<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-8692
PACIFIC GATEWAY PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 04-2816560
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
930 MONTGOMERY ST. - 4TH FLOOR
SAN FRANCISCO, CALIFORNIA 94133
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (415) 398-4800
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ----------------------
COMMON STOCK, $1.00 PAR VALUE AMERICAN STOCK EXCHANGE
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers
<PAGE>
pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ].
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant as of March 18, 1997: COMMON STOCK, PAR
VALUE $1.00--$10,303,496.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock as of March 18, 1997: COMMON STOCK, PAR
VALUE $1.00-3,892,596 SHARES.
<PAGE>
Pacific Gateway Properties, Inc. (the "Registrant") hereby amends
the following Item of its Annual Report on Form 10-K for the year ended
December 31, 1996:
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The following financial statements and supplementary financial
information are filed as part of this report:
FINANCIAL STATEMENTS OF THE REGISTRANT(i)
Consolidated Balance Sheet as of December 31, 1996 and 1995
Consolidated Statement of Income (Loss) for the three years ended
December 31, 1996, 1995 and 1994
Consolidated Statement of Stockholders' Equity (Deficit) for the three
years ended December, 1996, 1995 and 1994
Consolidated Statement of Cash Flows for the three years ended December
31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
(a)2. The following financial statement schedule is filed as part of this
report:
Schedule III -- Real Estate and Accumulated Depreciation as of
December 31, 1996 (i)
(a)3. Exhibits
Exhibit No. Description
- ----------- ----------------------------------------------------------------
3.1 Composite amended Certificate of Incorporation of the Registrant
(last amended September 4, 1996)(ii)
- ---------------------------------
(i) Filed with the original Form 10-K.
(ii) Filed with this Amendment.
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Exhibit No. Description
- ----------- ----------------------------------------------------------------
3.2 Amended By-Laws of the Registrant (last amended May 16, 1997).(ii)
4.1 Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 filed with this Amendment).
10.1 Purchase and Sale Agreement dated March 18, 1996 between the
Registrant and Metropolitan Life Insurance Company (filed as
Exhibit 1.3 to the Registrant's Amendment to Current Report on
Form 8-K/A filed April 24, 1996, and incorporated herein by
reference).
10.2 Purchase Agreement dated as of October 18, 1995 between Pacific
Gateway Properties Hotels, Inc. and Thayer Hotel Investments
L.P. (filed as Exhibit 1.3 to the Registrant's Current Report
on Form 8-K filed December 26, 1996, and incorporated herein by
reference).
10.3 Purchase and Sale Agreement dated December 16, 1996 between the
Registrant and Peter Paulsen (filed as Exhibit 1.2 to the
Registrant's Current Report on Form 8-K filed January 30, 1997,
and incorporated herein by reference).
10.4 Amendment dated January 15, 1997 to the Purchase and Sale
Agreement dated December 16, 1996 between the Registrant and
Peter Paulsen (filed as Exhibit 1.3 to the Registrant's Current
Report on Form 8-K filed January 30, 1997, and incorporated
herein by reference).
10.5 Purchase and Sale Agreement dated December 18, 1996 between the
Registrant and Donlon and Agnes Gabrielsen (filed as Exhibit
1.4 to the Registrant' Current Report on Form 8-K filed January
30, 1997, and incorporated herein by reference).
- ---------------------------------
(i) Filed with the original Form 10-K.
(ii) Filed with this Amendment.
(iii) Contract or compensatory plan in which directors and/or officers
participate.
<PAGE>
Exhibit No. Description
- ----------- ----------------------------------------------------------------
10.6 Employment Agreement dated as of October 29, 1996 between the
Registrant and Raymond V. Marino (filed as an Exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by
reference).(iii)
10.7 Severance agreement dated September 22, 1994 between the
Registrant and Christopher M. Watson.(ii)(iii)
10.8 Severance agreement dated May 9, 1997 between the Registrant
and Andrew Gorayeb.(ii)(iii)
10.9 Incentive Stock Option Plan of the Registrant.(ii)(iii)
10.10 1996 Stock Option Plan of the Registrant (included as Exhibit A
to the Registrant's Proxy Statement for its Special in Lieu of
Annual Meeting of Shareholders held October 29, 1996, and
incorporated herein by reference).(iii)
21. Subsidiaries of the Registrant.(i)
(b) The Registrant filed a Form 8-K dated December 24, 1996, reporting
under Items 2 and 7.
The Registrant filed a Form 8-K dated January 30, 1997 and Form 8-K/A
dated March 20, 1997 reporting under items 2 and 7.
(c) The following financial statements are filed as part of this report.
- ---------------------------------
(i) Filed with the original Form 10-K.
(ii) Filed with this Amendment.
(iii) Contract or compensatory plan in which directors and/or officers
participate.
<PAGE>
FINANCIAL STATEMENTS OF RINCON CENTER ASSOCIATES(i)
Report of Independent Public Accountants
Balance Sheets -- December 31, 1996 and 1995
Statements of Operations for the years ended December 31, 1996, 1995 and
1994
Statements of Changes in Partner's Deficit for the years ended December 31,
1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1996, 1995 and
1994
Notes to Financial Statements
- ---------------------------------
(i) Filed with the original Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
amendment to be signed by the undersigned thereunto duly authorized.
PACIFIC GATEWAY PROPERTIES, INC.
(Registrant)
By: /s/ Raymond V. Marino
--------------------------------
Raymond V. Marino, President and
Chief Executive Officer
Aug. 8, 1997
-----------------------------------
Date
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- ----------------------------------------------------------------
3.1 Composite amended Certificate of Incorporation of the
Registrant (last amended September 4, 1996)(ii)
3.2 Amended By-Laws of the Registrant (last amended May 16,
1997).(ii)
4.1 Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 filed with this Amendment).
10.1 Purchase and Sale Agreement dated March 18, 1996 between the
Registrant and Metropolitan Life Insurance Company (filed as
Exhibit 1.3 to the Registrant's Amendment to Current Report on
Form 8-K/A filed April 24, 1996, and incorporated herein by
reference).
10.2 Purchase Agreement dated as of October 18, 1995 between Pacific
Gateway Properties Hotels, Inc. and Thayer Hotel Investments
L.P. (filed as Exhibit 1.3 to the Registrant's Current Report
on Form 8-K filed December 26, 1996, and incorporated herein by
reference).
10.3 Purchase and Sale Agreement dated December 16, 1996 between the
Registrant and Peter Paulsen (filed as Exhibit 1.2 to the
Registrant's Current Report on Form 8-K filed January 30, 1997,
and incorporated herein by reference).
10.4 Amendment dated January 15, 1997 to the Purchase and Sale
Agreement dated December 16, 1996 between the Registrant and
Peter Paulsen (filed as Exhibit 1.3 to the Registrant's Current
Report on Form 8-K filed January 30, 1997, and incorporated
herein by reference).
- ---------------------------------
(i) Filed with the original Form 10-K.
(ii) Filed with this Amendment.
<PAGE>
Exhibit No. Description
- ----------- ----------------------------------------------------------------
10.5 Purchase and Sale Agreement dated December 18, 1996 between the
Registrant and Donlon and Agnes Gabrielsen (filed as Exhibit
1.4 to the Registrant' Current Report on Form 8-K filed January
30, 1997, and incorporated herein by reference).
10.6 Employment Agreement dated as of October 29, 1996 between the
Registrant and Raymond V. Marino (filed as an Exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by
reference).(iii)
10.7 Severance agreement dated September 22, 1994 between the
Registrant and Christopher M. Watson.(ii)(iii)
10.8 Severance agreement dated May 9, 1997 between the Registrant
and Andrew Gorayeb.(ii)(iii)
10.9 Incentive Stock Option Plan of the Registrant.(ii)(iii)
10.10 1996 Stock Option Plan of the Registrant (included as Exhibit A
to the Registrant's Proxy Statement for its Special in Lieu of
Annual Meeting of Shareholders held October 29, 1996, and
incorporated herein by reference).(iii)
21. Subsidiaries of the Registrant.(i)
- ---------------------------------
(i) Filed with the original Form 10-K.
(ii) Filed with this Amendment.
(iii) Contract or compensatory plan in which directors and/or officers
participate.
<PAGE>
EXHIBIT 3.1
COMPOSITE AMENDED
CERTIFICATE OF INCORPORATION
OF
PACIFIC GATEWAY PROPERTIES, INC.
FIRST: The name of the Corporation is PACIFIC GATEWAY PROPERTIES,
INC.
SECOND: The purpose for which the Corporation is formed is to
engage in any lawful act or activity for which corporations may be organized
under the provisions of the Business Corporation Law of the State of New
York. This Corporation is not formed to engage in any act or activity
requiring the consent or approval of any state official, department, board,
agency or other body.
THIRD: The office of the Corporation shall be located in the
City, County and State of New York.
FOURTH: (a) The aggregate number of shares which the Corporation
shall have authority to issue is Twelve Million (12,000,000), divided into
classes as follows:
(1) Two Million (2,000,000) shares, each with a par value of
One Dollar ($1.00), of a class designated "Preferred Stock", to be
issued in series, and
(2) Ten Million (10,000,000) shares, each with a par value of
One Dollar ($1.00), of a class designated "Common Stock".
