SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) June 30, 1997
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CAPITAL TRUST
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(Exact Name of Registrant as Specified in its Charter)
California 1-8063 94-6181186
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
131 Steuart Street, Suite 200
San Francisco, California 94105
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(Address of Principal Executive Offices) Zip Code)
(415) 905-0288
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(Registrant's Telephone Number, Including Area Code)
California Real Estate Investment Trust
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(Former name or former address, if changed since last report)
611524.1
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ITEM 2. Acquisition or Disposition of Assets
On June 30, 1997, the Registrant completed an investment in a junior,
subordinated class of commercial mortgage-backed securities. The Registrant
purchased from Credit Suisse First Boston $49,592,351 face amount of Class B
Owner Trust Certificates (the "CMBS Investment") issued pursuant to the
Intercreditor Trust I Trust and Security Agreement, dated as of April 25, 1997,
among Credit Suisse First Boston Mortgage Securities Corp., as depositor, Credit
Suisse First Boston Mortgage Capital LLC, as investment director, The Chase
Manhattan Bank, as owner trustee, and SunAmerica Life Insurance Company and
Anchor National Life Insurance Company, each as secured party. The CMBS
Investment was structured to provided an effective yield of a specified number
of basis points over LIBOR (as defined) based on specified base case modeling
assumptions. The CMBS Investment is secured by 20 short-term commercial mortgage
loans with original maturities ranging from two to three years which loans are
secured, directly or indirectly, by properties located throughout the United
States.
The purchase price for the CMBS Investment was $49,173,915, plus accrued
interest of $159,012. The purchase price was financed in part pursuant to a
reverse repurchase agreement that was entered into with Credit Suisse First
Boston (Hong Kong) Limited ("CSFBHKL") immediately following confirmation of the
purchase transaction. Pursuant to the reverse repurchase agreement, the
Registrant posted 25% of the purchase price (approximately $12,292,557) from
available cash sources as maintenance margin and received an extension of credit
from CSFBHKL for the remaining 75% balance (approximately $36,881,359). The
outstanding margin debt bears interest payable monthly in arrears at a rate of
LIBOR (as defined) plus a specified number of basis points. The reverse
repurchase agreement expires on June 28, 1998, provided that the term may be
extended for additional three month periods by mutual agreement of the parties.
The purchase price was arrived at through arms length negotiations.
ITEM 5. Other Events
On July 15, 1997, the Registrant issued press releases, copies of which are
attached hereto as Exhibits 99.1 and 99.2 announcing, among other things, the
results of its annual meeting of shareholders held on July 15, 1997 and the CMBS
Investment discussed in Item 2 above. At the meeting, all matters submitted for
the approval of shareholders were approved and all of the Registrant's nominees
for trustee were elected trustees of the Registrant.
Following the annual meeting, the amended and restated declaration of trust
(the "Restated Declaration"), which was approved by the shareholders, was
executed by the chairman of the board and the secretary of the Registrant
whereupon it came into effect. The Registrant's By-laws came into effect upon
the approval and execution of the Restated Declaration. A copy of the Restated
Declaration and the Bylaws are attached hereto as Exhibits 3.1 and 3.2,
respectively.
611524.1
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The 1997 Long-Term Incentive Share Plan (the "Incentive Plan") and 1997
Non-Employee Trustee Share Plan (the "Trustee Plan") were also approved by the
shareholders at the annual meeting whereupon they became effective. A copy of
the Incentive Plan and the Trustee Plan are attached hereto as Exhibits 10.1 and
10.2, respectively.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
3.1 Amended and Restated Declaration of Trust of the Registrant, as
amended through July 15, 1997.
3.2 By-laws of the Registrant.
4.1 Certificate of Designation, Preferences and Rights of the Class A
9.5% Cumulative Preferred Shares and the Class B 9.5% Cumulative
Convertible Non-Voting Preferred Shares.
10.1 1997 Long-Term Incentive Share Plan, as amended.
10.2 1997 Non-Employee Trustee Share Plan, as amended.
99.1. Press release of the Registrant, dated July 15, 1997.
99.2. Press release of the Registrant, dated July 15, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAPITAL TRUST
(Registrant)
Date: July 15, 1997 By: /s/ John R. Klopp
--------------------------------
Name: John R. Klopp
Title: Chief Executive Officer
611524.1
Exhibit 3.1
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CAPITAL TRUST
a California trust
As amended through July 15, 1997
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<TABLE>
<CAPTION>
CAPITAL TRUST
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I DEFINITIONS...........................................................................................2
Section 1.1 "Aggregated Transferor"......................................................................2
Section 1.2 "Board"......................................................................................2
Section 1.3 "Business Day"...............................................................................2
Section 1.4 "By-Laws"....................................................................................2
Section 1.5 "Certificate of Designation".................................................................2
Section 1.6 "Class A Common Shares"......................................................................2
Section 1.7 "Class A Preferred Shares"...................................................................2
Section 1.8 "Class B Common Shares"......................................................................2
Section 1.9 "Class B Preferred Shares"...................................................................2
Section 1.10 "Common Shares"..............................................................................2
Section 1.11 "Conversion Date"............................................................................2
Section 1.12 "Conversion Notice"..........................................................................2
Section 1.13 "Corporations Commissioner"..................................................................2
Section 1.14 "Declaration" and "Declaration of Trust".....................................................3
Section 1.15 "File for Record"............................................................................3
Section 1.16 "GAAP".......................................................................................3
Section 1.17 "Internal Revenue Code"......................................................................3
Section 1.18 "Person".....................................................................................3
Section 1.19 "Preferred Shares"...........................................................................3
Section 1.20 "Shares".....................................................................................3
Section 1.21 "Shareholders"...............................................................................3
Section 1.22 "Subsidiary".................................................................................3
Section 1.23 "Trustees....................................................................................3
Section 1.24 "Voting Preferred Shares"....................................................................3
Section 1.25 "Voting Shares"..............................................................................3
ARTICLE II THE COMPANY..................................................................................4
Section 2.1 Name.........................................................................................4
Section 2.2 Principal Office.............................................................................4
Section 2.3 Purpose......................................................................................4
Section 2.4 No Partnership Relationship..................................................................4
Section 2.5 Amendment and Restatement of Original Declaration of Trust...................................4
ARTICLE III INVESTMENT POLICY............................................................................4
Section 3.1 General Policy...............................................................................4
Section 3.2 Maintenance of Assets........................................................................4
Section 3.3 Disposition of Encumbrance of Assets.........................................................4
Section 3.4 Use of Brokers and Appraisers................................................................4
Section 3.5 Management of Company Property...............................................................4
Section 3.6 The Company's Right to Borrow Funds..........................................................5
Section 3.7 Transactions with Related Parties............................................................5
ARTICLE IV CLASSES OF SHARES; DESIGNATIONS, PREFERENCES, ETC............................................5
Section 4.1 Number of Shares; Classes....................................................................5
Section 4.2 Designations, Preferences, etc...............................................................6
Section 4.3 Shareholder's Interest in the Company........................................................6
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ARTICLE V COMMON SHARES................................................................................6
Section 5.1 Common Shares; Identical Rights..............................................................6
Section 5.2 Dividends....................................................................................6
Section 5.3 Liquidation Rights...........................................................................6
Section 5.4 Voting Rights................................................................................7
Section 5.5 Conversion Rights ...........................................................................7
Section 5.6 Stock Splits, etc............................................................................8
Section 5.7 Reacquired Shares............................................................................8
Section 5.8 Preferences, Appraisals, Redemption and Preemptive Rights....................................8
Section 5.9 Nonassessability of Common Shares............................................................8
ARTICLE VI PREFERRED SHARES.............................................................................8
Section 6.1 Preferred Shares.............................................................................8
Section 6.2 The Class A Preferred Shares and the Class B Preferred Shares................................9
Section 6.3 Nonassessability of Preferred Shares.........................................................9
Section 6.4 Recording of Certificates of Designation.....................................................9
ARTICLE VII MEETING OF SHAREHOLDERS.....................................................................10
Section 7.1 Annual Meeting..............................................................................10
Section 7.2 Special Meetings............................................................................10
Section 7.3 Record Date.................................................................................10
Section 7.4 Voting of Shares............................................................................10
Section 7.5 Inspectors of Elections.....................................................................10
Section 7.6 Shareholder List............................................................................11
Section 7.7 Quorum......................................................................................11
Section 7.8 Notice......................................................................................11
Section 7.9 Business Transacted.........................................................................11
Section 7.10 Action at a Meeting.........................................................................11
Section 7.11 Action Without a Meeting....................................................................11
Section 7.12 Effect of Action............................................................................11
ARTICLE VIII TRUSTEES; MEETINGS OF TRUSTEES..............................................................12
Section 8.1 Authority of Trustees.......................................................................12
Section 8.2 Powers of Trustees..........................................................................12
Section 8.3 Number, Term and Qualifications.............................................................13
Section 8.4 Resignations................................................................................13
Section 8.5 Removal of Trustees.........................................................................13
Section 8.6 Newly Created Trusteeships and Vacancies....................................................14
Section 8.7 Compensation................................................................................14
Section 8.8 Committees..................................................................................14
Section 8.9 By-Laws.....................................................................................14
ARTICLE IX OFFICERS....................................................................................14
ARTICLE X CONSOLIDATION, MERGER, SALE OF ASSETS, ETC..................................................14
ARTICLE XI ACCOUNTING..................................................................................15
Section 11.1 Standard....................................................................................15
Section 11.2 Inspection of Records.......................................................................15
Section 11.3 Annual Audit................................................................................15
Section 11.4 Interim Reports.............................................................................15
ARTICLE XII DURATION OF THE COMPANY.....................................................................15
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Section 12.1 Duration....................................................................................15
Section 12.2 Early Termination...........................................................................15
Section 12.3 Procedure Upon Termination..................................................................15
ARTICLE XIII AMENDMENTS................................................................................. 16
Section 13.1 Amendment Procedure.........................................................................16
Section 13.2 Amendments Without Shareholder Approval.....................................................16
Section 13.3 Recording Amendments........................................................................16
ARTICLE XIV EXCULPATION AND INDEMNIFICATION; LIMITATION OF LIABILITY; RIGHTS OF
TRUSTEES AND OFFICERS TO OWN SHARES; REPRESENTATIONS AND
GUARANTEES..................................................................................16
Section 14.1 Exculpation and Indemnification of Trustees, Officers and Others ...........................16
Section 14.2 Limitation on Liability of Shareholders, Trustees and Officers; Insurance...................16
Section 14.3 Right of Trustees and Officers to Own Shares................................................16
Section 14.4 Representations and Guarantees..............................................................17
ARTICLE XV MISCELLANEOUS...............................................................................17
Section 15.1 Fiscal Year.................................................................................17
Section 15.2 Checks .....................................................................................17
Section 15.3 Successors in Interest......................................................................17
Section 15.4 Severability................................................................................17
Section 15.5 California Laws Govern......................................................................17
Section 15.6 Headings....................................................................................17
Section 15.7 No Third-Party Reliance.....................................................................17
Section 15.8 Counterparts................................................................................17
Section 15.9 Notice......................................................................................17
Section 15.10 agreement of Shareholders.................................................................. 17
</TABLE>
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<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST OF
CAPITAL TRUST
a California trust
As amended through July 15, 19977
AMENDED AND RESTATED DECLARATION OF TRUST of Capital Trust, a
California trust (the "Company"), dated as of July 15, 1997.
R E C I T A L S
WHEREAS, Stanley C. Bateman, Noel Coleman, Donald Gilson, H. Glover
Hughes, John M. Inman, Edward P. Jones, Leo G. McClatchy and C. Frank Pratt,
Sr., desiring to create a trust entered into a Declaration of Trust, dated the
15th of September, 1966 (the "Original Declaration of Trust"), creating
California Real Estate Investment Trust, a California trust, for the benefit of
the holders from time to time of shares to be issued hereunder, who become
parties hereto and beneficiaries of the Company by becoming the holders of one
or more shares of beneficial interests in the Company;
WHEREAS, Messrs. Bateman, Coleman, Gilson, Hughes, Inman, Jones,
McClatchy and Pratt agreed to serve as the initial trustees of the Company;
WHEREAS, pursuant to the terms of the Original Declaration of Trust,
such individuals have been replaced as trustees by vote of the Shareholders by
Martin L. Edelman, Gary R. Garrabrant, Craig M. Hatkoff, John R. Klopp, Sheli Z.
Rosenberg, Lynne B. Sagalyn and Samuel Zell;
WHEREAS, the holders of no less than sixty-six and two-thirds percent
(66-2/3%) of the outstanding common shares of the Company entitled to vote,
desiring to amend and restate the Original Declaration of Trust, have approved
the amendment and restatement of the Original Declaration of Trust as set forth
herein, including without limitation changing the name of the Company from
"California Real Estate Investment Trust" to "Capital Trust"; and
WHEREAS, the Board and the Shareholders desire that the Company
qualify as an "association" taxable as a corporation under the Code, so long as
such qualification, in the opinion of the Board, is advantageous to the
Shareholders, and cease qualifying as a "real estate investment trust" under the
Code;
D E C L A R A T I O N
NOW, THEREFORE, in order to declare the terms and conditions upon
which the Company is to be created, continued and operated and the terms and
conditions upon which the proportionate share and interest of each Shareholder
thereof is to be determined, as well as the terms and conditions under which
property is to be held therein, the Trustees hereby declare that they will hold
all investments of every type and description which they may acquire as such
Trustees, together with the proceeds thereof, in trust, to manage, improve, hold
and dispose of the same for the benefit of the holders of record from time to
time of the Shares issued and to be issued hereunder, and in the manner and
subject to the provisions hereof, to wit:
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ARTICLE I
DEFINITIONS
Section 1.1 "Aggregated Transferor". The phrase "Aggregated
Transferor" of a Person shall mean any other Person other than the Company who
previously held Voting Shares of the Company now held by such Person.
Section 1.2 "Board". The word "Board" shall mean the board of trustees
of the Company established pursuant to Section 8.3.
Section 1.3 "Business Day". The phrase "Business Day" shall mean any
day other than a Saturday, Sunday or a day on which banking institutions in the
City of New York, New York are authorized or obligated by law or executive order
to close.
Section 1.4 "By-Laws". The word "By-Laws" shall mean the By-Laws of
the Company as adopted, and as amended and restated from time to time, by the
Board pursuant to Section 8.2(m) and Section 8.9 hereof, which By-Laws are
incorporated herein by reference and shall form a part of the governing
instrument of the Company.
Section 1.5 "Certificate of Designation". The phrase "Certificate of
Designation" shall mean a certificate of designation, preferences and rights
establishing a class or series of preferred shares pursuant to Section 6.1.
Section 1.6 "Class A Common Shares". The phrase "Class A Common
Shares" shall mean the class A common shares, par value $1.00 per share, of
beneficial interests in the Company, having the designations and rights,
qualifications, limitations and restrictions set forth in this Declaration.
Section 1.7 "Class A Preferred Shares". The phrase "Class A Preferred
Shares" shall mean the class A 9.5% cumulative convertible preferred shares, par
value $1.00 per share, in the Company established pursuant to the Certificate of
Designation of the class A 9.5% cumulative convertible preferred shares and the
class B 9.5% cumulative convertible non-voting preferred shares adopted pursuant
to Section 6.2.
Section 1.8 "Class B Common Shares". The phrase "Class B Common
Shares" shall mean the class B common shares, par value $1.00 per share, in the
Company, having the designations and rights, qualifications, limitations and
restrictions set forth in this Declaration.
Section 1.9 "Class B Preferred Shares". The phrase "Class B Preferred
Shares" shall mean the class B 9.5% cumulative convertible non-voting preferred
shares, par value $1.00 per share, in the Company established pursuant to the
Certificate of Designation of the class A 9.5% cumulative convertible preferred
shares and the class B 9.5% cumulative convertible non-voting preferred shares
adopted pursuant to Section 6.2.
Section 1.10 "Common Shares". The phrase "Common Shares" shall mean,
collectively, the Class A Common Shares and the Class B Common Shares.
Section 1.11 "Conversion Date". The phrase "Conversion Date" is
defined in Section 5.5(b).
Section 1.12 "Conversion Notice". The phrase "Conversion Notice" is
defined in Section 5.5(b).
Section 1.13 "Corporations Commissioner". The phrase "Corporations
Commissioner" shall mean the Commissioner of Corporations of the State of
California or his or her authorized representatives.
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<PAGE>
Section 1.14 "Declaration" and "Declaration of Trust". The word
"Declaration" and the phrase "Declaration of Trust" shall mean this document as
it may from time to time be supplemented, amended or modified pursuant to the
provisions hereof.
Section 1.15 "File for Record". The phrase "File for Record" shall
mean to file for record in the office of the county recorder for the county in
which the Company maintains its principal office, and in the offices of the
recorders for such other places as the Board may, from time to time, designate.
Section 1.16 "GAAP". The phrase "GAAP" shall mean those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and which are consistently applied for
all periods after the date hereof so as to properly reflect the financial
condition, results of operations and changes in financial position of any
Person, except that any accounting principle or practice required to be changed
by such Accounting Principles Board or Financial Accounting Standards Board (or
other appropriate board or committee of such Boards) in order to continue as a
generally accepted accounting principle or practice may be so changed.
Section 1.17 Internal Revenue Code". The phrase "Internal Revenue
Code" shall mean the United States Internal Revenue Code of 1986, as amended and
in effect from time to time (or any corresponding provision of succeeding law).
Section 1.18 "Person". The word "Person" shall mean an individual, a
corporation, a partnership, a limited liability company, a joint venture, an
association, a joint-stock company, a trust, a business trust, a government or
any agency or any political subdivision, any unincorporated organization or any
other entity.
Section 1.19 "Preferred Shares". The phrase "Preferred Shares" shall
mean the Class A Preferred Shares, the Class B Preferred Shares and such other
shares of the Company created pursuant to Section 6.1.
Section 1.20 "Shares". The word "Shares" shall mean the Common Shares
and the Preferred Shares, collectively.
Section 1.21 "Shareholders". The word "Shareholders" shall mean the
holders of record of the Company's outstanding Shares.
Section 1.22 "Subsidiary". The phrase "Subsidiary" shall mean (a) any
corporation 50% or more of the voting securities of which is owned, directly or
indirectly, by the Company, or (b) any other Person whose accounts are required
under GAAP to be included in the Company's consolidated financial statements.
Section 1.23 "Trustees". The word "Trustees" shall mean the trustees
of the Company elected from time to time as provided in Article VIII hereof.
Section 1.24 "Voting Preferred Shares". The phrase "Voting Preferred
Shares" shall mean the Class A Preferred Shares and such other shares of the
Company created pursuant to Section 6.1 and designated by the Board at such time
as Shares entitled to vote.
Section 1.25 "Voting Shares". The phrase "Voting Shares" shall mean,
collectively, the Class A Common Shares and the Voting Preferred Shares.
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<PAGE>
ARTICLE II
THE COMPANY
Section 2.1 Name. The name of the Company is "Capital Trust," and so
far as may be practicable the Board shall conduct the Company's activities,
execute all documents and sue or be sued under that name, which name shall refer
to the Company and the Trustees in their capacity as trustees, and not
individually or personally, and shall not refer to the officers or Shareholders
of the Company or to the agents or employees of the Company or of such Trustees.
Should the Board determine that the use of such name is not practicable, legal
or convenient, the Board may use such other designation or they may adopt such
other name for the Company as they deem proper and the Company may hold property
and conduct its activities under such designation or name.
Section 2.2 Principal Office. The Company shall maintain its principal
office at 885 Third Avenue, New York, New York 10022. Such office may be changed
from time to time by the Board. The Company may have additional business
addresses as the Board may determine from time to time.
Section 2.3 Purpose. The purpose of the Company shall be, as
determined from time to time by the Board, to engage in any lawful business or
activity for which a trust may be organized under the laws of the State of
California.
Section 2.4 No Partnership Relationship. The Company shall be a common
law trust under the laws of the State of California. The Company is not intended
to be, and shall not be deemed to be, and shall not be or elect to be treated
as, a general partnership, limited partnership, joint venture or joint stock
company. The Shareholders shall be beneficiaries and their relationship to the
Trustees shall be solely in that capacity in accordance with the rights
conferred upon them hereunder. Nothing contained herein or in any Share
certificate, and no act done or any writing or agreement made during the
continuance of the Company, shall be construed as, or have the effect of
constituting the Trustees, the Shareholders or any of them or any other Person,
co-partners or otherwise members of any association.
Section 2.5 Amendment and Restatement of Original Declaration of
Trust. This Declaration of Trust amends and restates in its entirety the
Original Declaration of Trust with respect to the Company.
ARTICLE III
INVESTMENT POLICY
Section 3.1 General Policy. The Board shall from time to time
establish by resolution or in the By-Laws of the Company policies to govern the
investment and reinvestment of monies and other property held in the trust
estate. Any such investment policies may contain prohibitions or restrictions
upon certain types of investments.
Section 3.2 Maintenance of Assets. The Board, on behalf of the
Company, shall have the authority, itself or through officers, agents or
independent contractors, to incur all expenses and make all expenditures from
Company assets necessary or desirable for the protection, improvement,
maintenance, repair, alteration, efficient operation or ready marketability of
any asset of the Company. All such expenses shall be paid or reimbursed from the
assets of the Company.
Section 3.3 Disposition or Encumbrance of Assets. The Board shall have
full discretion in retaining, selling, exchanging, financing or encumbering any
asset of the Company, or any interest in such asset.
Section 3.4 Use of Brokers and Appraisers. Subject to the provisions
of Section 3.7 hereof, the Board may employ at the expense of the Company the
services of any Person, including without limitation any real estate or
securities broker, for the purpose of appraising, acquiring, financing,
encumbering or disposing of assets of the Company.
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Section 3.5 Management of Company Property. Subject to the provisions
of Section 3.7 hereof, whenever any property of the Company shall require active
management, such services shall be provided for reasonable compensation by a
contractor selected for such purpose by the Board from among qualified Persons.
The Board shall not perform such services.
Section 3.6 The Company's Right to Borrow Funds. The Company may, in
the discretion of the Board, borrow funds from institutional lenders, banks and
other lenders through the issuance of commercial paper, notes, debentures, bonds
and other debt obligations of any kind and nature whatsoever (which may be
convertible into Shares or other equity interests or be issued together with
warrants to acquire Shares or other equity interests), and may grant security
interests in or otherwise encumber any Company assets or provide Company
guarantees in connection therewith.
Section 3.7 Transactions with Related Parties. (a) No contract or
transaction between the Company and one or more of its Trustees, officers or
Shareholders, or between the Company and any other Person in which one or more
of its Trustees, officers or Shareholders are directors, officers or trustees,
or have a financial interest, shall be void or voidable solely for this reason,
or solely because the Trustee or officer is present at or participates in the
meeting of the Board or any committee thereof which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if:
(i) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
Board or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested Trustees, even though the disinterested
Trustees be less than a quorum; or
(ii) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
Shareholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the Shareholders; or
(iii) the contract or transaction is fair as to the Company as of
the time it is authorized, approved or ratified, by the Board, a
committee of the Board or the Shareholders.
Interested Trustees may be counted in determining the presence of a quorum at a
meeting of the Board or of a committee which authorizes the contract or
transaction.
(b) The Board or any committee thereof shall be entitled in their
discretion to retain, at the Company's expense, independent appraisers,
investment bankers, legal counsel, accountants and other professional
consultants or advisors to assist them in their determination as described in
paragraph (a) above.
(c) No Shareholder shall have any right, by virtue of this Agreement or
otherwise, to share or participate in or to approve any other investments or
activities of any other Shareholder, Trustee or employee or the income or
proceeds derived therefrom. No Shareholder, Trustee or employee shall be
obligated to offer or bring to the attention of the Company or the Board any
business investment or opportunity, whether or not within the scope of the
Company's purposes. Any Shareholder, Trustee or employee may at any time own,
invest in or manage any business investment or opportunity, whether or not
competitive with the Company or otherwise within the scope of the Company
purpose. No Shareholder, Trustee or employee shall have any restriction on
competing with the Company (except as may be specifically provided for in a
written agreement between the Company and such Trustee, Shareholder or employee)
or any obligation or responsibility to disclose, account for or offer any
investment or opportunity to the Company or its Shareholders, and the Company
and its Shareholders shall have no rights or interests therein.
