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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
----------------
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 29, 1999
LIBERTY SELF-STOR, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 0-12166 94-6542723
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(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
8500 Station Street, Suite 100, Mentor, Ohio 44060
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(Address of Principal Executive Offices) (Zip Code)
440-974-3770
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(Registrant's Telephone Number, Including Area Code)
Meridian Point Realty Trust `83 *
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(Former name or former address, if changed since last report)
* Liberty Self-Stor, Inc. is the successor to Meridian Point Realty Trust
`83 as discussed in the Explanatory Note hereto.
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EXPLANATORY NOTE
This Current Report on Form 8-K is being filed by Liberty Self-Stor,
Inc., a Maryland corporation, as the successor to Meridian Point Realty Trust
`83, a California business trust, following consummation of the mergers that
were undertaken to effect the reorganization of Meridian into a Maryland
corporation. Prior to the mergers, Liberty had engaged in no activities other
than those incident to the reorganization. Upon consummation of the mergers, the
common stock of Liberty became registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended, in accordance with Rule 12g-3(a) thereunder.
The registration is implemented by the Securities and Exchange Commission's
acceptance for filing on the date hereof of this Form 8-K and the continuation
of Meridian's file number (0-12166) until a new file number is generated for
Liberty after this Form 8-K is filed pursuant to the telephonic interpretation
of the staff of the Commission set forth in the Division of Corporation
Finance's Manual of Publicly-Available Telephone Interpretations (July 1997 and
March 1999).
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 29, 1999, pursuant to the terms of the Agreement and Plan
of Merger, dated as of December 28, 1999, between Liberty, Meridian and Liberty
Self-Stor Limited Partnership, a Maryland limited partnership, and the
transactions contemplated thereby, Meridian merged with and into the Maryland
limited partnership, with the Maryland limited partnership continuing as the
surviving entity, and the Maryland limited partnership merged with and into
Liberty, with Liberty continuing as the surviving corporation. In the mergers,
each outstanding share of beneficial interest, stated value $1.00 per share, of
Meridian was converted into one share of common stock, par value $0.001 per
share, of Liberty. The consummation of the mergers effected a reorganization of
Meridian from a California business trust into a Maryland corporation. A copy of
the Agreement and Plan of Merger is filed herewith as Exhibit 2.1. Copies of
Liberty's Articles of Incorporation and Bylaws following consummation of the
mergers are filed herewith as Exhibits 3.1 and 3.2, respectively.
The Agreement and Plan of Merger was approved by the shareholders of
Meridian at its Special Meeting of Shareholders in lieu of the Annual Meeting of
Shareholders held on December 28, 1999, for which proxies were solicited
pursuant to proxy material contained in Liberty's Registration Statement on Form
S-4 (File No. 333-78479). The registration statement was declared effective on
October 29, 1999. The proxy material is deemed filed pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, in accordance with
Instruction E to Form S-4.
At the special meeting, Meridian's shareholders also approved the
following:
(1) an amendment to Meridian's Amended and Restated
Declaration
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of Trust in order to effect the mergers;
(2) the acquisition of Liberty Self-Stor, Ltd., an Ohio
limited liability company which owns 15 self-storage
facilities and of which Richard M. Osborne, Meridian's and
Liberty's Chairman of the Board and Chief Executive Officer,
was the managing member;
(3) the election of Steven A. Calabrese, Mark D. Grossi, Marc
C. Krantz, Richard M. Osborne and Thomas J. Smith, the
incumbent trustees of Meridian who upon consummation of the
mergers became the members of the board of directors of
Liberty;
(4) Liberty's 1999 Stock Option and Award Plan;
(5) the lease for Liberty's executive offices; and
(6) the ratification of Arthur Andersen LLP as Liberty's
independent accountants for the year ending December 31, 1999.
Copies of Liberty's 1999 Stock Option and Award Plan and the Lease for its
executive offices are filed herewith as Exhibits 10.1 and 10.2, respectively.
In the acquisition of the self-storage facilities, the members of Mr.
Osborne's self-storage company exchanged their membership interests for Class A
limited partnership interests in LSS I Limited Partnership, a Delaware limited
partnership formed by Liberty to be the operating partnership. The Class A
limited partnership interests are redeemable for cash or, at the election of
Liberty, convertible into common stock of Liberty on a one-for-one basis. The
operating partnership is owned 29.9% by Liberty, the sole general partner and
Class B limited partner, and 70.1% by the Class A limited partners, consisting
of the former members of Mr. Osborne's self-storage company, including Mr.
Osborne and Thomas J. Smith, President and Chief Operating Officer of Meridian
and Liberty. As set forth in Liberty's proxy material, the percentage interest
in the operating partnership received by each contributor to the operating
partnership was determined by dividing the net asset value contributed by each
contributor by the sum of the net asset value of the cash and other assets and
liabilities contributed to the operating partnership by Liberty, and the net
asset value of the assets and liabilities contributed to the operating
partnership by Mr. Osborne's self-storage company. Liberty intends to continue
to operate the self-storage facilities. A copy of the Agreement of Limited
Partnership of LSS I Limited Partnership is filed herewith as Exhibit 10.3.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of the Business Acquired:
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Financial statements for Liberty Self-Stor, Ltd. will be filed
not later than March 13, 2000.
(b) Pro Forma Financial Information:
Pro forma financial statements of Liberty showing the effect
of the acquisition of Liberty Self-Stor, Ltd. will be filed
not later than March 13, 2000.
(c) Exhibits:
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated as of December 28, 1999,
by and among Meridian Point Realty Trust `83, Liberty
Self-Stor, Inc. and Liberty Self-Stor Limited Partnership
(Exhibits A and B to the Agreement and Plan of Merger are
attached hereto as Exhibits 3.1 and 3.2, respectively)
3.1 Articles of Incorporation of Liberty Self-Stor, Inc.
3.2 Bylaws of Liberty Self-Stor, Inc.
10.1 1999 Stock Option and Award Plan of Liberty Self-Stor, Inc.
10.2 Lease between OsAir, Inc. and Liberty Self-Stor, Inc.
10.3 Agreement of Limited Partnership of LSS I Limited Partnership,
dated December 29, 1999.
10.4 Employment Agreement, dated December 28, 1999, by and between
Liberty Self-Stor, Inc. and Thomas J. Smith
99.1 Press Release dated December 30, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Liberty has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
LIBERTY SELF-STOR, INC.
Dated: January 12, 2000 By: /s/ Thomas J. Smith
-----------------------------------
Thomas J. Smith, President and
Chief Operating Officer
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated as of December 28, 1999,
by and among Meridian Point Realty Trust `83, Liberty
Self-Stor, Inc. and Liberty Self-Stor Limited Partnership
(Exhibits A and B to the Agreement and Plan of Merger are
attached hereto as Exhibits 3.1 and 3.2, respectively)
3.1 Articles of Incorporation of Liberty Self-Stor, Inc.
3.2 Bylaws of Liberty Self-Stor, Inc.
10.1 1999 Stock Option and Award Plan of Liberty Self-Stor, Inc.
10.2 Lease between OsAir, Inc. and Liberty Self-Stor, Inc.
10.3 Agreement of Limited Partnership of LSS I Limited Partnership,
dated December 29, 1999.
10.4 Employment Agreement, dated December 28, 1999, by and between
Liberty Self-Stor, Inc. and Thomas J. Smith
99.1 Press Release dated December 30, 1999
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made as of
December 28, 1999, by and among Meridian Point Realty Trust `83, a California
business trust (the "Company"), Liberty Self-Stor Limited Partnership, a
Maryland limited partnership (the "Limited Partnership"), and Liberty Self-Stor,
Inc., a Maryland corporation (the "New Company").
PRELIMINARY STATEMENT
The Board of Trustees of the Company has determined that it is
advisable and in the best interest of the Company to reorganize from a business
trust organized under the laws of the State of California into a corporation
incorporated under the laws of the State of Maryland. In connection with the
foregoing reorganization, the Company has formed the Limited Partnership and the
New Company as direct or indirect wholly-owned subsidiaries of the Company. The
parties hereto desire to effect the Mergers (as defined in Section 1.2) upon the
terms and subject to the conditions set forth herein.
Accordingly, in consideration of these premises, the covenants and
agreements made herein and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto adopt the
plan of merger encompassed by this Agreement and agree as follows:
ARTICLE I
THE MERGERS; CLOSING; EFFECTIVE TIME
1.1. THE LIMITED PARTNERSHIP MERGER. Subject to the terms and
conditions of this Agreement, at the Effective Time (as defined in Section 1.4),
the Company shall be merged with and into the Limited Partnership and the
separate existence of the Company shall thereupon cease (the "Limited
Partnership Merger"). The Limited Partnership shall be the surviving entity in
the Limited Partnership Merger (sometimes hereinafter referred to as the
"Surviving Limited Partnership"), shall continue to be governed by the laws of
the State of Maryland and the separate existence of the Limited Partnership with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Limited Partnership Merger.
The Limited Partnership Merger shall have the effects specified in the
Maryland Revised Uniform Limited Partnership Act ( the "MRULPA").
1.2. THE COMPANY MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.4), the Surviving
Limited Partnership shall be merged with and into the New Company and the
separate existence of the Surviving Limited Partnership shall thereupon cease
(the "Company Merger" and, together with the Limited Partnership Merger, the
"Mergers"). The New Company shall be the surviving entity in the Company Merger
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(sometimes hereinafter referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Maryland and the separate
existence of the New Company with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Mergers.
The Company Merger shall have the effects specified in the Maryland
General Corporation Law (the "MGCL").
The parties intend that the Mergers qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended.
1.3. CLOSING. The closing of the Mergers (the "Closing") shall take
place (i) at the offices of the Kohrman Jackson & Krantz P.L.L., 1375 East Ninth
St., 20th Floor, Cleveland, Ohio 44114 at 10:00 a.m. local time the first
business day on which the last to be fulfilled or waived of the conditions set
forth in Section 5.1 hereof shall be fulfilled or waived or (ii) at such other
place and time and/or on such other date as the Company, the Limited Partnership
and the New Company may agree.
1.4. EFFECTIVE TIME. Following the fulfillment or waiver of the
conditions set forth in Section 5.1 hereof, and provided that this Agreement has
not been terminated or abandoned pursuant to Article VI hereof, the Company and
the Limited Partnership will, at such time as they deem advisable, cause
Articles of Merger (the "Partnership Articles of Merger") to be filed with the
State Department of Assessments and Taxation of Maryland (the "SDAT") as
provided in Section 10-208(d) of the MRULPA. Following the fulfillment or waiver
of the conditions set forth in Section 5.1 hereof, provided that this Agreement
shall not have been terminated or abandoned pursuant to Article VI hereof, the
Surviving Limited Partnership and the New Company will, at such time as they
deem advisable, cause Articles of Merger (the "Company Articles of Merger") to
be filed with the SDAT as provided in Section 3-107 of the MGCL. The Mergers
shall become effective upon the acceptance for record of the Partnership
Articles of Merger and the Company Articles of Merger by the SDAT (the
"Effective Time"). The parties hereto intend the Mergers to become effective
simultaneously.
ARTICLE II
CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
OF THE SURVIVING LIMITED PARTNERSHIP AND THE
CHARTER AND BYLAWS OF THE SURVIVING CORPORATION
2.1. SURVIVING LIMITED PARTNERSHIP. The certificate of limited
partnership and agreement of limited partnership, if any, of the Limited
Partnership, as in effect at the Effective Time, shall be the certificate of
limited partnership and agreement of limited partnership of the Surviving
Limited Partnership, until duly amended in accordance with the terms thereof and
the MRULPA.
2.2. SURVIVING CORPORATION. The Articles of Incorporation of the New
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Company, as in effect at the Effective Time, attached hereto as Exhibit A, shall
be the Articles of Incorporation of the Surviving Corporation, until duly
amended in accordance with the MGCL. The Bylaws of the New Company, as in effect
at the Effective Time, attached hereto as Exhibit B, shall be the Bylaws of the
Surviving Corporation, until duly amended in accordance with the MGCL.
ARTICLE III
DIRECTORS AND EXECUTIVE OFFICERS AND
COMMITTEES OF THE BOARD OF DIRECTORS
OF THE SURVIVING CORPORATION
3.1. DIRECTORS AND OFFICERS. At or before the Effective Time, the
following persons shall be elected or appointed as the executive officers and
directors of the Surviving Corporation and such officers and directors shall
thereafter serve until their successors have been duly elected and qualified or
until their earlier death, resignation or removal in accordance with the charter
of the Surviving Corporation:
NAME OFFICE
---- ------
Richard M. Osborne Chairman of the Board, Chief Executive
Officer and Director
Steven A. Calabrese Director
Mark D. Grossi Director
Marc C. Krantz Secretary and Director
Thomas J. Smith President, Chief Operating Officer and
Director
Sherry Kirchenbauer Chief Financial Officer and Assistant
Secretary
Jeffrey J. Heidnik Vice President of Operations
3.2. COMMITTEES OF THE BOARD OF DIRECTORS. At or before the Effective
Time, the Board of Directors of the Surviving Corporation shall create and
constitute the following committees and each member of such committee shall
thereafter serve until his successor shall have been duly appointed in
accordance with the Bylaws of the Surviving Corporation:
AUDIT COMMITTEE
---------------
Mark D. Grossi
Marc C. Krantz
COMPENSATION COMMITTEE
----------------------
Steven A. Calabrese
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Mark D. Grossi
The foregoing committees shall have the same functions and powers delegated to
the same committees of the board of trustees of the Company as set forth in the
minutes of the board of trustees of the Company, as may be revised from time to
time by the Board of Directors of the New Company.
ARTICLE IV
EFFECT OF THE MERGER
ON SHARES OF BENEFICIAL INTEREST;
EXCHANGE OF CERTIFICATES
4.1. EFFECT ON STOCK. At the Effective Time, by virtue of the Mergers
and without any action on the part of the holders thereof:
(a) Each share of beneficial interest, $1.00 par value, of the Company
(the "Shares") issued and outstanding immediately prior to the Effective Time
shall be converted into, and shall become, one validly issued, fully paid and
nonassessable share of common stock, $0.001 par value per share ("Common
Stock"), of the New Company. At the Effective Time, all Shares shall no longer
be outstanding and shall be canceled and retired and shall cease to exist.
(b) Each Share issued and held in the Company's treasury at the
Effective Time shall, by virtue of the Mergers and without any action on the
part of the holder thereof, cease to be outstanding, shall be canceled and
retired without payment of any consideration therefor and shall cease to exist.
(c) At the Effective Time, each partnership interest in the Limited
Partnership existing immediately prior to the Effective Time shall, by virtue of
the Mergers and without any action on the part of the Limited Partnership or the
holder of such interests, be canceled and retired without payment of any
consideration therefor.
(d) At the Effective Time, each share of Common Stock of the New
Company issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Mergers and without any action on the part of the New Company or
the holder thereof, be canceled and retired without payment of any consideration
therefor, and such shares shall have the status of unauthorized and unissued
shares of Common Stock.
4.2. STOCK CERTIFICATES. From and after the Effective Time, (i) each
certificate which immediately prior to the Effective Time represented one Share
(each, a "Certificate") shall be deemed for all purposes to represent ownership
of one share of Common Stock. The registered owner on the books and records of
the Company or its transfer agent of any Certificate shall, until such
Certificate shall have been surrendered for transfer or otherwise accounted for
to the Surviving Corporation or its transfer agent, have and be entitled to
exercise any voting or other rights with
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respect to and to receive any dividends and other distributions upon the shares
of Common Stock represented by any such outstanding Certificate as provided
above. Nothing contained herein shall be deemed to require the holder of any
Shares to surrender any Certificate(s) representing such shares in exchange for
a certificate or certificates representing shares of Common Stock.
ARTICLE V
CONDITIONS
5.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the Company, the Limited Partnership and the New
Company to consummate the Mergers are subject to the fulfillment of each of the
following conditions:
(a) The registration statement on Form S-4 to be filed by the New
Company, which will include the proxy statement of the Company soliciting
proxies to approve the Mergers, shall have been declared effective in accordance
with the Securities Act of 1933, as amended, by the Securities and Exchange
Commission and no stop order shall have been issued or threatened.
(b) This Agreement shall have been duly approved by (i) the requisite
vote of holders of the Shares in accordance with applicable law and the Amended
and Restated Declaration of Trust and Trustee By-laws of the Company, (ii) the
New Company as the general partner of the Limited Partnership, and (iii) the
Company, as the sole stockholder of the New Company.
(c) No order to restrain, enjoin or otherwise prevent the consummation
of this Agreement or either of the Mergers shall have been entered by any court
or administrative body and shall remain in full force and effect.
(d) The obligations to consummate the Mergers contemplated hereby shall
not have been terminated or abandoned pursuant to Article VI hereof.
(e) All consents and approvals, if any, necessary for the transactions
contemplated hereby shall have been obtained and be in full force and effect.
ARTICLE VI
TERMINATION
6.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Mergers may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of the Shares, by the mutual consent of the
Board of Trustees of the Company and the general partner of the Limited
Partnership and the Board of Directors of the New Company.
6.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and abandonment of the Mergers pursuant to this Article VI, no
party
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hereto (or any of its directors, trustees or officers) shall have any liability
or further obligation to any other party to this Agreement.
ARTICLE VII
MISCELLANEOUS AND GENERAL
7.1. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. From and
after the Effective Time, the Surviving Corporation will indemnify, and pay or
reimburse reasonable expenses in advance of final disposition of a proceeding
to, (i) any individual who is a present or former trustee or officer of the
Company or the Limited Partnership or its general partner or (ii) any individual
who, while a trustee of the Company and at the request of the Company, 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, arising out of or pertaining to matters existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent required or permitted by
Maryland Law.
7.2. MODIFICATION OR AMENDMENT. Subject to the applicable provisions of
the MRULPA and the MGCL, at any time prior to the Effective Time, the parties
hereto may amend or modify this Agreement by written agreement, executed and
delivered by duly authorized officers of the respective parties; provided,
however, that after the Mergers have been approved by the Company's
shareholders, no amendment or modification may change the amount or form of the
consideration to be received by such shareholders in the Mergers.
7.3. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the relevant Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
7.4 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the same
agreement.
7.5. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California and Maryland in the case of
the Limited Partnership Merger, and in accordance with the laws of the State of
Maryland in the case of the Company Merger.
7.6. NO THIRD PARTY BENEFICIARIES. Except as provided in Section 7.1,
no provision of this Agreement is intended, nor shall it be interpreted, to
provide or create any third party beneficiary rights or any other rights of any
kind in any client, customer, affiliate, stockholder, partner or employee or any
other person or entity.
7.7. HEADINGS. The Article, Section and Paragraph headings herein are
for
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convenience of reference only and shall have no effect on the construction or
meaning of this Agreement.
7.8. SERVICE OF PROCESS. The New Company may be served with process in
the State of Maryland in any proceeding for the enforcement of any obligation of
the Company or the Limited Partnership, as well as for enforcement of any
obligations of the New Company arising from the Mergers, and the agreement for
services of process of the New Company is CSC-Lawyers Incorporating Services
Company, 11 East Chase Street, Baltimore, MD 21202.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
LIBERTY SELF-STOR, INC.
By: /s/ Thomas J. Smith
-------------------------------
Name: Thomas J. Smith
Title: President
LIBERTY SELF-STOR LIMITED
PARTNERSHIP
By: LIBERTY SELF-STOR, INC.,
its general partner
By: /s/ Thomas J. Smith
-----------------------
Name: Thomas J. Smith
Title: President
MERIDIAN POINT REALTY TRUST `83
By: /s/ Thomas J. Smith
------------------------------
Name: Thomas J. Smith
Title: President
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EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
LIBERTY SELF-STOR, INC.
ARTICLE I
INCORPORATION
1600 CNB Corp., whose address is 1375 East Ninth Street, 20th Floor,
Cleveland, Ohio 44114, does hereby serve as incorporator and form a corporation
(the "Corporation") under the general laws of the State of Maryland.
ARTICLE II
NAME
The name of the Corporation is Liberty Self-Stor, Inc.
ARTICLE III
PURPOSE
3.1 General Purposes. The Corporation is formed for the purpose of
engaging in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Maryland as it presently
exists or may be amended in the future (the "Maryland General Corporation Law").
3.2 Operation as REIT. Without limiting the generality of the foregoing
purpose, at such time or times as the Board of Directors of the Corporation
determines that it is in the interest of the Corporation and its stockholders
that the Corporation engage in the business of, and conduct its business and
affairs so as to qualify as a real estate investment trust (as that phrase is
defined in the Internal Revenue Code of 1986, as amended, the purpose of the
Corporation shall include engaging in the business of a real estate investment
trust. This reference to such purpose shall not make unlawful or unauthorized
any otherwise lawful act or activity that the Corporation may take that is
inconsistent with such purpose.
ARTICLE IV
PRINCIPAL OFFICE ADDRESS
The address of the principal office of the Corporation in the State of
Maryland is c/o CSC - Lawyers Incorporating Services Company, 11 East Chase
Street, Baltimore, MD 21202.
ARTICLE V
RESIDENT AGENT
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The Resident Agent of the Corporation is CSC - Lawyers Incorporating
Services Company, 11 East Chase Street, Baltimore, MD 21202. Said Resident Agent
is a Maryland corporation.
ARTICLE VI
CAPITAL STRUCTURE
6.1 Authorized Capital Stock. The aggregate number of shares of all
classes of stock that the Corporation is authorized to issue is 52,000,000
shares, consisting of:
(a) 50,000,000 shares of Common Stock, par value $0.001 per share
(the "Common Stock"); and
(b) 2,000,000 shares of Serial Preferred Stock, par value $0.001 per
share (the "Preferred Stock").
The Common Stock and the Preferred Stock are collectively referred to
herein as the "Equity Shares."
6.2 REIT-Related Restrictions and Limitations on the Equity Shares of
the Corporation.
From the date hereof and until the "Restriction Termination Date," as
defined below, all Equity Shares of the Corporation shall be subject to the
following restrictions and limitations intended to preserve the Corporation's
status as a REIT:
6.2.1 DEFINITIONS. The following terms shall have the following
meanings:
"Acquire" shall mean the acquisition of Beneficial or Constructive
Ownership of Equity Shares, whether by a Transfer, Non-Transfer Event
or by any other means, including, without limitation, acquisition
pursuant to the exercise of any option, warrant, pledge or other
security interest or similar right to acquire Equity Shares, but shall
not include the acquisition of any such rights, unless, as a result,
the acquiror would be considered a Beneficial Owner, as defined below.
"Beneficial Ownership" shall mean ownership of Equity Shares by a
person who would be treated as an owner of Equity Shares either
directly or indirectly under Section 542(a)(2) of the Code, taking into
account, for this purpose, constructive ownership determined under
Section 544 of the Code, as modified by section 856(h)(1)(B) of the
Code (except where expressly provided otherwise). The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Beneficiary" shall mean, with respect to any Share Trust, one or
more organizations described in each of Section 170(b)(1)(A) (other
than clauses (vii) or (viii) thereof) and Section 170(c)(2) of the Code
named by the Share Trust as the beneficiary or beneficiaries of such
Share Trust, in accordance with the provisions of Section 6.4.1.
hereof.
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"Code" shall mean the Internal Revenue Code of 1986, as amended and
in effect from time to time, or any successor statute thereto, as
interpreted by the applicable regulations thereunder. Any reference
herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
"Constructive Ownership" shall mean ownership of Equity Shares by a
person who would be treated as an owner of such Equity Shares either
directly or constructively through the application of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructively Own," "Constructively Owned" and "Constructive Owner"
shall have the correlative meanings.
"Exempt Party" shall mean (1) Turkey Vulture Fund XIII, Ltd., (2)
Richard M. Osborne and all members of Osborne's immediate family, as
such term is defined in Section 544(a)(2) of the Code, and (3) any
Section 544 Subsidiary of the entity or individuals described in
clauses (1) and (2) above (the entities and individuals described in
clauses (1) and (2) above being collectively referred to herein as the
"Osborne Affiliates").
"Market Price" shall mean the average closing price for the ten (10)
consecutive Trading Days immediately preceding such date. The market
price for each such Trading Day shall be: (i) if the Equity Shares are
listed or admitted to trading on any national securities exchange or
the Nasdaq National Market System, the closing price, regular way, on
such day, or if no such sale takes place on such day, the average of
the closing bid and asked prices on such day; (ii) if the Equity
Shares are not listed or admitted to trading on any national
securities exchange or the Nasdaq National Market System, the last
reported sale price on such day or, if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the Corporation,
or (iii) if the Equity Shares are not listed or admitted to trading on
any national securities exchange or the Nasdaq National Market System
and no such last reported sale price or closing bid and asked prices
are available, the average of the reported high bid and low asked
prices on such day, as reported by a reliable quotation source
designated by the Corporation, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices,
as so reported, on the most recent day (not more than ten (10) days
prior to the date in question) for which prices have been so reported;
provided, however, that if there are no bid and asked prices reported
during the ten (10) days prior to the date in question, the Market
Price of the Equity Shares shall be determined by the Corporation
acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
In the event the Equity Shares includes rights that a holder of Equity
Shares would be entitled to receive, and the Corporation acting in
good faith determines that the value of such rights is not reflected
in the Market Price of the Equity Shares determined as aforesaid, then
the Market Price of such rights shall be determined by the Corporation
acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
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"Non-Transfer Event" shall mean an event other than a purported
Transfer that would cause any Person to Beneficially Own or
Constructively Own Equity Shares in excess of the Ownership Limit (or
would cause the Corporation to fail to qualify as a REIT), including,
without limitation, a change in the capital structure of the
Corporation.
"Ownership Limit" shall mean 9.8% of the aggregate value of all
outstanding Equity Shares; provided, however, with respect to any
entity, the ownership of whose Equity Shares is attributable to the
owners of such entity under Sections 544 and 856(h) of the Code and
which will be "looked through" for the purposes of applying Section
856(a)(6) and (h) of the Code, the Ownership Limit shall mean 15% of
the aggregate value of all outstanding Equity Shares.
"Partnership" shall mean LSS I Limited Partnership, a Delaware
limited partnership any successor thereto and any other similar
partnership formed by the Corporation or any successor to such similar
partnership.
"Permissible Ownership Threshold" shall mean as to the Osborne
Affiliates 75%; provided that once an Exempt Party transfers such
Equity Shares such that such Exempt Party following such transfer
Beneficially Owns and Constructively Owns less in value than the
Ownership Limit, then such Exempt Party's Permissible Ownership
Threshold shall equal the Ownership Limit; provided, further, however,
that the foregoing proviso shall not restrict the Osborne Affiliates
from acquiring Equity Shares upon the redemption of Class A limited
partnership interests and preferred limited partnership interests of
the Partnership if such acquisition would not result in the Osborne
Affiliates exceeding 75% as specified above.
"Permitted Transferee" shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Section
6.4.5 hereof.
"Person" shall mean an individual, corporation, partnership, limited
liability company, estate, trust (including a trust qualified under
section 401(a) or 501(e)(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 who
participates in any public offering of Equity Shares and/or securities
convertible into or exchangeable for Equity Shares (a "Secondary
Offering") for a period of sixty (60) days following the purchase by
such underwriter of the Equity Shares and/or securities convertible
into or exchangeable for Equity Shares in such Secondary Offering.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer that results in Shares-In-Trust as defined below in
section 6.4 hereof, the purported beneficial
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transferee for whom the Purported Record Transferee would have
Acquired Equity Shares of the Corporation if such Transfer had been
valid under Section 6.2.2 hereof.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Shares-in-Trust, the Person who
would have been the record holder of the Equity Shares of the
Corporation if such Transfer had been valid under Section 6.2.2
hereof.
"REIT" shall mean a real estate investment trust under Section 856
ET. SEQ. of the Code.
"Restriction Termination Date" shall mean the day on which the
Corporation determines pursuant to Section 6.2.8 that it is no longer
in the best interests of the Corporation to attempt to, or continue
to, qualify as a REIT.
"Share Trust" shall mean any separate trust created pursuant to
Section 6.4.1 hereof and administered in accordance with the terms of
Section 6.4 hereof, for the exclusive benefit of any Beneficiary.
"Shares-in-Trust" shall mean any Equity Shares designated
Shares-in-Trust pursuant to Section 6.4.1 hereof.
"Share Trustee" shall mean the trustee of the Share Trust, which is
selected by the Corporation but not affiliated with the Corporation,
the Partnership or the Beneficiary, and any successor trustee
appointed by the Corporation.
"Section 544 Subsidiary" of any individual or entity shall mean any
entity, over 50% of the ownership interest in which is owned, directly
or indirectly (applying the principles of Section 544 of the Code), by
the individual or entity in question.
"Trading Day" shall mean a day on which the principal national
securities exchange on which such Equity Shares are listed or admitted
to trading is open for the transaction of business, or, if such Equity
Shares are not listed or admitted to trading on any national
securities exchange, shall mean 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.
"Transfer" (as a noun) shall mean any sale, transfer, gift,
assignment, devise or other disposition of Equity Shares or the right
to vote or receive dividends on Equity Shares (including without
limitation (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Equity Shares
or the right to vote or receive dividends on Equity Shares or (ii) the
sale, transfer, assignment or other disposition or grant of any
securities or rights convertible into or exchangeable for Equity
Shares, or the right to vote or receive dividends on Equity Shares),
whether voluntary or involuntary, whether of record or beneficially
and whether by operation or law or otherwise. "Transfer" (as a
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verb) shall have a correlative meaning.
6.2.2 OWNERSHIP LIMITATION AND TRANSFER RESTRICTIONS.
(i) Except as provided in Section 6.2.6 hereof, from the date hereof
and prior to the Restriction Termination Date: (w) no Person (other
than an Exempt Party) shall Beneficially Own or Constructively Own
Equity Shares in excess of the Ownership Limit; (x) no Person shall
Acquire Equity Shares if, as a result of such acquisition, the Equity
Shares would be beneficially owned by fewer then 100 Persons
(determined without reference to any rules of attribution under the
Code); (y) no Person shall Acquire Equity Shares or any interest
therein if, as a result of such acquisition, the Corporation would be
"closely held" within the meaning of Section 856(h) of the Code or
would otherwise fail to qualify as a REIT, as the case may be; and (z)
no Person shall Acquire Equity Shares or any interest therein if, as a
result of such acquisition, the Corporation would Constructively Own
10% or more of the ownership interest in a tenant of the Corporation's
or the Partnership's real property, within the meaning of Section
856(d)(2)(B) of the Code, or would otherwise fail to qualify as a
REIT, as the case may be.
(ii) Any Transfer (other than a Transfer to an Exempt Party) that
would result in a violation of the restrictions in Section 6.2.2(i)
above shall be void AD INITIO as to the purported Transfer of such
number of Equity Shares that would cause the violation of the
applicable restriction in Section 6.2.2(i), and the Purported Record
Transferee (other than an Exempt Party) and the Purported Beneficial
Transferee, if different, shall acquire no rights in such Equity
Shares.
6.2.3 AUTOMATIC TRANSFER TO SHARE TRUST.
(i) If, notwithstanding the other provisions contained in this
Article VI, at any time from the date hereof and prior to the
Restriction Termination Date, there is a purported Transfer or
Non-Transfer Event such that any Person (other than an Exempt Party)
would either Beneficially Own or Constructively Own Equity Shares in
excess of the Ownership Limit, then, except as otherwise provided in
Section 6.2.6 hereof (x) the Purported Record Transferee and the
Purported Beneficial Transferee, if different, shall acquire no right
or interest (or in the case of a Non-Transfer Event, the person
holding record title to the Equity Shares Beneficially Owned or
Constructively Owned by such Beneficial Owner or Constructive Owner,
shall cease to own any right or interest) in such number of Equity
Shares which would cause such Purported Record Transferee and
Purported Beneficial Transferee, if different, to Beneficially Own or
Constructively Own Equity Shares in excess of the Ownership Limit
(rounded up to the nearest whole share), (y) such number of Equity
Shares in excess of the Ownership Limit (rounded up to the nearest
whole share) shall be designated Shares-in-Trust and, in accordance
with the provisions of Section 6.4.1 hereof, transferred automatically
and by operation of law to the Share Trust to be held in
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accordance with Section 6.4.1 hereof and (z) such Purported Record
Transferee and the Purported Beneficial Transferee, if different,
shall submit such number of Equity Shares to the Share Trust for
registration in the name of the Share Trustee. Any Purported Record
Transferee and Purported Beneficial Transferee, if different, shall
acquire no right or interest (or, in the case of a Non-Transfer Event,
the person holding record title to the Equity Shares Beneficially
Owned or Constructively Owned by such Beneficial Owner or Constructive
Owner, shall cease to own any right or interest) in such number of
Equity Shares which would cause such Person to own Equity Shares in
excess of the Ownership Limit. Such transfer to a Share Trust and the
designation of shares as Shares-in-Trust shall be effective as of the
close of business on the business day prior to the date of the
Transfer or Non-Transfer Event, as the case may be.