(b) The shares of Preferred Stock may be issued in one or
more series, and each series shall be so designated as to distinguish
the shares thereof from the shares of all other series. All shares
of Preferred Stock shall be identical except as to the relative
rights, preferences and limitations referred to below:
Authority is hereby expressly granted to the Board of Directors of
the Corporation to fix, subject to the provisions herein set forth, before
the issuance of any shares of a particular series, the number, designation,
and relative rights, preferences and limitations of the shares of such series
including (1) voting rights, if any, which may include the right to vote
separately and the right to vote together as a single class with the Common
Stock and any other series of the Preferred
<PAGE>
Stock with the number of votes per share accorded to shares of such series
being the same as or different from that accorded to such other shares, (2)
the dividend rate per annum, if any, and the terms and conditions pertaining
to dividends and whether such dividends shall be cumulative, (3) the amount
or amounts payable upon such shares and the priority thereof, if any, in the
event of voluntary or involuntary liquidation, (4) the redemption price or
prices, if any, and the terms and conditions of the redemption, (5) sinking
fund provisions, if any, for the redemption or purchase of such shares, (6)
the terms and conditions on which such shares are convertible, in the event
the shares are to have conversion rights, and (7) any other rights,
preferences and limitations pertaining to such series which may be fixed by
the Board of Directors pursuant to the Business Corporation Law.
(c) No amendment to the Certificate of Incorporation of the
Corporation shall amend, alter, modify, change or repeal any of the
provisions of this Article FOURTH unless the amendment effecting such
amendment, alteration, modification, change or repeal shall receive the
affirmative vote of such percentage (not less than a majority) as the Board
of Directors shall determine of any series of the authorized Preferred Stock
upon which the right to vote has been conferred by the resolution or
resolutions adopted by the Board of Directors providing for the establishment
of any such series of Preferred Stock in addition to any other vote of
shareholders required by law or provision of this Certificate of
Incorporation.
FIFTH: No shareholder, as such, shall have any preemptive or
similar right to have first offered to him any part of any presently or
hereafter authorized shares, or bonds, debentures or securities convertible
into shares, of the Corporation which may at any time or times be issued,
optioned or sold by the Corporation. This provision shall operate to defeat
all preemptive rights of any and all shares of the Corporation now
authorized, or which the Corporation may hereafter be authorized to issue by
any amendment or amendments to this Certificate of Incorporation.
SIXTH: The number of directors of the Corporation shall not be
more than thirteen. The number of directors constituting the entire Board
shall be fixed from time to time by the By-Laws of the Corporation.
SEVENTH: Any or all of the directors may be removed only for cause
and only if such removal is authorized by the affirmative vote of the holders
of two-thirds of the outstanding shares of stock of the Corporation entitled
to vote thereon, except that when, by the provisions of the Certificate of
Incorporation, the holders of shares of Preferred Stock or any series thereof
voting as a class are entitled to elect any one or more directors, the
directors so elected may be removed only by the applicable vote of the
holders of the
<PAGE>
Preferred Stock or such series voting as a class.
EIGHTH: (a) In addition to any affirmative vote required by
law or this Certificate of Incorporation, and except as otherwise expressly
provided in Paragraph (c) of this Article EIGHTH:
(1) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (A) any Interested
Shareholder (as hereinafter defined) or (B) any other corporation
(whether or not itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions)
to or with any Interested Shareholder or any Affiliate of any
Interested Shareholder of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value (as hereinafter
defined) of Five Million Dollars ($5,000,000) or more; or
(3) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Shareholder or any Affiliate of any Interested Shareholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of Five Million
Dollars ($5,000,000) or more; or
(4) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate of any Interested
Shareholder; or
(5) any reclassification of securities (including any reverse
stock split), or recapitalization of the corporation, or any merger
or consolidation of the Corporation with any of its Subsidiaries or
any other transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Shareholder or any Affiliate of any
Interested Shareholder;
shall require the affirmative vote of the holders of at least eighty percent
(80%) of the then outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class. Such affirmative
<PAGE>
vote shall be required notwithstanding the fact that no vote may be required,
or that a lesser percentage may be specified, by law or in any agreement with
any national securities exchange or otherwise. Notwithstanding any other
provision of this Certificate of Incorporation to the contrary, each share of
the Voting Stock shall have one vote for purposes of this Article EIGHTH.
(b) The term "Business Combination" as used in this Article EIGHTH
shall mean any transaction which is referred to in any one or more of Clauses
(1) through (5) of Paragraph (a) of this Article EIGHTH.
(c) The provisions of Paragraph (a) of this Article EIGHTH shall
not be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law
and any other provision of this Certificate of Incorporation, if in the case
of a Business Combination that does not involve any cash or other
consideration being received by the shareholders of the Corporation, solely
in their capacities as shareholders, the condition specified in Clause (1)
below is met, or if in the case of any other Business Combination, the
conditions specified in either Clauses (1) or (2) below are met:
(1) Prior to the consummation of a Business Combination, the
Board of Directors of the Corporation adopts a resolution approving such
Business Combination by the affirmative vote of not less than seventy-five
percent (75%) of the total number of Directors in office or by unanimous
written consent;
(2) All of the following conditions shall have been met:
(A) The aggregate amount of cash and Fair Market Value as
of the date of the consummation of the Business Combination
(the "Consummation Date") of consideration other than cash, to
be received per share by holders of shares of Common Stock in
such Business Combination shall be at least equal to the
highest amount determined under Sub-Clauses (i) or (ii) below
(it being intended that the requirements of this Clause (2)(A)
of Paragraph (c) of ARTICLE EIGHTH shall be required to be met
with respect to all shares of Common Stock outstanding, whether
or not the Interested Shareholder has previously acquired any
shares of the Common Stock);
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Shareholder for any share of Common Stock acquired by it
(I) within the three-year period immediately prior to the
first public announcement of the proposal of the Business
Combination (the "Announcement Date") or (II)
<PAGE>
in the transaction in which it became an Interested
Shareholder, whichever is higher, plus interest compounded
annually from the date on which the interested Shareholder
became an Interested Shareholder through the Consummation
Date at the prime rate of interest of Morgan Guaranty
Trust Company of New York (or other major bank
headquartered in New York City selected by at least
seventy-five percent (75%) of the entire Board of
directors) from time to time in effect in New York City,
less the aggregate amount of any cash dividends paid and
the Fair Market Value of any dividends paid in other than
cash, per share of Common Stock from the date on which the
Interested Shareholder became an Interested Shareholder
through the Consummation Date in an amount up to but not
exceeding the amount of such interest payable per share of
Common Stock; or
(ii) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the
Interested Shareholder became an Interested Shareholder,
whichever is higher.
(B) The aggregate amount of cash and Fair Market Value as
of the Consummation Date of the Business Combination of
consideration other than cash, to be received per share by
holders of shares of any class of outstanding Voting Stock
other than the common stock, or any series thereof, shall be at
least equal to the highest amount determined under Sub-Clauses
(i), (ii) or (iii) below (it being intended that the
requirements of this Clause (2)(B) of Paragraph (c) of Article
EIGHTH shall be required to be met with respect to all shares
of every such other class of outstanding Voting Stock, and any
series thereof, whether or not the Interested Shareholder has
previously acquired any shares of a particular series or class
of Voting Stock):
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Shareholder for any share of such series or class of
Voting Stock, acquired by it (I) within the three-year
period immediately prior to the Announcement Date or (II)
in the transaction in which it became an Interested
Shareholder, whichever is higher, plus interest compounded
annually from the date on which the Interested Shareholder
became an Interested Shareholder through the Consummation
Date at the prime rate of interest of Morgan Guaranty
Trust Company of New York
<PAGE>
(or other major bank headquartered in New York City
selected by at least seventy-five percent (75%) of the
entire Board of Directors) from time to time in effect in
New York City, less the aggregate amount of any cash
dividends paid and the Fair Market Value of any dividends
paid in other than cash, per share of such series or class
of Voting Stock from the date on which the Interested
Shareholder became an Interested Shareholder through the
Consummation Date in an amount of to but not exceeding the
amount of such interest payable per share of such series
or class of Voting Stock; or
(ii) the Fair Market Value per share of such series
or class of Voting Stock on the Announcement Date or the
date on which the Interested Shareholder became an
Interested Shareholder, whichever is higher; or
(iii) the highest preferential amount per share to
which the holders of shares of such series or class of
Voting Stock would be entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.
(C) The consideration to be received by holders of a
particular series or class of outstanding Voting Stock
(including Common Stock) shall be in cash or in the same form
as the Interested Shareholder has previously paid for shares of
such series or class of Voting Stock. If the Interested
Shareholder has paid for shares of any series or class of
Voting Stock with varying forms of consideration, the form of
consideration for such series or class of Voting Stock shall be
either in cash or the form used to acquire the largest number
of shares of such series or class of Voting Stock previously
acquired by it.
(D) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination: (i) except as approved by at least
seventy-five percent (75%) of the entire Board of Directors,
there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or
not cumulative) on any series or class of outstanding Preferred
Stock; (ii) there shall have been (I) no reduction in the
annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock),
except as approved by at least seventy-five percent (75%) of
the entire Board of Directors, and (II) an increase
<PAGE>
in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase
such annual rate is approved by at least seventy-five percent
(75%) of the entire Board of Directors, and (iii) such
Interested Shareholder shall have not become the beneficial
owner of any additional shares of Voting Stock except as part
of the transaction which results in such Interested Shareholder
becoming an Interested Shareholder.
(E) After such Interested Shareholder has become an
Interested Shareholder, such Interested Shareholder shall not
have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation.
(F) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
public shareholders of the Corporation at least 30 days prior
to the consummation of such Business Combination (whether or
not such proxy or information statement is required to be
mailed pursuant to such Act or subsequent provisions).
(d) For the purposes of this Article EIGHTH:
(1) A "person" shall mean any individual, partnership,
association, firm, corporation or other entity.