ARTICLE IV
CLASSES OF SHARES; DESIGNATIONS, PREFERENCES, ETC.; SHAREHOLDERS
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Section 4.1 Number of Shares; Classes. (a) The total number of Common
Shares and Preferred Shares which may be issued by the Board shall not be
limited.
(b) There shall be four classes of shares of beneficial interest: the
Class A Common Shares, the Class B Common Shares, the Class A Preferred Shares
and the Class B Preferred Shares; provided, however, that the Board may
establish additional classes or series of Preferred Shares as set forth in
Section 6.1. All Common Shares, the Class A Preferred Shares and the Class B
Preferred Shares shall be of one dollar ($1.00) par value.
(c) Effective on the date hereof, each Common Share of beneficial
interest, $1.00 par value, of the Company, issued and outstanding immediately
prior to the date hereof (the "Old Common Shares") shall be reclassified as and
changed into one (1) validly issued, fully paid, and non-assessable Class A
Common Share. Each certificate that theretofore represented an Old Common Share
or Old Common Shares shall thereafter represent that number of Class A Common
Shares into which the Old Common Share or Old Common Shares represented by Such
certificate shall have been reclassified. Each record holder of a share
certificate or certificates that theretofore represented an Old Common Share or
Old Common Shares shall receive, upon surrender of such certificates or
certificates, a new certificate or certificates evidencing and representing the
number of Class A Common Shares to which such record holder is entitled.
Section 4.2 Designations, Preferences, etc. The designations,
preferences, powers, qualifications and special or relative rights or privileges
of the Common Shares and Preferred Shares of the Company shall be as set forth
below in Article V with respect to Common Shares and in Certificates of
Designation adopted pursuant to Article VI with respect to Preferred Shares.
Section 4.3 Shareholder's Interest in the Company. The interest in the
Company of each Shareholder consists of his or her right to enforce the
performance of the Company, including the right to participate in distributions
of the Company's assets, as provided in this Declaration of Trust and any
Certificate of Designation. Such interest is personal property. During the
continuation of the Company's business, no Shareholder or his or her legal
representative or successor shall be entitled to a partition of the Company's
property or, except as herein provided, to an accounting, nor shall the Company
be in any manner affected by the death, insanity or bankruptcy of any
Shareholder, or by the transfer of any Share or Shares of the Company.
ARTICLE V
COMMON SHARES
Section 5.1 Common Shares; Identical Rights. Except as expressly
provided otherwise in this Article V or as required by law, all Common Shares
shall be identical and shall entitle the holders thereof to the same voting,
dividend or distribution, liquidation and other rights.
Section 5.2 Dividends. Subject to any preferences which may be granted
to holders of Preferred Shares, the Board may cause dividends to be declared and
paid on outstanding Common Shares out of funds legally available therefor, at
such times, in such amounts and from such sources, whether income, surplus,
capital or any combination thereof, as they in their discretion may determine.
When, as and if such dividends are declared by the Board, whether payable in
cash, property or securities of the Company, the holders of Common Shares shall
be entitled to share equally in, and to receive in accordance with the number of
Common Shares held by each such holder, all such dividends, except that if
dividends are declared that are payable in Common Shares, such dividends shall
be payable at the same rate on each class or series of Common Shares and shall
be payable only in Class A Common Shares to holders of Class A Common Shares and
in Class B Common Shares to holders of Class B Common Shares. The Board,
pursuant to Section 7.3, may fix a record date for the determination of holders
of Common Shares entitled to receive such dividend.
Section 5.3 Liquidation Rights. In the event of the termination of the
Company pursuant to Section 12.2, or upon the distribution of its assets, after
the payment in full or the setting apart for payment to all creditors of the
Company of the amounts to which they shall be entitled and subject to such
preferential amounts, if any, to which the
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holders of Preferred Shares at the time outstanding shall be entitled, the
remaining assets of the Company available for payment and distribution to
holders of Common Shares shall, subject to any participating or similar rights
of Preferred Shares at the time outstanding, be distributed ratably, in
accordance with the number of Common Shares held by each such holder, equally
among the holders of Common Shares at the time outstanding.
Section 5.4 Voting Rights. (a) The Class B Common Shares shall not
have voting rights and shall not be counted in determining the presence of a
quorum.
(b) Except as otherwise required by law or provided in Section 5.4(a)
or Section 8.3(c), and subject to the special voting rights of any outstanding
Voting Preferred Shares, the approval of all matters brought before the
Shareholders shall require the affirmative vote of the holders of a majority in
voting power of the Voting Shares (including the Class A Common Shares) that are
present in person or represented by proxy and voting as a single class. Each
Voting Share shall entitle the holder thereof to such voting rights as are
specified in this Section 5.4 or, with respect to a Voting Preferred Share, in
the Certificate of Designation with respect to such Voting Preferred Share.
(c) Notwithstanding anything to the contrary in this Section 5.4 or any
Certificate of Designation, any Voting Shares owned, directly or indirectly, by
the Company or any of its Subsidiaries shall not have voting rights hereunder
and shall not be counted in determining the presence of a quorum.
Section 5.5 Conversion Rights.
(a) Each Class A Common Share shall be convertible at the option of the
holder thereof at any time and from time to time into one fully paid and
nonassessable Class B Common Share. Subject to delivery of the certification
described in Section 5.5(b) below, each Class B Common Share shall be
convertible at the option of the holder thereof at any time and from time to
time into one fully paid and nonassessable Class A Common Share.
(b) In order to exercise the conversion right, the holder of any Common
Shares to be converted in whole or in part shall surrender the certificate or
certificates evidencing such Common Shares to the Company and shall give written
notice to the Company ("Conversion Notice") that the Shareholder elects to
convert such Common Shares or the portion thereof specified in said notice into
Class A Common Shares or Class B Common Shares, as specified by the Shareholder
in the Conversion Notice. The Conversion Notice shall also (i) state the name or
names (with address) in which the certificates for Common Shares shall be issued
and (ii) if Class B Common Shares are to be converted into Class A Common
Shares, contain a certification by the Shareholder that the Shareholder either
(a) will not, together with such Shareholder's Aggregated Transferors, upon the
issuance of such Class A Common Shares, own more than 4.9% of any class of
Voting Shares of the Company or (b) is not limited by the Bank Holding Company
Act of 1956, as amended, to holding no more than 4.9% of any class or series of
Voting Shares of the Company. Each certificate evidencing Common Shares
surrendered for conversion shall, unless the Shares issuable on conversion are
to be issued in the same name as the registration of such Common Shares, be duly
endorsed by, or be accompanied by instruments of transfer in form satisfactory
to the Company duly executed by, the Shareholder or its duly authorized
attorney. As promptly as practicable after receipt of a Conversion Notice and
surrender of the certificate or certificates evidencing the Common Shares
relating thereto, the Company shall issue and deliver to such Shareholder (or
upon the written order of such Shareholder) a certificate or certificates for
the number of full Common Shares issuable upon the conversion of such Common
Shares or portion thereof in accordance with the provisions of this Section
5.5(b). In the event that less than all the Common Shares represented by a
certificate are to be converted, the Company shall issue and deliver or cause to
be issued and delivered to (or upon the written order of) the Shareholder of the
Common Shares so surrendered, without charge to such Shareholder, a new
certificate or certificates representing a number of Common Shares equal to the
unconverted portion of the surrendered certificate. Each conversion shall be
deemed to have been effected on the date (the "Conversion Date") on which the
certificate or certificates evidencing such Common Shares shall have been
surrendered to the Company or its transfer agent and a Conversion Notice with
respect to such Common Shares shall have been received by the Company, as
described above. Any Person in whose name any certificate or certificates for
Common Shares shall be issuable upon conversion shall be deemed to have become
the holder of record of the Common Shares represented thereby on the Conversion
Date; provided, however, if the certificate or certificates evidencing Common
Shares are surrendered on any date when the Share transfer books of the Company
shall be closed, the
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Shareholder shall constitute the Person in whose name the certificates are to be
issued as the record holder thereof for all purposes until the next succeeding
day on which such Share transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such certificate or
certificates shall have been surrendered. No payment or adjustment will be made
for dividends or other distributions with respect to any Common Shares issuable
upon conversion of Common Shares as provided herein.
(c) The issuance of Share certificates upon conversion of Common Shares
shall be made without charge to the converting Shareholder for any tax in
respect of the issuance thereof.
(d) The Company covenants that all Common Shares which may be issued
upon conversion of Common Shares will upon issuance be validly issued, fully
paid and nonassessable by the Company and free from all taxes, liens and charges
with respect to the issuance thereof.
Section 5.6 Stock Splits, etc. The Company shall not in any manner
subdivide or combine (by any stock split, reclassification, stock dividend,
recapitalization, consolidation or otherwise) any outstanding class or series of
Common Shares unless all classes and series of outstanding Common Shares shall
be subdivided or combined proportionately and in the same manner.
Section 5.7 Reacquired Shares. Any Common Shares which are converted,
purchased, redeemed or otherwise acquired by the Company shall be retired and
canceled by the Company promptly thereafter.
Section 5.8 Preferences, Appraisals, Redemption and Preemptive Rights.
Holders of Common Shares shall not be entitled to preferences, appraisals or
preemptive rights of any kind. No Shareholder may demand that the Company or the
Trustees redeem his or her Common Shares.
Section 5.9 Nonassessability of Common Shares. After the payment of
subscription price therefor, no assessment shall ever be made upon the Common
Shares of the Company.
ARTICLE VI
PREFERRED SHARES
Section 6.1 Preferred Shares. (a) The Board is hereby expressly
authorized at any time, and from time to time, to provide for the issuance of
Preferred Shares in one or more classes or series, with such rights, powers,
preferences, privileges and restrictions as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof adopted by the Board,
and as are not otherwise stated and expressed in this Declaration of Trust,
including (without limiting the generality thereof) the following as to each
such class or series:
(i) The distinctive designation of such class or series, and the
number of Preferred Shares of such class or series
authorized;
(ii) The dividends payable with respect to such class or series,
the rates or basis for determining such dividends, and
conditions and dates upon which such dividends shall be
payable, the preferences, if any, of such dividends over, or
the relation of such dividends to, the dividends payable on
any other class or series of securities of the Company,
whether such dividends shall be noncumulative or cumulative,
and, if cumulative, the date or dates from which such
dividends shall be cumulative;
(iii) Whether Preferred Shares of such class or series shall be
redeemable at the option of the Company or upon the happening
of a specified event, and, if redeemable, whether for cash,
property or rights, including securities of the Company, the
times, prices or rates and any adjustment and other terms and
conditions of such redemption;
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(iv) The terms and amount of any sinking, retirement or purchase
fund provided for the purchase or redemption of Preferred
Shares of such class or series;
(v) Whether or not Preferred Shares of such class or series shall
be convertible into or exchangeable for other securities of
the Company, at the option of the Company or of the holder of
such Preferred Shares or both, or upon the happening of a
specified event, and, if provision be made for such conversion
or exchange, the terms, prices, rates, adjustments and any
other terms and conditions thereof;
(vi) The extent, if any, to which the holders of the Preferred
Shares of such class or series shall be entitled to vote with
respect to the election of Trustees or on other issues,
including without limitation the extent, if any, to which such
holders shall be entitled, voting as a class or series or
jointly with other classes or series, to elect one or more
Trustees upon the happening of a specified event or otherwise,
or entitled to multiple votes per Preferred Share;
(vii) The restrictions, if any, on the issue or reissue of
Preferred Shares of such class or series or any other classes
or series;
(viii) The extent, if any, to which the holders of the Preferred
Shares of such class or series shall be entitled to
preemptive rights;
(ix) The rights of the holders of the Preferred Shares of such
class or series upon the termination of the Company or any
distribution of its assets, including without limitation any
preferential amount payable upon such Preferred Shares or any
other rights of holders of such Preferred Shares in the event
of the liquidation, dissolution or winding up of the Company
or the distribution of its assets; and
(x) The terms of any other provisions to be applicable to such
Preferred Shares and such other powers, preferences, rights,
limitations or restrictions as the Board shall determine.
(b) Before the Company shall issue any Preferred Shares of any
class or series, a Certificate of Designation setting forth the resolution or
resolutions of the Board fixing the voting powers, designations, preferences and
rights of such class or series, the qualifications, limitations or restrictions
thereof, and the number of Preferred Shares of such class or series authorized
by the Board, shall be signed and acknowledged by the officer or officers of the
Company designated by the Board pursuant to resolution of the Board and filed
among the records of the Company. Except to the extent otherwise expressly
provided in any such resolution or resolutions creating such class or series,
the number of Preferred Shares of the classes or series authorized by such
resolution or resolutions may be increased or decreased (but not below the
number of Preferred Shares of such class or series then outstanding) and any
other amendment to such resolution or resolutions may be effected, by a
Certificate of Designation, setting forth a resolution or resolutions of the
Board authorizing such increase, decrease or amendment, signed and acknowledged
by the officer or officers of the Company designated by the Board. The Board
shall cause notice of the adoption or amendment of any Certificate of
Designation and a copy thereof to be mailed to Shareholders within 90 days
following such adoption or amendment. Except to the extent otherwise expressly
provided in the resolution or resolutions creating such class or series of
Preferred Shares, any such amendment may, without limitation, cancel or
otherwise affect the right of the holders of Preferred Shares of such class or
series to receive dividends which have accrued but have not been declared.
Section 6.2 The Class A Preferred Shares and the Class B Preferred
Shares. The Class A Preferred Shares and the Class B Preferred Shares shall have
the rights, preferences, privileges and restrictions stated and expressed in the
Certificate of Designation of the Class A Preferred Shares and the Class B
Preferred Shares adopted by resolution or resolutions of the Board providing for
the issue thereof, and signed and acknowledged by the officer or officers of the
Company designated by the Board, as the same may be amended or modified from
time to time.
Section 6.3 Nonassessability of Preferred Shares. After payment of the
subscription price therefor, no assessment shall ever be made upon the Preferred
Shares of the Company.
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Section 6.4 Recording of Certificates of Designation. Following the
adoption of any Certificate of Designation, if deemed advisable by the Board,
the officer or officers of the Company designated by the Board shall execute
such Certificate of Designation and File for Record such Certificate of
Designation.
ARTICLE VII
MEETINGS OF SHAREHOLDERS
Section 7.1 Annual Meeting. The annual meeting of the Shareholders
shall be held on a Business Day during the fifth or sixth calendar month of the
Company's fiscal year, between 9:00 a.m. and 10:00 p.m., at New York, New York,
or at such other location as the Board shall select. Notice of the date, hour
and place of the meeting as determined by resolution of the Board shall be
mailed to Shareholders at least 14 days before the day of the meeting.
Section 7.2 Special Meetings. Special meetings of Shareholders may be
called at any time and place by the Board and the Board shall cause a special
meeting to be called upon receipt of the written request of the holders of
thirty-three and one-third percent (33-1/3%) of the outstanding Voting Shares
entitled to vote on any matter to be voted on at such special meeting, which
request shall specify the purpose or purposes for which such meeting is to be
called. If for any reason an annual meeting of Shareholders as herein provided
for shall be omitted, a special meeting of Shareholders may subsequently be held
in lieu thereof and the business of the annual meeting may be transacted
thereat.
Section 7.3 Record Date. The Board may, without closing the transfer
books, fix a date not more than 60 days prior to the date of any meeting of
Shareholders or dividend payment as a record date for the determination of
Shareholders entitled to vote at such meeting and any adjournment thereof, or to
receive such dividend. Any Person who is a registered Shareholder of Voting
Shares at the time so fixed shall be entitled to vote at such meeting or any
adjournment thereof, and any Person who is a registered Shareholder at the time
so fixed shall be entitled to receive such dividend, even though he or she has
since that date disposed of his or her Shares, and no Shareholder becoming such
after that date shall be so entitled to vote at such meeting or any adjournment
thereof or to receive such dividend.
Section 7.4 Voting of Shares. (a) Each Voting Share shall be entitled
to the vote specified in Section 5.4; provided, that only holders of record as
of the record date for the meeting shall be entitled to vote at any meeting of
Shareholders.
(b) Whenever the vote or written consent of Shareholders is required
or permitted under this Declaration, such vote or consent may be given either in
person or by proxy. The Board may solicit such proxies from the holders of
Voting Shares or any of them in any matter requiring or permitting the
Shareholders' vote or written consent. No proxy for any meeting of Shareholders
shall be effective unless such proxy shall have been received in the office of
the Company, or such other location designated by the Board and indicated in the
material soliciting the proxies, for verification prior to the meeting.
(c) When a Voting Share entitled to vote is held jointly by several
Persons, any one of them may vote at any meeting in person or by proxy with
respect to such Voting Share, but if more than one of them shall be present at
such meeting in person or by proxy and such joint owners or their proxies so
present disagree as to any vote to be cast, no vote shall be received with
respect to such Voting Share.
Section 7.5 Inspectors of Elections. (a) The Board, in advance of any
Shareholders' meeting, may appoint one or more inspectors to act at the meeting
or any adjournment thereof. If inspectors are not so appointed, the person
presiding at a Shareholders' meeting may, and on the request of any Shareholder
entitled to vote thereat shall, appoint at least one inspector. In case any
appointed inspector fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at that meeting by
the person presiding thereat. Each inspector, before entering upon the discharge
of his or her duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his or her ability.
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(b) The inspectors shall determine the number of Shares outstanding,
the number of Shares represented at the meeting, the existence of a quorum and
the validity and effect of proxies; receive votes, ballots or consents; hear and
determine all challenges and questions arising in connection with the right to
vote; count and tabulate all votes, ballots or consents; determine the result;
and do such acts as are necessary to conduct the election or vote with fairness
to all holders of Voting Shares. On request of the person presiding at the
meeting or any Shareholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, question or matter determined by them and
execute a certificate of any fact found by them. Any report or certificate made
by them shall be prima facie evidence of the facts stated and of the vote as
certified by them.
Section 7.6 Shareholder List. The officer who has charge of the Share
ledger of the Company shall, at least ten days before each meeting of
Shareholders, prepare a complete alphabetical address list of the Shareholders
entitled to vote at the ensuing election, with the number of Voting Shares held
by each. Said list shall be open to the examination of any Shareholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall be available for inspection at the meeting.
Section 7.7 Quorum. A majority of the outstanding Voting Shares
entitled to vote on any matter to be voted on at such meeting represented in
person or by proxy shall constitute a quorum at any such meeting. The holders of
Voting Shares present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Shareholders to leave less than a quorum. In the absence of
a quorum, any meeting of Shareholders may be adjourned from time to time, up to
and including the 45th day following the originally noticed meeting date by an
affirmative vote of a majority of the Voting Shares entitled to vote and
represented in person or by proxy at the meeting.
Section 7.8 Notice. Notice of all meetings of Shareholders shall be
given at the direction of the Board by the officer or officers authorized by the
Board, and shall be mailed not less than 14 days nor more than 60 days before
the day of the meeting to each Shareholder at his or her address as given in the
register, or lacking such address, to such Shareholder addressed to the
principal office of the Company. Any adjourned meeting may be held as adjourned,
without further notice.
Section 7.9 Business Transacted. No business shall be transacted at
any special meeting of Shareholders unless notice of such business have been
given in the call for the meeting.
Section 7.10 Action at a Meeting. Whenever any action is to be taken
by the Shareholders, it shall, except as otherwise required by this Declaration,
provisions of the Certificate of Designation relating to any class or series of
Voting Preferred Shares which may at the time be outstanding, or by law, be
authorized by the affirmative vote of a majority of the votes cast at a meeting
of Shareholders at which a quorum is present by holders of Voting Shares
entitled to vote thereon.
Section 7.11 Action Without a Meeting. Any action which may be taken
at any meeting of Shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding Voting Shares
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all Shares entitled to vote
thereon were present and voted. Prompt notice (but in any event within 90 days)
of the taking of the action without a meeting by less than unanimous written
consent shall be given to those Shareholders who have not consented in writing.
Section 7.12 Effect of Action. Except as otherwise expressly provided
by law, this Declaration of Trust or the provisions of the Certificate of
Designation relating to any class or series of Voting Preferred Shares which may
at the time be outstanding, no action taken by the Shareholders at any meeting
shall in any way bind the Board in its management of the Company.
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ARTICLE VIII
TRUSTEES; MEETINGS OF TRUSTEES
Section 8.1 Authority of Trustees. Except as otherwise expressly
provided in this Declaration of Trust or a Certificate of Designation, the
business, affairs and assets of the Company shall be entrusted to the exclusive
management and control of the Trustees. The Trustees shall exercise their powers
hereunder for the exclusive benefit of the Shareholders.
Section 8.2 Powers of Trustees. The Trustees shall have full and
absolute power, control and authority over all of the Company's assets held by
or for them hereunder, and over the business and affairs of the Company, to the
same extent as if they were the sole owners of such assets and such business in
their own right, subject only to the limitations expressly stated in this
Declaration of Trust or a Certificate of Designation. Without limitation of the
generality of the foregoing, the Trustees shall have power:
(a) To design and adopt a seal of the Company, and to change
the same from time to time; to locate and relocate the principal office
of the Company; and from time to time to change the name of the
Company, and under such name to make and execute contracts and all
kinds of instruments, conduct business, acquire and convey real or
personal property, and sue or be sued;
(b) To solicit proxies of the Shareholders; to declare and
effect Share dividends and splits; and when good reason appears
therefor, to require that outstanding certificates be handed in to the
Company in exchange for new certificates;
(c) To issue from time to time, without the necessity of a
prior offering thereof to existing Shareholders (subject to the
provisions of the Certificate of Designation relating to any class or
series of Preferred Shares that may then be outstanding), Shares of the
Company in addition to any then outstanding, issuing the same to such
party or parties, for such property or consideration, at such time or
times, and on such terms as the Board deems best, and in so doing, to
allow or eliminate fractional Shares, in their discretion;
(d) To acquire and dispose of assets, and otherwise conduct
the business of the Company; and to cause to be organized or assist in
organizing, under the laws of any jurisdiction, such corporations,
partnerships, limited liability companies, trusts, associations or
other organizations having such rights, powers and discretion as they
deem desirable for purposes of the Company;
(e) To take out policies of insurance at the expense of the
Company, including without limitation liability, life, fire and
casualty insurance, including Workman's Compensation, covering such
Persons, property and contingencies and in such amounts as they deem
proper;
(f) To lease to or from others for a term extending beyond the
possible termination of the Company; to acquire and deal absolutely
with property of any description, real or personal; and to lend and
borrow money and incur indebtedness for the purposes of the Company,
and cause to be executed and delivered therefor promissory notes,
bonds, debentures, deeds of trust, mortgages, pledges, hypothecations
or other evidences of debt and securities therefor;
(g) To exercise all rights, powers and privileges relating to
the ownership of any stock, bonds or other securities forming part of
the Company's assets;
(h) To employ such assistance, at such compensation, as they
deem expedient in the transaction of the
business of the Company;
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(i) To determine in their discretion whether any moneys,
securities or other properties of the Trust are to be considered as
principal or income, and in what manner any expenses or disbursements
are to be charged as between principal and income, or as between
earnings, surplus and capital, as the case may be;
(i) To determine the Fiscal Year and the accounting
procedures of the Company, and to change the same from time to time;
(j) To invest the assets of the Company, and to distribute or
retain the income of the Company in a manner that will terminate the
status of the Company as a real estate investment trust under the Code
or to file an election with the Internal Revenue Service that
terminates such status;
(k) To compromise or settle claims of or against the Company;
and to take such action, legal or otherwise, as appears to them
necessary or desirable in the interests of the Company or the
Shareholders, and in so doing to pay the expenses thereby incurred in
good faith, including counsel fees, from the funds of the Company;
(l) To determine the proper interpretation of any provision
of this Declaration of Trust, the By-Laws and any Certificate of
Designation;
(m) To adopt, implement and from time to time amend or restate
By-Laws of the Company relating to the business and organization of the
Company that are not inconsistent with the provisions of this
Declaration; and
(n) To do all acts and undertake all things which in their
judgment are necessary, convenient or appropriate to promote the
purposes of the Company, although such acts or things are not
specifically mentioned in this Declaration.
