<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RAMCO-GERSHENSON PROPERTIES TRUST
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
RAMCO-GERSHENSON PROPERTIES TRUST
27600 NORTHWESTERN HIGHWAY, SUITE 200
SOUTHFIELD, MI 48034
Dear Shareholder:
You are being asked to vote on an important step that Ramco-Gershenson
Properties Trust (the "Trust") proposes to take. At a Special Meeting on
, 1997, the shareholders of the Trust will be asked to approve the
Trust's reorganization as a Maryland real estate investment trust, which will
include the adoption of a more modern form of Declaration of Trust. Immediately
thereafter, the Trust will issue preferred shares to clients advised by Morgan
Stanley Asset Management Inc. ("MSAM") and to Kimco Realty Corporation
("Kimco"). Your interests as a shareholder of the Trust will be unchanged, in
that you will receive an equivalent number of shares of the reorganized Trust in
a transaction which the Trust has been advised by legal counsel will have no tax
consequences to you.
By changing its state of organization and, in the process, adopting a more
modern Declaration of Trust, the Trust expects to position itself for continued
and improved access to the capital markets and to enhance its institutional and
investment community following. As you are aware, the operations of the Trust
have changed significantly since May, 1996, when the Trust completed the
transaction with Ramco-Gershenson, Inc. and certain of its affiliates. Since
that time, the Trust has pursued a growth strategy which has led to numerous
retail property acquisitions. The Trust believes that it will be better
positioned to continue this strategy if the Trust changes its state of
organization to Maryland, which has become the preferred organizational
jurisdiction in recent years for real estate investment trusts. In addition, by
adopting a more modern form of Declaration of Trust, the Trust will have greater
flexibility in raising equity than it has with its current Declaration of Trust.
The approval of the shareholders of the Trust is required for the change of
venue of the Trust into the Maryland Trust.
As is discussed in the accompanying Proxy Statement, the Trust has entered
into a transaction with certain clients advised by MSAM and with Kimco pursuant
to which such entities have agreed to invest up to an aggregate of $35 million
in Ramco-Gershenson Properties, L.P., the Trust's real estate partnership (the
"Operating Partnership"). Upon completion of the change of venue, an investment
in preferred shares of the Trust will be substituted for the investment in the
Operating Partnership. Under the terms of the Preferred Units and Stock Purchase
Agreement (the "Purchase Agreement") which was entered into by the Trust and the
Operating Partnership to effect the investment, the Operating Partnership has
agreed to sell and the investors have agreed to purchase up to an aggregate of
1,400,000 Preferred Units of interest in the Operating Partnership for a cash
purchase price of $25.00 per Preferred Unit (or an aggregate purchase price of
$35 million). Upon completion of the change of venue of the Trust into a
Maryland real estate investment trust (the "Maryland Trust"), the MSAM clients
and Kimco will exchange their Preferred Units for Series A Convertible Preferred
Shares of the Maryland Trust ("Series A Preferred Shares"). Thereafter,
subsequent investments by the investors under the Purchase Agreement will
consist of purchases of Series A Preferred Shares at a purchase price of $25.00
per share. Under certain circumstances, the Preferred Units and the Series A
Preferred Shares are convertible into shares of beneficial interest of the Trust
or, upon completion of the change of venue, of the Maryland Trust, at a
conversion price of $17.50 per share of beneficial interest. The Trust has
entered into this transaction because it believes that the Trust will benefit
both from the additional equity capital provided by the transaction and from the
Trust developing an affiliation with institutional investors that are highly
regarded in the real estate investment trust community. The Trust
<PAGE> 3
believes that its shareholders will benefit on a long term basis from a
heightened institutional investment community following.
Pursuant to the rules of the New York Stock Exchange, approval of the
shareholders of the Trust is required for the future issuance by the Maryland
Trust of Series A Preferred Shares and voting shares in connection with the
redemption and/or conversion of the Series A Preferred Shares.
Although approval of the shareholders of the Trust was not needed for the
Trust and the Operating Partnership to enter into the Purchase Agreement, the
approval by the shareholders of the change of venue and the future issuance by
the Maryland Trust of Series A Preferred Shares and voting shares in connection
with the redemption and/or conversion of Series A Preferred Shares will permit
the Trust to obtain the full benefit of the transactions contemplated by the
Purchase Agreement. If the shareholders of the Trust approve the change of
venue, the initial Operating Partnership investment by the clients of MSAM and
Kimco will be exchanged for Series A Preferred Shares issued by your new
Maryland real estate investment trust. If the proposed change of venue is not
approved by the shareholders of the Trust, the Preferred Units of the Operating
Partnership which constitute the initial investment will be held by the
purchasers subject to redemption (a) at a time or times of their choosing and
(b) in an amount reflective of the then-market price of the Trust's shares.
At the Special Meeting, you will be asked to approve the change of venue
merger into the new Maryland Trust and, pursuant to the rules of the New York
Stock Exchange, the future issuance by the Maryland Trust of Series A Preferred
Shares and voting shares in connection with the redemption and/or conversion of
the Series A Preferred Shares.
YOUR BOARD OF TRUSTEES SUPPORTS THE PROPOSAL AND BELIEVES THAT IT IS IN THE
BEST INTERESTS OF THE TRUST AND OF THE SHAREHOLDERS, AND YOUR BOARD OF TRUSTEES
RECOMMENDS A VOTE FOR THE PROPOSAL.
It is important that your Shares be represented and voted at the Special
Meeting, whether or not you plan to attend. Please sign, date and mail the
enclosed proxy card at your earliest convenience to ensure that your vote on
this important proposal will be recorded.
Your continued interest and participation in the affairs of the Trust are
greatly appreciated.
Sincerely,
/S/ JOEL D. GERSHENSON
Joel D. Gershenson
Chairman
Date: , 1997
<PAGE> 4
RAMCO-GERSHENSON PROPERTIES TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
, 1997
------------------------
To the Shareholders of Ramco-Gershenson Properties Trust:
Notice is hereby given that a Special Meeting of Shareholders of
Ramco-Gershenson Properties Trust (the "Trust") will be held at on
, 1997 at 10:00 a.m. (the "Special Meeting"), to consider and take
action upon the following matters:
(1) To consider and vote upon (i) the changing of the Trust's state of
organization from Massachusetts to Maryland through the termination
of the Trust's current Amended and Restated Declaration of Trust,
the merger (the "Change of Venue Merger") of the Trust into a
newly-formed Maryland real estate investment trust subsidiary (the
"Maryland Trust"), and the conversion of each outstanding share of
beneficial interest of the Trust into a common share of beneficial
interest of the surviving Maryland Trust, and (ii) the future
issuance of Series A Convertible Preferred Shares of the Maryland
Trust and common shares of beneficial interest of the Maryland Trust
to holders of Series A Convertible Preferred Shares issued by the
Maryland Trust upon the conversion or redemption of such Series A
Convertible Preferred Shares.
(2) The transaction of such other business as may properly come before
the meeting or any adjourning thereof.
The Board of Trustees has fixed the close of business on ,
1997 as the record date for the determination of Shareholders entitled to notice
of and to vote at the Special Meeting and any adjournment thereof. As of the
record date, the Trust had a total of shares of beneficial interest, $.10
par value per share (the "Shares"), outstanding. A list of Shareholders entitled
to vote at the Special Meeting will be available for examination by any
Shareholder, for any purpose germane to such meeting, during ordinary business
hours during the 10 days prior to the meeting date, at the offices of the Trust,
27600 Northwestern Highway, Suite 200, Southfield, Michigan 48034.
By Order of the Board of Trustees
/s/ Richard D. Gershenson
Richard D. Gershenson
Executive Vice President & Secretary
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING.
WHETHER OR NOT YOU INTEND TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD IN THE STAMPED AND ADDRESSED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE. SHAREHOLDERS CAN HELP THE TRUST AVOID UNNECESSARY EXPENSE AND DELAY
BY PROMPTLY RETURNING THE ENCLOSED PROXY CARD.
, 1997
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY..................................................... 1
GENERAL INFORMATION......................................... 4
Description of the Proposal............................... 4
New York Stock Exchange Matters........................... 4
Vote Required at the Special Meeting...................... 4
BACKGROUND OF THE CHANGE OF VENUE MERGER.................... 4
RECOMMENDATIONS OF THE BOARD OF TRUSTEES.................... 5
BENEFITS AND CONSEQUENCES OF THE PROPOSAL................... 5
Potential Benefits of the Proposal........................ 5
Beneficial Maryland Statute............................ 5
Increased Capital Access............................... 6
Positioning for Future Offerings....................... 6
Benefits of Equity Investment.......................... 6
Potential Consequences of the Proposal.................... 7
Ownership Concentration................................ 7
Limitations on Transactions and Corporate Actions...... 7
Rights of Series A Preferred Shares.................... 7
Registration Rights.................................... 8
POTENTIAL EFFECTS OF SHAREHOLDER APPROVAL OR
FAILURE TO APPROVE THE PROPOSAL........................... 8
Effects of Shareholder Approval........................... 8
Effects of Failure to Approve the Proposal................ 8
THE CHANGE OF VENUE MERGER.................................. 9
General................................................... 9
Effective Time and Effect of the Change of Venue Merger... 9
Trust Dividends........................................... 10
Anticipated Accounting Treatment.......................... 10
New York Stock Exchange Listing........................... 10
Continuation of Stock Option and Dividend Reinvestment
Plans.................................................. 11
Declaration of Trust and Bylaws........................... 11
DESCRIPTION OF THE SHARES OF BENEFICIAL INTEREST OF
THE MARYLAND TRUST........................................ 11
General................................................... 11
Common Shares............................................. 11
Preferred Shares.......................................... 12
Series A Preferred Shares................................. 13
Power to Issue Additional Common Shares and Preferred
Shares................................................. 13
Restrictions On Ownership and Transfer of Shares.......... 13
Staggered Board of Directors.............................. 16
Transfer Agent............................................ 16
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPARISON OF SIGNIFICANT PROVISIONS OF THE TRUST'S AMENDED
AND RESTATED DECLARATION OF TRUST AND BY-LAWS AND THE
DECLARATION OF TRUST AND BYLAWS OF THE MARYLAND TRUST..... 16
General................................................... 16
Capitalization............................................ 17
Voting Rights............................................. 17
Number, Election, Vacancy and Removal of Directors........ 17
Powers of Trustees........................................ 18
Committees of the Board................................... 18
Amendments to Declaration of Trust........................ 18
Shareholder Meetings and Actions by Shareholders Without a
Meeting................................................ 18
Shareholder and Trustee Liability for Obligations of the
Trust.................................................. 19
Duties and Liability of Trustees and Officers............. 19
Indemnification of Trustees and Officers.................. 20
Restrictions on Investment................................ 20
Dividends................................................. 20
Certain Provisions of Maryland Law........................ 21
Business Combinations.................................. 21
Control Share Acquisitions............................. 21
Advance Notice of Trustee Nominations and New
Business.............................................. 22
Anti-Takeover Effect of Certain Provisions of Maryland
Law and of the Declaration of Trust and the Bylaws of
the Maryland Trust.................................... 22
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 23
THE EQUITY INVESTMENT....................................... 23
Background................................................ 23
General................................................... 24
Qualified Underwritten Offering and Preemptive Rights..... 25
Conditions to Closings of Subsequent Purchases............ 25
Use of Proceeds........................................... 26
Representations and Warranties............................ 26
Indemnification........................................... 26
Restriction on Competing Transaction...................... 26
Terms of Series A Preferred Shares........................ 26
Dividend Rights........................................ 26
Rank................................................... 27
Maturity Date.......................................... 27
Mandatory Conversion................................... 27
Optional Conversion.................................... 28
Redemption on Acceleration of the Maturity Date........ 28
Voting Rights.......................................... 28
Anti-Dilution Rights................................... 30
Terms of Preferred Units.................................. 30
Registration Rights....................................... 31
Shelf Registration Rights.............................. 31
</TABLE>
ii
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Demand Registration Rights............................. 31
Black-Out Rights....................................... 31
Piggy-Back Registration Rights......................... 31
Tag-Along Rights of Investor and the Advancing Party... 32
Indemnification Rights................................. 32
OTHER MATTERS............................................... 32
Solicitation of Proxies................................... 32
Accountant's Representatives.............................. 34
INCORPORATION BY REFERENCE.................................. 34
ANNEXES..................................................... 35
</TABLE>
iii
<PAGE> 8
SUMMARY
The following is a summary of certain information contained in this Proxy
Statement. This Summary is not intended to be complete and is subject to and
qualified in its entirety by reference to the more detailed information set
forth elsewhere in this Proxy Statement and the Annexes attached hereto.
