicitation shall
apply as if fully set forth herein.
6. Successors and Assigns.
(a) New Reit shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business
11
<PAGE>
and/or assets of New Reit, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that New Reit would be required to perform it if
no such succession had taken place. Failure of New Reit to obtain such agreement
prior to the effectiveness of a succession shall be a breach of this Agreement
and shall entitle Executive to compensation from New Reit in the same amount and
on the same terms as she would be entitled to hereunder if she terminated her
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the date of termination. In the event of such a breach of this Agreement,
the Notice of Termination shall specify such date as the date of termination. As
used in this Paragraph, "New Reit" shall mean New Reit as hereinbefore defined
and any successor to all or substantially all of its business and/or its assets
as aforesaid which executes and delivers the agreement provided for in this
Paragraph 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. Any cash payments owed to Executive pursuant
to this Paragraph 6 shall be paid to Executive in a single sum, without discount
for early payment, immediately prior to the consummation of the transaction with
such successor.
(b) This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to her hereunder if she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid
12
<PAGE>
in accordance with the terms of this Agreement to Executive's devisee, legatee,
or other designee or, if there be no such designee, to Executive's estate.
7. Timing of and No Duplication of Payments.
All payments payable to Executive pursuant to this Agreement
shall be paid as soon as practicable after such amounts have become fully vested
and determinable. In the event any amount becomes vested or payable under more
than one provision of this Agreement, Executive shall not be entitled to receive
a duplicate payment of any such amount.
8. Modification or Waiver.
No amendment, modification, waiver, termination or
cancellation of this Agreement shall be binding or effective for any purpose
unless it is made in a writing signed by the party against whom enforcement of
such amendment, modification, waiver, termination or cancellation is sought. No
course of dealing between or among the parties to this Agreement shall be deemed
to affect or to modify, amend or discharge any provision or term of this
Agreement. No delay on the part of New Reit or Executive in the exercise of any
of their respective rights or remedies shall operate as a waiver thereof, and no
single or partial exercise by New Reit or Executive of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
9. Notices.
13
<PAGE>
All notices or other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
if delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to New Reit or Executive, as applicable, at the address
set forth above (or to such other address as shall have been previously provided
in accordance with this Paragraph 9).
10. Governing Law and Resolution of Disputes.
This agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of laws thereunder. Any claim for damages arising out of or related to
this Agreement except for any claims arising out of or related to Paragraph 5
hereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, provided, however,
that the arbitration shall take place in New York and the arbitrators shall
apply New York law. Each party to the Agreement may select one arbitrator. The
selected arbitrators shall in turn appoint a third arbitrator, and the three so
chosen shall comprise the arbitration panel. All arbitrators shall be
independent third parties. The decision of the arbitration panel shall be final
and binding on the parties, and judgment upon the award rendered by the
arbitration panel may be entered by any court having jurisdiction thereof. This
Paragraph shall not be construed to prevent New Reit from seeking injunctive
relief with respect to any and all disputes arising out of or related to
Paragraph 5 hereof which shall be adjudicated by a court of competent
jurisdiction.
14
<PAGE>
11. Severability.
Whenever possible, each provision and term of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then such provision or
term shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.
12. Counterparts.
This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and both of which taken together shall
constitute one and the same agreement.
13. Headings.
The headings of the Paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part hereof and
shall not affect the construction or interpretation of this Agreement.
14. Entire Agreement.
This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
15
<PAGE>
15. Survival of Agreements.
The covenants made in Paragraph 4 and those made in the
Non-Competition Agreement shall survive the termination of this Agreement.