(2) "Interested Shareholder" shall mean any person (other than
the Corporation or any Subsidiary) who or which:
(A) is the beneficial owner, directly or indirectly, of
10% or more of the outstanding Voting Stock; or
(B) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date of
determination of Interested Shareholder status was the
beneficial owner, directly or indirectly, of 10% or more of the
then outstanding Voting Stock; or
(C) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the
<PAGE>
two-year period immediately prior to the date of determination
of Interested Shareholder status beneficially owned by any
Interested Shareholder (other than Perini Corporation), if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be a "beneficial-owner" of any Voting Stock:
(A) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly
or indirectly; or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to
any agreement, arrangement or understanding; or
(C) which are beneficially owned, directly or indirectly,
by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
(4) For the purposes of determining whether a person is an
Interested Shareholder pursuant to Clause (2) of this Paragraph (d),
the number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned through application of Clause (3) of
this Paragraph (d) but shall not include any other shares of Voting
Stock which may be issuable pursuant to any agreement, arrangement
or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(5) "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in
effect on December 1, 1983.
(6) "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the
definition of Interested Shareholders set forth in Clause (2) of
this Paragraph (d), the term "Subsidiary" shall mean only a
<PAGE>
corporation of which a majority of each class of equity security is
owned, directly or indirectly, by the Corporation.
(7) "Fair Market Value" means: (A) in the case of stock, the
highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such Exchange, on
the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or,
if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during
the 30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations System
or any system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of such
stock as determined by at least seventy-five percent (75%) of the
entire Board of Directors in good faith; and (B) in the case of
property other than cash or stock, the fair market value of such
property on the date in question as determined by at least
seventy-five percent (75%) of the entire Board of Directors in good
faith.
(8) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to
be received" as used in Clauses (2)(A) and (2)(B) of Paragraph (c)
of this Article EIGHTH shall include the shares of Common Stock
and/or the shares of any other series or class of outstanding Voting
Stock retained by the holders of such shares.
(e) The Board of Directors by at least a seventy-five percent
(75%) vote shall have the power and duty to determine, on the basis of
information known to the Board after reasonable inquiry, all facts necessary
to determine compliance with this Article EIGHTH, including without
limitation (1) whether a person is an Interested Shareholder, (2) the number
of shares of Voting Stock beneficially owned by any person, (3) whether a
person is an Affiliate or Associate of another, (4) whether the requirements
of Clause (2) of Paragraph (c) have been met with respect to any Business
Combination, and (5) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of Five Million Dollars
($5,000,000) or more; and the good faith determination by at least
seventy-five percent (75%) of the entire Board of Directors on such matters
shall be conclusive and binding for all the purposes of this Article EIGHTH.
<PAGE>
(f) Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
(g) Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the By-Laws of the Corporation), the affirmative vote of the
holders of eighty percent (80%) or more of the shares of the then outstanding
Voting Stock, voting together as a single class, shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article EIGHTH of
this Certificate of Incorporation.
NINTH: Where the By-Laws of the Corporation provide that a
section or subsection thereof may only be amended or repealed in accordance
with this Certificate of Incorporation, such amendment or repeal shall
require the affirmative vote of the holders of at least seventy percent (70%)
of all outstanding shares of the Corporation entitled to vote thereon at any
regular or special meeting of shareholders.
TENTH: Except as otherwise provided by law or this Certificate of
Incorporation, special meetings of the shareholders of the Corporation may
only be called by a majority of the entire Board of Directors of the
Corporation.
ELEVENTH: The duration of the Corporation shall be perpetual.
TWELFTH: The Secretary of State is designated as agent of the
Corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the Corporation served upon him is:
c/o Jacobs Persinger & Parker
77 Water Street
New York, New York 10005
THIRTEENTH: In addition to any other vote of shareholders required
by law or by any other provision of this Certificate of Incorporation, an
amendment or change of any provision of Articles "SIXTH", "SEVENTH", "NINTH",
"TENTH", or "THIRTEENTH" hereof shall be authorized by vote of the holders of
at least seventy percent (70%) of all outstanding shares of the Corporation
entitled to vote thereon, except that any amendment or change which by law or
any provision of this Certificate of Incorporation may be authorized by the
Board of Directors shall be authorized by a majority of the entire Board of
Directors.
<PAGE>
FOURTEENTH: No director of the Corporation shall be personally
liable to the Corporation or its shareholders for damages for any breach of
duty as a director notwithstanding any provision of law imposing such
liability; provided, however, that this Article FOURTEENTH shall not
eliminate or limit any liability of a director if a judgment or other final
adjudication adverse to such director establishes (i) that the director's
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law; or (ii) that the director personally gained in fact
a financial profit or other advantage to which the director was not legally
entitled; or (iii) that the director's acts violated Section 719 of the New
York Business Corporation Law. No amendment to or repeal of this Article
FOURTEENTH shall adversely affect the rights and protection afforded to a
director of the Corporation under this Article FOURTEENTH for acts or
omissions occurring prior to such amendment or repeal.
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
PACIFIC GATEWAY PROPERTIES, INC.
(Under Section 601 of the Business Corporation Law)
(As amended through May 16, 1997)
SECTION 1
CERTIFICATE OF INCORPORATION
These By-Laws shall be subject to the provisions of the Certificate
of Incorporation of the Corporation in effect from time to time.
SECTION 2
OFFICES
2.1 The office of the Corporation in the State of New York shall
be located at such place in the City of New York as the Board of Directors
shall from time to time determine.
2.2 The Corporation may also have offices at such other places
within and without the State of New York as the Board of Directors may from
time to time determine or the business of the Corporation may require.
SECTION 3
SHAREHOLDERS
3.1 ANNUAL MEETING. The annual meeting of the shareholders shall
be held at ten o'clock in the forenoon on the first Tuesday in May of each
year, unless a different date and hour is fixed by the Chairman of the Board,
the President or the Board of Directors. If that day be a Saturday, Sunday
or legal holiday at the place where the meeting is to
<PAGE>
be held, the meeting shall be held on the next succeeding day not a Saturday,
Sunday or legal holiday at such place and hour. The purposes for which an
annual meeting is to be held, in addition to those prescribed by law, by the
Certificate of Incorporation or by these By-Laws, may be specified by the
Chairman of the Board, the President or by the Board of Directors.
3.2 SPECIAL MEETING IN PLACE OF ANNUAL MEETING. If no annual
meeting has been held in accordance with the foregoing provisions, a special
meeting of the shareholders may be held in place thereof, and any action
taken at such special meeting shall have the same force and effect as if
taken at the annual meeting and in such case all references in these By-Laws
to the annual meeting of the shareholders shall be deemed to refer to such
special meeting. Any such special meeting shall be called only as provided
in Subsections 3.4 and 3.5 below.
3.3 SPECIAL MEETING FOR ELECTION OF DIRECTORS.
(a) If, for a period of one month after the date fixed by or
under these By-Laws for the annual meeting of shareholders, there is a
failure to elect a sufficient number of directors to conduct the business of
the Corporation, the Board of Directors shall call a special meeting for the
election of directors. If such special meeting is not called by the Board of
Directors within two weeks after the expiration of such period or if it is so
called but there is a failure to elect such directors for a period of two
months after the expiration of such period, holders of ten percent of the
shares entitled to vote in an election of directors may, in writing, demand
the call of a special meeting for the election of directors specifying the
date and month thereof, which shall not be less than sixty nor more than
ninety days from the date of such written demand. The Secretary of the
Corporation upon receiving the written demand shall promptly give notice of
such meeting pursuant to the procedure prescribed in Subsection 3.5 below, or
if he fails to do so within five business days thereafter, any shareholder
signing such demand may give such notice. The meeting shall be held at the
place fixed in these By-Laws or, if not so fixed, at the office of the
Corporation.
(b) At any such special meeting called on demand of
shareholders, the shareholders attending, in person or by proxy, and entitled
to vote in an election of directors shall constitute a quorum for the purpose
of electing directors, but not for the transaction of any other business.
3.4 CALLING OF SPECIAL MEETINGS. Except for the calling of a
special meeting for the election of directors pursuant to Subsection 3.3
above, all special meetings of shareholders may be called only by a majority
vote of the entire Board of Directors. At any such special
<PAGE>
meeting only such business may be transacted which is related to the purpose
or purposes set forth in the notice required by Subsection 3.5 below.
3.5 NOTICE OF MEETING OF SHAREHOLDERS. Whenever under the
provisions of this Section 3, shareholders are required or permitted to take
any action at a meeting, written notice shall be given stating the place,
date and hour of the meeting and, unless it is the annual meeting, indicating
that it is being issued by or at the direction of the person or persons
calling the meeting. Notice of a special meeting shall also state the
purpose or purposes for which the meeting is called. A copy of the notice of
any meeting shall be given, personally or by mail, not less than ten nor more
than fifty days before the date of the meeting, to each shareholder entitled
to vote at such meeting. If mailed, such notice shall be deemed given when
deposited in the United States mail, with postage thereon prepaid, directed
to the shareholder at his address as it appears on the record of
shareholders, or, if he shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some other
address, then directed to him at such other address. An affidavit of the
Secretary or other person giving the notice or of a transfer agent of the
Corporation that the notice required by this section has been given shall, in
the absence of fraud, be prima facie evidence of the facts therein stated.
3.6 PLACE OF MEETING. A meeting of the shareholders may be held
anywhere within the United States at such place as shall be fixed by the
Chairman of the Board, the President or the Board of Directors. Any
adjourned session of any meeting of the shareholders shall be held at the
same city or town as the initial session, or within New York, in either case
at the place designated in the vote of adjournment.
3.7 QUORUM OF SHAREHOLDERS. The holders of a majority of the
shares entitled to vote thereat shall constitute a quorum at a meeting of
shareholders for the transaction of any business, provided that when a
special item of business is required to be voted on by a class or series,
voting as a class, the holders of a majority of the shares of such class or
series shall constitute a quorum for the transaction of such specified item
of business.