Section 8.3 Number, Term and Qualifications. (a) In managing the
business, affairs and assets of the Company, the Trustees shall act as a Board.
The full Board shall consist of no less than three Trustees and no more than 21
Trustees, the number to be established by resolution of the Board from time to
time. Ownership of all trust assets, legal, equitable or both, shall be vested
jointly in those Trustees in office at any time. A successor Trustee shall
succeed immediately upon accepting office to the interest of his or her
predecessor without the necessity of any transfer or conveyance.
(b) Each Trustee shall hold office until the expiration of his or her
term and until the election and qualification of his or her successor. The term
of the Trustees shall expire at each annual meeting of the Shareholders
following the election of Trustees at such annual meeting. Trustees may be
reelected.
(c) Subject to the terms of Section 8.6 and the provisions of the
Certificate of Designation relating to any class or series of Preferred Shares
which may at the time be outstanding, Trustees shall be elected by a plurality
of the Voting Shares represented in person or by proxy at the annual meeting of
Shareholders. At all elections of Trustees, voting by Shareholders shall be
conducted under the non-cumulative method. Each Trustee so elected shall serve
until his or her term of office expires and until the election and qualification
of his or her successor. Each Trustee shall qualify following his or her
election, whether by the Shareholders or by the remaining Trustees, by filing a
notice of acceptance with the Board. The officers so designated by the Board
shall, from time to time when deemed necessary by the Board, execute and File
for Record an instrument which sets forth the then existing membership to the
Board.
Section 8.4 Resignations. Any Trustee may resign his or her office by
an instrument in writing signed by him and delivered to the Board, which
resignation shall take effect after such delivery and on the date indicated in
such instrument.
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Section 8.5 Removal of Trustees. Subject to the provisions of the
Certificate of Designation relating to any class or series of Preferred Shares
which may at the time be outstanding, a Trustee may be removed from office at
any time either:
(a) with or without cause by the vote or written consent of either (i)
a majority of the Trustees then in office and a majority of the outstanding
Voting Shares of the Company entitled to vote or (ii) sixty-six and two-thirds
percent (66-2/3%) of the outstanding Voting Shares of the Company entitled to
vote, or
(b) with cause by the vote or written consent of a majority of the
Trustees then in office.
Section 8.6 Newly Created Trusteeships and Vacancies. In the case of
the death or resignation of one or more Trustees, or vacancies occurring in the
Board for any reason, including newly created trusteeships resulting from an
increase in the number of Trustees, the vacancies so created may be filled by
the Trustee (if only one Trustee is then remaining) or a majority of the
Trustees remaining in office at the time, although less than a quorum exists,
and each new Trustee shall serve for the unexpired term of his or her
predecessor and until the election and qualification of his or her successor. No
vacancy in the Board shall operate to diminish the powers of the Trustee or
Trustees remaining in office. Upon the resignation or removal of any Trustee, or
his or her otherwise ceasing to be a Trustee, his or her interest as a Trustee
in all the Company's properties shall automatically cease and, without need for
any conveyancing document, shall vest in the remaining Trustees, but he or she
shall execute and deliver such documents as the remaining Trustees shall require
to confirm the conveyance of any of the Company's property held in his or her
name, and shall account to the remaining Trustees as they require for all
property which he or she holds as Trustee and shall thereupon be discharged as
Trustee.
Section 8.7 Compensation. The Trustees, the officers and every other
Person appointed, employed or otherwise engaged to assist in the execution of
the Company's business, shall receive such compensation from the assets of the
Company for their respective services to the Company as shall be fixed from time
to time by the Board.
Section 8.8 Committees. The Trustees may appoint one or more
committees from their number and delegate to such committees any of the powers
and authority of the Board in the management of the business, affairs and assets
of the Company, except the power to declare dividends and initiate amendments to
this Declaration.
Section 8.9 By-Laws. The Board may adopt and from time to time amend or
repeal by-laws for the conduct of its business and the business of the Company,
including, without limitation, the form of share certificates, mechanics of
share transfers, limitations upon the transferability of shares, and provisions
with respect to the exculpation and indemnification of Trustees, officers and
other parties by the Company. Such by-laws may also define the duties of the
Company's officers, agents, employees and representatives.
ARTICLE IX
OFFICERS
The Board may appoint such officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
power and perform such duties as shall be determined from time to time by the
Board. Officers of the Company shall be elected by the Board and shall hold
office until their successors are elected and qualify or until their earlier
resignation or removal. The officers shall be elected at the first meeting of
the Board after each annual meeting of the Shareholders. More than one office
may be held by the same person. The Board may delegate to any Trustee(s),
officer(s), employee(s) or agent(s) the authority to act on behalf of the
Company, including without limitation the authority to execute any contract,
agreement, document, conveyance, deed, deed of trust, mortgage, release or other
written instruments.
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<PAGE>
ARTICLE X
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
Subject to other requirements and restrictions of this Declaration of
Trust and the provisions of the Certificate of Designation relating to any class
or series of Preferred Shares which may at the time be outstanding, the Company
shall not be incorporated, merged into another entity, consolidated with one or
more entities into a new entity, reorganized as a new entity, liquidated or
dissolved, and all or substantially all of the assets of the Company shall not
be sold, leased, exchanged or otherwise disposed of, except in each case upon
the affirmative vote or written consent of a majority of the outstanding Voting
Shares of the Company entitled to vote, voting as a single class or series. Upon
any such approval of the holders of the Voting Shares, no approval of such
transaction by the Board shall be required.
ARTICLE XI
ACCOUNTING
Section 11.1 Standard. Unless otherwise determined by the Board, the
books and records of the Company shall be kept in conformity with GAAP.
Section 11.2 Inspection of Records. The records of the Company shall
be open for inspection by the Corporations Commissioner, who shall have the
right to make copies thereof or extracts therefrom. The Share register or a
duplicate thereof, the books of account, and minutes of proceedings of the
Shareholders and the Board and of executive committees of the Board, shall be
open to inspection at any reasonable time upon the written demand of any
Shareholder, made upon the Board, for a purpose reasonably related to his or her
interests as a Shareholder, and shall be exhibited at any time when required by
the demand at any Shareholders' meeting of ten percent of the Shares represented
at the meeting. Inspection by a Shareholder may be made in person or by agent or
attorney, and the right of such inspection includes the right to make extracts.
Each Trustee shall have the right at all reasonable times during his or her term
of office to inspect the records and property of the Company.
Section 11.3 Annual Audit. The Board shall cause to be prepared at
least annually, at the expense of the Company, a report of the Company's
operations, containing a balance sheet and a statement of income and an opinion
of an independent certified public accountant on the financial statements. Such
opinion shall be based on an examination of the books and records of the Company
which is not materially limited in scope and, unless otherwise determined by the
Board, is made in accordance with GAAP.
Section 11.4 Interim Reports. Interim reports, containing a current
balance sheet which may be unaudited, shall be prepared at least quarterly and
shall be furnished within a reasonable time after the close of the quarter to
each Shareholder.
ARTICLE XII
DURATION OF THE COMPANY
Section 12.1 Duration. The Company shall continue for the lives of the
following named children and grandchildren of the initial trustees, living on
the day of execution of the Original Declaration of Trust, to-wit: Phillip Allen
Bateman, Deborah Brown, Donald Gilson, Jr., Judy C. Inman, Gregory B. Jones,
James W. Jones, Steven E. Jones, Valerie Jones, Cherryl McClatchy, Julia
McClatchy, Leo A. McClatchy, Patricia O'Neil, Sean M. O'Neil, C. Frank Pratt,
Jr., C. Frank Pratt III, Paul D. Pratt, George Robert Thompson, Laraine M.
Thompson, Lynette F. Thompson, and for 20 years after the death of the last
survivor of them, and shall thereupon cease.
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<PAGE>
Section 12.2 Early Termination. This trust shall be irrevocable.
Subject to the provisions of the Certificate of Designation relating to any
class or series of Preferred Shares which may at the time be outstanding, the
business of the Company may be terminated or dissolved only upon the affirmative
vote or written consent of either (i) a majority of the Trustees then in office
and a majority of the outstanding Voting Shares of the Company or (ii) sixty-six
and two-thirds percent (66-2/3%) of the outstanding Voting Shares of the
Company.
Section 12.3 Procedure Upon Termination. Upon termination of the
Company, the Board shall cause such liquidation of the Company's assets as they
deem desirable, shall pay or make adequate provision for all liabilities of the
Company, whether present or contingent, shall pay to the holders of Preferred
Shares at the time outstanding such preferential amounts, if any, as such
holders shall be entitled, and shall distribute the remaining assets of the
Company, either in kind or in money or both, ratably to the holders of the
Common Shares at the time outstanding, subject to any participating or similar
rights of the Preferred Shares at the time outstanding.
ARTICLE XIII
AMENDMENTS
Section 13.1 Amendment Procedure. Any amendment to this Declaration of
Trust shall be in writing and, subject to the terms of Section 13.2 and the
provisions of the Certificate of Designation relating to any class or series of
Preferred Shares which may at the time be outstanding, shall require and shall
be effective upon the affirmative vote or written consent of either (i) a
majority of the Trustees then in office and a majority of the outstanding Voting
Shares of the Company, or (ii) sixty-six and two-thirds percent (66-2/3%) of the
outstanding Voting Shares of the Company.
Section 13.2 Amendments without Shareholder Approval. Notwithstanding
Section 13.1, a majority of the Trustees then in office may amend this
Declaration of Trust without the vote or consent of Shareholders to the extent
they deem it necessary to conform this Declaration of Trust to any other
applicable laws, rulings or regulations; provided, that the Trustees shall in no
event be liable for failing to so amend this Declaration of Trust. The Board
shall cause notice of any such amendment to be mailed to Shareholders within 90
days following such amendment.
Section 13.3 Recording Amendments. Following the adoption of any
amendment hereto, if deemed advisable by the Board, the officers of the Company
designated by the Board shall execute an instrument which sets forth such
amendment and File for Record such instrument.
ARTICLE XIV
EXCULPATION AND INDEMNIFICATION; LIMITATION OF LIABILITY;
RIGHT OF TRUSTEES AND OFFICERS TO OWN SHARES;
REPRESENTATIONS AND GUARANTEES
Section 14.1 Exculpation and Indemnification of Trustees, Officers and
Others. The Company may, to the full extent permitted by law, cause the Company
to limit the liability of and indemnify any and all Trustees, officers,
employees or agents from and against any and all expenses, liabilities or other
matters both as to action in his or her official capacity on behalf of the
Company and as to action in another capacity while holding such office, and
shall continue as to a Person who has ceased to be a Trustee, officer, employee
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such Person, as provided in any By-Law adopted by a majority
of the Board.
Section 14.2 Limitation on Liability of Shareholders, Trustees and
Officers; Insurance. (a) All Persons dealing with or having any claim against
the Trustees or any officer, agent or employee of the Company shall look only to
the Company for the payment of any debt, claim, obligation or damage, or of any
money or other thing that might become due or payable in any way, whether
founded upon contract, tort or otherwise, and no Shareholder shall be personally
or individually liable therefor. Each Shareholder shall be entitled to pro rata
indemnity from the Company's
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<PAGE>
assets if, contrary to the provisions hereof, such Shareholder is held to any
personal liability for any debt, claim, obligation or damage, or of any money or
other thing that might become due or payable in any way, whether founded upon
contract, tort or otherwise, of the Company.
(b) The Board shall maintain liability insurance for the protection of
the Company and those connected therewith, and cause any premiums therefor to be
paid from Company assets.
Section 14.3 Right of Trustees and Officers to Own Shares. Any
Trustee, officer, agent or employee may acquire, own, hold and dispose of Shares
in the Company, for his or her individual account, and may exercise all rights
of a Shareholder to the same extent and in the same manner as if he or she were
not a Trustee, officer, agent or employee.
Section 14.4 Representations and Guarantees. No officer, agent,
representative or employee of the Company or of any Trustee, nor anyone other
than the Board, has authority to make any representations or guarantees
concerning the Company; nor shall any Trustee or officer of the Company be
responsible for or with respect to the validity or sufficiency of this trust or
of the Share certificates issued hereunder; nor has any such officer, agent,
representative, employee or other Person any authority to change the terms and
conditions of this Declaration of Trust or any certificate issued hereunder, or
to bind the Company or its agents by any representation, statement, agreement or
interpretation, written or oral, not contained herein or in such certificate.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Fiscal Year. The fiscal year of the Company for financial
statement and Federal income tax purposes shall be the same and shall end on
December 31st, except as may be otherwise required by the Internal Revenue Code
or otherwise approved by resolution of the Board.
Section 15.2 Checks. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Company shall be signed by such officer(s) or agent(s) of the Company, and
in such manner, as shall be determined from time to time by resolution of the
Board.
Section 15.3 Successors in Interest. This Declaration of Trust shall
be binding upon and inure to the benefit of the undersigned Trustees and their
successors, assigns, heirs, distributees and legal representatives, and every
Shareholder and his or her successors, assigns, heirs, distributees and legal
representatives.
Section 15.4 Severability. If any provision of this Declaration of
Trust shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such jurisdiction and shall
not in any manner affect or render invalid or unenforceable such provision in
any other jurisdiction or any other provision of this Declaration of Trust in
any jurisdiction.
Section 15.5 California Laws Govern. This Declaration of Trust, its
provisions and all rights, powers, privileges, trusts, duties and obligations
hereunder and under all Share certificates, shall be governed by the laws of the
State of California and of the United States of America.
Section 15.6 Headings. The use of headings in this Declaration of
Trust is solely for convenience, and all such headings shall be disregarded in
the construction of its provisions.
Section 15.7 No Third-Party Reliance. Any act done by the Board or
under its authority shall, as to third parties dealing in good faith with the
Company, be conclusively deemed to be within the purposes of the Company and
within the powers and authority of the Person or Persons acting.
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<PAGE>
Section 15.8 Counterparts. This Declaration may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 15.9 Notice. No notice to the Board or any officer of the
Company shall be effective for any purpose unless given in writing, and until
the same is received. Any notice required or permitted by this Declaration or by
law to be given by the Board or by an officer or authorized agent of the
Company, shall be conclusively deemed to have been given when such notice is
enclosed in an envelope addressed to the proper Person at the last address shown
in the records of the Company, and such envelope is deposited in the United
States mail, postage prepaid; and the date of mailing shall be deemed the date
such notice is given. All distributions from the Company's assets may be made by
mailing the same in like manner.
Section 15.10 Agreement of Shareholders. Each of the Shareholders,
severally but not jointly, by becoming a Shareholder hereunder, hereby agrees
with the Trustees and their successors in office that he or she accepts and
agrees to, and shall be bound and governed by, the provisions, terms and
conditions of this Declaration, as amended from time to time in accordance with
Section 13.1 and Section 13.2 hereof, in the same manner as if he or she had
personally executed the same.
IN WITNESS WHEREOF, the undersigned individuals, comprising the
Chairman of the Board and the Secretary of the Company, have executed this
Amended and Restated Declaration of Trust as of this 15th day of July, 1997.
/s/ Samuel Zell
----------------------------
Chairman of the Board
/s/ Susan Obuchowski
-----------------------------
Secretary
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Exhibit 3.2
B Y - L A W S
OF
CAPITAL TRUST
a California business trust
______________________
Capitalized terms used in the following by-laws of Capital Trust, a
California business trust (the "Company"), and not otherwise defined have the
meaning set forth in the Amended and Restated Declaration of Trust of the
Company executed and in effect on July 15, 1997 following approval of the same
by the Shareholders at the Company's annual meeting of shareholders held on July
15, 1997 (as amended from time to time, the "Declaration of Trust").
ARTICLE I
MEETINGS OF TRUSTEES
Section 1.1 Place of Meetings. All meetings of the Board shall be held
at the principal office of the Company designated by a majority of the Board,
unless another location for a particular meeting is otherwise designated by the
Chairman of the Board, if any, or a majority of the Board.
Section 1.2 Quorum. A majority of the Trustees in office at any one
time shall constitute a quorum at any meeting of the Board.
Section 1.3 Notice. Meetings of the Board shall be held from time to
time upon the call of the Chairman of the Board, if any, or any two Trustees.
Notice of any meeting shall be given at least three days before the meeting.
Section 1.4 Action by Trustees. The vote of a majority of the Trustees
present at a meeting at which a quorum is present shall be the act of the Board.
Section 1.5 Action Without Meeting. No action of the Board shall be
effective without a meeting unless all Trustees then in office shall sign,
before or after such action is taken, a written consent to such action and
waiver of meeting; provided, however, that the lack of such consent and waiver
shall not be raised to defeat the rights of any third party who has in good
faith relied upon such action.
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473793.6
<PAGE>
Section 1.6 Telephonic Meeting. All or any one or more Trustees may
participate in a meeting of the Board or any committee thereof by means of
conference telephone or similar communications equipment by means of which all
participants can hear each other and participation in a meeting pursuant to such
communication shall constitute presence in person at such meeting.
Section 1.7 Use and Effect of Company Seal. The officer of the Company
designated by the Board shall have custody of the seal of the Company. As to any
Person relying thereon in good faith, the impression of the seal of the Company
upon a document or writing bearing the handwritten signature of such officer,
shall conclusively evidence that such document or writing was duly executed
pursuant to authority granted by the Board and the Declaration of Trust.
ARTICLE II
EXCULPATION AND INDEMNIFICATION
Section 2.1 Exculpation of Trustees, Officers and Others. (a) No
Trustee, officer, employee or agent of the Company shall be liable to the
Company or to any other Person for any act or omission except for his or her own
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
or his or her failure to act in good faith in the reasonable belief that his or
her actions are in the best interests of the Company.
(b) The Trustees, officers, employees and agents of the Company in
incurring any debts, liabilities or obligations, or in taking or omitting any
other action for or in connection with the Company are, and shall be deemed to
be, acting as Trustees, officers, employees or agents of the Company and not in
their own individual capacities. Notwithstanding any provision herein to the
contrary, no Trustee, officer, employee or agent of the Company shall be liable
for any debt, claim, demand, judgment, decree, liability or obligation of any
kind in tort, contract or otherwise of, against or with respect to the Company
arising out of any action taken or omitted for or on behalf of the Company, and
the Company shall be solely liable therefor and resort shall be had solely to
the assets of the Company for the payment or performance thereof.
Section 2.2 Indemnification and Reimbursement. (a) Any Person made a
party to any action, suit or proceeding or against whom a claim or liability is
asserted by reason of the fact that he, she, his or her testator or intestate
was or is a Trustee, officer, employee or agent of the Company or active in such
capacity on behalf of the Company shall be indemnified and held harmless by the
Company against judgments, fines, amounts paid on account thereof (whether in
settlement or otherwise) and
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473793.6
<PAGE>
reasonable expenses, including attorneys' fees, actually and reasonably incurred
by him in connection with the defense of such action, suit or proceeding or in
connection with any appeal therein, whether or not the same proceeds to judgment
or is settled or otherwise brought to a conclusion. Notwithstanding the above,
no Person shall be so indemnified or reimbursed for any claim, obligation or
liability which shall have been adjudicated to have arisen out of or been based
upon such Person's willful misfeasance, bad faith, gross negligence or reckless
disregard of duty or for his or her failure to act in good faith in the
reasonable belief that his or her action was in the best interests of the
Company. Any Person seeking indemnification under this Section 2.2 shall give
prompt notice to the Company of the claim, alleged liability, action, suit or
proceeding; provided, that the failure to give such notice shall not relieve the
Company of its obligations under this Section 2.2, except to the extent that
such failure to give notice prejudices the Company. Such rights of
indemnification and reimbursement shall be satisfied only out of the assets of
the Company.
(b) The rights accruing to any Person under this Section 2.2 shall not
exclude any other right to which he or she may be lawfully entitled, nor shall
anything contained herein restrict the right of the Company to indemnify or
reimburse such Person in any proper case even though not specifically provided
for herein, nor shall anything contained herein restrict such rights of a
Trustee to contribution as may be available under applicable law. The Board
shall make advance payments for expenses incurred in defending any proceeding in
advance of its final disposition in connection with indemnification under this
Section 2.2 provided that the indemnified Person shall have given a written
undertaking to reimburse the Company in the event it is subsequently determined
that he or she is not entitled to such indemnification. For purposes of this
Section 2.2, any investment advisor, investment manager or independent property
manager of the Company shall be considered agents of the Company.
(c) In order to carry out the intent and purposes of this Section 2.2,
the Company shall have the power to enter into individual indemnification
agreements with any Person entitled to be indemnified under this Section 2.2,
without approval thereof by the Shareholders, provided that the substantive
provisions of any such agreement shall not be inconsistent in any material
respect with the provisions of this Section 2.2 at the time such agreement is
entered into. The terms of any such agreement need not be identical to the terms
of any other such agreement and any such agreement which has been entered into
may subsequently be amended or changed by mutual agreement of the parties
thereto, without approval thereof by the Shareholders, so long as at the time
such agreement is entered into or amended or changed, as the case may be, its
substantive provisions are not inconsistent in any material respect with the
provisions of this Section 2.2.
(d) The Company shall have the power to use the assets of the Company
to establish arrangements for funding its indemnification obligations under this
Section
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473793.6
<PAGE>
2.2, including but not limited to depositing assets in trust funds, obtaining
bank letters of credit in favor of indemnified Persons or entities, establishing
specific reserve accounts and otherwise funding special self-insurance
arrangements for these purposes.
ARTICLE III
OFFICERS
Section 3.1 Contracts and Other Documents. The officer, officers,
Trustee or Trustees as may from time to time be authorized by the Board shall
have the power to sign and execute on behalf of the Company deeds, conveyances
and contracts, and any and all other documents requiring execution by the
Company.
Section 3.2 Ownership of Stock of a Corporation. The officer, officers,
Trustee or Trustees as may from time to time be authorized by the Board shall
have the power and authority, on behalf of the Company, to attend and to vote at
any meeting of stockholders of any corporation in which the Company holds stock
and may exercise, on behalf of the Company, any and all of the rights and powers
incident to the ownership of such stock at any such meeting, including the
authority to execute and deliver proxies and consents on behalf of the Company.
Section 3.3 Delegation of Duties. In the absence, disability or refusal
of any officer to exercise and perform his duties, the Board may delegate to
another officer such powers or duties.
Section 3.4 Resignation and Removal. Any officer of the Company may be
removed from office for or without cause at any time by the Board. Any officer
may resign at any time upon written notice to the Board.
Section 3.5 Vacancies. The Board shall have the power to fill vacancies
occurring in any office.
ARTICLE IV
SHARE CERTIFICATES
Section 4.1 Issuance of Certificates. Every Shareholder shall be
entitled to receive a Share certificate in such form as the Board shall from
time to time approve. There shall be stated on each Share certificate the
certificate number, the date of its issuance, the number of Shares represented
thereby, and the name of the Shareholder. All certificates shall be for full
Shares. No certificates for fractional Shares shall be issued.
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473793.6
<PAGE>
Section 4.2 Authentication of Certificates. Each certificate shall bear
the signatures of two officers of the Company designated by the Board, and if
there shall be an independent transfer agent or registrar, the countersignature
of an officer thereof duly authorized for such purpose. The signatures of such
officers of the Company may be facsimile reproductions. The validity of a Share
or certificate therefor shall not be affected by the fact that at the time of
issuance of the certificate one or more Persons whose signatures were duly
authorized when placed thereon are no longer authorized to sign the same.
Section 4.3 Replacement Certificates. Lost, stolen, mutilated or
destroyed certificates shall be replaced subject to such conditions of proof and
indemnity as the Board may determine to impose.
Section 4.4 Only Registered Holder Recognized. A register shall be kept
under the direction of the Board, which shall contain the names and addresses of
the Shareholders, the number of Shares held by them respectively, the numbers of
the certificates representing the same, and a record of all transfers thereof.
Only the Shareholder designated in such register as the holder of a Share
certificate shall be recognized for purposes of the Company as having any
interest in such certificate or the Shares represented thereby, and neither the
Company nor any Person connected therewith shall be bound by any notice to the
contrary, but in cases of dispute the Board may require that the certificate in
question be submitted for inspection and that the registered Shareholder's title
thereto be satisfactorily established. A holder may be registered as a
fiduciary, and customary words may be employed to identify the fiduciary
relationship.
