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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
(Exact name of registrant as specified in its charter)
OHIO 34-6513657
(State of Organization) (I.R.S. Employer Identification No.)
55 PUBLIC SQUARE, SUITE 1900
CLEVELAND, OHIO 44113
(Address of Principal Executive Offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
<S> <C>
Series A Cumulative Convertible Redeemable New York Stock Exchange
Preferred Shares of Beneficial Interest, par value
$25.00
</TABLE>
If this form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instructions A(c)(1), please check
the following box. [ ]
If this form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
A complete description of the Series A Cumulative Convertible
Redeemable Preferred Shares of Beneficial Interest, par value $25.00 per share
(the "Series A Preferred Shares"), which are to be registered hereunder is
contained under the caption "Description of Series A Preferred Shares" in the
Preliminary Prospectus Supplement dated October 7, 1996 to the Prospectus dated
October 7, 1996 of First Union Real Estate Equity and Mortgage Investments
("First Union") filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"). Such description,
and the related material contained under the caption "Description of Preferred
Shares of Beneficial Interest" in the Prospectus dated October 7, 1996, is
hereby incorporated by reference and any description included in a form of
prospectus supplement subsequently filed by First Union pursuant to Rule 424(b)
under the Securities Act shall be deemed to be incorporated by reference into
this registration statement.
Item 2. Exhibits.
The following exhibits are filed herewith and with the New York Stock
Exchange, Inc.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------ -------
<S> <C>
4(a) Declaration of Trust of First Union dated August 1, 1961, as amended through July 25, 1986
(incorporated by reference to First Union's Registration Statement on Form S-3 (No.
33-4493)).
4(b) By-laws of First Union, as amended (incorporated by reference to First Union's Registration
Statement on Form S-3 (No. 33-4493)).
4(c) Rights Agreement between First Union and National City Bank dated March 7, 1990
(incorporated by reference to First Union's Form 8-A dated March 30, 1990 (No. 0-18411)).
4(d) Form of certificate of Shares of Beneficial Interest (incorporated by reference to First
Union's Registration Statement on Form S-3 (No. 33-2818)).
4(e) Form of certificate of the Series A Preferred Shares.
4(f) Form of Certificate of Designations with respect to the Series A Preferred Shares.
</TABLE>
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS
By: /s/Paul F. Levin
------------------------------------
Name:Paul F. Levin
Title:Sr. Vice President and General
Counsel
Dated: October 18, 1996
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TEMPORARY CERTIFICATE - EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE
WHEN READY FOR DELIVERY
<TABLE>
<CAPTION>
NUMBER PREFERRED
PA SHARES
[LOGO]
- --------------------------- ------------------------ -----------------------------------
<S> <C> <C>
SERIES A CUMULATIVE CONVERTIBLE SERIES A CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED SHARES OF REDEEMABLE PREFERRED SHARES OF
BENEFICIAL INTEREST BENEFICIAL INTEREST
PAR VALUE $25.00 PAR VALUE $25.00
</TABLE>
Organized under the Laws of the State of Ohio
FIRST UNION
Real Estate Equity and Mortgage Investments
THIS CERTIFICATE IS TRANSFERABLE IN THE CITY OF NEW YORK OR IN CLEVELAND, OHIO
CUSIP 337400 30 3
see Reverse for Certain
Definitions and Restrictions
THIS IS TO CERTIFY THAT [Name]
IS THE REGISTERED HOLDER OF [Amount]
FULLY PAID AND NON-ASSESSABLE PREFERRED SHARES OF BENEFICIAL INTEREST,
$25.00 PAR VALUE, IN
First Union Real Estate Equity and Mortgage Investments a trust established in
business trust form under the laws of the State of Ohio under a Declaration of
Trust dated as of August 1, 1961, as amended from time to time, a copy of which
is on file with the Transfer Agents of the Trust. The Preferred Shares
evidenced by this certificate are subject to all the terms and provisions of
the Certificate of Designations referred to on the reverse hereof which the
holder or transferee hereof by accepting this certificate agrees to be bound.
The Trust is not a bank or trust company and does not and will not solicit,
receive or accept deposits as a business. The shares represented hereby are
transferable on the records of the Trust only by the registered holder hereof
or by his agent duly authorized in writing on delivery to a Transfer Agent of
the Trust of this certificate properly endorsed or accompanied by duly executed
instrument of transfer together with such evidence of the genuineness thereof
and such other matters as may reasonably be required. The transferability of
the shares represented hereby is subject to the aforementioned Certificates of
Designations and such regulations as may from time to time be
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adopted by the Trustees of the Trust and set forth in the By-Laws to which
reference is hereby made to prevent transfers of shares which would result in
disqualification of the Trust for taxation as a real estate investment trust
under the Internal Revenue Code as amended. This certificate is not valid
unless countersigned by a Transfer Agent and registered by a Registrar of the
Trust.
In Witness Whereof, the Trustees of this Trust have caused this certificate
to be signed by facsimile signatures.
[SEAL]
Dated:
Countersigned and Registered:
THE HUNTINGTON NATIONAL BANK
(Columbus, Ohio)
TRANSFER AGENT
AND REGISTRAR
BY
SENIOR VICE PRESIDENT CHAIRMAN, PRESIDENT AND
AUTHORIZED SIGNATURE AND SECRETARY CHIEF EXECUTIVE OFFICER
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
THE CERTIFICATE OF DESIGNATIONS DATED AS OF OCTOBER ___, 1996 SETS FORTH A
FULL STATEMENT OF ALL OF THE DESIGNATIONS, PREFERENCES, RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS, AND TERMS AND
CONDITIONS OF REDEMPTION, AND OTHER RELATIVE RIGHTS OF THESE SERIES A PREFERRED
SHARES. THE DECLARATION OF TRUST DATED AS OF AUGUST 1, 1961, AS AMENDED FROM
TIME TO TIME, SETS FORTH A FULL STATEMENT OF THE AUTHORITY OF THE TRUSTEES OF
THE TRUST TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, THE DIFFERENCES IN
THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE
EXTENT THEY HAVE BEEN SET AND THE AUTHORITY OF THE TRUSTEES OF THE TRUST TO SET
THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES OF PREFERRED SHARES.
A COPY OF SUCH STATEMENTS MAY BE OBTAINED FROM THE SECRETARY OF THE TRUST. THE
SERIES A PREFERRED SHARES WILL NOT BE ENTITLED TO THE BENEFIT OF THE
DECLARATION OF TRUST DATED AS OF OCTOBER 1, 1996, WHICH OWNS ALL OF THE SHARES
OF FIRST UNION MANAGEMENT, INC.
THE CERTIFICATE OF DESIGNATIONS DATED AS OF OCTOBER ___, 1996 PROVIDES,
AMONG OTHER THINGS, THAT NO PERSON MAY ACQUIRE THE SERIES A PREFERRED SHARES
IF, THEREAFTER, HE WOULD BENEFICIALLY OWN MORE THAN 25% OF THE SERIES A
PREFERRED SHARES, EXCEPT AS A RESULT OF A TRUST'S REDEMPTION OF ANY OF THE
SERIES A PREFERRED SHARES.