(ii) If, notwithstanding the other provisions contained in this
Article VI, at any time from the date hereof and prior to the
Restriction Termination Date, there is a purported Transfer or
Non-Transfer Event that, if effective, would (i) result in the Equity
Shares being beneficially owned by fewer that 100 Persons (determined
without reference to any rules of attribution), (ii) result in the
Corporation being "closely held" within the meaning of Section 856(h)
of the Code, (iii) cause the Corporation to Constructively Own 10% or
more of the ownership interests in a tenant of the Corporation's or
the Partnership's real property, within the meaning of Section
856(d)(2)(B) of the Code, or (iv) cause the Corporation to otherwise
fail to qualify as a REIT, as the case may be, then (x) the Purported
Record Transferee and the Purported Beneficial Transferee, if
different, shall acquire no right or interest (or, in the case of a
Non-Transfer Event, the person holding record title to the Equity
Shares Beneficially Owned or Constructively Owned by such Beneficial
Owner or Constructive Owner, shall cease to own any right or interest)
in such number of Equity Shares, the ownership of which by such
Purported Record Transferee and Purported Beneficial Transferee, if
different, would (A) result in the Equity Shares being beneficially
owned by fewer than 100 Persons (determined without reference to any
rules of attribution), (B) result in the Corporation being "closely
held" within the meaning of Section 856(b) of the Code, (C) cause the
Corporation to Constructively Own 10% or more of the ownership
interests in a tenant of the Corporation's or the Partnership's
property, within the meaning of Section 856(d)(2)(B) of the Code, or
(D) would otherwise cause the Corporation to fail to qualify as a
REIT, as the case may be, (y) such number of Equity Shares (rounded up
to the nearest whole share) shall be designated Shares-in-Trust and,
in accordance with the provisions of Section 6.4.1 hereof, transferred
automatically and by operation of law to the Share Trust to be held in
accordance with Section 6.4.1 hereof and (z) the Purported Record
Transferee and the Purported Beneficial Transferee, if different,
shall submit such number of Equity Shares to the Share Trust for
registration in the name of the Share Trustee. Any Purported Record
Transferee and Purported Beneficial Transferee, if different, shall
acquire no right or interest (or, in the case of a Non-Transfer Event,
the person holding record title to the Equity Shares Beneficially
Owned or Constructively Owned by such Beneficial Owner or Constructive
Owner, shall cease to own any right or interest) in such number of
Equity Shares which would cause such Person to own Equity Shares that
would (A) result
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in the Equity Shares being beneficially owned by fewer than 100
Persons (determined without reference to any rules of attribution),
(B) result in the Corporation being "closely held" within the meaning
of Section 856(h) of the Code, (C) cause the Corporation to
Constructively Own 10% or more of the ownership interests in a tenant
of the Corporation's or the Partnership's property, within the meaning
of Section 856(d)(2)(B) of the Code, or (D) would otherwise cause the
Corporation to fail to qualify as a REIT. Such transfer to a Share
Trust and the designation of Equity Shares as Shares-in-Trust shall be
effective as of the close of business on the business day prior to the
date of the Transfer or Non-Transfer Event, as the case may be.
6.2.4 REMEDIES FOR BREACH.
If the Board of Directors of the Corporation or its designee shall at
any time determine in good faith that a purported Transfer of Equity
Shares has taken place in violation of Section 6.2.2 hereof or that a
Person intends to acquire or has attempted to acquire (determined
without reference to any rules of attribution) Beneficial Ownership or
Constructive Ownership of any Equity Shares of the Corporation in
violation of Section 6.2.2 hereof, the Board of Directors of the
Corporation or its designee shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including but not limited to, refusing to give effect to
such Transfer or acquisition on the books of the Corporation or
instituting proceedings to enjoin such Transfer or acquisition;
PROVIDED HOWEVER, that any Transfer, attempted Transfer, acquisition
or attempted acquisition in violation of Section 6.2.2(i) hereof shall
automatically result in the Transfer described in Section 6.2.3
hereof, irrespective of any action (or non-action) by the Board of
Directors, except as provided in Section 6.2.6 hereof.
6.2.5 NOTICE OF RESTRICTED TRANSFER.
(i) Any Person who acquires or attempts to acquire Equity Shares in
violation of Section 6.2.2, and any Person who is a Purported Record
Transferee or a Purported Beneficial Transferee of Equity Shares that
are transferred to a Share Trust under Section 6.2.3 hereof, shall
immediately give written notice to the Corporation of such event,
shall submit to the Corporation such number of Equity Shares to be
transferred to the Share Trust and shall provide to the Corporation
such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer
or such Non-Transfer Event on the Corporation's status as REIT;
(ii) From the date hereof and prior to the Restriction Termination
Date every Beneficial Owner or Constructive Owner of more than 5% (or
such other percentage as provided in the pertinent income tax
regulations promulgated under the Code) of the number or value of the
outstanding Equity Shares of the Corporation shall, within 30 days
after January 1 of each year, give written notice to the Corporation
stating the name and address of such Beneficial Owner or Constructive
Owner, the number of Equity Shares Beneficially or Constructively
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Owned, and a description of how such shares are held. Each such
Beneficial Owner or Constructive Owner shall provide to the
Corporation such additional information that the Corporation may
reasonably request in order to determine the effect, if any, of such
Beneficial or Constructive Ownership on the Corporation's status as a
REIT and to ensure compliance with the Ownership Limit; and
(iii) From the date hereof and prior to the Restriction Termination
Date, each Person who is a Beneficial Owner or Constructive Owner of
Equity Shares of the Corporation and each Person (including the
stockholder of record) who is holding Equity Shares of the Corporation
for a Beneficial Owner or Constructive Owner shall provide the
Corporation such information as the Corporation may reasonably request
in order to determine the Corporation's status as a REIT, to comply
with the requirements of any taxing authority or governmental agency
or to determine any such compliance and to ensure compliance with the
Ownership Limit.
6.2.6 EXCEPTION. The Board of Directors, in its sole discretion, may,
but shall in no case be required to, exempt a Person (an "Exempted
Holder") from the Ownership Limit if no Person who is an individual as
defined in Section 542(a)(2) of the Code will, as the result of the
ownership of Equity Shares by the Exempted Holder, be considered to
have Beneficial Ownership or Constructive Ownership of an amount of
Equity Shares that will violate the restrictions contained in Section
6.2.2(i)(x), (y) or (z) hereof; PROVIDED that (i) the Board of
Directors obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain that no individual's
Beneficial Ownership or Constructive Ownership of an amount of Equity
Shares will violate the Ownership Limit or the restrictions contained
in Section 6.2.2(i)(x)(y) and (z) hereof, and (ii) such Person agrees
that any violation or attempted violation will result in a Transfer to
the Share Trust of Equity Shares pursuant to Section 6.2.3 hereof.
Prior to granting any exception pursuant to this Section 6.2.6, the
Board of Directors may require a ruling from the Internal Revenue
Service, or an opinion of counsel, in either case in form and
substance satisfactory to the Board of Directors, in its sole
discretion, as it may deem necessary or advisable in order to
determine or ensure the Corporation's status as a REIT.
Notwithstanding the receipt of any ruling or opinion, the Board of
Directors may impose such conditions or restrictions as it deems
appropriate in connection with granting such exception.
6.2.7. LEGEND. Each certificate for shares of Equity Shares shall
bear substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT
TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"). EXCEPT AS OTHERWISE PROVIDED PURSUANT TO THE CHARTER OF
THE CORPORATION, NO PERSON MAY BENEFICIALLY
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OWN OR CONSTRUCTIVELY OWN (1) EQUITY SHARES IN EXCESS OF 9.8% (OR
15% IN THE CASE OF AN ENTITY, THE OWNERSHIP OF WHOSE EQUITY SHARES
IS ATTRIBUTABLE TO THE OWNERS OF SUCH ENTITY UNDER SECTIONS 544 AND
856(h) OF THE CODE AND WHICH WILL BE "LOOKED THROUGH" FOR THE
PURPOSES OF APPLYING SECTION 856(a)(6) AND (h) OF THE CODE) OF THE
AGGREGATE VALUE OF THE OUTSTANDING EQUITY SHARES, (2) EQUITY SHARES
THAT WOULD RESULT IN THE TRUST BEING "CLOSELY HELD" UNDER SECTION
856(h) OF THE CODE, (3) EQUITY SHARES THAT WOULD RESULT IN THE
EQUITY SHARES BEING BENEFICIALLY OWNED BY FEWER THAN 100 PERSONS
(DETERMINED WITHOUT REFERENCE TO ANY RULES OF ATTRIBUTION) OR (4)
EQUITY SHARES THAT WOULD CAUSE THE CORPORATION TO CONSTRUCTIVELY
OWN 10% OR MORE OF THE OWNERSHIP INTERESTS IN A TENANT OF THE REAL
PROPERTY OF THE CORPORATION OR THE PARTNERSHIP, WITHIN THE MEANING
OF SECTION 856(d)(2)(B) OF THE CODE, WITH FURTHER RESTRICTIONS AND
EXCEPTIONS SET FORTH IN THE CORPORATION'S CHARTER. ANY PERSON WHO
ATTEMPTS OR PROPOSES TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN
EQUITY SHARES IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY
NOTIFY THE CORPORATION IN WRITING. IF AN ATTEMPT IS MADE TO VIOLATE
OR THERE IS A VIOLATION OF THESE RESTRICTIONS (1) ANY PURPORTED
TRANSFER WILL BE VOID AB INITIO AND WILL NOT BE RECOGNIZED BY THE
CORPORATION, (2) THE EQUITY SHARES IN VIOLATION OF THESE
RESTRICTIONS, WHETHER AS A RESULT OF A TRANSFER OR NON-TRANSFER
EVENT, WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO
A SHARE TRUST AND SHALL BE DESIGNATED SHARES-IN-TRUST. ALL TERMS
USED IN THIS LEGEND AND DEFINED IN THE CORPORATION'S CHARTER HAVE
THE MEANINGS DEFINED IN THE CORPORATION'S CHARTER, AS THE SAME MAY
BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE
RESTRICTIONS ON OWNERSHIP AND TRANSFER, WILL BE SENT WITHOUT CHARGE
TO EACH STOCKHOLDER WHO SO REQUESTS."
6.2.8 REIT QUALIFICATIONS. The Board of Directors shall use its
reasonable best efforts to cause the Corporation to qualify for United
States Federal income tax treatment as a REIT in accordance with the
provisions of the Code applicable to a REIT and shall not take any
action which could adversely affect the ability of the Corporation to
qualify as a REIT. In furtherance of the foregoing, the Board of
Directors shall use its reasonable best efforts to take such actions
as are necessary, and may take such actions as in its sole judgment
and discretion are desirable to preserve the status of the Corporation
as a REIT; PROVIDED, HOWEVER, that if the Board of Directors
determines in its sole judgment and discretion it is no longer in the
best interests of the Corporation to continue to have the Corporation
qualify as a REIT, the Board of Directors may terminate the
Corporation's REIT election.
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6.2.9 REMEDIES NOT LIMITED. 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 in preserving the Corporation's
status as a REIT.
6.2.10 AMBIGUITY. In the case of an ambiguity in the application of
any of the provisions of this Article VI, including any definition
contained in Section 6.2.1, 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.
6.2.11 SEVERABILITY. If any provision of this Article VI or any
application of any such provision is determined to be invalid by a
federal or state court having jurisdiction over the issue, the
validity 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.
6.3 Common Stock.
(a) Powers, Preferences and Rights. Except as may otherwise be
provided by these Articles of Incorporation, as may be amended from time to time
by resolutions of the Board of Directors designating a class or series of
Preferred Stock pursuant to Section 6.5 hereof (these "Articles of
Incorporation"), or by the Maryland General Corporation Law, the powers,
preferences and rights of the Common Stock, and the qualifications, limitations
or restrictions thereof, shall be in all respects identical.
(b) Voting Rights. Except as may otherwise be provided by these
Articles of Incorporation or by the Maryland General Corporation Law, (i) all
rights to vote and all voting power shall be vested exclusively in the holders
of the Common Stock and (ii) each holder of Common Stock shall be entitled to
one vote for each share held of record on the applicable record date on all
matters presented for a vote of the stockholders of the Corporation, including,
without limitation, the election of directors.
(c) Dividends; Recapitalizations. Except as may otherwise be provided
by these Articles of Incorporation or by the Maryland General Corporation Law,
if, as and when dividends on the Common Stock are declared payable from time to
time by the Board of Directors as provided in this Section 6.3(c), whether
payable in cash, property, stock or other securities, the holders of Common
Stock shall be entitled to share equally, on a per share basis, in such
dividends.
(d) Liquidating Distributions. Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, or upon any
sale or conveyance of all or substantially all of the assets of the Corporation,
after payment or provision for payment of all the liabilities of the Corporation
and the expenses of liquidation, and after the holders of the Preferred Stock
shall have been paid in full the amounts, if any, to which they are entitled or
a sum sufficient
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for such payment in full shall have been set aside, the remaining assets of the
Corporation available for distribution shall be distributed ratably to the
holders of the Common Stock in accordance with their respective rights and
interests.
6.4 Shares-in Trust.
6.4.1 SHARE TRUST. Any Equity Shares transferred to a Share Trust and
designated Shares-in-Trust pursuant to Section 6.2.3 hereof shall be
held for the exclusive benefit of the Beneficiary. The Corporation
shall name a Beneficiary and Share Trustee of each Share Trust within
30 days after discovery of the existence thereof. Any transfer to a
Share Trust, and subsequent designation of Equity Shares as
Shares-in-Trust, pursuant to Section 6.2.3 hereof shall be effective
as of the close of business on the business day prior to the date of
the Transfer or Non-Transfer Event that results in the transfer to the
Share Trust. Shares-in-Trust shall remain issued and outstanding
Equity Shares of the Corporation and shall be entitled to the same
rights and privileges on identical terms and conditions as are all
other issued and outstanding Equity Shares of the same class and
series. When transferred to a Permitted Transferee in accordance with
the provisions of Section 6.4.3 hereof, such Shares-in-Trust shall
cease to be designated as Shares-in-Trust.
6.4.2 DIVIDEND RIGHTS. The Share Trustee, as record holder of
Shares-in-Trust, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Directors on such
Equity Shares and shall hold such dividends or distributions in trust
for the benefit of the Beneficiary. The Purported Record Transferee or
Purported Beneficial Transferee, if different, with respect to
Shares-in-Trust shall repay to the Share Trustee the amount of any
dividends or distributions received by it that (i) are attributable to
any Equity Shares designated as Shares-in-Trust and (ii) the record
date of which was on or after the date that such shares became
Shares-in-Trust. The Corporation shall take all measures that it
determines reasonably necessary to recover the amount of any such
dividend or distribution paid to the Purported Record Transferee or
Purported Beneficial Transferee, if different, including, if
necessary, withholding any portion of future dividends or
distributions payable on Equity Shares Beneficially Owned or
Constructively Owned by the Person who, but for the provisions of
Section 6.2.3 hereof, would Constructively Own or Beneficially Own the
Shares-in-Trust; and, as soon as reasonably practicable following the
Corporation's receipt or withholding thereof, shall pay over to the
Share Trustee for the benefit of the Beneficiary the dividends so
received or withheld, as the case may be.
6.4.3 RIGHTS UPON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of the Corporation (other than a dividend),
each Share Trustee shall be entitled to receive, ratably with each
other holder of Equity Shares of the same class or series, that
portion of the assets of the Corporation which is available for
distribution to the holders of such class and series of Equity Shares.
The Share Trustee shall distribute to the Purported Record Transferee
the amounts received upon such liquidation, dissolution, winding up,
or distribution; PROVIDED, HOWEVER, that the
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Purported Record Transferee shall not be entitled to receive amounts
pursuant to this Section 6.4.3 in excess of, in the case of a
purported Transfer in which the Purported Record Transferee gave value
for Equity Shares and which Transfer resulted in the transfer of the
shares to the Share Trust, the price per share, if any, such Purported
Record Transferee paid for the Equity Shares and, in the case of a
Non-Transfer Event or Transfer in which the Purported Record
Transferee did not give value for such shares (E.G., if the shares
were received through a gift or devise) and which Non-Transfer Event
or Transfer, as the case may be, resulted in the transfer of shares to
the Share Trust, the price per share equal to the Market Price on the
date of such Non-Transfer Event or Transfer. Any remaining amount in
such Share Trust shall be distributed to the Beneficiary.
6.4.4 VOTING RIGHTS. The Share Trustee shall be entitled to vote all
Shares-in-Trust. Any vote by a Purported Record Transferee as a holder
of Equity Shares prior to the discovery by the Corporation that the
Equity Shares are Shares-in-Trust shall, subject to applicable law, be
rescinded and shall be void AB INITIO with respect to such
Shares-in-Trust and the Purported Record Transferee shall be deemed to
have given, as of the close of business on the business day prior to
the date of the purported Transfer or Non-Transfer Event that results
in the transfer to the Share Trust of Equity Shares under Section
6.2.3 hereof, an irrevocable proxy to the Share Trustee to vote the
Shares-in-Trust in the manner in which the Share Trustee, in its sole
and absolute discretion, desires.
6.4.5 DESIGNATION OF PERMITTED TRANSFEREE. The Share Trustee shall
have the exclusive and absolute right to designate a Permitted
Transferee of any and all Shares-in-Trust. In an orderly fashion so as
not to materially adversely affect the Market Price of the Shares-in
Trust, the Share Trustee shall designate any Person as Permitted
Transferee; PROVIDED, HOWEVER, that (i) the Permitted Transferee so
designated purchases for valuable consideration (whether in a public
or private sale), at a price set forth in Section 6.4.7 hereof, the
Shares-in-Trust, and (ii) the Permitted Transferee so designated may
acquire such Shares-in-Trust without such acquisition resulting in a
transfer to a Share Trust and the redesignation of such Equity Shares
so acquired as Shares-in-Trust under Section 6.2.3 hereof. Upon the
designation by the Share Trustee of a Permitted Transferee in
accordance with the provisions of this Section 6.4.5, the Share
Trustee shall (i) cause to be transferred to the Permitted Transferee
that number of Shares-in-Trust acquired by the Permitted Transferee,
(ii) cause to be recorded on the books of the Corporation that the
Permitted Transferee is the holder of record of such number of Equity
Shares, (iii) cause the Shares-in-Trust to be canceled, and (iv)
distribute to the Beneficiary any and all amounts held with respect to
the Shares-in-Trust after making the payment to the Purported Record
Transferee pursuant to Section 6.4.6 hereof.
6.4.6 COMPENSATION TO RECORD HOLDER OF EQUITY SHARES THAT BECOME
SHARES-IN-TRUST. Any Purported Record Transferee shall be entitled
(following discovery of the Shares-in-Trust and subsequent designation
of the Permitted Transferee in accordance with Section 6.4.5 hereof)
to receive from the Share Trustee upon the sale or other disposition
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of such Shares-in-Trust the lesser of (i) in the case of (a) a
purported Transfer in which the Purported Record Transferee, or
Purported Beneficial Transferee, if different, gave value for Equity
Shares and which Transfer resulted in the transfer of the shares to
the Share Trust, the price per share, if any, such Purported Record
Transferee or Purported Beneficial Transferee, if different, paid for
the Equity Shares, or (b) a Non-Transfer Event or Transfer in which
the Purported Record Transferee or Purported Beneficial Transferee, if
different, did not give value for such shares (E.G., if the shares
were received through a gift or devise) and which Non-Transfer Event
or Transfer, as the case may be, resulted in the transfer of shares to
the Share Trust, the price per share equal to the Market Price on the
date of such Non-Transfer Event or Transfer, and (ii) the price per
share received by the Share Trustee of the Share Trust from the sale
or other disposition of such Shares-in-Trust in accordance with
Sections 6.4.5 or 6.4.7 hereof. Any amounts received by the Share
Trustee in respect of such Shares-in-Trust and in excess of such
amounts to be paid the Purported Record Transferee pursuant to this
Section 6.4.6 shall be distributed to the Beneficiary in accordance
with the provisions of Section 6.4.5 hereof. Each Beneficiary and
Purported Record Transferee and Purported Beneficial Transferee, if
different, waives any and all claims that each may have against the
Share Trustee and the Share Trust arising out of the disposition of
the Shares-in-Trust, except for claims arising out of the gross
negligence or willful misconduct of, or any failure to make payments
in accordance with this Section 6.4, by such Share Trustee or the
Corporation.
6.4.7 PURCHASE RIGHT IN SHARES-IN-TRUST. Shares-in-Trust shall be
deemed to have been offered for sale to the Corporation, or its
designee, at a price per share equal to the lesser of (i) the price
per share in the transaction that created such Shares-in-Trust (or, in
the case of devise, gift or Non-Transfer Event, the Market Price at
the time of such devise, gift or Non-Transfer Event) and (ii) the
Market Price on the date the Corporation, or its designee, accepts
such offer. The Corporation shall have the right to accept such offer
for a period of ninety days after the later of (i) the date of the
Non-Transfer Event or purported Transfer which resulted in such
Shares-in-Trust and (ii) the date the Corporation determines in good
faith that a Transfer or Non-Transfer Event resulting in
Shares-in-Trust has occurred, if the Corporation does not receive a
notice of such Transfer or Non-Transfer Event pursuant to Section
6.2.5 hereof.
6.5 Preferred Stock.
(a) Designations by Board of Directors. The Preferred Stock may be
issued from time to time in one or more classes or series with such voting
rights, full or limited, or without voting rights, and with such designations,
preferences and relative, participating, optional or special rights, and
qualifications, limitations or restrictions as are stated herein and as shall be
stated and expressed in the resolution or resolutions providing for the issue of
such stock adopted by the Board of Directors as hereinafter prescribed.
(b) Terms of the Preferred Stock. Subject to the rights of the
holders of the Common
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Stock, authority is hereby expressly granted to and vested in the Board of
Directors or any designated committee thereof to authorize the issuance of the
Preferred Stock from time to time in one or more classes or series, to determine
and take necessary proceedings to fully effectuate the issuance and redemption
of any such Preferred Stock and, with respect to each class or series of
Preferred Stock, to fix and state from time to time, by resolution or
resolutions providing for the issuance thereof, the following:
(i) the number of shares to constitute the class or series and
the designations thereof;
(ii) whether the class or series is to have voting rights,
full or limited, or to be without voting rights;
(iii) the preferences and relative, participating, optional or
special rights, if any, and qualifications, limitations or
restrictions thereof, if any, of the class or series;
(iv) whether the shares of the class or series will be
redeemable and, if redeemable, the redemption price or prices and the
time or times at which, and the terms and conditions upon which, such
shares will be redeemable and the manner of redemption;
(v) whether the shares of the class or series will be subject
to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement and, if such
retirement or sinking funds are to be established, the annual amount
thereof and the terms and conditions relative to the operation
thereof;
(vi) the dividend rate, whether dividends are payable in cash,
stock or otherwise, the conditions upon which and the times when such
dividends are payable, the preference or relation to the payment of
dividends on any other class or series of stock, whether or not such
dividends will be cumulative or noncumulative and, if cumulative, the
date or dates from which such dividends will accumulate;
(vii) the preferences, if any, and the amounts thereof that
the holders of the class or series will be entitled to receive upon
the voluntary or involuntary dissolution, liquidation or winding up
of, or upon any distribution of the assets of, the Corporation;
(viii) whether the shares of the class or series will be
convertible into, or exchangeable for, the shares of any other class
or classes, or of any other series of the same or any other class or
classes, of stock of the Corporation and the conversion price or
prices, or ratio or ratios, or rate or rates, at which such conversion
or exchange may be made, with such adjustments, if any, as shall be
expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with
respect to the
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class or series as the Board of Directors or any designated committee
thereof may deem advisable.
The shares of each class or series of Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors or any designated committee thereof may from
time to time increase the number of shares of Preferred Stock designated for any
existing class or series by a resolution adding to such class or series
authorized but unissued shares of Preferred Stock not designated for any other
class or series thereof. The Board of Directors or any designated committee
thereof may from time to time decrease the number of shares of Preferred Stock
designated for any existing class or series by a resolution subtracting from
such class or series any unissued shares of Preferred Stock designated for such
class or series, and the shares so subtracted shall become authorized, unissued
and undesignated shares of Preferred Stock.
6.6 ISSUANCE OF EQUITY SHARES. The Board of Directors may authorize the
issuance from time to time of Equity Shares of any class, whether now or
hereafter authorized, or securities or rights convertible into Equity Shares,
for such consideration as the Board of Directors may deem advisable (or without
consideration in the case of a share split or dividend), subject to such
restrictions or limitations, if any, as may be set forth in the Bylaws of the
Corporation or the MGCL, and without any action by the stockholders.
6.7 DIVIDENDS OR DISTRIBUTIONS. Subject to the requirements of the
MGCL, the Board of Directors may from time to time declare and pay to
stockholders such dividends or distributions in cash, property or other assets
of the Corporation or in securities of the Corporation or from any other source
as the Board of Directors in their discretion shall determine.
6.8 PREEMPTIVE RIGHTS. No holder of any shares of any class or any
other securities of the Corporation, whether now or hereafter authorized, shall
have any preemptive rights to subscribe for or purchase any shares of any class
or any other securities of the Corporation other than such rights, if any, as
the Board of Directors, in its sole discretion, may fix; and any shares of any
class or other securities which the Board of Directors may determine to offer
for subscription may, within the Board of Directors' sole discretion, be offered
to the holders of any class, series or type of shares of any class or other
securities at the time outstanding to the exclusion of holders of any or all
other classes, series or types of shares of any class or other securities at the
time outstanding.
6.9 SETTLEMENT. Nothing in this Article VI shall preclude settlement of
any transaction entered into through the facilities of the New York Stock
Exchange or any other national securities exchange or the Nasdaq National Market
System. Despite the fact that settlement of any transaction is permitted, any
transferee in such a transaction shall be subject to all of the provisions and
limitations set forth in this Article VI.
6.10 LIMITED LIABILITY. Notwithstanding the foregoing, no director or
officer of the Corporation shall be liable to the Corporation for any damages,
costs or expenses arising from any
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dividend or other distribution paid by the Corporation to a Purported Record
Transferee or Purported Beneficial Transferee prior to the discovery by such
director or officer that such Purported Record Transferee or Purported
Beneficial Transferee was not entitled to receive such dividend or distribution
by virtue of the provisions of Section 6.4.2, and no corporate action authorized
by the stockholders of the Corporation prior to the discovery that a Purported
Record Transferee or Purported Beneficial Transferee is not entitled to vote
Equity Shares shall be void or voidable as a result of the inclusion of the vote
of such Purported Record Transferee or Purported Beneficial Transferee in
approving a Corporation action or in determining the presence of a quorum prior
to the discovery that such Purported Record Transferee or Purported Beneficial
Transferee was not entitled to vote by virtue of the provisions of Section
6.4.4.
6.11 Amendment and Waiver. No amendment, modification or waiver of any
provisions of Sections 6.1, 6.2, 6.3 or 6.4 hereof or of this Section 6.11 that
adversely affects the rights, preferences or privileges of the Common Stock
shall be effective without the affirmative vote of the holders of at least 51%
of the outstanding shares of Common Stock entitled to vote at a meeting of the
holders of Common Stock duly called for such purpose.
ARTICLE VII
BOARD OF DIRECTORS
7.1 Number and Term of Directors. The Board of Directors shall consist
of not less than three nor more than fifteen members, with the exact number to
be fixed from time to time by resolution of the Board of Directors in accordance
with the Bylaws of the Corporation. No decrease in the number of directors shall
have the effect of shortening the term of any incumbent director. The directors
shall serve until their respective successors are duly elected and qualified or
until their earlier resignation, death or removal from office. Except as may
otherwise be provided by these Articles of Incorporation, the stockholders may
remove a director, but only for cause, from office prior to the expiration of
his or her term by an affirmative vote of two-thirds of the outstanding shares
of all capital stock entitled to vote at a stockholders' meeting duly called for
such purpose. For purposes of this section, "cause" shall mean that the director
has (a) acted with gross negligence or willful misconduct in connection with the
performance of his material duties to the Corporation; (b) acted against the
best interests of the Corporation, which act has had a material and adverse
impact on the financial affairs of the Corporation; or (c) been convicted of a
felony or committed a material act of common law fraud against the Corporation
or its employees and such act or conviction has or will have a material adverse
effect on the interests of the Corporation.
The following five individuals shall act as Directors until the first
annual meeting of stockholders of the Corporation or until their successors are
duly elected and qualified:
Steven A. Calabrese
Mark D. Grossi
Marc C. Krantz
Richard M. Osborne
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<PAGE> 18
Thomas J. Smith
7.2 Director Vacancies. Except as may otherwise be provided by these
Articles of Incorporation, (i) whenever any vacancy on the Board of Directors
occurs because of death, resignation, retirement, disqualification, removal,
increase in the number of directors or otherwise, a majority of the directors
then in office, although less than a majority of the entire Board of Directors,
may fill the vacancy or vacancies for the balance of the unexpired term or
terms, at which time a successor or successors shall be duly elected by the
stockholders and qualified, and (ii) only the remaining directors of the
Corporation shall have the authority, in accordance with the foregoing
procedure, to fill any vacancy that exists on the Board of Directors.
7.3 Amendment of Bylaws. In furtherance and not in limitation of the
power conferred upon the Board of Directors by the MGCL, the Board of Directors
shall have the power to make, adopt, alter, amend and repeal from time to time
the Bylaws of the Corporation without any action on the part of the stockholders
except as otherwise specifically provided in the Bylaws of the Corporation.
ARTICLE VIII
INDEMNIFICATION RIGHTS AND LIMITATION OF LIABILITY
8.1 Indemnification Rights. The Corporation shall indemnify (i) its
directors and officers, whether serving the Corporation or at its request any
other entity, to the fullest extent required or permitted by MGCL or decisional
law, now or hereafter in force, including the advance of expenses under the
procedures and to the fullest extent permitted by MGCL, and (ii) other employees
and agents of the Corporation whether serving the Corporation or at its request
any other entity, to such extent as shall be authorized by the directors or the
Bylaws and as permitted by law. The directors may take such action as is
necessary to carry out these indemnification provisions and are expressly
empowered to adopt, approve and amend from time to time such Bylaws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law.
8.2 Limitation on Liability. To the maximum extent permitted under the
MGCL or decisional law, as amended or interpreted, no director or officer of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages for the breach of his or her fiduciary duty as an officer or director.
8.3 Nonexclusivity and Benefit. The indemnification rights granted
pursuant to this Article VIII shall not be exclusive of other indemnification
rights, if any, granted to such person and shall inure to the benefit of the
heirs and legal representatives of such person.
8.4 Effect of Repeal, Amendment or Termination. To the maximum extent
permitted under the MGCL, no repeal of or restrictive amendment of this Article
VIII and no repeal, restrictive amendment or termination of effectiveness of any
law authorizing this Article VIII shall
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apply to or affect adversely any right or protection of any director, officer,
employee or agent of the Corporation, for or with respect to any acts or
omissions of such person occurring prior to such repeal, amendment or
termination of effectiveness.
8.5 Retroactive Effect. To the maximum extent permitted under the MGCL,
the indemnification and advancement of expenses provided by this Article VIII
shall apply with respect to acts or omissions occurring prior to the adoption of
this Article VIII.
ARTICLE IX
STOCKHOLDERS
9.1 Special Meetings. Except as otherwise required by the MGCL, special
meetings of holders of the Common Stock may be called only by (i) the Board of
Directors pursuant to a resolution approved by a majority of the entire Board of
Directors, (ii) the Chief Executive Officer, (iii) the President, or (iv) the
holders of at least 25% of the outstanding shares of Common Stock entitled to
vote at the special meeting. The business transacted at any special meeting
shall be limited to the purposes stated in the notice of such meeting.
ARTICLE X
CONTROL SHARES AND BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
10.1 The provisions of Subtitle 7 of Title 3 of the MGCL are by this
reference incorporated herein as if set forth in their entirety; provided
however that such provision shall not apply to the Osborne Affiliates. The Board
of Directors in its sole judgment and discretion may in accordance with Subtitle
7 of Title 3 of the MGCL amend the Bylaws to exclude any other Person from the
application of Subtitle 7 of Title 3 of the MGCL.
10.2 The provisions of Subtitle 6 of Title 3 of the MGCL are by this
reference incorporated herein as if here set forth in their entirety; provided,
however that such provision shall not apply to the Osborne Affiliates.
ARTICLE XI
CONFLICTS OF INTEREST
Any director or officer individually, or any entity of which any
director or officer may be a member, or any corporation or association of which
any director or officer may be a director or officer or in which any director or
officer may be interested as the holder of any amount of its capital stock or
otherwise, may be a party to, or may be pecuniarily or otherwise interested in,
any contract or transaction of the Corporation, and, in the absence of fraud, no
contract or other transaction shall be thereby affected or invalidated;
provided, however, that (a) such fact shall have been disclosed or shall have
been known to the Board of Directors, or the committee thereof that approved
such contract or transaction, and such contract or transaction shall have been
approved or satisfied by the affirmative vote of a majority of the disinterested
directors, (b) such fact shall
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have been disclosed or shall have been known to the stockholders entitled to
vote, and such contract or transaction shall have been approved or ratified by a
majority of the votes cast by the stockholders entitled to vote, other than the
votes of shares owned of record or beneficially by the interested director,
officer or corporation, firm or other entity, or (c) the contract or transaction
is fair and reasonable to the Corporation. Any director of the Corporation who
is also a member of such other entity so interested, or who is also a director
or officer of or interested in such other corporation or association, may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation which shall authorize any such contract or
transaction, with like force and effect as if he were not such a director or
officer of such other corporation or association or were not so interested or
were not a member of an entity so interested.