Shareholders are urged to read this Proxy Statement in its entirety. As used
herein, the term the "Trust" means Ramco-Gershenson Properties Trust, a
Massachusetts business trust. Certain terms used in this Summary may be defined
elsewhere in this Proxy Statement.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of the Trust (the "Board of Trustees" or the
"Board"). The proxies will be exercised at the Special Meeting of the
Shareholders of the Trust (as the same may be postponed or adjourned, the
"Special Meeting") to be held on , , 1997, at
10:00 a.m. local time, at .
At the Special Meeting, holders of shares of beneficial interest of the
Trust, par value $0.10 per share ("Shares"), will be asked to consider and
approve (i) the changing of the Trust's state of organization from Massachusetts
to Maryland through the termination of the Trust's current Amended and Restated
Declaration of Trust, the merger (the "Change of Venue Merger") of the Trust
into a newly-formed Maryland real estate investment trust subsidiary (the
"Maryland Trust"), and the conversion of each outstanding share of beneficial
interest of the Trust into a common share of beneficial interest of the
surviving Maryland Trust, and (ii) the future issuance of Series A Convertible
Preferred Shares of the Maryland Trust ("Series A Preferred Shares") and common
shares of beneficial interest of the Maryland Trust ("Common Shares") to holders
of Series A Preferred Shares upon the conversion or redemption of the Series A
Preferred Shares. The matters referred to above are collectively referred to as
the "Proposal."
The Trust was organized under the laws of the Commonwealth of Massachusetts
in keeping with Massachusetts' historic role in the organization of business
trusts. More recently, most newly created real estate investment trusts
("REITs") have chosen Maryland as their jurisdiction of organization and have
been formed as either corporations under the Maryland General Corporation Law
("MGCL") or statutory real estate investment trusts under Title 8 of the
Corporations and Associations Article of the Annotated Code of Maryland ("Title
8"). For REITs which choose to be organized as trusts rather than corporations,
Title 8 provides statutory organization and governance provisions specifically
for such REITs. In addition, in recent years a number of existing REITs have
chosen to relocate to Maryland from other states. See "Material Benefits of the
Change of Venue Merger," "The Change of Venue Merger -- General" and "Comparison
of Significant Provisions of the Trust's Amended and Restated Declaration of
Trust and By-laws and the Declaration of Trust and Bylaws of the Maryland Trust"
for a more detailed description of the benefits of organization under Title 8.
Because of the benefits associated with being organized in Maryland and the
large number of publicly traded REITs which are Maryland entities, management
believes that this form of organization will be in the best interests of the
Trust and its shareholders and will provide the Trust with enhanced
opportunities to access the capital markets to fund future growth.
The Trust believes that the approval of the Proposal will have a number of
material beneficial effects on the Trust and its Shareholders, including the
following: (i) the Change of Venue Merger will permit the Trust to enjoy the
benefits afforded to REITs organized under the laws of the State of Maryland;
(ii) the Change of Venue Merger (including the adoption of a more modern
Declaration of Trust) will permit the Trust better access to the capital
markets, a better following in the marketplace, increased interest from the
institutional investment community and generally a broader base from which the
Trust may seek investment; and (iii) the
<PAGE> 9
Trust will be better positioned to raise equity capital through the issuance of
registered securities of the Trust in the public marketplace.
The Trust has entered into a transaction with certain clients advised by
Morgan Stanley Asset Management Inc. ("MSAM") and with Kimco Realty Corporation
("Kimco") pursuant to which such entities have agreed to invest up to an
aggregate of $35 million in Ramco-Gershenson Properties, L.P., the Trust's real
estate partnership (the "Operating Partnership"). Under the terms of a Preferred
Units and Stock Purchase Agreement (the "Purchase Agreement") which was entered
into by the Trust and the Operating Partnership to effect the investment, the
Operating Partnership has agreed to sell and the clients advised by MSAM (such
clients are referred to in this Proxy Statement as the "Advancing Party") and
Kimco have agreed to purchase up to an aggregate of 1,400,000 Preferred Units of
interest in the Operating Partnership for a cash purchase price of $25.00 per
Preferred Unit (or an aggregate purchase price of $35 million). The majority of
the investment by the Advancing Party and Kimco will be made through Special
Situations RG REIT, Inc. ("Investor"), an entity created by such investors to
effect the contemplated investment.
Upon completion of the Change of Venue Merger, the Advancing Party and
Kimco will exchange their Preferred Units for Series A Preferred Shares of the
Maryland Trust. Thereafter, subsequent investments by the investors under the
Purchase Agreement will consist of purchases of Series A Preferred Shares at a
purchase price of $25.00 per share. Under certain circumstances, the Preferred
Units and the Series A Preferred Shares are convertible into Shares of the Trust
or, upon completion of the Change of Venue Merger, of Common Shares of the
Maryland Trust at a conversion price of $17.50 per share of beneficial interest.
The Trust has entered into this transaction because it believes that the Trust
will benefit both from the additional equity capital provided by the transaction
and from the Trust developing an affiliation with institutional investors that
are highly regarded in the real estate investment trust community. The Trust
believes that its Shareholders will benefit on a long term basis from a
heightened institutional investment community following.
A more detailed description of the transactions contemplated by the
Purchase Agreement, including the terms and conditions of the Series A Preferred
Shares and the Preferred Units, is set forth in this Proxy Statement under the
heading "The Equity Investment."
As described above, the Trust is seeking the consent and approval of the
Shareholders to the Proposal. The approval of the Shareholders is necessary in
order to permit the Trust to effect the Change of Venue Merger and, pursuant to
the rules of the New York Stock Exchange, to permit the listing of the Common
Shares of the Maryland Trust that may be issued in the future in connection with
the redemption and/or conversion of the Series A Preferred Shares. The approval
of the Shareholders was not necessary for the Trust and the Operating
Partnership to enter into the Purchase Agreement.
In the event that the Shareholders fail to approval the Proposal (at either
this Special Meeting or the Trust's next annual meeting of Shareholders), the
Trust may, under certain circumstances, be required to repurchase all of the
outstanding Preferred Units for cash, in an amount equal to (i) the original
purchase price for such Preferred Units plus any accrued and unpaid preferred
distributions with respect to such Preferred Units, divided by $17.50, (ii)
multiplied by the then current market price of the Trust's Shares. If the
Proposal is not approved, the holders of Preferred Units may require the Trust
to repurchase Preferred Units for Shares and/or for cash. Such repurchase would
need to be made in cash if the Trust was not then legally able to issue to the
holders of Preferred Units a number of Shares reflective of the number of
Preferred Units noticed for repurchase. In the event that the Trust is required
to redeem the Preferred Units, no assurance can be given that the Trust will be
able to raise additional equity capital on terms which are as
2
<PAGE> 10
favorable or more favorable than the terms of the Purchase Agreement either to
fund such redemption or to fund the Trust's future equity capital needs.
The affirmative vote of a majority of the issued and outstanding Shares is
required to approve the Proposal. YOUR BOARD OF TRUSTEES SUPPORTS THE PROPOSAL
AND BELIEVES THAT IT IS IN THE BEST INTERESTS OF THE TRUST AND OF THE
SHAREHOLDERS, AND YOUR BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSAL.
Shareholders of record at the close of business on , 1997
are entitled to notice of and to vote at the Special Meeting. On such date,
there were Shares issued and outstanding. A majority of the Shares
entitled to vote represented in person or by proxy constitute a quorum for the
meeting. If a quorum is not present, the Special Meeting may be adjourned to a
later date at which a quorum is present, and Shares represented by proxies may
be voted for such adjournment. The vote of a majority of the Shares present or
represented by proxies and entitled to vote at the Special Meeting is required
to approve the Proposal. Abstentions and broker non-votes will have the same
effect as a vote against the Proposal.
Proxies in the accompanying form which are properly executed and duly
returned to the Trust and not revoked will be voted as specified and, if no
direction is made, will be voted in favor of the change of venue proposal. Each
proxy granted is revocable and may be revoked at any time prior to its exercise
by giving notice to the Trust of its revocation. A Shareholder who attends the
Special Meeting in person may, if such Shareholder wishes, vote by ballot at the
Special Meeting, thereby cancelling any proxy previously given.
Shares held of record by Shareholders or brokers who do not return a signed
and dated proxy or attend the Special Meeting and vote in person will not be
considered present or represented at the Special Meeting, will not be counted in
determining the presence of a quorum, and will not be voted. The presence, in
person or by proxy, of Shareholders holding a majority of the Shares entitled to
vote shall constitute a quorum for the Special Meeting. Abstentions and broker
non-votes will neither be counted in establishing a quorum nor be voted for or
against matters presented for Shareholder consideration. Because the Proposal
set forth in this Proxy Statement requires the affirmative vote of holders of a
majority in interest of the outstanding Shares of the Trust, and because
abstentions and broker non-votes with respect to the Proposal are not counted as
affirmative votes, they have the same effect as a vote against the Proposal.
3
<PAGE> 11
GENERAL INFORMATION
DESCRIPTION OF THE PROPOSAL
As more fully described in this Proxy Statement, the Shareholders will be
asked to consider and approve (i) the changing of the Trust's state of
organization from Massachusetts to Maryland through the termination of the
Trust's current Amended and Restated Declaration of Trust, the merger of the
Trust into a newly-formed Maryland real estate investment trust subsidiary, and
the conversion of each outstanding share of beneficial interest of the Trust
into a common share of beneficial interest of the surviving Maryland Trust, and
(ii) the future issuance of Series A Preferred Shares and common shares of
beneficial interest of the Maryland Trust to holders of Series A Preferred
Shares of the Maryland Trust upon the conversion or redemption of the Series A
Preferred Shares. The matters referred to above are collectively referred to as
the "Proposal."
