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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) October 24, 1996
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
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(Exact Name of Registrant as Specified in its Charter)
Ohio
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(State of Organization)
1-6249 34-6513657
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(Commission File Number) (I.R.S. Employer Identification No.)
55 Public Square, Suite 1900, Cleveland, Ohio 44113
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(Address of Principal Executive Offices) (Zip Code)
(216) 781-4030
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On October 24, 1996, First Union Real Estate Equity and Mortgage
Investments, an Ohio real estate investment trust ("First Union"), announced the
pricing of an offering of 2,000,000 shares of its Series A Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest, $25.00 par value
per share (the "Series A Preferred Shares"). Copies of the announcement and the
underwriting agreement relating to the Series A Preferred Shares are filed as
exhibits hereto and are hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION
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<S> <C>
1(a) Underwriting Agreement dated October 23, 1996
among Sutro & Co. Incorporated, BT
Securities Corporation and Tucker
Anthony Incorporated and First Union
Real Estate Equity and Mortgage
Investments.
4(a) Certificate of Designations for
the Series A Preferred Shares.
4(b) Form of certificate of Series A
Preferred Shares.
99(a) Press Release dated October 24, 1996.
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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.
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
Dated: October 24, 1996 By: /s/ John J. Dee
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John J. Dee
Senior Vice President
and Chief Accounting Officer
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2,000,000 SHARES
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
SERIES A CUMULATIVE CONVERTIBLE REDEEMABLE
PREFERRED SHARES OF BENEFICIAL INTEREST
(LIQUIDATION PREFERENCE VALUE $25 PER SHARE)
UNDERWRITING AGREEMENT
OCTOBER 23, 1996
SUTRO & CO. INCORPORATED
BT SECURITIES CORPORATION
TUCKER ANTHONY INCORPORATED
As Representatives of Several Underwriters
c/o Sutro & Co. Incorporated
201 California Street
San Francisco, California 94111
Dear Sirs:
1. INTRODUCTION. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, an Ohio business trust (the "Trust"), proposes to issue and sell
to the several Underwriters named in Schedule I hereto (the "Underwriters"),
for which Sutro & Co. Incorporated, BT Securities Corporation and Tucker
Anthony Incorporated are acting as representatives (the "Representatives"),
2,000,000 Series A Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest, $25 liquidation preference value per share (the "Preferred
Shares"). The Trust also proposes to issue to the several Underwriters an
aggregate of not more than 300,000 additional Preferred Shares (the "Additional
Preferred Shares"), if requested by the Underwriters in accordance with Section
9 hereof.
The Trust hereby agrees with the Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES.
(a) The Trust represents, warrants and agrees with
each of the Underwriters that:
(i) A registration statement on Form S-3
(File No. 333-00953) under the Securities Act of 1933, as amended
(the "Act"), with respect to preferred shares of beneficial
interest of the Trust (as well as other securities of the Trust),
including a prospectus, has been prepared by the Trust in
conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission (the
"Commission") thereunder (the "Rules and Regulations"). Such
registration statement has been filed with the Commission under
the Act, and one amendment to such registration statement has also
been so filed. After the execution of this Agreement, the Trust
shall file with the Commission in accordance with Rule 424 of the
Rules and Regulations, a prospectus in the form most recently
filed with the
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Commission, with such amendments and supplements in relation to
the Preferred Shares. Such prospectus (as amended and
supplemented) shall have been provided to and approved by the
Representatives. As used in this Agreement, the term
"Registration Statement" means such registration statement, as
amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and to
documents incorporated therein by reference; the term "Prospectus"
means the prospectus contained in such registration statement as
it may be amended in accordance with Rule 424 of the Rules and
Regulations, but excluding the Prospectus Supplement as defined
below; the term "Prospectus Supplement" means the prospectus
supplement relating to the offer of the Preferred Shares, but
excluding the Prospectus, filed with the Commission pursuant to
Rule 424(b) under the Rules and Regulations; and the term
"Preliminary Prospectus Supplement" means the preliminary
prospectus supplement subject to completion relating to the offer
of the Preferred Shares and filed pursuant to Rule 424 of the
Rules and Regulations. References herein to any document or other
information incorporated by reference in the Registration
Statement shall include documents or other information
incorporated by reference in the Prospectus. Reference made
herein to the Prospectus shall be deemed to include all documents
and information incorporated by reference therein and shall be
deemed to refer to and include any documents and information filed
after the date of such Prospectus and so incorporated by
reference, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(ii) The Commission has not issued any order
preventing or suspending the use of any Prospectus, or Preliminary
Prospectus Supplement or the Registration Statement and has not
instituted or threatened to institute any proceedings with respect
to such an order. When any Preliminary Prospectus Supplement was
filed with the Commission it (A) contained all statements required
to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the Rules
and Regulations and (B) did not include any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When
the Registration Statement was declared effective, it (A) complied
in all material respects with the requirements of the Act and the
Rules and Regulations and (B) did not include any untrue statement
of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus
and Prospectus Supplement are filed with the Commission pursuant
to Rule 424(b) and at all times subsequent thereto up to and
including the Closing Date (as defined in Section 3 hereof) and
the Option Closing Date (as defined in Section 9 hereof), the
Prospectus and the Prospectus Supplement (A) will comply in all
material respects with the requirements of the Act and the Rules
and Regulations and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (ii) shall not apply to
statements or omissions made in any Preliminary Prospectus
Supplement, the Registration Statement or any amendment thereto,
the Prospectus or any amendment thereto or the Prospectus
Supplement or any amendment thereto in reliance upon, and in
conformity with, information furnished in writing to the Trust by
or on behalf of the Underwriters through any Representative
expressly for use therein. The documents which are incorporated
by reference in the Prospectus or from which information is so
incorporated by reference, when they became effective or were
filed with the Commission, as the case may be, complied in all
material respects with the requirements of the Act and the Rules
and Regulations or the Exchange Act and the rules and regulations
thereunder, as applicable, and did
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not, when such documents became effective or were so filed,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading, and any documents so
filed and incorporated by reference subsequent to the effective
date of the Registration Statement shall, when they are filed with
the Commission, conform in all material respects with the
requirements of the Act and the Rules and Regulations and the
Exchange Act and the rules and regulations thereunder, as
applicable.
(iii) The Trust (A) is a duly organized and
validly existing business trust in good standing under the laws of
Ohio, with full power and authority to own or lease its properties
and to conduct its business as described in the Registration
Statement, the Prospectus and the Prospectus Supplement; and (B)
is duly qualified to do business as a foreign business trust and
is in good standing in each jurisdiction (x) in which the conduct
of its business requires such qualification (except for those
jurisdictions in which the failure so to qualify has not had and
will not have a Material Adverse Effect (as hereinafter defined)).
The Trust has an affiliated Management Company, First Union
Management, Inc. ("Management"), and the shares of Management are
held in trust for the benefit of the holders of shares of
beneficial interest, $1.00 par value per share, of the Trust.
Management (A) is a duly incorporated and validly existing
corporation under the laws of Delaware, with full power and
authority to own or lease its properties or to conduct its
business as described in the Registration Statement and the
Prospectus Supplement, and (B) is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business requires such qualification
(except for those jurisdictions in which the failure so to qualify
has not had and will not have a Material Adverse Effect).
"Material Adverse Effect" means, when used in connection with the
Trust or Management, any development, change or effect that is
materially adverse to the business, properties, assets, net
worth, condition (financial or other), results of operations or
prospects of the Trust and Management taken as a whole.