THE BY-LAWS OF THE TRUST PROVIDE, AMONG OTHER THINGS, THAT NO PERSON MAY
ACQUIRE TRUST SECURITIES INCLUDING THESE SECURITIES) IF, THEREAFTER, HE WOULD
BENEFICIALLY OWN MORE THAN 9.8% OF THE TRUST'S SHARES OF BENEFICIAL INTEREST,
$1.00 PAR VALUE. IN APPLYING THIS RESTRICTION, CONVERTIBLE SECURITIES OF THE
TRUST BENEFICIALLY OWNED BY SUCH PERSON (INCLUDING CONVERTIBLE SECURITIES SUCH
AS THESE SERIES A PREFERRED SHARES) ARE TO BE TREATED AS IF ALREADY CONVERTED
INTO SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE. A COPY OF THE BY-LAWS AND
INFORMATION ABOUT THE LIMIT ON OWNERSHIP MAY BE OBTAINED FROM THE SECRETARY OF
THE TRUST.
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS:
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<S> <C>
TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT __________ CUSTODIAN_______
TEN ENT - AS TENANTS BY THE ENTIRETIES (CUST) (MINOR)
JT TEN - AS JOINT TENANTS WITH RIGHT UNDER UNIFORM GIFTS TO MINORS
OF SURVIVORSHIP AND NOT AS ACT_____________
TENANTS IN COMMON (STATE)
</TABLE>
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
FOR VALUE RECEIVED, __________ hereby sell, assign and transfer unto
<TABLE>
<S> <C>
PLEASE INSERT SOCIAL SECURITY OR NOTICE: THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND WITH
OTHER IDENTIFYING THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
NUMBER OF ASSIGNEE PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
</TABLE>
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________ Series A Preferred Shares
of Beneficial Interest represented by the within-named Trust, with full power of
substitution in the premises.
Dated _____________________
(Sign here)_______________________________
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EXHIBIT 4f
Series A Cumulative Convertible Redeemable
Preferred Shares of Beneficial Interest
CERTIFICATE OF DESIGNATIONS
FIRST UNION REAL ESTATE
EQUITY AND MORTGAGE INVESTMENTS
==================================================
Designating a Series of
Preferred Shares of Beneficial Interest as
Series A Cumulative Convertible Redeemable
Preferred Shares of Beneficial Interest and
Fixing Distribution and Other Preferences
and Rights of Such Series
==================================================
Dated as of October ___, 1996
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FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
The undersigned, James C. Mastandrea, Chairman, President and Chief
Executive Officer of First Union Real Estate Equity and Mortgage Investments,
an Ohio real estate investment trust (the "Trust"), hereby certifies on behalf
of the Trust that:
The Board of Trustees adopted the following resolution creating the
Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial
Interest, par value $25.00 per share, of the Trust:
RESOLVED, that pursuant to the authority vested in the Board of
Trustees in accordance with Section 11.22 of the Declaration of Trust, as
amended, a series of preferred shares of the Trust be and it hereby is created,
and that the designation and amount thereof and the preferences and relative,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Number of Shares and Designation. This class of preferred
shares of beneficial interest shall be designated as Series A Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest, par value
$25.00 per share (the "Series A Preferred Shares"), and the number of shares
which shall constitute such series shall not be more than 2,000,000 shares (or
not more than 2,300,000 shares if the over-allotment option granted by the
Trust in the Underwriting Agreement dated October __, 1996, between the Trust
and the underwriters named therein is exercised), which number may be decreased
(but not below the number thereof then outstanding) from time to time by the
Board of Trustees.
Section 2. Definitions. For purposes of the Series A Preferred
Shares, the following terms shall have the meanings indicated:
"Board of Trustees" shall mean the Board of Trustees of the Trust
or any committee authorized by such Board of Trustees to perform
any of its responsibilities with respect to the Series A Preferred
Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or
a day on which state or federally chartered banking institutions in
Cleveland, Ohio are not required to be open.
"Call Date" shall mean the date specified in the notice to holders
required under Section 5(c) as the Call Date.
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"Common Shares" shall mean the common shares of beneficial interest
of the Trust, par value $1.00 per share.
"Constituent Person" shall have the meaning set forth in Section 6
(e).
"Conversion Price" shall mean the conversion price per Common
Share for which the Series A Preferred Shares are convertible, as
such Conversion Price may be adjusted pursuant to Section 6. The
initial conversion price shall be $_______ (equivalent to a conversion
rate of _______ Common Shares for each Series A Preferred Share).
"Current Market Price" of publicly traded common shares or any
other class of shares of beneficial interest or other security of
the Trust or any other issuer for any day shall mean the last reported
sales price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock
Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on
which such security is listed or admitted for trading or, if not listed
or admitted for trading on any national securities exchange, on the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such
security is not quoted on such National Market System, the average of
the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for such
security on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by any
NYSE member firm regularly making a market in such security selected
for such purpose by the Chairman of the Board or the Board of Trustees.
"Dividend Payment Date" shall mean the last calendar day of
January, April, July and October in each year, commencing on January
31, 1997; provided, however, that if any Dividend Payment Date falls on
any day other than a Business Day, the dividend payment due on such
Dividend Payment Date shall be paid on the Business Day immediately
following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods
commencing on February 1, May 1, August 1 and November 1 of each year
and ending on and including the day preceding the first day of the next
succeeding Dividend Period (other than the initial Dividend Period,
which shall commence on the Issue Date and end on and include January
31, 1997, and other than the Dividend Period during which any Series A
Preferred Shares
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shall be redeemed pursuant to Section 5, which shall end on and include
the Call Date with respect to the Series A Preferred Shares being
redeemed).
"Expiration Time" shall have the meaning set forth in Section 6(d)
(iv).
"Fair Market Value" shall mean the average of the daily Current
Market Prices of a Common Share during the five (5) consecutive
Trading Days selected by the Trust commencing not more than 20 Trading
Days before, and ending not later than, the earlier of the day in
question and the day before the "ex date" with respect to the issuance
or distribution requiring such computation. The term "ex date," when
used with respect to any issuance or distribution, means the first day
on which the Common Shares trade regular way, without the right to
receive such issuance or distribution, on the exchange or in the
market, as the case may be, used to determine that day's Current Market
Price.
"Fully Junior Shares" shall mean the Common Shares and any other
class or series of shares of beneficial interest of the Trust now or
hereafter issued and outstanding over which the Series A Preferred
Shares have preference or priority in both (i) the payment of
dividends and (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Trust.
"Income from Operations" shall mean the Trust's consolidated
revenues minus expenses.
"Issue Date" shall mean October ___, 1996.
"Junior Shares" shall mean the Common Shares and any other class or
series of shares of beneficial interest of the Trust now or hereafter
issued and outstanding over which the Series A Preferred Shares have
preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of
the Trust.
"Non-Electing Share" shall have the meaning set forth in Section 6
(e).
"Parity Shares" shall have the meaning set forth in Section 8(b).
"Person" shall mean any individual, firm, partnership, corporation,
limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
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"Purchased Shares" shall have the meaning set forth in Section 6(d)
(iv).