NEW YORK STOCK EXCHANGE MATTERS
The Trust's Shares are currently traded on, and upon completion of the
Change of Venue Merger, the Common Shares of the Maryland Trust will be traded
on, the New York Stock Exchange. The Trust intends to file an additional listing
application with the New York Stock Exchange with respect to the Shares which
may be issued in connection with the conversion or redemption of the Preferred
Units. In addition, the Maryland Trust intends to file an additional listing
application with the New York Stock Exchange with respect to the Common Shares
which will be issued in connection with the conversion or redemption of the
Series A Preferred Shares. Before Common Shares may be eligible for listing on
the New York Stock Exchange, New York Stock Exchange rules require the Trust to
obtain Shareholder approval for (i) the sale or issuance of Common Shares, and
Series A Preferred Shares convertible into Common Shares, equal to 20% or more
of the outstanding Common Shares and (ii) the sale or issuance of Common Shares
representing in excess of 1% of the voting power of the Trust to a person or
entity that holds securities representing in excess of 5% of the outstanding
voting power of the Trust. The approval of the Proposal will constitute the
approval necessary to satisfy the above described New York Stock Exchange
requirements.
VOTE REQUIRED AT THE SPECIAL MEETING
As described above, the Trust is seeking the consent and approval of the
Shareholders to the Proposal. The approval of the Shareholders is necessary in
order to permit the Trust to effect the Change of Venue Merger and, pursuant to
the rules of the New York Stock Exchange, to permit the listing of the Common
Shares of the Maryland Trust that may be issued in the future in connection with
the redemption and/or conversion of the Series A Preferred Shares.
The affirmative vote of a majority of the issued and outstanding Shares is
required to approve the Proposal. THE BOARD OF TRUSTEES SUPPORTS THE PROPOSAL
AND BELIEVES THAT IT IS IN THE BEST INTEREST OF THE TRUST AND OF THE
SHAREHOLDERS, AND THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE PROPOSAL.
BACKGROUND OF THE CHANGE OF VENUE MERGER
The Trust is a Massachusetts business trust organized pursuant to a
Declaration of Trust declared and accepted in Boston, Massachusetts on June 21,
1988, as amended and restated by an Amended and Restated Declaration of Trust
dated June 21, 1988, as amended and restated by an Amended and Restated
Declaration
4
<PAGE> 12
of Trust dated October 14, 1988 and by a First Amendment to the Amended and
Restated Declaration of Trust dated May 10, 1996 (as amended, the "Amended and
Restated Declaration of Trust").
The Trust was organized under the laws of the Commonwealth of Massachusetts
in keeping with Massachusetts' historic role in the organization of business
trusts. More recently, most newly created REITs have chosen Maryland as their
jurisdiction of organization and have been formed as either corporations under
the MGCL or statutory real estate investment trusts under Title 8. For REITs
which choose to be organized as trusts rather than corporations, Title 8
provides statutory organization and governance provisions specifically for such
REITs. In addition, in recent years a number of existing REITs have chosen to
relocate to Maryland from other states. See "Material Benefits of the Change of
Venue Merger", "The Change of Venue Merger -- General" and "Comparison of
Significant Provisions of the Trust's Amended and Restated Declaration of Trust
and By-laws and the Declaration of Trust and Bylaws of the Maryland Trust" for a
more detailed description of the benefits of organization under Title 8. Because
of the benefits associated with being organized in Maryland and the large number
of publicly traded REITs which are Maryland entities, management believes that
this form of organization will be in the best interests of the Trust and its
shareholders and will provide the Trust with enhanced opportunities to access
the capital markets to fund future growth.
RECOMMENDATIONS OF THE BOARD OF TRUSTEES
The Board of Trustees has unanimously approved the Proposal and has
determined that the matters covered by the Proposal are in the best interests of
the Trust and its Shareholders. THE BOARD OF TRUSTEES RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE PROPOSAL.
The Board of Trustees believes that the Proposal is in the best interests
of the Trust and its Shareholders because it believes that the Change of Venue
Merger will position the Trust for continued and improved access to the capital
markets, and will enhance the institutional and investment community following
for the Trust. In addition, the Board of Trustees considered the factors listed
below under "Benefits and Consequences of the Proposal -- Potential Benefits of
the Proposal" in reaching its determination that the Proposal is in the best
interests of the Trust and its Shareholders.
BENEFITS AND CONSEQUENCES OF THE PROPOSAL
POTENTIAL BENEFITS OF THE PROPOSAL
The Trust believes that the approval of the Proposal will have a number of
material beneficial effects on the Trust and its Shareholders, including the
following:
Beneficial Maryland Statute. The Change of Venue Merger will permit the
Trust to enjoy the benefits afforded to REITs organized under the laws of the
State of Maryland. In particular, the Maryland Trust will provide greater
certainty with respect to the applicability of laws relating to the Trust by
virtue of the fact that the Maryland Trust will be governed by a statute (by way
of contrast, the Trust was created under the common law of the Commonwealth of
Massachusetts, for which there are no specific statutory governance provisions).
In addition, Maryland law provides certain protections to trustees which the
Trust believes will be beneficial to the Trust's ability to attract and retain
experienced individuals to manage the Trust, and which may not be available
under the laws of the Commonwealth of Massachusetts. Also, the Maryland statute
provides that shareholders in a Maryland real estate investment trust have no
liability for obligations of the
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Maryland real estate investment trusts; Massachusetts law relating to business
trusts does not provide similar statutory protection.
Increased Capital Access. The Trust believes that utilizing a Maryland real
estate investment trust (including the adoption of a more modern Declaration of
Trust) will permit the Trust better access to the capital markets, a better
following in the marketplace, increased interest from the institutional
investment community and generally a broader base from which the Trust may seek
investment. Management believes that a stronger following of the Trust's
securities will strengthen market pricing, enabling the Trust to obtain
financing on more favorable terms, which should contribute materially to the
advancement of the Trust's business goals. Moreover, the more modern Declaration
of Trust used by the Maryland Trust will permit the rapid creation of innovative
securities and to take advantage of opportune pricing, both of which will
translate into savings in financing costs for the benefit of all shareholders.
Positioning for Future Offerings. Management believes that, upon completion
of the Change of Venue Merger and the subsequent issuance of Series A Preferred
Shares, the Trust will be better positioned to raise capital through the
issuance of registered securities of the Trust in the public marketplace.
Widespread investor acceptance of the Trust's securities is, in the eyes of
management, an important feature in enhancing the perception of the Trust in the
marketplace and gaining capital access which is important to the Trust in
achieving its goals and implementing its growth strategy.
Benefits of Equity Investment. As described in this Proxy Statement, the
approval of the Proposal will allow the Trust to fully implement the terms of
the Purchase Agreement and the transactions contemplated thereby. In so doing,
the Trust believes that it will realize a number of benefits from the equity
investment by the MSAM clients and Kimco, including the following:
Institutional Alliances. By entering into the Purchase Agreement with
MSAM and Kimco, the Trust has forged new and powerful alliances with
knowledgeable and well-respected investors. MSAM has a history of investing
in companies that offer attractive revenue growth and capital appreciation
opportunities. Kimco is considered one of the premier real estate
investment trusts focussing on retail shopping center properties. The Trust
believes that it will benefit significantly from its association with MSAM
and Kimco, and from the increased access to market knowledge and operating
experience that such alliances may bring. In addition, management believes
that it is implicit in such investment by MSAM and Kimco that there will be
heightened interest in the investment community in the Trust's securities
and in its operations.
Acquisition and Development of Properties; Reduction of Trust
Debt. The Trust may apply a portion of the net proceeds of the sale of the
Preferred Units and the Series A Preferred Shares to (i) acquire, develop
or redevelop retail properties or (ii) reduce outstanding debt of the Trust
and/or the Operating Partnership. If the Trust elects to use a portion of
the net proceeds for the acquisition, development or redevelopment of
retail properties, the Trust will be better able to implement its growth
strategy and will have increased opportunities to generate additional
returns for the Trust's Shareholders. See "--Potential Return to
Shareholders" below. The Trust also believes that, among other things, a
reduction of debt (if undertaken) will increase the attractiveness of the
Trust to the capital markets, resulting in the Trust's greater access to
future financing, which will, in turn, permit greater future growth.
Potential Return to Shareholders. The transactions contemplated by the
Purchase Agreement will not result in any direct return to Shareholders of
cash or other consideration. The Trust, however, believes that such
transactions offer Shareholders an opportunity to realize long-term value
through the potential appreciation of the Trust's Shares primarily as a
result of (i) the potential yields to Shareholders from the
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properties that the Operating Partnership will be in a position to acquire,
develop or redevelop with portions of the net proceeds from the sale of the
Preferred Units and Series A Preferred Shares (provided that, there is no
assurance as to the existence or extent of such yields), all of which may
enable Shareholders to sell their Shares in the future at a price that is
higher than the Share price at the time that the MSAM transaction was
publicly announced, and (ii) debt reduction (if the Trust elects to apply
proceeds of the sale of the Preferred Units and Series A Preferred Shares
to reduce debt), which among other things, should increase the Trust's
access to capital, permitting increased growth. However, there can be no
assurance that the price of the Trust's Shares will rise in the future.
POTENTIAL CONSEQUENCES OF THE PROPOSAL
The Proposal may raise considerations for the Trust and its Shareholders
which should be considered in connection with the approval of the Proposal,
including the following:
Ownership Concentration. In seeking institutional alliances, and seeking to
obtain institutional capital, it is necessary for the Trust to allow those
institutions with which it wishes to ally, including MSAM and Kimco, to purchase
securities of the Trust. Investments of the magnitude likely to benefit the
Trust in achieving its goals may require issuance of a substantial amount of
securities with the result that the institutions with which the Trust allies,
including MSAM and Kimco, will become substantial shareholders. Assuming the
approval of the Proposal and completion of the investment contemplated by
Purchase Agreement, the Series A Preferred Shares purchased by the MSAM clients
and Kimco will be convertible into Common Shares representing an approximate
% ownership of the Maryland Trust's Common Shares on a fully-diluted basis as
of the date of this Proxy Statement (assuming (i) the conversion of outstanding
units of beneficial interest of the Operating Partnership ("OP Units") into
Common Shares and (ii) the exercise of outstanding options to purchase Shares
issued under the Trust's existing share option plans).
Substantial shareholders, by virtue of their investment in any company,
including the Trust, generally seek to have an active voice in the affairs of
the company in which they invest, and managements are often attentive to the
suggestions of such shareholders. It is possible that the MSAM investors and
Kimco would have, and might seek to exercise, substantial influence over the
affairs of the Trust as the result of their ownership of Series A Preferred
Shares or, following conversion, Common Shares. See "The Equity Investment --
Terms of Series A Preferred Shares -- Voting Rights."
Limitations on Transactions and Corporate Actions. Pursuant to the various
limitations on the Trust's actions described in this Proxy Statement which will
remain in effect until the Preferred Units and the Series A Preferred Shares are
converted into Shares (in the case of Preferred Units) or into Common Shares (in
the case of Series A Preferred Shares), the Trust will be proscribed from or
limited with respect to certain transactions and corporate actions which the
Trust may have otherwise taken. Although the Trust does not believe that these
limitations on the Trust's activities will materially impair the Trust's ability
to conduct its business, there can be no assurance that these limitations will
not adversely affect the Trust's operations in the future. See "The Equity
Investment -- Terms of Series A Preferred Shares -- Voting Rights."