(iv) The Trust has the duly authorized and
validly outstanding capitalization set forth under the caption
"Capitalization" in the Prospectus Supplement and will have the
adjusted capitalization set forth therein on the Closing Date and
the Option Closing Date (as hereinafter defined), based on the
assumptions set forth therein. The Preferred Shares of the Trust
conform to the descriptions thereof contained in the Prospectus
and the Prospectus Supplement. Except as created hereby pursuant
to Section 9 of this Agreement, or referred to or included in the
Prospectus or Prospectus Supplement, there are no outstanding
options, warrants, rights or other arrangements requiring the
Trust or Management at any time to issue any capital stock. No
holders of outstanding shares of capital stock of the Trust are
entitled as such to any preemptive or other rights to subscribe
for any of the Preferred Shares and neither the filing of the
Registration Statement nor the offering or sale of the Preferred
Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or
relating to, the registration of any securities of the Trust. On
the Closing Date or the Option Closing Date (as the case may be),
after payment therefor in accordance with the terms of this
Agreement, good and marketable title to the Preferred Shares,
fully paid, and except as set forth under the Caption "Shareholder
Liability" in the Prospectus, non-assessable, will pass to the
Underwriters on the Closing Date or the Option Closing Date (as
the case may be) free and clear of any lien, encumbrance,
security interest, claim or other restriction whatsoever.
All outstanding shares of capital stock of Management
have been duly authorized and validly issued, are fully paid and
nonassessable and are free and clear of any lien,
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encumbrance, security interest, claim or other restriction
whatsoever. The Trust has received, subject to notice of
issuance, approval to have the Preferred Shares listed on The New
York Stock Exchange and the Trust knows of no reason or set of
facts which is likely to adversely affect such approval.
(v) The combined financial statements and the
related notes and schedules thereto included in the Registration
Statement or incorporated therein by reference and the Prospectus
fairly present the combined financial condition, results of
operations, shareholders' equity and cash flows of the Trust and
Management at the dates and for the periods specified therein.
Such financial statements and the related notes and schedules
thereto have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein) and such financial
statements as are audited have been examined by Arthur Andersen
LLP, who are independent public accountants within the meaning of
the Act and the Rules and Regulations, as indicated in their
reports filed therewith. The selected financial information and
statistical data set forth under the caption "Selected Financial
Data" in the Prospectus Supplement have been prepared on a basis
consistent with the combined financial statements of the Trust and
Management.
(vi) The Trust and Management each has filed
all necessary federal, state and local income, franchise and other
material tax returns and each has paid or, if not due on the date
hereof, intends to pay all taxes shown as due thereunder. The
Trust and Management each has no knowledge of any tax deficiency
which might be assessed against the Trust or Management which, if
so assessed, may have a Material Adverse Effect.
(vii) The Trust and Management each maintains
insurance of the types and in amounts which each reasonably
believes to be adequate for its business in such amounts and with
such deductibles as is customary for companies in the same or
similar business, all of which insurance is in full force and
effect.
(viii) Except as disclosed in the Prospectus and
the Prospectus Supplement, there is no pending action, suit,
proceeding or investigation or threatened action, suit, proceeding
or investigation before or by any court, regulatory body or
administrative agency or any other governmental agency or body,
domestic or foreign, which (A) questions the validity of the
capital stock of the Trust or this Agreement or of any action
taken or to be taken by the Trust pursuant to or in connection
with this Agreement, (B) is required to be disclosed in the
Registration Statement which is not so disclosed (and such
proceedings, if any, as are summarized in the Registration
Statement or incorporated therein by reference are accurately
summarized in all material respects), or (C) will have a Material
Adverse Effect.
(ix) The Trust has full legal right, power and
authority to enter into this Agreement and to consummate the
transactions provided for herein. This Agreement has been duly
authorized, executed and delivered by the Trust and, assuming it
is a binding agreement of yours, constitutes a legal, valid and
binding agreement of the Trust enforceable against the Trust in
accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights and the application
of equitable principles relating to the availability of remedies
and except as rights to indemnity or contribution may be limited
by federal or state securities laws and the public policy
underlying such
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laws), and none of the Trust's execution or delivery of this
Agreement, its performance hereunder, its consummation of the
transactions contemplated herein, its application of the net
proceeds of the offering in the manner set forth under the caption
"Use of Proceeds" in the Prospectus Supplement or the conduct of
its business as described in the Prospectus and the Prospectus
Supplement, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under,
causes or will cause (or permits or will permit) the maturation or
acceleration of any liability or obligation or the termination of
any right under, or result in the creation or imposition of any
lien, charge, or encumbrance upon, any property or assets of the
Trust or Management pursuant to the terms of (A) the Declaration
of Trust or By-Laws, each as amended, of the Trust or Articles of
Incorporation or By-Laws of Management, (B) any indenture,
mortgage, deed of trust, voting trust agreement, shareholders'
agreement, note agreement or other agreement or instrument to
which the Trust or Management is a party or by which their
respective properties may be bound or to which any of their
respective properties are or may be subject or (C) any statute,
judgment, decree, order, rule or regulation applicable to the
Trust or Management of any government, arbitrator, court,
regulatory body or administrative agency or other governmental
agency or body, domestic or foreign, having jurisdiction over the
Trust or Management or any of their respective activities or
properties.
(x) All executed agreements or copies of
executed agreements filed or incorporated by reference as exhibits
to the Registration Statement to which the Trust or Management is
a party or by which the Trust is or Management may be bound or to
which any of their respective assets, properties or businesses are
or may be subject have been duly and validly authorized, executed
and delivered by the Trust or Management and constitute the legal,
valid and binding agreements of the Trust or Management, as the
case may be, enforceable against each in accordance with their
respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws relating to enforcement of creditors' rights generally, and
general equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution may be
limited by federal or state securities laws and the public policy
underlying such laws). The descriptions in the Registration
Statement or incorporated therein by reference of contracts and
other documents are accurate and fairly present the information
required to be shown with respect thereto by the Act and the Rules
and Regulations, and there are no contracts or other documents
which are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as
required or incorporated therein by reference, and the exhibits
which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(xi) Subsequent to the most recent date as of
which information is given in the Prospectus Supplement up to and
including the Closing Date, and except as included or contemplated
therein, neither the Trust nor Management has, other than in the
ordinary course of its business, (i) incurred any material
liabilities or obligations, direct or contingent, (ii) purchased
any material amount of its outstanding capital stock, (iii) paid
or declared any dividends or other distributions on its capital
stock other than the Trust's regular quarterly dividend or (iv)
entered into any material transactions. Subsequent to the most
recent date as of which information is given in the Prospectus
Supplement and except as contemplated therein, there has been no
material change in capital stock or debt or any material adverse
change in the business, properties, assets, net worth, condition
(financial or other), or results of operations or
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prospects of the Trust and Management taken as a whole. Neither
the Trust nor Management is in breach or violation of, or in
default under, any term or provision of (A) the Trust's
Declaration of Trust or By-Laws, each as amended, (B) Management's
Articles of Incorporation or By-Laws, (C) any material indenture,
evidence of indebtedness, mortgage, deed of trust, voting trust
agreement, shareholders' agreement, note agreement or other
agreement or instrument to which either the Trust or Management is
a party or by which either the Trust or Management is or may be
bound or to which any of the respective properties of either the
Trust or Management are or may be subject, or (D) any statute,
judgment, decree, order, rule or regulation applicable to the
Trust or Management or of any arbitrator, court, regulatory body,
administrative agency or any other governmental agency or body,
domestic or foreign, having jurisdiction over the Trust or
Management or any of their respective activities or properties,
the effect of which breach or violation of, or default under, as
applicable, singly or in the aggregate, will have a Material
Adverse Effect.
(xii) No labor disturbance by the employees of
the Trust or Management exists or, to the best of Trust's and
Management's knowledge, is imminent which will have a Material
Adverse Effect.
(xiii) Since its inception, the Trust has not
incurred any material liability arising under or as a result of
the application of the provisions of the Act, which would
adversely affect the consummation of the transactions contemplated
hereby.