ARTICLE XII
PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS
(a) The provisions of these Articles are severable, and if the
directors shall determine that any one or more of such provisions are in
conflict with the REIT provisions of the Code, or other applicable federal or
state laws, the conflicting provisions shall be deemed never to have constituted
a part of these Articles, even without any amendment of these Articles;
provided, however, that such determination by the directors shall not affect or
impair any of the remaining provisions of these Articles or render invalid or
improper any action taken or omitted prior to such determination. No director
shall be liable for making or failing to make such a determination.
(b) If any provisions of these Articles or any application of such
provision shall be held invalid or unenforceable by any federal or state court
having jurisdiction, such holding shall not in any manner affect or render
invalid or uneforceable such provision in any other jurisdiction, and the
validity of the remaining provisions of these Articles shall not be affected.
Other applications of such provision shall be affected only to the extent
necessary to comply with the determination of such court. Moreover, if the
transfer restrictions regarding Shares-In-Trust set forth in Article VI hereof
are determined to be void or invalid by virtue of any legal decision, statute,
rule or regulation, then the intended transferee or issuee of any Shares may be
deemed, at the option of the Board of Directors, to have acted as an agent on
behalf of the Corporation in acquiring any Equity Shares that would otherwise
result in the issuance of Shares-In-Trust and to hold such Equity Shares on
behalf of the Corporation.
ARTICLE XIII
DURATION
The duration of the Corporation shall be perpetual.
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EXHIBIT 3.2
BYLAWS
OF
LIBERTY SELF-STOR, INC.
ARTICLE I
STOCKHOLDERS
1.1. Annual Meetings. An annual meeting of stockholders shall be held
for the election of directors at such date, time and place, either within or
outside the State of Maryland, as may be designated by resolution of the Board
of Directors (the "Board") of Liberty Self-Stor, Inc. (the "Corporation"). Any
other proper business may be transacted at the annual meeting.
1.2. Special Meetings. Except as otherwise required by the Maryland
General Corporation Law ("MGCL"), special meetings of holders of shares of
common stock, $0.001 par value per share, of the Corporation ("Common Stock")
may be called only by (i) the Board pursuant to a resolution approved by a
majority of the entire Board, (ii) the Chief Executive Officer, (iii) the
President, or (iv) the holders of at least 25% of the outstanding shares of
Common Stock entitled to vote at the special meeting. The business transacted at
any special meeting shall be limited to the purposes stated in the notice of
such meeting.
1.3. Notice of Meetings. Written notice of every meeting of
stockholders shall be given not less than ten nor more than ninety days before
the date of the meeting by or at the direction of the Secretary or such other
person as the Board may appoint, to each stockholder entitled to vote at such
meeting. The notice shall include the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. If mailed, notice shall be deemed to be given when deposited in the
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation.
1.4. Waiver of Notice of Meetings of Stockholders. Any written waiver
of notice, signed by a stockholder entitled to notice, shall be deemed
equivalent to notice. Attendance of a stockholder at a meeting constitutes a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Except as otherwise required by the MGCL, neither the business to be
transacted at, nor the purpose of any meeting of the stockholders, need be
specified in any written waiver of notice.
1.5. Adjournments. Any meeting of stockholders, annual or special, may
adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of
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any such reconvened meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the reconvened meeting, the
Corporation may transact any business which could have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the reconvened meeting, a notice
of the reconvened meeting shall be given to each stockholder of record entitled
to vote at the meeting.
1.6. Quorum. Except as otherwise provided by the MGCL, the Articles of
Incorporation or these Bylaws, at each meeting of stockholders the presence in
person or by proxy of the holders of shares of stock having a majority of the
votes which could be cast by the holders of all outstanding shares of stock
entitled to vote at the meeting shall be necessary and sufficient to constitute
a quorum. Shares of stock of the Corporation belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the Corporation, will neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing does not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
In the absence of a quorum, the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided in
Section 1.5 of these Bylaws until a quorum is in attendance.
1.7. Organization of Meetings. Meetings of stockholders shall be
presided over by the Chairman of the Board or, if the Chairman of the Board is
not present, by the President or, in the absence of the foregoing persons, by a
chairman chosen by the stockholders at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
1.8. Action by Vote. Except as otherwise provided by the Articles of
Incorporation, each stockholder entitled to vote at any meeting of stockholders
shall be entitled to one vote for each share of stock held by him which has
voting power upon the matter in question.
Except as otherwise provided by the Articles of Incorporation, at all
meetings of stockholders for the election of directors, a plurality of the votes
cast shall be sufficient to elect directors. Unless otherwise provided by the
MGCL, the Articles of Incorporation or these Bylaws, all other elections,
proposals and questions shall be determined by the vote of the holders of shares
of stock having a majority of the votes which could be cast by the holders of
all shares of stock entitled to vote thereon which are present in person or
represented by proxy at the meeting.
Voting at stockholder meetings need not be by written ballot.
1.9. Representation by Proxy. Each stockholder entitled to vote at a
meeting of
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stockholders may authorize another person or persons to act for him by proxy. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary prior to the taking of a vote.
1.10. Inspectors of Election. The Board in advance of any meeting of
stockholders may appoint one or more inspectors of election ("Inspectors of
Election") to act at the meeting or any adjournment of the meeting. Each
Inspector of Election, before entering upon the discharge of his duties, must
take and sign an oath faithfully to execute the duties of Inspector of Election
at such meeting with strict impartiality and according to the best of his
ability. Inspectors of Election shall take charge of the polls and, when the
vote is completed, shall make a certificate of the result of the vote taken and
of such other facts as may be required by the MGCL. The Inspectors of Election
may appoint or retain other persons or entities to assist them in the
performance of their duties as inspectors.
1.11. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board and
which record date:
(a) in the case of determination of stockholders entitled to
notice of or to vote at any meeting of stockholders or
adjournment thereof, shall, unless otherwise required by the
MGCL, not be more than ninety nor less than ten days before
the date of such meeting; and
(b) in the case of any other action, shall not be more than
ninety days prior to such other action.
If no record date is fixed:
(a) the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be
the latter of: the close of business on the day next
preceding the day on which notice is mailed, or, the
thirtieth day before the meeting; and
(b) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which
the Board adopts the resolution relating thereto.
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A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the reconvened
meeting.
1.12. Advance Notice of Stockholder Proposed Business. At a meeting of
the holders of the Common Stock, only such business may be conducted as is
properly brought before the meeting. To be properly brought before a meeting,
business must be either (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board, (ii) otherwise
properly brought before the meeting by or at the direction of the Board, or
(iii) otherwise properly brought before the meeting by a holder of Common Stock.
In addition to any other applicable requirements, for business to be properly
brought before a meeting of the holders of the Common Stock, the stockholder
must have given timely notice thereof in writing to the Secretary. To be timely,
a stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 120 days before the
date of the Corporation's proxy statement released to stockholders in connection
with the previous year's annual meeting in accordance with Rule 14a-8, as
amended from time to time, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). In addition to the requirements of Rule 14a-8 under the
Exchange Act, a stockholder's notice to the Secretary must set forth as to each
matter the stockholder proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares of Common Stock that are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at a meeting of the holders of the Common Stock except in
accordance with the procedures set forth in this Section 1.12; provided,
however, that nothing in this Section 1.12 shall be deemed to preclude
discussion by any stockholder of any business properly brought before such
meeting in accordance with said procedure.
The chairman at a meeting of the holders of the Common Stock shall,
if the facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Section 1.12, and if he should so determine, he shall so declare to the meeting
and any such business not properly brought before the meeting shall not be
transacted.
1.13. Elimination of Action By Written Consent of Stockholders. Any
action required to be taken or which may be taken at any annual or special
meeting of holders of the Common Stock may be taken in an unanimous written
consent which sets forth the action is signed by each stockholder entitled to
vote on the matter and a written waiver of any right to dissent signed by each
stockholder entitled to notice but not entitled to vote is filed with the
records of stockholder meetings.
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ARTICLE II
BOARD OF DIRECTORS
2.1. Powers. Subject to applicable provisions of the MGCL and any
limitations in the Articles of Incorporation or these Bylaws, the Board shall
manage the business and affairs of the Corporation and exercise all corporate
powers.
2.2. Number and Term. The number of directors of the Corporation shall
be fixed from time to time by resolution of the Board in accordance with the
Articles of Incorporation. The terms of office of such directors shall be as set
forth in the Articles of Incorporation.
2.3. Election; Removal; Vacancies; Resignation. The election and
removal of directors and the filling of vacancies on the Board shall be as set
forth in the Articles of Incorporation. Any director may resign at any time upon
written notice to the Corporation. Such resignation shall take effect on the
date of receipt of such notice or at any later time set forth in such notice
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
2.4. Regular Meetings. The Board shall hold a regular meeting
immediately after each annual meeting of stockholders. Other regular meetings of
the Board may be held at such places within or outside the State of Maryland and
at such times as the Board may determine. Notice of a regular meeting need not
be given.
2.5. Special Meetings. Special meetings of the Board may be held at
any time or place within or without the State of Maryland whenever called by the
Chairman of the Board. Notice of a special meeting of the Board shall be given
by the officer calling the meeting at least twenty-four hours before the special
meeting.
2.6. Waiver of Notice of Meetings of Directors. Any written waiver of
notice, signed by a director entitled to notice, shall be deemed equivalent to
notice. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except when the director attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the directors, need be specified in any written
waiver of notice.
2.7. Quorum; Vote Required for Action. At all meetings of the Board, a
majority of the whole Board shall constitute a quorum for the transaction of
business. In the absence of a quorum, the directors present at the meeting may
adjourn the meeting until a majority attends. Except in cases in which the
Articles of Incorporation or these Bylaws otherwise provide, the vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board.
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2.8. Organization of Meetings. Meetings of the Board shall be presided
over by the Chairman of the Board or, if the Chairman of the Board is not
present, by a chairman chosen by the directors at the meeting. The Secretary
shall act as secretary of the meeting, but in his absence the chairman of the
meeting may appoint any person to act as secretary of the meeting.
2.9. Telephonic Meetings Permitted. Members of the Board, or any
committee designated by the Board, may participate in meetings by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meetings can hear each other, and participation in
meetings pursuant to this Section shall constitute presence in person at such
meetings.
2.10. Action by Written Consent of Directors. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, any action required
or permitted to be taken at any meeting of the Board, or of any committee
thereof, may be taken without a meeting if all members of the Board or such
committee, as the case may be, consent in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or such committee.
2.11. Compensation of Directors. In the discretion of the Board, the
Corporation may pay each director such fees for his services as director and
reimburse him for his reasonable expenses incurred in the performance of his
duties as director, as determined by the Board. Nothing contained in this
Section may be construed to preclude any director from serving the Corporation
in any other capacity and receiving reasonable compensation for such service.
Members of any special or standing committees may be allowed like compensation
for attending committee meetings.
2.12. Committees. The Board may, by resolution, designate, change the
membership of or terminate the existence of any committee or committees. Each
committee shall consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of the committee, the
member or members of the committee present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board to act at the meeting in place of any such
absent or disqualified member. Any such committee, to the extent permitted by
the MGCL and to the extent provided in the resolution of the Board, shall have
and may exercise all the powers and authority of the Board in the management of
the business and affairs of the Corporation.
2.13. Committee Rules. Unless the Board otherwise provides, each
committee designated by the Board may make, alter and repeal rules for the
conduct of its business. In the absence of such rules each committee shall
conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these Bylaws.
2.14. Stockholder Nominations for Director Candidates. Except as may
otherwise be
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provided in the Articles of Incorporation, only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board may be made at a
meeting of stockholders only (i) by or at the direction of the Board, (ii) by
any nominating committee or person appointed by the Board or (iii) by any
stockholder of the Corporation entitled to vote for the election of directors at
the meeting who complies with the notice procedures set forth in this Section
2.14. Such nominations, other than those made by or at the direction of the
Board, must be made pursuant to timely notice in writing to the Secretary. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than sixty days nor
more than ninety days prior to the meeting; provided, however, that in the event
that less than seventy days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth day
following the date on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever occurs first. Such stockholder's
notice to the Secretary must set forth: (i) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (a)
the name, age, business address and residence address of the person, (b) the
principal occupation or employment of the person, (c) the class and number of
shares of capital stock of the Corporation that are beneficially owned by the
person, and (d) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a, as amended from time to time, under the Exchange Act; and (ii) as to
the stockholder giving the notice, (a) the name and record address of the
stockholder, and (b) the class and number of shares of capital stock of the
Corporation that are beneficially owned by the stockholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth herein.
The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure and, if he should so determine and declare, the defective
nomination shall be disregarded.
ARTICLE III
OFFICERS
3.1. Enumeration; Appointment. The Board shall appoint a Chief
Executive Officer, President, Secretary and Treasurer, and it may, if it so
determines, elect a Chairman of the Board from among its members. The Board may
also appoint, or empower the Chairman of the Board, or the President, to
appoint, such other officers and agents as the business of the Corporation may
require. Any number of offices may be held by the same person. The Board may
require any officer, agent or employee to give security for the faithful
performance of his duties.
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3.2. Term of Office; Resignation; Removal; Vacancies. Each officer
shall hold office until his successor is appointed and qualified or until his
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. The Board may, when in its judgment the best
interests of the Corporation will be served, remove any officer with or without
cause at any time, but such removal shall be without prejudice to the
contractual rights of such officer, if any, with the Corporation. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the Board.
3.3. Powers and Duties. The officers of the Corporation shall have
such powers and duties in the management of the Corporation as may be prescribed
in these Bylaws and by the Board and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board.
3.4. Compensation of Officers. The Board shall determine the officers'
salaries, and no officer shall be prevented from receiving such compensation by
reason of the fact that he is also a director of the Corporation.
ARTICLE IV
CAPITAL STOCK
4.1. Stock Certificates. Every stockholder, upon written request,
shall be entitled to a certificate signed by or in the name of the Corporation
by the President or Chairman of the Board, and counter-signed by the Secretary,
an Assistant Secretary, the Treasurer, or an Assistant Treasurer, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be by facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
4.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. Upon written request by a stockholder, the Corporation may issue
a new certificate of stock in the place of any certificate previously issued by
the Corporation, alleged to have been lost, stolen or destroyed. The Corporation
may require the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
4.3. Transfer on Books. Subject to the restrictions, if any, stated or
noted on the stock certificate, shares of stock may be transferred on the books
of the Corporation by the surrender to the Corporation or its transfer agent of
the stock certificate properly endorsed or accompanied by a written assignment
and power of attorney properly executed, with any
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necessary transfer stamps affixed and with such proof of the authenticity of
signature as the Board or the transfer agent of the Corporation may reasonably
require.
4.4. Registered Stockholders. Except as may be otherwise required by
the MGCL, by the Articles of Incorporation or by these Bylaws, the Corporation
shall be entitled to treat the record holder of stock as shown on its books as
the owner of such stock for all purposes, including the payment of dividends and
the right to receive notice and to vote or to give any consent with respect to
such stock and to be held liable for such calls and assessments, if any, as may
lawfully be made on such stock, regardless of any transfer, pledge or other
disposition of such stock until the shares have been properly transferred on the
books of the Corporation. It shall be the duty of each stockholder to notify the
Corporation of his current mailing address.
ARTICLE V
INDEMNIFICATION
5.1. Indemnification to the Extent Permitted by Law. Unless the Board
otherwise determines prospectively in the case of any one or more specified
individuals, the Corporation shall indemnify, to the full extent permitted by
the MGCL, any person who is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise (an
"Indemnified Person"), including the advancement of expenses under procedures
provided under such law; provided, however, that no indemnification shall be
provided for expenses relating to any willful or grossly negligent act by any
director or officer. The provisions of this Section 5.1 shall constitute a
contract with each Indemnified Person who serves at any time while these
provisions are in effect and may be modified adversely only with the consent of
affected Indemnified Persons and each such Indemnified Person shall be deemed to
be serving as such in reliance on these provisions.
5.2 Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any Indemnified Person against any liability,
whether or not the Corporation would have the power to indemnify him or her
against such liability.
5.3 Non-Exclusive Right to Indemnify; Heirs and Personal
Representatives. The rights of indemnification set forth in this Article V are
in addition to all rights which any Indemnified Person may be entitled as a
matter of law, and shall inure to the benefit of the heirs and personal
representatives of each Indemnified Person. The Corporation shall indemnify any
Indemnified Person's spouse (whether by statute or at common law and without
regard to the location of the governing jurisdiction) and children to the same
extent and subject to the same limitations applicable to any Indemnified Person
hereunder for claims arising out of the same of such person as a spouse or child
of such Indemnified Person, including claims seeking damages from marital
property (including community property) or property held by such Indemnified
Person and such spouse or property transferred to such spouse or child.
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5.4 No Limitation. In addition to any indemnification permitted by
these Bylaws, the Board shall, in its sole discretion, have the power to grant
such indemnification as it deems in the interest of the Corporation to the full
extent permitted by law. This Article shall not limit the Corporation's power to
indemnify against liabilities other than those arising from a person's serving
the Corporation a director or officer.
ARTICLE VI
MISCELLANEOUS
6.1. Articles of Incorporation. These Bylaws are subject to the
Articles of Incorporation and, in the case of any conflict with the Articles of
Incorporation, the Articles of Incorporation shall control.
6.2. Amendment of Bylaws. The Board shall have the exclusive power to
make, adopt, alter, amend and repeal from time to time these Bylaws without any
action on the part of the stockholders.
6.3. Location of Records. The books and records of the Corporation may
be kept outside of the State of Maryland at such location or locations as may be
designated from time to time by the Board.
6.4. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year, unless otherwise fixed by resolution of the Board.
6.5. Corporate Seal. The Corporation shall not have a corporate seal.
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EXHIBIT 10.1
LIBERTY SELF-STOR, INC.
1999 STOCK OPTION AND AWARD PLAN
1. PURPOSE. The purpose of this Plan is to advance the interests of
LIBERTY SELF-STOR, INC., a Maryland corporation (the "Company"), by providing
additional incentive to attract and retain qualified and competent persons who
are key to the Company, including key employees, Officers and Directors, and
upon whose efforts and judgment the success of the Company is largely dependent,
by encouraging such persons to own stock in the Company.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change of Control" shall mean the occurrence of any of the
following:
(i) any transaction (which shall include a series of
transactions occurring within sixty days or occurring pursuant to a plan) that
has the result that shareholders of the Company immediately before such
transaction cease to own at least 51% of the voting stock of the Company or of
any entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(ii) the stockholders of the Company approving a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) the stockholders of the Company approving a plan for the
sale, lease, exchange, transfer, assignment or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the compensation committee appointed by
the Board pursuant to Section 15 hereof or, if not appointed, the full Board.
(e) "Common Stock" shall mean the Company's Common Stock, par value
$0.001 per share.
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(f) "Controlled Entity" shall mean any trust, partnership, limited
liability company or other entity in which such person that receives Options or
Restricted Shares under this Plan acts as trustee, managing partner, managing
member or otherwise controls; provided that, to the extent any such Option or
Restricted Shares received under this Plan is awarded to a spouse pursuant to
any divorce proceeding, such interest shall be deemed to be terminated and
forfeited notwithstanding any vesting provisions or other terms herein or in the
agreement evidencing such Option.
(g) "Director" shall mean a member of the Board.
(h) "Effective Date" shall mean December 28, 1999.
(i) "Fair Market Value" of a Share on any date of reference shall be
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair and consistent manner. For the purpose of
determining Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be the average of the average bid and ask prices of the
Common Stock on the National Association of Securities Dealers Automated
Quotation System -- SmallCap Market for the five business days preceding such
day.
(j) "Incentive Stock Option" shall mean an incentive stock option as
defined in sec.422 of the Code.
(k) "Non-Employee Director" shall mean a Director who: (i) is not an
Officer or employee of the Company or any Subsidiary; (ii) does not (A) receive
compensation, directly or indirectly, from the Company or any Subsidiary for
services rendered as a consultant or in any other capacity other than as a
Director, except for an amount that does not exceed the dollar amount for which
disclosure would be required under Item 404(a) of Regulation S-K, 17 C.F.R.
sec.229.404(a), or (B) possess an interest in any transaction for which
disclosure would be required under Item 404(a) of Regulation S-K, 17 C.F.R.
sec.229.404(a); and (iii) is not engaged in a business relationship for which
disclosure would be required under Item 404(b) of Regulation S-K, 17 C.F.R.
sec.229.404(b).
(l) "Non-Statutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(m) "Officer" shall mean the Company's Chairman, Chief Financial
Officer, principal accounting officer (or, if there is no such accounting
officer, the controller), any vice president of the Company in charge of a
principal business unit, division or function (such as sales, administration or
finance), any other officer who performs a policy-making function, or any other
person who performs similar policy-making functions for the Company. Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this paragraph, the phrase
"policy-making function"
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does not include policy-making functions that are not significant.
(n) "Option" (when capitalized) shall mean any option granted under
this Plan.
(o) "Optionee" shall mean a person to whom an Option is granted under
this Plan or any person who succeeds to the rights of such person under this
Plan by reason of a transfer made pursuant to Section 13 hereof.
(p) "Participant" shall mean either a person to whom Restricted
Shares are granted under this Plan, an Optionee or any person who succeeds to
the rights of either such person under this Plan by reason of the death of such
person.
(q) "Plan" shall mean this 1999 Stock Option and Award Plan of the
Company.
(r) "Restricted Shares" shall mean Shares granted or sold pursuant to
Section 10 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers referred to in such Section 10 has expired.
(s) "Restricted Share Agreement" shall mean the agreement entered
into between the Company and the Participant who is to receive Restricted Shares
at the time of any Restricted Share grant.
(t) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(u) "Share(s)" shall mean a share or shares of the Common Stock.
(v) "Subsidiary" shall mean a "subsidiary corporation" as defined in
sec.424(f) of the Code.
3. AVAILABLE SHARES. The Company may grant to Participants from time to
time an aggregate of up to 300,000 Restricted Shares or Options from Shares held
in the Company's treasury or from authorized and unissued Shares. If any Option
granted under this Plan shall terminate, expire, or be canceled or surrendered
as to any Shares, or if any Restricted Shares are forfeited by the holder
thereof, new Options or Restricted Shares may thereafter be granted covering
such Shares.
4. OPTION GRANTS. An Option granted hereunder shall be either an
Incentive Stock Option or a Non-Statutory Stock Option as determined by the
Committee at the time of grant of such Option and shall clearly state whether it
is an Incentive Stock Option or a Non-Statutory
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Stock Option. All Incentive Stock Options shall be granted within ten years from
the date this Plan is adopted by the Board or the date this Plan is approved by
the stockholders of the Company, whichever is later.
5. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate Fair Market Value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Code sec.422(b) are exercisable for the first time by any individual during
any calendar year (under all plans of the Company and any Subsidiary), exceeds
$100,000.
6. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by a written agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons selected by the Committee from the class of all Directors,
Officers and regular employees of the Company or its Subsidiaries. Any person
who files with the Committee, in a form satisfactory to the Committee, a written
waiver of eligibility to receive any Option under this Plan shall not be
eligible to receive any Option under this Plan for the duration of such waiver.
(b) In granting Options to Directors, Officers and employees of
the Company or its Subsidiaries, the Committee shall take into consideration the
contribution the person has made to the success of the Company or its
Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options to Directors, Officers and employees of the Company or its
Subsidiaries under this Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) prescribing the date or dates on which the Option becomes exercisable, (ii)
providing that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both, or (iii)
relating an Option to the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more favorable
to an Optionee than those expressly permitted herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither this Plan nor
any Option granted under this Plan shall confer upon any person any right to
employment or continuance of employment by the Company or its Subsidiaries.
7. OPTION PRICE. The Committee shall establish, at the time any Option
is granted, the price per Share for which the Shares covered by the option may
be purchased; provided,
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however, that if the option is an Incentive Option, such price shall not be less
than 100% of the Fair Market Value of the Shares on the date on which the option
is granted; provided, further, that with respect to an Incentive Option granted
to a Participant who at the time of the grant owns (after applying the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting stock of the Corporation or of any parent corporation (as
defined in Section 424(e) of the Code) or Subsidiary, the option price shall not
be less than 110% of the fair market value of the Shares subject to the
Incentive Option on the date such Option is granted.
8. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of an amount that is sufficient to satisfy
all applicable federal or state tax withholding requirements relating to
exercise of the Option, if any. Unless further limited by the Committee in any
Option, the option price of any Shares purchased shall be paid in cash, by
certified or official bank check, by money order, with Shares or by a
combination of the above; provided further, however, that the Committee in its
sole discretion may accept a personal check in full or partial payment of any
Shares. If the exercise price is paid in whole or in part with Shares, the value
of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole discretion may, on an individual
basis or pursuant to a general program established in connection with this Plan,
lend money to an Optionee, guarantee a loan to an Optionee, or otherwise assist
an Optionee to obtain the cash necessary to exercise all or a portion of an
Option granted hereunder or to pay any tax liability of the Optionee
attributable to such exercise. If the exercise price is paid in whole or in part
with an Optionee's promissory note, such note shall (i) provide for full
recourse to the maker, (ii) be collateralized by the pledge of the Shares that
the Optionee purchases upon exercise of such Option, (iii) bear interest at the
base lending rate of the Company's principal lender, and (iv) contain such other
terms as the Committee in its sole discretion shall reasonably require. No
Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for such Shares are issued
to such person(s) under the terms of this Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 12 hereof.
9. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 9.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall (i) an Option be
exercisable after the expiration of ten years from the date of grant of the
Option or (ii) an Incentive Option granted to a Participant,
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who at the time of the grant owns (after applying the attribution rules of
Section 424(d) of the Code) more than 10% of the total combined voting stock of
the Corporation or of any parent corporation (as defined in Section 424(e) of
the Code) or Subsidiary, be exercisable after the expiration of five years from
the date of grant of the Incentive Stock Option.
(b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable upon any Change in Control.
(c) The Committee may in its sole discretion accelerate the date
on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of any
Option.
10. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated for any reason other than by reason of (A) Cause,
which, solely for purposes of this Plan, shall mean the termination of the
Optionee's employment by reason of the Optionee's willful misconduct or gross
negligence, (B) a mental or physical disability (within the meaning of sec.22(e)
of the Code) as determined by a medical doctor satisfactory to the Committee, or
(C) death;
(ii) immediately upon the termination of the Optionee's
employment for Cause;
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of sec.22(e) of the Code) as determined by a medical doctor
satisfactory to the Committee; or
(iv) (A) one year after the date of termination of the
Optionee's employment by reason of death of the Optionee, or (B) three months
after the date on which the Optionee dies if the Optionee dies during the one
year period specified in Section 9(a)(iii) hereof.
(b) The Committee in its sole discretion may, by giving written
notice (a "cancellation notice"), cancel, effective upon the date of the
consummation of any corporate transaction described in Sections 2(b)(ii) or
(iii) hereof, any Option that remains unexercised on such date. Such
cancellation notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
approval of such corporate transaction.
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11. RESTRICTED SHARES. The Committee may also authorize the grant or
sale to Directors, Officers and employees of the Company or its subsidiaries of
Restricted Shares. Each such grant or sale may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:
(a) Each such grant or sale shall constitute an immediate
transfer of the ownership of Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture and
restrictions on transfer referred to in the Restricted Share Agreement.
(b) In granting Restricted Share awards to Directors, Officers
and employees of the Company or its Subsidiaries, the Committee shall take into
consideration the contribution the person has made to the success of the Company
or its Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Restricted Share awards to Directors, Officers and employees of the
Company or its Subsidiaries under this Plan prescribe such other terms and
conditions concerning such grants as it deems appropriate.
(c) Each Restricted Share grant or sale may be made without
additional consideration or in consideration of a payment by the Participant
that is less than Fair Market Value per Share at the date of grant.
(d) Each such grant or sale shall be subject to a Restricted
Share Agreement, which shall provide that the Restricted Shares covered by such
grant or sale shall be subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code for a period of not less than one (1) year to
be determined by the Committee at the date of grant, and any grant or sale may
provide for the earlier termination of such period in the event of a Change in
Control, retirement, or death or disability of the Participant or other similar
transaction or event as approved by the Committee.
(e) Each Restricted Share Agreement shall provide that during the
period for which such substantial risk of forfeiture is to continue, and any
other period prescribed by law, the transferability of the Restricted Shares
shall be prohibited or restricted in the manner and to the extent prescribed by
the Committee or law, as the case may be, at the date of grant (which
restrictions may include, without limitation, prohibitions on transfer, rights
of repurchase or first refusal in the Company or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture in the hands of
any transferee).
(f) Any grant or sale of Restricted Shares may require that any
or all dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional Restricted
Shares, which may be subject to
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the same restrictions as the underlying award.
12. ADJUSTMENT OF SHARES.
(a) If at any time while this Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares available for grant to Participants under this Plan, so that
the same percentage of the Company's issued and outstanding Shares shall
continue to be subject to being so granted; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of any corporate transaction described in Sections 2(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
direct sale or upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to the number of or exercise price of Shares
then subject to outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under this Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, lease, exchange, transfer, assignment or other disposition of all or any
part of the assets or business of the Company; or (vi) any other corporate act
or proceeding, whether of a similar character or otherwise.
13. TRANSFERABILITY OF OPTIONS AND RESTRICTED SHARES.
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(a) No Incentive Stock Option shall be transferable by the
Optionee other than by will, the laws of descent and distribution, and each
Incentive Stock Option shall be exercisable during the Optionee's lifetime only
by the Optionee.
(b) A person that receives Non-Statutory Stock Options under this
Plan or such person's beneficiary shall have the power or right to sell,
exchange, pledge, transfer, assign or otherwise encumber or dispose of such
person's or beneficiary's Non-Statutory Stock Options received under this Plan
only as follows: (i) to the spouse or any children or grandchildren of such
person that receives Non-Statutory Stock Options under this Plan; (ii) as a
charitable contribution or gift to or for the use of any person or entity
described in sec.170(c) of the Code; (iii) to any Controlled Entity; or (iv) by
will or the laws of intestate succession.
(c) Restricted Shares may be transferred only as set forth in the
applicable Restricted Share Agreement.
14. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option or Restricted Share award grant, the
Committee may require such agreements or undertakings (in an Option Agreement or
Restricted Share Agreement), if any, as the Committee may deem necessary or
advisable to assure compliance with any such federal or state securities or
other law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Participant to the
Company, at the time any Option is exercised or Restricted Share granted, that
he is acquiring the Shares to be issued to him for investment and not with a
view to, or for sale in connection with, the distribution of any such Shares;
and
(ii) a representation, warranty and/or agreement by the
Participant to the Company to be bound by any legends that are, in the opinion
of the Committee or counsel to the Company, necessary or appropriate to comply
with the provisions of any securities law deemed by the Committee or counsel to
the Company to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.
15. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Committee, which shall
consist of not less than two Directors. The Committee shall have all of the
powers of the Board with respect to this Plan; provided that if any member of
the Committee is not a Non-Employee Director, then the Board shall approve any
Option or Restricted Share that the Committee proposes to grant hereunder. The
Board may change the membership of the Committee at any time and fill any
vacancy occurring in the membership of the Committee by appointment.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of this Plan. The Committee's
determinations and its interpretation
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and construction of any provision of this Plan shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written consent of the
members of the Committee.
16. INTERPRETATION.
(a) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under this Plan will qualify as Incentive Stock
Options under sec.422 of the Code. If any provision of this Plan should be held
invalid for the granting of Incentive Stock Options or illegal for any reason,
such determination shall not affect the remaining provisions hereof, but instead
this Plan shall be construed and enforced as if such provision had never been
included in this Plan.
(b) This Plan shall be governed by the laws of the State of Ohio.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
17. AMENDMENT AND DISCONTINUATION OF THE PLAN.
(a) Either the Board or the Committee may from time to time amend
this Plan or any Option; provided, however, that, except to the extent provided
in Section 12, no such amendment may, without approval by the stockholders of
the Company, (i) materially increase the benefits accruing to participants under
this Plan, (ii) materially increase the number of securities which may be issued
under this Plan, or (iii) materially modify the requirements as to eligibility
for participation in this Plan; and provided further, that except to the extent
provided in Section 10, no amendment or suspension of this Plan or any Option
issued hereunder shall substantially impair any Option previously granted to any
Optionee without the consent of such Optionee.
(b) Notwithstanding anything herein to the contrary, the
provisions of this Plan which govern the exercise price per Share under each
such Option, when and under what circumstances such Option will be granted and
the period within which each such Option may be exercised, shall not be amended
more than once every six months (even with stockholder approval) other than to
conform to changes to (i) the Code or the rules promulgated thereunder, (ii) the
Employee Retirement Income Security Act of 1974, as amended, or the rules
promulgated thereunder, or (iii) rules promulgated by the Securities and
Exchange Commission.
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18. EFFECTIVE DATE AND TERMINATION DATE. The Plan shall be effective
upon the Effective Date and shall terminate on the tenth anniversary of the
Effective Date.
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EXHIBIT 10.2
LEASE AGREEMENT
THIS LEASE made this 28th day of December, 1999 Mentor, Ohio by and
between OSAIR, INC. an Ohio Corporation, owner of THE MATCH WORKS, (hereinafter
called "Landlord"), and LIBERTY SELF-STOR, INC., a Maryland corporation
(hereinafter called "Tenant").
WITNESSETH, that Landlord hereby leases to Tenant and Tenant hereby
hires and takes from Landlord certain premises, being Suite No. 100 and
containing approximately 6,000 square feet of space of The Match Works. Said
premises are hereinafter sometimes referred to as the "Demised Premises."