Rights of Series A Preferred Shares. Pursuant to the Articles Supplementary
which form a part of the Maryland Trust's Amended and Restated Declaration of
Trust (as supplemented by the Articles Supplementary, the "Declaration of
Trust") and set forth the terms and conditions of the Series A Preferred Shares,
the holders of the Series A Preferred Shares are afforded several rights and
preferences which may be disadvantageous to the holders of Common Shares,
including (i) cumulative preferential dividends such that no dividends are
payable with respect to the Common Shares until all accrued and unpaid dividends
on the
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Series A Preferred Shares are paid in full, (ii) the right to approve certain
transactions and actions of the Maryland Trust voting as a separate class, (iii)
a liquidation preference senior to that of the Common Shares, and (iv) the right
to convert to Common Shares under certain circumstances which could result in a
substantial percentage of Common Shares being held by the former holders of
Series A Preferred Shares. See "The Equity Investment -- Terms of Series A
Preferred Shares" below.
Registration Rights. The Trust has entered into a Registration Rights
Agreement with the holders of Preferred Units which will also apply to the
holders of Series A Preferred Shares upon completion of the Change of Venue
Merger. Under the Registration Rights Agreement, those holders may, under
certain circumstances, require the Trust to cause registration statements to be
filed so as to permit the sale of Series A Preferred Shares, Common Shares or
Shares by such holders in registered form. Although the Registration Rights
Agreement contains "blackout" provisions permitting the Trust to gain access to
the capital markets without the interruption of the exercise of such
registration rights, there is no assurance that such registration rights might
not interfere at some time in the future with the Trust's planned offerings. See
"The Equity Investment -- Registration Rights" below.
POTENTIAL EFFECTS OF SHAREHOLDER APPROVAL OR
FAILURE TO APPROVE THE PROPOSAL
Effects of Shareholder Approval. Approval of the Proposal by the
Shareholders of the Trust will constitute approval of the Change of Venue
Merger, the issuance of Series A Preferred Shares and the future issuance of
Common Shares upon the conversion or redemption of Series A Preferred Shares.
Additionally, Shareholder approval will mean that all Preferred Units will be
retired for Series A Preferred Shares, with the result that the Trust will not
need to consider the liquidity questions that might arise where the holders of
Preferred Units seek redemption for Shares and/or cash.
Effects of Failure to Approve the Proposal. As described elsewhere in this
Proxy Statement, under the terms of the Purchase Agreement, the Trust agreed to
call this Special Meeting for the purpose of obtaining the approval of the
Trust's Shareholders to the Proposal. In the event that the Shareholders fail to
approve the Proposal (at either this Special Meeting or the Trust's next annual
meeting of Shareholders), the Trust may, under certain circumstances, be
required to repurchase all of the outstanding Preferred Units for cash, in an
amount equal to (i) the original purchase price for such Preferred Units plus
any accrued and unpaid preferred distributions with respect to such Preferred
Units, divided by $17.50, (ii) multiplied by the then current market price of
the Trust's Shares. If the Proposal is not approved, the holders of Preferred
Units may require the Trust to repurchase Preferred Units for Shares and/or for
cash. Such repurchase would need to be made in cash if the Trust was not then
legally able to issue to the holders of Preferred Units a number of Shares
reflective of the number of Preferred Units noticed for repurchase.
In the event that the Trust is required to redeem the Preferred Units, no
assurance can be given that the Trust will be able to raise additional equity
capital on terms which are as favorable or more favorable than the terms of the
Purchase Agreement either to fund such redemption or to fund the Trust's future
equity capital needs. If the Trust is unable to raise additional equity capital,
management of the Trust believes that the Trust's ability to continue its growth
strategy will be adversely affected. In addition, any such required redemption
could occur at a time when the Trust does not have the financial resources to
redeem the Preferred Units, or could result in a default under borrowing
agreements then in effect, either of which could have a material adverse effect
on the Trust.
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THE CHANGE OF VENUE MERGER
GENERAL
The Change of Venue Merger will be effected through the termination of the
Trust's Amended and Restated Declaration of Trust and the merger of the Trust
into a newly-formed Maryland real estate investment trust subsidiary, and the
conversion of each Share into a Common Share of the Maryland Trust pursuant to a
Certificate of Termination of Trust and a Change of Venue Merger Agreement (the
"Change of Venue Merger Agreement"), the form of which agreement is attached as
Annex A to this Proxy Statement. As a result of the Change of Venue Merger, the
Trust will be operated as a Maryland REIT pursuant to the provisions of Title 8
and the Declaration of Trust and Bylaws of the Maryland Trust. Immediately upon
completion of the Change of Venue Merger, Investor will be reorganized (the
"Investor Reorganization") with and into the Maryland Trust pursuant to which
the Maryland Trust will acquire all Preferred Units owned by Investor and issue
to the Advancing Party and Kimco, in exchange for their interests in Investor,
Series A Preferred Shares in accordance with an Agreement of Merger of the
Maryland Trust and Investor substantially in the form attached as Annex B to
this Proxy Statement. The Investor Reorganization does not require approval by
the Shareholders of the Trust under Title 8 or the Declaration of Trust or
Bylaws of the Maryland Trust (since it has already been approved by action of
the Board of Trustees of the Trust, as the sole shareholder of the Maryland
Trust).
The Trust's Board of Trustees and its management believes that the Change
of Venue Merger will be beneficial to the Trust's Shareholders for the following
reasons:
- The Maryland Trust will provide greater certainty with respect to
the applicability of laws relating to the Trust by virtue of the fact that
the Maryland Trust will be governed by a statute created specifically to
govern REITs (by way of contrast, the Trust was created under the common
law of the Commonwealth of Massachusetts, for which there are no specific
statutory governance provisions).
- Maryland law provides certain protections to trustees which the
Trust believes will be beneficial to the Trust's ability to attract and
retain experienced individuals to manage the Trust, and which may not be
available under the laws of the Commonwealth of Massachusetts.
- The Declaration of Trust of the Maryland Trust will permit the Trust
to issue preferred securities, including the Series A Preferred Shares, to
investors who wish to invest in the Trust on a preferred share basis, which
will afford the Trust greater flexibility in conducting its financing
activities.
- The Maryland statute provides that shareholders in a Maryland REIT
have no liability for obligations of the Maryland REIT; Massachusetts law
relating to business trusts does not provide similar statutory protection
to shareholders.
Certain differences exist between (a) Massachusetts law and Title 8 and (b)
the Trust's existing Amended and Restated Declaration of Trust and By-Laws and
the Declaration of Trust and Bylaws that will govern the Maryland Trust. See
"Comparison of Significant Provisions of the Trust's Amended and Restated
Declaration of Trust and By-Laws and the Maryland Trust's Declaration of Trust
and Bylaws" below for a more complete discussion of such differences and their
effects.
EFFECTIVE TIME AND EFFECT OF THE CHANGE OF VENUE MERGER
The Change of Venue Merger will become effective upon the filing of
Articles of Merger with the State Department of Assessments and Taxation of
Maryland and the filing of a copy of such Articles of Merger
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attached to a Certificate of Termination of Trust with the Secretary of State of
the Commonwealth of Massachusetts, which filings are anticipated to be made as
soon as practicable after the Proposal is approved by the Shareholders of the
Trust (such time will be referred to herein as the "Effective Time").
At the Effective Time, the separate existence of the Trust will terminate
and Shareholders of the Trust will become shareholders of the Maryland Trust.
Promptly after the closing of the Change of Venue Merger, a letter of
transmittal will be mailed to Shareholders containing instructions relating to
the surrender of outstanding certificates representing Shares in exchange for
certificates representing Common Shares of the Maryland Trust. SHARE
CERTIFICATES SHOULD NOT BE SURRENDERED UNTIL THE LETTER OF TRANSMITTAL IS
RECEIVED.
TRUST DIVIDENDS
Upon completion of the Change of Venue Merger, holders of Shares of the
Trust will receive Common Shares of the Maryland Trust in exchange for such
Shares. Both the existing Amended and Restated Declaration of Trust and the
Declaration of Trust of the Maryland Trust permit the Board of Trustees to
authorize and declare from time to time such dividends or distributions to
shareholders as the Board of Trustees in its discretion shall determine. As
described elsewhere in this Proxy Statement, the holders of Series A Preferred
Shares issued by the Maryland Trust will have a preference over Common Shares
with respect to dividends of the Maryland Trust to the extent that there exists
any unpaid accrued dividends on the Series A Preferred Shares. See "The Equity
Investment -- Terms of Series A Preferred Shares -- Rank" below. The Trust
believes that, upon completion of the Change of Venue Merger, it will generate
sufficient funds from its operations to pay accrued dividends on the Series A
Preferred Shares and to continue to pay dividends on Common Shares which are
consistent with levels historically paid by the Trust on its Shares, although no
assurance can be given that the Maryland Trust will generate such funds.
Accordingly, the Trust does not believe that the Change of Venue Merger will
have a material adverse effect on the Trust's ability to pay dividends to
shareholders in respect of Common Shares.
ANTICIPATED ACCOUNTING TREATMENT
The Change of Venue Merger and the Investor Reorganization are each
expected to be accounted for on an "as if" pooling of interests basis for
accounting and financial purposes. Accordingly, the Trust does not expect that
there will be a material impact on the financial position or results of
operations of the Trust solely as a result of the Change of Venue Merger or the
Investor Reorganization.
NEW YORK STOCK EXCHANGE LISTING
The Trust's Shares are currently traded on, and upon completion of the
Change of Venue Merger, the Common Shares of the Maryland Trust will be traded
on, the New York Stock Exchange. The Trust intends to file an additional listing
application with the New York Stock Exchange with respect to the Shares which
may be issued in connection with the conversion or redemption of the Preferred
Units. In addition, the Maryland Trust intends to file an additional listing
application with the New York Stock Exchange with respect to the Common Shares
which will be issued in connection with the conversion or redemption of the
Series A Preferred Shares. Before Common Shares may be eligible for listing on
the New York Stock Exchange, New York Stock Exchange rules require the Trust to
obtain Shareholder approval for (i) the sale or issuance of Common Shares, and
Series A Preferred Shares convertible into Common Shares, equal to 20% or more
of the outstanding Common Shares and (ii) the sale or issuance of Common Shares
representing in excess of 1% of the voting power of the Trust to a person or
entity that holds securities representing in excess
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of 5% of the outstanding voting power of the Trust. The approval of the Proposal
will constitute the approval necessary to satisfy the above described New York
Stock Exchange requirements.
CONTINUATION OF STOCK OPTION AND DIVIDEND REINVESTMENT PLANS
The Change of Venue Merger Agreement provides that the Maryland Trust will
continue the Trust's existing stock option plans and dividend reinvestment plan.
Such plans shall be deemed to provide for the purchase of Common Shares of the
Maryland Trust rather than Shares of the Trust following the Effective Time of
the Change of Venue Merger. Outstanding options to purchase Shares under the
Trust's 1996 Stock Option Plan (the "Employee Plan") and 1997 Non-Employee
Trustee Stock Option Plan (the "Non-Employee Trustee Plan") will represent
options to purchase the same number of Common Shares of the Maryland Trust
following the Effective Time. No action will be necessary on the part of a
participant in any of such plans to reflect the substitution of Common Shares in
the Maryland Trust for Shares of the Trust as a result of the Change of Venue
Merger.