16
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ Philip Pilevsky
-----------------------------------------
Name: Philip Pilevsky
Title: Chairman of the Board and
Chief Executive Officer
EXECUTIVE
/s/ Sheila Levine
-----------------------------------------
Sheila Levine
17
<PAGE>
AMENDMENT NO. 1
TO
CONTRIBUTION AND EXCHANGE AGREEMENT
Amendment No. 1 to that certain Contribution and Exchange Agreement
dated as of August 11, 1997 (the "Agreement") among National Properties
Investment Trust, a Massachusetts business trust, the members of the Board of
Trustees of the Trust, Philips International Realty Corp., a Maryland
corporation, Philips International Realty, L.P., a Delaware limited partnership,
and certain contributing partnerships or limited liability companies associated
with a private real estate firm controlled by Philip Pilevsky and certain
partners and members thereof who are signatories hereto. Each of the parties to
the Agreement are writing to confirm our understanding and agreement to this
Amendment No. 1 to the Agreement as follows:
1. Section 5.1(b) of the Agreement is hereby amended to add the
following language to the beginning of the second sentence thereof:
"except with respect to the failure to obtain the consent of First Union
National Bank, as holder of approximately $24.1 million first mortgage loan
secured by certain portions of the Palm Springs Mile Shopping Center in Hialeah,
Florida, to the consummation of the transactions contemplated by the Agreement,"
2. Section 27.1 of the Agreement is hereby amended by inserting in the
fifth line thereof following the words "at the Closing" the following:
", or within a period not to exceed five (5) business days from the date
of the Closing,"
3. The parties agree that the Closing of the transactions contemplated
by the Agreement shall be effective as of the close of business on December 31,
1997.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to the Agreement as the 29th day of December 1997.
FOREST AVENUE SHOPPING LLC
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Managing Member
<PAGE>
PHILIPS FREEPORT ASSOCIATES, L.P.
By: Philips Freeport Development Corporation,
its general partner
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: President
MERRICK SHOPPING ASSOCIATES
By: Merrick Holiday Limited Partnership,
a general partner
By: Merrick Holiday Corp., general partner
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: President
By: Merrick Equities L.P., a general partner
By: The Merrick Corporation, general
partner
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
SP AVENUE U ASSOCIATES, L.P.
By: SP Avenue U Corp., its general partner
By:/s/ Philip Pilevsky
--------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
<PAGE>
ENFIELD SHOPPING L.L.C.
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Managing Member
BRANHAVEN PLAZA L.L.C.
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Member
PALM SPRINGS MILE ASSOCIATES, LTD.
By: Palm Mile Corp., its General Partner
By:/s/ Philip Pilevsky
-------------------
Name: Sheila Levine
Title: President
(by Philip Pilevsky, attorney-in fact)
PARTNERS OF PALM SPRINGS MILE
ASSOCIATES, LTD.:
PALM MILE CORP.
By:/s/ Philip Pilevsky
-------------------
Name: Sheila Levine
Title: President
(by Philip Pilevsky, attorney-in fact)
PL PALM SPRINGS L.P.
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: General Partner
/s/ Philip Pilevsky
-------------------
Philip Pilevsky
3
<PAGE>
FOXBOROUGH SHOPPING L.L.C.
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Managing Member
MEMBERS OF FOXBOROUGH SHOPPING L.L.C.
/s/ Philip Pilevsky
-------------------
Philip Pilevsky
BARAKA REALTY CO.
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
CENTURY REALTY INC.
By: /s/ Philip Pilevsky
Name: Philip Pilevsky
Title: Attorney-in-Fact
/s/ Philip Pilevsky
-------------------
Joseph Wilf, by Philip Pilevsky,
Attorney-in-Fact
ESTATE OF HARRY WILF
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
4
<PAGE>
DELRAN SHOPPING L.L.C.
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Managing Member
MEMBERS OF DELRAN SHOPPING L.L.C.
/s/ Philip Pilevsky
-------------------
Philip Pilevsky
BARAKA REALTY CO.
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
CENTURY REALTY INC.
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
/s/ Philip Pilevsky
-------------------
Joseph Wilf, by Philip Pilevsky,
Attorney-in-Fact
ESTATE OF HARRY WILF
By:/s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Attorney-in-Fact
5
<PAGE>
NATIONAL PROPERTIES INVESTMENT TRUST
By: /s/ Peter Stein
---------------
Name: Peter Stein
Title: Trustee
By: /s/ Jay Goldman
---------------
Name: Jay Goldman
Title: Trustee
By: /s/ Robert Reibstein
--------------------
Name: Robert Reibstein
Title: Trustee
PHILIPS INTERNATIONAL REALTY, L.P.
By: Philips International Realty Corp.,
its General Partner
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Chief Executive Officer
PHILIPS INTERNATIONAL REALTY CORP.