Section 4.5 Shareholder's Transfer of Shares. Excepting transfers by
operation of law and subject to the restrictions set forth in Section 4.7,
Shares shall be transferable on the records of the Company only by the record
holder thereof by his or her agent duly authorized in writing, upon delivery to
the Board or a transfer agent of the Company, if any, of the certificate or
certificates therefor, properly endorsed or accompanied by duly executed
instrument or instruments of transfer, together with such evidence of the
genuineness of each such endorsement, execution and authorization and of other
matters as may reasonably be required. Upon such delivery and proof, the
transfer shall be recorded upon the register of the Company, and one or more new
certificates shall be issued to those entitled thereto by reason of such
transfer. Until the transfer is so recorded, the Shareholder designated by the
register as the holder of such Shares shall be deemed to be the holder thereof
for all purposes of the Company, and neither the Board nor any transfer agent or
registrar, nor any officer or agent of the Company, shall be affected by any
notice of any proposed transfer. The Board may establish particular procedures
to govern the assignment of Shares for security purposes.
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473793.6
<PAGE>
Section 4.6 Transfers by Operation of Law. Any Person becoming entitled
to any Share in consequence of the death or bankruptcy of any Shareholder, or in
any other way other than as provided in Section 4.5, may, subject to the
restrictions set forth in Section 4.7, be entered upon the register as the
holder thereof and receive a new certificate therefor, upon delivery of the
existing certificate and such proofs as may be required to the Board or any
transfer agent of the Company. The transfer shall have no effect until entered
upon the register, and notice given to any Person prior to such entry shall
likewise be ineffective for any purpose.
Section 4.7 Certain Restrictions on Transfer; Legend. Notwithstanding
anything to the contrary in Section 4.5 and Section 4.6, no Shareholder shall
transfer any Voting Shares to a Bank Holding Company, unless, after giving
effect to such transfer, such Bank Holding Company would own no more than 4.9%
of any class or series of Voting Shares of the Company. Each Shareholder
understands and agrees that the Shares may be transferred by a Bank Holding
Company only in accordance with applicable federal and state securities laws and
in a widely dispersed offering in which no more than 2% of the outstanding
Shares of such class or series are transferred to any one holder, in which
circumstance the transferee will be permitted to convert such Shares into Voting
Shares. Each Shareholder agrees that substantially the following legend shall be
placed on the certificates representing any non-voting Shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
LIMITATIONS UPON TRANSFER AND CONVERSION CONTAINED IN THE
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF THE
CLASS B 9.5% CUMULATIVE CONVERTIBLE NON-VOTING PREFERRED
SHARES OF BENEFICIAL INTEREST AND THE BY-LAWS OF THE COMPANY
(COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE COMPANY)."
ARTICLE V
AMENDMENT OF BY-LAWS
Section 5.1 Amendments. These By-Laws may be amended or repealed or new
By-Laws may be adopted by the affirmative vote of a majority of the Board at any
regular or special meeting of the Board.
Effective Date of Adoption: July 15, 1997.
6
473793.6
Exhibit 4.1
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF THE
CLASS A 9.5% CUMULATIVE CONVERTIBLE
PREFERRED SHARES
(par value $1.00 per share)
AND THE
CLASS B 9.5% CUMULATIVE CONVERTIBLE NON-VOTING
PREFERRED SHARES
(par value $1.00 per share)
of
CAPITAL TRUST
------------------------------------------------
Pursuant to Article VI of the
Amended and Restated Declaration of Trust of
Capital Trust
------------------------------------------------
Capital Trust, a trust organized under the laws of the State of
California (hereinafter called the "Company"), does hereby certify that,
pursuant to authority conferred on its board of trustees (the "Board") by
Article VI of the Amended and Restated Declaration of Trust of the Company, the
Board, at a meeting held on May 23, 1997, adopted the following resolutions
providing for the creation of two classes of the Company's preferred shares of
beneficial interests, consisting of 12,639,405 Class A 9.5% Cumulative
Convertible Preferred Shares, par value $1.00 per share, and 12,639,405 Class B
9.5% Cumulative Convertible Non-Voting Preferred Shares, par value $1.00 per
share.
"RESOLVED, that pursuant to the authority vested in this Board in
accordance with the provisions of Article VI of the Amended and Restated
Declaration of Trust of the Company, two classes of preferred shares of
beneficial interests in the Company, known, respectively, as Class A 9.5%
Cumulative Convertible Preferred Shares, par value $1.00 per share, and Class B
9.5% Cumulative Convertible Non-Voting Preferred Shares, par value $1.00 per
share, be, and each hereby is, created, classified and authorized and that the
designation and number of shares, and relative rights, preferences and
limitations thereof, shall be as follows:
1 Designation and Amount. The shares of the classes of preferred shares
of beneficial interests in the Company created hereby shall be
designated as (i) "Class A 9.5% Cumulative Convertible Preferred
Shares," and the number of shares constituting such class shall be
12,639,405, with a par value of $1.00 per share, and (ii) "Class B 9.5%
Cumulative Convertible Non-Voting Preferred Shares," and the number of
shares constituting such class shall be 12,639,405, with a par value of
$1.00 per share. The relative rights, preferences, restrictions and
other matters relating to the Class A Preferred Shares and the Class B
Preferred Shares are contained in this Certificate of Designation.
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<PAGE>
2 Definitions. As used in this Certificate of Designation, the following
terms shall have the following meanings:
(a) "Aggregate Consideration Receivable" by the Company in
connection with the issuance of any Common Shares or any
Common Share Equivalents means the sum of:
(i) the aggregate consideration paid to the Company
for such Common Shares or Common Share Equivalents and
(ii) the aggregate consideration or premiums, if any,
stated in such Common Share Equivalents to be
payable for the Common Shares upon the exercise
or conversion of such Common Share Equivalents,
calculated in each case in accordance with section 7(d)(vii)
hereof. In case all or any portion of the consideration to be
received by the Company may be paid in a form other than cash,
the value of such consideration shall be determined in good
faith by the Board or a duly authorized committee thereof
(irrespective of the accounting treatment thereof), and
described in a resolution of the Board or such committee.
(b) "Aggregated Transferor" of a Person shall mean any other
Person other than the Company who previously held Voting
Shares of the Company now held by such Person.
(c) "Annual Dividend Rate" has the meaning set forth in section
3(a) hereof.
(d) "Bank Holding Company" means a bank holding company (as
defined in Section 1841(a) of the Bank Holding Company Act of
1956, as amended) or any affiliate (as defined in Section
1841(k) of the Bank Holding Company Act of 1956, as amended)
of any bank holding company (as defined in Section 1841(a) of
the Bank Holding Company Act of 1956, as amended).
(e) "Board" means the board of trustees of the Company.
(f) "Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in the City of New
York, New York are authorized or obligated by law or executive
order to close.
(g) "Capital Shares" means any and all shares, rights, warrants or
options to purchase shares, securities convertible into or
exchangeable or exercisable for shares and participations in
or other equivalents of or interests (other than security
interests) in shares of beneficial interest in the Company,
however designated and whether voting or nonvoting.
(h) "Certificate of Designation" means this Certificate of
Designation, Preferences and Rights establishing the Class A
Preferred Shares and Class B Preferred Shares pursuant to
Article VI of the Amended and Restated Declaration of Trust,
as the same may be amended, supplemented or modified from time
to time in accordance with the terms hereof and pursuant to
applicable law.
(i) "Class A Common Shares" means the class A common shares, par
value $1.00 per share, of beneficial interests in the Company,
having the designations and rights, qualifications,
limitations and restrictions set forth in the Amended and
Restated Declaration of Trust of the Company.
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<PAGE>
(j) "Class A Preferred Shares" means the Class A 9.5% Cumulative
Convertible Preferred Shares, par value $1.00 per share, in
the Company established pursuant to this Certificate of
Designation.
(k) "Class B Common Shares" means the class B common shares, par
value $1.00 per share, of beneficial interests in the Company,
having the designations and rights, qualifications,
limitations and restrictions set forth in the Amended and
Restated Declaration of Trust of the Company.
(l) "Class B Preferred Shares" means the Class B 9.5% Cumulative
Convertible Non-Voting Preferred Shares, par value $1.00 per
share, in the Company established pursuant to this Certificate
of Designation.
(m) "Common Shares" means, collectively, the Class A Common Shares
and the Class B Common
Shares.
(n) "Common Share Equivalents" means, without double counting:
(i) Common Shares, where one Common Share shall
constitute one Common Share
Equivalent,
(ii) Capital Shares (including without limitation the
Preferred Shares) convertible into Common
Shares, where any one Capital Share shall
constitute a number of Common Share Equivalents
equal to the number of Common Shares issuable in
respect of such Capital Share,
(iii) any rights, warrants, options and convertible,
exchangeable or exercisable securities entitling
the holder thereof to subscribe for or purchase
any Common Shares, where any such rights,
warrants, options and convertible, exchangeable
or exercisable securities shall constitute a
number of Common Share Equivalents equal to the
number of Common Shares issuable in respect of
such rights, warrants, options or convertible or
exercisable securities, and
(iv) any share appreciation rights entitling the
holders thereof to any interest in an increase
in value, however measured, of Common Shares,
where any such share appreciation rights shall
constitute a number of Common Share Equivalents
equal to the Common Shares equivalent, as nearly
as it may be calculated, of such share
appreciation rights.
(o) "Company" means Capital Trust, a trust organized under the
laws of the State of California.
(p) "Conversion Date" has the meaning set forth in section 7(b)
hereof.
(q) "Conversion Notice" has the meaning set forth in section 7(b)
hereof.
(r) "Conversion Price" has the meaning set forth in section 7(a)
hereof.
(s) "D/E Ratio" means, as of the date of determination, the ratio
of (i) the sum of (x) the total Indebtedness of the Company
and its consolidated Subsidiaries as reflected on the
Company's most recent last regularly prepared balance sheet,
plus (y) all Indebtedness issued by the Company since the date
of such balance sheet less all indebtedness retired or
repurchased by the Company since that date, plus (z) the
Company's pro rata share, based upon its percentage equity
ownership interest therein, of aggregate total Indebtedness of
Equity Affiliates, to (ii)
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the excess of total assets (including the Company's equity in
its Equity Affiliates) over total liabilities of the Company,
as reflected on the Company's most recent last regularly
prepared balance sheet, in each case determined in accordance
with GAAP and after giving effect to the incurrence of any
proposed Indebtedness and the application of proceeds of such
Indebtedness.
(t) "Dividend Payment Date" has the meaning set forth in section
3(a) hereof.
(u) "Dividend Period" has the meaning set forth in section 3(a)
hereof.
(v) "Effective Purchase Price per Share" at which the Company
issues any Common Shares or any Common Share Equivalents means
an amount equal to the ratio of:
(i) the Aggregate Consideration Receivable by the Company in
connection with the issuance of such Common Shares or
Common Share Equivalents to
(ii) the number of Common Shares and Common Share Equivalents
so issued.
(w) "Equity Affiliate" means any Person in which the Company or
any of its consolidated Subsidiaries has an equity interest
which is or, in accordance with GAAP, should be accounted for
on the equity method in the Company's consolidated financial
statements.
(x) "Exempted Transaction" means each and any of the following:
(i) the issuance, from April 1, 1997 through the date of
the Exempted Transaction, of Common Share Equivalents
to employees or officers of the Company or any of its
subsidiaries, or to consultants or service providers to
the Company or any of its subsidiaries, or to trustees
or directors of the Company or any of its subsidiaries,
under an employee benefit plan or similar arrangement
adopted by the Company in an amount not to exceed 10%
of the aggregate number of Common Share Equivalents
outstanding at such time,
(ii) the issuance of any Common Shares or Preferred Shares
of the Company upon the conversion of any Common Shares
or Preferred Shares, and
(iii) the issuance of any Capital Shares of the
Company in exchange, in whole or in part, for
any acquisition by the Company of shares or
other assets of any kind.
(y) "Fair Market Value" of a Common Share" means, as of any date,
the average of the closing prices of Class A Common Shares for
the 20 consecutive Trading Days next preceding the date five
days prior to the date in question. The closing price for each
day shall be:
(i) if the Class A Common Shares are listed or
admitted for trading on the New York Stock
Exchange or any other national securities
exchange, the last sale price, or the closing
bid price if no sale occurred, of one Class A
Common Share on the New York Stock Exchange or,
if not then listed on the New York Stock
Exchange, the principal securities exchange on
which the Class A Common Shares are listed or
admitted for trading; or
(ii) if not listed or admitted for trading as
described in clause (i) of this section 2(y),
the average of the closing sale price or, in the
absence of a closing sale price, the average of
the highest bid and lowest asked prices of one
Class A Common Share quoted in the NASDAQ
National Market System or any similar system of
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<PAGE>
automated dissemination of quotations of securities
prices then in common use, if so quoted; or
(iii) if not quoted as described in clause (ii) of
this section 2(y), the average of the highest
bid and lowest offered quotations for one Class
A Common Share as reported by the National
Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and
offered quotations for Class A Common Shares on
at least five of the 20 consecutive Trading Days
next preceding the date five days prior to the
date in question.
If none of the conditions set forth above is met, the closing
price of one Class A Common Share on any day or the average of
such closing prices for any period shall be the fair market
value of one Common Share for such day or period as determined
in good faith by the Board.
"Fair Market Value" of a Preferred Share means the Fair Market
Value of a number of fully paid and nonassessable Class A
Common Shares equal to the ratio of (a) the Liquidation
Preference for such Preferred Share plus an amount equal to
the dividends per share accrued and unpaid thereon as of the
date of such determination to (b) the Conversion Price in
effect as of the date of such determination.
(z) "GAAP" means those generally accepted accounting
principles and practices which are recognized as such
by the American Institute of Certified Public
Accountants acting through its Accounting Principles
Board or by the Financial Accounting Standards Board or
through other appropriate boards or committees thereof
and which are consistently applied for all periods
after the date hereof so as to properly reflect the
financial condition, results of operations and changes
in financial position of any Person, except that any
accounting principle or practice required to be changed
by such Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board
or committee of such Boards) in order to continue as a
generally accepted accounting principle or practice may
be so changed.
(aa) "Holder" of a Class A Preferred Share or a Class B Preferred
Share means the Person in whose name such Class A Preferred
Share or Class B Preferred Share is registered on the books of
the Company.
(bb) "Incur" means to issue, assume, guarantee, incur or otherwise
become liable for.
(cc) "Indebtedness" means, with respect to any Person, without
duplication, any liability of such Person (i) for borrowed
money, (ii) evidenced by bonds, debentures, notes or other
similar instruments, (iii) constituting capitalized lease
obligations, (iv) incurred or assumed as the deferred purchase
price of property, or pursuant to conditional sale obligations
and title retention agreements (but excluding trade accounts
payable arising in the ordinary course of business) and (v)
which are secured by any Lien on any property or asset of such
first referred to Person.
(dd) "Issuance Date" means, with respect to any Preferred Share,
the date on which such Preferred Share is issued by the
Company.
(ee) "Junior Shares" means Common Shares and any other class or
series of Capital Shares of the Company now or hereafter
authorized, issued or outstanding which is subject, under the
terms of the Company's Amended and Restated Declaration of
Trust (including any certificate of designation adopted
thereunder relating to any class or series of preferred
shares), to the following restrictions and limitations:
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<PAGE>
(i) no dividend or distribution can be declared or
paid on the shares of such class or series
unless all accrued dividends and other amounts
then due with respect to the Preferred Shares
shall have been paid in full,
(ii) in the event of any liquidation, dissolution or
winding up of the Company, either voluntary or
involuntary, the Holders of the Preferred Shares
shall be entitled to receive out of assets of
the Company available for distribution to
shareholders, the amount specified in section 4
hereof, before any payment shall be made or any
assets distributed to the holders of such other
class or series of Capital Shares of the
Company, and
(iii) shares of such class or series may not be
redeemed under any circumstances, either at the
option of the Company or of any holder thereof,
unless all of the outstanding Preferred Shares
have theretofore been redeemed or converted.
(ff) "Lien" means any lien, mortgage, deed of trust, pledge, charge
or other encumbrance of any kind, including, without
limitation, any conditional sale or other title retention
agreement and any lease in the nature thereof.
(gg) "Liquidation Preference" means, with respect to each Preferred
Share, an amount equal to $2.69.
(hh) "Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a
joint-stock company, a trust, a business trust, a government
or any agency or any political subdivision, any unincorporated
organization or any other entity.
(ii) "Preferred Shares" means, collectively, the Class A Preferred
Shares and the Class B Preferred Shares.
(jj) "Restricted Payment" has the meaning set forth in section 3(c)
hereof.
(kk) "Subsidiary" means:
(i) any corporation 50% or more of the Voting Shares of
which is owned, directly or indirectly, by the Company,
or
(ii) any other Person whose accounts are required
under GAAP to be included in the Company's
consolidated financial statements.
(ll) "Trading Day" means, with respect to the Class A Common
Shares: (i) if the Class A Common Shares are listed or
admitted for trading on any national securities exchange, days
on which such national securities exchange is open for
business; or (ii) if the Class A Common Shares are not listed
or admitted for trading on any national securities exchange,
but are quoted on the NASDAQ National Market System, any
similar system of automated dissemination of quotations of
securities prices or the National Quotation Bureau
Incorporated, each day on which quotations may be made on such
system; or (iii) if the Class A Common Shares are not quoted
on any system or listed or admitted for trading on any
securities exchange, a Business Day.
(mm) "Voting Shares" means, with respect to the Company, all
classes of Capital Shares of the Company then outstanding and
normally entitled to vote for the election of directors,
managers or trustees of the Company. Any reference to a
percentage of Voting Shares shall refer to the
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<PAGE>
percentage of votes eligible to be cast for the election of
directors, managers or trustees which are attributable to the
applicable Voting Shares.
3 Dividends.
(a) Payment of Dividends. The Holders of the Preferred Shares
shall be entitled to receive, when and as declared by the
Board, out of funds legally available therefor, cash dividends
per share at the rate of 9.5% per annum on the Liquidation
Preference (the "Annual Dividend Rate"). Such dividends shall
accrue (whether or not declared) from and including the
Issuance Date to and including the date on which the
Liquidation Preference is paid on such shares or on which such
shares are converted or redeemed and, to the extent not paid
for any Dividend Period, will be cumulative. Dividends on the
Preferred Shares shall accrue on a daily basis whether or not
the Company shall have earnings or surplus at the time.
Semi-annual dividend periods (each a "Dividend Period") shall
commence on and include the sixteenth day of December and June
of each year and shall end on and include the fifteenth day of
June and December, respectively, of such year; provided,
however, that the first Dividend Period shall commence on the
Issuance Date and shall end on and include December 15, 1997.
Dividends on the Preferred Shares shall be payable, when and
as declared, semi-annually, in arrears, no later than December
26 and June 25 of each year commencing December 26, 1997 (each
such date, a "Dividend Payment Date"), except that if any such
date is not a Business Day, then such dividend shall be paid
on the next succeeding Business Day. Each such dividend shall
be payable to Holders of Preferred Shares at the close of
business on the record date established by the Board, which
record date shall be not more than 60 days prior to the date
fixed for payment thereof.
The amount of dividends payable per Preferred Share for each
full Dividend Period shall be computed by applying the Annual
Dividend Rate to the Liquidation Preference and dividing such
amount by two. The amount of dividends payable for the initial
Dividend Period and any period shorter than a full Dividend
Period shall be computed on the basis of actual days elapsed
and a 360-day year consisting of twelve 30-day months.
The Company shall not declare or pay or set apart for payment
any dividends or make any other distributions on either class
of Preferred Shares unless the Company simultaneously declares
or pays or sets apart for payment dividends or makes
distributions, at the same rate, each share being treated
equally, on the other class of Preferred Shares.
(b) Distribution of Partial Dividend Payments. Except as otherwise
provided in this Certificate of Designation, if on any
Dividend Payment Date the Company pays less than the total
amount of dividends then accrued with respect to the Preferred
Shares, the amount so paid shall be distributed ratably, each
share being treated equally, among the Holders of the
Preferred Shares based upon the number of Preferred Shares
then held by each such Holder.
(c) Limitations on Certain Payments. Unless all accrued dividends
and other amounts then accrued through the end of the last
Dividend Period and unpaid with respect to the Preferred
Shares shall have been paid in full, the Company shall not
declare or pay or set apart for payment any dividends or make
any other distributions on, or make any payment on account of
the purchase, redemption, exchange or other retirement of, any
Capital Shares of the Company other than the Preferred Shares
(each, a "Restricted Payment"); provided, however, that a
"Restricted Payment" shall not include:
(i) any dividend or distribution payable solely in Junior
Shares, or
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<PAGE>
(ii) the acquisition of any Capital Shares in exchange
solely for Junior Shares.
4 Liquidation Preference.
In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, the Holders of Preferred
Shares shall be entitled to receive out of assets of the Company
available for distribution to shareholders, an amount per share equal
to the Liquidation Preference plus the amount of all dividends per
share accrued and unpaid thereon through the date of final distribution
to shareholders, whether or not declared, before any payment shall be
made or any assets distributed to the holders of any other class or
series of Capital Shares of the Company.
If the assets and funds thus distributed among the Holders of the
Preferred Shares shall be insufficient to permit the payment to such
Holders of the full preferential amount described above, then the
entire assets and funds of the Company legally available for
distribution shall be distributed ratably, each share being treated
equally, among the Holders of the Preferred Shares based on the number
of Preferred Shares then held by each such Holder.
5 Consolidation, Merger and Sale of Assets, etc. Unless all of the
outstanding Preferred Shares shall have been redeemed or converted on
or prior to the effective date of any consolidation, merger or transfer
referred to below involving the Company, without the approval of the
Holders of a majority of the outstanding Preferred Shares, voting
together as a single class, but voting together as a separate class
from the Common Shares, the Company shall not consolidate with or merge
into, or transfer all or substantially all of its assets to, another
Person unless:
(a) in the case of a merger or consolidation, the Company is the
surviving entity, the rights and preferences of the Preferred
Shares are not modified the Company, as the surviving entity,
does not have outstanding any Capital Shares that are not
Junior Shares, and immediately after the consummation of such
merger or consolidation and after giving effect thereto, the
D/E Ratio of the Company shall not exceed 5:1, or
(b) the surviving, resulting or acquiring Person is a Person
organized under the laws of the United States, any state
thereof or the District of Columbia, or a Person organized
under the laws of a foreign jurisdiction whose equity
securities are listed on a national securities exchange in the
United States or authorized for quotation on the NASDAQ
National Market System, the Company shall make effective
provision such that, upon consummation of such transaction,
the Holders of Preferred Shares shall receive preferred shares
of the surviving entity having substantially identical terms
as the Preferred Shares surrendered by them, the surviving,
resulting or acquiring Person does not have outstanding any
Capital Shares that are not Junior Shares and, immediately
after the consummation of such consolidation, merger or
transfer, the D/E Ratio of such Person shall not exceed 5:1.
6 Voting Rights of Preferred Shares.
(a) Voting Rights of the Class A Preferred Shares. In addition to
the voting rights described in sections 5 and 6(c) hereof, the
Class A Preferred Shares shall be entitled to vote together
with the holders of Class A Common Shares as a single class on
all matters submitted for a vote of shareholders, and shall be
entitled to notice of all shareholders' meetings and to act by
written consent in the same manner as the holders of Class A
Common Shares. Each Class A Preferred Share shall entitle the
Holder thereof to such number of votes per share as shall
equal the number of Class A Common Shares into which such
Class A Preferred Share is then convertible.
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<PAGE>
(b) Voting Rights of the Class B Preferred Shares. Except for the
voting rights described in sections 5 and 6(c) hereof, the
Class B Preferred Shares shall not have voting rights and
shall not be counted in determining the presence of a quorum.