3.8 ACTION BY VOTE.
(a) Directors shall be elected by a plurality of the votes
cast at a meeting of shareholders by the holders of shares entitled to vote
in the election.
(b) Whenever any corporate action, other than the election of
directors, is to be taken by vote of the shareholders, it shall, except as
otherwise required by these By-Laws, or by the
<PAGE>
Certificate of Incorporation, be authorized by a majority of the votes cast
at a meeting of shareholders by the holders of shares entitled to vote
thereon.
3.9 VOTING. Except as otherwise provided in the Certificate of
Incorporation, shareholders entitled to vote shall have one vote for each
share of stock entitled to vote held by them of record according to the
records of the Corporation. The Corporation shall not, directly or
indirectly, vote any share of its own stock.
3.10 INSPECTOR OF ELECTION. The Board of Directors in advance of
any meeting of shareholders may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at a meeting of shareholders may, and on the request of any
shareholder entitled to vote thereat shall appoint one or more inspectors.
In case any person appointed as inspector fails to appear or act, the vacancy
may be filled by the Board of Directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering
upon the discharge of his duties shall take and sign an oath to faithfully
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
3.11 LIST OF SHAREHOLDERS. A list of shareholders as of the record
date, certified by the officer of the Corporation responsible for its
preparation or by the transfer agent, shall be produced at any meeting of
shareholders upon the request thereat or prior thereto of any shareholder.
If the right to vote at any meeting is challenged, the inspectors of
election, or person presiding thereat, shall require such list of
shareholders to be produced as evidence of the right of the persons
challenged to vote at such meeting, and all persons who appear from such list
to be shareholders entitled to vote thereat may vote at such meeting.
3.12 ACTION BY WRITING. Any action to be taken by shareholders may
be taken without a meeting if all shareholders entitled to vote on the matter
consent to the action by a writing filed with the records of the meetings of
shareholders. Such consent shall be treated for all purposes as a vote at a
meeting.
3.13 PROXIES.
(a) Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
(b) Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the
<PAGE>
proxy. Every proxy shall be revocable at the pleasure of the shareholder
executing it, except as otherwise provided by applicable law.
3.14 ANNUAL MEETING PROCEDURE.
Meetings of shareholders shall generally follow reasonable and fair
procedure. Subject to the foregoing, the conduct of any meeting and the
determination of procedure and rules shall be within the absolute discretion
of the Chairman, and there shall be no appeal from any ruling of the Chairman
with respect to procedure or rules. Accordingly, in any meeting of
shareholders or part thereof, the Chairman shall have the absolute power to
determine appropriate rules or to dispense with theretofore prevailing rules.
The Chairman of the Board shall serve as Chairman of the meeting and preside
at the meeting. Without limiting the foregoing, the following rules shall
apply:
(a) Within his sole discretion, the Chairman of the meeting
may adjourn such meeting by declaring such meeting adjourned. Upon his doing
so, the meeting is immediately adjourned.
(b) The Chairman may ask or require that anyone not a bona
fide shareholder or proxy leave the meeting.
(c) A resolution or motion shall be considered for vote only
if proposed by a shareholder or duly authorized proxy, and seconded by an
individual who is a shareholder or a duly authorized proxy other than the
individual who proposed the resolution or motion. The Chairman may propose
any motion for vote.
(d) The Chairman of the meeting may impose any reasonable
limits with respect to participation in the meeting by shareholders,
including, but not limited to, determining when the polls for the taking of
any shareholder vote at the meeting shall be closed, limiting the amount of
time at the meeting taken up by the remarks or questions of any shareholder,
limiting the number of questions per shareholder, and limiting the subject
matter and timing of questions and remarks by shareholders.
3.15 ANNUAL MEETING BUSINESS.
To be properly brought before any meeting of shareholders, business
must be either (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (ii)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by
a shareholder. In addition to any other applicable requirements, including
(without limitation) requirements imposed by federal securities laws
pertaining to proxies, the
<PAGE>
shareholder must have given timely notice thereof in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice of business to be
brought before an annual meeting of shareholders must be delivered to or
mailed and received at the principal executive offices of the Corporation at
least seventy-five (75) days prior to the corresponding date of the previous
year's annual meeting of shareholders, PROVIDED, HOWEVER, that such notice by
the shareholder to be timely must in any event be so received not later than
the close of business on the 15th day following the day on which actual
notice of the date of the annual meeting is mailed or public disclosure of
such date is made, whichever first occurs. To be timely, a shareholder's
notice of business to be brought before any special meeting of shareholders
must be so received not later than the close of business on the 15th day
following the day on which notice of the date of such special meeting is
mailed or public disclosure of such date is made, whichever first occurs. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before any meeting of the shareholders (i) a
brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the meeting, (ii) the name
and record address of the shareholder proposing such business, (iii) the
class and number of shares of the Corporation which are beneficially owned by
the shareholder and (iv) any material interest of the shareholder in such
business.
Notwithstanding anything in these By-Laws to the contrary, no
business shall be conducted at any meeting of the shareholders except in
accordance with the provisions set forth in this Section 3.15, PROVIDED,
HOWEVER, that nothing in this Section 3.15 shall be deemed to preclude
discussion by any shareholder as to any business properly brought before any
meeting.
The Chairman of the Board of the Corporation shall, if the facts
warrant, determine and declare at any meeting of the shareholders that
business was not properly brought before the meeting in accordance with the
provisions of this Section 3.15, and if he should so determine, he shall so
declare to the meeting, and any such business not properly brought before the
meeting shall not be transacted or considered.
SECTION 4
BOARD OF DIRECTORS
4.1 ELECTION AND QUALIFICATION. A Board of Directors shall be
elected at the annual meeting of the shareholders, by such shareholders as
have the right to vote at such election. No director need be a shareholder.
4.2 NOMINATION NOTICE PROCEDURE. Nominations of
<PAGE>
individuals for election as directors of the Corporation may be made only by
the Board of Directors or a committee thereof or by a shareholder at a
meeting called and held to elect directors upon notice as set forth in this
Subsection 4.2. Notice of a proposed nomination shall be given to the
Secretary of the Corporation not less than seven (7) days prior to the
shareholders meeting at which the nomination is to be made. Such notice
shall contain the name and address of the proposed nominees and shall
disclose the nature of the proposed nominees' relationship to the Corporation
at the time of such notice, as well as the nature of the relationship between
the nominating shareholder and the proposed nominees at the time of such
notice.
4.3 NUMBER. The number of directors constituting the entire Board
of Directors shall be eight (8). Such number may be increased up to the
maximum number permitted by Article SIXTH of the Certificate of Incorporation
or decreased to any number not less than three by amendment to these By-Laws.
4.4 VACANCIES. Any vacancy on the Board of Directors, however
occurring, shall be filled by a majority vote of the entire Board of
Directors.
4.5 TENURE. Except as otherwise provided by law, by the
Certificate of Incorporation and by these By-Laws, the directors shall hold
the office until the next annual meeting of the shareholders and until their
successors are elected and qualified.
4.6 POWERS; ISSUANCE OF SHARES. Except as reserved to the
shareholders by law, by the Certificate of Incorporation or by these By-Laws,
the business of the Corporation shall be managed by the directors, who shall
have and may exercise all the powers of the Corporation. In particular, and
without limiting the generality of the foregoing, the Board of Directors
shall have the authority to issue or reserve for issue from time to time the
whole or any part of the capital stock of the Corporation which may be
authorized from time to time, to such persons or organizations, for such
consideration, whether cash, property, services or expenses, and on such
terms as the Board of Directors may determine, including without limitation
the granting of options, warrants, or conversion or other rights to subscribe
to said capital stock.
4.7 COMMITTEES. The directors may, by vote of a majority of the
entire Board, elect from their members an executive committee and other
committees each consisting of two (2) or more directors and may by vote
delegate to any such committee or committees some or all of the powers of the
directors except those which by law, by the Certificate of Incorporation or
by these By-Laws they are prohibited from delegating. Except as the
directors may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise
<PAGE>
provided by the directors or such rules, its meetings shall be called, notice
given or waived, its business conducted, or its action taken as nearly as may
be in the same manner as is provided by these By-Laws with respect to
meetings or for the conduct of business or the taking of action by the
directors. All members of such committees shall hold such offices at the
pleasure of the Board of Directors. The Board of Directors may abolish any
such committee at any time. Any committee to which the Board of Directors
delegates any of its powers or duties shall keep records of its meetings and
shall report its action to the Board of Directors. The Board of Directors
shall have power to rescind any action of any committee, but no such
rescission shall have retroactive effect.
4.8 MEETINGS. Regular meetings of the directors, including the
first meeting of the Board of Directors following the annual meeting of the
shareholders, may be held without call or notice at such places and at such
times as the directors may from time to time determine, provided that notice
of the first regular meeting following any such determination shall be given
to absent directors. Special meetings of the directors may be held at any
time and at any place designated in the call of the meeting when called by
the Chairman of the Board, the President or by a majority of the directors,
notice thereof being given to each director by the Secretary or an Assistant
Secretary or by the officer or the directors calling the meeting. Directors
may participate in meetings of the Board of Directors by means of conference
telephone or similar communications equipment by means of which all directors
participating in the meeting can hear each other, and participation in a
meeting in accordance herewith shall constitute presence in person at such
meeting.
4.9 NOTICE OF MEETING OF DIRECTORS. It shall be sufficient notice
to a director to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to him at
his usual or last known business or residence address or to give notice to
him in person or by telephone at least twenty-four hours before a meeting.