(xiv) No consent, approval, authorization or
order of or filing with any court, regulatory body, administrative
agency or any other governmental agency or body, domestic or
foreign, is required for the performance of this Agreement or the
consummation of the transactions contemplated hereby, except such
as have been obtained under the Act, the Rules and Regulations,
the Exchange Act or the rules and regulations thereunder or may be
required under state securities or Blue Sky laws in connection
with the Underwriters' purchase and distribution of the Preferred
Shares.
(xv) There are no contracts, agreements or
understandings between the Trust and any person granting such
person the right to require the Trust to file a registration
statement under the Act with respect to any securities of the
Trust owned or to be owned by such person or to require the Trust
to include such securities under the Registration Statement (other
than those disclosed in the Prospectus Supplement or Prospectus)
that have not been waived with respect to the Registration
Statement.
(xvi) Neither the Trust nor any of its
officers, directors or affiliates (within the meaning of the Rules
and Regulations) has taken, directly or indirectly, any action
designed to stabilize or manipulate the price of any security of
the Trust, or which has constituted or which would reasonably be
expected to cause or result in stabilization or manipulation of
the price of any security of the Trust, to facilitate, in each
case, the sale or resale of the Preferred Shares.
(xvii) The Trust and Management each has good
and marketable title to, or valid and enforceable leasehold
interests in, all properties and assets owned or leased by it,
free and clear of all liens, encumbrances, security interests,
claims, restrictions, equities, claims and defects, except (A)
such as are described in the Registration Statement, Prospectus
and Prospectus Supplement or such as do not materially adversely
affect the value of any of such properties or assets taken as a
whole and do not materially interfere with the use made and
proposed to be made of
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any of such properties or assets, and (B) liens for taxes not yet
due and payable as to which appropriate reserves have been
established and reflected in the financial statements included or
incorporated by reference in the Registration Statement. The
Trust owns or leases all such properties as are necessary to its
operations as now conducted, and as proposed to be conducted as
set forth in the Registration Statement, Prospectus and Prospectus
Supplement; and the properties and business of the Trust and
Management conform in all material respects to the descriptions
thereof contained in the Registration Statement, the Prospectus
and the Prospectus Supplement. All the material leases and
subleases of the Trust and Management, and under which the Trust
or Management holds properties or assets as lessee or sublessee,
constitute valid leasehold interests of the Trust or Management
free and clear of any lien, encumbrance, security interest,
restriction, equity, claim or defect, are in full force and
effect, and neither the Trust nor Management is in default in
respect of any of the material terms or provisions of any such
material leases or subleases, and neither the Trust nor Management
has notice of any claim which has been asserted by anyone adverse
to the Trust's or Management's rights as lessee or sublessee under
either the material lease or sublease, or affecting or questioning
the Trust's or Management's right to the continued possession of
the leased or subleased premises under any such material lease or
sublease, which may have a Material Adverse Effect.
(xviii) Neither the Trust nor Management has
violated any applicable environmental, safety, health or similar
law applicable to the business of the Trust, nor any federal or
state law relating to discrimination in the hiring, promotion, or
pay of employees, nor any applicable federal or state wages and
hours law, nor any provisions of ERISA or the rules and
regulations promulgated thereunder, the consequences of which
violation will have a Material Adverse Effect.
(xix) The Trust and Management each holds all
franchises, licenses, permits, approvals, certificates and other
authorizations from federal, state and other governmental or
regulatory authorities necessary to the ownership, leasing and
operation of their respective properties or required for the
present conduct of the business, and such franchises, licenses,
permits, approvals, certificates and governmental authorizations
are in full force and effect and the Trust and Management each is
in compliance therewith in all material respects except where the
failure so to hold, obtain, maintain or comply with would not have
a Material Adverse Effect.
(xx) Management is not currently prohibited,
directly or indirectly from repaying to the Trust any loans or
advances to Management from the Trust, except as described in or
contemplated by the Prospectus Supplement or Prospectus.
(xxi) The Trust meets the requirements for use
of Form S-3 under the Rules and Regulations.
(xxii) The Trust is qualified as a "real estate
investment trust" under the Internal Revenue Code of 1986, as
amended, and will be so qualified immediately after consummation
of the transactions contemplated by the Registration Statement.
3. PURCHASE, SALE AND DELIVERY OF THE PREFERRED SHARES. On the
basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase from the Trust at a purchase price of $23.875 per
share, the number of Preferred Shares set forth opposite the name of such
Underwriter in Column (1) of Schedule I hereto.
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Delivery of certificates, and payment of the purchase price, for
the Preferred Shares shall be made at the offices of Squire, Sanders & Dempsey
L.L.P., or such other location as shall be agreed upon by the Trust and the
Representatives. Such delivery and payment shall be made at 10:00 a.m., New
York City time, on October 29, 1996 or at such other time and date not more
than ten business days thereafter as shall be agreed upon by the
Representatives and the Trust. The time and date of such delivery and payment
are herein called the "Closing Date." Delivery of the certificates for the
Preferred Shares shall be made to the Representatives for the respective
accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price for the
Preferred Shares by wire transfer of same day funds. The certificates for the
Preferred Shares to be so delivered will be in definitive, fully registered
form, will bear no restrictive legends, other than those relating to
restrictions described in the Prospectus and Prospectus Supplement, and will be
in such denominations and registered in such names as the Representatives shall
request, not less than one full business day prior to the Closing Date. The
certificates for the Preferred Shares will be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging not later than 11:00 a.m., New
York time on the business day prior to the Closing Date.
4. PUBLIC OFFERING OF THE PREFERRED SHARES. It is understood
that the Underwriters propose to make a public offering of the Preferred Shares
at the price and upon the other terms set forth in the Prospectus Supplement.
5. COVENANTS OF THE TRUST.
(a) The Trust covenants and agrees with each of the
Underwriters that:
(i) If required, the Trust will file the
Prospectus and Prospectus Supplement and any amendment or
supplement thereto with the Commission in the manner and within
the time period required by Rule 424(b) under the Rules and
Regulations. During any time when a prospectus relating to the
Preferred Shares is required to be delivered under the Act, the
Trust (A) will comply with all requirements imposed upon it by the
Act and the Rules and Regulations to the extent necessary to
permit the continuance of sales of or dealings in the Preferred
Shares in accordance with the provisions hereof and of the
Prospectus and Prospectus Supplement, as then amended or
supplemented, and (B) will not file with the Commission the
Prospectus or the Prospectus Supplement, any amendment or
supplement to the Prospectus or Prospectus Supplement or any
amendment to the Registration Statement of which the
Representatives shall not previously have been advised and
furnished with a copy a reasonable period of time prior to the
proposed filing and as to which filing the Representative shall
not have given its consent, which may be given by counsel to the
Underwriters.
(ii) As soon as the Trust is advised or
obtains knowledge thereof, on or subsequent to the date hereof,
the Trust will advise the Representatives (A) of any request made
by the Commission for amending the Registration Statement, for
supplementing any Preliminary Prospectus Supplement, the
Prospectus or Prospectus Supplement or for additional information,
or (B) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order preventing or
suspending the use of any Preliminary Prospectus Supplement, the
Prospectus or Prospectus Supplement or any amendment or supplement
thereto or the institution or threat of any investigation or
proceeding for that purpose, and will use its best efforts to
prevent the issuance of any such order and, if issued, to obtain
the lifting thereof as soon as reasonably possible.
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(iii) The Trust will (A) use its best efforts
to arrange for the qualification (whether through exemptions,
notice, filings, registrations or otherwise) of the Preferred
Shares for offer and sale under the state securities or Blue Sky
laws of such jurisdictions as the Underwriters may designate with
such notice as to reasonably enable the Trust to make such
arrangements, (B) continue such qualifications in effect for as
long as may be necessary to complete the distribution of the
Preferred Shares, and (C) make such applications, file such
documents and furnish such information as may be required for the
purposes set forth in clauses (A) and (B); provided, however, that
the Trust shall not be required to qualify as a foreign business
trust or file a general or unlimited consent to service of process
in any such jurisdiction.