DECLARATION OF TRUST AND BYLAWS
The Declaration of Trust and Bylaws of the Maryland Trust in effect at the
Effective Time of the Change of Venue Merger will survive and continue as the
Declaration of Trust and Bylaws of the Trust after the Effective Time. A copy of
the Declaration of Trust of the Maryland Trust (including the Articles
Supplementary which form a part thereof) is attached as Annex C to this Proxy
Statement.
DESCRIPTION OF THE SHARES OF BENEFICIAL INTEREST
OF THE MARYLAND TRUST
GENERAL
After the Change of Venue Merger, the authorized capitalization of the
Maryland Trust will consist of 30,000,000 common shares of beneficial interest,
$.01 par value per share, and 10,000,000 preferred shares of beneficial
interest, par value $.01 per share. At the Effective Time, the Maryland Trust
will have Common Shares outstanding and 1,400,000 Series A Preferred
Shares outstanding (upon conversion of the Preferred Units into Series A
Preferred Shares and assuming the full investment of $35 million by Investor and
Kimco as contemplated under the Purchase Agreement and the Kimco Purchase
Agreement). The authorized but unissued Common Shares and Preferred Shares of
the Maryland Trust will be available to issue from time to time without further
action or authorization by the shareholders (except as required by law or by the
rules of any stock exchange on which the Maryland Trust's securities may be
issued).
COMMON SHARES
All issued Common Shares, issuable in connection with the Change of Venue
Merger, will upon consummation of the Change of Venue Merger at the Effective
Time be duly authorized, fully paid and nonassessable. Subject to the
preferential rights of any other shares of beneficial interest and to the
provisions of the Maryland Trust's Declaration of Trust regarding restrictions
on transfers of shares of beneficial interest, holders of Common Shares are
entitled to receive distributions if, as and when authorized and declared by the
Board of Trustees out of assets legally available therefor and to share ratably
in the assets of the Maryland Trust legally available for distribution to its
shareholders in the event of its liquidation, dissolution or winding-up after
payment of, or adequate provision for, all known debts and liabilities of the
Maryland Trust.
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Subject to the provisions of the Maryland Trust's Declaration of Trust
regarding restrictions on transfer of shares of beneficial interest, each
outstanding Common Share entitles the holder to one vote on all matters
submitted to a vote of shareholders, including the election of trustees, and,
except as provided with respect to any other class or series of shares of
beneficial interest (including the Series A Preferred Shares), the holders of
Common Shares will possess the exclusive voting power. There is no cumulative
voting in the election of trustees, which means that the holders of a majority
of the outstanding Common Shares can elect all of the trustees then standing for
election and the holders of the remaining shares of beneficial interest, if any,
will not be able to elect any trustees.
Holders of Common Shares have no preferences, conversion, sinking fund,
redemption rights or preemptive rights to subscribe for any securities of the
Company. Subject to the provisions of the Maryland Trust's Declaration of Trust
regarding restrictions on ownership and transfer, Common Shares have equal
distribution, liquidation and other rights.
Pursuant to Title 8, a Maryland REIT generally cannot amend its declaration
of trust or merge, unless approved by the shareholders of the trust by the
affirmative vote of at least two-thirds of all votes entitled to be cast by
shareholders on the matter unless a lesser percentage (but not less than a
majority of all of the votes entitled to be cast on the matter) is set forth in
the trust's declaration of trust. The Maryland Trust's Declaration of Trust
contains provisions which (i) require any merger, consolidation or sale of
substantially all of the assets of the trust, the dissolution of the trust, and
any amendments to the Declaration of Trust to change such provisions, to be
approved by the shareholders of the Maryland Trust by the affirmative vote of at
least two-thirds of all votes entitled to be case by shareholders on the matter;
and (ii) permit any other amendments to the Declaration of Trust and any other
extraordinary actions (other than removal of trustees) requiring shareholder
approval to be approved by the shareholders by the affirmative vote of at least
a majority of all votes entitled to be cast by shareholders on the matter. The
Maryland Trust's Declaration of Trust also contains a provision which requires
the affirmative vote of the holders of not less than two-thirds of the shares
outstanding and entitled to vote generally in the election of trustees in order
to remove a trustee.
Under Title 8, a declaration of trust may permit the trustees by a
two-thirds vote to amend the declaration of trust from time to time to qualify
as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), or
Title 8 without the affirmative vote or written consent of the shareholders. The
Maryland Trust's Declaration of Trust permits such action by the Board of
Trustees. Also under Title 8, a declaration of trust may permit the board of
trustees to amend the declaration of trust to increase the aggregate number of
shares of beneficial interest or the number of shares of any class without
shareholder approval. Pursuant to this statute, the Declaration of Trust of the
Maryland Trust authorizes the Board of Trustees to increase or decrease the
aggregate number of shares of beneficial interest of the Maryland Trust or the
number of shares of beneficial interest of any class of beneficial trust of the
Maryland Trust.
The Declaration of Trust of the Maryland Trust authorizes the Board of
Trustees to reclassify any unissued Common Shares or Preferred Shares into other
classes or series of beneficial interest and to establish the number of shares
in each class or series and to set the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption for each such class or
series.
PREFERRED SHARES
The Declaration of Trust of the Maryland Trust authorizes the Board of
Trustees to issue 10,000,000 Preferred Shares, to classify any unissued
Preferred Shares and to reclassify any previously classified but
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unissued Preferred Shares of any series from time to time in one or more series,
as authorized by the Board of Trustees. Prior to issuance of shares of each
series, the Board of Trustees is required by Title 8 and the Declaration of
Trust of the Maryland Trust to set, subject to the provisions of the Declaration
of Trust regarding the restrictions on transfer of shares of beneficial
interest, the terms, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
and terms or conditions of redemption for each such series. Thus, the Board
could authorize the issuance of a class or series of Preferred Shares with terms
and conditions which could have the effect of delaying, deferring or preventing
a transaction or a change in control of the Maryland Trust that might involve a
premium price for holders of Common Shares or otherwise be in their best
interest.
SERIES A PREFERRED SHARES
The Board of Trustees of the Maryland Trust has classified 1,400,000 shares
of Preferred Shares as Series A Preferred Shares. The Maryland Trust has filed
Articles Supplementary with the State Department of Assessments and Taxation of
Maryland (the "Department") which form a part of the Maryland Trust's
Declaration of Trust and set forth the terms and conditions of the Series A
Preferred Shares. The purchase price for the Series A Preferred Shares will be
$25.00 per share (the "Stated Value"). The terms of the Series A Preferred
Shares are set forth below under "The Equity Investment -- Terms of Series A
Preferred Shares" below.
POWER TO ISSUE ADDITIONAL COMMON SHARES AND PREFERRED SHARES
The Trust believes that the power of the Board of Trustees to issue
additional authorized but unissued Common Shares or Preferred Shares and to
classify or reclassify unissued Common Shares or Preferred Shares and thereafter
to cause the Maryland Trust to issue such classified or reclassified shares of
beneficial interest will provide the Maryland Trust with increased flexibility
in structuring possible future financings and acquisitions and in meeting other
needs which might arise. The additional authorized but unissued Common Shares
and Preferred Shares, which may be classified into different classes or series,
will be available for issuance without further action by the shareholders of the
Maryland Trust, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which the Maryland Trust's
securities may be listed or traded. Although the Board of Trustees has no
intention at the present time of doing so, it could authorize the Maryland Trust
to issue a class or series of shares that could, depending upon the terms of
such class or series, delay, defer or prevent a transaction or a change in
control of the Maryland Trust that might involve a premium price for holders of
Common Shares or otherwise be in their best interest.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES
For the Maryland Trust to qualify as a REIT under the Code, no more than
50% in value of its outstanding shares of beneficial interest may be owned,
actually or constructively, by five or fewer individuals (as defined in the
Code), during the last half of a taxable year (other than the first year for
which an election to be treated as a REIT has been made) or during a
proportionate part of a shorter taxable year. In addition, if the Maryland
Trust, or an owner of 10% or more of the Maryland Trust, actually or
constructively owns 10% or more of a tenant of the Maryland Trust (or a tenant
of any partnership in which the Maryland Trust is a partner), the rent received
by the Maryland Trust (either directly or through any such partnership) from
such tenant will not be qualifying income for purposes of the REIT gross income
tests of the Code. A REIT's shares also must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of
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twelve months or during a proportionate part of a shorter taxable year (other
than the first year for which an election to be treated as a REIT has been
made).
Because the Board of Trustees believes it is desirable for the Maryland
Trust to qualify as a REIT, the Maryland Trust's Declaration of Trust, subject
to certain exceptions, provides that no holder may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than the Ownership Limit
(as defined below). The ownership attribution rules under the Code are complex
and may cause Common Shares owned actually or constructively by a group of
related individuals and/or entities to be owned constructively by one individual
or entity. As a result, the acquisition of less than 9.8% of the Common Shares
(or the acquisition of an interest in an entity that owns, actually or
constructively, Common Shares) by an individual or entity, could, nevertheless
cause that individual or entity, or another individual or entity, to own
constructively in excess of 9.8% of the outstanding Common Shares and thus
subject such Common Shares to the Ownership Limit. The Board of Trustees may in
its sole discretion and upon the vote of 75% of the members of the Board of
Trustees entitled to vote thereon, grant an exemption from the Ownership Limit
with respect to one or more persons who would not be treated as "individuals"
for purposes of the Code if such person submits to the Board information
satisfactory to the Board, in its reasonable discretion, demonstrating that (i)
such person is not an individual for purposes of the Code, (ii) such ownership
will not cause a person who is an individual to be treated as owning Common
Shares in excess of the Ownership Limit, applying the applicable constructive
ownership rules, and (iii) such ownership will not otherwise jeopardize the
Company's status as a REIT. As a condition of such waiver, the Board of Trustees
may, in its reasonable discretion, require undertakings or representations from
the applicant to ensure that the conditions in clauses (i), (ii) and (iii) of
the preceding sentence are satisfied and will continue to be satisfied as long
as such person owns shares in excess of the Ownership Limit. Under certain
circumstances, the Board of Trustees may, in its sole discretion and upon the
vote of 75% of the members of the Board of Trustees entitled to vote thereon,
grant an exemption for individuals to acquire Preferred Shares in excess of the
Ownership Limit, provided that certain conditions are met and any
representations and undertakings that may be required by the Board of Trustees
are made. The Board of Trustees intends to grant such an exemption for Investor,
Kimco and the Advancing Party, as such entities could own more than 9.8% of the
Series A Preferred Shares following completion of the transactions contemplated
by the Purchase Agreement as a result of receiving Series A Preferred Shares
upon conversion of the Preferred Units. The term "Ownership Limit" means (i)
with respect to the Common Shares, 9.8% (in value or number of shares, whichever
is more restrictive) of the outstanding Common Shares of the Maryland Trust, and
(ii) with respect to any class or series of Preferred Shares, 9.8% (in value or
number of shares, whichever is more restrictive) of the outstanding shares of
such class or series of Preferred Shares of the Maryland Trust.
The Board of Trustees of the Maryland Trust will have the authority to
increase the Ownership Limit from time to time, but will not have the authority
to do so to the extent that after giving effect to such increase, five
beneficial owners of Common Shares could beneficially own in the aggregate more
than 49.5% of the outstanding Common Shares.