Notice of a meeting need not be given to any director if a written waiver of
notice, executed by him before or after the meeting, is filed with the
records of the meeting, or to any director who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him.
Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
4.10 QUORUM. At any meeting of the directors a majority of the
entire Board of Directors then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the directors
present, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.
4.11 ACTION BY VOTE. When a quorum is present at any
<PAGE>
meeting, a majority of the directors present may take any action except when
a larger vote is required by law or by the Certificate of Incorporation.
4.12 ACTION BY WRITING. Any action required or permitted to be
taken at any meeting of the directors may be taken without a meeting if a
written consent thereto is signed by all the directors and such written
consent is filed with the records of the meetings of the directors. Such
consent shall be treated for all purposes as a vote at a meeting.
SECTION 5
OFFICERS AND AGENTS
5.1 ENUMERATION AND QUALIFICATION. The officers of the
Corporation shall be a Chairman of the Board, a President, a Treasurer, a
Secretary and such other officers, including one or more Vice-Presidents, as
the directors from time to time may in their discretion elect or appoint.
The Corporation may also have such agents as the directors from time to time
may in their discretion appoint. No officer need be a director or
shareholder. Any two or more offices may be held by the same person except
the offices of President and Secretary. Any officer may be required by the
directors to give bond for the faithful performance of his duties to the
Corporation in such amount and with such sureties as the directors may
determine.
5.2 POWERS. Subject to the law, the Certificate of Incorporation
and the other provisions of these By-Laws, each officer shall have, in
addition to the duties and powers herein set forth, such duties and powers as
are commonly incident to this office and such duties and powers as the
directors may from time to time designate.
5.3 ELECTION. The Chairman of the Board, the President, the
Treasurer and the Secretary shall be elected annually by the directors at
their first meeting following the annual meeting of the shareholders. Other
officers may be elected or appointed from time to time as the directors may
in their discretion determine.
5.4 TENURE. Except as otherwise provided by law or by the
Certificate of Incorporation or by these By-Laws, the Chairman of the Board,
the President, the Treasurer and the Secretary shall hold office until the
first meeting of the directors following the next annual meeting of the
shareholders and until their respective successors are chosen and qualified,
and each other officer shall hold office until the first meeting of the
directors following the next annual meeting of the shareholders unless a
shorter period shall have been specified by the terms of his election or
appointment, or in each case until he sooner
<PAGE>
dies, resigns, is removed or becomes disqualified. Each agent shall retain
his authority at the pleasure of the directors.
5.5 VACANCIES. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of office which shall be vacant in the manner
prescribed in these By-Laws for the regular election or appointment to such
office.
5.6 CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board of Directors at which he is present.
The Chairman of the Board shall preside at all meetings of shareholders at
which he is present and chooses to preside.
In the event of the disability or death of the President, the
Chairman of the Board may assume the office of the President. In the event
the Chairman of the Board chooses to assume the office of the President he
shall have the authority to delegate all or part of his duties as President
to one or more of the Vice-Presidents. At any time following the disability
or death of the President, the Chairman of the Board may request that the
Board of Directors elect a new President in accordance with the procedures
for filling officer vacancies set forth in Subsection 5.5.
5.7 PRESIDENT. The President shall be the chief executive officer
of the Corporation. The President shall preside at meetings of shareholders
in the event the Chairman of the Board is absent or chooses not to preside at
such meetings. Subject to the direction of the directors, the President shall
have general charge of the property and business of the Corporation and of
all its operations and shall direct and supervise the administration of the
business and affairs of the Corporation, shall employ and remove at pleasure
and fix the duties and compensation of managers, agents, salesmen, clerks,
workmen and other subordinate employees of the Corporation, and shall have
such other duties and powers as shall be prescribed from time to time by the
directors.
5.8 VICE-PRESIDENTS. The Vice-Presidents shall have such duties
and powers as shall be prescribed for them respectively from time to time by
the directors or by the President. The directors or the President may from
time to time designate one or more Vice-Presidents as Executive
Vice-President, Financial Vice-President, Administrative Vice-President,
Senior Vice-President, or otherwise, or may otherwise fix or indicate the
order of their rank, and, in their or his discretion, may from time to time
change or revoke any such designation. One or more Vice-Presidents may be
designated by the Board of Directors to perform all or part of the duties of
the President or Chairman of the Board in the event of the death or
disability of the President or Chairman of the Board.
<PAGE>
5.9 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall,
subject to the direction and under the supervision of the Board of Directors,
have general charge of the financial concerns of the Corporation and of its
funds and valuable papers, and shall have such other duties and powers as may
be prescribed from time to time by the Board of Directors or the President.
The Treasurer shall report to the Board of Directors but in the ordinary
conduct of the Corporation's business shall be under the supervision of the
President or such other officer as the Board of Directors from time to time
may determine.
Any Assistant Treasurers shall have such duties and powers as shall
be prescribed from time to time by the Board of Directors, the President, and
shall be responsible to and shall report to the Treasurer.
5.10 SECRETARY AND ASSISTANT SECRETARY. The Secretary shall keep
the minutes of all meetings of the shareholders and of the Board of Directors
and committees thereof, in books provided for that purpose. He shall give,
or cause to be given, all notices required by law or by these By-Laws. He
shall be custodian of the records and of the seal or seals of the
Corporation. He shall, when authorized by the Board of Directors or the
President, affix the seal of the Corporation to all documents requiring it,
and he may attest the same. In general, he shall perform all duties incident
to the office of a secretary of a corporation, and such other duties as from
time to time may be assigned to him by the Board of Directors.
Assistant Secretaries shall have such duties and powers as shall be
prescribed from time to time by the Board of Directors, the President or the
Secretary, and shall be responsible to and shall report to the Secretary.
SECTION 6
RESIGNATIONS AND REMOVALS
Any director or officer may resign at any time by delivering his
resignation in writing to the President, the Treasurer or the Secretary or to
a meeting of the directors. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. A director (including
persons elected by directors to fill vacancies in the board) may be removed
from office only in accordance with the provisions of Article SEVENTH of the
Certificate of Incorporation.
The directors may remove any officer elected by them with or
without cause by the vote of a majority of the directors then in office.
Removal of an officer or director for cause may be made only
<PAGE>
after reasonable notice and an opportunity to be heard before the body
proposing to remove such officer or director. No director or officer
resigning, and no director or officer removed (except where a right to
receive compensation shall be expressly provided in a duly authorized written
agreement with the Corporation), shall have any right to any compensation as
such director or officer for any period following his resignation or removal,
or any right to damages on account of removal, whether his compensation be by
the month or by the year or otherwise unless, in the case of a resignation,
the directors, or in the case of a removal, the body acting on the removal,
shall in their or its discretion provide for compensation.
SECTION 7
CERTIFICATES REPRESENTING SHARES
7.1 NUMBER AND PAR VALUE. The total number of shares and the par
value, if any, of each class of stock which the Corporation is authorized to
issue shall be as stated in the Certificate of Incorporation.
7.2 FRACTIONAL SHARES. The Corporation shall not issue
fractional shares of stock, but may issue scrip in registered or bearer form
which shall entitle the holder to receive a certificate for a full share upon
surrender of such scrip aggregating a full share, the terms and conditions
and manner of issue of such scrip to be fixed by the directors.
7.3 CERTIFICATES. The shares of the Corporation shall be
represented by certificates signed by the President or a Vice-President and
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer of the Company, and may be sealed with the seal of the Corporation
or a facsimile thereof. The signatures of the officers upon a certificate may
be facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or its employee.
In case any officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
7.4 LOSS OF CERTIFICATES. In the case of the alleged loss or
destruction or the mutilation of a certificate of stock, a duplicate
certificate may be issued in place thereof, upon such terms as the directors
may prescribe.
<PAGE>
SECTION 8
TRANSFER OF SHARES
8.1 TRANSFER ON BOOKS. Subject to the restrictions, if any,
stated or noted on the certificates, shares may be transferred on the books
of the Corporation by the surrender to the Corporation or its transfer agent
of the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
directors or the transfer agent of the Corporation may reasonably require.
8.2 RECORD HOLDER. Except as may be otherwise required by law,
by the Certificate of Incorporation or by these By-Laws, the Corporation
shall be entitled to treat the record holder of shares as shown on its books
as the owner of such shares for all purposes, including the payment of
dividends and the right to receive notice and to vote with respect thereto,
regardless of any transfer, pledge or other disposition of such shares, until
the shares have been transferred on the books of the Corporation in
accordance with the requirements of these By-Laws.
It shall be the duty of each shareholder to notify the Corporation
of his post office address.
8.3 RECORD DATE AND CLOSING TRANSFER BOOKS. The directors may
fix in advance a time, not more than fifty (50) nor less than ten (10) days
before the date of any meeting of shareholders nor more than fifty days prior
to any other action, or the date for the payment of any dividend or making of
any distribution to shareholders or the last day on which the consent or
dissent of shareholders may be effectively expressed for any purpose, as the
record date for determining the shareholders having the right to notice of
and to vote at such meeting and any adjournment thereof or the right to
receive such dividend or distribution or the right to give such consent or
dissent. In such case, only shareholders of record on such record date shall
have such right, notwithstanding any transfer of stock on the books of the
Corporation after the record date. Without fixing such record date, the
directors may for any of such purposes close the transfer books for all or
any part of such period.
SECTION 9
INDEMNIFICATION OF DIRECTORS AND OFFICERS
9.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN
THE RIGHT OF A CORPORATION TO PROCURE A JUDGMENT IN ITS FAVOR.