(iv) The Trust consents to the use of the
Prospectus and Prospectus Supplement (and any amendment or
supplement thereto) by the Underwriters and all dealers to whom
the Preferred Shares may be sold, in connection with the offering
or sale of the Preferred Shares and for such period of time
thereafter as the Prospectus and Prospectus Supplement are
required by law to be delivered in connection therewith. If, at
any time when a Prospectus and Prospectus Supplement relating to
the Preferred Shares are required to be delivered under the Act,
any event occurs as a result of which the Prospectus or Prospectus
Supplement, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading, or
if it becomes necessary at any time to amend or supplement the
Prospectus or Prospectus Supplement to comply with the Act or the
Rules and Regulations, the Trust promptly will so notify the
Representatives and, subject to Section 5(a)(i) hereof, will
prepare and file with the Commission an amendment to the
Registration Statement or an amendment or supplement to the
Prospectus or Prospectus Supplement which will correct such
statement or omission or effect such compliance, each such
amendment or supplement to be reasonably satisfactory to counsel
to the Underwriters.
(v) As soon as practicable, but in any event
not later than 45 days after the end of the 12-month period
beginning on the day after the end of the fiscal quarter of the
Trust during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Trust's fiscal year), the Trust will
make generally available to its security holders, in the manner
specified in Rule 158(b) of the Rules and Regulations, and to the
Representatives, an earnings statement which will be in the detail
required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required
by the Act or the Rules and Regulations, covering a period of at
least 12 consecutive months after the effective date of the
Registration Statement.
(vi) The Trust will maintain a transfer agent
and, if necessary under the jurisdiction of formation of the
Trust, a registrar (which may be the same entity as the transfer
agent) for its Preferred Shares.
(vii) Except as provided in the foregoing
sentence, the Trust will furnish, without charge, to the
Representatives or on the order of the Representatives at such
place as the Representatives may designate, copies of the
Preliminary Prospectus Supplement, the Registration Statement and
any pre-effective or post-effective amendments thereto (two copies
of which will be signed (or conformed) and will include all
financial statements and exhibits), the Prospectus and Prospectus
Supplement, and all amendments and supplements thereto, in each
case as soon as
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<PAGE> 10
available and in such quantities as the Representatives may
reasonably request. Notwithstanding the foregoing, the Trust will
not be required to send any of the foregoing documents to any
purchasers of the Preferred Shares (other than the Underwriters or
their affiliates) and the Underwriters will be solely responsible
for any prospectus delivery requirements contained in the Act and
the Rules and Regulations.
(viii) The Trust will not, directly or
indirectly, without the prior written consent of any of the
Representatives, issue, offer, sell, grant any option to purchase
or otherwise dispose (or announce any issuance, offer, sale, grant
of any option to purchase or other disposition) of any Preferred
Shares or any securities convertible into, or exchangeable or
exercisable for, Preferred Shares for a period of 180 days after
the date hereof, except pursuant to this Agreement, except for
issuances pursuant to the exercise of stock options outstanding on
or granted subsequent to the date hereof, pursuant to a stock
option or other employee benefit plan in existence on the date
hereof and except as contemplated by the Prospectus or the
Prospectus Supplement.
(ix) The Preferred Shares have been duly
authorized for listing, subject to official notice of issuance, on
The New York Stock Exchange.
(x) Neither the Trust nor any of its
officers, directors or affiliates (within the meaning of the Rules
and Regulations) will take, directly or indirectly, any action
designed to, or which would in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price
of any securities of the Trust.
(xi) The Trust will apply the net proceeds of
the offering received by it in the manner set forth under the
caption "Use of Proceeds" in the Prospectus Supplement.
(xii) For a period of three years from the date
hereof, the Trust will timely file all such reports, forms or
other documents as may be required from time to time, under the
Act, the Rules and Regulations, the Exchange Act, and the rules
and regulations thereunder, and all such reports, forms and
documents filed will comply as to form and substance in all
material respects with the applicable requirements under the Act,
the Rules and Regulations, the Exchange Act and the rules and
regulations thereunder.
6. EXPENSES. Regardless of whether the transactions
contemplated in this Agreement are consummated, and regardless of whether for
any reason this Agreement is terminated, the Trust will pay, and hereby agrees
to indemnify each Underwriter against, all fees and expenses incident to the
performance of the obligations of the Trust under this Agreement, including,
but not limited to, (i) fees and expenses of accountants and counsel for the
Trust, (ii) all costs and expenses incurred in connection with the preparation,
duplication, printing, filing, delivery and shipping of copies of the
Registration Statement and any pre-effective or post-effective amendments
thereto, any Preliminary Prospectus Supplement, the Prospectus and the
Prospectus Supplement and any amendments or supplements thereto, this
Agreement, the Agreement Among Underwriters, any Selected Dealer Agreement,
Underwriters' Questionnaire, Underwriters' Power of Attorney, and all other
documents in connection with the transactions contemplated herein, including
the cost of all copies thereof, subject to the last sentence of Section
5(a)(vii), (iii) fees and expenses relating to qualification of the Preferred
Shares under state securities or Blue Sky laws, including the cost of preparing
and mailing the preliminary and final Blue Sky memoranda and filing fees and
disbursements and reasonable fees of counsel and other related expenses, if
any, in connection therewith, (iv) filing fees of the Commission relating to
the Preferred Shares,
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<PAGE> 11
(v) any fees and expenses in connection with the listing of the Preferred
Shares on The New York Stock Exchange, and (vi) costs and expenses incident to
the preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Preferred Shares, including transfer agent's and registrar's
fees and any applicable transfer taxes incurred in connection with the delivery
to the Underwriters of the Preferred Shares to be sold by the Trust pursuant
to this Agreement.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation
of each Underwriter to purchase and pay for the Preferred Shares set forth
opposite the name of such Underwriter in Schedule I is subject to the
continuing accuracy of the representations and warranties of the Trust herein
as of the date hereof and as of the Closing Date as if they had been made on
and as of the Closing Date; the accuracy on and as of the Closing Date of the
statements of officers of the Trust made pursuant to the provisions hereof; the
performance by the Trust on and as of the Closing Date of its covenants and
agreements hereunder; and the following additional conditions:
(a) The Registration Statement shall have been
declared effective not later than 11:00 A.M., New York time, on the date
hereof; if required, in the case of any changes in or amendments or supplements
to the Prospectus in addition to those contemplated above, the Trust shall have
filed such Prospectus as amended or supplemented with the Commission in the
manner and within the time period required by Rule 424(b) under the Act; no
stop order suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for that purpose
shall have been instituted or threatened or, to the knowledge of the Trust or
the Representatives, shall be contemplated by the Commission; and the Trust
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall not have advised the
Trust that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material,
or omits to state a fact which, in such Underwriter's opinion, is material and
is required to be stated therein or is necessary to make the statements therein
not misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material,
or omits to state a fact which, in the Representatives' opinion, is material
and is required to be stated therein or is necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) On or prior to the Closing Date, the
Representatives shall have received from counsel to the Underwriters, such
opinion or opinions with respect to the issuance and sale of the Preferred
Shares, the Registration Statement and the Prospectus and such other related
matters as the Representatives reasonably may request and such counsel shall
have received such documents and other information as they reasonably request
to enable them to pass upon such matters.
(d) On or prior to the Closing Date, the
Representatives shall have received a certificate executed and delivered by the
Chairman and the principal financial officer of the Trust and any vice
president, dated the Closing Date, to the effect set forth below:
(i) The representations and warranties of the
Trust contained in Section 2 hereof are true and correct as of the
date of such certificate, and the Trust has complied with all the
agreements and satisfied all conditions contained herein to be
performed or satisfied at or prior to the Closing Date;
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<PAGE> 12
(ii) No stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending
or, to the knowledge of such officers, are contemplated under the
Act.