Landlord excepts and reserves hallways, stairways, shaftways, elevators and
other common areas and common facilities, and the right to maintain, use, repair
and replace pipes, ducts, wires, meters and any other equipment, machinery,
apparatus and fixtures serving other parts of the said building, including such
of them as may occur above the finished ceiling of the Demised Premises or
elsewhere within the Demised Premises.
1. LEASE TERM Landlord leases the Demised Premises to Tenant and Tenant
Leases and agrees to take possession of the same form Landlord, for a term
commencing on the date set forth above (the "Commencement Date") and ending on
the last day of the sixtieth (60th) full month following the Commencement Date.
2. RENT Tenant shall pay to Landlord without demand, deduction or
setoff rent in the aggregate amount of Four Thousand Dollars ($4,000.00) per
month, in advance on the first day of each month during the Lease Term.
Said rent sum shall include electricity charges.
3. PERMITTED USE The Demised Premises may be used only for the purpose
of general office space all in accordance with Landlord's Rules and Regulations.
Tenant specifically acknowledges that the Demised Premises shall not be used for
any use other than those indigenous to Tenant's anticipated use, unless approved
by Landlord.
4. POSSESSION The taking of possession of the Demised Premises by the
Tenant shall be conclusive evidence of its acceptance thereof and approval of
any and all construction.
5. IMPROVEMENTS BY TENANT Tenant shall not make any additions,
improvements or modifications of the Demised Premises, including decorations,
without the written consent of Landlord, which shall not be unreasonably
withheld. The improvements set forth in Exhibit "A", if any, shall be
constructed by Landlord at its sole expense. All other additions, improvements
or modifications (hereinafter referred to as "Improvements by Tenant") shall be
constructed at Tenant's sole expense upon approval by landlord. Work will be
commenced upon Improvements by Tenant, if any, within fifteen (15) days after
the last to occur to the following: (1) Landlord's approval of plans and
specifications, or (2) Landlord's notice to Tenant that the
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Demised Premises are ready for the commencement of Tenant's work. Improvements
by Tenant, which shall include the removal by Tenant of any debris resulting
from said work, shall be completed within thirty (30) days, except for delays
due to casualties or other causes beyond Tenant's reasonable control, and Tenant
shall open the Demised Premises for the permitted uses upon such completion. In
all events, the Lease Term shall commence upon the earlier to occur of fourteen
(14) business days after the work should be commenced upon the Improvements by
Tenant, except for such delays caused by neglect or omission of Landlord, its
agents and employees, or upon the date specified in Section 1 hereof.
6. SECURITY DEPOSIT
THIS SECTION INTENTIONALLY LEFT BLANK
7. LANDLORD'S COVENANTS Subject to Section 9 of this Lease, Landlord
covenants that it shall perform or furnish, or cause to be performed or
furnished, the following:
(a) Such heat and air conditioning to maintain the Demised Premises at
comfortable temperatures during the hours of the day between 8:00 a.m.
and 6:00 p.m. Mondays through Fridays inclusive, and 9:00 a.m. to 1:00
p.m. Saturdays, all days observed by the New York Stock Exchange as
legal holidays excepted.
(b) Common rest rooms, as required by local applicable code.
(c) Hot and cold water in reasonable amounts to the aforesaid common
washrooms and to the Demised Premises.
(d) Adequate janitorial services to common areas.
(e) Window washing service as reasonably required.
(f) Reasonable adequate parking spaces on the grounds appurtenant to
The Match Works for the use, in common, with the other Tenants of said
building and their employees and invitees.
(g) Adequate snow removal service for the aforementioned parking
spaces and for all approaches thereto.
(h) During business hours, reasonable illumination for all parking
areas and footways appurtenant to The Match Works.
(i) A Tenant directory in the lobby of the building. Landlord will
supply a sign at the door to the Demised Premises which will identify
the suite number and the identity of the Tenant. Said signs shall be
of uniform appearance and design throughout the building, as
determined
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by Landlord. Tenant will not place any sign, marking or designation on
the doorway to the Demised Premises, the building corridors, or on the
windows, or on the exterior of the Demised Premises.
8. TENANT'S COVENANTS Tenant covenants to and with Landlord as
follows:
(a) Except for damage by fire or other unavoidable casualty and
reasonable use and wear, Tenant shall keep the Demised Premises in as
good order, repair and condition as the same are at the commencement
of the Lease Term, or may be put in thereafter, and at the termination
of the Lease Term, peaceably yield up and surrender the Demised
Premises and all additions thereto and permanent installations therein
in good order, repair and condition, first removing all goods and
effects, except those of Landlord, and making any repairs made
necessary by such removal, and leaving the Demised Premises clean and
tenantable.
(b) Tenant covenants that it shall not injure, overload, deface or
commit waste in the Demised Premises or any part of The Match Works,
shall not permit therein any auction sale; shall not permit the
occurrence of any nuisance therein or the emission therefrom of any
objectionable noise, odor or effect; shall not use or permit the use
of the Demised Premises for any purpose other than the permitted uses
as herein specified; and shall not use or permit any use of the
Demised Premises which is improper, offensive, contrary to law or
ordinance, or which is liable to invalidate or increase the premium
for any insurance on The Match Works or its contents or which is
liable to render necessary any alterations or additions to the
building.
(c) Tenant covenants that it shall not obstruct in any manner any
portion of the building, or the approaches to said building, or any
windows or doors.
(d) Tenant covenants that it shall conform to all reasonable rules and
regulations now or hereafter promulgated by Landlord ("Landlord's
Rules and Regulations") or applicable governmental authorities for the
care and use of the building, its facilities and approaches.
(e) Tenant covenants that it shall keep the Demised Premises equipped
with all safety appliances and permits required by law or ordinance or
any order or regulation of any public authority or insurer because of
the use made of the Demised Premises by Tenant, and, if requested by
Landlord, shall make all repairs, alterations, replacements or
additions so required in the Demised Premises.
(f) Tenant covenants that it shall save Landlord harmless and
indemnified from any injury, loss, claim or damage to any person or
property while on or in said Demised Premises and to any person or
property anywhere occasioned by any omission, neglect or default of
Tenant or of employees, agents, contractors or officers of Tenant.
(g) Tenant covenants that, except for the negligence of Landlord, its
agents and employees,
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Landlord and Landlord's agents and employees shall not be liable for,
and Tenant waives all claims for, damage to person or property
sustained by Tenant or any person claiming through Tenant resulting
from any accident or occurrence in or upon the Demised Premises or the
building of which they shall be a part, or the land appurtenant
thereto, including, but not limited to, claims for damage resulting
from: (1) any equipment or appurtenances becoming out of repair; (2)
injury done or occasioned by wind, rain or other force of nature; (3)
any defect in or failure of plumbing, heating or air conditioning
equipment, electric wiring or installation thereof, gas, water,
compressed air and steam pipes, stairs, porches, railing or walks; (4)
broken glass; (5) the backing up on any sewer pipe or downspout; (6)
the bursting, leaking or running of any tank, tub, washstand, water
closet, waste pipe, drain or any other pipe or tank in, upon or about
such building or Demised Premises; (7) the escape of steam, compressed
air, natural gas or hot water; (8) water, snow or ice being upon or
coming through the rood, skylight, trapdoor, stairs, doorways, walks
or any other place upon or near such building or the Demised Premises
or otherwise; (9) falling of any fixture, plaster, tile or stucco; and
(10) any act, omission or negligence of co-tenants, licensees or of
any other persons or occupants of said building or of persons,
occupants and/or owners of adjoining or contiguous property.
(h) Tenant covenants that it shall permit the Landlord and the
Landlord's agents to enter and examine the Demised Premises at
reasonable times and, if the Landlord shall so elect to make any
repairs or additions the Landlord may reasonable deem necessary and ,
at the Tenant's expense, to remove any alterations, additions, signs,
antennas or the like, not consented to by the Landlord in writing.
(i) Tenant covenants that it shall pay the Landlord's expenses,
including reasonable attorney's fees incurred in enforcing any
obligations of Tenant under this Lease which are not complied with.
(j) Tenant covenants that it shall not knowingly permit any employee
or visitor of the Tenant to violate any covenant or obligation of the
Tenant hereunder.
(k) Tenant covenants that, in case the Tenant takes possession of the
Demised Premises prior to the commencement of said term, it shall
perform and observe all of the Tenant's covenants from and after the
date upon which the Tenant takes possession.
(l) Tenant covenants that it shall not assign this Lease or sublet any
portion of the Demised Premises or enter into a space-sharing
agreement without prior written consent of Landlord, such consent not
to be unreasonable withheld, or mortgage or hypothecate this lease or
license the Demised Premises or any portion thereof. No operation of
law, including merger or consolidation, shall be effective to create
an assignment or transfer without the written consent of Landlord,
which shall not be unreasonably withheld.
(m) Tenant covenants that it shall not make any alterations or
additions in or to the
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Demised Premises without the prior written consent of Landlord.
(n) Tenant covenants that it shall not erect or paint on any
sign or other identification on any exterior window, any corridor or
door to the exterior or door to a corridor or other common area.
(o) Tenant covenants that it shall not misuse or abuse the plumbing
system in the Demised Premises and shall be responsible for the cost
of clearing discharge lines of objects or other material causing
stoppage thereof, if such stoppage shall have been caused by Tenant or
any of tenant's invitees, agents or employees.
(p) Tenant shall maintain, in responsible companies approved by
Landlord, liability insurance insuring Landlord and Tenant as their
interest may appear against all claims, demands or actions for injury
to or death of any one person in an amount of not less than One
Hundred Thousand Dollars ($100,000) arising from one occurrence, and
for injury to and/or death of more than one person arising from one
occurrence in an amount of not less the Three Hundred Thousand Dollars
($300,000.), and for damage to property in an amount of not less than
Fifty Thousand Dollars ($50,000.), made by or on behalf of any person
or persons, firm or corporation, arising from, related to or connected
with the conduct and operation of Tenant's business in the Demised
Premises. Landlord may require copies of said insurance policies to be
filed with it.
(q) Tenant shall supply all light bulbs and fluorescent lights for the
Demised Premises other than the initial light bulbs and fluorescent
lights for the fixtures installed by Landlord, which initial lighting
shall be furnished by Landlord at no expense to Tenant.
9. FORCE MAJEURE Landlord shall not be liable to anyone for the
cessation of or interruption of any service, including public utility services,
rendered to Tenant pursuant to the Lease due to accident, or due to the making
of repairs, alterations or improvements, or due to labor difficulties, or due to
inability to obtain fuel, electricity, services or supplies from the sources
from which they are usually obtained for the Match Works, or for any other
reason whatsoever. Any such interruption of any of the above services shall
never be deemed in eviction or disturbance of the Tenant's use of the Demised
Premises or any part thereof, or render the Landlord liable to the Tenant for
damage, or relieve the Tenant from performance of the Tenant's obligations under
this Lease. Landlord, however, shall promptly take the necessary steps to
terminate such interruptions as expeditiously as possible under the
circumstances.
10. DISPLAY OF PREMISES Tenant covenants and agrees that, for the
period of three months prior to the expiration of the term of this lease,
Landlord may show the Demised Premises and all parts thereof to prospective
tenants between the hours of 9:00 a.m. and 6:00 p.m. on any day.
11. SUBORDINATION This Lease shall be subject to and subordinate to any
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mortgages, easements or trust deeds that may hereafter be placed upon The Match
Works and/or the land thereunder and all advances to be made under such
mortgages or trust deeds and to the interest thereon, and all renewals,
extensions and consolidations thereof. Tenant covenants that it shall execute
and deliver whatever instruments may be required to acknowledge such
subordination in recordable form, and in the event Tenant fails to do so within
ten (10) day after demand in writing, Tenant does hereby make, constitute and
irrevocably appoint Landlord as its attorney in fact and in its name, place and
stead so to do. Tenant acknowledges that said power of attorney is irrevocable
and coupled with an interest. No easement created by Landlord shall in any way
interfere with or disturb Tenants right of quiet enjoyment of the premises as
hereinafter set forth.
12. ESTOPPEL CERTIFICATES At any time and from time to time, Tenant
agrees, upon request in writing from Landlord, to execute, acknowledge and
deliver to Landlord a statement in writing certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force as modified and stating the modifications) and
the dates to which the rent and other charges have been paid.
13. BROKERAGE Tenant warrants that it has had no dealings with any
broker or agent other than Landlord's representative in connection with this
Lease and covenants to pay, hold harmless and indemnify Landlord from and
against any and all cost, expense or liability for any compensation, commissions
and charges claimed by any broker or agent other than Landlord's personnel with
respect to this Lease or the negotiation thereof.
14. POSSESSION If the Landlord shall be unable to give possession of
the Demised Premises on the date of the commencement of the term hereof by
reason of substantial in completion of the construction of the Demised Premises
or the holding over of any tenant or tenants or for any other reason beyond the
control of the Landlord, then the rent shall not commence until possession of
the premises is given or is available and the Tenant agrees to accept such
allowance and abatement of rent as liquidated damages in full satisfaction for
the failure of the Landlord to give possession of said premises on the
commencement date and to the exclusion of all claims and rights which the Tenant
may otherwise have by reason of possession of the Demised Premises not being
given on the commencement date of the term hereof. No such failure to give
possession on the date of the commencement of the term, shall in any event,
extend or be deemed to extend, the term of this Lease. In the event that Tenant
shall occupy the Demised Premises or a portion thereof prior to the term of this
Lease with the Landlord's consent, all the provisions of this Lease shall be in
full force and effect as soon as the Tenant occupies the said premises, and rent
shall be charged on a per diem basis at the rates specified in Section 2. hereof
for the period prior to the commencement date of this Lease.
15. HOLDING OVER Should the Tenant remain in possession of said
premises after the date of the expiration of this Lease with or without the
consent of the Landlord, then unless a new written lease agreement shall have
been entered into between the parties hereto, the Tenant shall be a tenant from
month-to-month, and such tenancy shall be otherwise subject to all the covenants
and conditions of this Lease, except that the rent shall be at one hundred
twenty-five
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percent (125%) of the monthly rate set forth in this Lease, unless otherwise
agreed upon.
16. UNTENANTABILITY If the Demised Premises or the building in which
they are located are made unfit for occupancy by the elements, fire or other
cause, the Landlord may elect to terminate this Lease as of the time when the
premises or building are made unfit for occupancy, by notice to the Tenant
within ninety (90) days after that occurrence. In the alternative, Landlord may
elect to repair the building or the premises at the Landlord's expense within
one hundred eighty (180) days after the Landlord is enabled to take possession
of the damaged premises and undertake reconstruction or repairs, in which event
this Lease shall not terminate, but rent shall be abated on a per diem basis,
prorata, for the portion of the Demised Premises rendered unfit for occupancy.
If the Landlord elects to so repair, restore or rehabilitate the building or the
premises and does not substantially compete the work within said one hundred
eighty (180) days period, excluding from said period loss of time caused by the
delay beyond the control of the Landlord, then either party may terminate this
Lease as of the time when the premises or the building were made unfit for
occupancy, by notice to the other party not later than thirty (30) days after
expiration of said one hundred eighty (180) day period, as so computed. In the
event of termination of the Lease pursuant to this section, rent, including any
escalation thereof, shall be apportioned on a per diem basis and shall be paid
to the date of termination.
Anything herein stated to the contrary notwithstanding, in the event
that the building in which the Demised Premises are located shall be damaged in
any way whatsoever, and the estimated cost of repairing such damage shall exceed
one-half (1/2) of the value of the building at the time of the happening of such
damage by reason of such damage, the Landlord may decide to demolish said
building and rebuild the same and, in such event, the Landlord shall have the
right to terminate this Lease by giving to the Tenant thirty (30) days' written
notice of such termination.
17. FIRE AND CASUALTY INSURANCE Insofar as it is able to do so without
invalidating the fire and extended coverage insurance on the Demised Premises,
Landlord agrees to and does hereby waive all rights of recovery and causes of
action against Tenant, its employees, servants, agents and all parties claiming
through or under the Tenant for any damage to the Demised Premises and the
building in which they are located, caused by any of the perils covered by fire
and extended coverage insurance policies, notwithstanding the fact that said
damage to or destruction of said building and the Demised Premises by fire or
other casualty shall be due to the negligence of Tenant. If the premium paid by
the Landlord for said fire and extended coverage insurance during the term of
this Lease are increased by reason of the foregoing, then Tenant has the option
to pay said increase. Tenant's failure to pay said increase in insurance
premiums, if any, after reasonable notice of Tenant, shall render the Landlord's
waiver, as contained in this section, null and void.
Landlord and Tenant agree to and do hereby waive all rights of recovery
and causes of action against the other party and all parties claiming through or
under such other party by reason of any fire and extended coverage insurance
policies, for any damage to the Demised Premises, leasehold improvements or
personal property contained therein, notwithstanding the fact that said
7
<PAGE> 8
damage to or destruction of Landlord's or Tenant's property by fire or other
casualty shall be due to the negligence of the other party. Said waiver is and
shall continue in full force and effect, irrespective of an increase in either
party's fire and extended coverage insurance. Each party shall cause an
appropriate rider to be affixed to its fire and extended coverage insurance
policies, whereby such party's insurer shall waive all rights of recovery or
causes of action against the other party arising from the payment of any damage
or loss sustained by such party.
18. EMINENT DOMAIN If the whole or any part of the Demised Premises
shall be condemned or taken for any public or quasi public use or conveyed to a
public authority or quasi public authority under threat of condemnation, and
such taking and conveyance shall render the Demised Premises untenantable, this
Lease shall wholly expire on the date that title shall vest in the condemning
authority. In no event whatsoever shall Tenant have any claim against Landlord
by reason of condemnation or taking or by reason of a conveyance under threat of
condemnation or by taking of the whole or any part of the building or parking
areas or associated facilities. Tenants shall not have any claim to the amount
or any portion thereof which shall be awarded or paid to Landlord as a result of
any condemnation or taking. Tenant hereby irrevocably assigns to Landlord all
Tenant's right, title and interest in and to all amounts awarded or paid by
reason of any condemnation or taking or any conveyance under thereat thereof.
19. OPTION TO RENEW Landlord hereby grants to Tenant the option to
renew this Lease for One (1) additional term of five (5) years ("Extended Term")
commencing upon the expiration of the original Lease Term. The Extended Term
shall be subject to all of the covenants, agreements, provisions, terms and
conditions of this Lease, except that the monthly rental shall be $5,000 per
month.
Written notice of the exercise of this option shall be given by Tenant
to Landlord by registered mail at least ninety (90) days before the expiration
of the original term of this Lease and provided further that all rents have been
fully paid and that all covenants, agreements, provisions, terms and conditions
of this Lease to be performed by Tenant have been fully and faithfully
performed, kept and observed.
20. LANDLORD'S REMEDIES All rights and remedies of the Landlord herein
set forth are in addition to any and all rights and remedies allowed by law and
equity.
(a) If any voluntary or involuntary petition or similar pleading under
any Act of Congress relating to bankruptcy shall be filed by or
against Tenant or if any voluntary or involuntary proceedings in any
court or tribunal shall be instituted by or against Tenant to declare
Tenant insolvent or unable to pay Tenant's debts, then and in any such
event, Landlord may, if Landlord so elects, with or without notice of
such election and with or without entry or other action by Landlord,
forthwith terminate this Lease and, notwithstanding any other
provisions of this Lease, Landlord shall forthwith upon termination be
entitled to recover damages in an amount equal to the then present
value of the rent reserved in this Lease for the entire residue of the
stated term hereof, less the fair rental value of the premises for the
8
<PAGE> 9
residue of the stated term hereof.
(b) If the Tenant is (i) in default in the payment of rent for ten
(10) days, or is (ii) in default of the prompt or full performance of
any other provisions of this Lease after thirty (30) days' written
notice sent to the Tenant by the Landlord; or if the leasehold
interest of the tenant be levied upon under execution or be attached
or if the Tenant makes an assignment for the benefit of creditors, or
if a receiver be appointed by or for the Tenant or if the Tenant
abandons the Demised Premises, then and in any such event, the
Landlord may, if the Landlord so elects, with or without notice of
such election, except as herein provided, with or without demand,
forthwith terminate this Lease and the Tenant's right to possession of
the Demised Premises and retake possession of the Demised Premises by
self-help or other summary proceeding; provided, however, that if the
Landlord has notified the Tenant to cure non-monetary defaults by
thirty (30) days notice as above provided and the curing of such
defaults cannot be effected within said thirty (30) day period but has
been commenced during said thirty (30) day period, and provided that
once begun the Tenant proceeds diligently and in good faith to
complete the necessary work to cure said defaults, then the Landlord
shall not exercise the rights otherwise contained in this section.
(c) If the Tenant abandons the Demised Premises or if the Landlord
elects to terminate the Tenant's right to possession only without
terminating the Lease as above provided, the Landlord may remove from
the premises any and all property found therein and such repossession
shall not release the Tenant from Tenant's obligation to pay the rent
herein reserved. After any such repossession by Landlord without
termination of the Lease, the Landlord may, but need not, relet the
Demised Premises or any part thereof as agent of the Tenant to any
person, firm or corporation and for such time and upon such terms as
the Landlord, in the Landlord's sole discretion may determine; the
Landlord may make repairs, alterations and additions in and to the
Demised Premises and redecorate the same to the extent deemed by the
Landlord reasonably necessary or desirable and the Tenant, upon demand
in writing, shall pay the cost thereof, together with the costs of
such repairs, alterations, additions, redecorating and expenses. The
Tenant shall pay to the Landlord the amount of each monthly
deficiency, upon demand in writing, and if the rent so collected from
any such reletting is more than sufficient to pay the full amount of
the rent reserved herein, together with such costs and expenses of
Landlord, the Landlord at the end of the stated term of this Lease
shall account for any surplus to the Tenant, upon demand in writing.
(d) Any and all property which may be removed from the Demised
Premises by the Landlord, in accordance with the terms of this Lease,
may be handled, removed, stored or otherwise disposed of by the
Landlord at the risk and expense of the Tenant; the Landlord in no
event shall be responsible for the preservation or safekeeping of, or
damage to, Tenant's property.
Tenant shall pay all expenses incurred with such removal and all
storage charges against
9
<PAGE> 10
such property. If any property shall remain upon the Demised Premises or in the
possession of the Landlord and shall not be retaken by the Tenant within a
period of thirty (30) days from and after the time when the Demised Premises are
either abandoned by the Tenant or repossessed by the Landlord under terms of
this Lease, said property shall conclusively be deemed to have been forever
abandoned by the Tenant.
21. QUIET ENJOYMENT So long as the Tenant pays the rent and all charges
to be paid by the Tenant and performs and observes all of the covenants and
provisions herein, the Tenant shall quietly enjoy the Demised Premises subject,
however, to the terms of this Lease, to the underlying leases, if any, leasehold
mortgage and other mortgages herein mentioned and provided for or any defaults
thereunder.
22. WAIVER No consent or waiver, express or implied, by Landlord to or
of any breach of any covenant, condition or duty of Tenant shall be construed as
a consent or waiver to or of any other breach of the same or any other covenant,
condition or duty to be observed by Tenant or co-tenant.
23. NOTICE Any notice required or permitted to be given to either party
hereunder shall be sufficiently given, if in writing, addressed to such party,
and personally delivered or sent by nationally recognized overnight delivery
service or mailed certified mail, return receipt requested, to such address as
either party may from time to time designate for that purpose, which address
initially is: 8500 Station Street, Suite 100, Mentor, Ohio 44060 for Tenant
and 8500 Station Street, Suite 113, Mentor, Ohio 44060 for Landlord.
24. SUCCESSORS AND ASSIGNS This lease and the covenants and conditions
herein contained shall inure to the benefit of and be binding upon Landlord, its
successors and assigns, and shall be binding upon Tenant, its successors and
assigns, and shall inure to the benefits of Tenant and only such assignees of
Tenant to whom an assignment by Tenant has been consented to in writing by
Landlord.
25. ENTIRE AGREEMENT This Lease contains the entire agreement between
the parties hereto; any agreement hereafter or heretofore made shall not operate
to change, modify, terminate or discharge this Lease, in whole or in part,
unless such agreement is in writing and signed by each of the parties hereto.
Landlord has made no representations or warranties with respect to the Demised
Premises, except as herein expressly set forth.
26. RECORDING Tenant agrees not to record this Lease. At the request of
either party, a memorandum form of this Lease will be prepared in the form
approved by Landlord and Tenant, executed and filed with the Recorder of Lake
County, Ohio. The party requesting the memorandum form shall pay the cost of
recording.
27. TERMS Whenever herein the singular number is used, the same shall
include the plural; and the neuter gender shall include the masculine and
feminine genders.
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<PAGE> 11
This Lease Agreement is executed as of the date and at the place first
above written.
Signed and Acknowledged LANDLORD:
in the Presence of: OSAIR, INC.
/s/ Julie Hawley BY: /s/ Richard M. Osborne
- - -------------------------------- --------------------------------
(Signature of Witness)
Julie Hawley ITS: President
- - -------------------------------- --------------------------------
(Printed Name of Witness)
/s/ Sherry L. Kirchenbauer
- - --------------------------------
(Signature of Witness)
Sherry L. Kirchenbauer
- - --------------------------------
(Printed Name of Witness)
TENANT:
LIBERTY SELF-STOR, INC.
/s/ Julie Hawley BY: /s/ Thomas J. Smith
- - -------------------------------- --------------------------------
(Signature of Witness)
ITS: President and Chief Operating
Julie Hawley Officer
- - -------------------------------- --------------------------------
(Printed Name of Witness)
/s/ Sherry L. Kirchenbauer
- - --------------------------------
(Signature of Witness)
Sherry L. Kirchenbauer
- - ---------------------------------
(Printed Name of Witness)
11
<PAGE> 12
STATE OF OHIO )
) SS.
COUNTY OF ___________ )
BEFORE ME, a Notary Public in and for said county and State personally
appeared the above-named OSAIR, INC. by _________________, its
____________________ , who acknowledged that he did sign the foregoing
instrument and that the same is the free act and deed of said corporation and
his free act and deed personally and as such officer.
IN WITNESS WHEREOF, I have hereunto set my official hand and seal at
_____________, Ohio, this ____, day of _______________, _____.
_____________________________
Notary Public
STATE OF OHIO )
) SS.
COUNTY OF ___________ )
BEFORE ME, a Notary Public in and for said county and State personally
appeared the above-named LIBERTY SELF-STOR, INC. by ______________________, its
______________________ , who acknowledged that he did sign the foregoing
instrument and that the same is his free and voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto set my official hand and seal at
___________, Ohio, this ________ , day of _____________, _____.
____________________________
Notary Public
12
<PAGE> 13
EXHIBIT "A"
NONE
<PAGE> 1
EXHIBIT 10.3
AGREEMENT OF LIMITED PARTNERSHIP
OF
LSS I LIMITED PARTNERSHIP
DATED: DECEMBER 29, 1999
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINED TERMS; EXHIBITS ....................................1
Section 1.1 Defined Terms .............................1
Section 1.2 Exhibits, Schedules, Etc. .................6
ARTICLE II FORMATION; ADMISSION OF LIMITED PARTNERS; NAME;
PLACE OF BUSINESS AND REGISTERED AGENT .....................6
Section 2.1 Certificate of Limited Partnership;
Other Filings .............................6
Section 2.2 Limited Partners; Additional Limited
Partners ..................................7
Section 2.3 Name; Principal Place of Business .........7
Section 2.4. Registered Agent and Registered Office ....7
ARTICLE III BUSINESS AND TERM OF PARTNERSHIP ...........................7
Section 3.1 Business ..................................7
Section 3.2 Term ......................................8
ARTICLE IV CAPITAL CONTRIBUTIONS ......................................8
Section 4.1 General Partner ...........................8
Section 4.2 Limited Partners ..........................8
Section 4.3 Additional Capital Contributions and
Issuances of Additional Partnership
Interests .................................8
Section 4.4 Additional Funding .......................10
Section 4.5 Equity Plan ..............................10
Section 4.6 Dividend Reinvestment Plan ...............10
Section 4.7 Interest .................................11
Section 4.8 Return of Capital ........................11
ARTICLE V PROFITS, LOSSES AND ACCOUNTING ............................11
Section 5.1 Profits ..................................11
Section 5.2 Accounting ...............................11
Section 5.3 Partners' Accounts .......................12
Section 5.4 Section 754 Elections ....................13
ARTICLE VI POWERS, DUTIES, LIABILITIES, COMPENSATION AND
VOTING OF GENERAL PARTNER .................................13
Section 6.1 Powers of General Partner ................13
Section 6.2 Delegation of Authority ..................15
Section 6.3 Duties of General Partner ................15
i
<PAGE> 3
Section 6.4 Liabilities of General Partner;
Indemnification ..........................16
Section 6.5 Compensation of General Partner;
Reimbursement ............................18
Section 6.6 Reliance on Act of General Partner .......18
Section 6.7 Outside Services; Dealings with
Affiliates; Outside Activities ...........18
Section 6.8 General Partner Participation ............19
ARTICLE VII RIGHTS, PROHIBITIONS AND REPRESENTATIONS
WITH RESPECT TO LIMITED PARTNERS ..........................20
Section 7.1 Rights of Limited Partners ...............20
Section 7.2 Prohibitions with Respect to the Limited
Partners .................................20
Section 7.3 Ownership by Limited Partner of Corporate
General Partner or Affiliate .............20
Section 7.4 Grant of Redemption Rights ...............21
Section 7.5 Warranties and Representations of the
Limited Partners .........................21
Section 7.6 Indemnification by Limited Partners ......22
Section 7.7 Limited Partner Guarantees ...............22
Section 7.8 No Sale of Property ......................22
ARTICLE VIII DISTRIBUTIONS AND PAYMENTS TO PARTNERS ....................23
Section 8.1 Distributions of Cash Flow ...............23
Section 8.2 REIT Distribution Requirements ...........23
Section 8.3 No Right to Distributions in Kind ........23
Section 8.4 Disposition Proceeds .....................23
Section 8.5 Withdrawals ..............................23
Section 8.6 Amounts Withheld .........................23
ARTICLE IX TRANSFERS OF INTERESTS ....................................24
Section 9.1 General Partner ..........................24
Section 9.2 Admission of a Substitute or Additional
General Partner ..........................24
Section 9.3 Effect of Bankruptcy, Withdrawal, Death
or Dissolution of a General Partner ......24
Section 9.4 Removal of a General Partner .............25
Section 9.5 Restrictions on Transfer of Limited
Partnership Interests ....................25
Section 9.6 Admission of Substitute Limited Partner ..26
Section 9.7 Rights of Assignees of Partnership
Interests ................................27
Section 9.8 Effect of Bankruptcy, Death, Incompetence
or Termination of a Limited Partner ......27
Section 9.9 Joint Ownership of Interests .............27
Section 9.10 Transferees ..............................28
Section 9.11 Absolute Restriction .....................28
ii
<PAGE> 4
ARTICLE X TERMINATION OF THE PARTNERSHIP ............................28
Section 10.1 Termination ..............................28
Section 10.2 Payment of Debts .........................29
Section 10.3 Debts to Partners ........................29
Section 10.4 Remaining Distribution ...................29
Section 10.5 Reserve ..................................29
Section 10.6 Final Accounting .........................29
ARTICLE XI AMENDMENTS ................................................29
Section 11.1 Authority to Amend .......................29
Section 11.2 Notice of Amendments .....................30
ARTICLE XII POWER OF ATTORNEY .........................................30
Section 12.1 Power ....................................30
Section 12.2 Survival of Power ........................31
ARTICLE XIII CONSENTS, APPROVALS, VOTING AND MEETINGS ..................31
Section 13.1 Method of Giving Consent or Approval .....31
Section 13.2 Meetings of Limited Partners .............32
Section 13.3 Opinion ..................................32
Section 13.4 Submissions to Partners ..................32
ARTICLE XIV MISCELLANEOUS .............................................32
Section 14.1 Governing Law ............................32
Section 14.2 Agreement for Further Execution ..........32
Section 14.3 Entire Agreement .........................32
Section 14.4 Severability .............................32
Section 14.5 Notices ..................................33
Section 14.6 Mediation/Arbitration of Disputes ........33
Section 14.7 Titles and Captions ......................33
Section 14.8 Counterparts .............................33
Section 14.9 Pronouns .................................33
Section 14.10 Survival of Rights .......................34
Section 14.11 Personal Liability .......................34
iii
<PAGE> 5
AGREEMENT OF LIMITED PARTNERSHIP
OF
LSS I LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP made as of the 29th day of
December 1999, by and among LIBERTY SELF-STOR, INC., a Maryland corporation,
having an address at Suite 100, 8500 Station Street, Mentor, Ohio 44060, the
general partner ("General Partner"), and the limited partners listed on Exhibit
A attached hereto ("Limited Partners"), is intended to evidence the mutual
agreement of the General Partner and the Limited Partners to form a limited
partnership pursuant to Title 6, Chapter 17 of the Delaware Code (the "Act") for
the purposes and upon the terms and conditions hereinafter set forth.
ARTICLE I
DEFINED TERMS; EXHIBITS
Section 1.1 DEFINED TERMS. Whenever used in this Agreement, the
following terms shall have the meanings respectively assigned to them in this
Article I, unless otherwise expressly provided herein or unless the context
otherwise requires:
"Additional Funds" has the meaning set forth in Section 4.4 hereof.