<PAGE>
The Corporation shall indemnify any person, made a party to an action by or
in the right of the Corporation to procure a judgment in its favor by reason
of the fact that he, his testator or intestate, is or was a director or
officer of the Corporation, against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him in connection with
the defense of such action, or in connection with an appeal therein, except
in relation to matters as to which such director or officer is adjudged to
have breached his duty to the Corporation under Article Seven of the New York
Business Corporate Law.
9.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS OR
PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF A CORPORATION TO PROCURE A
JUDGMENT IN ITS FAVOR. The Corporation shall indemnify any person, made, or
threatened to be made, a party to an action or proceeding other than one by
or in the right of the Corporation to procure a judgment in its favor,
whether civil or criminal, including an action by or in the right of any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
which any director or officer of the Corporation served in any capacity at
the request of the Corporation, by reason of the fact that he, his testator
or intestate, was a director or officer of the Corporation, or served such
other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid
in settlement and reasonable expenses, including attorneys' fees actually and
necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a purpose
which he reasonably believed to be in, or in the case of service for any
other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise, not opposed to, the best interests of the
corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
9.3 INDEMNIFICATION OTHER THAN BY COURT AWARD.
(a) A person who has been wholly successful, on the merits or
otherwise, in the defense of a civil or criminal action or proceeding of the
character described in Subsection 9.1 or 9.2 herein shall be entitled to
indemnification as authorized in such sections.
(b) Except as provided in paragraph (a), any indemnification
under Subsection 9.1 or 9.2 herein, unless ordered by a court, shall be made
by the Corporation, only if authorized in the specific case:
(1) By the Board of Directors acting by a
quorum consisting of directors who are not parties to
such action or proceeding upon a finding that the
director or officer has met the standard of conduct set
forth in Subsection 9.1 or
<PAGE>
9.2, as the case may be, or
(2) If a quorum under subparagraph (1) is not
obtainable with due diligence:
(A) By the Board of Directors upon the
opinion in writing of independent legal counsel that
indemnification is proper in the circumstances because
the applicable standard of conduct set forth in such
sections has been met by such director or officer, or
(B) By the shareholders upon a finding
that the director or officer has met the applicable
standard of conduct set forth in such sections.
9.4 ADVANCES. Except as limited by law, expenses incurred by a
director or officer in defending any proceeding (including a proceeding by or
in the right of the Corporation) may be paid by the Corporation in advance of
final disposition of the proceeding upon receipt of his written undertaking
to repay such amount if it is ultimately determined that he is not eligible
to be indemnified, which undertaking shall be an unlimited general obligation
but need not be secured and may be accepted without regard to the financial
ability of such person to make repayment; provided, that no such advance
payment shall be made if the circumstances known at that time (without any
further investigation) establish that he will ultimately be determined not to
be eligible to be indemnified.
9.5 NOTICE TO SHAREHOLDERS. If, under this article, any expenses
or other amounts are paid by way of indemnification, otherwise than by court
order or action by the shareholders, the Corporation shall, not later than
the next annual meeting of shareholders unless such meeting is held within
three months from the date of such payment, and, in any event, within fifteen
months from the date of such payment, mail to its shareholders of record at
the time entitled to vote for the election of directors a statement
specifying the persons paid, the amounts paid, and the nature and status at
the time of such payment of the litigation or threatened litigation.
9.6 INSURANCE. The Corporation shall have the power to purchase
and maintain insurance to the full extent permitted by law to (i) indemnify
directors and officers, and (ii) to indemnify the Corporation for any
obligation which it may incur as a result of the indemnification of directors
and officers under this Section 9.
9.7 OTHER PROVISIONS. The provisions of this Section 9 shall not
be construed to limit the power of the Corporation to indemnify its officers
or directors to the full extent permitted by appropriate law and to enter
specific
<PAGE>
agreements or arrangements for this purpose. In addition, the Corporation
shall have power to indemnify any of its agents or employees who are not
directors or officers on any terms consistent with the appropriate law.
SECTION 10
MISCELLANEOUS
10.1 CORPORATE SEAL. The seal of the Corporation shall, subject to
alteration by the directors, consist of a flat-faced circular die with the
words "New York" and "Corporate Seal", together with the name of the
Corporation and the year of its organization, cut or engraved thereon.
10.2 EXECUTION OF PAPERS. Except as the directors may generally or
in particular cases authorize the execution thereof in some other manner, all
deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Corporation shall be signed by
the chief executive officer.
10.3 VOTING OF SECURITIES. Unless otherwise provided, the
President or Treasurer each may waive notice of and act on behalf of this
Corporation, or appoint another person or persons to act as proxy or
attorney-in-fact for this Corporation with or without discretionary power
and/or power of substitution, at any meeting of stockholders or shareholders
of any other corporation or organization, any of whose securities are held by
this Corporation.
10.4 FISCAL YEAR. Except as from time to time provided by the
Board of Directors, the fiscal year of the Corporation shall end on the 31st
day of December.
10.5 CORPORATE RECORDS. The original, or attested copies, of the
Certificate of Incorporation, By-Laws and records of all meetings of the
incorporators and shareholders shall be kept at the principal office of the
Corporation. The shares and transfer records containing the names and
addresses of all shareholders, the number and class of shares held by each
and the dates when they respectively became the owners of record thereof,
shall be kept at the principal office of the Corporation in the State of New
York, or at an office of its transfer agent, or registrar in the State of New
York, and shall be open at reasonable times to the inspection of any
shareholder to the extent permitted by applicable law.
SECTION 11
<PAGE>
AMENDMENTS
Except as set forth below, these By-Laws may be amended or repealed
or new By-Laws may be adopted at any regular or special meeting of
shareholders, by the vote of the holders of a majority of all outstanding
shares entitled to vote thereon, in the manner provided in the Certificate of
Incorporation, provided notice of the proposed alteration, amendment or
repeal be contained in the notice of such meeting. Except as set forth
below, these By-Laws may also be amended or repealed or new By-Laws may be
adopted by the affirmative vote of a majority of the entire Board of
Directors at any regular or special meeting of the Board of Directors.
By-Laws adopted by the Board of Directors may be amended or repealed by the
shareholders.
Any amendment or repeal of this Section 11 or of Subsections 3.4,
4.2 and 4.4 of these By-Laws shall be made only in accordance with Article
NINTH of the Certificate of Incorporation.
<PAGE>
EXHIBIT 10.7
September 22, 1994
Mr. Christopher M. Watson
3715 Webster Street
San Francisco, CA 94123
Dear Chris,
This letter will serve to confirm that Pacific Gateway Properties,
Inc. ("PGP"), as authorized by its Board of Directors, on September 8, 1994,
has agreed to pay you severance compensation under certain circumstances if a
"change of control" of PGP occurs as hereinafter provided.
If a "change of control" of PGP occurs and your employment is
terminated by PGP without good cause within one year thereafter, you will
receive as severance pay an amount equal to one-year's base salary, including
medical insurance and life insurance during such one-year severance period.
In addition, any options then held by you under the PGP's Stock Option Plan
(the "Plan") which are not then currently exercisable shall be accelerated
and become immediately exercisable, and, notwithstanding any provision of
such Plan, you shall have thirty (30) days following such termination in
which to exercise such options.
It will be a condition of your right to receive the foregoing
severance and accelerated vesting that you remain employed by PGP through the
consummation of any such "change in control". "Base salary" as used in the
preceding sentence shall be the highest base salary which you were earning at
any time following the "change of control". "Good cause" shall mean only (i)
self-dealing involving personal profit, (ii) the commission of a criminal act
related to the performance of duties, or (iii) habitual intoxication by
alcohol or drugs during work hours. A resignation by you in the year
following the "change of control" of PGP triggered by (i) a relocation in the
principal place for performance of your duties of more than 25 miles, (ii) a
substantial reduction in salary, or (iii) a substantial diminution of your
responsibilities shall be treated as termination without good cause for
purposes of this Agreement and you shall be entitled to the benefits
hereunder in the event you terminate your employment in such circumstances.
A "change of control" shall only be deemed to have occurred if (i) in a single
<PAGE>
Mr. Christopher M. Watson
September 22, 1994
Page 2
transaction or series of related transactions a transfer of ownership of PGP
common stock occurs as a result of which the stockholders immediately prior
to such transaction or series of transactions no longer control, directly or
indirectly, fifty (50%) percent or more of the voting stock of the PGP, or
(ii) PGP merges or consolidates with another corporation (other than a
subsidiary of PGP) or sells all or substantially all of its assets and at
least fifty (50%) percent of the voting stock of the surviving or purchasing
entity is not controlled, directly or indirectly, by stockholders who were
stockholders of PGP immediately prior to such transaction or (iii) the
composition of the Board of Directors changes such that a majority of the
then Board of Directors are no longer persons who were serving as directors
of the Company on October 1, 1994, other than David Post. A public
distribution by PGP of its common stock shall not be a "change in control"
within the meaning of this Agreement.
Sincerely yours,
s/ R.D. Snell
------------------------
Roger D. Snell
President, Director and
Chief Executive Officer
Accepted and Agreed to this
22nd day of September, 1994
s/ C. M. Watson
- ----------------------
Christopher M. Watson
<PAGE>
EXHIBIT 10.8
May 9, 1997
Mr. Andrew Gorayeb
2202 Golden Gate Avenue
San Francisco, CA 94118
Dear Drew:
This letter will serve to confirm that Pacific Gateway Properties,
Inc. (PGP), as authorized by its Board of Directors, on March 19, 1997, has
agreed to pay you severance compensation under certain circumstances if a
"change of control" of PGP occurs as hereinafter provided.
If a "change of control" of PGP occurs and your employment is
terminated by PGP without good cause within one year thereafter, you will
receive as severance pay an amount equal to one-year's base salary, including
medical insurance and life insurance during such one-year severance period.