(e) On the Closing Date the Underwriters shall have
received the opinion, dated the Closing Date, of Mayer, Brown & Platt, counsel
to the Trust ("Trust Counsel"), to the effect set forth below (for all matters
of Ohio law, Mayer, Brown & Platt will rely for those matters on the opinion
of Paul F. Levin, Senior Vice President-General Counsel and Secretary of the
Trust).
(i) The Trust has authorized capital stock as
set forth in the Prospectus and Prospectus Supplement; the common
shares of the Trust conform in all material respects to the
description thereof contained in the Prospectus and Prospectus
Supplement; the Preferred Shares, when issued by the Trust and
paid for in accordance with the terms hereof, will be validly
issued, fully paid and, except as set forth in the Prospectus
under the heading "Description of Shares of Beneficial Interest -
Shareholder Liability," nonassessable and will conform in all
material respects to the description thereof contained in the
Prospectus and Prospectus Supplement and will not be subject to
any preemptive, subscription or other similar rights; and the
Preferred Shares have been duly authorized for listing, subject to
official notice of issuance, on The New York Stock Exchange;
(ii) The Registration Statement is effective
under the Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued,
and no proceedings for that purpose have been instituted or are
pending or are threatened or contemplated under the Act; the
Registration Statement and each amendment thereto and the
Prospectus and, if any, each amendment and supplement thereto
(except for the financial statements, schedules and other
financial data included therein, as to which such counsel need not
express any opinion), complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations;
(iii) No consent, approval, authorization or
order of any court, regulatory body or administrative agency or
other governmental agency or body, domestic or foreign, has been
or is required for the Trust's performance of this Agreement or
the consummation of the transactions contemplated hereby, except
such as have been obtained under the Act and the Rules and
Regulations, the Exchange Act and the rules and regulations
thereunder or may be required under state securities or Blue Sky
laws in connection with the purchase and distribution by the
Underwriters of the Preferred Shares; and
(iv) The Trust's existing legal organization
and its method of operation, as described in the Prospectus and
the Prospectus Supplement and as represented by the Trust, will
enable the Trust to satisfy the requirements for qualification as
a real estate investment trust (a "REIT") under the Internal
Revenue Code of 1986, as amended (the "Code").
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Trust and public officials.
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<PAGE> 13
References to the Registration Statement and the Prospectus in
this paragraph (c) and (e) shall include any amendment or supplement thereto at
the date of such opinion.
The opinion described in paragraph 7(e)(iv) may be based upon
assumptions relating to the organization and operation of Management and of any
partnerships in which the Trust will hold an interest, and may be conditioned
upon representations made by the Trust as to factual matters relating to the
Trust's and Management's organization and manner of operation. Such opinion
may also be based upon the assumption that for all of its taxable years (or a
portion thereof) prior to the date of the Prospectus Supplement, the Trust
satisfied all the requirements necessary for qualification as a REIT under the
Code, and the assumption that all organizational documents for the Trust and
Management are complied with.
(f) On the Closing Date the Underwriters shall have
received the opinion, dated as of the Closing Date, of Paul F. Levin, Senior
Vice President-General Counsel and Secretary of the Trust, to the effect set
forth below:
(i) The Trust (A) is a duly organized and
validly existing business trust in good standing under the laws of
Ohio with full power and authority to own or lease its properties
and to conduct its business as described in the Registration
Statement and the Prospectus, and (B) is duly qualified to do
business as a foreign business trust and is in good standing in
each jurisdiction in which the conduct of its business requires
such qualification (except for those jurisdictions in which the
failure so to qualify has not and will not have a Material Adverse
Effect);
(ii) Management (A) is a duly incorporated and
validly existing corporation under the laws of Delaware, with full
power and authority to own or lease its property and to conduct
its business as described in the Registration Statement and the
Prospectus, and (B) is duly qualified to do business as a foreign
corporation and is in good standing in Delaware and in each
jurisdiction in which the conduct of its business requires such
qualification (except for those jurisdictions in which the failure
so to qualify has not and will not have a Material Adverse
Effect);
(iii) The Trust has duly authorized the
issuance and sale of the Preferred Shares to be sold by it
hereunder, and when issued, the Preferred Shares shall be fully
paid and, except as set forth under the caption "Shareholder
Liability" in the Prospectus, non-assessable;
(iv) The descriptions contained and summarized
in the Registration Statement and the Prospectus of contracts and
other documents, are accurate and fairly represent in all material
respects the information required to be shown by the Act and the
Rules and Regulations; to the best knowledge of such counsel,
there are no contracts or documents which are required by the Act
to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement which are
not described or filed as required by the Act and the Rules and
Regulations; to the best knowledge of such counsel, there is not
pending or threatened against the Trust any action, suit,
proceeding or investigation before or by any court, regulatory
body, or administrative agency or any other governmental agency or
body, domestic or foreign, of a character required to be disclosed
in the Registration Statement or the Prospectus which is not so
disclosed therein;
(v) The Trust has full legal right, power,
and authority to enter into this Agreement and to consummate the
transactions provided for herein; this
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<PAGE> 14
Agreement has been duly authorized, executed and delivered by the
Trust; and this Agreement, assuming due authorization, execution
and delivery by each other party hereto, is a valid and binding
agreement of the Trust, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in
effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of
remedies and except as rights to indemnity and contribution may be
limited by federal or state securities laws or the public policy
underlying such laws. None of the Trust's execution or delivery
of this Agreement, its performance hereof, its consummation of the
transactions contemplated herein or its application of the net
proceeds of the offering in the manner set forth under the caption
"Use of Proceeds" in the Prospectus Supplement, conflicts or will
conflict with or results or will result in any breach or violation
of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any material
lien, charge or encumbrance upon, any material property or assets
of the Trust or Management (A) with respect to the Trust pursuant
to the terms of the Declaration of Trust or By-Laws, each as
amended, of the Trust and with respect to Management pursuant to
the terms of the Articles of Incorporation or By-Laws of
Management; (B) the terms of any material indenture, mortgage,
deed or trust, voting trust agreement, shareholder's agreement,
note agreement or other agreement or instrument known to such
counsel after reasonable investigation to which the Trust or
Management is a party or by which it or Management is or may be
bound or to which any of their respective properties may be
subject; (C) any statute, rule or regulation of any regulatory
body or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over the Trust or
any of its activities or properties; (D) or any judgment, decree
or order, known to such counsel, of any government, arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having such
jurisdiction;
(vi) To the best of such counsel's knowledge,
the conduct of the businesses of the Trust and Management is not
in violation of any federal, state or local statute,
administrative regulation or other law, which violation is likely
to have a Material Adverse Effect; and the Trust and Management
each has obtained all material licenses, permits, franchises,
certificates and other authorizations from state, federal and
other regulatory authorities as are necessary or required for the
ownership, leasing and operation of properties and the conduct of
their respective businesses as presently conducted and as
contemplated in the Prospectus and the Prospectus Supplement; and
(vii) The issued shares of capital stock of
Management have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by a trust created pursuant
to an amended and restated declaration of trust dated as of
October 1, 1996 free and clear of any perfected security interest
or, to the best knowledge of such counsel, any other liens,
encumbrances, claims or security interests.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Trust and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (f) shall include any amendment or supplement thereto at the
date of such opinion.
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<PAGE> 15
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Trust and
with the Trust's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it was declared effective and as of the Closing Date
or the Prospectus as of the date thereof and as of the Closing Date contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (it being understood that such counsel need
not express any opinion with respect to the financial statements, schedules and
other financial data included in the Registration Statement or the Prospectus).