(c) Preferred Shares Class Vote. So long as any Preferred Shares
remain outstanding, the affirmative vote of the Board and the
Holders of a majority of the outstanding Preferred Shares,
voting together as a single class, but voting together as a
separate class from the Common Shares, shall be required in
order:
(i) to amend, alter or repeal any of the provisions of
this Certificate of Designation;
(ii) to authorize, create or issue any class or series of
Capital Shares of the Company that are not Junior
Shares; and
(iii) for the Company to Incur any Indebtedness if the
Company's D/E Ratio would exceed 5:1.
Any Preferred Shares owned, directly or indirectly, by the
Company or any of its Subsidiaries shall not have voting
rights hereunder and shall not be counted in determining the
presence of a quorum.
7 Conversion Right.
(a) Right of Conversion. Each Class A Preferred Share shall be
convertible at the option of the Holder thereof at any time
and from time to time in whole or in part into:
(i) a number of fully paid and nonassessable Class A
Common Shares equal to the ratio of:
(x) the Liquidation Preference of such
Class A Preferred Share plus an amount
equal to all dividends per share
accrued and unpaid thereon as of the
Conversion Date to
(y) the Conversion Price in effect on the
Conversion Date, or
(ii) an equal number of fully paid and nonassessable Class
B Preferred Shares,
or into such additional or other securities, cash or property
and at such other rates as required in accordance with the
provisions of this section 7.
Each Class B Preferred Share shall be convertible at the
option of the Holder thereof at any time and from time to time
in whole or in part into:
(i) a number of fully paid and nonassessable Class B Common
Shares equal to the ratio of:
(x) the Liquidation Preference of such
Class B Preferred Share plus an amount
equal to all dividends per share
accrued and unpaid thereon as of the
Conversion Date to
(y) the Conversion Price in effect on the Conversion
Date, or
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<PAGE>
(ii) if the Holder (a) would not, together with such
Holder's Aggregated Transferors, upon the
issuance of such Class A Preferred Shares, own
more than 4.9% of any class of Voting Shares of
the Company or (b) is not limited by the Bank
Holding Company Act of 1956, as amended, to
holding no more than 4.9% of any class of Voting
Shares of the Company, an equal number of fully
paid and nonassessable Class A Preferred Shares,
or into such additional or other securities, cash or property
and at such other rates as required in accordance with the
provisions of this section 7.
For purposes of this Certificate of Designation, the
"Conversion Price" shall initially be $2.69 per share and
shall be adjusted from time to time in accordance with the
provisions of this section 7.
(b) Conversion Procedures. In order to exercise the conversion
right, the Holder of any Preferred Shares to be converted in
whole or in part shall surrender the certificate or
certificates evidencing such shares to the Company and shall
give written notice to the Company ("Conversion Notice") that
the Holder elects to convert such shares or the portion
thereof specified in said notice into Class A Common Shares,
Class B Common Shares, Class A Preferred Shares or Class B
Preferred Shares, as provided herein and as specified by the
Holder in the Conversion Notice. The Conversion Notice shall
also (i) state the name or names (with address) in which the
certificates for Common Shares or Preferred Shares, as the
case may be, shall be issued and (ii) if Class B Preferred
Shares are to be converted into Class A Preferred Shares,
contain a certification by the Holder that the Holder either
(a) will not, together with such Holder's Aggregated
Transferors, upon the issuance of such Class A Preferred
Shares, own more than 4.9% of any class of Voting Shares of
the Company or (b) is not limited by the Bank Holding Company
Act of 1956, as amended, to holding no more than 4.9% of any
class of Voting Shares of the Company. Each certificate
evidencing Preferred Shares surrendered for conversion shall,
unless the shares issuable on conversion are to be issued in
the same name as the registration of such Preferred Shares, be
duly endorsed by, or be accompanied by instruments of transfer
in form satisfactory to the Company duly executed by, the
Holder or its duly authorized attorney.
As promptly as practicable after receipt of a Conversion
Notice and surrender of the certificate or certificates
evidencing the Preferred Shares relating thereto, the Company
shall issue and deliver to such Holder (or upon the written
order of such Holder) a certificate or certificates for the
number of full Class A Common Shares, Class B Common Shares,
Class A Preferred Shares or Class B Preferred Shares, as
specified in the Conversion Notice, issuable upon the
conversion of such Preferred Shares or portion thereof in
accordance with the provisions of this section 7, and a check
or cash in respect of any fractional shares issuable upon such
conversion, as provided in section 7(c) hereof. In the event
that less than all the Preferred Shares represented by a
certificate are to be converted, the Company shall issue and
deliver or cause to be issued and delivered to (or upon the
written order of) the Holder of the Preferred Shares so
surrendered, without charge to such Holder, a new certificate
or certificates representing a number of Preferred Shares
equal to the unconverted portion of the surrendered
certificate.
Each conversion shall be deemed to have been effected on the
date (the "Conversion Date") on which the certificate or
certificates evidencing such Preferred Shares shall have been
surrendered to the Company or its transfer agent and a
Conversion Notice with respect to such shares shall have been
received by the Company, as described above. Any Person in
whose name any certificate or certificates for Common Shares
or Preferred Shares shall be issuable upon conversion shall be
deemed to have become the holder of record of the shares
represented
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<PAGE>
thereby on the Conversion Date; provided, however, if the
certificate or certificates evidencing such Preferred Shares
are surrendered on any date when the share transfer books of
the Company shall be closed, the Holder shall constitute the
Person in whose name the certificates are to be issued as the
record holder thereof for all purposes until the next
succeeding day on which such share transfer books are open,
but such conversion shall be at the Conversion Price in effect
on the date on which such certificate or certificates shall
have been surrendered.
Except as otherwise provided in this section 7, no payment or
adjustment will be made for dividends or other distributions
with respect to any Common Shares or Preferred Shares issuable
upon conversion of Preferred Shares as provided herein.
(c) Cash Payments in Lieu of Fractional Shares. No fractional
shares or scrip representing fractional shares shall be issued
upon conversion of Preferred Shares. If any fractional share
would, but for this section 7(c), be issuable upon the
conversion of any Preferred Shares, the Company shall make a
payment therefor in cash on the first Business Day immediately
preceding the Conversion Date equal to the Fair Market Value
of such fractional share.
(d) Adjustment of Conversion Price for Conversion into Common
Shares. The Conversion Price with respect to the conversion of
the Preferred Shares into Common Shares shall be adjusted from
time to time by the Company as follows:
(i) In the event that the Company shall at any time after the
Issuance Date:
(A) declare a dividend or make a distribution on the
Common Shares in Common Shares,
(B) subdivide or reclassify the Common Shares into a
greater number of shares,
(C) combine the Common Shares into a smaller number
of shares,
(D) pay a dividend or make a distribution on the
Common Shares in any class of its Capital Shares
other than Common Shares, or
(E) reclassify the Common Shares,
then the conversion right and the Conversion
Price in effect immediately prior thereto shall
be adjusted so that the Holder of any Preferred
Shares thereafter surrendered for conversion
into Common Shares shall be entitled to receive
the number of Common Shares or other Capital
Shares of the Company which such Holder would
have owned or have been entitled to receive
after the happening of any of the events
described above had such Preferred Shares been
converted into Common Shares immediately prior
to the happening of such event. An adjustment
made pursuant to this section 7(d)(i) shall
become effective immediately after the record
date in the case of a dividend or distribution
and shall become effective immediately after the
effective date in the case of subdivision,
combination or reclassification. Such adjustment
shall be made successively whenever any event
referred to above shall occur.
(ii) In the event that the Company shall at any time
after the Issuance Date issue any Common Shares
or any Common Share Equivalents other than in an
Exempted Transaction, at an Effective Purchase
Price per Share less than the Conversion
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Price in effect immediately prior to the date of
such issuance, then such Conversion Price shall
be adjusted to equal the ratio of:
(A) the sum of:
(1) the product of:
(a) the number of Common Shares and Common
Share Equivalents outstanding
immediately prior to such issuance and
(b) the Conversion Price in effect
immediately prior to such issuance and
(2) the Aggregate Consideration Receivable by
the Company in connection with such
issuance to
(B) the sum of:
(1) the number of Common Shares and Common Share
Equivalents outstanding immediately prior to
such issuance and
(2) the number of additional Common Shares and
Common Share Equivalents.
For example, if on any given date the Company
has 20,000,000 Common Shares and Common Share
Equivalents outstanding, the Company issues
warrants exercisable at $1 per share to purchase
an additional 1,000,000 Common Shares for a
purchase price of $1 per warrant, and the
Conversion Price in effect on such date is
$2.69, then the Conversion Price shall be
adjusted to equal $2.66, which is calculated as
follows:
$2.66 per share =
[(20,000,000 shares x $2.69/share) + $2,000,000] /
(20,000,000 shares + 1,000,000 shares).
Such adjustment shall be made successively
whenever any shares, rights, warrants, options,
convertible or exercisable securities or share
appreciation rights are issued at an Effective
Purchase Price per Share that is less than the
Conversion Price in effect on the date of such
issuance. To the extent that any right, option,
warrant, convertible or exercisable security or
share appreciation right expires without having
been converted or exercised, the Conversion
Price then in effect shall be readjusted to the
Conversion Price which then would be in effect
if such rights, options, warrants, convertible
or exercisable securities or share appreciation
rights had not been issued, but such
readjustment shall not affect the number of
Common Shares or other Capital Shares delivered
upon any conversion prior to the date such
readjustment is made.
(iii) In the event that the Company shall distribute
to all holders of its Common Shares any of its
assets (other than cash dividends payable on or
after April 1, 1997 which together with all
prior cash dividends payable on or after April
1, 1997, do not exceed the amount of retained
earnings of the Company accrued on or after
April 1, 1997 and on or prior to the date of
such dividends) or debt
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<PAGE>
securities, or rights, options, warrants or
convertible or exercisable securities of the
Company (including securities issued for cash,
but excluding distributions of Capital Shares
referred to in section 7(d)(i) hereof), then in
each such case, the Conversion Price shall be
adjusted to equal the Conversion Price in effect
immediately prior to such distribution less an
amount equal to the then fair market value (as
reasonably determined by the Board, in good
faith and as described in a resolution of the
Board) of the portion of the assets or debt
securities of the Company so distributed or of
such rights, options, warrants or convertible or
exchangeable securities applicable to one Common
Share. Such adjustment shall become effective
immediately after the record date for the
determination of shares entitled to receive such
distribution. Notwithstanding the foregoing, no
adjustment of the Conversion Price shall be made
upon the distribution to holders of Common
Shares of such rights, options, warrants,
convertible securities, assets or debt
securities if the plan or arrangement under
which such rights, options, warrants,
convertible securities, assets or debt
securities are issued provides for their
issuance to Holders of Preferred Shares in the
same pro rata amounts upon conversion thereof.
Such adjustment shall be made successively
whenever any event listed above shall occur.
(iv) Anything in this section 7(d) to the contrary
notwithstanding, the Company shall be entitled to make
such reductions in the Conversion Price, in addition to
those required by this section 7(d), as it in its
reasonable discretion shall determine to be advisable
in order that any share dividends, subdivision of
shares, distribution of rights to purchase shares or
securities, or distribution of securities convertible
into or exchangeable for shares hereafter made by the
Company to its shareholders, shall not be taxable.
(v) Whenever the Conversion Price is adjusted as
provided in this section 7(d), or the Preferred Shares
become convertible into shares of securities, property
or assets pursuant to section 7(e) hereof, or the
Company reduces the Conversion Price pursuant to
section 7(f) hereof, the Company shall prepare a notice
of such adjustment of the Conversion Price setting
forth the adjusted Conversion Price and the date on
which such adjustment becomes effective, and setting
forth in reasonable detail the facts requiring such
adjustment and the calculation of such adjustment, and
shall mail such notice of adjustment to all Holders of
Preferred Shares at their last addresses appearing on
the share transfer books of the Company.
(vi) In any case in which this section 7(d) provides that an
adjustment shall become effective immediately after a
record date for an event, the Company may defer until
the occurrence of such event:
(A) issuing to the Holder of any Preferred
Shares converted after such record date
and before the occurrence of such event
the additional Common Shares issuable
upon such conversion by reason of the
adjustment required by such event over
and above the Common Shares issuable
upon such conversion before giving
effect to such adjustment, and
(B) paying to such Holder any amount in
cash in lieu of any fractional share of
Common Shares pursuant to section 7(c).
(vii) For purposes of any computations of Aggregate
Consideration Receivable or other consideration
pursuant to this section 7(d), the following shall
apply:
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<PAGE>
(A) in the case of the issuance of Common
Shares or Common Share Equivalents for
cash, the consideration shall be the
amount of such cash, provided that in
no case shall any deduction be made for
any commissions, discounts or other
expenses incurred by the Company for
any underwriting of the issue or
otherwise in connection therewith; and
(B) in the case of the issuance of Common
Shares or Common Share Equivalents for
a consideration in whole or in part
other than cash, the consideration
other than cash shall be deemed to be
the fair market value thereof as
reasonably determined in good faith by
the Board or a duly authorized
committee thereof (irrespective of the
accounting treatment thereof), and
described in a resolution of the Board
or such committee.
(viii) If, after an adjustment a Holder of Preferred
Shares may, upon conversion of such security,
receive two or more classes of Capital Shares of
the Company, the Company shall determine on a
fair basis the allocation of the adjusted
Conversion Price between the classes of Capital
Shares. After such allocation, the conversion
right and the Conversion Price of each class of
Capital Shares shall thereafter be subject to
adjustment on terms comparable to those
applicable to Common Shares in this section 7.
(e) Effect of Reclassification, Consolidation, Merger or Sale.
Unless all of the Preferred Shares shall have been redeemed or
converted on or prior to the effective date of any of the
events referred to in clauses (i), (ii) and (iii) of this
section 7(e), if any of the following events occur, namely:
(i) any reclassification or change of outstanding
Common Shares issuable upon conversion of any
class of Preferred Shares (other than a change
in par value, or from par value to no par value,
or from no par value to par value, or as a
result of a subdivision or combination),
(ii) any consolidation or merger of the Company with
another Person shall be effected as a result of
which holders of Common Shares issuable upon
conversion of any class of Preferred Shares
shall be entitled to receive shares, securities
or other property or assets (including cash)
with respect to or in exchange for such Common
Shares, or
(iii) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to
any other Person,
then the Company or such successor or purchasing Person, as
the case may be, shall make provisions in its constituent
documents to establish that each Preferred Share then
outstanding (or the successor shares referred to in section
5(b) hereof) shall be convertible into the kind and amount of
shares and other securities or property or assets (including
cash) receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the
number of Common Shares issuable upon conversion of such
Preferred Shares immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance, each
Preferred Share being treated equally. Such provisions shall
provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this
section 7.
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<PAGE>
If this section 7(e) applies with respect to a transaction,
section 7(d) hereof shall not apply with respect to that
transaction. The above provisions of this section 7(e) shall
similarly apply to successive reclassifications,
consolidations, mergers and sales.
(f) Subdivision, Reclassification or Combination of Preferred
Shares. The Company shall not (i) subdivide or reclassify any
class of Preferred Shares or (ii) combine any class of
Preferred Shares, unless the Company simultaneously
subdivides, reclassifies or combines, at the same rate, each
share being treated equally, all classes of Preferred Shares.
(g)
Taxes on Shares Issued. The issuance of share
certificates upon conversion of Preferred Shares shall
be made without charge to the converting Holder for any
tax in respect of the issuance thereof.
(h) Shares to be Fully Paid. The Company covenants that all Common
Shares and Preferred Shares which may be issued upon
conversion of Preferred Shares will upon issuance be validly
issued, fully paid and nonassessable by the Company and free
from all taxes, liens and charges with respect to the issuance
thereof.
(i) Notice to Holders Prior to Certain Actions.
(i) In the event:
(A) that the Company shall take any action
that would require an adjustment in the
Conversion Price pursuant to section
7(d)(i) or (iii) hereof; or
(B) that any event described in section 7(e)
hereof shall occur; or
(C) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
the Company shall cause notice of such proposed
action or event to be mailed to each Holder of
record of Preferred Shares at its address
appearing on the share transfer books of the
Company, as promptly as possible but in any
event no later than the later of (x) the date 30
days prior to the record date for such proposed
action or the effective date of such event or
(y) the date on which the Company first publicly
announces such proposed action or event.
(ii) In the event that the Company shall take any
action that would require an adjustment in the
Conversion Price pursuant to section 7(d)(ii)
hereof, the Company shall cause notice of such
proposed action or event to be mailed to each
Holder of record of Preferred Shares at its
address appearing on the share transfer books of
the Company, as promptly as possible but in no
event later than the date that the Company
provides public notice of such proposed action
or event.
(iii) In any event, such notice shall specify:
(A) the record date as of which the holders
of record of Common Shares are to be
determined, or
(B) the date on which such proposed event
is expected to become effective, and
the date as of which it is expected
that holders of record of Common Shares
shall be entitled to exchange their
Common Shares for securities or other
property deliverable upon such event.
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<PAGE>
Failure to give such notice, or any defect
therein, shall not affect the legality or
validity of such action or event.
8 Reacquired Shares. Any Preferred Shares which are converted,
purchased, redeemed or otherwise acquired by the Company, shall be
retired and canceled by the Company promptly thereafter. No such
shares shall upon their cancellation be reissued.
9 Covenant Regarding Employee Equity Plans. For so long as any shares of
Preferred Stock are outstanding, the Company will not:
(a) grant to any employees or officers of the Company or any of
its subsidiaries, or to any consultants or service providers
to the Company or any of its subsidiaries, or to any trustees
or directors of the Company or any of its subsidiaries, under
an employee benefit plan or similar arrangement adopted by the
Company, any options to purchase Common Share Equivalents
having an exercise price per share less than the fair market
value of a Common Share Equivalent on the date of grant of
such option as determined in good faith by any reasonable
method by the Board, or
(b) issue or sell to any employees or officers of the Company or
any of its subsidiaries, or to any consultants or service
providers to the Company or any of its subsidiaries, or to any
trustees or directors of the Company or any of its
subsidiaries, or to any shareholder of the Company, any Common
Share Equivalents at a price per share below the fair market
value of such Common Share Equivalent on the date of such
issuance or sale as determined in good faith by any reasonable
method by the Board.
10 Certain Restrictions on Transfer; Legend.
(a) Holder shall not transfer Class A Preferred Shares or Class A
Common Shares to any Bank Holding Company, unless, after
giving effect to such transfer, such Bank Holding Company:
(i) would, together with its Aggregated Transferors,
own no more than 4.9% of any class of Voting
Shares of the Company or
(ii) is not limited by the Bank Holding Company Act
of 1956, as amended, to holding not more than
4.9% of the Voting Shares of the Company.
(b) The Class B Preferred Shares and the Class B Common Shares may
be transferred by a Bank Holding Company only:
(i) in accordance with applicable federal and state
securities laws and
(ii) unless the Company shall have received an
opinion of counsel stating that the restriction
in this section 10(b)(ii) is not applicable
under the circumstances:
(A) in a widely dispersed offering in which
no more than 2% of the outstanding
Class B Common Shares and Capital
Shares convertible into Class B Common
Shares are transferred to any one
holder,
(B) to a transferee who has agreed in
writing acceptable to the Company to be
bound by the restrictions set forth in
this section 10.
(c) Holder agrees that substantially the following legend shall be
placed on the certificates representing any Class B Preferred
Shares and Class B Common Shares:
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<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
LIMITATIONS UPON TRANSFER AND CONVERSION CONTAINED IN THE
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF THE
CLASS B 9.5% CUMULATIVE CONVERTIBLE NON-VOTING PREFERRED
SHARES AND THE BY-LAWS OF THE COMPANY (COPIES OF WHICH ARE ON
FILE AT THE OFFICE OF THE COMPANY)."
"RESOLVED, that the Chairman of the Board, Chief Executive Officer or
Vice Chairman of the Company sign and acknowledge a certificate of designation
setting forth the resolution or resolutions of the Board fixing the voting
powers, designations, preferences and rights of any Preferred Shares of any
class or series, the qualifications, limitations or restrictions thereof, and
the number of the Preferred Shares of such class or series authorized by the
Board, and cause such certificate of designation to be filed among the records
of the Company."
IN WITNESS WHEREOF, Capital Trust has caused this Certificate of
Designation to be duly signed and acknowledged as of this 15th day of June, 1997
by the undersigned, its Chief Executive Officer.
CAPITAL TRUST
By: /s/ John R. Klopp
_______________________________
Name: John R. Klopp
Title: Chief Executive Officer
-17-
Exhibit 10.1
CALIFORNIA REAL ESTATE INVESTMENT TRUST
1997 LONG-TERM INCENTIVE SHARE PLAN
<PAGE>
CALIFORNIA REAL ESTATE INVESTMENT TRUST
1997 LONG-TERM INCENTIVE SHARE PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan. On May 23, 1997, the Board of Trustees
of California Real Estate Investment Trust (the "Company") adopted, subject to
the approval of shareholders, an incentive share compensation plan known as the
"1997 Long-Term Incentive Share Plan" (hereinafter referred to as the "Plan"),
which permits the grant of Incentive Share Options, Nonqualified Share Options,
Share Appreciation Rights, Restricted Shares, Performance Units, Performance
Shares and Share Units. The Plan is designed to comply with the
performance-based compensation exemption under the proposed regulations to
Internal Revenue Code Section 162(m) issued by the Department of Treasury.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success of the Company and its Subsidiaries by providing incentives to Eligible
Individuals that will link their personal interests to the long-term financial
success of the Company and its Subsidiaries and to growth in shareholder value.
The Plan is designed to provide flexibility to the Company and its Subsidiaries
in their ability to motivate, attract, and retain the services of Eligible
Individuals upon whose judgment, interest, and special effort the successful
conduct of their operations is largely dependent.
1.3 Duration of the Plan. The Plan commences on the date on which
shareholders first approve the Plan, and shall remain in effect, subject to the
right of the Board of Trustees to terminate the Plan at any time pursuant to
Article 13 herein, until all Shares subject to it shall have been purchased or
acquired according to the provisions herein. However, in no event may an Award
be granted under the Plan on or after the tenth anniversary of the effective
date of the Plan.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" or "Awards" means, individually or collectively, a
grant under this Plan of Incentive Share Options, Nonqualified
Share Options, Share Appreciation Rights, Restricted Shares,
Performance Units, Performance Shares or Share Units.
(b) "Award Agreement" means the agreement required under Article 3
evidencing an Award under this Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
(d) "Board" or "Board of Trustees" means the Board of Trustees of
the Company.
(e) "Cause" means the occurrence of any one of the following:
(i) The willful and continued failure by a Participant to
substantially perform his/her duties (other than any such
failure resulting from the Participant's disability),
after a written demand for substantial performance is
delivered to the Participant that specifically identifies
the manner in which the Company or any of its
Subsidiaries, as the case may be, believes that the
1
<PAGE>
Participant has not substantially performed his/her
duties, and the Participant has failed to remedy the
situation within ten (10) business days of receiving such
notice; or
(ii) the Participant's conviction for committing a felony in
connection with the employment or service relationship;
or
(iii) the willful engaging by the Participant in gross
misconduct materially and demonstrably injurious to the
Company or any of its Subsidiaries. However, no act, or
failure to act, on the Participant's part shall be
considered "willful" unless done, or omitted to be done,
by the Participant not in good faith and without
reasonable belief, that his/her action or omission was in
the best interest of the Company or any of its
Subsidiaries.
(f) "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) any Person (other than Veqtor Finance Company, LLC or its
affiliates as that term is defined under the rules and
regulations promulgated under the Exchange Act, a trustee
or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries,
or a corporation owned directly or indirectly by the
shareholders of the Company in substantially the same
proportions as their ownership of Shares of the Company),
is or becomes the Beneficial Owner, directly or
indirectly, of 20% or more of the Voting Securities of
the Company;
(ii) the Board shall at any time consist of a majority of
individuals (the "New Majority") who where elected or
appointed Trustees of the Company without the approval of
a majority of the Trustees either (A) in office prior to
the election or appointment of the first of the Trustees
comprising the New Majority, or (B) appointed by or
elected with the approval of such Trustees; or
(iii)the shareholders of the Company approve (A) a plan of
complete liquidation of the Company; or (B) an agreement
for the sale or disposition of all or substantially all
the Company's assets; or (C) a merger or consolidation of
the Company with any other corporation, other than a
merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the surviving entity), at least 50% of the combined
voting power of the Voting Securities of the Company (or
such surviving entity) outstanding immediately after such
merger or consolidation.