In addition, any options then held by you under PGP's Stock Option Plan (the
"Plan") which are not then currently exercisable shall be accelerated and
become immediately exercisable, and, notwithstanding any provision of such
Plan, you shall have thirty (30) days following such termination in which to
exercise such options.
It will be a condition of your right to receive the foregoing
severance and accelerated vesting that you remain employed by PGP through
consummation of any such "change of control". "Base salary" as used in the
preceding sentence shall be the highest base salary which you were earning at
any time following the "change of control". "Good cause" shall mean only (i)
self-dealing involving personal profit, (ii) the commission of a criminal act
related to the performance of duties, or (iii) habitual intoxication by
alcohol or drugs during work hours. A resignation by you in the year
following the "change of control" of PGP triggered by (i) a relocation in the
principal place for performance of your duties of more than 25 miles, (ii) a
substantial reduction in salary, or (iii) a substantial diminution of your
responsibilities shall be treated as termination without good cause for
purposes of this Agreement and you shall be entitled to the benefits
hereunder in the event you terminate your employment in such circumstances.
A "change of control" shall only be deemed to have occurred if (i) in a single
<PAGE>
Mr. Andrew Gorayeb
May 9, 1997
Page 2
transaction or series of related transactions a transfer of ownership of PGP
common stock occurs as a result of which the stockholders immediately prior
to such transaction or series of transactions no longer control, directly or
indirectly, fifty percent (50%) or more of the voting stock of PGP, or (ii)
PGP merges or consolidates with another corporation (other than a subsidiary
of PGP) or sells all or substantially all of its assets and at least fifty
percent (50%) of the voting stock of the surviving or purchasing entity is
not controlled, directly or indirectly, by stockholders who were stockholders
of PGP immediately prior to such transaction or (iii) the composition of the
Board of Directors changes such that a majority of the then Board of
Directors are no longer persons who were serving as directors of the Company
on April 1, 1997. A public distribution by PGP of its common stock shall not
be a "change of control" within the meaning of this Agreement.
Very truly yours,
s/ R. V. Marino
Raymond V. Marino
President, Director and
Chief Executive Officer
Accepted and Agreed to this
9th day of May, 1997
s/ Andrew T. Gorayeb
- ---------------------------
Andrew T. Gorayeb
<PAGE>
EXHIBIT 10.9
PACIFIC GATEWAY PROPERTIES, INC.
INCENTIVE STOCK OPTION PLAN
1. PURPOSE
The Plan is intended to enhance the profitability and value of
Pacific Gateway Properties, Inc. for the benefit of its stockholders by
permitting the Corporation to grant stock ownership to officers and other key
employees. These opportunities are intended to provide additional incentive
to such personnel by offering them a greater stake in the Corporation's
continued success. Further, the availability and offering of award
opportunities under the Plan is intended to enhance the Corporation's ability
to attract and retain individuals of exceptional managerial talent upon whom,
in large measure, the sustained progress, growth and profitability of the
Corporation will depend. Through incentive stock option grants, the
proprietary position and outlook of officers and key employees is furthered,
thus tying their personal interests more closely to those of stockholders.
2. DEFINITIONS
For Plan purposes, except where the context otherwise indicates, the
following terms shall have the meanings which follows:
(a) "Agreement" shall mean a written agreement (including any
amendment or supplement thereto) between the Corporation and a
Participant which specifies the terms and conditions of an Option
granted to such Participant.
(b) "Award" shall mean an Option granted to a Participant.
(c) "Beneficiary" shall mean the person or persons, who may be
designated by a Participant from time to time in writing to the
Committee, and who shall receive, if the Participant dies, any Option
exercise rights.
(d) "Board" shall mean the Board of Directors of the Corporation.
(e) "Code" shall mean the Internal Revenue Code of 1954, as
amended, and the rules and regulations promulgated thereunder.
(f) "Committee" shall mean the Compensation Committee, or such
other Committee of the Board, which shall be designated by
<PAGE>
the Board to administer the Plan. The Committee shall be composed of
three or more persons as from time to time are appointed to serve by the
Board. Each member of the Committee, while serving as such, shall also
be a member of the Board and shall be a disinterested person within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934.
(g) "Common Stock" shall mean the Common Stock of the Corporation
having a par value of $1.00 per share.
(h) "Corporation" shall mean Pacific Gateway Properties, Inc.
(i) "Employee" shall mean any person who is employed on full-time
or part-time bases by the Corporation or any Subsidiary Corporation of
the Corporation and who is compensated, at least in part, by the
Corporation.
(j) "Fair Market Value" shall mean, with respect to any given day,
the mean average of the highest and lowest reported sales prices on the
principal national stock exchange on which the Common Stock is traded,
or if such exchange was closed on such day or, if it was open but the
Common Stock was not traded on such day, then on the next preceding day
that the Common Stock was traded on such exchange, as reported by such
responsible reporting service as the Committee may select.
(k) "Incentive Stock Option" shall mean a stock option which is
intended to meet and comply with the terms and conditions for an
"incentive stock option" as set forth in Section 422A of the Code.
(l) "Option" shall mean a right, including an Incentive Stock
Option, to purchase a stated number of shares of Common Stock subject to
such terms and conditions as are set forth in the Agreement and the Plan.
(m) "Participant" shall mean an Employee, including an Employee who
may also be a member of the Board, who is granted an Award under the
Plan.
(n) "Plan" shall mean the Pacific Gateway Properties, Inc.
Incentive Stock Option Plan as set forth herein and as amended from time
to time.
(o) "Subsidiary Corporation" shall mean any corporation which is a
subsidiary corporation of the Corporation as defined in Section 425(f)
of the Code.
<PAGE>
3. ADMINISTRATION
(a) The Committee shall administer the Plan and, accordingly, it
shall have full power to grant Awards, construe and interpret the Plan,
establish rules and regulations and perform all other acts it believes
reasonable and proper, including the authority to delegate responsibilities
to others to assist in administering the Plan.
(b) The determination of those eligible to receive Awards, and the
amount, type and timing of each Award shall rest in the sole discretion of
the Committee, subject to the provisions of the Plan.
(c) The Committee may cancel any Awards awarded under the Plan if a
Participant conducts oneself in a manner which the Committee determines to be
inimical to the best interests of the Corporation. Any decision made, or
action taken, by the Committee, arising out of, or in connection with, the
interpretation and administration of the Plan shall be final and conclusive.
4. COMMON STOCK
(a) The total number of shares of Common Stock available for grants
of Options under the Plan shall be 200,000, subject to adjustment in
accordance with Section 7 of the Plan, which shares may be either authorized
but unissued or reacquired shares of Common Stock. If an Option or portion
thereof shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares covered by such Option shall again
be available for grants.
5. ELIGIBILITY FOR PARTICIPATION
(a) Consistent with Plan objectives, eligibility to become a
Participant in the Plan and receive Awards shall be limited to key Employees.
(b) No Incentive Stock Option shall be granted to an Employee
ineligible at the time to receive such an Option because of owning more than
10% of the Common Stock in accordance with the provisions of Section
422A(b)(6) of the Code, unless the Option meets the requirements of Section
422A(c)(8).
6. OPTIONS -- TERMS AND CONDITIONS
All Options granted under the Plan shall be evidenced by Agreements
which shall be subject to applicable provisions of the Plan, and such other
provisions not inconsistent with the qualification requirements for an
Incentive Stock Option as the Committee may adopt, including the following
provisions:
<PAGE>
(a) PRICE: The Option price per share shall not be less than 100%
of the Fair Market Value of a share of Common Stock on the date of grant.
(b) PERIOD: An Option shall not be granted for a period longer
than ten years from date of grant.
(c) TIME OF EXERCISE: The Committee may establish installment
exercise terms for an Option such that the Option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the time of exercise of any Option.
(d) EXERCISE: An Option, or portion thereof, shall be exercised by
delivery of a written notice of exercise to the Corporation and payment
of the full price of the shares being exercised. Payment may be made:
(i) in the United States dollars in cash or by check, bank draft or
money order payable to the order of the Corporation, or (ii) at the
discretion of the Committee, through the delivery of shares of Common
Stock with a value equal to the Option price, or (iii) by a combination
of both (i) and (ii) above. The Committee shall determine acceptable
methods for tendering Common Stock as payment upon exercise of an Option
and may impose such limitations and prohibitions on the use of Common
Stock to exercise an Option as it deems appropriate. A Participant
shall not have any of the rights or privileges of a holder of Common
Stock until such time as shares of Common Stock are issued or
transferred to the Participant pursuant to exercising said option.
(e) TERMINATION OF EMPLOYMENT: In the event a Participant shall
cease to be employed by the Corporation or any subsidiary corporation of
the Corporation while he is holding one or more Options, each Option
shall expire at the earlier of the expiration of the Option's term or
the following:
(i) one year after termination due to disability within the
meaning of Section 22(e)(3) of the Code as determined by the
Committee;
(ii) one year after the Participant's death; and
(iii) coincident with the date of termination if due to any
other reason, except as and to the extent that the Committee may
determine otherwise.
In the event of termination due to normal retirement, or earlier
retirement with Committee consent under a formal plan or policy of the
Corporation while any portion of an Option remains exercisable, such Option
shall expire at the earlier of the expiration of the
<PAGE>
Option's term or three years after such termination; provided, however, that
exercise of the Option after the periods set forth in the preceding sentence
may disqualify such Option from treatment as an Incentive Stock Option.
In the event of death following termination of employment while any
portion of the Option remains exercisable, the Committee in its discretion
may provide for an extension of the exercise period for up to one year after
the Participant's death but not beyond the expiration of the Options' terms.