The Declaration of Trust further prohibits (a) any person from actually or
constructively owning shares of beneficial interest of the Maryland Trust that
would result in the Maryland Trust being "closely held" under Section 856(h) of
the Code or otherwise cause the Maryland Trust to fail to qualify as a REIT and
(b) any person from transferring shares of beneficial interest of the Maryland
Trust if such transfer would result in shares of beneficial interest of the
Maryland Trust being owned by fewer than 100 persons.
Any person who acquires or attempts or intends to acquire actual or
constructive ownership of shares of beneficial interest of the Maryland Trust
that will or may violate any of the foregoing restrictions on
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transferability and ownership will be required to give notice immediately to the
Maryland Trust and provide the Maryland Trust with such other information as the
Maryland Trust may request in order to determine the effect of such transfer on
the Maryland Trust's status as a REIT.
If any purported transfer of shares of beneficial interest of the Maryland
Trust or any other event would otherwise result in any person violating the
Ownership Limit or the other restrictions in the Declaration of the Trust of the
Maryland Trust, then any such purported transfer will be void and of no force or
effect with respect to the purported transferee (the "Prohibited Transferee") as
to that number of shares that exceeds the Ownership Limit (referred to as
"excess shares") and the Prohibited Transferee shall acquire no right or
interest (or, in the case of any event other than a purported transfer, the
person or entity holding record title to any such shares in excess of the
Ownership Limit (the "Prohibited Owner") shall cease to own any right or
interest) in such excess shares. Any such excess shares described above will be
transferred automatically, by operation of law, to a trust, the beneficiary of
which will be a qualified charitable organization selected by the Maryland Trust
(the "Beneficiary"). Such automatic transfer shall be deemed to be effective as
of the close of business on the Business Day (as defined in the Declaration of
Trust) prior to the date of such violating transfer. Within 20 days of receiving
notice from the Maryland Trust of the transfer of shares to the trust, the
trustee of the trust (who shall be designated by the Maryland Trust and be
unaffiliated with the Maryland Trust and any Prohibited Transferee or Prohibited
Owner) will be required to sell such excess shares to a person or entity who
could own such shares without violating the Ownership Limit, and distribute to
the Prohibited Transferee an amount equal to the lesser of the price paid by the
Prohibited Transferee for such excess shares or the sales proceeds received by
the trust for such excess shares. In the case of any excess shares resulting
from any event other than a transfer, or from a transfer for no consideration
(such as a gift), the trustee will be required to sell such excess shares to a
qualified person or entity and distribute to the Prohibited Owner an amount
equal to the lesser of the fair market value of such excess shares as of the
date of such event or the sales proceeds received by the trust for such excess
shares. In either case, any proceeds in excess of the amount distributable to
the Prohibited Transferee or Prohibited Owner, as applicable, will be
distributed to the Beneficiary. Prior to a sale of any such excess shares by the
trust, the trustee will be entitled to receive, in trust for the Beneficiary,
all dividends and other distributions paid by the Maryland Trust with respect to
such excess shares, and also will be entitled to exercise all voting rights with
respect to such excess shares. Subject to Maryland law, effective as of the date
that such shares have been transferred to the trust, the trustee shall have the
authority (at the trustee's sole discretion and subject to applicable law) (i)
to rescind as void any vote cast by a Prohibited Transferee prior to the
discovery by the Maryland Trust that such shares have been transferred to the
trust and (ii) to recast such vote in accordance with the desires of the trustee
acting for the benefit of the Beneficiary. However, if the Maryland Trust has
already taken irreversible corporate action, then the trustee shall not have the
authority to rescind and recast such vote. Any dividend or other distribution
paid to the Prohibited Transferee or Prohibited Owner (prior to the discovery by
the Maryland Trust that such shares had been automatically transferred to a
trust as described above) will be required to be repaid to the trustee upon
demand for distribution to the Beneficiary. If the transfer to the trust as
described above is not automatically effective (for any reason) to prevent
violation of the Ownership Limit, then the Declaration of Trust provides that
the transfer of the excess shares will be void.
In addition, shares of beneficial interest of the Maryland Trust held in
the trust shall be deemed to have been offered for sale to the Maryland Trust,
or its designee, at a price per share equal to the lesser of (i) the price per
share in the transaction that resulted in such transfer to the trust (or, in the
case of a devise or gift, the market value at the time of such devise or gift)
and (ii) the market value of such shares on the date of the Maryland Trust, or
its designee, accepts such offer. The Maryland Trust shall have the right to
accept such offer until the trustee has sold the shares of beneficial interest
held in the Trust. Upon such a sale to the
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Maryland Trust, the interest of the Beneficiary in the shares sold shall
terminate and the trustee shall distribute the net proceeds of the sale to the
Prohibited Owner.
All certificates evidencing shares of beneficial interest shall bear a
legend referring to the restrictions described above or a statement that the
Maryland Trust will furnish a full statement about restrictions on
transferability to a shareholder on request and without charge.
All persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% (or such other percentage between 1/2 of 1% and 5% as
provided in the rules and regulations promulgated under the Code) of the lesser
of the number or value of the outstanding shares of beneficial interest of the
Maryland Trust must give a written notice to the Maryland Trust by January 30 of
each year. In addition, each shareholder will, upon demand, be required to
disclose to the Maryland Trust in writing such information with respect to the
direct, indirect and constructive ownership of shares of beneficial interest as
the Board of Trustees deems reasonably necessary to comply with the provisions
of the Code applicable to a REIT, to comply with the requirements of any taxing
authority or governmental agency or to determine any such compliance.
STAGGERED BOARD OF DIRECTORS
The current members of the Board of Trustees of the Maryland Trust are the
current members of the Board of Trustees of the Trust. Upon completion of the
Change of Venue Merger, the current members of the Board of Trustees of the
Trust will continue to hold office as trustees of the Maryland Trust for the
same terms for which they would otherwise have served as Trustees of the Trust.
As is the case with the Trust, the Trustees of the Maryland Trust will be
divided into three classes as nearly equal in number as possible, with each
class serving a term of three years and the term of one class expiring each
year.
TRANSFER AGENT
As is the case with the Trust, the Maryland Trust will use American Stock
Transfer & Trust Company as the transfer agent for the Common Shares.
COMPARISON OF SIGNIFICANT PROVISIONS OF THE TRUST'S
AMENDED AND RESTATED DECLARATION OF TRUST AND BY-LAWS AND
THE DECLARATION OF TRUST AND BYLAWS OF THE MARYLAND TRUST
GENERAL
The Maryland Trust is organized as a real estate investment trust under
Title 8. The Trust is a common law business trust organized under the laws of
the Commonwealth of Massachusetts. As a Maryland real estate investment trust,
the Maryland Trust will be governed by Title 8 and certain other provisions of
the Annotated Code of Maryland. Title 8 addresses by statute several of the
matters covered by the Trust's existing Amended and Restated Declaration of
Trust, such as liabilities of the trust, shareholders, trustees and officers and
amendment of the Declaration of Trust. It is, moreover, a general practice for
both Massachusetts business trusts and Maryland REITs to address a wide range of
governance matters through provisions contained in their declarations of trust.
The discussion set forth below does not purport to be complete and is subject to
and qualified in its entirety by reference to Massachusetts law and Title 8 and
also to the Trust's existing Amended and Restated Declaration of Trust and
By-laws and the Declaration of Trust and Bylaws of
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the Maryland Trust. The Declaration of Trust of the Maryland Trust is attached
as Annex C to this Proxy Statement.
CAPITALIZATION
Under the Trust's existing Amended and Restated Declaration of Trust, the
number of shares of beneficial interest issuable by the Trust is unlimited.
Under the Declaration of Trust of the Maryland Trust, up to 30,000,000 Common
Shares of beneficial interest are authorized to be issued and up to 10,000,000
Preferred Shares of beneficial interest, which numbers of shares may be
increased or decreased by an amendment to the Declaration of Trust adopted by
the Board of Trustees of the Maryland Trust, without shareholder approval.
VOTING RIGHTS
Shareholders of the Trust are entitled to one vote for each Share of the
Trust held by such Shareholder. Under the Maryland Trust's Declaration of Trust,
holders of Common Shares are entitled to cast one vote on each matter upon which
the holders of the Common Shares are entitled to vote. The Maryland Trust's
Declaration of Trust also provides that holders of Series A Preferred Shares are
entitled to vote on all matters on which the holders of Common Shares are
entitled to vote on an "as converted" basis with the holders of Common Shares.
In addition, as described under "The Equity Investment -- Terms of Series A
Preferred Shares," holders of Series A Preferred Shares have the right to vote
as a separate class with respect to certain transactions and matters.
Upon completion of the Change of Venue Merger, holders of Common Shares
will have their voting power diluted to the extent of the voting rights of the
Series A Preferred Shares. In addition, until the Series A Preferred Shares are
redeemed or converted into Common Shares, the holders of Series A Preferred
Shares have the right to approve certain transactions and corporate actions
which the Trust may desire to take, but which the Trust would be proscribed from
taking if the holders of the requisite amount of Series A Preferred Shares do
not approve such transaction or action.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
The current members of the Board of Trustees of the Maryland Trust are the
current members of the Board of Trustees of the Trust. Upon completion of the
Change of Venue Merger, the Board of Trustees of the Maryland Trust will
continue to be composed of the then current members of the Board of Trustees of
the Trust. The current members of the Board of Trustees of the Trust will
continue to hold office as trustees of the Maryland Trust for the same terms for
which they would otherwise have served as Trustees of the Trust. As is the case
with the Trust, the Trustees of the Maryland Trust will be divided into three
classes as nearly equal in number as possible, with each class serving a term of
three years and the term of one class expiring each year.
Under both the existing Amended and Restated Declaration of Trust and the
Declaration of Trust of the Maryland Trust, the shareholders have the right to
remove a Trustee by the affirmative vote of the holders of two-thirds of the
shares of beneficial interest then outstanding and entitled to vote generally in
the election of the trustees. Under the existing Amended and Restated
Declaration of Trust, a majority of the Trustees of the Trust may remove a
Trustee; however, the Maryland Trust does not permit such action by the
Trustees. Under the existing Amended and Restated Declaration of Trust, any
vacancy on the Board of Trustees generally may be filled by a vote of a majority
of the trustees then in office or by a plurality vote of the Shareholders. Under
the Maryland Trust's Bylaws, vacancies on the Board of Trustees, other than a
vacancy created as a result of
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the removal of any Trustee by action of the shareholders, must be filled by a
majority of the Trustees at any regular meeting or at any special meeting called
for that purpose.
POWERS OF TRUSTEES
The Trust's existing Amended and Restated Declaration of Trust grants to
the Trustees general authority over the Trust's business and assets, as well as
certain enumerated rights and powers, subject to certain specified restrictions
on investments. The Declaration of Trust of the Maryland Trust retains the
general grant of authority, but eliminates the enumerated list of rights and
powers. The existing Amended and Restated Declaration of Trust also specifically
provides that the Trustees may take any and all actions that, in their sole
judgment and discretion, are necessary or desirable to conduct the business of
the Trust.