"Securities" and "Security" shall have the meanings set forth in
Section 6(d)(iii).
"Series A Preferred Shares" shall have the meaning set forth in
Section 1.
"set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Trustees, the allocation of funds to be so paid on any
series or class of shares of beneficial interest of the Trust;
provided, however, that if any funds for any class or series of Junior
Shares or any class or series of shares of beneficial interest ranking
on a parity with the Series A Preferred Shares as to the payment of
dividends are placed in a separate account of the Trust or delivered to
a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Series A Preferred Shares shall mean
placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed
or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or
if not listed or admitted for trading on any national securities
exchange, on the National Market System of NASDAQ, or if such
securities are not quoted on such National Market System, in the
applicable securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in Section 6(e).
"Transfer Agent" means The Hunington National Bank, Cleveland,
Ohio, or such other agent or agents of the Trust as may be designated
by the Board of Trustees or their designee as the transfer agent,
registrar and dividend disbursing agent for the Series A Preferred
Shares.
"Voting Preferred Shares" shall have the meaning set forth in
Section 9.
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Section 3. Dividends.
(a) The holders of Series A Preferred Shares shall be entitled to
receive, when, as and if declared by the Board of Trustees, out of funds
legally available for the payment of dividends, cumulative preferential
dividends payable in cash in an amount per share equal to the greater of (i)
__% of the liquidation preference per annum (equivalent to $____ per share)
or (ii) the cash dividends (determined on each Dividend Payment Date) on the
Common Shares, or portion thereof, into which a Series A Preferred Share is
convertible. Such dividends shall equal the number of Common Shares, or
portion thereof, into which a Series A Preferred Share is convertible,
multiplied by the most current quarterly cash dividend on a Common Share on
or before the applicable Dividend Payment Date. Such dividends shall begin
to accrue and shall be fully cumulative from the Issue Date, whether or not
in any Dividend Period or Periods there shall be funds of the Trust legally
available for the payment of such dividends, and shall be payable quarterly,
when, as and if declared by the Board of Trustees, in arrears on Dividend
Payment Dates, commencing on January 31, 1997. Each such dividend shall be
payable in arrears to the holders of record of Series A Preferred Shares as
they appear in the records of the Trust at the close of business on such
record dates, not less than 10 nor more than 50 days preceding such Dividend
Payment Dates thereof, as shall be fixed by the Board of Trustees. Accrued
and unpaid dividends for any past Dividend Periods may be declared and paid
at any time and for such interim periods, without reference to any regular
Dividend Payment Date, to holders of record on such date, not less than 10
nor more than 50 days preceding the payment date thereof, as may be fixed by
the Board of Trustees. Any dividend payment made on Series A Preferred
Shares shall first be credited against the earliest accrued but unpaid
dividend due with respect to Series A Preferred Shares which remains payable.
(b) The initial Dividend Period will include a partial dividend for
the period from the Issue Date until October 31, 1996. The amount of
dividends payable for such period, or any other period shorter than a full
Dividend Period, on the Series A Preferred Shares shall be computed on the
basis of a 360-day year of twelve 30-day months. Holders of Series A
Preferred Shares shall not be entitled to any dividends, whether payable in
cash, property or shares, in excess of cumulative dividends, as herein
provided, on the Series A Preferred Shares. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series A Preferred Shares which may be in arrears.
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(c) So long as any Series A Preferred Shares are outstanding, no
dividends, except as described in the immediately following sentence, shall
be declared or paid or set apart for payment on any class or series of Parity
Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Series A Preferred
Shares for all Dividend Periods terminating on or prior to the dividend
payment date on such class or series of Parity Shares. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon Series A Preferred Shares and all
dividends declared upon any other class or series of Parity Shares shall be
declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series A Preferred Shares and accumulated and
unpaid on such Parity Shares.
(d) So long as any Series A Preferred Shares are outstanding, no
dividends (other than dividends or distributions paid solely in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common
Shares made for purposes of an employee incentive or benefit plan of the
Trust or First Union Management, Inc. (the "Management Company") or any
subsidiary of the Trust or the Management Company) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any Junior Shares) by the Trust, directly or indirectly (except by
conversion into or exchange for Fully Junior Shares), unless in each case (i)
the full cumulative dividends on all outstanding Series A Preferred Shares
and any other Parity Shares of the Trust shall have been or contemporaneously
are declared and paid or declared and set apart for payment for all past
Dividend Periods with respect to the Series A Preferred Shares and all past
dividend periods with respect to such Parity Shares and (ii) sufficient funds
shall have been or contemporaneously are declared and paid or declared and
set apart for the payment of the dividend for the current Dividend Period
with respect to the Series A Preferred Shares and the current dividend period
with respect to such Parity Shares.
(e) No distributions on Series A Preferred Shares shall be declared
by the Board of Trustees or paid or set apart for payment by the Trust at
such time as the terms and provisions of any agreement of the Trust,
including any agreement relating to its indebtedness, prohibits such
declaration,
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payment or setting apart for payment or provides that such declaration,
payment or setting apart for payment would constitute a breach thereof
or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Trust, whether voluntary or involuntary, before any payment or distribution
of the assets of the Trust (whether capital or surplus) shall be made to or
set apart for the holders of Junior Shares, the holders of the Series A
Preferred Shares shall be entitled to receive Twenty-Five Dollars ($25.00)
per Series A Preferred Share plus an amount equal to all dividends (whether
or not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders, without interest; but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Trust, the assets of the Trust, or proceeds thereof,
distributable among the holders of the Series A Preferred Shares shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any other shares of any class or series of Parity Shares, then
such assets, or the proceeds thereof, shall be distributed among the holders
of Series A Preferred Shares and any such other Parity Shares ratably in
accordance with the respective amounts that would be payable on such Series A
Preferred Shares and any such other Parity Shares if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Trust with one or more corporations, real
estate investment trusts or other entities, (ii) a sale, lease or conveyance
of all or substantially all of the Trust's property or business or (iii) a
statutory share exchange shall not be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary, of the Trust.
(b) Subject to the rights of the holders of shares of any series or
class or classes of shares of beneficial interest ranking on a parity with or
prior to the Series A Preferred Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the Trust,
after payment shall have been made in full to the holders of the Series A
Preferred Shares, as provided in this Section 4, any other series or class or
classes of Junior Shares shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and the holders of the Series A
Preferred Shares shall not be entitled to share therein.
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Section 5. Redemption at the Option of the Trust.
(a) The Series A Preferred Shares shall not be redeemable by the
Trust prior to the fifth anniversary of the Issue Date. On and after the
fifth anniversary of the Issue Date, the Trust, at its option, may redeem the
Series A Preferred Shares in whole or in part, as set forth herein, subject
to the provisions described below.