(g) On or prior to the Closing Date, counsel to the
Underwriters shall have been furnished such documents, certificates and
opinions as they may reasonably require in order to evidence the accuracy,
completeness or satisfaction of any of the representations or warranties of the
Trust, or conditions herein contained.
(h) At the time that this Agreement is executed by
the Trust, the Underwriters shall have received from Arthur Andersen LLP a
letter as of the date this Agreement in form and substance which is customary
for a transaction of this nature and which is reasonably satisfactory to the
Representatives (the "Original Letter"), and on the Closing Date the
Underwriters shall have received from such accounting firm a letter dated the
Closing Date stating that, as of a specified date not earlier than five (5)
days prior to the Closing Date, nothing has come to the attention of such firm
to suggest that the statements made in the Original Letter are not true and
correct.
(i) On the Closing Date, the Underwriters shall have
received a certificate, dated the Closing Date, of the principal executive
officer and the principal financial or accounting officer of the Trust to the
effect that each of such persons has carefully examined the Registration
Statement and the Prospectus and any amendments or supplements thereto and this
Agreement, and that:
(i) The representations and
warranties of the Trust in this Agreement are true and correct, as
if made on and as of the Closing Date, and the Trust has
complied with all agreements and covenants and satisfied all
conditions contained in this Agreement on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the
effectiveness of the Registration Statement has been issued, and
no proceedings for that purpose have been instituted or are
pending or, to the best knowledge of each of such persons are
contemplated or threatened under the Act and any and all filings
required by Rule 424 have been timely made;
(iii) The Registration Statement and Prospectus
and, if any, each amendment and each supplement thereto, contain
all statements and information required to be included therein,
and neither the Registration Statement nor any amendment thereto
includes any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements
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<PAGE> 16
therein not misleading and neither the Prospectus (or any
amendment thereto) or the Prospectus Supplement (or any amendment
thereto) includes or included any untrue statement of a material
fact or omits or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and
(iv) Subsequent to the most recent respective
dates as of which information is given in the Registration
Statement and the Prospectus Supplement up to and including the
Closing Date, the Trust has not, other than in the ordinary course
of its business or as included in or contemplated by the
Prospectus Supplement or the Prospectus, (i) incurred any material
liabilities or obligations, direct or contingent; (ii) paid or
declared any dividends or other distributions on its capital stock
other than its regular quarterly dividend; (iii) entered into any
material transactions not in the ordinary course of business.
Subsequent to the most recent respective dates as of which
information is given in the Registration Statement and the
Prospectus Supplement up to and including the Closing Date, other
than in the ordinary course of business or as included in or
contemplated by the Prospectus Supplement or the Prospectus, there
has not been any material change in the capital stock or long-term
debt or any increase in the short-term borrowings (other than any
increase in short-term borrowings in the ordinary course of
business) of the Trust or any material adverse change to the
business properties, assets, net worth, condition (financial or
other), results of operations or prospects of the Trust; the Trust
has not sustained any material loss or damage to its property or
assets, whether or not insured; there is no litigation which is
pending or threatened against the Trust which is required under
the Act or the Rules and Regulations to be set forth in an amended
or supplemented Prospectus which has not been set forth, and there
has not occurred any event required to be set forth in an amended
or supplemented Prospectus which has not been set forth, and there
has been no document required to be filed under the Exchange Act
and the rules and regulations thereunder that upon such filing
would be deemed incorporated by reference into the Prospectus that
has not been filed.
References to the Registration Statement, the
Prospectus and Prospectus Supplement in this paragraph (i) are to
such documents as amended and supplemented at the date of the
certificate.
(j) Subsequent to the most recent respective dates as
of which information is given in the Registration Statement, the Prospectus and
the Prospectus Supplement up to and including the Closing Date, there has not
been (i) any change or decrease specified in the letter or letters referred to
in paragraph (h) of this Section 7 or (ii) any change, or any development
involving a prospective change, in the business or properties of the Trust
which change or decrease in the case of clause (i) or change or development in
the case of clause (ii) makes it impractical or inadvisable in the
Representatives' judgment to proceed with the public offering or the delivery
of the Preferred Shares as contemplated by the Prospectus Supplement.
(k) No order suspending the sale of the Preferred
Shares in any jurisdiction designated by the Representatives pursuant to
Section 5(a)(iii)(A) hereof has been issued on or prior to the Closing Date and
no proceedings for that purpose have been instituted or, to the
Representatives' knowledge or that of the Trust, have been or are contemplated.
(l) The Trust shall have furnished the Underwriters
with such further opinions, letters, certificates or documents as either the
Representative or counsel for the Underwriters may reasonably request. All
opinions, certificates, letters and documents to be furnished by the Trust will
comply with the provisions hereof only if they are reasonably
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<PAGE> 17
satisfactory in all material respects to the Underwriters and to counsel for
the Underwriters. The Trust shall furnish the Underwriters with conformed
copies of such opinions, certificates, letters and documents in such quantities
as the Representatives may reasonably request. The certificates delivered
under this Section 7 shall constitute representations, warranties and
agreements of the Trust, as the case may be, as to all matters set forth
therein as fully and effectively as if such matters had been set forth in
Section 2 of this Agreement.
(m) The Preferred Shares shall have been duly
authorized for listing, subject to official notice of issuance, on The New York
Stock Exchange.
8. INDEMNIFICATION.
(a) The Trust agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls such Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any and all losses, claims, damages or liabilities, joint or several (and
actions in respect thereof), to which such Underwriter or such controlling
person may become subject, under the Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus
Supplement or the Prospectus Supplement, or any amendment or supplement
thereto, or any Blue Sky application or other document executed by the Trust
specifically for the purpose of qualifying, or based upon written information
furnished by the Trust filed in any state or other jurisdiction in order to
qualify, any or all of the Preferred Shares under the securities or Blue Sky
laws thereof (any such application, document or information being hereinafter
called a "Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
will reimburse, as incurred, such Underwriter or such controlling persons for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling persons in connection with investigating, defending or appearing as
a third party witness in connection with any such loss, claim, damage,
liability or action; provided, however, that the Trust will not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with information furnished in writing to the
Trust by such Underwriter expressly for use therein, and provided, further,
that such indemnity with respect to any Preliminary Prospectus Supplement shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage, liability or action purchased Preferred Shares which are the
subject thereof to the extent that any such loss, claim, damage, liability or
action (i) results from the fact that such Underwriter failed to send or give a
copy of the Prospectus and Prospectus Supplement (as amended or supplemented)
to such person at or prior to the confirmation of the sale of such Preferred
Shares to such person in any case where such delivery is required by the Act or
the Rules and Regulations or (ii) arises out of or is based upon an untrue
statement or omission of a material fact contained in such Preliminary
Prospectus Supplement that was corrected in the Prospectus or Prospectus
Supplement (as amended and supplemented), unless such failure resulted from
non-compliance by the Trust with Section 5(a)(vii) hereof.
The indemnity agreement in this paragraph (a) shall be in
addition to any liability which the Trust may otherwise have.