"Additional Limited Partner" shall mean a Person admitted to this
Partnership as a Limited Partner pursuant to and in accordance with
Section 2.2(b) of this Agreement.
"Additional Securities" shall mean any additional REIT Shares (other
than REIT Shares issued in connection with an exchange pursuant to
Section 7.4 and Exhibit D hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase REIT Shares, as set forth in Section
4.3(a)(ii).
"Affiliate" of another Person shall mean (a) any Person directly or
indirectly owning, controlling or holding with power to vote ten
percent (10%) or more of the outstanding voting securities of such
other Person; (b) any Person ten percent (10%) or more of whose
outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by such other Person; (c) any
Person directly or indirectly controlling, controlled by, or under
common control with, such other Person; (d) any officer, director,
member or partner of such other Person; and (e) if such other Person is
an officer, director, member or partner in a company, the company for
which such Person acts in any such capacity.
"Agreed Value" shall mean the fair market value of Contributed Property
as agreed to by the Contributing Partner and the Partnership, using any
reasonable method as they may adopt and the fair market value of the
Partnership Properties after being adjusted in accordance with Part B
of Exhibit B.
<PAGE> 6
"Agreement" shall mean this Agreement of Limited Partnership of LSS I
Limited Partnership, as amended, modified, supplemented or restated
from time to time, as the context requires.
"Articles of Incorporation" shall mean that certain Articles of
Incorporation, dated May 12, 1999, of the General Partner, as amended,
modified, supplemented or restated from time to time, as the context
requires.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as
amended, 11 U.S.C. sec. 101 et seq., and as hereafter amended from time
to time.
"Business Day" shall mean any day when the New York Stock Exchange is
open for trading.
"Capital Account" shall mean, as to any Partner, the account
established and maintained for such Partner pursuant to Section 5.3
hereof.
"Capital Contribution" shall mean the amount in cash or the Agreed
Value of Contributed Property contributed by each Partner (or his
original predecessor in interest) to the capital of the Partnership for
his interest in the Partnership.
"Cash Flow" shall mean the excess of cash revenues actually received by
the Partnership in respect of Partnership operations for any period,
less Operating Expenses for such period. Cash Flow shall not include
Disposition Proceeds.
"Class A Limited Partners" shall mean those persons listed under the
heading "Class A Limited Partners" on the signature pages hereto.
"Class B Limited Partners" shall mean those persons listed under the
heading "Class B Limited Partners" on the signature pages hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular
provision of the Code shall mean that provision in the Code at the date
hereof and any succeeding provision of the Code.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Computation Date" shall mean the date on which an Redemption Exercise
Notice is delivered to the General Partner.
"Contributed Entities" shall mean the various limited partnerships
and/or limited liability companies that own the Initial Properties
prior to the formation transaction.
2
<PAGE> 7
"Contributed Property" shall mean a Partner's interest in property or
other consideration (excluding services and cash) contributed to the
Partnership by such Partner.
"Disposition Proceeds" shall mean the net cash proceeds from all sales
and other dispositions (other than in the ordinary course of business)
and all refinancings of Property, less any portion thereof used to
establish reserves or reinvested by the General Partner, all as
determined by the General Partners(s). Disposition Proceeds shall
include all principal and interest payments with respect to any note or
other obligation received by the Partnership in connection with sales
and other dispositions (other than in the ordinary course of business)
of Property.
"Equity Plan" shall mean the General Partner's 1999 Stock Option Plan,
as the same may be amended from time to time.
"Event of Bankruptcy" shall mean as to any Person the filing of a
petition for relief as to such Person as debtor or bankrupt under the
Bankruptcy Code or similar provision of law of any jurisdiction (except
if such petition is contested by such Person and has been dismissed
within ninety (90) days of the filing thereof); insolvency of such
Person as finally determined by a court of competent jurisdiction;
filing by such Person of a petition or application to accomplish the
same or for the appointment of a receiver or a trustee for such Person
or a substantial part of such Person's assets; commencement of any
proceedings relating to such Person as a debtor under any other
reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or
hereinafter in effect, either by such Person or by another; provided,
however, that if such proceeding is commenced by another, such Person
indicates his approval of such proceeding, consents thereto or
acquiesces therein, or such proceeding is contested by such Person and
has not been finally dismissed within ninety (90) days. The term "Event
of Bankruptcy" as defined in this Agreement and as used herein, is
intended and shall be deemed to supersede and replace the events of
withdrawal described in Sections 17-402(a)(4) and (5) of the Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"General Partner" shall mean Liberty Self-Stor, Inc. and any Person who
becomes a substitute or additional General Partner as provided herein,
and any of their successors as General Partner.
"General Partnership Interest" shall mean the ownership interest of a
General Partner in the Partnership.
"Indemnitee" shall mean (i) any Person made a party to a proceeding by
reason of its status as (A) the General Partner, or (B) a trustee,
director or officer of the General Partner, and
3
<PAGE> 8
(ii) such other Persons (including Affiliates of the General Partner or
the Partnership) as the General Partner may designate from time to
time, in its sole and absolute discretion.
"Initial Properties" shall mean those Properties listed on Exhibit C
hereto.
"IRS" shall mean the Internal Revenue Service.
"Limited Partners" shall mean the Class A Limited Partners and the
Class B Limited Partners in their respective capacities as limited
partners of the Partnership, their permitted successors or assigns who
have been admitted to the Partnership as limited partners of the
Partnership, or any Person who, at the time of reference thereto, is a
limited partner of the Partnership.
"Limited Partnership Interest" shall mean the ownership interest of a
Limited Partner in the Partnership at any particular time, including
the right of such Limited Partner to any and all benefits to which such
Limited Partner may be entitled as provided in this Agreement and in
the Act, together with the obligations of such Limited Partner to
comply with all the provisions of this Agreement and of the Act.
"Majority-In-Interest of the Limited Partners" shall mean Limited
Partner(s) who hold in the aggregate more than fifty percent (50%) of
the Percentage Interests then allocable to and held by the Limited
Partners, as a class.
"Operating Expenses" shall mean (i) all administrative and operating
costs and expenses incurred by the Partnership, (ii) those
administrative costs and expenses of the General Partner, including any
salaries or other payments to trustees, officers or employees of the
General Partner, and any accounting and legal expense of the General
Partner, which expenses the Partners have agreed, are expenses of the
Partnership and not the General Partner, and (iii) to the extent not
included in clause (ii) above, REIT Expenses; provided, however, that
Operating Expenses shall not include any administrative costs and
expenses incurred by the General Partner that are attributable to
properties or partnership interests in a Subsidiary that are owned by
the General Partner directly.
"Partner" shall mean the General Partner or any Limited Partner.
"Partnership" shall mean LSS I Limited Partnership, a Delaware limited
partnership.
"Partnership Interest" shall mean an ownership interest in the
Partnership representing a Capital Contribution by either a Limited
Partner or the General Partner and includes any and all benefits to
which the holder of such an ownership interest may be entitled as
provided in this Agreement or the Act, together with all obligations of
such Person to comply with the terms and provisions of this Agreement
and the Act.
4
<PAGE> 9
"Partnership Record Date" shall mean the record date established by the
General Partner for the distribution of Cash Flow pursuant to Sections
8.1 and 8.2 hereof, which record date shall be the same as the record
date established by the General Partner for a distribution to its
shareholders of some or all of its portion of such distribution.
"Partnership Unit" shall mean a unit of interest in the Partnership
issued under this Agreement. The initial issuance of Partnership Units
to each Partner is as set forth on Exhibit A hereto.
"Percentage Interest" shall mean the percentage ownership interest in
the Partnership of each Partner, as determined by dividing the
Partnership Units owned by a Partner by the total number of Partnership
Units then outstanding.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other entity.
"Profits" and "Losses" shall have the meaning set forth in Section
5.2(c) hereof.
"Property" shall mean any self-storage property or other investment in
which the Partnership holds an ownership interest.
"REIT" shall mean a real estate investment trust under Sections 856
through 860, inclusive, of the Code.
"REIT Expenses" means (i) costs and expenses relating to the formation
and continuity of existence of the General Partner and any Subsidiaries
thereof (which Subsidiaries shall, for purposes hereof, be included
within the definition of General Partner), including taxes, fees and
assessments associated therewith, any and all costs, expenses or fees
payable to any trustee, director, officer, or employee of the General
Partner, (ii) costs and expenses relating to a public offering and
registration of securities or private offering of securities by the
General Partner and all statements, reports, fees and expenses
incidental thereto, including underwriting discounts and selling
commissions applicable to any such offering of securities, (iii) costs
and expenses associated with the preparation and filing of any periodic
reports by the General Partner under federal, state or local laws or
regulations, including filings with the Commission, (iv) costs and
expenses associated with compliance by the General Partner with laws,
rules and regulations promulgated by any regulatory body, including the
Commission, and (v) all other operating or administrative costs of the
General Partner, including, without limitation, insurance premiums, and
legal, accounting and trustees fees, incurred in the ordinary course of
its business on behalf of or in connection with the Partnership.
"REIT Share" shall mean one share of common stock, $0.001 par value, of
the General Partner.
5
<PAGE> 10
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting
equity securities, or (ii) the outstanding equity interests, are owned,
directly or indirectly, by such Person.
"Substitute General Partner" has the meaning set forth in Section 9.2.
"Substitute Limited Partner" shall mean any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.6 hereof.
"Transfer" has the meaning set forth in Section 9.5(a) hereof.
"Value" shall mean, with respect to a REIT Share, the average of the
daily market price for the thirty (30) consecutive trading days
immediately preceding the Valuation Date. The market price for each
such trading day shall be: (i) if the REIT Shares are listed or
admitted to trading on any national securities exchange or the NASDAQ
National Market System, the closing price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid
and asked prices on such day; (ii) if the REIT Shares are not listed or
admitted to trading on any national securities exchange or the NASDAQ
National Market System, the last reported sale price on such day or, if
no sale takes place on such day, the average of the closing bid and
asked prices on such day, as reported by a reliable quotation source
designated by the General Partner; or (iii) if the REIT Shares are not
listed or admitted to trading on any national securities exchange or
the NASDAQ National Market System and no such last reported sale price
or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or if
there shall be no bid and asked prices on such day, the average of the
high bid and low asked prices, as so reported, on the most recent day
(not more than ten (10) days prior to the date in question) for which
prices have been so reported; provided, however, that if there are no
bid and asked prices reported during the ten (10) days prior to the
date in question, the Value of the REIT Shares shall be determined by
the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable
judgment, appropriate. In the event the REIT Shares includes rights
that a holder of REIT Shares would be entitled to receive, and the
General Partner acting in good faith determines that the value of such
rights is not reflected in the Value of the REIT Shares determined as
aforesaid, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment,
appropriate.
Section 1.2 EXHIBITS, SCHEDULES, ETC. References to "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules
attached to this Agreement, and references to an "Article" or a "Section" are,
unless otherwise specified, to one of the Articles or Sections of this
Agreement. Each Exhibit and Schedule attached hereto and referred to herein is
hereby incorporated herein by reference.
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ARTICLE II
FORMATION; ADMISSION OF LIMITED PARTNERS;
NAME; PLACE OF BUSINESS AND REGISTERED AGENT
Section 2.1 CERTIFICATE OF LIMITED PARTNERSHIP; OTHER FILINGS. The
General Partner shall prepare (or caused to be prepared), execute, acknowledge,
record and file at the expense of the Partnership, a Certificate of Limited
Partnership and all requisite fictitious name statements and notices in such
places and jurisdictions as may be required by the Act or necessary to cause the
Partnership to be treated as a limited partnership under, and otherwise to
comply with, the laws of each state or other jurisdiction in which the
Partnership conducts business.
Section 2.2 LIMITED PARTNERS; ADDITIONAL LIMITED PARTNERS. (a) The
Limited Partners shall be those Persons identified as Limited Partners on
Exhibit A attached hereto, as amended from time to time pursuant to the terms of
this Agreement, and such Persons are hereby admitted to the Partnership as
Limited Partners.
(b) The General Partner shall in timely fashion amend this
Agreement and, if required by the Act, the Certificate of Limited Partnership to
reflect the admission pursuant to the terms of this Agreement of a Person as a
Limited Partner.
Section 2.3 NAME; PRINCIPAL PLACE OF BUSINESS. The name of the
Partnership shall be LSS I Limited Partnership. The principal place of business
of the Partnership shall be at 8500 Station Street, Mentor, Ohio. The General
Partner may at any time change the location of such office, provided the General
Partner gives notice to the Partners of any such change.
Section 2.4. REGISTERED AGENT AND REGISTERED OFFICE. The registered
agent of the Partnership shall be Corporation Service Company, a Delaware
corporation, located at 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1265, or such other Person as the General Partner may select in
its sole discretion. The registered office of the Partnership shall be
Corporation Service Company, a Delaware corporation, located at 1013 Centre
Road, Wilmington, New Castle County, Delaware 19805-1265, or such other location
as the General Partner may select in its sole and absolute discretion.
ARTICLE III
BUSINESS AND TERM OF PARTNERSHIP
Section 3.1 BUSINESS. The purpose and nature of the business of the
Partnership is to conduct any business that may lawfully be 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, unless the Board of
Trustees of the General Partner determines to cease to maintain the
qualification of the General Partner as a REIT. To consummate the foregoing and
to carry out the obligations of the Partnership in connection therewith or
incidental thereto, the General Partner shall have the authority, in
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accordance with and subject to the limitations set forth elsewhere in this
Agreement, to make, enter into, perform and carry out any arrangements,
contracts or agreements of every kind for any lawful purpose, without limit as
to amount or otherwise, with any corporation, association, partnership, limited
liability company, firm, trustee, syndicate, individual or any political or
governmental division, subdivision or agency, domestic or foreign, and generally
to make and perform agreements and contracts of every kind and description and
to do any and all things necessary or incidental to the foregoing for the
protection and enhancement of the assets of the Partnership.
Section 3.2 TERM. The Partnership as herein constituted shall continue
for perpetuity, unless earlier dissolved or terminated pursuant to law or the
provisions of this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS
Section 4.1 GENERAL PARTNER. The General Partner has contributed cash
and certain other assets to the capital of the Partnership in the amount set
forth opposite the name of the General Partner on Exhibit A attached hereto.
Section 4.2 LIMITED PARTNERS. The Limited Partners have contributed
their respective ownership interests in the Contributed Entities and cash and
certain other assets to the capital of the Partnership. The Agreed Values of the
Limited Partners' proportionate ownership interests in the Contributed Entities
are set forth on Exhibit A attached hereto.
Section 4.3 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF
ADDITIONAL PARTNERSHIP INTERESTS. Except as provided in this Section 4.3 or in
Section 4.4, the Partners shall have no right or obligation to make any
additional Capital Contributions or loans to the Partnership. The General
Partner may contribute additional capital to the Partnership, from time to time,
and receive additional Partnership Interests in respect thereof, in the manner
contemplated in this Section 4.3.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized
to cause the Partnership to issue such additional
Partnership Interests in the form of Partnership
Units for any Partnership purpose at any time or from
time to time, to the Partners or to other Persons for
such consideration and on such terms and conditions
as shall be established by the General Partner in its
sole and absolute discretion, all without the
approval of any of the Limited Partners. Any
additional Partnership Interest issued thereby may be
issued in one or more classes, or one or more series
of any of such classes, with such designations,
preferences and relative, participating, optional or
other special rights, powers and duties, including
rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by
the General Partner in its sole and absolute
discretion and without the approval of any
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Limited Partner, 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 each such class or
series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of
each class or series of Partnership Interests upon
dissolution and liquidation of the Partnership;
provided, however, that no additional Partnership
Interests shall be issued to the General Partner
unless:
(1) The additional Partnership Interests are
issued in connection with an issuance of
Additional Securities as permitted under
clause (ii) below, or
(2) the additional Partnership Interests are
issued to all Partners in proportion to
their respective Percentage Interests.
Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue
Partnership Interests for less than fair market value, so long
as the General Partner concludes in good faith that such
issuance is in the best interests of the General Partner and
the Partnership.
(ii) Upon Issuance of Additional Securities. The
General Partner shall not issue any additional REIT
Shares (other than REIT Shares issued in connection
with an exchange pursuant to Section 7.4 hereof) or
rights, options, warrants or convertible or
exchangeable securities containing the right to
subscribe for or purchase REIT Shares (collectively,
"Additional Securities") other than to all holders of
REIT Shares, unless (A) 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 Additional
Securities, and (B) the General Partner contributes
the proceeds from the issuance of such Additional
Securities and from any exercise of rights contained
in such Additional Securities to the Partnership.
Without limiting the foregoing, the General Partner
is expressly authorized to issue Additional
Securities for less than fair market value, and 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 best interests of the General
Partner and the Partnership, and (y) the General
Partner contributes all proceeds from such issuance
to the Partnership. For example, in the event the
General Partner issues REIT Shares for a cash
purchase price and contributes all of the proceeds of
such issuance to the Partnership as required
hereunder, the General Partner shall
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be issued a number of additional Partnership Units
equal to the product of (A) the number of such REIT
Shares issued by the General Partner, the proceeds of
which were so contributed, multiplied by (B) a
fraction, the numerator of which is 100%, and the
denominator of which is the Exchange Factor (as
defined in Exhibit D hereto) in effect on the date of
such contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of REIT
Shares. In connection with any and all issuances of REIT Shares, the General
Partner shall contribute all of the proceeds raised in connection with such
issuance to the Partnership as Capital Contributions, provided that if the
proceeds actually received and contributed by the General Partner are less than
the gross proceeds of such issuance as a result of any underwriter's discount or
other expenses paid or incurred in connection with such issuance, then the
General Partner shall be deemed to have made Capital Contributions to the
Partnership in the aggregate amount of the gross proceeds of such issuance and
the Partnership shall be deemed simultaneously to have paid such offering
expenses in connection with the required issuance of additional Partnership
Units to the General Partner for such Capital Contributions pursuant to Section
4.3(a) hereof.
Section 4.4 ADDITIONAL FUNDING. If the General Partner determines that
it is in the best interests of the Partnership to provide for additional
Partnership funds ("Additional Funds") for any Partnership purpose, the General
Partner may (i) cause the Partnership to obtain such funds from outside
borrowings, or (ii) elect to borrow such funds itself and lend these funds to
the Partnership on the same terms and conditions as applicable to its
borrowings.
Section 4.5 EQUITY PLAN. If at any time or from time to time stock
options or other equity compensation granted in connection with the General
Partner's Equity Plan or other compensation programs are exercised in accordance
with the terms of such agreements:
(a) the General Partner shall, as soon as practicable after such
exercise, contribute to the capital of the Partnership an amount equal to the
exercise price paid to the General Partner by such exercising party in
connection with the exercise of the stock option;
(b) the Partnership shall issue and the General Partner shall
receive the number of Partnership Units corresponding to the number of REIT
Shares delivered by the General Partner to such exercising party multiplied by a
fraction the numerator of which is 100% and the denominator of which is the
Exchange Factor (as defined in Exhibit D hereto) in effect on the date of such
contribution;
(c) after the issuance of such Partnership Units to the General
Partner, the Percentage Interest of each Limited Partner shall be adjusted such
that the Percentage Interest of the Limited Partner shall be equal to a
fraction, the numerator of which is the number of Partnership Units owned by
such Limited Partner and the denominator of which is the total number of issued
and outstanding Partnership Units on such date. The General Partner shall
promptly give each
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Limited Partner written notice of its Percentage Interest, as adjusted; and
(d) after the issuance of such Partnership Units to the General
Partner, the Percentage Interest of the General Partner shall be adjusted such
that it equals 100% minus the sum of the Percentage Interests of all Limited
Partners immediately after being adjusted pursuant to paragraph (c) of this
Section 4.5.
Section 4.6 DIVIDEND REINVESTMENT PLAN. All amounts received by the
General Partner in respect of its dividend reinvestment plan, if any, shall be
contributed by the General Partner to the Partnership in exchange for additional
Partnership Units as follows:
(a) the Partnership shall issue and the General Partner shall
receive the number of Partnership Units corresponding to the number of REIT
Shares delivered by the General Partner to such exercising party multiplied by a
fraction the numerator of which is 100% and the denominator of which is the
Exchange Factor (as defined in Exhibit D hereto) in effect on the date of such
contribution;
(b) after the issuance of such Partnership Units to the General
Partner, the Percentage Interest of each Limited Partner shall be adjusted such
that the Percentage Interest of the Limited Partner shall be equal to a
fraction, the numerator of which is the number of Partnership Units owned by
such Limited Partner and the denominator of which is the total number of issued
and outstanding Partnership Units on such date. The General Partner shall
promptly give each Limited Partner written notice of its Percentage Interest, as
adjusted; and
(c) after the issuance of such Partnership Units to the General
Partner, the Percentage Interest of the General Partner shall be adjusted such
that it equals 100% minus the sum of the Percentage Interests of all Limited
Partners immediately after being adjusted pursuant to paragraph (b) of this
Section 4.6.
Section 4.7 INTEREST. No interest shall be paid on the Capital
Contribution or Capital Account of any Partner.
Section 4.8 RETURN OF CAPITAL. Except as expressly provided in this
Agreement, no Partner shall be entitled to demand or receive the return of his
Capital Contribution.
ARTICLE V
PROFITS, LOSSES AND ACCOUNTING
Section 5.1 PROFITS . After giving effect to the special allocations
set forth in Part A of Exhibit B hereof, Profits and Losses shall be allocated
among the Partners in accordance with their respective Percentage Interests.
Section 5.2 ACCOUNTING. (a) The books of the Partnership shall be kept
on the accrual
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basis and in accordance with generally accepted accounting principles
consistently applied.
(b) The fiscal year of the Partnership shall be the calendar
year.
(c) The terms "Profits" and "Losses," as used herein, shall mean
all items of income, gain, expense or loss as determined utilizing federal
income tax accounting principles and shall also include each Partner's share of
income described in Section 705(a)(1)(B) of the Code, any expenditures described
in Section 705(a)(2)(B) of the Code, any expenditures described in Section
709(a) of the Code which are not deducted or amortized in accordance with
Section 709(b) of the Code, losses not deductible pursuant to Sections 267(a)
and 707(b) of the Code and adjustments made pursuant to Exhibit B attached
hereto.
(d) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the IRS, and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Operating Expenses of the
Partnership. In the event the General Partner receives notice of a final
Partnership adjustment under Section 6223(a)(2) of the Code, the General Partner
shall either (i) file a court petition for judicial review of such final
adjustment within the period provided under Section 6226(a) of the Code, a copy
of which petition shall be mailed to each Limited Partner on the date such
petition is filed, or (ii) mail a written notice to each Limited Partner, within
such period, that describes the General Partner's reasons for determining not to
file such a petition.
(e) Except as specifically provided herein, all elections
required or permitted to be made by the Partnership under the Code shall be made
by the General Partner in its sole discretion.
(f) Any Partner shall have the right to a private audit of the
books and records of the Partnership, provided such audit is made at the expense
of the Partner desiring it, and it is made during normal business hours.
Section 5.3 PARTNERS' ACCOUNTS. (a) There shall be maintained a Capital
Account for each Partner in accordance with this Section 5.3 and the principles
set forth in Exhibit B attached hereto and made a part hereof. The amount of
cash and the net fair market value of property contributed to the Partnership by
each Partner, net of liabilities assumed by the Partnership, shall be credited
to its Capital Account, and from time to time, but not less often than annually,
the share of each Partner in Profits, Losses and fair market value of
distributions shall be credited or charged to its Capital Account. The
determination of Partners' Capital Accounts, and any adjustments thereto, shall
be made consistent with tax accounting and other principles set forth in Section
704(b) of the Code and applicable regulations thereunder and Exhibit B attached
hereto.
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(b) Except as otherwise specifically provided herein or in a
guarantee of a Partnership liability, signed by a Limited Partner, no Limited
Partner shall be required to make any further contribution to the capital of the
Partnership to restore a loss, to discharge any liability of the Partnership or
for any other purpose, nor shall any Limited Partner personally be liable for
any liabilities of the Partnership or of the General Partner except as provided
by law or this Agreement. All Limited Partners hereby waive their right of
contribution which they may have against other Partners in respect of any
payments made by them under any guarantee of Partnership debt.
(c) Immediately following the transfer of any Partnership
Interest, the Capital Account of the transferee Partner shall be equal to the
Capital Account of the transferor Partner attributable to the transferred
interest, and such Capital Account shall not be adjusted to reflect any basis
adjustment under Section 743 of the Code.
(d) For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes, taking into account any adjustments required pursuant to Section
704(b) of the Code and the applicable regulations thereunder as more fully
described in Exhibit B attached hereto.
Section 5.4 SECTION 754 ELECTIONS. The General Partner shall elect,
pursuant to Section 754 of the Code, to adjust the basis of the Partnership's
assets for all transfers of Partnership interests if such election would benefit
any Partner or the Partnership.
ARTICLE VI
POWERS, DUTIES, LIABILITIES, COMPENSATION
AND VOTING OF GENERAL PARTNER
Section 6.1 POWERS OF GENERAL PARTNER. Notwithstanding any provision of
this Agreement to the contrary, the General Partner's discretion and authority
are subject to the limitations imposed by law, by the General Partner's Articles
of Incorporation and By-Laws. Subject to the foregoing and to other limitations
imposed by this Agreement, the General Partner shall have full, complete and
exclusive discretion to manage and control the business and affairs of the
Partnership and make all decisions affecting the business and assets of the
Partnership. Without limiting the generality of the foregoing (but subject to
the restrictions specifically contained in this Agreement), the General Partner
shall have the power and authority to take the following actions on behalf of
the Partnership:
(a) to acquire, purchase, own, lease and dispose of any real
property and any other property or assets that the General Partner determines
are necessary or appropriate or in the best interests of conducting the business
of the Partnership;
(b) to construct buildings and make other improvements (including
renovations)
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on or to the properties owned or leased by the Partnership;
(c) to borrow money for the Partnership, issue evidences of
indebtedness in connection therewith, refinance, guarantee, increase the amount
of, modify, amend or change the terms of, or extend the time for the payment of,
any indebtedness or obligation of or to the Partnership, and secure such
indebtedness by mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
(d) to pay, either directly or by reimbursement, for all
Operating Expenses to third parties or to the General Partner (as set forth in
this Agreement);
(e) to lease all or any portion of any of the Partnership's
assets, whether or not the terms of such leases extend beyond the termination
date of the Partnership and whether or not any portion of the Partnership's
assets so leased are to be occupied by the lessee, or, in turn, subleased in
whole or in part to others, for such consideration and on such terms as the
General Partner may determine;
(f) to prosecute, defend, arbitrate, or compromise any and all
claims or liabilities in favor of or against the Partnership, on such terms and
in such manner as the General Partner may reasonably determine, and similarly to
prosecute, settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership's assets; provided, however, that the General
Partner may not, without the consent of all of the Partners, confess a judgment
against the Partnership;
(g) to file applications, communicate, and otherwise deal with
any and all governmental agencies having jurisdiction over, or in any way
affecting, the Partnership's assets or any other aspect of the Partnership
business;
(h) to make or revoke any election permitted or required of the
Partnership by any taxing authority;
(i) to maintain such insurance coverage for public liability,
fire and casualty, and any and all other insurance for the protection of the
Partnership, for the conservation of Partnership assets, or for any other
purpose convenient or beneficial to the Partnership, in such amounts and such
types as the General Partner shall determine from time to time;
(j) to determine whether or not to apply any insurance proceeds
for any Property to the restoration of such Property or to distribute the same;
(k) to retain providers of services of any kind or nature in
connection with the Partnership business and to pay therefor such reasonable
remuneration as the General Partner may deem proper;
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(l) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority conferred
upon the General Partner, including, without limitation, management agreements,
franchise agreements, agreements with federal, state or local liquor licensing
agencies and agreements with operators of restaurants and bars;
(m) to maintain accurate accounting records and to file promptly
all federal, state and local income tax returns on behalf of the Partnership;
(n) to form or acquire an interest in, and contribute property
to, any further limited or general partnerships, joint ventures or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to, its
Subsidiaries and any other Person in which it has an equity interest from time
to time);
(o) to distribute Partnership cash or other Partnership assets in
accordance with this Agreement;
(p) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities or any other valid Partnership
purpose;
(q) to take whatever action the General Partner deems appropriate
to maintain an equivalency of Partnership Units and REIT Shares; and
(r) to take such other action, execute, acknowledge, swear to or
deliver such other documents and instruments, and perform any and all other acts
the General Partner deems necessary or appropriate for the formation,
continuation and conduct of the business and affairs of the Partnership
(including, without limitation, all actions consistent with qualification of the
General Partner as a REIT) and to possess and enjoy all of the rights and powers
of a general partner as provided by the Act.
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.
Section 6.2 DELEGATION OF AUTHORITY. The General Partner may delegate
any or all of its powers, rights and obligations hereunder, and may appoint,
employ, contract or otherwise deal with any Person for the transaction of the
business of the Partnership, which Person may, under supervision of the General
Partner, perform any acts or services for the Partnership as the General Partner
may approve.
Section 6.3 DUTIES OF GENERAL PARTNER. (a) The General Partner, subject
to the limitations
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contained elsewhere in this Agreement, shall manage or cause to be managed the
affairs of the Partnership in a prudent and businesslike manner and shall devote
sufficient time and effort to the Partnership affairs.
(b) In carrying out its obligations, the General Partner
shall:
(i) Render annual reports to all Partners with
respect to the operations of the Partnership;
(ii) On or before April 30th of every year, mail to
all persons who were Partners at any time during the
Partnership's prior fiscal year an annual report of
the Partnership, including all necessary tax
information, and any other information regarding the
Partnership and its operations during the prior
fiscal year deemed by the General Partner to be
material;
(iii) Maintain complete and accurate records of all
business conducted by the Partnership and complete
and accurate books of account (containing such
information as shall be necessary to record
allocations and distributions), and make such records
and books of account available for inspection and
audit by any Partner or such Partner's duly
authorized representative (at the sole expense of
such Partner) during regular business hours and at
the principal office of the Partnership; and
(iv) Cause to be filed such certificates and do such
other acts as may be required by law to qualify and
maintain the Partnership as a limited partnership
under the laws of the State of Delaware.
(c) The General Partner shall take such actions as it deems
appropriate to maintain an equivalency of Partnership Units and REIT Shares.
Section 6.4 LIABILITIES OF GENERAL PARTNER; INDEMNIFICATION. (a) The
General Partner shall not be liable for the return of all or any part of the
Capital Contributions of the Limited Partners. Any returns shall be made solely
from the assets of the Partnership according to the terms of this Agreement.
(b) In carrying out its duties hereunder, the General Partner
shall not be liable to the Partnership or to any other Partner for any actions
taken in good faith and reasonably believed to be in the best interests of the
Partnership, or for errors of judgment, but shall be liable only for fraud or
gross negligence. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, the General Partner and the
General Partner's shareholders collectively, and that the General Partner is
under no obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners) in
deciding whether to cause the Partnership to take (or decline to take) any
actions. In the event
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of a conflict between the interests of the shareholders of the General Partner
on one hand and the Limited Partners on the other, the General Partner shall
endeavor in good faith to resolve the conflict in a manner not adverse to either
the shareholders of the General Partner or the Limited Partners; provided,
however, that for so long as the General Partner has securities registered
pursuant to Section 12 or Section 15 of the Exchange Act, any such conflict that
cannot be resolved in a manner not adverse to either the shareholders of the
General Partner or the Limited Partners shall be resolved in favor of the
shareholders. The General Partner shall not be liable for monetary damages for
losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner
has acted in good faith. Any amendment, modification or repeal of this Section
6.4 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 6.4 as in effect immediately prior to
such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when claims relating to such matters may arise or be asserted.
(c) The Partnership shall indemnify and defend an Indemnitee to
the fullest extent permitted by law, and save and hold it harmless from and
against, and in respect of, all: (i) fees, costs and expenses (including
reasonable attorney fees) incurred in connection with or resulting from any
claim, action or demand against any Indemnitee or the Partnership that arises
out of or in any way relates to the Partnership, and (ii) claims, actions and
demands arising out of or in any way related to the Partnership, and any losses
or damages resulting from such claims, actions and demands, including, without
limitation, reasonable costs and expenses of litigation and appeal and amounts
paid in settlement or compromise of any such claim, action or demand; provided,
however, that this indemnification shall not apply if: (A) the act or omission
of the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty; (B) the Indemnitee actually received an improper personal benefit in
money, property or services; or (C) in the case of any criminal proceeding, the
Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.4(c). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.4(c). Any indemnification pursuant to this Section 6.4 shall be
made only out of the assets of the Partnership.
(d) The Partnership may reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.4 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard
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of conduct has not been met.
(e) The indemnification provided by this Section 6.4 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
(f) The Partnership may purchase and maintain insurance on behalf
of the Indemnities, and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(g) For purposes of this Section 6.4, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by the Indemnitee of its duties to the
Partnership also imposes duties on, or otherwise involves services by the
Indemnitee, to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 6.4; and actions taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of its duties for a purpose reasonably
believed by the Indemnitee to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.
(h) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(i) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 6.4 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(j) The provisions of this Section 6.4 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other persons.
(k) Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT, or (ii) to prevent the General Partner
from incurring any taxes under Section 857 or Section 4981 of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners. Further, any provision of this Agreement that might jeopardize
the General Partner's REIT status shall be (i) void and of no effect, or (ii)
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reformed, as necessary, to avoid the General Partner's loss of REIT status,
unless the Board of Trustees of the General Partner shall determine not to
maintain the General Partner's REIT status.