(b) The Series A Preferred Shares may be redeemed, in whole or in
part, at the option of the Trust, at any time, only if for 20 Trading Days,
within any period of 30 consecutive Trading Days, including the last Trading
Day of such period, the Current Market Price of the Common Shares on each of
such 20 Trading Days equals or exceeds the Conversion Price in effect on such
Trading Day. In order to exercise its redemption option, the Trust must
issue a press release announcing the redemption (the "Press Release") prior
to the opening of business on the second Trading Day after the condition in
the preceding sentence has, from time to time, been met. The Trust may not
issue a Press Release prior to ________ __, 2001. The Press Release shall
announce the redemption and set forth the number of Series A Preferred Shares
which the Trust intends to redeem. The Call Date (as defined below) shall be
selected by the Trust, shall be specified in the notice of redemption and
shall be not less than 30 days or more than 60 days after the date on which
the Trust issues the Press Release.
(c) Upon redemption of Series A Preferred Shares by the Trust on the
date specified in the notice to holders required under subparagraph (e) of
this Section 5 (the "Call Date"), each Series A Preferred Share so redeemed
shall be converted into a number of Common Shares equal to the liquidation
preference (excluding any accrued and unpaid dividends) of the Series A
Preferred Shares being redeemed divided by the Conversion Price as of the
opening of business on the Call Date.
Upon any redemption of Series A Preferred Shares, the Trust shall pay any
accrued and unpaid dividends in arrears for any Dividend Period ending on or
prior to the Call Date, without interest. If the Call Date falls after a
dividend payment record date and prior to the corresponding Dividend Payment
Date, then each holder of Series A Preferred Shares at the close of business
on such dividend payment record date shall be entitled to the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares before such Dividend Payment
Date. Except as provided above, the Trust shall make no payment or allowance
for unpaid dividends, whether or not in arrears, on
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<PAGE> 10
Series A Preferred Shares called for redemption or on the Common Shares
issued upon such redemption.
(d) If full cumulative dividends on the Series A Preferred Shares and
any other class or series of Parity Shares of the Trust have not been paid or
declared and set apart for payment, the Series A Preferred Shares may not be
redeemed in part and the Trust may not purchase or acquire Series A Preferred
Shares or Parity Shares, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of Series A Preferred Shares or
Parity Shares, as the case may be.
(e) If the Trust shall redeem Series A Preferred Shares pursuant to
paragraph (a) of this Section 5, notice of such redemption shall be given not
more than four Business Days after the date on which the Trust issues the
Press Release to each holder of record of the shares to be redeemed. Such
notice shall be provided by first class mail, postage prepaid, at such
holder's address as the same appears on the transfer books of the Trust.
Neither the failure to mail any notice required by this paragraph (e), nor
any defect therein or in the mailing thereof, to any particular holder, shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Any notice which was mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such notice shall state, as appropriate: (1) the Call Date; (2) the number
of Series A Preferred Shares to be redeemed and, if fewer than all the shares
held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (3) the number of Common Shares to be issued with
respect to each Series A Preferred Share; (4) the place or places at which
certificates for such shares are to be surrendered for certificates
representing Common Shares; (5) the then-current Conversion Price; and (6)
that dividends on the shares to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein. Notice having been mailed as
aforesaid, from and after the Call Date (unless the Trust shall fail to make
available the number of Common Shares or amount of cash necessary to effect
such redemption), (i) except as otherwise provided herein, dividends on the
Series A Preferred Shares so called for redemption shall cease to accrue,
(ii) said shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series A Preferred Shares of the
Trust shall cease (except the rights to receive the Common Shares and cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Trust's
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<PAGE> 11
obligation to provide Common Shares and cash in accordance with the
preceding sentence shall be deemed fulfilled if, on or before the Call Date,
the Trust shall deposit with a bank or trust company (which may be an
affiliate of the Trust) that has an office in the Borough of Manhattan, City
of New York, or in Cleveland, Ohio and that has, or is an affiliate of a bank
or trust company that has, a capital and surplus of at least $50,000,000,
Common Shares and any cash necessary for such redemption, in trust, with
irrevocable instructions that such Common Shares and cash be applied to the
redemption of the Series A Preferred Shares so called for redemption. At the
close of business on the Call Date, each holder of Series A Preferred Shares
to be redeemed (unless the Company defaults in the delivery of the Common
Shares or cash payable on such Call Date) shall be deemed to be the record
holder of the number of Common Shares into which such Series A Preferred
Shares are to be redeemed, regardless of whether such holder has surrendered
the certificates representing the Series A Preferred Shares. No interest
shall accrue for the benefit of the holders of Series A Preferred Shares to
be redeemed on any cash so set aside by the Trust. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call
Date shall revert to the general funds of the Trust, after which reversion
the holders of such shares so called for redemption shall look only to the
general funds of the Trust for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Trust shall so require and if the
notice shall so state), such shares shall be exchanged for certificates of
Common Shares and any cash (without interest thereon) for which such shares
have been redeemed. If fewer than all the outstanding Series A Preferred
Shares are to be redeemed, shares to be redeemed shall be selected by the
Trust from outstanding Series A Preferred Shares not previously called for
redemption on a pro rata basis (as nearly as may be) or by any other manner
determined by the Trust in its sole discretion to be equitable. If fewer
than all the Series A Preferred Shares represented by any certificate are
redeemed, then new certificates representing the unredeemed shares shall be
issued without cost to the holder thereof.
(f) No fractional shares or scrip representing fractions of Common
Shares shall be issued upon redemption of the Series A Preferred Shares.
Instead of any fractional interest in a Common Share that would otherwise be
deliverable upon the redemption of a Series A Preferred Share, the Trust
shall pay to the holder of such share an amount in cash (computed to the
nearest cent) based upon the Current Market Price of Common
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<PAGE> 12
Shares on the Trading Day immediately preceding the Call Date. If more than
one share shall be surrendered for redemption at one time by the same holder,
the number of full Common Shares issuable upon redemption thereof shall be
computed on the basis of the aggregate number of Series A Preferred Shares so
surrendered.
(g) The Trust covenants that any Common Shares issued upon redemption
of the Series A Preferred Shares shall be validly issued, fully paid and
(subject to any customary qualification based upon the nature of a real
estate investment trust) non-assessable. The Trust shall endeavor to list
the Common Shares required to be delivered upon redemption of the Series A
Preferred Shares, prior to such redemption, upon each national securities
exchange, if any, upon which the outstanding Common Shares are listed at the
time of such delivery.
The Trust shall endeavor to take any action necessary to ensure that any
Common Shares issued upon the redemption of Series A Preferred Shares are
freely transferable and not subject to any resale restrictions under the
Securities Act of 1933, as amended (the "Act"), or any applicable state
securities or blue sky laws (other than any Common Shares issued upon
redemption of any Series A Preferred Shares which are held by an "affiliate"
(as defined in Rule 144 under the Act) of the Trust).
Section 6. Conversion. Holders of Series A Preferred Shares shall have the
right to convert all or a portion of such shares into Common Shares, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 6, a holder of Series A Preferred Shares shall have the right, at his
or her option, at any time to convert such shares into the number of Common
Shares obtained by dividing the aggregate liquidation preference (excluding
any accrued and unpaid dividends) of such shares by the Conversion Price (as
in effect at the time and on the date provided for in the last paragraph of
paragraph (b) of this Section 6) by surrendering such shares to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 6; provided, however, that the right to convert shares called for
redemption pursuant to Section 5 shall terminate at the close of business on
the Call Date fixed for such redemption, unless the Trust shall default in
making payment of the Common Shares and any cash payable upon such redemption
under Section 5.