However, in no event shall a Change in Control be deemed to
have occurred, with respect to a Participant, if the
Participant is part of a purchasing group which consummates
the Change in Control transaction. The Participant shall be
deemed "part of a purchasing group..." for purposes of the
preceding sentence if the Participant is an equity participant
or has agreed to become an equity participant in the
purchasing company or group (except for (i) passive ownership
of less than 5% of the combined voting power of the purchasing
company or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not deemed to
be significant, as determined prior to the Change in Control
by a majority of the nonemployee continuing members of the
Board).
(g) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(h) "Committee" means the committee appointed by the Board to
administer the Plan pursuant to Article 3 herein.
2
<PAGE>
(i) "Common Shares" means the class A common shares, per value
$1.00 per share, of beneficial interest in the Company.
(j) "Company" means California Real Estate Investment Trust, a
California trust, or any successor thereto.
(k) "Covered Employee" means any Participant designated prior to
the grant of Restricted Shares, Performance Units or
Performance Shares by the Committee who is or may be a
"covered employee" within the meaning of Section 162(m)(3) of
the Code in the year in which such Restricted Shares,
Performance Units or Performance Shares are taxable to such
Participant.
(l) "Eligible Individual" means an employee of the Company or any
of its Subsidiaries, including an employee who is an officer
or a Trustee of the Company or any of its Subsidiaries, or a
consultant or service provider to the Company or any of its
Subsidiaries who, in the opinion of the Committee, can
contribute significantly to the growth and profitability of
the Company and its Subsidiaries.
"Eligible Individual" also may include any other employee,
consultant or service provider, identified by the Committee,
in special situations involving extraordinary performance,
promotion, retention, or recruitment.
(m) "Election Form" means the form under which a Participant
elects to receive Shares granted under a Share Unit Award upon
the occurrence of certain events.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(o) "Fair Market Value" means the closing price of the Shares on a
securities exchange, or if the Shares were not traded on an
exchange, the average of the highest price and lowest price at
which the Shares were traded, as reported on the Nasdaq
National Market, on the relevant date, or on the most recent
date on which the Shares were traded prior to such date.
(p) "Incentive Share Option" or "ISO" means an option to purchase
Shares, granted to a Participant pursuant to Article 6 herein,
which is designated as an incentive share option and is
intended to meet the requirements of Section 422 of the Code.
(q) "Nonqualified Share Option" or "NQSO" means an option to
purchase Shares, granted to a Participant pursuant to Article
6 herein, which is not intended to be an Incentive Share
Option.
(r) "Option" or "Options" means an Incentive Share Option or a
Nonqualified Share Option.
(s) "Option Agreement" means an Award Agreement evidencing an
Option Award granted under Article 6 herein.
(t) "Outside Trustee" means any Trustee who qualifies as an
"outside director" as that term is defined in Code Section
162(m) and the regulations issued thereunder.
(u) "Participant" means an Eligible Individual who has been
granted an Award under the Plan.
(v) "Performance Share" means an Award, designated as a
performance share, granted to a Participant pursuant to
Article 9 herein.
(w) "Performance Unit" means an Award, designated as a performance
unit, granted to a Participant pursuant to Article 9 herein.
3
<PAGE>
(x) "Period of Restriction" means the period during which the
transfer of Restricted Shares is restricted, during which the
Participant is subject to a substantial risk of forfeiture,
pursuant to Article 8 herein.
(y) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in Section
13(d) thereof.
(z) "Plan" means this Long-Term Incentive Share Plan of the
Company, as herein described and as hereafter from time to
time amended.
(aa) "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a "pooling of
interests" under generally accepted accounting principles.
(bb) "Restricted Shares" means an Award granted to a Participant
pursuant to Article 8 herein.
(cc) "Restricted Share Agreement" means an Award Agreement
evidencing a Restricted Share Award granted under Article 8
herein.
(dd) "Subsidiary" means any corporation of which more than 50% (by
number of votes) of the combined voting power of outstanding
securities is owned, directly or indirectly, by the Company.
(ee) "Share" or "Shares" means the Common Shares.
(ff) "Share Unit" means a derivative interest in Shares granted to
a Participant pursuant to Article 9 herein which is credited
to a bookkeeping account and paid out on a one-for-one basis
in Shares.
(gg) "Share Appreciation Right" or "SAR" means an Award, designated
as a Share Appreciation Right, granted to a Participant
pursuant to Article 7 herein.
(hh) "Trustee" means a member of the Board.
(ii) "Voting Securities" means Shares or securities of any class or
classes of securities of the Company, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect
a majority of the Trustees.
2.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Board or by a
committee (the "Committee") consisting of not less than two Trustees who shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Trustees. To the extent required to comply with Rule 16b-3 under the
Exchange Act, each member of the Committee shall qualify as a "Non-Employee
Director" as defined in Rule 16b-3 or any successor definition adopted by the
Securities and Exchange Commission or Awards made under the Plan will be made in
accordance with another available exception, including approval by the full
Board or Trustees or the shareholders. To the extent required to comply with
Code Section 162(m), each member of the Committee also shall be an Outside
Trustee.
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<PAGE>
3.2 Authority of the Committee. Subject to the provisions of the Plan,
the Committee shall have full power to construe and interpret the Plan; to
establish, amend or waive rules and regulations for its administration; to
accelerate the exercisability of any Award or the end of a performance period or
the termination of any Period of Restriction or any Award Agreement, or any
other instrument relating to an Award under the Plan; and (subject to the
provisions of Article 13 herein) to amend the terms and conditions of any
outstanding Option, Share Appreciation Right or other Award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the Plan. Notwithstanding the foregoing, the Committee shall have no authority
to adjust upwards the amount payable to a Covered Employee with respect to a
particular Award, to take any of the foregoing actions or to take any other
action to the extent that such action or the Committee's ability to take such
action would cause any Award under the Plan to any Covered Employee to fail to
qualify as "performance-based compensation" within the meaning of Code Section
162(m)(4) and the regulations issued thereunder. Also notwithstanding the
foregoing, no action of the Committee (other than pursuant to Section 4.3 hereof
or Section 9.6 hereof) may, without the consent of the person or persons
entitled to exercise any outstanding Option or Share Appreciation Right or to
receive payment of any other outstanding Award, adversely affect the rights of
such person or persons.
3.3 Selection of Participants. The Committee shall have the authority
to grant Awards under the Plan, from time to time, to such Eligible Individuals
(including officers and Trustees who are employees) as may be selected by it.
The Committee shall select Participants from among those who they have
identified as being Eligible Individuals.
3.4 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Trustees shall be final, conclusive and binding on
all persons, including the Company and its Subsidiaries, its shareholders,
employees, and Participants and their estates and beneficiaries, and such
determinations and decisions shall not be reviewable.
3.5 Delegation of Certain Responsibilities. The Committee may, in its
sole discretion, delegate to an officer or officers of the Company the
administration of the Plan under this Article 3; provided, however, that no such
delegation by the Committee shall be made with respect to the administration of
the Plan as it affects officers of the Company or its Subsidiaries and provided
further that the Committee may not delegate its authority to correct errors,
omissions or inconsistencies in the Plan. The Board or the Committee may
delegate to the Chief Executive Officer of the Company its authority under this
Article 3 to grant Awards to Eligible Individuals who are not Covered Employees
or who are not officers or Trustees of the Company or its Subsidiaries subject
to the reporting requirements of Section 16(a) of the Exchange Act. All
authority delegated by the Board or the Committee under this Section 3.5 shall
be exercised in accordance with the provisions of the Plan and any guidelines
for the exercise of such authority that may from time to time be established by
the Board or the Committee.
3.6 Procedures of the Board or the Committee. All determinations of the
Board or the Committee shall be made by not less than a majority of its members
present at the meeting (in person or otherwise) at which a quorum is present. A
majority of the entire Board or the Committee shall constitute a quorum for the
transaction of business. Any action required or permitted to be taken at a
meeting of the Board or the Committee may be taken without a meeting if a
unanimous written consent, which sets forth the action, is signed by each member
of the Board or the Committee and filed with the minutes for proceedings of the
Board or the Committee. Service on the Board or the Committee shall constitute
service as a Trustee of the Company so that members of the Board or the
Committee shall be entitled to indemnification, limitation of liability and
reimbursement of expenses with respect to their services as members of the Board
or the Committee to the same extent that they are entitled under the Company's
Certificate of Incorporation and California law for their services as Trustees
of the Company.
3.7 Award Agreements. Each Award under the Plan shall be evidenced by
an Award Agreement which shall be signed by an authorized officer of the Company
and by the Participant, and shall contain such terms and conditions as may be
approved by the Board or the Committee. Such terms and conditions need not be
the same in all cases.
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3.8 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Board or the Committee may impose such conditions on any Award
(including, without limitation, the right of the Board or the Committee to limit
the time of exercise to specified periods) as may be required to satisfy the
requirements of Rule 16b-3 (or any successor rule) under the Exchange Act ("Rule
16b-3").
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The maximum number of Shares that may be made the
subject of Awards granted under the Plan is two million (2,000,000) reduced by
the number of Shares made the subject of Awards under the Company's 1997
Non-Employee Trustee Share Plan; provided, however, that the maximum number of
Shares that may be the subject of Awards granted to any Eligible Individual
during the term of the Plan may not exceed 500,000 Shares and the maximum amount
payable in cash to any Eligible Individual with respect to any Performance
Period pursuant to any Performance Unit or Performance Share Award shall be
$1,000,000. Upon a change in capitalization or authorized shares (as described
in Section 4.3) the maximum number of Shares shall be adjusted in number and
kind pursuant to Section 4.3. The Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, the number of Shares as shall be
determined by the Board. Upon the granting of an Award, the number of Shares
available under Section 4.1 for the granting of further Awards shall be reduced
as follows:
(a) In connection with the granting of an Award (other than
the granting of a Performance Unit denominated in dollars), the number of Shares
shall be reduced by the number of Shares in respect of which the Award is
granted or denominated.
(b) In connection with the granting or a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (a) the dollar amount in which the Performance Unit is
denominated, divided by (b) the Fair Market value of a Share on the date the
Performance Unit is granted.
4.2 Lapsed Awards. If any Award (other than Restricted Shares) granted
under this Plan terminates, expires, or lapses for any reason, any Share subject
to such Award again shall be available for the grant of an Award under the Plan,
subject to Section 7.2 herein.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, share
dividend, split-up, share combination, or other change in affecting the
Company's Common Shares, such adjustment shall be made in the number and class
of Shares which may be delivered under the Plan, and in the number and class of
and/or price of Shares subject to outstanding Options, Share Appreciation
Rights, Restricted Share Awards, Performance Shares, Performance Units and Share
Units granted under the Plan, as may be determined to be appropriate and
equitable by the Board or the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; and provided that the number of Shares
subject to any Award shall always be a whole number. Any adjustment of an
Incentive Share Option under this paragraph shall be made in such a manner so as
not to constitute a modification within the meaning of Section 425(h)(3) of the
Code.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include
all employees of and consultants or service providers to the Company or any of
its Subsidiaries who, in the opinion of the Board or the Committee, are Eligible
Individuals. "Eligible Individuals" may include employees who are members of the
Board, but may not include Trustees who are not employees of the Company or any
of its Subsidiaries.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Board or the Committee may from time to time select those Eligible Individuals
to whom Awards shall be granted and determine the nature and amount of each
Award. No individual shall have any right to be granted an Award under this Plan
even if previously granted an Award.
ARTICLE 6. STOCK OPTIONS
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6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Eligible Individuals at any time and from time to time
as shall be determined by the Board or the Committee. The Board or the Committee
shall have the sole discretion, subject to the requirements of the Plan, to
determine the actual number of Shares subject to Options granted to any
Participant. The Board or the Committee may grant any type of Option that is
permitted by law at the time of grant including, but no limited to, ISOs and
NQSOs; provided, however, ISOs may only be granted to Eligible Individuals who
are employees or the Company or a Subsidiary at the time of grant. Unless
otherwise expressly provided at the time of grant, Options granted under the
Plan will be NQSOs.
6.2 Limitation on Exercisability. The aggregate Fair Market Value
(determined as of the date of grant) of the Shares issuable pursuant to an ISO
under this Plan and under any other plan of the Company, any parent corporation
or any Subsidiary of the Company, which are exercisable for the first time by
any employee during any calendar year, shall not exceed $100,000. Options for
Shares which are exercisable for the first time by any employee during any
calendar year in excess of $100,000 shall be treated as NQSOs, in accordance
with Section 422(d)(i) of the Code.
6.3 Option Agreement. Each Option grant shall be evidenced by an
Option Agreement that shall specify the type of Option granted, the Option
price, the duration of the Option, the number of Shares to which the Option
pertains, and such other provisions as the Board or the Committee shall
determine. The Option Agreement shall specify whether the Option is intended to
be an Incentive Share Option within the meaning of Section 422 of the Code, or a
Nonqualified Share Option whose grant is not intended to be subject to the
provisions of Code Section 422.
6.4 Option Price. The purchase price per share of an Option shall be
determined by the Board or the Committee but shall not be less than the Fair
Market Value of the Shares on the date the Option is granted.
An Incentive Share Option granted to an employee, who at the time of
grant, owns (within the meaning of Section 425(d) of the Code) Shares possessing
more than 10% of the total combined voting power of all classes of Shares of the
Company, shall have an exercise price which is at least 110% of the Fair Market
Value of the Shares subject to the Option.
6.5 Duration of Options. Each Option shall expire at such time as the
Board or the Committee shall determine at the time of grant, provided, however,
that no ISO shall be exercisable later than the tenth (10th) anniversary date of
its grant, and no ISO granted to any individual who owns more than 10% of the
Voting Securities of the Company shall be exercisable later than the fifth (5th)
anniversary date of its grant.
6.6 Exercise of Options. Subject to Section 3.8 herein, Options
granted under the Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Board or the Committee shall in each instance
approve, which need not be the same for all Participants.
6.7 Payment. Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the Shares. The
purchase price upon exercise of any Option shall be payable to the Company in
full either (a) in cash or its equivalent, (b) by tendering previously acquired
Shares having a Fair Market Value at the time of exercise equal to the total
purchase price, (c) by foregoing compensation under rules established by the
Board or the Committee, or (d) by a combination of (a), (b), or (c). The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general purposes. As soon as practicable, after receipt of
written notification and payment, the Company shall deliver to the Participant
Share certificates in an appropriate amount based upon the number of Options
exercised, issued in the Participant's name.
6.8 Restrictions on Share Transferability. The Board or the Committee
shall impose such restrictions on any Shares acquired pursuant to the exercise
of an Option under the Plan as it may deem advisable, including,
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without limitation, restrictions under applicable Federal securities law, under
the requirements of any securities exchange upon which such Shares are then
listed and under any applicable blue sky or state securities laws.
6.9 Termination of Employment or Service Due to Death, Disability, or
Retirement. In the event the employment or service of a Participant is
terminated by reason of death, the Participant's outstanding Options may be
exercised at any time prior to the expiration date of the Options or within one
year after such date of termination of employment or service, whichever period
is shorter, but only to the extent that the Participant was entitled to exercise
the Options at the date of his termination, by such person or persons as shall
have acquired the Participant's rights under the Option pursuant to Article 10
hereof or by will or by the laws of descent and distribution. In the event the
employment of a Participant is terminated by reason of disability (as defined
under the then established rules of the Company or any of its Subsidiaries, as
the case may be), the Participant's outstanding Options may be exercised at any
time prior to the expiration date of the Options or within one year after such
date of termination of employment or service, whichever period is shorter but
only to the extent that the Participant was entitled to exercise the Options on
the date of his termination. In the event the employment or service of a
Participant who is an employee is terminated by reason of retirement, the
Participant's outstanding Options may be exercised (subject to Section 3.8
herein) at any time prior to the expiration date of the Options or within 90
days after such date of termination of employment or service, whichever period
is shorter, but only to the extent that the Participant was entitled to exercise
the Options on the date of his termination. In the case of Incentive Share
Options, the favorable tax treatment prescribed under Section 422 of the
Internal Revenue Code of 1986, as amended, may not be available if the Options
are not exercised within the Code Section 422 prescribed time period after
termination of employment for death, disability, or retirement.
6.10 Termination of Employment or Service for Other Reasons. If the
employment or service of a Participant shall terminate for any reason other than
death, disability, retirement (in the case of an employee) or for Cause, the
Participant shall have the right to exercise outstanding Options at any time
prior to the expiration date of the Options or within the 90 days after the date
of his termination, whichever period is shorter, but only to the extent that the
Participant was entitled to exercise the Options at the date of his termination
of employment or service. In its sole discretion, the Company may extend the 90
days to up to one year, but in no event beyond the expiration date of the
Option.
If the employment or service of the Participant shall terminate for
Cause, all of the Participant's outstanding Options shall be immediately
forfeited back to the Company.
6.11 Nontransferability of Options. No Option granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution.
Further, all Options granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant.
ARTICLE 7. SHARE APPRECIATION RIGHTS
7.1 Grant of Share Appreciation Rights. Subject to the terms and
conditions of the Plan, Share Appreciation Rights may be granted to
Participants, at the discretion of the Board or the Committee, in any of the
following forms:
(a) In lieu of Options;
(b) In addition to Options;
(c) Independent of Options; or
(d) In any combination of (a), (b), or (c).
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The Board or the Committee shall have the sole discretion, subject to the
requirements of the Plan, to determine the actual number of Shares subject to
SARs granted to any Participant.
7.2 Exercise of SARs in Lieu of Options. SARs granted in lieu of
Options may be exercised for all or part of the Shares subject to the related
Option upon the surrender of the related Options representing the right to
purchase an equivalent number of Shares. SARs may be exercised only with respect
to the Shares for which its related Option is then exercisable. Option Shares
with respect to which SARs shall have been exercised may not be subject again to
an Award under the Plan.
Notwithstanding any other provision of the Plan to the contrary, with
respect to an SAR granted in lieu of an Incentive Share Option, (i) the SAR will
expire no later than the expiration of the underlying Incentive Share Option;
(ii) the SAR amount may be for no more than one hundred percent (100%) of the
difference between the exercise price of the underlying Incentive Share Option
and the Fair Market Value of the Shares subject to the underlying Incentive
Share Option at the time the SAR is exercised; and (iii) the SAR may be
exercised only when the Fair Market Value of the Shares subject to the Incentive
Share Option exceeds the exercise price of the Incentive Share Option.
7.3 Exercise of SARs in Addition to Options. SARs granted in addition
to Options shall be deemed to be exercised upon the exercise of the related
Options. The deemed exercise of SARs granted in addition to Options shall not
necessitate a reduction in the number of related Options.
7.4 Exercise of SARs Independent of Options. Subject to Section 3.8
herein and Section 7.5 herein, SARs granted independently of Options may be
exercised upon whatever terms and conditions the Board or the Committee, in its
sole discretion, imposes upon the SARs, including, but not limited to, a
corresponding proportional reduction in previously granted Options.
7.5 Payment of SAR Amount. Upon exercise of the SAR, the holder shall
be entitled to receive payment of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on the
date of exercise over the price fixed by the Board or the
Committee at the date of grant (which price shall not be less
than 100% of the market price of a Share on the date of grant)
(the "Exercise Price"); by
(b) The number of Shares with respect to which the SAR is exercised.
7.6 Form and Timing of Payment. Payment to a Participant, upon SAR
exercise, will be made in cash or Shares, at the discretion of the Board or the
Committee, within ten calendar days of the exercise.
7.7 Term of SAR. The term of an SAR granted under the Plan shall not
exceed ten years.
7.8 Termination of Employment or Service. In the event the employment
or service of a Participant is terminated by reason of death, disability,
retirement (in the case of an employee), for Cause, or any other reason, the
exercisability of any outstanding SAR granted in lieu of or in addition to an
Option shall terminate in the same manner as its related Option as specified
under Sections 6.8 and 6.9 herein. The exercisability of any outstanding SARs
granted independent of Options also shall terminate in the manner provided under
Sections 6.8 and 6.9 hereof.
7.9 Nontransferability of SARs. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
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ARTICLE 8. RESTRICTED SHARES
8.1 Grant of Restricted Shares. Subject to the terms and provisions of
the Plan, the Board or the Committee, at any time and from time to time, may
grant Restricted Shares under the Plan to such Participants and in such amounts
as it shall determine. In the case of Covered Employees, the Board or the
Committee may condition the vesting or lapse of the Period of Restriction
established pursuant to Section 8.3 upon the attainment of one or more of the
Performance Goals utilized for purposes of Performance Units and Performance
Shares pursuant to Article 9 hereof.
8.2 Restricted Share Agreement. Each Restricted Share grant shall be
evidenced by a Restricted Share Agreement that shall specify the Period of
Restriction, or periods, the number of Restricted Shares granted, and such other
provisions as the Board or the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8 or in
Section 3.8 herein, the Restricted Shares granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
termination of the applicable Period of Restriction or for such period of time
as shall be established by the Board or the Committee and as shall be specified
in the Restricted Share Agreement, or upon earlier satisfaction of other
conditions (including any Performance Goals as defined below) as specified by
the Board or the Committee in its sole discretion and set forth in the
Restricted Share Agreement. All rights with respect to the Restricted Shares
granted to a Participant under the Plan shall be exercisable during his lifetime
only by such Participant.
8.4 Other Restrictions. The Board or the Committee shall impose such
other restrictions on any Restricted Shares granted pursuant to the Plan as it
may deem advisable including, without limitation, restrictions under applicable
Federal or state securities laws, and the Board or the Committee may legend
certificates representing Restricted Shares to give appropriate notice of such
restrictions.
8.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 8.4 herein, each certificate representing
Restricted Shares granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the Long-Term
Incentive Share Plan of California Real Estate Investment Trust, in the
rules and administrative procedures adopted pursuant to such Plan, and
in a Restricted Share Agreement dated . A copy of the Plan, such rules
and procedures and such Restricted Share Agreement may be obtained from
the Secretary of California Real Estate Investment Trust."
8.6 Removal of Restrictions. Except as otherwise provided in this
Article and subject to applicable securities laws and restrictions imposed
pursuant thereto, Restricted Shares shall become transferable by the Participant
after the last day of the Period of Restriction. Once the Shares are released
from the restrictions, the Participant shall be entitled to have the legend
required by Section 8.5 removed from his Share certificate.
8.7 Voting Rights. During the Period of Restriction, Participants
holding Restricted Shares granted hereunder may exercise full voting rights with
respect to those Shares.
8.8 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Restricted Shares granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions on
transferability as the Restricted Shares with respect to which they were paid.
8.9 Termination of Employment or Service. In the event that a
Participant terminates his employment or service with the Company or any of its
Subsidiaries for any reason or is terminated for Cause during the Period of
Restriction, then any Restricted Shares still subject to restrictions as of the
date of such termination shall
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automatically be forfeited and returned to the Company; provided, however, that
in the event of an involuntary termination of the employment or service of a
Participant by the Company or any of its Subsidiaries other than for Cause, the
Board or the Committee, in its sole discretion (subject to Section 3.8 herein),
may waive the automatic forfeiture of any or all such Shares and may add such
new restrictions to such Restricted Shares as it deems appropriate.
ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND SHARE UNITS
9.1 Grant of Performance Units, Performance Shares or Share Units.
Subject to the terms and provisions of the Plan, Performance Units, Performance
Shares or Share Units may be granted to Participants at any time and from time
to time as shall be determined by the Board or the Committee. The Board or the
Committee shall have complete discretion in determining the number of
Performance Units, Performance Shares or Share Units granted to each
Participant.