By: /s/ Philip Pilevsky
-------------------
Name: Philip Pilevsky
Title: Chief Executive Officer
6
<PAGE>
With respect to Section 27.1 only:
/s/ Peter Stein
---------------
Peter Stein
/s/ Jay Goldman
---------------
Jay Goldman
/s/ Robert Reibstein
--------------------
Robert Reibstein
7
<PAGE>
NON-RECOURSE SECURED PROMISSORY NOTE
------------------------------------
US $104,820.55 New York, New York
December 31, 1997
FOR VALUE RECEIVED, the undersigned maker, NATIONAL PROPERTIES
INVESTMENT TRUST, a Massachusetts business trust (the "Borrower"), hereby
unconditionally promises to pay to order of PHILIPS INTERNATIONAL REALTY CORP.,
a Maryland corporation (the "Lender") at its office located at c/o Philips
International, 417 Fifth Avenue, New York, New York, 10016, or at such other
place as the Lender may specify from time to time, in lawful money of the United
States of America and in immediately available funds, the principal amount of
One Hundred Four Thousand Eight Hundred Twenty United States Dollars and Fifty
Five cents (US $104,820.55) in a single installment on December 31, 1998, (the
"Maturity Date"); provided, however, that if the Lender fails to complete a
public or private equity offering of its securities aggregating in excess of $25
million (an "Offering") by the Maturity Date, the Borrower may, at its option,
extend the Maturity Date to June 30, 1999; provided, further, however, that, in
any case, upon consummation of an Offering, the Maturity Date (whether or not
extended) shall be accelerated to thirty (30) days after the closing date of
such Offering.
Interest shall accrue on the unpaid principal amount of this Note
from the date of this Note until such principal amount is paid in full at the
per annum rate equal to ten (10%) percent (the "Lending Rate"). Interest shall
be payable on the Maturity Date. Any principal amount, interest and other
payments which is not paid when due (whether each is due as stated, by
acceleration or otherwise) shall bear interest, payable on demand, until payment
in full of such amounts at the rate per annum equal to the Lending Rate plus two
(2%) percent (collectively, the "Default Rate"), after as well as before
judgment. Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. In no event shall the interest rate on this Note
exceed the maximum interest rate permitted by applicable law. If,
notwithstanding, interest in excess of said maximum rate shall be paid
hereunder, the excess shall be retained by the Lender as a prepayment of all or
part of the unpaid balance of principal or otherwise returned to the Borrower.
The Borrower may prepay this Note, in whole or in part, at any time at
par, without any penalty or premium. Any cash dividends or distributions payable
by the Lender to the Borrower, in its capacity as a shareholder of the Lender,
with respect to the Pledged Shares (as hereinafter defined) shall not be paid to
the Borrower but shall instead be applied as a partial prepayment of this Note.
All partial prepayments shall be applied by the Lender first, to the accrued and
unpaid interest and second, to the outstanding principal. The Lender is hereby
authorized to record the date and amount of each payment or prepayment of
principal hereof on the schedule annexed hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part hereof, and
any such notation shall be conclusive and binding for all purposes absent
manifest error; provided, however, that failure by the Lender to make any such
notation shall not affect the obligations of the Borrower or rights of the
Lender hereunder.
Whenever any payment on this Note shall be stated to be due on a day
which is not a business day, such payment shall be made on the next succeeding
business day and such extension of time shall be included in the computation of
the payment of interest on this Note.