(b) In order to exercise the conversion right, the holder of each
Series A Preferred Share to be converted shall
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<PAGE> 13
surrender the certificate representing such share, duly endorsed or assigned
to the Trust or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Trust that the holder thereof elects to convert such
Series A Preferred Shares. Unless the shares issuable on conversion are to
be issued in the same name as the name in which such Series A Preferred Share
is registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Trust, duly executed by
the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to
the Trust demonstrating that such taxes have been paid).
Holders of Series A Preferred Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. However, Series A Preferred
Shares surrendered for conversion during the period between the close of
business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date (except shares converted after the
issuance of notice of redemption with respect to a Call Date during such
period, such Series A Preferred Shares being entitled to such dividend on the
Dividend Payment Date) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such Dividend Payment Date. A holder
of Series A Preferred Shares on a dividend payment record date who (or whose
transferee) tenders any such shares for conversion into Common Shares on the
corresponding Dividend Payment Date will receive the dividend payable by the
Trust on such Series A Preferred Shares on such date, and the converting
holder need not include payment of the amount of such dividend upon surrender
of Series A Preferred Shares for conversion. Except as provided above, the
Trust shall make no payment or allowance for unpaid dividends, whether or not
in arrears, on converted shares or for dividends on the Common Shares issued
upon such conversion.
As promptly as practicable after the surrender of certificates for
Series A Preferred Shares as aforesaid, the Trust shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Shares issuable
upon the conversion of such shares in accordance with provisions of this
Section 6, and any fractional interest in respect of a Common Share arising
upon such conversion shall be settled as provided in paragraph (c) of this
Section 6.
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<PAGE> 14
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for Series A
Preferred Shares shall have been surrendered and such notice shall have been
received by the Trust as aforesaid (and if applicable, payment of an amount
equal to the dividend payable on such shares shall have been received by the
Trust as described above), and the Person or Persons in whose name or names
any certificate or certificates for Common Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of
the shares represented thereby at such time on such date and such conversion
shall be at the Conversion Price in effect at such time on such date unless
the share transfer books of the Trust shall be closed on that date, in which
event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on 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 shares shall have been
surrendered and such notice received by the Trust.
(c) No fractional shares or scrip representing fractions of Common
Shares shall be issued upon conversion of the Series A Preferred Shares.
Instead of any fractional interest in a Common Share that would otherwise be
deliverable upon the conversion of a Series A Preferred Share, the Trust
shall pay to the holder of such share an amount in cash (computed to the
nearest cent with $.005 being rounded upward) based upon the Current Market
Price of Common Shares on the Trading Day immediately preceding the date of
conversion. If more than one share shall be surrendered for conversion at
one time by the same holder, the number of full Common Shares issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Series A Preferred Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Trust shall after the Issue Date (A) pay a dividend
or make a distribution on its capital shares in Common Shares, (B)
subdivide its outstanding Common Shares into a greater number of
shares, (C) combine its outstanding Common Shares into a smaller number
of shares or (D) issue any shares of beneficial interest by
reclassification of its Common Shares, the Conversion Price in effect
at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such
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<PAGE> 15
subdivision, combination or reclassification becomes effective, as the
case may be, shall be adjusted so that the holder of any Series A
Preferred Share thereafter surrendered for conversion shall be entitled
to receive the number of Common Shares that such holder would have
owned or have been entitled to receive after the happening of any of
the events described above as if such Series A Preferred Shares had
been converted immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (i) shall become effective immediately
after the opening of business on the Business Day next following the
record date (except as provided in paragraph (h) below) in the case of
a dividend or distribution and shall become effective immediately after
the opening of business on the Business Day next following the
effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Trust shall issue after the Issue Date rights,
options or warrants to all holders of Common Shares entitling them (for
a period expiring within 45 days after the record date mentioned below)
to subscribe for or purchase Common Shares at a price per share less
than 94% (100% if a stand-by underwriter is used and charges the Trust
a commission) of the Fair Market Value per Common Share on the record
date for the determination of shareholders entitled to receive such
rights, options or warrants, then the Conversion Price in effect at the
opening of business on the Business Day next following such record date
shall be adjusted to equal the price determined by multiplying (A) the
Conversion Price in effect immediately prior to the opening of business
on the Business Day next following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the
sum of (x) the number of Common Shares outstanding on the close of
business on the date fixed for such determination and (y) the number of
shares that the aggregate proceeds to the Trust from the exercise of
such rights, options or warrants for Common Shares would purchase at
94% of such Fair Market Value (or 100% in the case of a stand-by
underwriting), and the denominator of which shall be the sum of (x) the
number of Common Shares outstanding on the close of business on the
date fixed for such determination and (y) the number of additional
Common Shares offered for subscription or purchase pursuant to such
rights, options or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following
such record date (except as provided in paragraph (h) below). In
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<PAGE> 16
determining whether any rights, options or warrants entitle the holders
of Common Shares to subscribe for or purchase Common Shares at
less than 94% of such Fair Market Value (or 100% in the case of a
stand-by underwriting), there shall be taken into account any
consideration received by the Trust upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if
other than cash, to be determined by the Chairman of the Board or the
Board of Trustees.
(iii) If the Trust shall distribute to all holders of its
Common Shares any shares of beneficial interest of the Trust (other
than Common Shares) or evidence of its indebtedness or assets
(excluding cumulative cash dividends or distributions paid with respect
to the Common Shares after December 31, 1995 which are not in excess of
the following: the sum of (A) the Trust's cumulative undistributed
Income from Operations and capital gains and cumulative depreciation
and amortization at December 31, 1995, plus (B) the cumulative amount
of net income before distributions accrued or paid on the Series A
Preferred Shares, plus depreciation and amortization, after December
31, 1995, minus (C) the cumulative amount of distributions accrued or
paid on the Series A Preferred Shares or any other class or series of
preferred shares of beneficial interest of the Trust after the Issue
Date) or rights, options or warrants to subscribe for or purchase any
of its securities (excluding those rights, options and warrants issued
to all holders of Common Shares entitling them for a period expiring
within 45 days after the record date referred to in subparagraph (ii)
above to subscribe for or purchase Common Shares, which rights and
warrants are referred to in and treated under subparagraph (ii) above)
(any of the foregoing being hereinafter in this subparagraph (iii)
collectively called the "Securities" and individually a "Security"),
then in each such case the Conversion Price shall be adjusted so that
it shall equal the price determined by multiplying (x) the Conversion
Price in effect immediately prior to the close of business on the date
fixed for the determination of shareholders entitled to receive such
distribution by (y) a fraction, the numerator of which shall be the
Fair Market Value per Common Share on the record date mentioned below
less the then fair market value (as determined by the Chairman of the
Board or the Board of Trustees, whose determination shall be
conclusive), of the portion of the shares of beneficial interest or
assets or evidences of indebtedness so distributed or of such rights,
options or
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<PAGE> 17
warrants applicable to one Common Share, and the denominator of which
shall be the Fair Market Value per Common Share on the record date
mentioned below. Such adjustment shall become effective immediately at
the opening of business on the Business Day next following (except as
provided in paragraph (h) below) the record date for the determination
of shareholders entitled to receive such distribution. For the
purposes of this subparagraph (iii), the distribution of a Security,
which is distributed not only to the holders of the Common Shares on
the date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each Common
Share delivered to a Person converting a Series A Preferred Share after
such determination date, shall not require an adjustment of the
Conversion Price pursuant to this subparagraph (iii); provided that on
the date, if any, on which a Person converting a Series A Preferred
Share would no longer be entitled to receive such Security with a
Common Share (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed
for the determination of the shareholders entitled to receive such
distribution" and "the record date" within the meaning of the two
preceding sentences).