Section 6.5 COMPENSATION OF GENERAL PARTNER; REIMBURSEMENT. The General
Partner, as such, shall not receive any compensation for services rendered to
the Partnership. Notwithstanding the preceding sentence, the General Partner
shall be entitled to its allocable share of the profits and distributable Cash
Flow of the Partnership and shall be entitled, in accordance with the provisions
of Section 6.7 below, to pay reasonable compensation to its Affiliates and other
entities with which it may be associated for services performed. 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 REIT
Expenses.
Section 6.6 RELIANCE ON ACT OF GENERAL PARTNER. No financial
institution or any other person, firm or corporation dealing with the General
Partner or the Partnership shall be required to ascertain whether the General
Partner is acting in accordance with this Agreement, but such financial
institution or such other person, firm or corporation shall be protected in
relying solely upon the assurance of and the execution of any instrument or
instruments by the General Partner.
Section 6.7 OUTSIDE SERVICES; DEALINGS WITH AFFILIATES; OUTSIDE
ACTIVITIES. (a) Notwithstanding any provision of this Article VI to the
contrary, the General Partner may employ such agents, accountants, attorneys and
others as it shall deem advisable, including its trustees, directors, officers,
shareholders, and its Affiliates and entities with which the General Partner,
any Limited Partner or their respective Affiliates may be associated, and may
pay them reasonable compensation from Partnership funds for services performed,
which compensation shall be reasonably believed by the General Partner to be
comparable to and competitive with fees charged by unrelated Persons who render
comparable services which could reasonably be made available to the Partnership.
The General Partner shall not be liable for the neglect, omission or wrongdoing
of any such Person so long as it was not grossly negligent in appointing such
Person.
(b) The Partnership may lend or contribute to its Subsidiaries or
other Persons in which it has an equity investment Partnership funds on terms
and conditions established in the sole and absolute discretion of the General
Partner. The foregoing authority shall not create any right or benefit in favor
of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent
with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates nor any Limited Partner shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are on
terms that are fair and reasonable to the Partnership.
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(e) Subject to the Articles of Incorporation, By-laws and any
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent, trustee,
Affiliate or shareholder of the General Partner shall be entitled to and may
have business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities
substantially similar or identical to those of the Partnership. Neither the
Partnership nor any of the Limited Partners shall have any rights by virtue of
this Agreement in any business ventures of such person.
(f) In the event the General Partner exercises its rights under
its Articles of Incorporation to redeem REIT Shares, then the General Partner
shall cause the Partnership to purchase from it a number of Partnership Units as
determined based on the application of the Exchange Factor on the same terms
that the General Partner redeemed such REIT Shares.
Section 6.8 GENERAL PARTNER PARTICIPATION. The General Partner agrees
that all business activities of the General Partner, including activities
pertaining to the acquisition, development and ownership of Properties, shall be
conducted through the Partnership. Without the Consent of the Limited Partners,
the General Partner shall not, directly or indirectly, participate in or
otherwise acquire any interest in any real or personal property. The General
Partner agrees that all borrowings for the purpose of making distributions to
its shareholders will be incurred by the Partnership.
ARTICLE VII
RIGHTS, PROHIBITIONS AND REPRESENTATIONS
WITH RESPECT TO LIMITED PARTNERS
Section 7.1 RIGHTS OF LIMITED PARTNERS. (a) The Partnership may engage
the Limited Partners or persons or firms associated with them for specific
purposes and may otherwise deal with such Partners on terms and for compensation
to be agreed upon by any such Partner and the Partnership; provided, however,
that no Limited Partner shall be entitled to participate in the management or
control of the business of the Partnership.
(b) Each Limited Partner shall be entitled to have the
Partnership books kept at the principal place of business of the Partnership and
at all times, during reasonable business hours and at such Partner's sole
expense, shall be entitled to inspect and copy any of them and have on demand
true and full information of all things affecting the Partnership and a formal
accounting of Partnership affairs whenever circumstances render it just and
reasonable.
(c) No Limited Partner shall be liable for any debts,
liabilities, contracts or obligations of the Partnership. A Limited Partner
shall be liable to the Partnership only to make payments of its Capital
Contribution, if any, as and when due hereunder. After its Capital Contribution
is fully paid, no Limited Partner shall, except as otherwise required by the
Act, be required to make any further Capital Contributions or other payments or
lend any funds to the Partnership.
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Section 7.2 PROHIBITIONS WITH RESPECT TO THE LIMITED PARTNERS. No
Limited Partner shall have the right:
(a) To take part in the control or management of the Partnership
business, to transact business for or on behalf of the Partnership or to sign
for or to bind the Partnership, such powers being vested solely in the General
Partner as set forth herein;
(b) To have such Partner's Capital Contributions repaid except to
the extent provided in this Agreement;
(c) To require partition of Partnership property or to compel any
sale or appraisement of Partnership assets or sale of a deceased Partner's
interests therein, notwithstanding any provisions of law to the contrary; or
(d) To sell or assign all or any portion of such Partner's
Limited Partnership Interest in the Partnership or to constitute the vendee or
assignee thereunder a Substitute Limited Partner, except as provided in Article
IX hereof.
Section 7.3 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER
OR AFFILIATE. No Limited Partner shall at any time, either directly or
indirectly, own any shares or other interest in the General Partner or in any
Affiliate thereof if such ownership by itself or in conjunction with other
shares or other interests owned by other Limited Partners would, in the opinion
of counsel for the Partnership, jeopardize the classification of the General
Partner as a REIT for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section 7.3 and the Limited Partners shall promptly and fully respond to such
inquiries.
Section 7.4 GRANT OF REDEMPTION RIGHTS. (a) Each Class A Limited
Partner shall have the right, but not the obligation (such rights hereinafter
sometimes referred to as the "Redemption Rights"), to redeem all or a portion of
the Partnership Units held by such Limited Partner (as a Class A Limited
Partner) to the Partnership (or its designee) at any time or from time to time
prior to the time the Partnership is dissolved, on the terms and subject to the
conditions and restrictions contained in Exhibit D hereto. The Redemption Rights
granted hereunder may be exercised by any one or more of such Limited Partners,
on the terms and subject and to the conditions and restrictions contained in
Exhibit D hereto, upon delivery to the General Partner of an Exercise Notice in
the form of Schedule 1 attached to Exhibit D, which notice shall specify the
Partnership Units to be redeemed by such Limited Partner. Once delivered, the
Redemption Exercise Notice shall be irrevocable, subject to payment by the
Partnership of the Purchase Price in respect of such Partnership Units in
accordance with the terms hereof.
(b) The terms and provisions applicable to the Redemption Rights
shall be as set forth in attached Exhibit D.
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(c) Any Partnership Units acquired by the General Partner in
accordance with Exhibit D hereto pursuant to an exercise by any Class A Limited
Partner of the Redemption Rights shall be deemed to be acquired by and
reallocated or reissued to the General Partner. The General Partner shall amend
Exhibit A hereto to reflect each such conversion and reallocation or reissuance
of Partnership Units and each corresponding recalculation of the Partnership
Units of the Partners.
(d) No Class B Limited Partner shall be entitled to the
Redemption Rights unless and until the Board of Trustees of the General Partner
agrees to reclassify the Class B Limited Partner as a Class A Limited Partner.
Section 7.5 WARRANTIES AND REPRESENTATIONS OF THE LIMITED PARTNERS. (a)
Each Class A Limited Partner hereby warrants and represents to and for the
benefit of the General Partner and the Partnership that such Limited Partner
owns good, valid and marketable title to the ownership interests in the
Contributed Entities being contributed to the capital of the Partnership by such
Limited Partner (the "Ownership Interests") and that such Ownership Interests
are free and clear of all mortgages, pledges, liens, security interests,
encumbrances and restrictions of any nature whatsoever. Each Limited Partner
further warrants and represents to and for the benefit of the General Partner
and the Partnership that such Limited Partner has all necessary power and
authority to transfer the Ownership Interests to the Partnership without the
consent or authorization of, or notice to, any third party, except those third
parties from whom such consents or authorizations have been obtained. Each Class
A Limited Partner also represents and warrants to and for the benefit of the
General Partner and the Partnership those matters set forth on Exhibit E hereto.
(b) Each Class B Limited Partner hereby warrants and represents
to and for the benefit of the General Partner and the Partnership that such
Limited Partner owns good, valid and marketable title to the interests in the
property being contributed to the capital of the Partnership by such Limited
Partner (the "Other Interests") and that such Other Interests are free and clear
of all mortgages, pledges, liens, security interests, encumbrances and
restrictions of any nature whatsoever. Each Limited Partner further warrants and
represents to and for the benefit of the General Partner and the Partnership
that such Limited Partner has all necessary power and authority to transfer the
Other Interests to the Partnership without the consent or authorization of, or
notice to, any third party, except those third parties from whom such consents
or authorizations have been obtained.
Section 7.6 INDEMNIFICATION BY LIMITED PARTNERS. Each Limited Partner
hereby agrees to indemnify and defend the General Partner and the Partnership
and hold the General Partner, its shareholders, officers and trustees and the
Partnership and its partners and each of their respective representatives,
successors and assigns harmless from and against any and all claims, demands,
losses, liabilities, damages and expenses (including reasonable attorneys' fees)
arising out of or in connection with (i) the inaccuracy of the warranties and
representations made by such Limited Partner under Section 7.5 above, or (ii)
the ownership of the Ownership Interests by such Limited Partner.
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Section 7.7 LIMITED PARTNER GUARANTEES. Upon the request of the General
Partner, or upon its own election, a Limited Partner (the "Initiating Limited
Partner") from time to time, may, but shall not be required to, guarantee or
otherwise provide credit support for Partnership indebtedness as such Limited
Partner may elect; provided, however, that the Limited Partner shall be entitled
to take such action(s) only if the General Partner determines that any such
action would not have a material adverse effect on the tax position of the
General Partner. All Partners are entitled to notice of any such guarantee(s) or
credit support, and shall have the right to provide guarantees or credit support
on the same terms and conditions as the Initiating Limited Partner does, and all
Limited Partners interested in providing such guarantee or credit support shall
cooperate with the General Partner and each other in considering any guarantee
or credit support proposal, and the General Partner will cooperate in permitting
or obtaining any consents for such guarantees or credit support.
Section 7.8 NO SALE OF PROPERTY. (a) Notwithstanding any other
provision to the contrary, except Section 7.8(b) below, the Partnership agrees
not to sell or exchange or offer for sale or exchange the Contributed Entities
and/or Initial Properties or any portion thereof during the ten (10) year period
following the date of this Agreement.
(b) The Partnership shall have the authority to enter into a
like-kind exchange as defined in Section 1031 of the Code with respect to all or
any portion of the Initial Properties to the extent that such an exchange will
not cause recognition of gain under Section 704(c) to any Class A Limited
Partner with respect to the Contributed Entities and/or the Initial Properties.
To the extent any property is received in a like-kind exchange as provided in
this section, such property received will be considered to be one of the Initial
Properties.
ARTICLE VIII
DISTRIBUTIONS AND PAYMENTS TO PARTNERS
Section 8.1 DISTRIBUTIONS OF CASH FLOW. (a) The General Partner shall
distribute on a quarterly basis such portion of the Cash Flow of the Partnership
as the General Partner shall determine in its sole discretion. All such
distributions of Cash Flow shall be made to Partners who are Partners on the
Partnership Record Date in accordance with each Partner's respective Percentage
Interest on such Partnership Record Date.
(b) In no event may a Partner receive a distribution with respect
to a Partnership Unit if such Partner is entitled to receive a distribution from
the General Partner with respect to a REIT Share for which all or part of such
Partnership Unit has been exchanged.
Section 8.2 REIT DISTRIBUTION REQUIREMENTS. Unless the General Partner
determines that such a distribution would not be in the best interests of the
Partnership, the Partnership shall make a distribution of Cash Flow for each
fiscal year of the Partnership to enable the General Partner (i) to meet its
distribution requirement for qualification as a REIT as set forth in Section
857(a)(1) of the Code, and (ii) to avoid the excise tax imposed by Section 4981
of the Code.
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Section 8.3 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be
entitled to demand property other than cash in connection with any distribution
by the Partnership.
Section 8.4 DISPOSITION PROCEEDS. Disposition Proceeds shall be
distributed to the Partners at such time as the General Partner may determine in
accordance with each Partner's respective Percentage Interest on such
Partnership Record Date.
Section 8.5 WITHDRAWALS. No Partner shall be entitled to make
withdrawals from its Capital Account except as provided herein.
Section 8.6 AMOUNTS WITHHELD. All amounts withheld pursuant to the Code
or any provision of any state or local tax law with respect to any payment
distribution, or allocations to the Partnership, the General Partner, or the
Limited Partners shall be treated as amounts distributed to the General Partner
and the Limited Partners pursuant to this Article VIII for all purposes under
this Agreement. The General Partner is authorized to withhold from
distributions, or with respect to allocations, to the General Partner and
Limited Partners and to pay over to any federal, state, or local government any
amounts required to be so withheld pursuant to the Code or any provisions of any
other federal, state, or local law and shall allocate such amounts to the
General Partner and Limited Partners with respect to which such amount was
withheld.
ARTICLE IX
TRANSFERS OF INTERESTS
Section 9.1 GENERAL PARTNER. The General Partner shall not withdraw
from the Partnership and shall not sell, assign, pledge, encumber or otherwise
transfer of all or any portion of its interest in the Partnership. In the event
the General Partner withdraws from the Partnership, in violation of this
Agreement or otherwise, or dissolves, terminates or upon an Event of Bankruptcy
of the General Partner, then the Partnership shall be dissolved and terminated
unless a Majority-In-Interest of the Limited Partners elect to continue the
Partnership business by selecting a substitute general partner.
Section 9.2 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER. A
Person shall be admitted as a Substitute or Additional General Partner of the
Partnership only if the transaction giving rise to such substitution or
admission is otherwise permitted under this Agreement and the following terms
and conditions are satisfied:
(a) the Person to be admitted as a Substitute or Additional
General Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by the Act in connection with such
admission shall have been performed;
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(b) if the Person to be admitted as a Substitute or Additional
General Partner is a corporation or a partnership, it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from counsel in the state or any other jurisdiction as
may be necessary) that the admission of the Person to be admitted as a
Substitute or Additional General Partner is in conformity with the Act and that
none of the actions taken in connection with the admission of such Person as a
Substitute or Additional General Partner will cause the termination of the
Partnership under Section 708 of the Code or will result in the loss of any
Limited Partner's limited liability status.
Section 9.3 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A
GENERAL PARTNER. (a) Upon the occurrence of an Event of Bankruptcy as to a
General Partner or the withdrawal, removal or dissolution of a General Partner
(except that, if a General Partner is on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to or
removal of a partner in such partnership shall be deemed not to be a dissolution
of such General Partner if the business of such General Partner is continued
within ninety (90) days by the remaining general partners or all remaining
members of such partnership), the Partnership shall be dissolved and terminated
unless the Partnership is continued pursuant to Section 9.3(b).
(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner or the withdrawal, removal or dissolution of a General Partner
(except that, if a General Partner is on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to or
removal of a partner in such partnership shall be deemed not be a dissolution of
such General Partner if the business of such General Partner is continued within
ninety (90) days by the remaining general partners or all remaining members of
such partnership), persons holding at least a majority of the Limited
Partnership Interests, within ninety (90) days after such occurrence, may elect
to continue the business of the Partnership for the balance of the term
specified in Section 3.2 by selecting, subject to Section 9.2 and any other
provisions of this Agreement, a Substitute General Partner. If the Limited
Partners elect to reconstitute the Partnership and admit a Substitute General
Partner, the relationship between the Partners and any Person who has acquired
an interest of a Partner in the Partnership shall be governed by this Agreement.
Section 9.4 REMOVAL OF A GENERAL PARTNER. (a) Upon the occurrence of an
Event of Bankruptcy as to, or the dissolution of, a General Partner, such
General Partner shall be deemed to be removed automatically; provided, however,
that if a General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to or removal of a
partner in such partnership shall be deemed not to be a dissolution of the
General Partner if the business of such General Partner is continued within
ninety (90) days by the remaining general partners or all remaining members of
such Partnership.
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(b) If a General Partner has been removed pursuant to this
Section 9.4 and the Partnership is not continued pursuant to Section 9.3(b), the
Partnership shall be dissolved.
Section 9.5 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Except as otherwise provided in this Article IX, no Limited Partner may
offer, sell, assign, hypothecate, pledge or otherwise transfer its Limited
Partnership Interest, in whole or in part, whether voluntarily or by operation
of law or at judicial sale or otherwise (collectively, a "Transfer"), without
the written consent of the General Partner, which consent may be withheld in the
sole and absolute discretion of the General Partner. The General Partner may
require, as a condition of any Transfer, that the transferor assume all costs
incurred by the Partnership in connection therewith.
(b) No Limited Partner may effect a Transfer of its Limited
Partnership Interest if, in the opinion of legal counsel for the Partnership,
such proposed Transfer would require the registration of the Limited Partnership
Interest under the Securities Act of 1933, as amended, or would otherwise
violate any applicable federal or state securities or "Blue Sky" law (including
investment suitability standards).
(c) No Transfer by a Limited Partner of its Partnership Interest
may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, the Transfer would result in the Partnership's being treated as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) such transfer is
effectuated through an "established securities market" or a "secondary market"
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code, or (iii) the Transfer would create a risk that the General Partner
would not be taxed as a REIT for federal income tax purposes.
(d) Section 9.5(a) shall not prevent any donative Transfer by an
individual Limited Partner to his immediate family members or any trust in which
the individual or his immediate family members own, collectively, one hundred
percent (100%) of the beneficial interests, provided that the transferor assumes
all costs of the Partnership in connection therewith and any such transferee
shall not have the rights of a Substitute Limited Partner (unless and until
admitted as a Substitute Limited Partner pursuant to this Section 9.5 and
Section 9.6 of this Agreement).
(e) Any Transfer in contravention of any of the provisions of
this Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
Section 9.6 ADMISSION OF SUBSTITUTE LIMITED PARTNER. (a) Subject to the
other provisions of this Article IX (including, without limitation, the
provisions of Section 9.5(a) regarding consent of the General Partner), an
assignee of the Limited Partnership Interest of a Limited Partner (including,
without limitation, any purchaser, transferee, donee, or other recipient of any
disposition of such Limited Partnership Interest) shall be deemed admitted as a
Limited Partner of the Partnership only upon the satisfactory completion of the
following:
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(i) the assignee shall have accepted and agreed to
be bound by the terms and provisions of this
Agreement by executing a counterpart or an
amendment thereof, including a revised Exhibit A,
and such other documents or instruments as the
General Partner may require in order to effect the
admission of such Person as a Limited Partner;
(ii) to the extent required, an amended
certificate of limited partnership evidencing the
admission of such Person as a Limited Partner
shall have been signed, acknowledged and filed for
record in accordance with the Act;
(iii) the assignee shall have delivered a letter
containing the representations and warranties and
agreements set forth in Section 9.12;
(iv) if the assignee is a corporation, partnership
or trust, the assignee shall have provided the
General Partner with evidence satisfactory to
counsel for the Partnership of the assignee's
authority to become a Limited Partner under the
terms and provisions of this Agreement;
(v) the assignee shall have executed a power of
attorney containing the terms and provisions set
forth in Article XII; and
(vi) the assignee shall have paid all reasonable
legal fees of the Partnership and the General
Partner and all filing and publication costs
incurred in connection with its substitution as a
Limited Partner.
(b) For the purpose of allocating profits and losses and
distributing cash received by the Partnership, a Substitute Limited Partner
shall be treated as having become, and appearing in the records of the
Partnership as, a Partner upon the filing of the certificate described in
Section 9.6(a)(ii) or, if no such filing is required, the later of the date
specified in the transfer documents, or the date on which the General Partner
has received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking
to become a Substitute Limited Partner by preparing the documentation required
by this Section and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article IX to effectuate the admission of
such Person as a Limited Partner of the Partnership.
Section 9.7 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS. (a) Subject
to the provisions of Sections 9.5 and 9.6 hereof, except as required by
operation of law, the Partnership shall not be obligated for any purposes
whatsoever to recognize the assignment by any Limited Partner of his Partnership
Interest until the Partnership has received notice thereof.
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(b) Any Person who is the assignee of all or any portion of a
Limited Partner's Limited Partnership Interest, but does not become a Substitute
Limited Partner and desires to make a further assignment of such Limited
Partnership Interest, shall be subject to all the provisions of this Article IX
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of its Limited Partnership Interest.
Section 9.8 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF
A LIMITED PARTNER. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue. If an order for relief in a
bankruptcy proceeding is entered against an individual Limited Partner, the
trustee or receiver of his estate or, if he dies, his executor, administrator or
trustee, or, if he is finally adjudicated incompetent, his committee, guardian
or conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
Section 9.9 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be
acquired by two (2) individuals as joint tenants with right of survivorship (but
not as tenants in common), provided that such individuals either are married or
are related. The written consent or vote of both owners of any such jointly held
Partnership Interest shall be required to constitute the action of the owners of
such Partnership Interest; provided, however, that the written consent of only
one (1) joint owner will be required if the Partnership has been provided with
evidence satisfactory to counsel for the Partnership that the actions of a
single joint owner can bind both owners under the applicable laws of the state
of residence of such joint owners. Upon the death of one (1) owner of a
Partnership Interest held in a joint tenancy with a right of survivorship, the
Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one (1) of the owners of a jointly held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner prior to the death of either owner, the General Partner shall cause the
Partnership Interest to be divided into two (2) equal Partnership Interests,
which shall thereafter be owned separately by each of the former owners.
Section 9.10 TRANSFEREES. Any Partnership Interests owned by the
Partners and transferred pursuant to this Article IX shall be and remain subject
to all of the provisions of this Agreement.
Section 9.11 ABSOLUTE RESTRICTION. Notwithstanding any provision of
this Agreement to the contrary, the sale or exchange of any interest in the
Partnership will not be permitted if the interest sought to be sold or
exchanged, when added to the total of all other interests sold or exchanged
within the period of twelve (12) consecutive months ending with the proposed
date of
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the sale or exchange, would result in the termination of the Partnership under
Section 708 of the Code, if such termination would materially and adversely
affect the Partnership or any Partner.
Section 9.12 INVESTMENT REPRESENTATION. Each Limited Partner hereby
represents and warrants to the General Partner and to the Partnership that the
acquisition of his Partnership Interest is made as a principal for his account
for investment purposes only and not with a view to the resale or distribution
of such Partnership Interest. Each Limited Partner agrees that he will not sell,
assign or otherwise transfer his Partnership Interest or any fraction thereof,
whether voluntarily or by operation of law or at judicial sale or otherwise, to
any Person who does not similarly represent and warrant and similarly agree not
to sell, assign or transfer such Partnership Interest or fraction thereof to any
Person who does not similarly represent, warrant and agree.
ARTICLE X
TERMINATION OF THE PARTNERSHIP
Section 10.1 TERMINATION. The Partnership shall be dissolved upon (i)
an Event of Bankruptcy as to the General Partner or the dissolution or
withdrawal of the General Partner unless the Limited Partners elect to
reconstitute the partnership in accordance with Article IX, (ii) ninety (90)
days following the sale of all or substantially all of the Partnership's assets
(provided that if the Partnership receives an installment obligation as
consideration for such sale or other disposition, the Partnership shall
continue, unless sooner dissolved under the provisions of this Agreement, until
such time as such note or notes are paid in full), (iii) the expiration of the
term specified in Section 3.2, if any, (iv) the redemption of all Limited
Partnership Interests (other than any of such interests held by the General
Partner), or (v) the election by the General Partner (but only in accordance
with and as permitted by applicable law) that the Partnership should be
dissolved. Upon dissolution of the Partnership (unless the business of the
Partnership is continued as set forth above), the General Partner (or its
trustee, receiver, successor or legal representative) shall proceed with the
winding up of the Partnership, and its assets shall be applied and distributed
as herein provided.
Section 10.2 PAYMENT OF DEBTS. The assets shall first be applied to the
payment of the liabilities of the Partnership (other than any loans or advances
that may have been made by Partners to the Partnership) and the expenses of
liquidation. A reasonable time shall be allowed for the orderly liquidation of
the assets of the Partnership and the discharge of liabilities to creditors so
as to enable the General Partner to minimize any losses resulting from
liquidation.
Section 10.3 DEBTS TO PARTNERS. The remaining assets shall next be
applied to the repayment of any loans made by any Partner to the Partnership.
Section 10.4 REMAINING DISTRIBUTION. The remaining assets shall then be
distributed to the Partners in accordance with the Partners' positive Capital
Account balances, after making the adjustments for allocations under Article V
hereof.
29
<PAGE> 34
Section 10.5 RESERVE. Notwithstanding the provisions of Sections 10.3
and 10.4, the General Partner may retain such amount as it deems necessary as a
reserve for any contingent liabilities or obligations of the Partnership, which
reserve, after the passage of a reasonable period of time, shall be distributed
pursuant to the provisions of this Article X.
Section 10.6 FINAL ACCOUNTING. Each of the Partners shall be furnished
with a statement examined by the Partnership's independent accountants, which
shall set forth the assets and liabilities of the Partnership as of the date of
the complete liquidation. Upon the compliance by the General Partner with the
foregoing distribution plan, the Limited Partners shall cease to be such, and
the General Partner, as the sole remaining Partner of the Partnership, shall
execute and cause to be filed a Certificate of Cancellation of the Partnership
and any and all other documents necessary with respect to termination and
cancellation of the Partnership.
ARTICLE XI
AMENDMENTS
Section 11.1 AUTHORITY TO AMEND. (a) This Agreement may be amended by
the General Partner without the approval of any other Partner if such amendment
is solely for the purpose of clarification and does not change the substance
hereof and the Partnership has obtained an opinion of counsel to that effect.
(b) This Agreement may be amended by the General Partner without
the approval of any other Partner if such amendment is for the purpose of adding
or substituting Limited Partners.
(c) This Agreement may be amended by the General Partner without
the approval of any other Partner if such amendment is, in the opinion of
counsel for the Partnership, necessary or appropriate to satisfy requirements of
the Code with respect to partnerships or REITs or of any federal or state
securities laws or regulations. Any amendment made pursuant to this Section
11.1(c) may be made effective as of the date of this Agreement.
(d) Notwithstanding any contrary provision of this Agreement, any
amendment to this Agreement or other act which would (i) adversely affect the
limited liability of the Limited Partners, (ii) change the method of allocation
of Profits and Losses as provided in Article V or the distribution provisions of
Articles VIII or X hereof, or (iii) seek to impose an obligation for additional
contributions by the Limited Partners shall require the consent and approval of
Limited Partners holding more than 65% of the Percentage Interests of the
Limited Partners. Notwithstanding any contrary provision of this Agreement, any
amendment to this Agreement that would affect the operation of the Redemption
Rights set forth in Section 7.4 hereof shall require the consent and approval of
Class A Limited Partners holding more than sixty-five percent (65%) of the
Percentage Interests of the Class A Limited Partners.
(e) Except as otherwise specifically provided in this Section
11.1, amendments
30
<PAGE> 35
to this Agreement shall require the approval of the General Partner and
Majority-in-Interest of the Limited Partners.
Section 11.2 NOTICE OF AMENDMENTS. A copy of any amendment to be
approved by the Partners pursuant to Sections 11.1(d) or 11.1(e) shall be mailed
in advance to such Partners. Partners shall be notified as to the substance of
any amendment pursuant to Sections 11.1(a), (b) or (c), and upon request shall
be furnished a copy thereof.
ARTICLE XII
POWER OF ATTORNEY
Section 12.1 POWER. Each of the Limited Partners irrevocably
constitutes and appoints the General Partner as such Limited Partner's true and
lawful attorney in such Limited Partner's name, place and stead to make,
execute, swear to, acknowledge, deliver and file:
(a) Any certificates or other instruments which may be required
to be filed by the Partnership under the laws of the State of Delaware or of any
other state or jurisdiction in which the General Partner shall deem it advisable
to file;
(b) Any documents, certificates or other instruments, including,
but not limited to, any and all amendments and modifications of this Agreement
or of the instruments described in Section 12.1(a) which may be required or
deemed desirable by the General Partner to effectuate the provisions of any part
of this Agreement and, by way of extension and not in limitation, to do all such
other things as shall be necessary to continue and to carry on the business of
the Partnership; and
(c) All documents, certificates or other instruments which may be
required to effectuate the dissolution and termination of the Partnership, to
the extent such dissolution and termination is authorized hereby. The power of
attorney granted hereby shall not constitute a waiver of, or be used to avoid,
the rights of the Partners to approve certain amendments to this Agreement
pursuant to Sections 11.1 (d) and 11.1 (e) or be used in any other manner
inconsistent with the status of the Partnership as a limited partnership or
inconsistent with the provisions of this Agreement.
Section 12.2 SURVIVAL OF POWER. It is expressly intended by each of the
Partners that the foregoing power of attorney is coupled with an interest, is
irrevocable and shall survive the death, incompetence, dissolution, liquidation
or adjudication of insanity or bankruptcy or insolvency of each such Partner.
The foregoing power of attorney shall survive the delivery of an assignment by
any of the Partners of such Partner's entire interest in the Partnership, except
that where an assignee of such entire interest has become a substitute Limited
Partner, then the foregoing power of attorney of the assignor Partner shall
survive the delivery of such assignment for the sole purpose of enabling the
General Partner to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution.
31
<PAGE> 36
ARTICLE XIII CONSENTS, APPROVALS,
VOTING AND MEETINGS
Section 13.1 METHOD OF GIVING CONSENT OR APPROVAL. Any consent or
approval required by this Agreement may be given as follows:
(a) by a written consent given by the consenting Partner and
received by the General Partner at or prior to the doing of the act or thing for
which the consent is solicited, provided that such consent shall not have been
nullified by:
(i) Notice to the General Partner of such
nullification by the consenting Partner prior to
the doing of any act or thing, the doing of which
is not subject to approval at a meeting called
pursuant to Section 13.2, or
(ii) Notice to the General Partner of such
nullification by the consenting Partner prior to
the time of any meeting called pursuant to Section
13.2 to consider the doing of such act or thing,
or
(iii) The negative vote by such consenting Partner
at any meeting called pursuant to Section 13.2 to
consider the doing of such act or thing;
(b) by the affirmative vote by the consenting Partner to the
doing of the act or thing for which the consent is solicited at any meeting
called pursuant to Section 13.2 to consider the doing of such act or thing; or
(c) by the failure of the Partner to respond or object to a
request from the General Partner for such Partner's consent within thirty (30)
days from its receipt of such request (or such shorter period of time as the
General Partner may indicate in such request in order to ensure that the General
Partner has sufficient time to respond, if required, to any third party with
respect to the subject matter of such request).
Section 13.2 MEETINGS OF LIMITED PARTNERS. Any matter requiring the
consent or vote of all or any of the Partners may be considered at a meeting of
the Partners held not less than five (5) nor more than sixty (60) days after
notice thereof shall have been given by the General Partner to all Partners.
Such notice (i) may be given by the General Partner, in its discretion, at any
time, or (ii) shall be given by the General Partner within fifteen (15) days
after receipt from Limited Partners holding more than fifty percent (50%) of the
Percentage Interests of the Limited Partners of a request for such meeting.
Section 13.3 OPINION. Except for Consents obtained pursuant to Sections
13.1 or 13.2, no Limited Partner shall exercise any consent or voting rights
unless either (a) at the time of the giving of consent or casting of any vote by
the Partners hereunder, counsel for the Partnership or counsel employed by the
Limited Partners (and reasonably satisfactory to the General Partner) shall have
delivered to the Partnership an opinion satisfactory to the Partners to the
effect that such conduct (i) is permitted by the Act, (ii) will not impair the
limited liability of the Limited Partners, and (iii) will not adversely affect
the classification of the Partnership as a partnership for federal
32
<PAGE> 37
income tax purposes, or (b) irrespective of the delivery or nondelivery of such
opinion of counsel, Limited Partners holding more than seventy-five percent
(75%) of the Percentage Interests of the Limited Partners determine to exercise
their consent and/or voting rights.
Section 13.4 SUBMISSIONS TO PARTNERS. The General Partner shall give
the Partners notice of any proposal or other matter required by any provision of
this Agreement, or by law, to be submitted for consideration and approval of the
Partners. Such notice shall include any information required by the relevant
provision or by law.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 GOVERNING LAW. The Partnership and this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Section 14.2 AGREEMENT FOR FURTHER EXECUTION. At any time or times upon
the request of the General Partner, the Limited Partners hereby agree to sign,
swear to, acknowledge and deliver all further documents and certificates
required by the laws of Delaware, or any other jurisdiction in which the
Partnership does, or proposes to do, business, or which may be reasonable,
necessary, appropriate or desirable to carry out the provisions of this
Agreement or the Act. This Section 14.2 shall not prejudice or affect the rights
of the Limited Partners to approve certain amendments to this Agreement pursuant
to Sections 11.1(d) and 11.1(e).
Section 14.3 ENTIRE AGREEMENT. This Agreement and the exhibits attached
hereto contain the entire understanding among the parties and supersede any
prior understandings or agreements among them respecting the within subject
matter. There are no representations, agreements, arrangements or
understandings, oral or written, between or among the parties hereto relating to
the subject matter of this Agreement which are not fully expressed herein.