<PAGE>
In order to secure the obligations of the Borrower under this Note, the
Borrower hereby pledges, assigns and grants the Lender a first priority security
interest and lien in four thousand (4,000) shares of common stock, $.01 par
value per share (the "Common Stock"), of the Lender, currently owned
beneficially and of record by the Borrower (including, without limitation, all
income, cash, dividends or other distributions received therefrom, and all
proceeds thereof, including, without limitation, proceeds received from any sale
thereof, and all products, substitutions, additions, changes and replacements
thereof (all of the same being herein referred to as the "Pledged Shares"). The
Borrower, the Lender and Boston EquiServe Trust Company, the transfer agent for
the Common Stock (the "Transfer Agent"), shall enter into an agreement whereby
the Transfer Agent agrees (i) upon the occurrence of a default hereunder, to
comply with any order or instruction from the Lender directing sale, transfer or
redemption of all or part of the Pledged Shares and remit the proceeds thereof,
if any, to the Lender, without further consent by Borrower, (ii) that the
Pledged Shares shall be treated as a financial asset under Article 8 of the New
York Uniform Commercial Code (the "UCC"), and (iii) the Pledged Shares will not
be sold, encumbered, transferred or otherwise disposed of by Borrower without
the express consent of the Lender; provided, however, that upon the consummation
of an Offering, the Borrower shall be able to sell the Pledged Shares provided
that the net proceeds from such sale shall be used to repay in full all amounts
owing under this Note. In the event that stock certificates representing the
Pledged Shares are issued to the Borrower, the Borrower agrees to promptly
deliver to the Lender one or more stock certificates representing such Pledged
Shares, registered in its name, together with an undated stock power duly
executed in blank. The Borrower agrees that at any time and from time to time,
at its expense, the Borrower will promptly execute and deliver all further
instruments and documents, and take all further action, that may be reasonably
necessary or desirable, or that the Lender may reasonably request. The Lender
may exercise in respect of the Pledged Shares, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party in default under the UCC, and the Lender may also,
without notice except as specified below, sell the Pledged Shares or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Lender's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Lender may deem
commercially reasonable. The Borrower agrees that, to the extent notice of sale
shall be required by law, at least five (5) days' notice to the Borrower of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Lender shall not be
obligated to make any sale of Pledged Shares regardless of notice of sale having
been given and the Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
The Borrower represents and warrants to the Lender that (i) the Borrower
is a business trust duly organized and validly existing and in good standing
under the laws of the State of Massachusetts, (ii) the Borrower is duly
qualified to do business as a foreign corporation or entity and is in good
standing in each jurisdiction (other than the state of its respective
incorporation or organization) in which the conduct of its respective business
or the ownership or operation of its respective properties or assets makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the financial condition, operations or prospects of
the Borrower, (iii) the Borrower has full power, capacity and authority to (a)
own its respective properties and assets and carry on its respective business as
now conducted, and (b) execute and deliver this Note and to incur and perform
the obligations provided for herein and therein, (iv) no consent or approval of
any governmental authority or other third party is or will be required as a
condition to the enforceability of this Note, and the Borrower is and will be in
compliance in all material respects with all laws and regulatory requirements to
which it is subject, (v) this Note has been duly executed and delivered by the
Borrower and is enforceable against
2
<PAGE>
the Borrower in accordance with its terms, (vi) the Borrower will not use any of
the proceeds of this Note for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying "margin stock" or "margin securities"
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), or in a manner which would breach of contravene any of
Regulations G, T, U, or X of the Board of Governors of the Federal Reserve
System, as in effect from time to time, (vii) the Borrower is the legal and
beneficial owner of the Pledged Shares, free and clear of any liens, adverse
claims, security interests, options or other charges or encumbrances, and (viii)
the pledge of the Pledged Shares creates a valid and perfected continuing first
priority lien and security interest in the Pledged Shares, securing the
indefeasible payment and performance of the obligations hereunder.
If at any time (i) there occurs a default in the payment by the Borrower
of principal or interest pursuant to this Note which is not cured within fifteen
(15) days, (ii) any representation or warranty made to the Lender by the
Borrower in this Note was when made untrue in any material respect or materially
misleading, (iii) the Borrower becomes insolvent under any applicable law, (iv)
the Borrower commences or has commenced against it any bankruptcy or insolvency
proceeding or has a trustee or receiver appointed for it or its assets, and any
such non-consensual event continues for ninety (90) days undismissed, unstayed,
unbonded or undischarged, or (v) there occurs a material default in the
performance of any other obligation of the Borrower under this Note
(collectively, a "Default"), the Lender shall give written notice thereof to the
Borrower; provided, however, that, upon the occurrence of an event specified in
clauses (iii) or (iv) above, no notice shall be required. Immediately upon the
occurrence of an event specified in clauses (iii) or (iv) above, or immediately
upon the Lender giving the Borrower notice regarding the occurrence of an event
specified in clauses (i), (ii) or (v) above, the Lender shall be entitled to
retain any and all payments previously made pursuant to this Note and all
amounts owing pursuant to this Note shall immediately become due and payable.
Any amount not paid when due shall continue to bear interest from the due date
at the Default Rate or the highest rate then permitted by law (if the Default
Rate is then in excess of the maximum rate).