(iv) In case a tender or exchange offer made by the Trust or any
subsidiary of the Trust for all or any portion of the Common Shares
shall expire and such tender or exchange offer shall involve the payment
by the Trust or such subsidiary of consideration per Common Share having
a fair market value (as determined in good faith by the Board of
Trustees, whose determination shall be conclusive and described in a
resolution of the Board of Trustees), at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or
exchange offer, that exceeds the Current Market Price per Common Share
on the Trading Day next succeeding the Expiration Time, the Conversion
Price shall be reduced so that the same shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
subparagraph, by a fraction of which the numerator shall be the number
of Common Shares outstanding (including any tendered or exchanged
shares) at the Expiration Time, multiplied by the Current Market Price
per Common Share on the Trading Day next succeeding the Expiration Time,
and the denominator shall be the sum of (A) the fair market value
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<PAGE> 18
(determined as aforesaid) of the aggregate consideration payable to
shareholders based upon the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any maximum, being referred to as the
"Purchased Shares") and (B) the product of the number of Common Shares
outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price per Common Share on the Trading Day next
succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments
that by reason of this subparagraph (v) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall
be required and made in accordance with the provisions of this Section
6 (other than this subparagraph (v)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution to
the holders of Common Shares. Notwithstanding any other provisions of
this Section 6, the Trust shall not be required to make any adjustment
of the Conversion Price for the issuance of any Common Shares pursuant
to any plan providing for the reinvestment of dividends or interest
payable on securities of the Trust and the investment of additional
optional amounts in Common Shares under such plan. All calculations
under this Section 6 shall be made to the nearest cent (with $.005
being rounded upward) or to the nearest one-tenth of a share (with .05
of a share being rounded upward), as the case may be. Anything in this
paragraph (d) to the contrary notwithstanding, the Trust shall be
entitled, to the extent permitted by law, to make such reductions in
the Conversion Price, in addition to those required by this paragraph
(d), as it in its discretion shall determine to be advisable in order
that any share dividends, subdivision of shares, reclassification or
combination of shares, distribution of rights or warrants to purchase
shares or securities, or distribution of other assets (other than cash
dividends) hereafter made by the Trust to its shareholders shall not be
taxable.
(e) If the Trust shall be a party to any transaction (including
without limitation a merger, consolidation,
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<PAGE> 19
statutory share exchange, self tender offer for all or substantially
all Common Shares, sale of all or substantially all of the Trust's
assets or recapitalization of the Common Shares and excluding
any transaction as to which subparagraph (d)(i) of this Section 6
applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which all or substantially
all Common Shares are converted into the right to receive shares,
securities or other property (including cash or any combination
thereof), each Series A Preferred Share which is not redeemed or
converted into the right to receive shares, securities or other
property prior to such Transaction shall thereafter be convertible into
the kind and amount of shares, securities and other property (including
cash or any combination thereof) receivable upon the consummation of
such Transaction by a holder of that number of Common Shares into which
one Series A Preferred Share was convertible immediately prior to such
Transaction, assuming such holder of Common Shares (i) is not a Person
with which the Trust consolidated or into which the Trust merged or
which merged into the Trust or to which such sale or transfer was made,
as the case may be ("Constituent Person"), or an affiliate of a
Constituent Person and (ii) failed to exercise his rights of election,
if any, as to the kind or amount of shares, securities and other
property (including cash) receivable upon such Transaction (provided
that if the kind or amount of shares, securities and other property
(including cash) receivable upon such Transaction is not the same for
each Common Share held immediately prior to such Transaction by other
than a Constituent Person or an affiliate thereof and in respect of
which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purpose of this paragraph (e) the
kind and amount of shares, securities and other property (including
cash) receivable upon such Transaction by each Non-Electing Share shall
be deemed to be the kind and amount so receivable per share by a
plurality of the Non-Electing Shares). The Trust shall not be a party
to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (e), and it shall not consent or
agree to the occurrence of any Transaction until the Trust has entered
into an agreement with the successor or purchasing entity, as the case
may be, for the benefit of the holders of the Series A Preferred Shares
that will contain provisions enabling the holders of the Series A
Preferred Shares that remain outstanding after such Transaction to
convert into the consideration received by holders of Common Shares at
the Conversion Price in effect immediately prior to such Transaction.
The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
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<PAGE> 20
(i) the Trust shall declare a dividend (or any other
distribution) on the Common Shares (other than cash dividends or
distributions paid with respect to the Common Shares after December 31,
1995 not in excess of the sum of the Trust's cumulative undistributed
Income from Operations and capital gains and cumulative depreciation
and amortization at December 31, 1995, plus the cumulative amount of
net income before distributions accrued or paid on the Series A
Preferred Shares, plus depreciation and amortization, after December
31, 1995, minus the cumulative amount of distributions accrued or paid
on the Series A Preferred Shares or any other class or series of
preferred shares of beneficial interest of the Trust after the Issue
Date); or
(ii) the Trust shall authorize the granting to the holders of
Common Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or
warrants; or
(iii) there shall be any reclassification of the Common Shares
(other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Trust is a party
and for which approval of any shareholders of the Trust is required, or
a statutory share exchange, or a self tender offer by the Trust for all
or substantially all of its outstanding Common Shares or the sale or
transfer of all or substantially all of the assets of the Trust as an
entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Trust;
then the Trust shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of Series A Preferred Shares at their
addresses as shown on the records of the Trust, as promptly as possible, but
at least 10 days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Shares
of record to be entitled to such dividend, distribution or rights, options or
warrants are to be determined or (B) the date on which such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Shares of record shall be
entitled to exchange their Common Shares for securities or other property, if
any, deliverable upon such
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<PAGE> 21
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity
of the proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Trust shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate
shall be conclusive evidence of the correctness of such adjustment absent
manifest error. Promptly after delivery of such certificate, the Trust shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each Series A Preferred Share at such holder's last address as shown on the
records of the Trust.
(h) In any case in which paragraph (d) of this Section 6 provides
that an adjustment shall become effective on the day next following the
record date for an event, the Trust may defer until the occurrence of such
event (A) issuing to the holder of any Series A Preferred Share 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 of cash in lieu of any fraction pursuant to paragraph (c)
of this Section 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any shares of beneficial interest of the Trust in a
reorganization, acquisition or other similar transaction except as
specifically set forth in this Section 6. If any action or transaction would
require adjustment of the Conversion Price pursuant to more than one
paragraph of this Section 6, only one adjustment shall be made and such
adjustment shall be the amount of adjustment that has the highest absolute
value.