(b) Each of the Underwriters agrees severally, but
not jointly, to indemnify and hold harmless the Trust, each of its trustees,
each of its officers who has signed the
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<PAGE> 18
Registration Statement, each person, if any, who controls the Trust within the
meaning of Section 15 of the Act or Section 20 or the Exchange Act against any
and all losses, claims, damages or liabilities (and actions in respect thereof)
to which the Trust or any such director, officer, or controlling person may
become subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus
Supplement, or any amendment or supplement thereto or in any Blue Sky
Application, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with information furnished in writing by that Underwriter through any
Representative to the Trust expressly for use therein; and will reimburse, as
incurred, all legal or other expenses reasonably incurred by the Trust or any
trustee, officer, controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. The Trust
acknowledges that the statements with respect to the public offering of the
Preferred Shares set forth in paragraphs two and three under the heading
"Underwriting" and the stabilization legend in the Prospectus Supplement have
been furnished by the Underwriters to the Trust expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement
contained in this subsection (b) shall be in addition to any liability which
the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 8, notify such indemnifying
party or parties of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) of this
Section 8 or to the extent that the indemnifying party was not adversely
affected by such omission. In case any such action is brought against an
indemnified party and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties against which a claim
is to be made will be entitled to participate therein and, to the extent that
it or they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and otherwise to participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses (other
than the reasonable costs of investigation) subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party has employed such counsel in connection with the assumption
of such different or additional legal defenses in accordance with the proviso
to the immediately preceding sentence, (ii) the indemnifying party has not
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action, or (iii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
- 18 -
<PAGE> 19
(d) If the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) above in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, from the offering of the Preferred Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified, on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. In any case where the Trust is a contributing party and an
Underwriter is the indemnified party, the relative benefits received by the
Trust on the one hand, and the Underwriter, on the other, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the
Preferred Shares (before deducting expenses) bear to the total underwriting
discounts received by the Underwriter hereunder, in each case as set forth in
the table on the cover page of the Prospectus Supplement. Relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Trust or by the
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Preferred Shares purchased by such Underwriter hereunder. The Underwriters'
obligations to contribute pursuant to this paragraph (d) are several in
proportion to their respective underwriting obligations, and not joint. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), (i) each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter and (ii) each trustee of the Trust,
each officer of the Trust who has signed the Registration Statement, and each
person, if any, who controls the Trust within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Trust, subject in each case to this paragraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation (x) it or they may have hereunder or otherwise than this
paragraph (d) or (y) to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any indemnifying party may
otherwise have.
9. RIGHT TO INCREASE OFFERING. At any time during a period of
30 days from the date of the Prospectus Supplement, the Underwriters, by no
less than two business days' prior written notice may designate a closing
(which may be concurrent with, and part of, the closing on the Closing Date
with respect to the Preferred Shares or may be a second closing held on a date
subsequent to the Closing Date, in either case such date shall be referred to
herein as the "Option Closing Date") at which the Underwriters may purchase
Additional Preferred Shares in accordance
- 19 -
<PAGE> 20
with the provisions of this Section 9 at the purchase price per share to be
paid for the Preferred Shares. In no event shall the Option Closing Date be
later than 10 business days or less than three business days after written
notice of election to purchase Preferred Shares is given.
The Trust agrees to sell to the several Underwriters on the
Option Closing Date the number of Additional Preferred Shares specified in such
written notice and the Underwriters agree severally and not jointly, to
purchase such Additional Preferred Shares on the Option Closing Date. Such
Additional Preferred Shares shall be purchased for the account of each
Underwriter in the same proportion as the number of Preferred Shares set forth
opposite the name of such Underwriter in Column (1) of Schedule I and bears to
the total number of Preferred Shares (subject to adjustment by the
Representative to eliminate fractions) and may be purchased by the Underwriters
only for the purpose of covering over-allotments made in connection with the
sale of the Preferred Shares.
No Additional Preferred Shares shall be sold or delivered
unless the Preferred Shares previously have been, or simultaneously are, sold
and delivered. The right to purchase Additional Preferred Shares or any
portion thereof may be surrendered and terminated at any time upon written
notice by the Representative to the Trust but not subsequent to the time
written notice was given to purchase Additional Preferred Shares.
Except to the extent modified by this Section 9, all
provisions of this Agreement relating to the transactions contemplated to occur
on the Closing Date for the sale of the Preferred Shares, including but not
limited to the representations and warranties of the Trust, shall apply,
MUTATIS MUTANDIS, to the Option Closing Date for the sale of the Preferred
Shares.
10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Trust and its officers and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Preferred
Shares for a period of three years after such delivery and payment. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
11. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective when
executed by the Trust and the Representatives.
(b) This Agreement (except for the provisions of
Sections 6 and 8 hereof) may be terminated by the Representatives by written
notice to the Trust in the event that the Trust has failed to comply in any
respect with any of the provisions of this Agreement required on the part of
the Trust to be performed at or prior to the Closing Date, or if any of the
representations or warranties of the Trust is not accurate in any respect or if
the covenants, agreements or conditions of, or applicable to the Trust herein
contained have not been complied with in any respect or satisfied within the
time specified on the Closing Date, respectively, or if after the execution of
this Agreement but prior to the Closing Date:
(i) the Trust or Management shall have
sustained a loss by strike, fire, flood, accident or other
calamity of such a character as to interfere materially with the
conduct of the business and operations of the Trust or Management
taken as a whole regardless of whether or not such loss was
insured;
- 20 -
<PAGE> 21
(ii) trading in the common shares of the Trust
shall have been suspended by the Commission or The New York Stock
Exchange or trading in securities generally on the New York Stock
Exchange or a material limitation on such trading shall have been
imposed or minimum or maximum prices shall have been established
on any such exchange;
(iii) a banking moratorium shall have been
declared by New York or United States authorities;
(iv) there shall have been any material
adverse change in the financial markets in the United States or an
outbreak or escalation of hostilities between the United States
and any foreign power or an outbreak or escalation of any other
insurrection or armed conflict involving the United States; or
(v) there shall have been a material adverse
change in (A) general economic, political or financial conditions
or (B) the present or prospective business or condition (financial
or other) of the Trust or Management that, in each case, in the
Representatives' judgment makes it impracticable or inadvisable to
make or consummate the public offering, sale or delivery of the
Trust's Preferred Shares on the terms and in the manner
contemplated in the Prospectus, Prospectus Supplement and the
Registration Statement.
(c) Termination of this Agreement under this Section
11 or Section 12 after the Preferred Shares have been purchased by the
Underwriters hereunder shall be applicable only to the Additional Preferred
Shares. Termination of this Agreement shall be without liability of any party
to any other party other than as provided in Sections 6 and 8 hereof.
12. SUBSTITUTION OF UNDERWRITERS. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7 or
11 hereof) to purchase and pay for (a) in the case of the Closing Date, the
number of Preferred Shares agreed to be purchased by such Underwriter in
accordance with the terms hereof or (b) in the case of the Option Closing Date,
the number of Preferred Shares agreed to be purchased by such Underwriter in
accordance with the terms hereof, and the number of such Preferred Shares shall
not exceed 10% of the Preferred Shares required to be purchased on the Closing
Date, as the case may be, then, the non-defaulting Underwriters shall severally
purchase and pay for (in addition to the number of such Preferred Shares which
it has severally agreed to purchase hereunder) that proportion of the number of
Preferred Shares which the defaulting Underwriter shall have so failed or
refused to purchase on such Closing Date or Option Closing Date, as the case
may be, which the number of Preferred Shares agreed to be purchased by such
non-defaulting Underwriters bears to the aggregate number of Preferred Shares
so agreed to be purchased by such non-defaulting Underwriter on such Closing
Date or Option Closing Date, as the case may be. In such case, the
non-defaulting Underwriter shall have the right to postpone the Closing Date,
as the case may be, to a date not exceeding seven full business days after the
date originally fixed as such Closing Date, as the case may be, pursuant to the
terms hereof in order that any necessary changes in the Prospectus and
Prospectus Supplement or any other documents or arrangements may be made.
- 21 -
<PAGE> 22
13. NOTICES. All communications hereunder shall be in writing
and if mailed or delivered or telegraphed and confirmed by letter or telecopied
and confirmed by letter:
If to: Sutro & Co. Incorporated
201 California Street
San Francisco, California 94111
Attention: Syndicate Department
If to: Tucker Anthony Incorporated
1 Beacon Street
Boston, Massachusetts 02108
Attention: Marc Menchel, General Counsel
If to: BT Securities Corporation
130 Liberty Street
New York, New York 10006
Attention: High Yield Administration
If to the Trust: 55 Public Square
Suite 1900
Cleveland, Ohio 44113-1937
Attention: Paul F. Levin, Esq.