If a Default occurs, the Lender shall have, in addition to its other
rights, the right to setoff and/or recoupment against the amounts owing under
this Note any amount owing by the Lender in any capacity to the Borrower in any
capacity. All rights and remedies of the Lender under applicable law and this
Note are cumulative and not exclusive. No single, partial or delayed exercise by
the Lender of any right or remedy shall preclude full and timely exercise by the
Lender at any time of any right or remedy of the Lender without notice. No
waiver shall be effective unless made specifically in writing by the Lender.
The Borrower hereby waives diligence, presentment, protest, demand and
notice of every kind and, to the fullest extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder. The
non-exercise by the Lender of any of its rights under this Note in any
particular instance shall not constitute a waiver hereof in that or any
subsequent instance. The acceptance by the Lender of any partial payment shall
not constitute a waiver of any default or of any of the Lender's rights under
this Note. This Note may not be changed or terminated orally. This Note shall
bind the heirs, legal representatives, successors and assigns of the undersigned
and shall enure to the benefit of the Lender and its successors and assigns.
The Borrower promises to pay all costs and expenses, including all
reasonable attorneys' fees and disbursements, incurred in the collection and
enforcement of this Note. The Borrower hereby agrees to indemnify the Lender,
its officers, directors, employees, agents, counsel or representatives and to
hold the Lender and such other parties harmless from any loss, liability, cost
or expense that the Lender may sustain or incur as a consequence of, in
connection with, arising out of or relating to this Note.
3
<PAGE>
Any and all payments by the Borrower under this Note shall be made (i)
without setoff, defenses or counterclaim, and (ii) free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of the Lender, taxes imposed on or in respect of its income (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings,
penalties and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Lender, upon receipt of a certificate from the
Lender (i) the sum payable shall be increased as may be necessary so that, after
making all required deductions (including deductions applicable to additional
sums payable under this paragraph), the Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
Any notice, request, demand, statement, authorization, approval or
consent required or permitted under this Note shall be in writing and shall be
made by, and deemed duly given upon, (a) deposit in the United States mail,
postage prepaid, registered or certified, return receipt requested, such mailing
to be effective five (5) business days after mailing, (b) personal delivery, (c)
delivery by an overnight courier of recognized reputation (such as Federal
Express) or (d) transmission by telecopier as provided above or to such other
address as either party may specify by notice given in accordance with this
paragraph.
Each provision of this Note shall survive until all amounts due are paid
to the Lender's satisfaction and are not subject to any preference period, shall
be interpreted as consistent with existing law and shall be deemed amended to
the extent necessary to comply with any conflicting law. If a court deems any
provision invalid, the remainder of this Note shall remain in effect. Singular
number includes plural and neuter gender includes masculine and feminine as
appropriate.
This Note shall be governed by, and construed an interpreted in
accordance with, the laws of the State of New York, without regard to its
conflicts of law provisions.
In any action or other legal proceeding relating to this Note, the
Borrower (i) consents to the personal jurisdiction of any State or Federal court
located in the State of New York, (ii) waives objection to the laying of venue,
(iii) waives personal service of process, (iv) consents to service of process by
registered or certified mail directed to the Borrower at the last address shown
in the Lender's records relating to this Note, with such service of process to
be deemed completed five (5) days after mailing, and (v) waives any right to
trial by jury with respect to this Note or to assert any counterclaim or setoff
or recoupment with respect to this Note. In any proceeding, a copy of this Note
kept in the Lender's course of business shall be admitted into evidence as an
original.
This Note constitutes the entire and final agreement between the
parties, and supersedes all prior written agreements and all prior,
contemporaneous or subsequent oral agreements of the parties regarding all
issues addressed in this Note.
Notwithstanding anything contained herein to the contrary, the
obligations of the Borrower shall be "non-recourse" obligations, meaning that
the Borrower shall not be personally liable for any obligations hereunder and
that the Lender's remedies against the Borrower shall be limited to proceeding
against the Pledged Shares.
4
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered as of the day and year and at the place first above written.
NATIONAL PROPERTIES INVESTMENT TRUST
By:/s/ PETER STEIN
---------------------------------
Name: Peter Stein
Title: Managing Trustee
5