(j) If the Trust shall take any action affecting the Common Shares,
other than actions described in this Section 6, that in the opinion of the
Board of Trustees would materially and adversely affect the conversion rights
of the holders of the Series A Preferred Shares, the Conversion Price for the
Series A Preferred Shares may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as
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<PAGE> 22
the Board of Trustees, in its sole discretion, may determine to be equitable
in the circumstances.
(k) The Trust covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Shares, for the purpose of effecting
conversion of the Series A Preferred Shares, the full number of Common Shares
deliverable upon the conversion of all outstanding Series A Preferred Shares
not theretofore converted. For purposes of this paragraph (k), the number of
Common Shares that shall be deliverable upon the conversion of all
outstanding Series A Preferred Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
The Trust covenants that any Common Shares issued upon conversion of
the Series A Preferred Shares shall be validly issued, fully paid and
(subject to customary qualification based upon the nature of a real estate
investment trust) non-assessable. Before taking any action that would cause
an adjustment reducing the Conversion Price below the then-par value of the
Common Shares deliverable upon conversion of the Series A Preferred Shares,
the Trust will take any trust action that, in the opinion of its counsel, may
be necessary in order that the Trust may validly and legally issue fully paid
and (subject to any customary qualification based upon the nature of a real
estate investment trust) non-assessable Common Shares at such adjusted
Conversion Price.
The Trust shall endeavor to list the Common Shares required to be
delivered upon conversion of the Series A Preferred Shares, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of such delivery.
Prior to the delivery of any securities that the Trust shall be
obligated to deliver upon conversion of the Series A Preferred Shares, the
Trust shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
(l) The Trust will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common
Shares or other securities or property on conversion of the Series A
Preferred Shares pursuant hereto; provided, however, that the Trust shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common
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Shares or other securities or property in a name other than that of the
holder of the Series A Preferred Shares to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Trust the amount of any such tax or established, to
the reasonable satisfaction of the Trust, that such tax has been paid.
Section 7. Shares To Be Retired. All Series A Preferred Shares which shall
have been issued and reacquired in any manner by the Trust shall be restored to
the status of authorized but unissued shares of beneficial interest of the
Trust, without designation as to class or series.
Section 8. Ranking. Any class or series of shares of beneficial interest of
the Trust shall be deemed to rank:
(a) prior to the Series A Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of Series A Preferred Shares;
(b) on a parity with the Series A Preferred Shares, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof shall be different from
those of the Series A Preferred Shares, if the holders of such class or
series and the Series A Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or
priority one over the other ("Parity Shares");
(c) junior to the Series A Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series A Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Fully Junior Shares.
Section 9. Voting. If and whenever six quarterly dividends (whether or not
consecutive) payable on the Series A Preferred Shares or any series or class of
Parity Shares shall be in arrears
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(which shall, with respect to any such quarterly dividend, mean that any such
dividend has not been paid in full), whether or not earned or declared, the
number of trustees then constituting the Board of Trustees shall be increased
by two and the holders of Series A Preferred Shares, together with the holders
of shares of every other series of Parity Shares (any such other series, the
"Voting Preferred Shares"), voting as a single class regardless of series,
shall be entitled to elect two additional trustees to serve on the Board of
Trustees at any annual meeting of shareholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series A Preferred
Shares and the Voting Preferred Shares called as hereinafter provided. Whenever
all arrears in dividends on the Series A Preferred Shares and the Voting
Preferred Shares then outstanding shall have been paid and dividends thereon
for the current quarterly dividend period shall have been paid or declared and
set apart for payment, then the right of the holders of the Series A Preferred
Shares and the Voting Preferred Shares to elect such additional two trustees
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearages in six quarterly
dividends), and the terms of office of all persons elected as trustees by the
holders of the Series A Preferred Shares and the Voting Preferred Shares shall
forthwith terminate and the number of the Board of Trustees shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Series A Preferred Shares and the Voting Preferred Shares, the
Secretary of the Trust may, and upon the written request of any holder of
Series A Preferred Shares (addressed to the Secretary at the principal office
of the Trust) shall, call a special meeting of the holders of the Series A
Preferred Shares and of the Voting Preferred Shares for the election of the two
trustees to be elected by them as herein provided, such call to be made by
notice similar to that provided in the By-Laws of the Trust for a special
meeting of the shareholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Series A
Preferred Shares may call such meeting, upon the notice above provided, and for
that purpose shall have access to the records of the Trust. The trustees
elected at any such special meeting shall hold office until the next annual
meeting of the shareholders or special meeting held in lieu thereof if such
office shall not have previously terminated as above provided. If any vacancy
shall occur among the trustees elected by the holders of the Series A Preferred
Shares and the Voting Preferred Shares, a successor shall be elected by the
Board of Trustees, upon the nomination of the then-remaining trustee elected by
the holders of the Series A Preferred Shares and the Voting Preferred Shares or
the successor of such remaining trustee, to serve until the next annual meeting
of the shareholders or special meeting held in place thereof if such office
shall not have previously terminated as provided above.
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So long as any Series A Preferred Shares are outstanding, in addition
to any other vote or consent of shareholders required by law, by the Trust's
Amended Declaration of Trust, as amended and supplemented (the "Declaration of
Trust"), or by the Trust's By-Laws, as amended and supplemented (the
"By-Laws"), the affirmative vote of at least 66 2/3% of the votes entitled to
be cast by the holders of the Series A Preferred Shares and the Voting
Preferred Shares, at the time outstanding, acting as a single class regardless
of series, given in person or by proxy, either in writing without a meeting or
by vote at any meeting called for the purpose, shall be necessary for effecting
or validating:
(a) Any amendment, alteration or repeal of any of the provisions of
the Declaration of Trust, By-Laws or this Certificate of Designations that
materially and adversely affects the voting powers, rights or preferences
of the holders of the Series A Preferred Shares or the Voting Preferred
Shares; provided, however, that the amendment of the provisions of the
Declaration of Trust so as to authorize or create or to increase the
authorized amount of, any Fully Junior Shares, Junior Shares that are not
senior in any respect to the Series A Preferred Shares, or any shares of any
class ranking on a parity with the Series A Preferred Shares or the Voting
Preferred Shares shall not be deemed to materially adversely affect the
voting powers, rights or preferences of the holders of Series A Preferred
Shares, and provided, further, that if any such amendment, alteration or
repeal would materially and adversely affect any voting powers, rights or
preferences of the Series A Preferred Shares or another series of Voting
Preferred Shares that are not enjoyed by some or all of the other series
otherwise entitled to vote in accordance herewith, the affirmative vote of at
least 66 2/3% of the votes entitled to be cast by the holders of all series
similarly affected, similarly given, shall be required in lieu of the
affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the Series A Preferred Shares and the Voting Preferred Shares
otherwise entitled to vote in accordance herewith; or
(b) A share exchange that affects the Series A Preferred Shares, a
consolidation with or merger of the Trust into another entity, or a
consolidation with or merger of another entity into the Trust, unless in each
such case each Series A Preferred Share (i) shall remain outstanding without
a material and adverse change to its terms and rights or (ii) shall be
converted into or exchanged for convertible preferred shares of the surviving
entity having preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption thereof identical to that of a Series A Preferred
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Share (except for changes that do not materially and adversely affect the
holders of the Series A Preferred Shares); or
(c) The authorization, reclassification or creation of, or the
increase in the authorized amount of, any shares of any class or any
security convertible into shares of any class ranking prior to the Series
A Preferred Shares in the distribution of assets on any liquidation,
dissolution or winding up of the Trust or in the payment of dividends;
provided, however, that no such vote of the holders of Series A Preferred
Shares shall be required if, at or prior to the time when such amendment,
alteration or repeal is to take effect, or when the issuance of any such prior
shares or convertible security is to be made, as the case may be, provision is
made for the redemption of all Series A Preferred Shares at the time
outstanding.