9.2 Value of Performance Units and Performance Shares. The Board or
the Committee shall set certain periods to be determined in advance by the Board
or the Committee (the "Performance Periods"). Prior to each grant of Performance
Units or Performance Shares, the Board or the Committee shall establish an
initial value for each Performance Unit and an initial number of Shares for each
Performance Share granted to each Participant for that Performance Period. Prior
to each grant of Performance Units or Performance Shares, the Board or the
Committee also shall set the performance goals (the "Performance Goals") that
will be used to determine the extent to which the Participant receives a payment
of the value of the Performance Units or number of Shares for the Performance
Shares awarded for such Performance Period. These goals will be based on the
attainment, by the Company or its Subsidiaries, of certain objective or
subjective performance measures, which shall include one or more of the
following: total shareholder return, return on equity, return on capital,
earnings per share, market price, share price, revenues, costs, net income, cash
flow and retained earnings. Such Performance Goals also may be based upon the
attainment of specified levels of performance of the Company or one or more
Subsidiaries under one or more measures described above relative to the
performance of other corporations. With respect to each such performance measure
utilized during a Performance Period, the Board or the Committee shall assign
percentages to various levels of performance which shall be applied to determine
the extent to which the Participant shall receive a payout of the values of
Performance Units and number of Performance Shares awarded. With respect to
Covered Employees, all Performance Goals shall be objective performance goals
satisfying the requirements for "performance-based compensation" within the
meaning of Section 162(m)(4) of the Code, and shall be set by the Board or the
Committee within the time period prescribed by Section 162(m) of the Code and
related regulations.
9.3 Payment of Performance Units and Performance Shares. After a
Performance Period has ended, the holder of a Performance Unit or Performance
Share shall be entitled to receive the value thereof as determined by the Board
or the Committee. The Board or the Committee shall make this determination by
first determining the extent to which the Performance Goals set pursuant to
Section 9.2 have been met. It will then determine the applicable percentage
(which may exceed 100%) to be applied to, and will apply such percentage to, the
value of Performance Units or number of Performance Shares to determine the
payout to be received by the Participant. In addition, with respect to
Performance Units and Performance Shares granted to any Covered Employee, no
payout shall be made hereunder except upon written certification by the Board or
the Committee that the Applicable Performance Goal or Goals have been satisfied
to a particular extent.
9.4 Value of Share Units. Subject to the terms and provisions of the
Plan, Share Units may be granted to Participants at any time and from time to
time on such terms as shall be determined by the Board or the Committee. The
Board or the Committee shall have complete discretion in determining the number
of Share Units granted to each Participant. Share Units shall be payable in
Shares upon the occurrence of certain trigger events set forth on the
Participant's Election Form in his or her complete discretion (the "Trigger
Events"). The terms and conditions of the Trigger Events may vary by Share Unit
Award, by Participant, or both. The Election Form shall be filed with the
Secretary of the Company prior to the date on which any Share Unit Award is
made. Such election will be irrevocable as to any Share Unit Award made after
delivery of the Election Form to the Company, and it
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shall continue in effect until revoked, increased or decreased prospectively by
Participant prior to the grant of any future Share Unit Award for which the
change is effective.
9.5 Accounting for Share Units. The Participant's Share Unit Award
shall be credited by the Company to a bookkeeping account to reflect the
Company's liability to that Participant (the "Share Unit Account"). Each Share
Unit is credited as a Share equivalent on the date so credited. Additional Share
equivalents may be added to the Share Unit Account equal to the amount of Share
that could be purchased with dividends equal to that paid on one Share,
multiplied by the number of Share equivalents then existing in the Share Unit
Account, based on the Fair Market Value of the Share on the date a dividend is
paid. Because the Trigger Events of each Share Unit Award may differ, the
Company shall establish a separate Share Unit Account for each separate Share
Unit Award. Upon the occurrence of particular Trigger Events, the holder of a
Share Unit Award shall be entitled to receive a number of Shares which
corresponds to the number of Share Units granted as part of the initial Share
Unit Award, as such amount may have been increased to reflect dividends paid
with respect thereto. Because the payout of Share Unit Awards is not based on
objective performance goals, such award will not constitute "performance-based"
compensation within the meaning of Section 162(m)(4)(C) of the Code and, as
such, will count toward the annual $1,000,000 deduction limit.
9.6 Board or Committee Discretion to Adjust Awards. Subject to Section
3.2 regarding Awards to Covered Employees, the Board or the Committee shall have
the authority to modify, amend or adjust the terms and conditions of any
Performance Unit Award, Performance Share Award or Share Unit Award, at any time
or from time to time, including but not limited to the Performance Goals.
9.7 Form of Payment. The value of a Performance Unit or a Performance
Share may be paid in cash, Shares, or a combination thereof as determined by the
Board or the Committee. In the case of Share Units, payment shall be made in
Shares. Payment may be made in a lump sum or installments as prescribed by the
Board or the Committee. If any payment is to be made on a deferred basis, the
Board or the Committee may provide for the payment of dividend equivalents or
interest during the deferral period.
9.8 Termination of Employment or Service Due to Death, Disability, or
Retirement. In the case of death, disability, or retirement (in the case of a
Participant who is an employee) (each of disability and retirement as defined
under the established rules of the Company or any of its Subsidiaries, as the
case may be), the holder of a Performance Unit or Performance Share shall
receive a prorated payment based on the Participant's number of full months of
service during the Performance Period, further adjusted based on the achievement
of the Performance Goals during the entire Performance Period, as computed by
the Board or the Committee. Payment shall be made at the time payments are made
to Participants who did not terminate service during the Performance Period. In
the case of Share Units, all such Share Units held, to the extent vested at the
date of such Participant's termination of employment or service, will be paid as
set forth in the Participant's Election Form.
9.9 Termination of Employment or Service for Other Reasons. In the
event that a Participant terminates employment or service with the Company or
any of its Subsidiaries for any reason other than death, disability, or
retirement, all Performance Units and Performance Shares shall be forfeited;
provided, however, that in the event of an involuntary termination of the
employment or service of the Participant by the Company or any of its
Subsidiaries other than for Cause, the Board or the Committee in its sole
discretion may waive the automatic forfeiture provisions and pay out on a pro
rata basis. In the case of termination other than for Cause, all Share Units
held, to the extent vested at the date of such Participant's termination of
employment or service, will be paid as set forth in the Participant's Election
Form. However, in the event of termination for Cause, all Share Units held will
be forfeited.
9.10 Nontransferability. No Performance Units, Performance Shares or
Share Units granted under the Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Performance
Period or, in the case of Share Units, vesting and payment. All rights with
respect to Performance Units, Performance Shares and Share Units granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
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ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively and
who may include a trustee under a will or living trust) to whom any benefit
under the Plan is to be paid in case of his death before he receives any or all
of such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Board or the Committee, and
will be effective only when filed by the Participant in writing with the Board
or the Committee during his lifetime. In the absence of any such designation or
if all designated beneficiaries predecease the Participant, benefits remaining
unpaid at the Participant's death shall be paid to the Participant's estate.
ARTICLE 11. RIGHTS OF EMPLOYEES
11.1 Employment or Service. Nothing in the Plan shall interfere with
or limit in any way the right of the Company or any of its Subsidiaries to
terminate any Participant's employment or service at any time, nor confer upon
any Participant any right to continue in the employ or service of the Company or
any of its Subsidiaries.
11.2 Participation. No individual shall have the right to be selected
as a Participant, or, having been so selected, to be selected again as a
Participant.
11.3 No Implied Rights; Rights on Termination of Service. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving
any Participant, beneficiary, or any other person any legal or equitable right
unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Board or the Committee in accordance with the terms and
provisions of the Plan. Except as expressly provided in this Plan, neither the
Company nor any of its Subsidiaries shall be required or be liable to make any
payment under the Plan.
11.4 No Right to Company Assets. Neither the Participant nor any other
person shall acquire, by reason of the Plan, any right in or title to any
assets, funds or property of the Company or any of its Subsidiaries whatsoever
including, without limiting the generality of the foregoing, any specific funds,
assets, or other property which the Company or any of its Subsidiaries, in its
sole discretion, may set aside in anticipation of a liability hereunder. Any
benefits which become payable hereunder shall be paid from the general assets of
the Company or the applicable subsidiary. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company or any of its Subsidiaries. Nothing contained in the Plan
constitutes a guarantee by the Company or any of its Subsidiaries that the
assets of the Company or the applicable Subsidiary shall be sufficient to pay
any benefit to any person.
ARTICLE 12. CHANGE IN CONTROL
12.1 Share Based Awards. Notwithstanding any other provisions of the
Plan, in the event of a Change in Control, all Share based Awards granted under
this Plan shall immediately vest 100% in each Participant (subject to Section
3.8 herein), including Incentive Share Options, Nonqualified Share Options,
Share Appreciation Rights, Restricted Shares and Share Units.
12.2 Performance Based Awards. Notwithstanding any other provisions of
the Plan, in the event of a Change in Control, all performance based Awards
granted under this Plan shall be immediately paid out in cash, including
Performance Units and Performance Shares. The amount of the payout shall be
based on the higher of: (i) the extent, as determined by the Board or the
Committee, to which Performance Goals, established for the Performance Period
then in progress have been met up through and including the effective date of
the Change in Control or (ii) 100% of the value on the date of grant of the
Performance Units or number of Performance Shares.
12.3 Pooling Transactions. Notwithstanding anything contained in the
Plan or any agreement to the contrary, in the event of a Change in Control which
is also intended to constitute a Pooling Transaction, the Board
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or the Committee shall take such actions, if any, which are specifically
recommended by an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the Pooling Transaction will
qualify as such, including but not limited to (a) deferring the vesting,
exercise, payment or settlement with respect to any Award, (b) providing that
the payment or settlement in respect of any Award be made in the form of cash,
Shares or securities of a successor or acquired of the Company, or a combination
of the foregoing and (c) providing for the extension of the term of any Award to
the extent necessary to accommodate the foregoing, but not beyond the maximum
term permitted for any Award.
ARTICLE 13. AMENDMENT, MODIFICATION AND TERMINATION
13.1 Amendment, Modification and Termination. At any time and from time
to time, the Board may terminate, amend, or modify the Plan, subject to the
approval of the shareholders of the Company if required by the Code, by the
insider trading rules of Section 16 of the Exchange Act, by any securities
exchange or system on which the Shares are then listed or reported or by any
regulatory body having jurisdiction with respect hereto.
13.2 Awards Previously Granted. No termination, amendment or
modification of the Plan other than pursuant to Section 4.3 hereof shall in any
manner adversely affect any Award theretofore granted under the Plan, without
the written consent of the Participant.
ARTICLE 14. WITHHOLDING
14.1 Tax Withholding. The Company and any of its Subsidiaries shall
have the power and the right to deduct or withhold, or require a Participant to
remit to the Company or any of its Subsidiaries, an amount sufficient to satisfy
Federal, state and local taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any grant, exercise, or payment
made under or as a result of this Plan.
14.2 Share Delivery or Withholding. With respect to withholding
required upon the exercise of Nonqualified Share Options, or upon the lapse of
restrictions on Restricted Shares, Participants may elect, subject to the
approval of the Board or the Committee, to satisfy the withholding requirement,
in whole or in part, by tendering to the Company previously acquired Shares or
by having the Company withhold Shares, in each such case in an amount having a
Fair Market Value equal to the amount required to be withheld to satisfy the tax
withholding obligations described in Section 14.1. The value of the Shares to be
tendered or withheld is to be based on the Fair Market Value of the Shares on
the date that the amount of tax to be withheld is to be determined. All Share
withholding elections shall be irrevocable and made in writing, signed by the
Participant on forms approved by the Board or the Committee in advance of the
day that the transaction becomes taxable.
Share withholding elections made by Participants who are subject to the
short-swing profit restrictions of Section 16 of the Exchange Act must comply
with the additional restrictions of Section 16 and Rule 16b-3 in making their
elections.
ARTICLE 15. EFFECT OF CERTAIN TRANSACTIONS
Effect of Certain Transactions. Subject to Section 12, or as
otherwise provided in an agreement, in the event of (a) the liquidation or
dissolution of the Company or (b) a merger, consolidation or combination of the
Company (a "Transaction"), the Plan and the Awards issued hereunder shall
continue in effect in accordance with their respective terms except that
following a Transaction each Participant shall be entitled to receive in respect
of each Share subject to any outstanding Options or Awards, as the case may be,
upon exercise of any Option or payment or transfer in respect of any Award, the
same number and kind of Shares, securities, cash, property, or other
consideration that each holder of a Share was entitled to receive in the
Transaction in respect of a Share; provided, however, that such Shares,
securities, cash, property, or other consideration shall remain subject to all
of the conditions, restrictions and performance criteria which were applicable
to the Options or Awards prior to such Transaction.
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ARTICLE 16. REQUIREMENTS OF LAW
16.1 Requirements of Law. The granting of Awards and the issuance of
Shares under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges as may be required.
16.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of New York.
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AMENDMENT NUMBER 1
TO
CALIFORNIA REAL ESTATE INVESTMENT TRUST
1997 LONG-TERM INCENTIVE SHARE PLAN
WHEREAS, an amended and restated declaration of trust of
Capital Trust, formerly California Real Estate Investment Trust (the "Company"),
was approved by the shareholders and executed by the trustees of the Company on
July 15, 1997, thereby effecting the change in trust name to "Capital Trust";
WHEREAS, the Company maintains the California Real Estate
Investment Trust 1997 Long-term Incentive Share Plan ("Plan"); and
WHEREAS, the Company desires to amend the Plan to reflect
therein the change in trust name;
NOW THEREFORE, the Plan is amended effective as of July 15,
1997 by the addition of the following provision:
All references to "California Real Estate Investment Trust" in
the Plan shall be to "Capital Trust."
IN WITNESS WHEREOF, the Company has caused this amendment to
be executed by its duly authorized officer this 15th day of July 1997.
CAPITAL TRUST
(formerly California Real Estate Investment)
By:/s/ John R. Klopp
John R. Klopp
Chief Executive Officer
612402.1
Exhibit 10.2
CALIFORNIA REAL ESTATE INVESTMENT TRUST
1997 NON-EMPLOYEE TRUSTEE SHARE PLAN
<PAGE>
CALIFORNIA REAL ESTATE INVESTMENT TRUST
1997 NON-EMPLOYEE TRUSTEE SHARE PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan. On May 23, 1997, the Board of Trustees
of California Real Estate Investment Trust, a California trust (the "Company")
adopted, subject to the approval of shareholders, an incentive share plan for
members of the Board of Trustees known as the "1997 Non-Employee Trustee Share
Plan" (hereinafter referred to as the "Plan"), which permits the grant of
Nonqualified Share Options, Share Appreciation Rights, Restricted Share,
Performance Units, Performance Shares and Share Units.
1.2 Purpose of the Plan. The Purpose of the Plan is to promote the
success of the Company by providing incentives to Trustees that will link their
personal interests to the long-term financial success of the Company and to
growth in shareholder value. The Plan is designed to provide flexibility to the
Company in its ability to motivate, attract, and retain the services of Trustees
upon whose judgment, interest and special effort the successful conduct of the
Company's operations is largely dependent.
1.3 Duration of the Plan. The Plan commences on the date on which
shareholders first approve the Plan, and shall remain in effect, subject to the
right of the Board of Trustees to terminate the Plan at any time pursuant to
Article 13 herein, until all Shares subject to it shall have been purchased or
acquired according to the provisions herein. However, in no event may an Award
be granted under the Plan on or after the tenth anniversary of the effective
date of the Plan.
ARTICLE 2. DEFINITIONS AND CONSTRUCTIONS
2.1 Definitions: Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" or "Awards" means, individually or collectively, a
grant under this Plan of Nonqualified Share Options, Share
Appreciation Rights, Restricted Shares, Performance Units,
Performance Shares, or Share Units.
(b) "Award Agreement" means the agreement required under
Article 3 evidencing an Award under this Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
(d) "Board" or "Board of Trustees" means the Board of Trustees
of the Company.
(e) "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) any Person (other than Veqtor Finance
Company, LLC or its affiliates as that term
is defined under the rules and regulations
promulgated under the Exchange Act, a
trustee or other fiduciary holding
securities under an employee benefit plan of
the Company, or a corporation owned directly
or indirectly by the shareholders of the
Company in substantially the same
proportions as their ownership of Shares of
the Company), is or becomes the Beneficial
Owner, directly or indirectly, of 20% or
more of the Voting Securities of the
Company;
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(ii) the Board shall at any time consist of a
majority of individuals (the "New Majority")
who where elected or appointed Trustees of
the Company without the approval of a
majority of the Trustees either (A) in
office prior to the election or appointment
of the first of the Trustees comprising the
New Majority, or (B) appointed by or elected
with the approval of such Trustees; or
(iii) the shareholders of the Company approve (A)
a plan of complete liquidation of the
Company; or (B) an agreement for the sale or
disposition of all or substantially all the
Company's assets; or (C) a merger or
consolidation of the Company with any other
corporation, other than a merger or
consolidation which would result in the
Voting Securities of the Company outstanding
immediately prior thereto continuing to
represent (either by remaining outstanding
or by being converted into voting securities
of the surviving entity), at least 50% of
the combined voting power of the combined
voting power of the Company (or such
surviving entity) outstanding immediately
after such merger or consolidation.
However, in no event shall a Change in Control be deemed to
have occurred, with respect to a Participant, if the
Participant is part of a purchasing group which consummates
the Change in Control transaction. The Participant shall be
deemed "part of a purchasing group..." for purposes of the
preceding sentence if the Participant is an equity participant
or has agreed to become an equity participant in the
purchasing company or group (except for (i) passive ownership
of less than 5% of the Voting Securities of the purchasing
company or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not deemed to
be significant, as determined prior to the Change in Control
by a majority of the nonemployee continuing members of the
Board).
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(g) "Common Shares" means the class A common shares, par
value $1.00 per share, of beneficial interest in the
Company.
(h) "Company" means California Real Estate Investment
Trust, a California trust, or any successor thereto.
(i) "Election Form" means the form under which a
Participant elects to receive Shares granted under a
Share Unit Award upon the occurrence of certain events.
(j) "Exchange Act" means the Securities Exchange Actof
1934, as amended from time to time.
(k) "Fair Market Value" means the closing price of the
Shares on a securities exchange or, if not traded on an
exchange, the average of the highest price and lowest
price at which the Shares were traded as reported on
the Nasdaq National Market, on the relevant date, or on
the most recent date on which the Shares were traded
prior to such date.
(l) "Nonqualified Share Option" or "NQSO" means an option
to purchase Shares, which is not intended to satisfy
the requirements of Section 422 of the Code, granted
under Article 6 herein.
(m) "Option" or "Options" means a Nonqualified Share
Option.
(n) "Option Agreement" means an Award Agreement evidencing
an Option Award granted under Article 6 herein.
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(o) "Participant" means a Trustee who has been granted an
Award under the Plan.
(p) "Performance Share" means an Award, designated as a
performance share, granted to a Participant pursuant to
Article 9 herein.
(q) "Performance Unit" means an Award, designated as a
performance unit, granted to a Participant pursuant to
Article 9 herein.
(r) "Period of Restriction" means the period during which
the transfer of Restricted Shares is restricted, during
which the Participant is subject to a substantial risk
of forfeiture, pursuant to Article 8 herein.
(s) "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof; including a "group"
as defined in Section 13(d) thereof.
(t) "Plan" means this Non-Employee Trustee Share Plan of
the Company, as herein described and as hereafter from
time to time amended.
(u) "Pooling Transaction" means an acquisition of the
Company in a transaction which is intended to be
treated as a "pooling of interests" under generally
accepted accounting principles.
(v) "Restricted Shares" means an Award granted to a
Participant pursuant to Article 8 herein.
(w) "Restricted Share Agreement" means an Award Agreement
evidencing a Restricted Share Award granted under
Article 8 herein.
(x) "Share" or "Shares" means the Common Shares.
(y) "Share Unit" means a derivative interest in Shares
granted to a Participant pursuant to Article 9 herein
which is credited to a bookkeeping account and paid out
on a one-for-one basis in Shares.
(z) "Share Appreciation Right" or "SAR" means an Award,
designated as a share appreciation right, granted to a
Participant pursuant to Article 7 herein.
(aa) "Trustee" means a member of the Board.
(bb) "Voting Securities" means Shares or securities of any
class or classes of securities of the Company, the
holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the
Trustees.
2.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
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3.1 Authority of Board. The Plan shall be administered by the full
Board of Trustees of the Company. Subject to the provisions of the Plan, the
Board shall have full power to construe and interpret the Plan; to establish,
amend or waive rules and regulations for its administration; to accelerate the
exercisability of any Award or the end of a performance period or the
termination of any Period of Restriction or any Award Agreement, or any other
instrument relating to an Award under the Plan; and (subject to the provisions
of Article 13 herein) to amend the terms and conditions of any outstanding
Option, Share Appreciation Right or other Award to the extent such terms and
conditions are within the discretion of the Board as provided in the Plan. Also
notwithstanding the foregoing, no action of the Board (other than pursuant to
Section 4.3 hereof or Section 9.6 hereof) may, without the consent of the person
or persons entitled to exercise any outstanding Option or Share Appreciation
Right or to receive payment of any other outstanding Award, adversely affect the
rights of such person or persons.
3.2 Selection of Participants. The Board shall have the authority to
grant Awards under the Plan, from time to time, to such Trustees as may be
selected by it.
3.3 Decisions Binding. All determinations and decisions made by the
Board pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders and Participants and their estates and
beneficiaries, and such determinations and decisions shall not be reviewable.
3.4 Delegation of Certain Responsibilities. The Board may, in its sole
discretion, delegate to the Chairman of the Board of the Company (or if there
shall be Co-Chairmen, individually or jointly to such Co-Chairmen) the
administration of the Plan under this Article 3; provided, however, that the
Board may not delegate its authority to correct errors, omissions or
inconsistencies in the Plan and the Board may not delegate its authority under
this Article 3 to grant Awards to Trustees. All authority delegated by the Board
under this Section 3.4 shall be exercised in accordance with the provisions of
the Plan and any guidelines for the exercise of such authority that may from
time to time be established by the Board.
3.5 Procedures of the Board. All Awards and other determinations of the
Board shall be made by not less than a majority of its members present at the
meeting (in person or otherwise) at which a quorum is present. A majority of the
entire Board shall constitute a quorum for the transaction of business. Any
action required or permitted to be taken at a meeting of the Board may be taken
without a meeting if a unanimous written consent, which sets forth the action,
is signed by each member of the Board and filed with the minutes for proceedings
of the Board.
3.6 Award Agreements. Each Award under the Plan shall be evidenced by
an Award Agreement which shall be signed by the Chairman of the Board (or by a
Co-chairman) on behalf of the Board and by the Participant, and shall contain
such terms and conditions as may be approved by the Board. Such terms and
conditions need not be the same in all cases.
3.7 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Board may impose such conditions on any Award (including, without
limitation, the right of the Board to limit the time of exercise to specified
periods) as may be required to satisfy the requirements of Rule 16b-3 (or any
successor rule), under the Exchange Act ("Rule 16b-3").
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The maximum number of Shares that may be made the
subject of Awards granted under the Plan is two million (2,000,000) reduced by
the number of Shares made the
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subject of Awards under the Company's 1997 Long-term Incentive Share Plan. Upon
a change in the capitalization or authorized Shares (as described in Section
4.3) the maximum number of Shares shall be adjusted in number and kind pursuant
to Section 4.3. The Company shall reserve for the purposes of the Plan, out of
its authorized but unissued shares or out of such numbers of Shares held in the
Company's treasury, or partly out of each, such number of Shares as shall be
determined by the Board. Upon the granting of an Award, the number of Shares
available under Section 4.1 for the granting of further Awards shall be reduced
as follows:
(a) In connection with the granting of an Award (other than
the granting of a Performance Unit denominated in dollars), the number of Shares
shall be reduced by the number of Shares in respect of which the Award is
granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (a) the dollar amount in which the Performance Unit is
denominated, divided by (b) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.2 Lapsed Awards. If any Award (other than Restricted Shares) granted
under this Plan terminates, expires, or lapses for any reason, any Shares
subject to such Award again shall be available for the grant of an Award under
the Plan, subject to Section 7.2 herein.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, share
dividend, split-up, share combination, or other change affecting the Company's
Common Shares, such adjustment shall be made in the number and class of Shares
which may be delivered under the Plan, and in the number and class of and/or
price of Shares subject to outstanding Options, Share Appreciation Rights,
Restricted Shares, Performance Shares, Performance Units and Share Units granted
under the Plan, as may be determined to be appropriate and equitable by the
Board, in its sole discretion, to prevent dilution or enlargement of rights; and
provided that the number of Shares subject to any Award shall always be a whole
number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include
all Trustees who are not and have not been at any time, within the preceding
three years, officers or employees of the Company or any of its Subsidiaries.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Board may from time to time select those Trustees to whom Awards shall be
granted and determine the nature and amount of each Award. No Trustee shall have
any right to be granted an Award under this Plan even if previously granted an
Award.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Trustees at any time and from time to time as shall be
determined by the Board. The Board shall have the sole discretion, subject to
the requirements of the Plan, to determine the actual number of Shares subject
to Options granted to any Participant. Options granted under the Plan will be
NQSOs.