Section 14.4 SEVERABILITY. This Agreement is intended to be performed
in accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of the jurisdictions in which the Partnership
does business. If any provision of this Agreement, or the application thereof to
any person or circumstance, shall, for any reason and to any extent, be invalid
or unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
Section 14.5 NOTICES. Notices to Partners or to the Partnership shall
be deemed to have been given when personally delivered or mailed, by prepaid
registered or certified mail, addressed as set forth in Exhibit A attached
hereto, unless a notice of change of address has previously been given in
writing by the addressee to the addressor, in which case such notice shall be
addressed to the address set forth in such notice of change of address.
Section 14.6 MEDIATION/ARBITRATION OF DISPUTES. None of the parties
(including any Partner and the Partnership) shall institute a proceeding in any
court or administrative agency to resolve a dispute between the parties before
that party has sought to resolve the dispute through direct negotiation with the
other party. If the dispute is not resolved within three weeks after a
33
<PAGE> 38
demand for direct negotiation, the parties shall attempt to resolve the dispute
through mediation. If the parties do not promptly agree on a mediator, either
party may request the Court of Common Pleas of Lake County, Ohio, to appoint a
mediator certified by the Supreme Court of Ohio. The fees and expenses of the
mediator shall be paid equally by each party. If the mediator is unable to
facilitate a settlement of the dispute within a reasonable period of time, as
determined by the mediator, the mediator shall issue a written statement to the
parties to that effect and the aggrieved party may then seek relief through
arbitration in Cleveland, Ohio, administered by the American Arbitration
Association, under its commercial arbitration rules and its supplementary
procedures for larger, complex disputes, provided that persons eligible to be
selected as arbitrators shall be limited to attorneys-at-law who (i) are on the
AAA's Large Complex Case panel and (ii) who have practiced law for at least 15
years specializing in either general commercial litigation or general corporate
and commercial matters. The arbitrators shall base their award on applicable
laws and judicial precedent and include in such award a statement of the reasons
upon which the award is based. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof and shall
be final, binding and non-appealable. The obligation herein to mediate and/or
arbitrate shall not prevent any party from seeking temporary restraining orders,
preliminary injunctions or other procedures in a court of competent jurisdiction
to obtain interim relief when deemed necessary by such court to preserve the
status quo or prevent irreparable injury pending resolution by arbitration of
the actual dispute.
Section 14.7 TITLES AND CAPTIONS. All titles and captions are for
convenience only, do not form a substantive part of this Agreement, and shall
not restrict or enlarge any substantive provisions of this Agreement.
Section 14.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each one of which shall constitute an original executed copy of
this Agreement.
Section 14.9 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or persons may require.
Section 14.10 SURVIVAL OF RIGHTS. Subject to the provisions hereof
limiting transfers, this Agreement shall be binding upon and inure to the
benefit of the Partners and the Partnership and their respective legal
representatives, successors, transferees and assigns.
Section 14.11 PERSONAL LIABILITY. As provided in the Articles of
Incorporation establishing the General Partner, no trustee, officer,
shareholder, employee or agent of the General Partner shall be held to any
personal liability, jointly or severally, for any obligation of, or claim
against, the General Partner.
34
<PAGE> 39
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
GENERAL PARTNER:
LIBERTY SELF-STOR, INC.,
a Maryland corporation
By: /s/ Richard M. Osborne
---------------------------------------------
LIMITED PARTNERS:
(See attached limited partner signature pages)
35
<PAGE> 40
LIMITED PARTNERSHIP SIGNATURE PAGE
The undersigned, desiring to become a Limited Partner of LSS I
Limited Partnership, hereby agrees to all of the terms of the Agreement of
Limited Partnership of LSS I Limited Partnership and agrees to be bound by the
terms and provisions thereof.
Executed by the undersigned as a Class A Limited Partner of
LSS I Limited Partnership.
LIMITED PARTNER:
/s/ Richard M. Osborne
- - -----------------------------------------------
Richard M. Osborne
Suite 113, 8500 Station Street
- - -----------------------------------------------
(Residence Street Address)
Mentor, Ohio 44060
- - -----------------------------------------------
(City, State, Zip Code)
###-##-####
- - -----------------------------------------------
(Taxpayer Identification or Social Security Number)
36
<PAGE> 41
LIMITED PARTNERSHIP SIGNATURE PAGE
The undersigned, desiring to become a Limited Partner of LSS I
Limited Partnership, hereby agrees to all of the terms of the Agreement of
Limited Partnership of LSS I Limited Partnership and agrees to be bound by the
terms and provisions thereof.
Executed by the undersigned as a Class A Limited Partner of LSS I
Limited Partnership.
LIMITED PARTNER:
/s/ Thomas J. Smith
- - -----------------------------------------------
Thomas J. Smith
Suite 100, 8500 Station Street
- - -----------------------------------------------
(Residence Street Address)
Mentor, Ohio 44060
- - -----------------------------------------------
(City, State, Zip Code)
###-##-####
- - -----------------------------------------------
(Taxpayer Identification or Social Security Number)
37
<PAGE> 42
LIMITED PARTNERSHIP SIGNATURE PAGE
The undersigned, desiring to become a Limited Partner of LSS I
Limited Partnership, hereby agrees to all of the terms of the Agreement of
Limited Partnership of LSS I Limited Partnership and agrees to be bound by the
terms and provisions thereof.
Executed by the undersigned as a Class A Limited Partner of LSS I
Limited Partnership.
LIMITED PARTNER:
RETIREMENT MANAGEMENT COMPANY,
an Ohio corporation
By: /s/ Richard M. Osborne
----------------------------------------------------------
Suite 113, 8500 Station Street
- - -------------------------------------------------------------
(Residence Street Address)
Mentor, Ohio 44060
- - -------------------------------------------------------------
(City, State, Zip Code)
34-1734205
- - -------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
38
<PAGE> 43
LIMITED PARTNERSHIP SIGNATURE PAGE
The undersigned, desiring to become a Limited Partner of LSS I
Limited Partnership, hereby agrees to all of the terms of the Agreement of
Limited Partnership of LSS I Limited Partnership and agrees to be bound by the
terms and provisions thereof.
Executed by the undersigned as a Class B Limited Partner of LSS I
Limited Partnership.
LIMITED PARTNER:
LIBERTY SELF-STOR, INC.,
a Maryland corporation
By: /s/ Richard M. Osborne
--------------------------------------------------------
Suite 113, 8500 Station Street
- - -----------------------------------------------------------
(Residence Street Address)
Mentor, Ohio 44060
- - -----------------------------------------------------------
(City, State, Zip Code)
94-6542723
- - -----------------------------------------------------------
(Taxpayer Identification or Social Security Number)
39
<PAGE> 44
EXHIBIT A
LIST OF PARTNERS
<TABLE>
<CAPTION>
AGREED VALUE
OF CAPITAL PERCENTAGE PARTNERSHIP
PARTNERS CONTRIBUTION INTEREST UNITS
- - ---------------------------------------- -------------- -------------- -------------
<S> <C> <C> <C>
GENERAL PARTNER:........................
Liberty Self-Stor, Inc. $64,432.90 1% 101,392
Suite 113, 8500 Station Street
Mentor, Ohio 44060
CLASS A LIMITED PARTNERS................
Richard M. Osborne $3,297,494.70 51.173% 5,188,528
Suite 113, 8500 Station Street
Mentor, Ohio 44060
Thomas J. Smith $31,619.80 .4907% 49,753
Suite 100, 8500 Station Street
Mentor, Ohio 44060
Retirement Management Company $1,188,001.50 18.4363% 1,869,292
Suite 113, 8500 Station Street
Mentor, Ohio 44060
CLASS B LIMITED PARTNERS................
Liberty Self-Stor, Inc. $1,862,111.10 28.9% 2,930,226
------------- ----- ---------
Suite 113, 8500 Station Street
Mentor, Ohio 44060
TOTAL $6,443,660 100% 10,139,191
</TABLE>
A-1
<PAGE> 45
EXHIBIT B
FEDERAL INCOME TAX MATTERS
For purposes of interpreting and implementing Article V of the
Partnership Agreement, the following rules shall apply and shall be treated as
part of the terms of the Partnership Agreement:
A. Special Allocation Provisions.
1. For purposes of determining the amount of gain or loss to be
allocated pursuant to Article V of the Partnership Agreement, any basis
adjustments permitted pursuant to Section 743 of the Code shall be disregarded.
2. When Partnership Interests are transferred during any taxable
year, the General Partner intends to allocate Partnership Profits and Losses and
other items of income, loss, deductions and credits using the closing of the
books method.
3. Notwithstanding any other provision of the Partnership
Agreement, to the extent required by law, income, gain, loss and deduction
attributable to property contributed to the Partnership by a Partner shall be
shared among the Partners so as to take into account any variation between the
basis of the property and the fair market value of the property at the time of
contribution in accordance with the requirements of Section 704(c) of the Code
and the applicable regulations thereunder as more fully described in Part B
hereof. Treasury regulations under Section 704(c) of the Code allow partnerships
to use any reasonable method for accounting for Book-Tax Differences for
contributions of property so that a contributing partner receives the tax
benefits and burdens of any built-in gain or loss associated with contributed
property. The Operating Partnership shall account for Book-Tax Differences using
a method specifically approved in the regulations, the traditional method. An
allocation of remaining built-in gain under Section 704(c) will be made when
Section 704(c) property is sold.
4. Notwithstanding any other provision of the Partnership
Agreement, in the event the Partnership is entitled to a deduction for interest
imputed under any provision of the Code on any loan or advance from a Partner
(whether such interest is currently deducted, capitalized or amortized), such
deduction shall be allocated solely to such Partner.
5. Notwithstanding any provision of the Partnership Agreement to
the contrary, to the extent any payments in the nature of fees made to a Partner
or reimbursements of expenses to any Partner are finally determined by the
Internal Revenue Service to be distributions to a Partner for federal income tax
purposes, there will be a gross income allocation to such Partner in the amount
of such distribution.
6. (a) Notwithstanding any provision of the Partnership Agreement
to the contrary and subject to the exceptions set forth in Section
1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in
Partnership Minimum Gain during any Partnership fiscal year, each Partner shall
be specially allocated items of Partnership income and gain for such year (and,
if necessary, subsequent years) in an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain determined in accordance with
Section 1.704-2(g)(2) of the Treasury
B-1
<PAGE> 46
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is
intended to comply with the minimum gain chargeback requirement in such Section
of the Regulations and shall be interpreted consistently therewith. To the
extent permitted by such Section of the Regulations and for purposes of this
paragraph 6(a) only, each Partner's Adjusted Capital Account Balance shall be
determined prior to any other allocations pursuant to Article V of the
Partnership Agreement with respect to such fiscal year and without regard to any
net decrease in Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to
the contrary, except paragraph 6(a) of this Exhibit and subject to the
exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any
Partnership fiscal year, each Partner who has a share of the Partner Nonrecourse
Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the
Treasury Regulations, shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to such Partner's share of the net decrease in Partner Nonrecourse Debt Minimum
Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is
intended to comply with the minimum gain chargeback requirement in such Section
of the Treasury Regulations and shall be interpreted consistently therewith.
Solely for purposes of this paragraph 6(b), each Partner's Adjusted Capital
Account Balance shall be determined prior to any other allocations pursuant to
Article V of the Partnership Agreement with respect to such fiscal year, other
than allocations pursuant to paragraph 6(a) hereof.
7. Notwithstanding any provision of the Partnership Agreement to the
contrary, in the event any Partners unexpectedly receive any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6),
items of Partnership income and gain shall be specially allocated to such
Partners in an amount and manner sufficient to eliminate the deficits in their
Adjusted Capital Account Balances created by such adjustments, allocations or
distributions as quickly as possible.
8. No Losses shall be allocated to any Partner to the extent that such
allocation would result in a deficit in its Adjusted Capital Account Balance
while any other Partner continues to have a positive Adjusted Capital Account
Balance; in such event, Losses shall first be allocated to any Partners with
positive Adjusted Capital Account Balances, and in proportion to such balances,
to the extent necessary to reduce their positive Adjusted Capital Account
Balances to zero. Any excess shall be allocated to the General Partner. To the
extent that any Losses are allocated pursuant to this paragraph, Profits shall
thereafter be allocated in reverse order of such allocations of Losses to the
extent of such Losses.
9. Any special allocations of items pursuant to this Part A shall be
taken into account in computing subsequent allocations so that the net amount of
any items so allocated and the Profits, Losses and all other items allocated to
each such Partner pursuant to Article V of the
B-2
<PAGE> 47
Partnership Agreement shall, to the extent possible, be equal to the net amount
that would have been allocated to each such Partner pursuant to the provisions
of Article V of the Partnership Agreement if such special allocations had not
occurred.
10. Notwithstanding any provision of the Partnership Agreement to the
contrary, Nonrecourse Deductions for any fiscal year or other period shall be
specially allocated to the Partners in the manner and in accordance with the
percentages set forth in Section 5.2(d) of the Partnership Agreement.
11. Notwithstanding any provision of the Partnership Agreement to the
contrary, any Partner Nonrecourse Deduction for any fiscal year or other period
shall be specially allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(i) of the
Treasury Regulations.
12. The allocation of Profits and Losses to any Partner shall be deemed
to be an allocation to that Partner of the same proportionate part of each
separate item of taxable income, gain, loss, deduction or credit that comprises
such Profits and Losses.
B. Capital Account Adjustments and 704(c) Tax Allocations.
1. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' capital accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes; provided, however, that:
(a) Any income, gain or loss attributable to the
taxable disposition of any property shall be determined by the
Partnership as if the adjusted basis of such property as of such
date of disposition was equal in amount to (i) the Agreed Value
less book depreciation in the case of the Initial Properties or
other contributed properties, or (ii) the Carrying Value with
respect to property subsequently purchased.
(b) The computation of all items of income, gain,
loss and deduction shall be made by the Partnership and, as to
those items described in Section 705(a)(1)(B) or Section
705(a)(2)(B) of the Code, without regard to the fact that such
items are not includable in gross income or are neither currently
deductible nor capitalizable for federal income tax purposes.
2. A transferee of a Partnership interest will succeed to the capital
account relating to the Partnership interest transferred; provided, however,
that if the transfer causes a termination of the Partnership under Section
708(b)(1)(B) of the Code, the Partnership properties shall be deemed to have
been distributed in liquidation of the Partnership to the Partners (including
the transferee of a Partnership interest) and recontributed by such Partners and
transferees in reconstitution of the Partnership. The capital accounts of such
reconstituted Partnership shall be maintained in accordance with the principles
set forth herein.
3. Upon an issuance of additional Partnership interests for cash, the
capital
B-3
<PAGE> 48
accounts of all Partners (and the Agreed Values of all Partnership properties)
shall, immediately prior to such issuance, be adjusted (consistent with the
provisions hereof) upward or downward to reflect any unrealized gain or
unrealized loss attributable to each Partnership property (as if such unrealized
gain or unrealized loss had been recognized upon an actual sale of such property
at the fair market value thereof, immediately prior to such issuance, and had
been allocated to the Partners, at such time, pursuant to Article V of the
Partnership Agreement). In determining such unrealized gain or unrealized loss
attributable to the properties, the fair market value of Partnership properties
shall be determined by the General Partner using such reasonable methods of
valuation as it may adopt.
4. Immediately prior to the distribution of any Partnership
property in liquidation of the Partnership, the capital accounts of all Partners
shall be adjusted (consistent with the provisions hereof and Section 704 of the
Code) upward or downward to reflect any unrealized gain or unrealized loss
attributable to the Partnership property (as if such unrealized gain or
unrealized loss had been recognized upon an actual sale of each such property,
immediately prior to such distribution, and had been allocated to the Partners,
at such time, pursuant to Article V of the Partnership Agreement). In
determining such unrealized gain or unrealized loss attributable to property,
the fair market value of Partnership property shall be determined by the General
Partner using such reasonable methods of valuation as it may adopt.
5. In accordance with Section 704(c) of the Code and the
regulations thereunder, income, gain, loss and deduction with respect to any
property shall, solely for tax purposes, and not for capital account purposes,
be allocated among the Partners so as to take account of any variation between
the adjusted basis of such property to the Partnership for federal income tax
purposes.
6. In the event the Agreed Value of any Partnership asset is
adjusted as described in paragraph 3 above, subsequent allocations of income,
gain, loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Agreed Value in the same manner as under Section 704(c) of the
Code and the regulations thereunder.
7. Any elections or other decisions relating to such allocations
shall be made by the General Partner in any manner that reasonably reflects the
purpose and intention of this Agreement.
C. Definitions. For the purposes of this Exhibit, the following terms
shall have the meanings indicated unless the context clearly indicates
otherwise:
"Adjusted Capital Account Balance": means the balance in the
capital account of a Partner as of the end of the relevant fiscal
year of the Partnership, after giving effect to the following:
(i) credit to such capital account any amounts the Partner is
obligated to restore, pursuant to the terms of this Agreement or
otherwise, or is deemed obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5)
of the Treasury Regulations, and (ii) debit to such capital
account the items described in Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6) of the Regulations.
B-4
<PAGE> 49
"Carrying Value": means the adjusted basis of such property for
federal income tax purposes as of the time of determination.
"Nonrecourse Deductions": shall have the meaning set forth in
Section 1.704-2(b)(1) of the Treasury Regulations. The amount of
Nonrecourse Deductions for a Partnership fiscal year equals the
excess, if any, of the net increase, if any, in the amount of
Partnership Minimum Gain during that fiscal year over the
aggregate amount of any distributions during that fiscal year of
proceeds of a Nonrecourse Liability, that are allocable to an
increase in Partnership Minimum Gain, determined according to the
provisions of Section 1.704-2(c) of the Treasury Regulations.
"Nonrecourse Liability": shall have the meaning set forth in
Section 1.704-2(b)(3) of the Treasury Regulations.
"Partner Nonrecourse Debt Minimum Gain": means an amount, with
respect to each Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i) of the Treasury Regulations.
"Partner Nonrecourse Debt": shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.
"Partner Nonrecourse Deductions": shall have the meaning set
forth in Section 1.704-2(i)(2) of the Treasury Regulations. For
any Partnership taxable year, the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt equal the
net increase during the year, if any, in the amount of Partner
Nonrecourse Debt Minimum Gain reduced (but not below zero) by
proceeds of the liability that are both attributable to the
liability and allocable to an increase in the Partner Nonrecourse
Debt Minimum Gain.
"Partnership Agreement": shall mean this Agreement of Limited
Partnership Agreement of LSS I Limited Partnership.
"Partnership Minimum Gain": shall have the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury
Regulations.
For purposes of this Exhibit, all other capitalized terms will have the same
definition as in the Partnership Agreement.
B-5
<PAGE> 50
EXHIBIT C
INITIAL PROPERTIES
<TABLE>
<CAPTION>
YEAR
BUILT/ RENTABLE
LOCATION EXPANDED SQUARE FT. ACRES UNITS CONSTRUCTION
-------- -------- ---------- ----- ----- ------------
<S> <C> <C> <C> <C> <C>
OHIO:
Avon 1981- 67,423 6.1225 495 Masonry & Steel
998 Avon Belden Road 1986/1998
Avon, Ohio 44011
Canton 1979-87 41,175 11.1533 388 Concrete
3700 Fohl Road, S.W.
Canton, Ohio 44706
Catawba 1988/1998 43,052 7.57 302 Steel
5681 East Harbor Road
Marblehead, Ohio 43440
Cleveland 1997 40,150 3.6801 278 Steel
5440 S. Marginal Road
Cleveland, Ohio 44114
Dayton 1989 19,550 5.001 206 Concrete
3785 Shiloh Springs Rd.
Dayton, Ohio 45426
East Canton 1997 26,700 12.6298 177 Steel
5136 Lincoln Street
East Canton, Ohio 44730
East Liverpool 1986-1996 29,990 11.49 222 Steel
15031 Strader Road
East Liverpool, Ohio 43920
Louisville 1988-1990 53,060 6.828 364 Masonry
7100 Columbus Road
Louisville, Ohio 44641
Mentor 1983 20,382 6.000 204 Masonry
6784 Hopkins Road
Mentor, Ohio 44060
Perry 1992/1997 63,950 6.194 397 Steel
4376 North Ridge Road
Perry, Ohio 44081
Ravenna 1988 16,950 1.785 150 Steel
111 Loomis Parkway
Ravenna, Ohio 44266
</TABLE>
C-1
<PAGE> 51
<TABLE>
<CAPTION>
YEAR
BUILT/ RENTABLE
LOCATION EXPANDED SQUARE FT. ACRES UNITS CONSTRUCTION
-------- -------- ---------- ----- ----- ------------
<S> <C> <C> <C> <C> <C>
Willoughby 1997 33,998 2.37 276 Masonry
38255 St. Clair Street
Willoughby, Ohio 44094
NEW YORK
Endicott 1989 35,580 4.993 297 Concrete/Steel
1400 Campville Road Roof
Endicott, NY 13760
Southold 1989 53,055 6.949 552 Steel
1040 Hortons Lane
Southold, NY 11971
Riverhead 1985-1986 20,625 3.045 183 Steel
99 Mill Road
Riverhead, NY
------------------------------------
TOTAL/AVERAGE 565,640 95.8107 4,491
====================================
</TABLE>
C-2
<PAGE> 52
EXHIBIT D
REDEMPTION RIGHTS TERMS
The Redemption Rights granted by the Partnership to the Class
A Limited Partners pursuant to Section 7.4 hereof shall be subject to the
following terms and conditions:
1. Definitions. The following terms and phrases shall, for
purposes of this Exhibit D and the Agreement, have the meanings set forth below:
"Cash Purchase Price" shall have the meaning set forth in
Paragraph 4 hereof.
"Computation Date" shall mean the date on which an Redemption
Exercise Notice is delivered to the General Partner.
"Exchange Factor" shall mean 100%, provided that such factor
shall be adjusted in accordance with the Antidilution
Provisions of Paragraph 7 hereof.
"Exercising Partner" shall have the meaning set forth in
Paragraph 2 hereof.
"Offered Partnership Units" shall mean the Partnership Units
of the Exercising Partner(s) identified in a Redemption
Exercise Notice which, pursuant to the exercise of Redemption
Rights, can be redeemed by the Partnership or acquired by the
General Partner under the terms hereof.
"Purchase Price" shall mean the Cash Purchase Price or the
Stock Purchase Price, or a combination thereof.
"Redemption Date" shall mean the tenth (10th) Business Day
after receipt by the General Partner of a Redemption Exercise
Notice.
"Redemption Exercise Notice" shall have the meaning set forth
in Paragraph 2 hereof.
"Redemption Rights" shall have the meaning set forth in
Paragraph 2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute.
"Stock Purchase Price" shall have the meaning set forth in
Paragraph 4 hereof.
2. Grant of Redemption Rights. Beginning one year from the
date of this Agreement, each Class A Limited Partner shall have the right, but
not the obligation (hereinafter such right sometimes referred to as the
"Redemption Rights"), to require the Partnership to redeem on the Redemption
Date, all or any portion of the Units held by such Limited Partner (as a Class A
Limited Partner) at a redemption price equal to the Cash Purchase Price. The
Redemption Rights of a Limited Partner may be exercised on one or
D-1
<PAGE> 53
more occasions by the Limited Partner. The Redemption Rights shall be exercised
pursuant to a written notice (the "Redemption Exercise Notice") in the form set
forth in Schedule 1 attached hereto. The Redemption Exercise Notice shall be
given by the Partner who is exercising the Redemption Rights ("Exercising
Partner") to the General Partner. A Limited Partner may not exercise the
Redemption Rights as to fewer Partnership Units than the number of such
Partnership Units that is equal to the lesser of (a) 1,000 Partnership Units or
(b) all of the Units held by such Class A Limited Partner (as a Class A Limited
Partner). Neither the Electing Partner nor any assignee of any Limited Partner
shall have any right with respect to any Partnership Units so redeemed to
receive any distributions from the Partnership made after the Redemption Date.
The assignee of any Limited Partner may exercise the rights of such Limited
Partner pursuant to this Section 2, and such Limited Partner shall be deemed to
have assigned such rights to such assignee and shall be bound by the exercise of
such rights by such Limited Partner's assignee. In connection with any exercise
of such rights by such assignee on behalf of such Limited Partner, the Cash
Purchase Price shall be paid by the Partnership directly to such assignee and
not to such Limited Partner.
3. General Partner Exchange.
(a) Notwithstanding the provisions of Section 2, if a
Limited Partner elects to exercise the Redemption Rights, the General Partner
may, in its sole and absolute discretion, elect to assume directly and satisfy
the Redemption Rights by paying to the Electing Partner either the Cash Purchase
Price and/or the Stock Purchase Price for each Partnership Unit redeemed, as
elected by the General Partner (in its sole and absolute discretion) on the
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the Electing Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Interests.
(b) Unless the General Partner (in its sole and absolute
discretion) shall exercise its right to assume directly and satisfy the
Redemption Rights by paying to the Electing Partner either the Cash Purchase
Price and/or the Stock Purchase Price for each Partnership Unit redeemed, the
General Partner itself shall have no obligation to the Redeeming Partner or to
the Partnership with respect to the Redeeming Partner's exercise of the
Redemption Right.
(c) In the event that the General Partner satisfies the
Redemption Rights in the manner described in Paragraphs 3(a) or (b), each of the
Exercising Partner, the Partnership, and the General Partner shall treat the
transaction between the General Partner and the Exercising Partner for federal
income tax purposes as a sale of the Exercising Partner's Partnership Units to
the General Partner.
(d) Each Exercising Partner shall execute such documents as
the General Partner may reasonably require in connection with the issuance of
REIT Shares in the event that the General Partner satisfies the Redemption
Rights in the manner described in Paragraphs 3(a).
(e) If the Redemption Rights are satisfied by the delivery
of REIT Shares,
D-2
<PAGE> 54
the Exercising Partner shall be deemed to become a holder of REIT Shares as of
the close of business on the closing date.
(f) Notwithstanding the provisions of Section 2 and this
Section 3, a Limited Partner shall not be entitled to receive REIT Shares if the
delivery of REIT Shares to such Partner on the Redemption Date by the General
Partner pursuant to this Section 3 would be prohibited under the Articles of
Incorporation. The Cash Purchase Price shall be paid in such instance in
accordance with the terms of Section 2.
4. Computation of Purchase Price/Form of Payment. The Cash
Purchase Price shall mean an amount of cash equal to the product of (i) the
number of shares of the REIT Shares that would be issued to the Exercising
Partner if the Stock Purchase Price were paid for such Offered Partnership Units
(taking into account the adjustments required pursuant to the definition of
"Exchange Factor") multiplied by (ii) the REIT Share Value computed as of the
Computation Date. The Cash Purchase Price shall be paid in the form of cash, or
cashier's check, or by wire transfer to the Exercising Partner's designated
account. The Stock Purchase Price shall mean the number of REIT Shares equal to
the product, expressed as a whole number, of (i) the number of Class A Units
being exchanged, multiplied by (ii) the Exchange Factor.
5. Closing Deliveries. On the Redemption Date, payment of the
Purchase Price shall be accompanied by proper instruments of transfer and
assignment and by the delivery of (i) representations and warranties of (A) the
Exercising Partner with respect to its due authority to sell all of the right,
title and interest in and to such Offered Partnership Units and with respect to
the status of the Offered Partnership Units being sold, free and clear of all
liens, and (B) the Partnership or General Partner with respect to due authority
for the purchase of such Offered Partnership Units, and (ii) to the extent that
REIT Shares are issued in payment of the Stock Purchase Price, (A) an opinion of
counsel for the General Partner reasonably satisfactory to the Exercising
Partner(s), to the effect that such REIT Shares have been duly authorized, are
validly issued, fully-paid and non-assessable, and have been duly registered
under the Securities Act, and (B) a stock certificate or certificates evidencing
the REIT Shares to be issued and registered in the name of the Exercising
Partner(s) or its (their) designee.
6. Term of Rights. Unless sooner terminated, the rights of the
parties with respect to the Redemption Rights shall commence as of the date
hereof and lapse for all purposes and in all respects on the date that the
Partnership is dissolved; provided, however, that the parties hereto shall
continue to be bound by a Redemption Exercise Notice delivered to the General
Partner prior to such date.
7. Antidilution Provisions.
(a) The Exchange Factor shall be subject to adjustment from
time to time effective upon the occurrence of the following events and shall be
expressed as a percentage, calculated to the nearest one-thousandth of one
percent (.001%):
(i) In case the General Partner shall pay or make a
dividend or
D-3
<PAGE> 55
other distribution on any class of shares of the General
Partner in REIT Shares, the Exchange Factor in effect at
the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive
such dividend or other distribution shall be increased in
proportion to the increase in outstanding REIT Shares
resulting from such dividend or other distribution, such
increase to become effective immediately after the opening
of business on the day following the record date fixed for
such dividend or other distribution.
(ii) In case outstanding REIT Shares shall be
subdivided into a greater number of shares, the Exchange
Factor in effect at the opening of business on the day
following the day upon which such subdivision becomes
effective shall be proportionately increased, and,
conversely, in case the outstanding REIT Shares shall be
combined into a smaller number of shares, the Exchange
Factor in effect at the opening of business on the day
following the day upon which such combination becomes
effective shall be proportionately reduced, such increase
or reduction, as the case may be, to become effective
immediately after the opening of business on the day
following the day upon which such subdivision or
combination becomes effective.
(b) In case the General Partner shall issue rights, options
or warrants to all holders of its REIT Shares entitling them to subscribe for or
purchase REIT Shares at a price per share less than the current market price per
share (as determined in the next sentence), each holder of a Partnership Unit
shall be entitled to receive such number of rights or warrants, as the case may
be, as he would have been entitled to receive had he exchanged his Partnership
Units immediately prior to the record date for such issuance by the General
Partner. For the purpose of any computation pursuant to the next sentence, the
current market price per share of REIT Shares on any date shall be deemed to be
the average of the daily closing prices for the five consecutive Trading Days
selected by the General Partner commencing not more than twenty (20) Trading
Days before, and ending not later than, the earlier of the day in question and
the day before the "ex" date with respect to the issuance or distribution
requiring such computation. For purposes of this Exhibit D, the term "Trading
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday, other than
any day which securities are not traded on such exchange or in such market and
the term "'ex' date", when used in respect of any issuance or distribution,
shall mean the first date on which the shares trade regular way on such exchange
or in such market without the right to receive such issuance or distribution.
(c) In case the REIT Shares shall be changed into the same
or a different number of shares of any class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other than subdivision
or combination of shares or a stock dividend described in subparagraph (a)(ii)
of this Paragraph) then and in each such event the Limited Partners shall have
the right thereafter to exchange 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 into which the Partnership Units might have been exchanged immediately
prior to such
D-4
<PAGE> 56
reorganization, reclassification or change.
(d) The General Partner may, but shall not be required to,
make such adjustments to the number of REIT Shares issuable upon exchange of a
Partnership Unit, in addition to those required by this Paragraph 7, as the
General Partner's board of trustees considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients. The General Partner's board of
trustees shall have the power to resolve any ambiguity or correct any error in
the adjustments made pursuant to this Paragraph and its actions in so doing
shall be final and conclusive.
8. Fractions of Shares. No fractional REIT Shares shall be
issued upon exchange of Partnership Units. If more than one Partnership Unit
shall be surrendered for exchange at one time by the same Exercising Partner,
the number of full REIT Shares which shall be issuable upon exchange thereof (or
the cash equivalent amount thereof if the Cash Purchase Price is paid) shall be
computed on the basis of the aggregate amount of Partnership Units so
surrendered. Instead of any fractional REIT Share which would otherwise be
issuable upon exchange of any Partnership Unit or Partnership Units, the General
Partner shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the Value of a REIT Share on the Redemption Date.
9. Notice of Adjustments of Exchange Factor. Whenever the
Exchange Factor is adjusted as herein provided:
(a) the General Partner shall compute the adjusted Exchange
Factor in accordance with Paragraph 7 hereof and shall prepare a certificate
signed by the chief financial officer or the Treasurer of the General Partner
setting forth the adjusted Exchange Factor and showing in reasonable detail the
facts upon which such adjustment is based; and
(b) a notice stating that the Exchange Factor has been
adjusted and setting forth the adjusted Exchange Factor shall forthwith be
mailed by the General Partner to all holders of Redemption Rights at their last
addresses on record under this Agreement.
D-5
<PAGE> 57
SCHEDULE 1
REDEMPTION EXERCISE NOTICE
TO: LIBERTY SELF-STOR, INC.
Reference is made to that certain Agreement of Limited Partnership,
dated , 1999 (the "Partnership Agreement"), pursuant to
which Liberty Self-Stor, Inc., an Ohio corporation, and certain other persons,
including the undersigned, formed a Delaware limited partnership known as LSS I
Limited Partnership (the "Partnership"). Capitalized terms used but not defined
herein shall have the meanings set forth in the Partnership Agreement. Pursuant
to Section 7.4 and Paragraph 2 of Exhibit D of the Partnership Agreement, each
of the undersigned, being a Class A Limited Partner of the Partnership (an
"Exercising Partner"), hereby elects to exercise its Redemption Rights as to the
number of Offered Partnership Units specified opposite its name below:
Dated:
EXERCISING PARTNER PARTNERSHIP UNITS NUMBER OF OFFERED
- - ------------------ ----------------- -----------------
EXERCISING PARTNER
- - --------------------
- - --------------------
Schedule 1
<PAGE> 58
EXHIBIT E
REPRESENTATIONS AND WARRANTIES OF WARRANTING PARTNERS
Each of [___________________________________________________ (collectively, the
"Warranting Partners"), jointly and severally, represents to the Partnership
that, except as set forth on the Disclosure Schedule delivered to the General
Partner in connection with the execution of this Agreement, as follows:
(a) ORGANIZATION; AUTHORITY. Each of the Contributed Entities
is a Partnership or limited liability company duly formed, validly existing and
in good standing (to the extent applicable) under the laws of its jurisdiction
of formation. Each Warranting Partner has the requisite power and authority to
enter into and perform this Agreement.