COMMITTEES OF THE BOARD
The Bylaws of the Maryland Trust permit the establishment of an Executive
Committee, an Audit Committee, a Compensation Committee and other committees,
each comprised of two or more Trustees. The existing Amended and Restated
Declaration of Trust requires an Audit Committee consisting of one or more
independent Trustees, a Nominating Committee consisting of three or more
independent Trustees, an Advisory Committee consisting of three members who are
not Trustees, and permits (but does require) the establishment of a Compensation
Committee comprised of one or more Trustees and an Executive Committee comprised
of two Trustees, none of whom are required to be independent Trustees.
AMENDMENTS TO DECLARATION OF TRUST
Under Title 8 and the Declaration of Trust of the Maryland Trust, the
trustees, by a two-thirds vote, may at any time amend the Declaration of Trust
to enable the Maryland Trust to qualify as a REIT under the Code or Title 8,
without the approval of the shareholders. The Trust's existing Amended and
Restated Declaration of Trust permits a majority of the Board of Trustees to
amend or repeal any provision of the Amended and Restated Declaration of Trust
without Shareholder consent to the extent such provision conflicts with the
requirements of the Code relating to REITs.
SHAREHOLDER MEETINGS AND ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
Under the Trust's existing Amended and Restated Declaration of Trust,
annual meetings of the Shareholders of the Trust are to be held at such place
and at such time and date as the Board of Trustees determines or, in the event
that the Board of Trustees fails to determine the time, date and place of the
meeting, then at the registered office of the Trust in Massachusetts on the
first Monday in June. Special meetings of the Shareholders of the Trust may be
called by the Chairman of the Board of the Trust and shall be called by the
Chairman of the Board or the Secretary of the Trust at the request of any two
Trustees or at the written request of the holders of 10% or more of the Shares
outstanding.
The Bylaws of the Maryland Trust have similar provisions with respect to
the holding of annual meetings of the shareholders of the Maryland Trust,
however, special meetings of the shareholders may be called by the Chairman of
the Board or President of the Maryland Trust or by one-third of the Trustees of
the Maryland Trust. In addition, subject to certain advance notice provisions
set forth in the Bylaws, special meetings of the shareholders shall also be
called by the Secretary of the Maryland Trust upon the written request of the
holders of shares entitled to cast not less than 25% of all of the votes
entitled to be cast at such meeting.
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Therefore, it may be more difficult for the shareholders of the Maryland Trust
to require the Secretary of the Maryland Trust to call a special meeting than
under the existing Amended and Restated Declaration of Trust.
SHAREHOLDER AND TRUSTEE LIABILITY FOR OBLIGATIONS OF THE TRUST
Title 8 provides that shareholders and trustees of a Maryland REIT are not
personally liable for the obligations of the REIT, except that trustees will be
personally liable for any act constituting bad faith, willful malfeasance, gross
negligence or reckless disregard of the trustee's duties, subject to the
liability-limitation provision in the Declaration of Trust described below.
Massachusetts law does not provide a similar statutory provision limiting the
liability of shareholders or trustees of a Massachusetts business trust. In
addition, under the common law of Massachusetts, which does not treat a trust as
a separate business entity, liabilities of a business trust are technically the
liabilities of the trustees individually, to the extent not negated by contract;
however, such common law and the Trust's existing Amended and Restated
Declaration of Trust provide that the Trustees of the Trust are entitled to
indemnification from the Trust for such liabilities. The potential effect of
such distinction is that under Title 8, trustees of the Maryland Trust would
(except as noted in the first sentence of this paragraph) have no personal
liability for obligations of the Maryland Trust, but Trustees of the Trust would
be personally liable for Trust liabilities to the extent such liabilities exceed
the Trust's ability to indemnify such Trustees.
DUTIES AND LIABILITY OF TRUSTEES AND OFFICERS
Title 8 does not specifically set forth the duties of the trustees of a
Maryland real estate investment trust. The Declaration of Trust of the Maryland
Trust permits reference to the statutory standard of conduct for directors of a
Maryland corporation, which would require the trustees to act in good faith,
with a reasonable belief that their actions are in the best interests of the
Maryland Trust and with the care of an ordinarily prudent person in a like
position under similar circumstances. Nevertheless, pursuant to Title 8 and the
Declaration of Trust, the liability of trustees and officers of the Maryland
Trust to the Maryland Trust or to any shareholder of the Maryland Trust for
money damages has been eliminated except (a) for actual receipt of an improper
personal benefit or profit in money, property or services and (b) for active and
deliberate dishonesty established by a final judgment as being material to the
cause of action adjudicated in the proceeding.
No Massachusetts statute specifically sets forth the duties of trustees of
a Massachusetts business trust. However, judicial decisions in Massachusetts
have equated the duties of trustees of a common law business trust with those of
corporate directors. To the extent that a court in Massachusetts might determine
that the current provisions of the Massachusetts Business Corporation Law with
respect to directors of a Massachusetts business corporation are applicable to
trustees of a common law business trust such as the Trust, such trustees would
have the obligation to perform their duties as trustees in good faith, and in a
manner they reasonably believe to be in the best interests of the trust, and
with such care as an ordinarily prudent person in a like position would use
under similar circumstances. The Trust's existing Amended and Restated
Declaration of Trust provides that a Trustee, officer, employee or agent of the
Trust will be liable only for liabilities arising from such individual's breach
of his duty of loyalty to the Trust, his intentional acts or omissions not in
good faith or which involve knowing misconduct or knowing violations of law, or
for any transaction from which he has derived a personal benefit.
Based on the advice of Maryland and Massachusetts counsel, the Trust
believes that, as a practical matter, the duties of and the standards for
imposing liability on trustees and officers of REITs under Title 8 and on
trustees and officers of Massachusetts business trusts are similar, but that
there may be circumstances
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in which the conduct of a Trustee or officer of the Trust may fall within one of
the exceptions to the elimination of liability under the Trust's Amended and
Restated Declaration of Trust but which would not fall within either of the
exceptions to the elimination of liability under the Declaration of Trust of the
Maryland Trust, as described in the preceding two paragraphs.
INDEMNIFICATION OF TRUSTEES AND OFFICERS
Under the Bylaws of the Maryland Trust, the Maryland Trust will be required
to indemnify any trustee or officer (a) against reasonable expenses incurred by
him in the successful defense (on the merits or otherwise) of any proceeding to
which he is made a party by reason of such status or (b) against any claim or
liability to which he may become subject by reason of such status unless it is
established that (i) the act or omission giving rise to the claim was committed
in bad faith or was the result of the active and deliberate dishonesty, (ii) he
actually received an improper personal benefit in money, property or services,
or (iii) in the case of a criminal proceeding, he had reasonable cause to
believe that his act or omission was unlawful. The Maryland Trust will also be
required by its Bylaws to pay or reimburse, in advance of a final disposition,
reasonable expenses of a trustee or officer made a party to a proceeding by
reason of his status as such upon receipt of a written affirmation by the
trustee or officer of his good faith belief that he has met the applicable
standard for indemnification under such Bylaws and a written undertaking to
repay such expenses if it shall ultimately be determined that the applicable
standard was not met.
The Trust's existing Amended and Restated Declaration of Trust contains
similar indemnification requirements (including with respect to advancing
defense expenses) such that, based on the advice of Maryland and Massachusetts
counsel, the Trust believes that, as a practical matter, the rights of the
Trustees and officers of the Maryland Trust and of the Trust to indemnification
and advancement of defense expenses are similar.
RESTRICTIONS ON INVESTMENT
To maintain its qualification as a Maryland REIT, Title 8 requires that the
Maryland Trust hold, either directly or indirectly, at least 75% of the value of
its assets in real estate assets, mortgages or mortgage-related securities,
government securities, cash and cash equivalent items, including high-grade
short-term securities and receivables. Title 8 also prohibits using or applying
land for farming, agricultural, horticultural or similar purposes. The
Declaration of Trust of the Maryland Trust contains an investment policy to
comply with such requirements. Massachusetts law contains no similar
restrictions on investments and use of assets in order for the Trust to maintain
its qualification as a Massachusetts common law business trust.
DIVIDENDS
Both the Trust's existing Amended and Restated Declaration of Trust and the
Declaration of Trust of the Maryland Trust permit the Board of Trustees to
authorize and declare to shareholders from time to time such dividends or
distributions as the Board of Trustees in its discretion shall determine. As
described elsewhere in this Proxy Statement, the holders of Series A Preferred
Shares issued by the Maryland Trust will have a preference over Common Shares
with respect to dividends of the Maryland Trust to the extent that there exists
any unpaid accrued dividends on the Series A Preferred Shares. See "The Equity
Investment -- Terms of Series A Preferred Shares -- Rank" below. The Trust
believes that, upon completion of the Change of Venue Merger, it will generate
sufficient funds from its operations to pay accrued dividends on the Series A
Preferred Shares and to continue to pay dividends on Common Shares which are
consistent with levels historically paid by the Trust on its Shares, although no
assurance can be given that the Maryland Trust will
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generate such funds. Accordingly, the Trust does not believe that the Change of
Venue Merger will have a material adverse effect on the Trust's ability to pay
dividends to shareholders in respect of Common Shares.
CERTAIN PROVISIONS OF MARYLAND LAW
The following summary of certain provisions of Maryland law does not
purport to be complete and is qualified in its entirety by reference to Maryland
law.
Business Combinations. In addition to the business combination provisions
of the existing Amended and Restated Declaration of Trust and the Declaration of
Trust of the Maryland Trust, under Title 8 and certain provisions of the MGCL,
certain "business combinations" (including a merger, consolidation, share
exchange, or, in certain circumstances, an asset transfer or issuance or
reclassification of equity securities) between a Maryland REIT and any person
who beneficially owns directly or indirectly 10% or more of the voting power of
the trust's shares or an affiliate or associate (both as defined in the MGCL) of
the trust who, at any time within the two-year period prior to the date in
question, was the beneficial owner of 10% or more of the voting power of the
then outstanding voting shares of the trust (an "Interested Shareholder") or an
affiliate of such Interested Shareholder are prohibited for five years after the
most recent date on which the Interested Shareholder becomes an Interested
Shareholder. Thereafter, any such business combination must be recommended by
the board of trustees of the trust and approved by the affirmative vote of at
least (a) 80% of the votes entitled to be cast by holders of outstanding voting
shares of beneficial interest of the trust and (b) two-thirds of the votes
entitled to be cast by holders of outstanding voting shares of the trust, other
than shares held by the Interested Shareholder with whom (or with whose
affiliate) the business combination is to be effected, unless, among other
conditions, the trust's shareholders receive a minimum price (as defined in the
statute) for their shares and the consideration is received in cash or in the
same form as previously paid by the Interested Shareholder for its shares. These
provisions of Maryland law do not apply, however, to business combinations that
are approved or exempted by the board of trustees of a trust prior to the time
that the Interested Shareholder becomes an Interested Shareholder. In accordance
with the MGCL, the Board of Trustees of the Maryland Trust has exempted the
Maryland Trust from the business combination provisions described above;
however, the Trustees of the Maryland Trust may alter or repeal such exemption,
in whole or in part, at any time.