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6.2 Option Agreement. Each Option grant shall be evidenced by an Option
Agreement that shall specify the Option price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Board shall determine.
6.3 Option Price. The purchase price per share of Shares covered by an
Option shall be determined by the Board.
6.4 Duration of Options. Each Option shall expire at such time as the
Board shall determine at the time of grant.
6.5 Exercise of Options. Subject to Section 3.7 herein, Options granted
under the Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Board shall in each instance approve, which
need not be the same for all Participants.
6.6 Payment. Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the Shares. The
Option price upon exercise of any Option shall be payable to the Company in full
either (a) in cash or its equivalent, (b) by tendering shares of previously
acquired Company Shares having a Fair Market Value at the time of exercise equal
to the total Option price, (c) by foregoing compensation under rules established
by the Board, or (d) by a combination of (a), (b), or (c). The proceeds from
such a payment shall be added to the general funds of the Company and shall be
used for general purposes. As soon as practicable, after receipt of written
notification and payment, the Company shall deliver to the Participant Share
certificates in an appropriate amount based upon the number of Options
exercised, issued in the Participant's name.
6.7 Restrictions on Share Transferability. The Board shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities law, under the requirements of any
securities exchange upon which such Shares are then listed and under any
applicable blue sky or state securities laws.
6.8 Termination of Service Due to Death, Disability, or Retirement. In
the event a Participant dies while serving as a Trustee, any of such
Participant's outstanding Options may be exercised at any time prior to the
expiration date of the Options or within one year after his death, whichever
period is shorter, but only to the extent that the Participant was entitled to
exercise the Options at the date of his termination of service, by such person
or persons as shall have acquired the Participant's rights under the Option
pursuant to Article 10 hereof or by will or by the laws of descent and
distribution. In the event a Participant is unable to serve as a Trustee by
reason of disability (as defined under the then established rules of the
Company), the Participant shall have the right to exercise outstanding Options
at any time prior to the expiration date of the Options or within one year after
his disability, whichever period is shorter, but only to the extent that the
Participant was entitled to exercise the Options on the date of his termination
of service. In the event a Participant retires from the Board, the Participant
shall have the right to exercise outstanding Options at any time prior to the
expiration date of the Options or within 90 days after his retirement, whichever
period is shorter, but only to the extent that the Participant was entitled to
exercise the Options on the date of his termination of service.
6.9 Termination of Service for Other Reasons. If a Participant ceases
service as a Trustee for any reason other than death, disability, retirement or
removal, the Participant shall have the right to exercise outstanding Options at
any time prior to the expiration date of the Options or within the 90 days
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after the date of his termination, whichever period is shorter, but only to the
extent that the Participant was entitled to exercise the Options at the date of
his termination of service. In its sole discretion, the Board may extend the 90
days to up to one year, but in no event beyond the expiration date of the
Option.
Notwithstanding anything contained herein, if a Trustee is
removed from service, all of the Participant's outstanding Options shall be
immediately forfeited back to the Company.
6.10 Limited Transferability of Options. No Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution
or as provided for by the Board. Further, all Options (except for Options on
which SARs were granted) granted to a Participant under the Plan, unless
transferable, shall be exercisable during his lifetime only by such Participant.
If the Option Agreement provides, an Option may be transferred by a Participant
to the Participants children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners (collectively, "Permitted Family Members"); provided, however,
that the Participant may not receive any consideration for the transfer. The
holder of an Option transferred pursuant to this section shall be bound by the
same terms and conditions that governed the Option during the period that it was
held by the Participant.
ARTICLE 7. SHARE APPRECIATION RIGHTS
7.1 Grant of Share Appreciation Rights. Subject to the terms and
conditions of the Plan, Share Appreciation Rights may be granted to
Participants, at the discretion of the Board, in any of the following forms:
(a) In lieu of Options;
(b) In addition to Options;
(c) Independent of Options; or
(d) In any combination of (a), (b), or (c).
The Board shall have the sole discretion, subject to the requirements of the
Plan, to determine the actual number of Shares subject to SARs granted to any
Participant.
7.2 Exercise of SARs in Lieu of Options. SARs granted in lieu of
Options may be exercised for all or part of the Shares subject to the related
Option upon the surrender of the related Options representing the right to
purchase an equivalent number of Shares. The SAR may be exercised only with
respect to the Shares for which its related Option is then exercisable. Option
Shares with respect to which the SAR shall have been exercised may not be
subject again to an Award under the Plan.
7.3 Exercise of SARs in Addition to Options. SARs granted in addition
to Options shall be deemed to be exercised upon the exercise of the related
Options. The deemed exercise of SARs granted in addition to Options shall not
necessitate a reduction in the number of related Options.
7.4 Exercise of SARs Independent of Options. Subject to Section 3.7
herein and Section 7.5 herein, SARs granted independently of Options may be
exercised upon whatever terms and conditions the
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Board, in its sole discretion, imposes upon the SARs, including, but not limited
to, a corresponding proportional reduction in previously granted Options.
7.5 Payment of SAR Amount. Upon exercise of the SAR, the holder shall
be entitled to receive payment of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share
on the date of exercise over the price fixed by the
Board at the date of grant (which price shall not be
less than 100% of the market price of a Share on the
date of grant) (the "Exercise Price"); by
(b) The number of Shares with respect to which the SAR is
exercised.
7.6 Form and Timing of Payment. Payment to a Participant, upon SAR
exercise, will be made in cash or Shares, at the discretion of the Board, within
ten calendar days of the exercise.
7.7 Term of SAR. The term of an SAR granted under the Plan shall not
exceed ten years.
7.8 Termination of Service. In the event a Participant ceases service
as a Trustee by reason of death, disability, retirement, removal or any other
reason, the exercisability of any outstanding SAR granted in lieu of or in
addition to an Option shall terminate in the same manner as its related Option
as specified under Sections 6.8 and 6.9 herein. The exercisability of any
outstanding SARs granted independent of Options also shall terminate in the
manner provided under Sections 6.8 and 6.9 hereof.
7.9 Nontransferability of SARs. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
ARTICLE 8. RESTRICTED SHARES
8.1 Grant of Restricted Shares. Subject to the terms and provisions of
the Plan, the Board, at any time and from time to time, may grant Restricted
Shares under the Plan to such Participants and in such amounts as it shall
determine.
8.2 Restricted Share Agreement. Each Restricted Share grant shall be
evidenced by a Restricted Share Agreement that shall specify the Period of
Restriction, or periods, the number of Shares of Restricted Share granted, and
such other provisions as the Board shall determine.
8.3 Transferability. Except as provided in this Article 8, the
Restricted Shares granted hereunder may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the termination of the
applicable Period of Restriction or for such period of time as shall be
established by the Board and as shall be specified in the Restricted Share
Agreement, or upon earlier satisfaction of other conditions (including any
Performance Goals as defined below) as specified by the Board in its sole
discretion and set forth in the Restricted Share Agreement. All rights with
respect to the Restricted Shares granted to a Participant under the Plan shall
be exercisable during his lifetime only by such Participant.
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8.4 Other Restrictions. The Board shall impose such other restrictions
on any Restricted Shares granted pursuant to the Plan as it may deem advisable
including, without limitation, restrictions under applicable Federal or state
securities laws, and the Board may legend certificates representing Restricted
Shares to give appropriate notice of such restrictions.
8.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 8.4 herein, each certificate representing
Restricted Shares granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the
Non-Employee Trustees Share Plan of California Real Estate Investment
Trust, in the rules and administrative procedures adopted pursuant to
such Plan, and in a Restricted Share Agreement dated ___________. A
copy of the Plan, such rules and procedures, and such Restricted Share
Agreement may be obtained from the Secretary of California Real Estate
Investment Trust."
8.6 Removal of Restrictions. Except as otherwise provided in this
Article and subject to applicable securities laws and restrictions imposed
pursuant thereto, Restricted Shares shall become transferable by the Participant
after the last day of the Period of Restriction. Once the Shares are released
from the restrictions, the Participant shall be entitled to have the legend
required by Section 8.5 removed from his Share certificate.
8.7 Voting Rights. During the Period of Restriction, Participants
holding Restricted Shares granted hereunder may exercise full voting rights with
respect to those Shares.
8.8 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Restricted Shares granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions on
transferability as the Restricted Shares with respect to which they were paid.
8.9 Termination of Service. In the event that a Participant ceases to
be a Trustee of the Company for any reason during the Period of Restriction,
then any Restricted Shares still subject to restrictions as of the date of such
termination shall automatically be forfeited and returned to the Company;
provided, however, that in the event that Participant ceases to be a Trustee for
any reason other than removal, the Board, in its sole discretion (subject to
Section 3.7 herein) may waive the automatic forfeiture of any and all Shares and
may add such new restrictions to such Restricted Shares as it deems appropriate.
ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND SHARE UNITS
9.1 Grant of Performance Units, Performance Shares or Share Units.
Subject to the terms and provisions of the Plan, Performance Units, Performance
Shares or Share Units may be granted to Participants at any time and from time
to time as shall be determined by the Board. The Board shall have complete
discretion in determining the number of Performance Units, Performance Shares or
Share Units granted to each Participant.
9.2 Value of Performance Units and Performance Shares. The Board shall
set certain periods to be determined in advance by the Board (the "Performance
Periods"). Prior to each grant of
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Performance Units or Performance Shares, the Board shall establish an initial
value for each Performance Unit and an initial number of Shares for each
Performance Share granted to each Participant for that Performance Period. Prior
to each grant of Performance Units or Performance Shares, the Board also shall
set the Performance Goals (the "Performance Goals") that will be used to
determine the extent to which the Participant receives a payment of the value of
the Performance Units or number of Shares for the Performance Shares awarded for
such Performance Period. These goals will be based on the attainment by the
Company of certain objective or subjective performance measures, which may
include one or more of the following: total shareholder return, return on
equity, return on capital, earnings per share, market share, share price,
revenues, costs, net income, cash flow and retained earnings. Such Performance
Goals also may be based upon the attainment of specified levels of performance
of the Company under one or more of the measures described above relative to the
performance of other corporations. With respect to each such performance measure
utilized during a Performance Period, the Board shall assign percentages to
various levels of performance which shall be applied to determine the extent to
which the Participant shall receive a payout of the values of Performance Units
and number of Performance Shares awarded.
9.3 Payment of Performance Units and Performance Shares. After a
Performance Period has ended, the holder of a Performance Unit or Performance
Share shall be entitled to receive the value thereof as determined by the Board.
The Board shall make this determination by first determining the extent to which
the Performance Goals set pursuant to Section 9.2 have been met. It will then
determine the applicable percentage (which may exceed 100%) to be applied to,
and will apply such percentage to, the value of Performance Units or number of
Performance Shares to determine the payout to be received by the Participant.
9.4 Value of Share Units. Subject to the terms and provisions of the
Plan, Share Units may be granted to Participants at any time and from time to
time on such terms as shall be determined by the Board. The Board shall have
complete discretion in determining the number of Share Units granted to each
Participant. Share Units shall be payable in Shares upon the occurrence of
certain trigger events set forth on the Participant's Election Form in his or
her complete discretion (the "Trigger Events"). The terms and conditions of the
Trigger Events may vary by Share Unit Award, by Participant, or both. The
Election Form shall be filed with the Secretary of the Company prior to the date
on which any Share Unit Award is made. Such election will be irrevocable as to
any Share Unit Award made after delivery of the Election Form to the Company,
and it shall continue in effect until revoked, increased or decreased
prospectively by Participant prior to the grant of any future Share Unit Award
for which the change is effective.
9.5 Accounting for Share Units. A Participant's Share Unit Award shall
be credited by the Company to a bookkeeping account to reflect the Company's
liability to that Participant (the "Share Unit Account"). Each Share Unit is
credited as a Share equivalent on the date so credited. Additional share
equivalents may be added to the Share Unit Account equal to the amount of Shares
that could be purchased with dividends equal to that paid on one Share,
multiplied by the number of stock equivalents then existing in the Share Unit
Account, based on the Fair Market Value of the Shares on the date a dividend is
paid on the Share. Because the Trigger Events for each Share Unit Award may
differ, the Company shall establish a separate Share Unit Account for each
separate Share Unit Award. Upon the occurrence of particular Trigger Events, the
holder of a Share Unit Award shall be entitled to receive a number of Shares
which corresponds to the number of Share Units granted as part of the initial
Share Unit Award, as such amount may have been increased to reflect dividends
paid with respect thereto.
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9.6 Board Discretion to Adjust Awards. The Board shall have the
authority to modify, amend or adjust the terms and conditions of any Performance
Unit Award, Performance Share Award or Share Unit Award, at any time or from to
time, including but not limited to the Performance Goals.
9.7 Form of Payment. The value of a Performance Unit or Performance
Share may be paid in cash, Shares or a combination thereof as determined by the
Board. In the case of Share Units, payment shall be made in Shares. Payment may
be made in a lump sum or installments as prescribed by the Board. If any payment
is to be made on a deferred basis, the Board may provide for the payment of
dividend equivalents or interest during the deferral period.
9.8 Termination of Service Due to Death, Disability or Retirement. In
the case of death, disability or retirement (each of disability and retirement
as defined under the established rules of the Company), the holder of a
Performance Unit or Performance Share shall receive a prorated payment based on
the Participant's number of full months of service during the Performance
Period, further adjusted based on the achievement of the Performance Goals
during the entire Performance Period, as computed by the Board. Payment shall be
made at the time payments are made to Participants who did not terminate service
during the Performance Period. In the case of Share Units, all such Share Units
held to the extent vested on the date that the Participant ceases to be a
Trustee, will be paid as set forth in the Participant's Election Form.
9.9 Termination of Service for Other Reasons. In the event that a
Participant ceases to be a Trustee of the Company for any reason other than
death, disability or retirement, all Performance Units and Performance Shares
shall be forfeited. In the case of termination other than due to removal, all
Share Units held to the extent vested on the date that the Participant ceases to
be a Trustee, will be paid as set forth in the Participant's Election Form.
However, in the event of termination due to removal, all Share Units held will
be forfeited.
9.10 Nontransferability. No Performance Units, Performance Shares or
Share Units granted under the Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Performance
Period or, in the case of Share Units, until payment. All rights with respect to
Performance Units, Performance Shares and Share Units granted to a Participant
under the Plan shall be exercisable during his lifetime only by such
Participant.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively and
who may include a trustee under a will or living trust) to whom any benefit
under the Plan is to be paid in case of his death before he receives any or all
of such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Board, and will be effective
only when filed by the Participant in writing with the Board during his
lifetime. In the absence of any such designation or if all designated
beneficiaries predecease the Participant, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
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ARTICLE 11. RIGHTS OF TRUSTEES
11.1 Trusteeship. Nothing in the Plan shall interfere with or limit in
any way the right of the Board of Trustees or shareholders under applicable law
to remove any Participant from the Board at any time, nor confer upon any
Participant any right to continue in the service of the Company.
11.2 Participation. No Trustee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
11.3 No Implied Rights; Rights on Termination of Service. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving
any Participant, beneficiary, or any other person any legal or equitable right
unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Board in accordance with the terms and provisions of the
Plan. Except as expressly provided in this Plan, the Company shall not be
required or be liable to make any payment under the Plan.
11.4 No Right to Company Assets. Neither the Participant nor any other
person shall acquire, by reason of the Plan, any right in or title to any
assets, funds or property of the Company whatsoever including, without limiting
the generality of the foregoing, any specific funds, assets, or other property
which the Company, in its sole discretion, may set aside in anticipation of a
liability hereunder. Any benefits which become payable hereunder shall be paid
from the general assets of the Company. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company. Nothing contained in the Plan constitutes a guarantee by
the Company that the assets of the Company shall be sufficient to pay any
benefit to any person.
ARTICLE 12. CHANGE IN CONTROL
12.1 Share Based Awards. Notwithstanding any other provisions of the
Plan, in the event of a Change in Control, all Share based Awards granted under
this Plan shall immediately vest 100% in each Participant, including
Nonqualified Share Options, Share Appreciation Rights, Restricted Shares and
Share Units.
12.2 Performance Based Awards. Notwithstanding any other provision of
the Plan, in the event of a Change in Control, all performance based Awards
granted under this Plan shall be immediately paid out in cash, including
Performance Units and Performance Shares. The amount of the payout shall be
based on the higher of: (i) the extent, as determined by the Board, to which
Performance Goals, established for the Performance Period then in progress have
been met up through and including the effective date of the Change in Control or
(ii) 100% of the value on the date of grant of the Performance Units or number
of Performance Shares.
12.3 Pooling Transactions. Notwithstanding anything contained in the
Plan or any agreement to the contrary, in the event of a Change in Control which
is also intended to constitute a Pooling Transaction, the Committee shall take
such actions, if any, which are specifically recommended by an independent
accounting firm retained by the Company to the extent reasonably necessary in
order to assure that the Pooling Transaction will qualify as such, including but
not limited to (a) deferring the vesting, exercise, payment or settlement with
respect to any Award, (b) providing that the payment or settlement in respect of
any Award be made in the form of cash, Shares or securities of a successor or
acquired of the Company, or a combination of the foregoing and (c) providing for
the extension of the
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term of any Award to the extent necessary to accommodate the foregoing, but not
beyond the maximum term permitted for any Award.
ARTICLE 13. AMENDMENT, MODIFICATION AND TERMINATION
13.1 Amendment, Modification and Termination. At any time and from time
to time, the Board may terminate, amend or modify the Plan, subject to the
approval of the shareholders of the Company if required by the Code, by the
insider trading rules of Section 16 of the Exchange Act, by any securities
exchange or system on which the Shares are then listed or reported, or by any
regulatory body having jurisdiction with respect hereto.
13.2 Awards Previously Granted. No termination, amendment or
modification of the Plan other than pursuant to Section 4.3 hereof shall in any
manner adversely affect any Award theretofore granted under the Plan, without
the written consent of the Participant.
ARTICLE 14. WITHHOLDING
Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of this Plan.
ARTICLE 15. EFFECT OF CERTAIN TRANSACTIONS
Effect of Certain Transactions. Subject to Section 12, or as otherwise
provided in an agreement, in the event of (a) the liquidation or dissolution of
the Company or (b) a merger, consolidation or combination of the Company (a
"Transaction"), the Plan and the Awards issued hereunder shall continue in
effect in accordance with their respective terms except that following a
Transaction each Participant shall be entitled to receive in respect of each
Share subject to any outstanding Options or Awards, as the case may be, upon
exercise of any Option or payment or transfer in respect of any Award, the same
number and kind of Shares, securities, cash, property, or other consideration
that each holder of a Share was entitled to receive in the Transaction in
respect of a Share; provided, however, that such Shares, securities, cash,
property, or other consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to the Options or
Awards prior to such Transaction.
ARTICLE 16. REQUIREMENTS OF LAW
16.1 Requirements of Law. The granting of Awards and the issuance of
Shares under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges as may be required.
16.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of New York.
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AMENDMENT NUMBER 1
TO
CALIFORNIA REAL ESTATE INVESTMENT TRUST
1997 NON-EMPLOYEE TRUSTEE SHARE PLAN
WHEREAS, an amended and restated declaration of trust of
Capital Trust, formerly California Real Estate Investment Trust (the "Company"),
was approved by the shareholders and executed by the trustees of the Company on
July 15, 1997, thereby effecting the change in trust name to "Capital Trust";
WHEREAS, the Company maintains the California Real Estate
Investment Trust 1997 Non-Employee Trustee Share Plan ("Plan"); and
WHEREAS, the Company desires to amend the Plan to reflect
therein the change in trust name;
NOW THEREFORE, the Plan is amended effective as of July 15,
1997 by the addition of the following provision:
All references to "California Real Estate Investment Trust" in
the Plan shall be to "Capital Trust."
IN WITNESS WHEREOF, the Company has caused this amendment to
be executed by its duly authorized officer this 15th day of July 1997.
CAPITAL TRUST
(formerly California Real Estate Investment)
By:/s/John R. Klopp
______________________________
John R. Klopp
Chief Executive Officer
612402.1
Exhibit 99.1
CONTACT: CINDY McHUGH
(312) 466-3779
FOR IMMEDIATE RELEASE
JULY 15, 1997
CALREIT SHAREHOLDERS APPROVE PROPOSALS
AT ANNUAL MEETING
Changes Name to Capital Trust
San Francisco, July 15, 1997 -- California Real Estate Investment Trust
(NYSE, PSE:CT) today announced that, at its annual Meeting of Shareholders, the
following proposals were approved:
o Issuance of up to $33 million of cumulative convertible
preferred shares to Veqtor Finance Company, LLC ("Veqtor"), an
affiliate of Samuel Zell and the principals of Victor Capital
Group, LP to implement the company's previously approved new
strategic business plan
o Amendment and restatement of the company's declaration of trust
-- changing the company name to Capital Trust, the entity
that will implement the new business plan
-- electing not to operate as a real estate investment trust
o Election of seven trustees:
-- Martin L. Edelman Attorney, of Counsel, Battle Fowler LLP
-- Gary R. Garrabrant Executive Vice President, Equity Group
Investments
-- Craig M. Hatkoff Vice Chairman, Capital Trust; Managing
Partner, Victor Capital Group, LP
-- John R. Klopp Vice Chairman and CEO, Capital Trust;
Managing Partner, Victor Capital Group,
LP
-- Sheli Z. Rosenberg President, CEO and Director, Equity
Group Investments
-- Lynne B. Sagalyn Professor and coordinator of the MBA Real
Estate Program at Columbia University
Graduate School of Business
-- Samuel Zell Chairman, Capital Trust; Chairman, Equity
Group Investments
612701.1
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o Appointment of Ernst & Young LLP as auditors of the Company
o Implementation of a share option plan
"We have formed Capital Trust to focus on high-yield investments in
commercial real estate, an area of the real estate market with boundless
opportunities," said Samuel Zell, Capital Trust's Chairman. "Our collective
relationships, knowledge and experience in this arena will bring many investment
opportunities to the company."
Capital Trust is a real estate finance company headquartered in New
York with offices in Chicago and San Francisco.
Exhibit 99.2
CONTACT: CINDY McHUGH
(312) 466-3779
FOR IMMEDIATE RELEASE
JULY 15, 1997
CAPITAL TRUST ANNOUNCES CMBS INVESTMENT
Begins Implementation of Business Plan
NEW YORK, NY JULY 15, 1997 -- Capital Trust ("NYSE, PSE: CT) announced
today that it made an investment in junior subordinated commercial mortgage
backed securities (CMBS). The company purchased the $99.6 million of face amount
Class B Owner Trust certificates from Credit Suisse First Boston, representing a
subordinate interest in a pool of 20 commercial and mutifamily loans with an
aggregate principal balance of $413 million. The short-term commercial loans are
secured directly or indirectly by properties located throughout the United
States.
The transaction required a total equity investment of approximately
$12.3 million, with the remaining portion provided through financing.
"We are pleased to announce our first transaction at Capital Trust. It is
one example of the type of investments that we are seeking to make as we
implement our business plan," said John R. Klopp, Vice Chairman and Chief
Executive Officer, Capital Trust. "We believe that transactions such as this,
when carefully underwritten, structured and monitored, will provide attractive
'equity like' returns with significantly less risk than direct equity
ownership."
In addition, a subsidiary of the Company, has been appointed Special
Servicer for the $413 million issue.
612701.1
<PAGE>
Capital Trust is a real estate finance company headquartered in New
York with offices in Chicago and San Francisco.
612701.1