(b) AUTHORIZATION; BINDING AGREEMENT. The execution, delivery
and performance of this Agreement by each Warranting Partner has been duly and
validly authorized by all necessary action of such Warranting Partner. This
Agreement has been duly executed and delivered by each Warranting Partner and
constitutes the legal, valid and binding obligation of such Warranting Partner,
enforceable against such Warranting Partner in accordance with the terms hereof.
(c) CONSENTS AND APPROVALS. Except for those obtained prior to
the date hereof, no consent, waiver, approval or authorization of, or filing,
registration or qualification with or notice to, any governmental unit or any
other person is required to be made, obtained or given by any of the Warranting
Partners or the Contributed Entities in connection with the execution, delivery
and performance of this Agreement.
(d) NO VIOLATION. None of the execution, delivery or
performance of this Agreement by any Warranting Partner does, or with the giving
of notice, lapse of time or both, will (1) violate, conflict with or constitute
a default under any term or condition of (A) the organizational documents of
such Warranting Partner or any of the Contributed Entities, or (B) any term or
provision of any judgment, decree, order, statute, injunction, rule or
regulation of a governmental unit applicable to such Warranting Partner or any
of the Contributed Entities, or (C) any agreement, instrument or document to
which such Warranting Partner or any of the Contributed Entities is a party or
by which any of them is bound or to which their assets or properties is subject
or bound or (2) result in the creation of any lien, claim, equity, security
interest or other encumbrance ("Lien") upon the Contributed Property of such
Warranting Partner or the assets or properties of such Warranting Partner or the
Contributed Entities.
(e) COMPLIANCE WITH LAWS. To the Warranting Partners' best
knowledge, each of the Contributed Entities is in compliance in all material
respects with all private restrictions and laws, ordinances and regulations
applicable to the conduct of the business of such Contributed Entities and the
ownership, use and operation of their properties and each has obtained all
licenses, permits and other governmental approvals for the conduct thereof,
which licenses and permits are in full force and effect, and the Contributed
Entities
E-1
<PAGE> 59
have not taken (or failed to take) any action that would result in the
revocation of such licenses or permits nor have the Contributed Entities
received any notice of violation from any federal, state or municipal or other
governmental or quasi-governmental authority or notice of an intention by any
such authority to revoke any certificate of occupancy or other certificate,
license or permit issued by it in connection with the use of any such
Contributed Entities' properties.
(f) ENVIRONMENTAL MATTERS. To the Warranting Partners' best
knowledge, (1) the Contributed Entities and their respective properties are in
compliance, and heretofore have complied, with all Environmental Laws (as
hereinafter defined); (2) none of the Contributed Entities has received any
written notice from any governmental or quasi-governmental authority or other
person that it, its current or former operations, or its properties now or
heretofore owned, leased or used by it or any of its predecessors, are not or
have not been in compliance with any Environmental Laws or that it has any
material liability in respect thereof; and (3) there are no administrative,
regulatory or judicial proceedings pending or threatened against any Contributed
Entity pursuant to, or alleging any violation of or liability under, any
Environmental Laws. To the Warranting Partners' best knowledge, all of the
properties now or heretofore owned, leased or used by any of the Contributed
Entities are free of all Hazardous Materials, and, to the best knowledge of
Warranting Partners, no Hazardous Materials have ever been located on any of the
properties now or heretofore owned, leased or used by any of the Contributed
Entities.
The term "Hazardous Materials" shall mean any substance,
material, waste, gas or particulate matter which is regulated by any local
governmental authority, the state in which any real property of the Contributed
Entities is situated, or the United States Government, including but not limited
to, any material or substance which is (i) defined as a "hazardous waste",
"hazardous material", "hazardous substance", "extremely hazardous waste" or
"restricted hazardous waste" under any provision of law of the state in which
any real property of the Contributed Entities is situated, (ii) petroleum or
petroleum based, (iii) asbestos, (iv) polychlorinated biphenyl, (v) radioactive
material, (vi) designed a "hazardous substance" pursuant to Section 311 of the
Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317), (vii)
defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conversation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section
6903) or (viii) defined as a "hazardous substance" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601). The term "Environmental
Laws" shall mean all statutes specifically described in the foregoing sentence
and all federal, state and local environmental health and safety statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials.
(g) OWNERSHIP OF PROPERTIES. Each of the Contributed Entities
(i) is the sole owner of its respective properties and (ii) has good, valid and
marketable title to such properties, free and clear of all Liens other than
Permitted Exceptions (as hereafter defined).
The term "Permitted Exceptions" shall mean in respect of real
property or any interest or estate therein: (1) zoning laws and ordinances; (2)
any deeds of trust or mortgages listed
E-2
<PAGE> 60
as exceptions to title in the most recent title commitments to insure title
issued by _____________ relating to the properties of the Contributed Entities
and delivered to the General Partner in connection with the execution of this
Agreement (the "Title Commitments"); (3) any laws, ordinances, Liens, easements,
rights of way, restrictions, exemptions, reservations, conditions, limitations,
covenants, adverse rights or interests described as exceptions on Schedule B (or
any other applicable Schedule) of the Title Commitments; provided that any
Contributed Partnership's property is not in violation thereof or, if in
violation, provided that the same do not require the demolition, vacation or
cessation of the present use of any portion of the improvements material to such
property or require the discontinuance of the use of all or any material portion
of such property for its present use; (4) any other easements, restrictions,
reservations and encumbrances which do not individually or in the aggregate (A)
impair the use of any such property in the operation of the business of the
respective Contributed Partnership or (B) detract from the value of such
property for the purpose of such business; and (5) taxes and assessments, both
general and special, which are a lien but not yet due and payable.
(h) ABSENCE OF UNDISCLOSED LIABILITIES AND CONTRACTUAL
OBLIGATIONS. Except for liabilities arising in the ordinary course of business
since the date of the Contributed Entities' financial statements as of and for
the period ended June 30, 1999, the Contributed Entities have no liabilities of
any nature, whether matured or unmatured, fixed or contingent (regardless of
whether the disclosure thereof otherwise would be required by generally accepted
accounting principles) which could have, individually or in the aggregate, a
material adverse effect upon such Contributed Partnership or the Partnership.
There are no Significant Agreements (as hereinafter defined) of a Contributed
Partnership other than as previously disclosed to the General Partner.
For purposes hereof, "Significant Agreement" of a Contributed
Partnership means and includes any of the following to which such entity is a
party or by which it or any of its assets or properties may be subject or bound:
(1) all agreements, instruments and documents evidencing, securing or pertaining
to contractual obligations of a Contributed Partnership that involve annual
payments or receipts in excess of $50,000.00; (2) all leases involving real
property; and (3) all mortgages and deeds of trust encumbering any real
property.
(i) SIGNIFICANT AGREEMENTS; BINDING AGREEMENTS. Each of the
Significant Agreements is valid and binding and in full force and effect,
enforceable against the Contributed Partnership which is a party thereto in
accordance with its terms, subject to the bankruptcy or insolvency of such
parties, similar laws of general applicability relating to or affecting
creditors' rights generally, to general equity principles and to the discretion
of any court in granting any relief or issuing any order and to the
unenforceability of attorneys' fees provisions. Such Contributed Partnership is
not in default in the performance of any obligation thereunder, and no event has
occurred which, with the giving of notice or lapse of time or both, would
constitute a default thereunder or permit the other party to terminate the
rights of such Contributed Partnership thereunder.
(j) LITIGATION. There are no claims, actions, suits,
proceedings or investigations pending, or, to the Warranting Partners'
knowledge, threatened, before any court,
E-3
<PAGE> 61
governmental unit or any arbitrator in respect of any Contributed Partnership or
its assets.
(k) TRANSFER TAXES. There are no transfer taxes payable,
accruing or otherwise arising out of the transfer of the Contributed Partnership
Interests or the Contributed Property to the Partnership, the admission of the
General Partner to this Partnership or arising out of any of the transactions
specified in this Agreement that are expected to occur contemporaneously or
concurrent with or immediately after the execution hereof, which shall not have
been paid by the Limited Partners.
(l) PROJECT IMPROVEMENTS. To the Warranting Partners' best
knowledge, all buildings and improvements on the property owned by each
Contributed Partnership, and all tangible personal property, equipment and
fixtures constituting a part thereof, are in good condition and repair, and the
roofs, walls and foundations of the buildings are free from leaks and seepage of
moisture. To the best knowledge of the Warranting Partners, there is no
defective condition (latent or otherwise) in respect of the buildings and
improvements on the property owned by any Contributed Partnership.
(m) PROJECT EQUIPMENT; UTILITIES. The equipment located at the
property owned by each Contributed Entity is sufficient to permit the full
operation of the improvements for their respective intended purposes. All water,
sewer, gas, electric, telephone and drainage facilities and all of the utilities
required by law for the normal operation of the property owned by the
Contributed Entities are installed to the property line and are connected with
valid permits, are in good working order and are adequate to serve such property
in full compliance with law.
(n) CONDEMNATION PROCEEDINGS. No proceedings have been
commenced or threatened by any authority having the power of eminent domain to
condemn any part of the land or improvements relating to any of the properties
owned by the Contributed Entities.
(o) INSURANCE. The Warranting Partners have not received any
notices from any insurance company of any defects or inadequacies in any
property owned by a Contributed Entity or any part thereof which would affect
adversely the insurability of such property, and each such property complies
with the requirements of all insurance carriers providing insurance therefor.
(p) ACCURACY OF INFORMATION. All of the information provided
to the General Partner by the Warranting Partners and/or the Contributed
Entities (and/or the affiliates, agents, and advisors of any of them) in respect
of the Contributed Entities and/or the Initial Properties is complete and
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make such
Information, in light of the circumstances under which such Information was
provided, not misleading.
For the purposes of the representations and warranties made
pursuant to this Exhibit E, a statement that a fact is true to "the Warranting
Partner's best knowledge" means that, after due investigation, none of the
following Persons actually knows such statement to be untrue.
E-4
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into this 28th day of December, 1999, at Cleveland, Ohio, by and between
LIBERTY SELF-STOR, INC., a Maryland corporation (hereinafter referred to as
"Employer"), and THOMAS J. SMITH (hereinafter referred to as "Employee").
RECITALS:
Employer desires to offer Employee an opportunity to work for
Employer as President and Chief Operating Officer, upon the terms and conditions
hereinafter set forth, and Employee desires to accept such offer. Accordingly,
the parties agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee
agrees to be employed by Employer as President and Chief Operating Officer, for
a term of two (2) years, commencing on the date that the reincorporation of
Meridian Point Realty Trust '83 into Liberty Self-Stor, Inc. is approved by the
shareholders of Meridian Point Realty Trust '83 and terminating two years from
that date (hereinafter referred to as the "Employment Period"). Thereafter, the
Employment Period shall be automatically renewed for additional, subsequent and
consecutive one (1) year terms, unless either Employer or Employee gives written
notice to the other of the intent to terminate this Agreement at least sixty
(60) days prior to the end of the then current term, in which event the
Employment Period shall end at the end of the then current term.
2. COMPENSATION. During the Employment Period, Employee shall
receive as compensation:
(a) Salary at the annual rate of $125,000, payable not less
frequently than
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semi-monthly;
(b) The right to participate in all corporate employee
benefit programs offered to employees by Employer;
(c) Bonuses as determined in the sole discretion of
Employer's Board of Directors;
(d) Two weeks vacation each calendar year, commensurate
with Employer's vacation policy; and
(e) Use of a company car of Employee's choosing, including
all expenses related to the use of such car with the exception of gasoline.
3. DUTIES. During the Employment Period, the Board of
Directors of Employer shall be entitled to establish the business hours,
conditions of employment, job assignments, duties and responsibilities of
Employee hereunder, and to modify the foregoing from time to time. Employee
shall devote all of his business efforts to Employer.
4. EXPENSES. Employer shall reimburse Employee for all
reasonable and necessary business expenses incurred by Employee on behalf of
Employer during the Employment Period.
5. DEATH OF EMPLOYEE. If Employee should die during the
Employment Period, Employer shall continue to pay compensation to Employee's
wife (or if at the time of Employee's decease Employee has no wife, then to his
beneficiaries) for a period of ninety days at the rate of compensation earned by
Employee immediately prior to his death. The amount of the bonus, if any, which
Employee is to receive under paragraph 2 for such year shall be prorated for the
portion of the year beginning on the first day of the Employment Period (or the
most recent anniversary thereof) and ending upon the date of Employee's death.
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6. DISABILITY OF EMPLOYEE.
(a) In the event that Employee shall become mentally or
physically disabled (as hereinafter defined) during the Employment Period,
Employer shall continue to pay compensation to Employee, at the rate of
compensation earned by Employee immediately prior to his disability, for a
period of six months after the onset of such disability. If, at the end of such
period, Employee shall continue to be so disabled Employer may elect, upon ten
days prior written notice, to discontinue payments of compensation. Employer
shall have no further duties or obligations hereunder. The amount of the bonus,
if any, which Employee is to receive under paragraph 2 for such year shall be
prorated for the portion of the year ending upon the end of the period described
in this paragraph.
(b) If Employee, within six months after he had initially
become mentally or physically disabled, shall recover from such mental or
physical disability so as to be able to again perform the duties required of him
hereunder, he shall be entitled to return to work. Upon such return to work, all
of the terms and conditions hereof shall be reinstituted and shall continue in
full force and effect as if no such disability had occurred. However, if
following such return to work, Employee shall once again become mentally or
physically disabled so as to be unable to perform the duties required of him
hereunder, and such disability shall continue for a period of ninety consecutive
days, Employer may, upon ten days prior written notice, terminate this
Agreement. Upon such termination, Employer shall have no further obligations to
Employee hereunder. The amount of the bonus, if any, which Employee is to
receive under paragraph 2 for such year shall be prorated for the portion of the
year ending upon the end of the period described in this paragraph.
(c) For purposes of this paragraph 6, Employee shall become
"mentally or physically disabled" if (i) Employee has been declared legally
incompetent by a final court
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decree, (ii) Employee receives disability insurance benefits from any disability
income insurance policy maintained by Employer for a period of six (6)
consecutive months, or (iii) the Board shall find, on the basis of medical
evidence satisfactory to the Board, that as a result of a mental or physical
condition Employee is unable to perform his normal duties of employment
hereunder or is prevented from engaging in the same level of performance as he
engaged in prior to the onset of such condition, and that such disability is
likely to continue for a substantial period of time. Such decision of the Board
shall be referred to hereinafter as a "Disability Determination."
(d) The date on which the disability will be deemed to have
occurred shall be the day after Employee last performed the services for
Employer which are required of him pursuant to this Agreement, which performance
of services was discontinued because of the condition which gave rise to the
court decree of legal incompetence, the payment of disability insurance benefit,
or the Disability Determination, whichever is applicable.
(e) In the event that Employee disagrees with the
Disability Determination, Employee shall be entitled to request that the Board
reconsider its decision. Such request shall be in writing, shall be delivered
within thirty (30) days of the date on which the Board advised Employee of the
Disability Determination, and shall be supported by medical evidence from a
physician selected and paid for by Employee. If the Board does not grant
Employee's request for reconsideration, Employee may advise the Board, in
writing within thirty (30) days, of his desire to appeal. At that time, a
physician selected by the Board and the physician who supported Employee's
request for reconsideration shall choose a third consulting physician to decide
the dispute. Such physician (hereinafter, the "Arbitrator") must be
board-certified in the specialty most closely related to the nature of the
disability alleged to exist. The expenses of the Arbitrator shall be borne
equally by
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Employer and Employee. The decision of the Arbitrator shall be final and binding
and shall be conclusive on the issue of the disability of the Employee (or lack
thereof).
7. TERMINATION.
(a) TERMINATION FOR CAUSE. Employer may terminate
Employee's employment hereunder at any time for cause, which shall be deemed to
include but not be limited to the following:
(i) Employee's engaging in fraud, misappropriation of
funds, embezzlement or like conduct committed against
Employer.
(ii) Employee's conviction of a felony.
(iii) Employee's material violation of a generally
recognized policy of Employer.
(iv) Employee's material violation of any provision of
this Agreement.
In the event of such a termination for cause, Employer shall have no further
obligation to Employee pursuant to this Agreement after the date of termination.
(b) TERMINATION WITHOUT CAUSE. Employer may elect to
terminate Employee's employment for any reason other than for cause (pursuant to
subparagraph (a) above) prior to the expiration of the Employment Period. In the
event of a termination without cause, Employer shall be obligated (i) to
continue to pay the salary amount set forth in paragraph 2(a) above for one year
following the date of termination, and (ii) to pay to Employee any bonus earned
but not yet paid on the date of termination, prorated to reflect the portion of
the bonus computation period during which Employee actually worked; provided
however that all other employment benefits such as use of a company car shall
immediately cease. The amounts to be paid to Employee pursuant to this
subparagraph are
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intended by the parties to be in settlement of any and all claims of Employee
arising out of or related to Employee's employment with Employer, including,
without limitation, the termination of such employment, any express or implied
employment agreement, this Agreement, or the breach thereof (collectively,
"Employment Claims"). In consideration of such payment, Employee hereby releases
and waives any and all Employment Claims against Employer, and covenants not to
sue Employer in connection with any Employment Claim. In further consideration
for such release and waiver, it is agreed that Employee shall not be required to
mitigate damages, by seeking other employment or otherwise, and Employer shall
not be entitled to set off against amounts payable to Employee pursuant to this
subparagraph any amounts earned by Employee from other employment during the
balance of the Employment Period.
8. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. As a material
inducement to Employer to enter into this Agreement, Employee represents and
warrants as follows:
(a) Neither Employee, nor any member of Employee's
immediate family, nor any entity in which Employee has a substantial interest
(i) has any direct or indirect ownership interest in any entity with which
Employer or any affiliate of Employer has a business relationship or which
competes with Employer or any affiliate of Employer, except that the ownership
of 1% or less of any class of securities of a publicly-held corporation shall
not constitute a breach of this representation and warranty, and (ii) is, and
will not become during the term of this Agreement, directly or indirectly,
interested in any material contract with Employer or any affiliate of Employer
(other than this Agreement).
(b) Neither Employee's execution of this Agreement nor
Employee's employment by Employer hereunder will breach any agreement or
covenant entered into by
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Employee that is currently in effect.
9. COVENANTS AGAINST COMPETITION. Employee recognizes and
acknowledges that (i) the principal business of Employer will be the operation,
management, development, expansion, ownership and acquisition of self-storage
facilities (the "Company Business"); and (ii) the work of Employee for Employer
has brought Employee and will continue to bring him into close contact with many
confidential affairs not readily available to the public. Accordingly, Employee
covenants and agrees that:
(a) NON-COMPETE. During the Employment Period and for two
(2) years following the termination of Employee's employment hereunder, however
caused (the "Restricted Period"), Employee shall not, directly or indirectly,
(A) within the State of Ohio, (B) in any other state in which Employer has
actively engaged in the Company Business during any part of the term of
Employee's employment with Employer, and (C) with respect to any customer or
supplier with whom Employer has had material dealings during any part of the
term of Employee's employment with Employer, compete with Employer in any
manner, on behalf of himself or any other person, firm, business, corporation or
other entity (each such other person, firm, business or other entity being
referred to hereinafter as a "Person"), including, without limitation, that
Employee shall not (i) engage in the Company Business for his own account; (ii)
except for employment of Employee by Employer or an affiliate of Employer, enter
the employ of, or render any services to, any Person engaged in the Company
Business; (iii) request or instigate any account or customer of Employer to
withdraw, diminish, curtail or cancel any of its business with Employer, or (iv)
become interested in any Person engaged in the Company Business as an owner,
partner, shareholder, officer, director, licensor, licensee, principal, agent,
employee, trustee, consultant or in any other relationship or capacity;
provided, however, that Employee may own, directly or
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indirectly, solely as an investment, securities of any corporation which are
publicly-traded if he (A) is not a controlling person of, or a member of a group
which controls, such corporation, or (B) does not, directly or indirectly, own
1% or more of any class of securities of such corporation. In the event of
Employee's breach of any provision of this paragraph 9, the running of the
Restricted Period shall be automatically tolled (i.e., no part of the Restricted
Period shall expire) from and after the date of the first such breach.
(b) CONFIDENTIAL INFORMATION. Employee recognizes and
acknowledges that confidential information, including, without limitation,
information, knowledge or data (i) of a technical nature such as but not limited
to methods, know-how, formulae, compositions, processes, discoveries, machines,
inventions, products, product specifications, computer programs and similar
items or research projects; (ii) of a business nature such as but not limited to
information about cost, purchasing, profits, market, sales or customers,
including lists of customers, and the financial condition of Employer; (iii)
pertaining to future developments such as but not limited to research and
development or future marketing or merchandising, and trade secrets of Employer;
and (iv) all other matters which Employer treats as confidential (the items
described above being referred to collectively hereinafter as "Confidential
Information"), are valuable, special and unique assets of Employer. During and
after the Restricted Period, Employee shall keep secret and retain in strictest
confidence, and shall not use for the benefit of himself or others except in
connection with the business and affairs of Employer, any and all Confidential
Information learned by Employee before or after the date of this Agreement, and
shall not disclose such Confidential Information to anyone outside of Employer
either during or after employment by Employer, except as required in the course
of performing duties of his employment with Employer, without the express
written consent of Employer or as required by law.
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<PAGE> 9
(c) PROPERTY OF EMPLOYER. Employee agrees to deliver
promptly to Employer all drawings, blueprints, manuals, letters, notes,
notebooks, reports, sketches, formulae, computer programs and files, memoranda,
customer lists and all other materials relating in any way to the Company
Business and in any way obtained by Employee during the period of his employment
with Employer which are in his possession or under his control, and all copies
thereof, (i) upon termination of Employee's employment with Employer, or (ii) at
any other time at Employer's request. Employee further agrees he will not make
or retain any copies of any of the foregoing and will so represent to Employer
upon termination of his employment.
(d) EMPLOYEES OF EMPLOYER. During the Restricted Period,
Employee shall not, directly or indirectly, hire, solicit or encourage to leave
the employment of Employer or its affiliates any employee of Employer or its
affiliates or hire any such employee who has left the employment of Employer or
its affiliates within one year of the termination of such Employee's employment
with Employer or its affiliates.
(e) CONSULTANTS OF THE EMPLOYER. During the Restricted
Period, Employee shall not, directly or indirectly, hire, solicit or encourage
to cease to work with Employer or its affiliates any consultant then under
contract or under contract within the prior year with Employer or its
affiliates.
10. RIGHTS AND REMEDIES UPON BREACH. Both parties recognize
that the services to be rendered under this Agreement by Employee are special,
unique and of extraordinary character. If Employee breaches, or threatens to
commit a breach of, any of the provisions of paragraph 9 (the "Restrictive
Covenants"), then Employer shall have the following rights and remedies, each of
which shall be independent of the other and severally enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu of,
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<PAGE> 10
any other rights and remedies available to Employer under law or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to Employer and that money
damages will not provide adequate remedy to Employer. As to the covenants
contained in paragraph 9, specific performance shall be for a period of time
equal to the unexpired portion of the Restricted Period, giving full effect to
the tolling provision of paragraph 9, and beginning on the earlier of the date
on which the court's order becomes final and non-appealable, and the date on
which all appeals have been exhausted.
(b) ACCOUNTING. The right and remedy to require Employee to
account for and pay over to Employer all compensation, profits, monies,
accruals, increments or other benefits (collectively, "Benefits") derived or
received by him as the result of any transactions constituting a breach of any
of the Restrictive Covenants, and Employee shall account for and pay over such
Benefits to Employer.
(c) BLUE-PENCILLING. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
scope, duration and/or geographical area covered by such provision, such court
shall have the power to reduce the scope, duration or area of such provision
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
11. LIMITATIONS ON AUTHORITY. Notwithstanding anything else
herein contained, Employee, without the consent and direction of the Board of
Directors of Employer, may not on behalf of Employer:
(a) Borrow or loan money, except as required by his duties
in the ordinary course of business.
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(b) Assign, transfer, pledge, compromise, or release any
claims or debts of Employer, except in the ordinary course of
business.
(c) Make, execute or deliver any assignment for the benefit
of creditors, any bond, confession of judgment, chattel
mortgage, deed, guaranty, indemnity bond, contract to sell or
contract of sale of any of the assets of Employer.
(d) Lease or mortgage with respect to any of Employer's
corporate real property or any interest therein, or enter into
any such contract for such purposes, except in the ordinary
course of business.
(e) Pledge or hypothecate or in any manner whatsoever
transfer any interest in the assets of Employer.
(f) Materially change or alter Employer's present lines of
business.
(g) Do any act outside of the normal course of business
which could have a materially adverse effect on the business
and/or financial condition of Employer. Any violation of the
terms of this paragraph shall be deemed to be a material
violation of a provision of this Agreement.
12. INDEMNIFICATION. Employer shall indemnify Employee (and
his legal representatives or other successors) to the extent permitted by law
and Employee shall be entitled to the protection of any insurance policies which
Employer may elect to maintain generally for the benefit of its directors or
officers against all costs, charges and expenses whatsoever incurred or
sustained by Employee in connection with any action, suit or proceeding to which
he may be made a party by reason of his being or having been an employee,
director or officer of Employer or any other corporation that he served in any
such capacity at the request of Employer.
13. NON-ASSIGNMENT. This Agreement is a personal services
contract and
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it is expressly agreed that the rights and interests of Employee and Employer
hereunder may not be sold, transferred, assigned, pledged or hypothecated;
provided, however, that Employer may assign its rights and obligations hereunder
to a wholly-owned subsidiary of Employer, whether presently existing or formed
after the date hereof.
14. BINDING EFFECT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, their heirs, representatives and
successors.
15. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
16. EFFECT OF CAPTIONS. The captions in this Agreement are
included for convenience only and shall not in any way effect the interpretation
or construction of any provision hereof.
17. REMEDIES CUMULATIVE; NO WAIVER. All remedies specified
herein or otherwise available shall be cumulative and in addition to any and
every other remedy provided hereunder or now or hereafter available. No waiver
or failure (intentional or unintentional) to act with respect to any breach or
default hereunder shall be deemed to be a waiver with respect to any subsequent
breach or default, whether of a similar or different nature.
18. NOTICES. All notices, requests, demands or other
communications hereunder shall be sent by registered or certified mail to:
To Employer: Meridian Point Realty Trust '83
8500 Station St., Suite 100
Mentor, Ohio 44060
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Copy to: Marc C. Krantz, Esq.
Kohrman Jackson & Krantz P.L.L.
20th Floor, One Cleveland Center
1275 East Ninth Street
Cleveland, Ohio 44114-1793
To Employee: Thomas J. Smith
7573 Salida Road
Mentor-on-the-Lake, Ohio 44160
or to such other address as a party may designate by notice in accordance with
this paragraph.
19. GOVERNING LAW; JURISDICTION; LIMITATIONS ON FILING ACTIONS.
This Agreement shall be governed by and construed in accordance with the
substantive law of the State of Ohio. The parties intend to and hereby do confer
jurisdiction upon the courts of any jurisdiction within the State of Ohio to
determine any dispute arising out of or related to this Agreement, including the
enforcement and the breach hereof. The parties agree that any claim arising out
of or related to this Agreement, or the breach hereof, must be filed within six
(6) months after the date of the alleged breach, and in any event within six
months after the date of termination of Employee's employment, that any claim
which is not filed within such six month period is waived, and that any statute
of limitations to the contrary is hereby waived.
20. ACKNOWLEDGMENT. Employee acknowledges that: (i) he has
carefully read all of the terms of this Agreement, and that such terms have been
fully explained to him; (ii) he understands the consequences of each and every
term of this Agreement; (iii) he has had sufficient time and an opportunity to
consult with his own legal advisor prior to signing this Agreement, and that
Employer has encouraged him to seek legal counsel prior to signing this
Agreement; (iv) he had other employment opportunities at the time he entered
into this Agreement; (v) he specifically understands that by signing this
Agreement he is giving up
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certain rights he may have otherwise had, and that he is agreeing to limit his
freedom to engage in certain employment during and after the termination of this
Agreement, and (vi) the limitations to his right to compete contained in this
Agreement represent reasonable limitations as to scope, duration and
geographical area, and that such limitations are reasonably related to
protection which Employer reasonably requires.
21. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between Employer and Employee and supersedes all
prior agreements and understandings relating to the subject matter hereof.
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IN WITNESS WHEREOF, the undersigned have hereunto set their
hands on the date first hereinabove mentioned.
LIBERTY SELF-STOR, INC.
By: /s/ Richard M. Osborne
--------------------------------------
Its: Chairman and Chief Executive Officer
------------------------------------
/s/ Thomas J. Smith
-------------------
Thomas J. Smith
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EXHIBIT 99.1
MERIDIAN POINT REALTY TRUST '83 ANNOUNCES ACQUISITION OF
LIBERTY SELF-STOR, LTD., NAME CHANGE AND
APPOINTMENT OF CFO
Cleveland, Ohio (December 30, 1999) -- Based on results announced today by
Meridian Point Realty Trust '83 (OTCBB: MPTBS), Meridian shareholders have
approved the acquisition of Liberty Self-Stor, Ltd., an Ohio limited liability
which owns 15 self-storage facilities located in New York and Ohio. Liberty
Self-Stor, Ltd. was controlled by Richard M. Osborne, the Company's Chairman of
the Board and Chief Executive Officer. The vote was held on December 28, 1999 at
the Company's special meeting of shareholders in lieu of the annual meeting of
shareholders.
At the Meridian special meeting of shareholders, the shareholders also approved
the reincorporation of the Company from a California business trust to a
Maryland corporation. As part of the reincorporation, the Company's name changed
to Liberty Self-Stor, Inc. Each Share of beneficial interest of Meridian will
automatically be converted to one share of common stock of Liberty Self-Stor,
Inc. Fractional shares will be paid in cash. Liberty's common stock will be
traded on the OTCBB under the symbol LSSI, if available.
The shareholders also approved (1) the election of Steven A. Calabrese, Mark D.
Grossi, Marc C. Krantz, Richard M. Osborne and Thomas J. Smith as directors of
the Company, (2) the Company's 1999 Stock Option and Award Plan, (3) the
Company's lease for its executive offices, and (4) the ratification of Arthur
Andersen LLP as the Company's independent accountants for the year ending
December 31, 1999.
The Company also announced the appointment of Sherry Kirchenbauer, 31, as Chief
Financial Officer and Assistant Secretary. Prior to joining the Company, Ms.
Kirchenbauer was controller for 2 years for Interpak, a plastics manufacturing
company, and accounting manager for Larich Distributors, which has real estate
interests in apartment buildings and shopping centers.
Richard M. Osborne, the Company's Chairman of the Board and Chief Executive
Officer, stated, "We are very pleased by the support shown by the Meridian
shareholders. We have now fulfilled a promise that we made to the shareholders
when we were elected in September 1998. Through the reincorporation and the
acquisition of Liberty Self-Stor, Ltd., the Company is now in a position to grow
through the operation, expansion, acquisition and development of self-storage
facilities."
Thomas J. Smith, the Company's President and Chief Operating Officer, stated,
"We are committed to satisfying our shareholders in the year 2000 and beyond and
we are excited by the challenges and opportunities that the Company now faces.
We are continuing to look at acquisition opportunities and to talk with
prospective capital partners who can assist us in our growth efforts."
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In the acquisition of the self-storage facilities, the members of Liberty
Self-Stor, Ltd. exchanged their membership interests for Class A limited
partnership interests in LSS I Limited Partnership, the operating partnership.
The Class A limited partnership interests are redeemable for cash or, at the
election of the Company, convertible into common stock of the Company on a
one-for-one basis. LSS I Limited Partnership is owned 29.9% by Liberty
Self-Stor, Inc., the sole general partner and Class B limited partner, and 70.1%
by the Class A limited partners, consisting of the former members of Liberty
Self-Stor, Ltd., including Mr. Osborne and Mr. Smith.
Liberty is a real estate investment trust headquartered in Mentor, Ohio. It owns
and operates 15 self-storage facilities located in Ohio and New York.
This news release contains forward-looking statements with
respect to the financial condition, results of operations and business of the
Company. Forward-looking statements are statements other than historical
information or statements of current condition. In light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements herein should not be regarded as a representation by
the Company or any other person that the objectives or plans of the Company will
be achieved. Many factors could cause actual results to differ materially from
those contemplated by such forward-looking statements. Investors and others
should refer to the Company's filings with the Securities and Exchange
Commission, including its Registration Statement on Form S-4, its annual report
on Form 10-KSB for the year ended December 31, 1999, its quarterly reports on
Form 10-QSB and other periodic filings, for a description of the foregoing and
other factors. The Company undertakes no obligation to update forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
2