For purposes of the foregoing provisions of this Section 9, each Series A
Preferred Share shall have one (1) vote per share, except that when any other
series of Preferred Shares shall have the right to vote with the Series A
Preferred Shares as a single class on any matter, then the Series A Preferred
Shares and such other series shall have with respect to such matters one (1)
vote per $25.00 of stated liquidation preference. Except as otherwise required
by applicable law or as set forth herein, the Series A Preferred Shares shall
not have any relative, participating, optional or other special voting rights
and powers other than as set forth herein, and the consent of the holders
thereof shall not be required for the taking of any Trust action.
Section 10. Limitation on Ownership.
(a) Limitation. Notwithstanding any other provision of the terms of
the Series A Preferred Shares, except as provided in the next sentence and in
Section 10(b), no Person, or Persons acting as a group, shall at any time
directly or indirectly acquire ownership of more than 25% of the outstanding
Series A Preferred Shares (the "Limit"). Any Series A Preferred Shares owned
by a Person or Persons acting as a group in excess of such 25% shall be
deemed "Excess Preferred Shares," except that any such shares in excess of
25% will not be considered Excess Preferred Shares if the 25% limitation is
exceeded solely as a result of the Trust's redemption of Series A Preferred
Shares, provided that thereafter any additional Series A Preferred Shares
acquired by such Person or Persons acting as a group shall be considered
Excess Preferred Shares. The Limit set for in this Section 10(a) shall be in
addition to any other limitation set forth in the (1) By-Laws, (2)
Declaration of Trust, (3) Amended and Restated Declaration of Trust dated as
of October 1, 1996 made by Adolph Posnick, as amended and supplemented
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(the "Management Company Declaration of Trust"), and (4) applicable law.
(b) If any Series A Preferred Shares are issued or transferred to any
Person in violation of Section 10(a), such issuance or transfer shall be
valid only with respect to such amount of Series A Preferred Shares as does
not result in violation of Section 10(a), and such issuance or transfer shall
be null and void with respect to such Excess Preferred Shares. If the last
clause of the foregoing sentence is determined to be invalid by virtue of any
legal decision, statute, rule or regulation, such Person shall be
conclusively deemed to have acted as an agent on behalf of the Trust in
acquiring the Excess Preferred Shares and to hold such Excess Preferred
Shares on behalf of the Trust. As the equivalent of treasury securities for
such purposes, the Excess Preferred Shares shall not be entitled to any
voting rights; shall not be considered outstanding for quorums or voting
purposes; shall not be entitled to receive dividends, interest or any other
distribution with respect to such Shares; and shall not be entitled to any
conversion rights. Any Person who receives dividends, interest or any other
distribution in respect to Excess Preferred Shares shall hold the same as
agent for the Trust and (following a permitted transfer) for the transferee
thereof.
Notwithstanding the foregoing, any holder of Excess Preferred Shares
may transfer the same (together with any distributions thereon) to any Person
who, following such transfer, would not own Series A Preferred Shares (within
the meaning of Section 10(a)) in excess of the Limit. Upon such permitted
transfer, the Trust shall pay or distribute to the transferee any
distributions on the Excess Preferred Shares not previously paid or
distributed.
(c) Ownership of the Series A Preferred Shares is conditional upon
the owner or prospective owner having provided to the Trust definitive
written information respecting his ownership of the Series A Preferred
Shares. Failure to provide such information upon reasonable request shall
result in the Series A Preferred Shares so owned being treated as Excess
Preferred Shares pursuant to Section 10(b) for so long as such failure
continues.
(d) For purposes of this Section 10, "Ownership" means beneficial
ownership. Beneficial ownership, for this purpose, may be determined on the
basis of the beneficial ownership rules applicable under the Securities
Exchange Act of 1934, as amended, or such other basis as management of the
Trust reasonably determines to be appropriate to effectuate the purposes
hereof.
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(e) Nothing herein contained shall limit the ability of the Trust to
impose, or to seek judicial or other imposition of additional restrictions if
deemed necessary or advisable to protect the Trust and the interests of its
security holders by preservation of the Trust's status as a qualified real
estate investment trust under the Internal Revenue Code of 1986, as amended,
modified or rescinded from time to time, or any similar provision of
succeeding law.
(f) If any provision of this Section 10 or any application of any
such provision is determined to be invalid by any federal or state court
having jurisdiction over the issue, the validity of the remaining provisions
shall not be affected and other applications of such provision shall be
affected only to the extent necessary to comply with the determination of
such court.
(g) Exemptions. The limitation on ownership set forth in Section
10(a) shall not apply to the acquisition of Series A Preferred Shares by an
underwriter in a public offering of Series A Preferred Shares (including the
initial public offering of such Shares) and shall not apply to the ownership
of Series A Preferred Shares by a managing underwriter in the initial public
offering of Series A Preferred Shares. The Trustees, in their sole and
absolute discretion, may exempt from the ownership limitation set forth in
Section 10(a) certain designated Series A Preferred Shares owned by a Person
who has provided the Trustees with evidence and assurances acceptable to the
Trustees that the qualification of the Trust as a real estate investment
trust would not be jeopardized thereby.
Section 11. Record Holders. The Trust and the Transfer Agent may deem and
treat the record holder of any Series A Preferred Shares as the true and lawful
owner thereof for all purposes, and neither the Trust nor the Transfer Agent
shall be affected by any notice to the contrary.
Section 12. Sinking Fund. The Series A Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.
Section 13. Management Company Declaration of Trust. Notwithstanding any
other provisions of this Certificate of Designations, the holders of the Series
A Preferred Shares shall not be entitled to the benefit of the Management
Company Declaration of Trust.
Section 14. Exclusivity. Notwithstanding any provision of the Declaration of
Trust to the contrary, the holders of the Series A Preferred Shares shall have
no voting rights, and shall not be
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entitled to receive any dividends or distributions on account of their shares,
except, in each case, to the extent expressly set forth herein or as otherwise
required by applicable law.
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IN WITNESS WHEREOF, this Certificate of Designations has been duly executed
by the undersigned this ____ day of October, 1996.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By:_____________________________
James C. Mastandrea
Chairman, President
and Chief Executive Officer
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