14. SUCCESSORS. This Agreement shall inure to the benefit of and
be binding upon the Trust and each Underwriter and the Trust's and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representations, warranties, indemnities and
contribution agreements of the Trust contained in this Agreement shall also be
for the benefit of any person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and except that the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the trustees of the Trust, the officers of the Trust
who have signed the Registration Statement, and any person or persons, if any,
who control the Trust within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Preferred Shares from the Underwriters
will be deemed a successor because of such purchase.
15. LIABILITY OF BENEFICIARIES OF TRUST. Notwithstanding anything
contained herein to the contrary, this Agreement is made and executed on behalf
of First Union Real Equity and Mortgage Investments ("First Union"), a business
trust organized under the laws of the State of Ohio, by its officer(s) on
behalf of the trustees thereof, and none of the trustees or any additional or
successor trustee hereafter appointed, or any beneficiary, officer, employee or
agent of First Union shall have any liability in his personal or individual
capacity, but instead, all parties shall look solely to the property and assets
of First Union for satisfaction of claims of any nature arising under or in
connection with this Agreement.
16. APPLICABLE LAW; JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio,
without giving effect to the choices of law or conflict of law principles
thereof. Each party hereto consents to the jurisdiction of each court in which
any action is commenced seeking indemnity or contribution pursuant to Section 8
- 22 -
<PAGE> 23
above and agrees to accept, either directly or through an agent, service of
process of each such court.
17. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
- 23 -
<PAGE> 24
If the foregoing correctly sets forth our understanding, please
indicate the Representatives' acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between the Underwriters and the Trust.
Very truly yours,
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ James C. Mastandrea
------------------------------
James C. Mastandrea, Chairman
President and Chief Executive
Officer
Accepted as of the date first above written:
SUTRO & CO. INCORPORATED
By: /s/ Scott Wendelin
---------------------------------
Title: Managing Director
------------------------------
TUCKER ANTHONY INCORPORATED
By: /s/ Kevin J. Dresner
---------------------------------
Title: Executive Vice President
------------------------------
BT SECURITIES CORPORATION
By: /s/ Authorized Officer
---------------------------------
Title: Authorized Officer
------------------------------
For themselves and as Representatives of the
other Underwriters named in Schedule I hereto.
- 24 -
<PAGE> 25
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated October 23, 1996
<TABLE>
<CAPTION>
(1) (2)
Number of Preferred Number of Additional
Shares to be Preferred Shares to
Purchased be Purchased
--------- ------------
Name and Address
- ----------------
<S> <C>
SUTRO & Co.
Incorporated . . . . . . . . . . . . . . . . . . 568,000
Tucker Anthony Incorporated . . . . . . . . . . . 566,000
BT Securities Corporation . . . . . . . . . . . . 566,000
Robert W. Baird & Co. Incorporated . . . . . . . 20,000
J.C. Bradford & Co. . . . . . . . . . . . . . . . 20,000
Crowell, Weedon & Co. . . . . . . . . . . . . . . 20,000
EVEREN Securities, Inc. . . . . . . . . . . . . . 20,000
Friedman, Billings, Ramsey
& Co., Inc. . . . . . . . . . . . . . . . . . . 20,000
First of Michigan Corporation . . . . . . . . . . 20,000
Morgan Keegan & Company, Inc. . . . . . . . . . . 20,000
Parker/Hunter Incorporated . . . . . . . . . . . 20,000
Piper Jaffray Inc. . . . . . . . . . . . . . . . 20,000
Principal Financial Services, Inc. . . . . . . . 20,000
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . 20,000
Roney & Co., LLC . . . . . . . . . . . . . . . . 20,000
Starr Securities, Inc. . . . . . . . . . . . . . 20,000
The Ohio Company . . . . . . . . . . . . . . . . 20,000
Vector Securities International, Inc. . . . . . . 20,000
Total . . . . . . . . . . . . . . . . . . . . . . 2,000,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 4A
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 23, 1996
<PAGE> 2
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 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 23, 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.
<PAGE> 3
"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 $7.5625 (equivalent to a conversion
rate of 3.31 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
-2-
<PAGE> 4
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 29, 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.
-3-
<PAGE> 5
"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.
-4-
<PAGE> 6
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)
$0.525 per share per Dividend Period (equivalent to 8.4% of the liquidation
preference per annum) 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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<PAGE> 8
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 October 29, 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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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 with $.005 being rounded upward) based upon the Current Market
Price of Common
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Shares on the Trading Day immediately preceding the Call Date. If more than
one certificate representing Series A Preferred Shares 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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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 certificate representing Series A
Preferred Shares 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
-19-
<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
-20-
<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 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
-21-
<PAGE> 23
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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<PAGE> 24
(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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<PAGE> 25
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
-24-
<PAGE> 26
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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<PAGE> 27
(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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<PAGE> 28
(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
acquisition 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
-27-
<PAGE> 29
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.
-28-
<PAGE> 30
IN WITNESS WHEREOF, this Certificate of Designations has been duly executed
by the undersigned this 23rd day of October, 1996.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ James C. Mastandrea
-----------------------------
James C. Mastandrea
Chairman, President
and Chief Executive Officer
-29-
<PAGE> 1
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
<PAGE> 2
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
<PAGE> 3
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
THE CERTIFICATE OF DESIGNATIONS DATED AS OF OCTOBER 23, 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, PURSUANT TO WHICH ALL OF THE
SHARES OF FIRST UNION MANAGEMENT, INC. ARE HELD FOR THE BENEFIT OF THE HOLDERS
OF THE TRUST'S SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE.
THE CERTIFICATE OF DESIGNATIONS DATED AS OF OCTOBER 23, 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:
<TABLE>
<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)_______________________________
<PAGE> 1
[FIRST UNION REAL ESTATE INVESTMENTS LETTERHEAD]
FOR IMMEDIATE RELEASE
October 24, 1996
FIRST UNION REAL ESTATE INVESTMENTS ANNOUNCES
$50 MILLION PREFERRED SHARE OFFERING
Cleveland, Ohio, October 24, 1996 - First Union Real Estate Investments
(NYSE:FUR), a leading property repositioning REIT, today announced the public
offering of 2,000,000 shares of its 8.4% Series A Cumulative Convertible
Redeemable Preferred Shares at a price of $25.00 per share. The offering was
underwritten by Sutro & Co. Incorporated, as lead manager, with BT Securities
Corporation and Tucker Anthony Incorporated as co-managers. First Union (the
Trust) also granted the underwriters the option to purchase 300,000 additional
shares of the offering to cover over-allotments.
The Series A Preferred Shares are convertible, at the option of the
shareholder, into common shares at the conversion price of $7.5625 per common
share, which represents a 10% premium. After October 29, 2001, the Shares will
be redeemable, in whole or in part, at a rate of 3.31 common shares for each
Series A Preferred Share, when the common share price exceeds the conversion
price.
Commenting on the offering, James C. Mastandrea, chairman and chief executive
officer of First Union Real Estate Investments, said, "This is the first time
that First Union has been to the equity market since 1977. The successful
completion of this offering, reflected by the favorable pricing and strong
demand, is evidence that the market supports our strategic plan to reposition
assets to maximize total return to shareholders. The proceeds of the offering
will be used to substantially clear the outstanding balance on our $96 million
line of credit which will enhance financial flexibility and allow us to pursue
additional acquisitions."
This press release does not constitute an offer to sell or the solicitation of
an offer to buy securities. Such offers may be made only by means of a
prospectus, copies of which may be obtained from the Trust, or the
underwriters.
First Union Real Estate Investments (NYSE:FUR) is an equity real estate
investment trust (REIT) specializing in repositioning real estate to extract
intrinsic value.
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