(f) EFFECT OF LEAVES OF ABSENCE: For purposes of this
Section, it shall not be considered a termination of employment when a
Participant is placed by the Corporation or any Subsidiary Corporation
of the Corporation on military or sick leave or such other type of leave
of absence which is considered as continuing intact the employment
relationship of the Participant. In case of such leave of absence the
employment relationship shall be continued until the later of the date
when such leave equals 90 days or the date when the Optionee's right to
reemployment with the Corporation or such subsidiary shall no longer be
guaranteed either by statute or contract.
(g) LIMIT ON COMMON STOCK SUBJECT TO OPTIONS: The aggregate
Fair Market Value of the shares of stock, determined as of the time the
Option is granted, for which any Participant may be granted Incentive
Stock Options under the Plan or any other plan of the Corporation or any
subsidiary corporation of the Corporation or any corporation which is a
parent corporation (as defined in Section 425(e) of the Code) of the
Corporation, in any calendar year shall not exceed $100,000 plus any
unused limit carryover (or such larger individual employee maximum as
may be in effect from time to time under the Code at the time the
Incentive Stock Option is granted), computed in accordance with Section
422A(c)(4) of the Code.
(h) SEQUENTIAL EXERCISE: No Incentive Stock Option shall be
exercisable while there is outstanding any other Incentive Stock Option
(including any Option qualifying as an Incentive Stock Option by reason
of any election by the Corporation pursuant to Section 251(c)(1)(B) of
the Economic Recovery Tax Act of 1981) which was granted to the
Participant before the grant of such Option under the Plan or any other
plan which gives the right to the Participant to purchase stock in the
Corporation or in a corporation which is a parent corporation (as
defined in Section 425(e) of the Code) of the Corporation or a
Subsidiary Corporation of the Corporation or any predecessor corporation
of any of such corporations at the time of grant. An Incentive Stock
Option shall be treated as outstanding until it is either exercised in
<PAGE>
full or expires by reason of lapse of time.
(i) NOTICE OF CERTAIN DISPOSITIONS: Any participant who
disposes of shares of Common Stock acquired on the exercise of an
Incentive Stock Option by sale or exchange either (i) within two years
after the date of the grant of the Option under which the stock was
acquired or (ii) within one year after the acquisition of such shares
shall notify the Corporation of such disposition and of the amount
realized upon such disposition.
(j) RESTRICTIONS ON TRANSFERABILITY: Any Option shall not be
transferable by the individual to whom it is granted otherwise than by
will or the laws of descent and distribution and is exercisable during
his lifetime only by him.
7. ADJUSTMENTS
In the event of a stock dividend, stock split or other subdivision,
consolidation or change in the shares of Common Stock, the number of shares of
Common Stock available for Options and subject to outstanding Options shall be
adjusted proportionately. Likewise, the option price per share of outstanding
Options shall be appropriately adjusted.
8. MERGER, CONSOLIDATION OR TENDER OFFER
(a) If the Corporation shall be a party to a binding agreement
to any merger, consolidation or reorganization or sale of substantially
all the assets of the Corporation, each outstanding Option shall pertain
and apply to the securities and/or property which a holder of the number
of shares of Common Stock subject to the Option would have been entitled
to receive pursuant to such merger, consolidation or reorganization or
sale of assets.
(b) In the event that:
(i) any person other than the Corporation shall acquire
more than 20% of the Common Stock through a tender offer, exchange
offer or otherwise; or
(ii) a change in the "control" of the Corporation occurs,
as such term is defined in Rule 405 under the Securities Act of
1934; or
(iii) there shall be a sale of all or substantially all of
the assets of the Corporation;
Any then outstanding Option which has been held for six months or
longer by a Participant, who is deemed by the
<PAGE>
Committee to be statutory officer or insider for purposes of
Section 16 of the Securities Exchange Act of 1934 shall be entitled
to receive, subject to any action by the Committee revoking such
an entitlement as provided for below, in lieu of exercise of such
Option, a cash payment in an amount equal to the difference between
the aggregate exercise price of such Option and, (A) in the event
of an offer or similar event, the final offer price per share paid
for Common Stock, or such lower price as the Committee may
determine to conform an Option to preserve its Incentive Stock
Option status, times the number of shares of Common Stock covered
by the Option, or (B) in the case of any change of control or sale
of assets covered by (iii) above, the aggregate fair market value
of the shares covered by the Option, as determined by the Committee
at such time.
Any payment which the Corporation is required to make pursuant to
the above, shall be made within thirty business days following the event
which results in the Participant's right to such payment. In the event of an
offer in which fewer than all the shares which are validly tendered in
compliance with such offer are purchased or exchanged, then only that portion
of the shares covered by an Option as results from multiplying such shares by
a fraction, the numerator of which is the number of shares of Common Stock
acquired pursuant to the offer and the denominator of which is the number of
shares of Common Stock tendered in compliance with such offer, shall be used
to determine the payment thereupon. To the extent that all or any portion of
an Option shall be affected by this provision all or such portion of the
Option shall be terminated.
Notwithstanding the above, the Committee may, by unanimous vote, and
resolution, unilaterally revoke the benefits of the above provision;
provided, however, that such vote is taken no later than ten business days
following public announcement of the intent of an offer or the change of
control, whichever occurs earlier.
9. AMENDMENT AND TERMINATION OF PLAN
(a) The Board, without further approval of the stockholders, may at
any time, and from time to time, suspend or terminate the Plan in whole or in
part or amend it from time to time in such respects as the Board may deem
appropriate and in the best interests of the Corporation; provided, however,
that no such amendment shall be made, without approval of the stockholders,
which would:
(i) materially modify the eligibility requirements for
Participants;
(ii) increase the total number of shares of Common
<PAGE>
Stock which may be issued pursuant to Stock Options, except as is
provided for in accordance with section 7, under the Plan;
(iii) decrease the minimum Option price per share;
(iv) extend the period for granting Options;
(v) materially increase benefits accruing to Participants.
(b) No amendment, suspension or termination of this Plan shall,
without the Participant's consent, alter or impair any of the rights or
obligations under any Award theretofore granted to her or him under the Plan.
(c) The Board may amend the Plan, subject to the limitations cited
above, in such manner as it deems necessary to permit the granting of Stock
Options meeting the requirements of future amendments or issued regulations,
if any, to the Code.
10. GOVERNMENT AND OTHER REGULATIONS
The obligation of the Corporation to issue, or transfer and deliver
shares for Stock Options exercised under the Plan shall be subject to all
applicable laws, regulations, rules and orders which shall then be in effect.
11. UNFUNDED PLAN
The Plan, insofar as it provides for payments, shall be unfunded and
the Corporation shall not be required to segregate any assets which may at
any time be subject to Awards under the Plan. Any liability of the
Corporation to any person with respect to any award under this Plan shall be
based solely upon any contractual obligations which may be created by
Agreements reflecting grants under this Plan.
12. MISCELLANEOUS PROVISIONS
(a) RIGHT TO CONTINUED EMPLOYMENT: No person shall have any claim
or right to be granted an Award under the Plan, and the grant of an Award
under the Plan shall not be construed as giving any Participant the right to
be retained in the employ of the Corporation or any Subsidiary Corporation of
the Corporation and the Corporation expressly reserves the right at any time
to dismiss a Participant with or without cause, free from any liability, or
any claim under the Plan, except as provided herein or in an Agreement.
<PAGE>
(b) NON-TRANSFERABILITY: Except by will or the laws of descent and
distribution, no right or interest of any Participant in the Plan shall be
assignable or transferable and no right or interest of any Participant shall
be liable for, or subject to, any lien, obligation or liability of such
Participant.
(c) WITHHOLDING TAXES: The Corporation may require a payment to
cover applicable withholding for income and employment taxes in the event of
certain exercises of Options or dispositions of Common Stock acquired
pursuant to an Option. In the event such tax withholding shall be required,
a Participant may make a written election to have shares of Common Stock
withheld by the Corporation from the shares otherwise to be received. The
number of shares so withheld shall have an aggregate Fair Market Value on the
date of exercise sufficient to satisfy the applicable withholding taxes. The
acceptance of any such election made by a Participant shall be at the sole
discretion of the Committee.
(d) PLAN EXPENSES: Any expenses of administering this Plan shall
be borne by the Corporation.
(e) LEGAL CONSIDERATIONS: No person, including a Participant, or
his or her Beneficiary, shall have any claim or right to receipt of an award,
if, in the opinion of counsel for the Corporation, such payment does not
comply with legal requirements, or is opposed to governmental public policy.
(f) OTHER PLANS: Nothing contained herein shall prevent the
Corporation from establishing other incentive and benefit plans in which
Participant in the Plan may also participate. However, any amounts paid to a
Participant with respect to Awards under the Plan shall not affect the level
of benefits provided to or received by any Participant (or his or her estate
or Beneficiary) as part of any other employee benefit plan of the Corporation.
(g) NO WARRANTY OF TAX EFFECT: Except as may be contained in any
Agreement, no opinion shall be deemed to be expressed or warranties made as
to the effect for federal, state or local tax purposes of any Awards.
(h) CONSTRUCTION OF PLAN: The place of administration of the Plan
shall be in the Commonwealth of Massachusetts. The validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of New York.
13. STOCKHOLDER APPROVAL AND EFFECTIVE DATES
Upon approval by the stockholders of the Corporations, this Plan
shall become unconditionally effective as of September 23, 1985.
<PAGE>
No Option shall be granted after September 22, 1995; provided, however, that
the Plan and all outstanding Awards granted under the Plan prior to such date
shall remain in effect until the applicable Options have expired. If the
stockholders shall not approve the Plan, the Plan shall not be effective and
any and all actions taken prior thereto shall be null and void or shall, if
necessary, be deemed to have been fully rescinded.