Control Share Acquisitions. Subtitle 7 of Title 3 of the MGCL (the
"Maryland Control Share Acquisition Statute"), as applicable to Maryland REITs,
provides that "control shares" of a Maryland REIT acquired in a "control share
acquisition" have no voting rights except to the extent approved by a vote of
two-thirds of the votes entitled to be cast on the matter, excluding shares of
beneficial interest owned by the acquiror, by officers or by trustees who are
employees of the trust. "Control shares" are voting shares of beneficial
interest which, if aggregated with all other such shares of beneficial interest
previously acquired by the acquiror, or in respect of which the acquiror is able
to exercise or direct the exercise of voting power (except solely by virtue of a
revocable proxy), would entitle the acquiror to exercise voting power in
electing trustees within one of the following ranges of voting power (i)
one-fifth or more but less than one-third, (ii) one-third or more but less than
a majority, or (iii) a majority or more of all voting power. Control shares do
not include shares the acquiring person is then entitled to vote as a result of
having previously obtained shareholder approval. A "control share acquisition"
means the acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of trustees of the trust to call a
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special meeting of shareholders to be held within 50 days of demand to consider
the voting rights of the shares. If no request for a meeting is made, the trust
may itself present the question at any shareholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the trust may redeem any or all
of the control shares (except those for which voting rights have previously been
approved) for fair value determined, without regard to the absence of voting
rights for the control shares, as of the date of the last control share
acquisition by the acquiror or any meeting of shareholders at which the voting
rights of such shares are considered and not approved. If voting rights for
control shares are approved at a shareholder's meeting and the acquiror becomes
entitled to vote a majority of the shares entitled to vote, all other
shareholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.
The Maryland Control Share Acquisition Statute does not apply (a) to shares
acquired in a merger, consolidation or share exchange if the trust is a party to
the transaction or (b) to acquisitions approved or exempted by the declaration
of trust or bylaws of the trust.
The Maryland Control Share Acquisition Statute also provides that it will
not apply to the voting rights of shares if the acquisition of such shares is
approved or exempted from the Maryland Control Share Acquisition Statute in the
charter (or Declaration of Trust) or bylaws of the issuer of the shares, prior
to the time of acquisition of the shares. The Bylaws of the Maryland Trust
provide that the Maryland Control Share Acquisition Statute will not apply to
any acquisition by any person of shares of beneficial interest of the Maryland
Trust, and that such Bylaw provision may be repealed or amended only by a vote
of holders of a majority of the voting shares entitled to vote at a meeting duly
called and at which a quorum is present.
Advance Notice of Trustee Nominations and New Business. The Bylaws of the
Maryland Trust provide that (a) with respect to an annual meeting of
shareholders, nominations of persons for election to the Maryland Trust's board
of trustees and the proposal of business to be considered by shareholders may be
made only (i) pursuant to the Maryland Trust's notice of the meeting, (ii) by
the Maryland Trust's board of trustees or (iii) by a shareholder who was a
shareholder of record both at the time of giving of notice and at the time of
the annual meeting, who is entitled to vote at the meeting and has complied with
the advance notice procedures set forth in the Maryland Trust's Bylaws, and (b)
with respect to special meetings of shareholders, only the business specified in
the Maryland Trust's notice of meeting may be brought before the meeting of
shareholders and nominations of persons for election to the Maryland Trust's
board of trustees may be made only (i) pursuant to the Maryland Trust's notice
of the meeting, (ii) by the Maryland Trust's board of trustees or (iii) provided
that the Maryland Trust's board of trustees has determined that trustees shall
be elected at such meeting, by a shareholder who was a shareholder of record
both at the time of giving notice of the meeting and the time of the special
meeting, who is entitled to vote at the meeting and has complied with the
advance notice provisions set forth in the Bylaws.
Anti-Takeover Effect of Certain Provisions of Maryland Law and of the
Declaration of Trust and the Bylaws of the Maryland Trust. The business
combination and control share provisions of the MGCL, as well as the provisions
of the Declaration of Trust of the Maryland Trust regarding business
combinations, classification of the Board of Trustees and removal of trustees
and the advance notice provisions of the Maryland Trust's Bylaws, could delay,
defer or prevent a change in control of the Maryland Trust or other transaction
that might involve receipt of a premium price by holders of Shares or otherwise
be in their best interest.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Change of Venue Merger of the Trust into the Maryland Trust is expected
to be treated as a tax-free reorganization under Section 368(a)(1)(F) of the
Code and the Investor Reorganization is expected to be treated as a taxfree
reorganization under Section 368(a)(1)(A) of the Code. As such, the
reorganizations are expected to result in taxable gain neither to the Trust nor
to the Maryland Trust nor to the Shareholders of the Trust. No ruling will be
requested from the IRS as to the tax consequences of the Change of Venue Merger
or the Investor Reorganization; however, the Trust does expect to receive an
opinion from legal counsel to the effect that the Change of Venue Merger will be
treated as a tax-free reorganization under Section 368(a)(1)(F) of the Code and
that the Investor Reorganization will be treated as a tax-free reorganization
under Section 368(a)(1)(A) of the Code.
THE EQUITY INVESTMENT
BACKGROUND
In May 1996, the Trust acquired substantially all of the shopping center
and retail properties, as well as the management organization and business
operations, of Ramco-Gershenson, Inc. and certain of its affiliates (the "Ramco
Acquisition"). Upon completion of the Ramco Acquisition, the Trust owned 28
shopping centers with approximately 6,048,000 square feet of gross leasable
area, and had a debt to market capitalization ratio of approximately 43%.
Since the Ramco Acquisition, the Board of Trustees has adopted a growth
strategy which calls for the acquisition, development and redevelopment of
retail properties. Since the Ramco Acquisition, the Trust's property portfolio
has grown to 34 shopping centers with approximately 7,028,000 square feet of
gross leasable area. The Trust's growth in properties has principally been
funded through debt financing. This has caused the Trust's debt to market
capitalization ratio to increase to approximately 47%. In order to support
future growth, management of the Trust and the Board of Trustees have determined
that it is necessary for the Trust to obtain additional equity capital. The
Trust has been advised that it will be difficult to raise equity capital through
a public offering of securities as long as the investigation by the Internal
Revenue Service ("IRS") of the Trust's tax status and the corresponding audit of
the Trust's tax returns for the taxable years ended December 31, 1991, 1992,
1993 and 1994 (collectively, the "Tax Case") remains outstanding, even though
the Trust has a right of indemnification from Atlantic Realty Trust ("Atlantic")
under the Tax Indemnity Agreement (the "Tax Agreement") with Atlantic for any
taxes or other liabilities arising out of such Tax Case.
In addition, on July 7, 1997, the Operating Partnership entered into a
series of purchase agreements to acquire a portfolio of 15 shopping centers
located in the Southeast United States. The purchase price for the portfolio was
$124,500,000, and the closing of the purchase of the properties occurred on
, 1997. With the acquisition of the 15 shopping centers, the Trust
has a portfolio of 49 shopping centers with a total gross leasable area of
approximately 9,519,000 square feet. On a pro forma basis, the Trust's debt to
market capitalization ratio is approximately 61% (not taking into account any
pay down of debt using proceeds of the initial sale of Preferred Units).
As a result of the Trust's growth through acquisition and the corresponding
increase in debt, the Trust has sought additional equity capital through the
private placement of its securities to institutional investors. In
, 1997, the Trust commenced discussions with MSAM concerning the
private placement of equity securities. As previously announced, on June 9, 1997
the Trust entered into a letter of intent with
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MSAM concerning the proposed investment by the Advancing Party of $30 million in
the Trust in the form of a preferred security. As definitive transaction
documents were being negotiated, Kimco expressed an interest in investing $5
million in the Trust on substantially the same terms and conditions as the MSAM
clients. On October 3, 1997, the Trust finalized the terms and conditions of an
investment of up to an aggregate of $35 million by the Advancing Party and Kimco
in the Operating Partnership and, upon completion of the Change of Venue Merger,
in the Trust and immediately thereafter closed on the initial sale of
approximately $11.67 million of Preferred Units to such investors. Until
completion of the Change of Venue Merger and the Investor Reorganization, the
majority of the investment by the Advancing Party and Kimco will be made through
Investor.
GENERAL
Under the terms of the Purchase Agreement, the Operating Partnership has
agreed to sell to Investor and Investor has agreed to purchase from the
Operating Partnership, up to an aggregate of 1,200,000 Preferred Units of the
Operating Partnership for a cash purchase price of $25.00 per Preferred Unit, or
an aggregate purchase price of $30 million. Concurrently with the execution of
the Purchase Agreement, Investor and the Advancing Party entered into an
agreement with Kimco (the "Kimco Purchase Agreement") pursuant to which Kimco
agreed to purchase up to $5 million of common stock of Investor, the proceeds of
which are required to be used by Investor to purchase additional Preferred Units
(or, upon consummation of the Change of Venue Merger, Series A Preferred
Shares). Under the Purchase Agreement, upon the timely performance by Kimco of
its obligations under the Kimco Purchase Agreement, the purchase of Preferred
Units and/or Series A Preferred Shares at each closing will be increased by the
amount invested in Investor by Kimco. Upon the performance by Kimco of its
obligations under the Kimco Purchase Agreement, the aggregate number of
Preferred Units which may be purchased will be 1,400,000 and the aggregate
investment by Investor will be $35 million.
On October 3, 1997 (the "Initial Closing") Investor purchased 400,000
Preferred Units for an aggregate purchase price of $10 million. On October 8,
1997, Kimco made its initial investment in Investor, and Investor purchased an
additional 66,667 Preferred Units for an aggregate purchase price of $1,666,675.
Subject to the terms and conditions of the Purchase Agreement and the Kimco
Purchase Agreement, the Trust has the right to require Investor and Kimco to
purchase all or any of the remaining Preferred Units (the "Remaining Units"), at
the same purchase price per Preferred Unit as the initial investment. Such
additional investment may be effected in up to three additional closings
("Subsequent Purchases") at the option of the Trust, and each Subsequent
Purchase must consist of a purchase of at least $5 million of Preferred Units.
If the Trust has not caused Investor and Kimco to invest the entire $35 million
by September 25, 1998 (which date will be extended to February 1, 1999 in the
event that the Tax Case has not been resolved by October 25, 1998), then
Investor and Kimco will have the right to purchase a number of Preferred Units
(or Series A Preferred Shares in the event the Proposal is approved and the
Change of Venue Merger is completed) in a final purchase such that their total
investment equals $35 million.
Upon the approval of the Proposal by the Trust's Shareholders and the
completion of the Change of Venue Merger, (i) the Investor Reorganization will
be effected pursuant to which Investor will be reorganized with and into the
Trust and the shareholders of Investor (who consist of the Advancing Party and
Kimco) will receive Series A Preferred Shares in exchange for the Preferred
Units owned by such parties on the effective date of such reorganization, and
(ii) the Advancing Party will succeed to all rights and obligations of Investor
under the Purchase Agreement. The Series A Preferred Shares will have the
rights, privileges and preferences as described under "-- Terms of Series A
Preferred Shares" below.
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QUALIFIED UNDERWRITTEN OFFERING AND PREEMPTIVE RIGHTS
Upon the sale by the Trust of Shares (or, upon completion of the Change of
Venue Merger, a sale of Common Shares by the Maryland Trust) pursuant to a
Qualified Underwritten Offering (as defined below), Investor is required to
purchase $9,700,000 of Shares or Common Shares from the Trust or the Maryland
Trust, as applicable, in a concurrent offering at the price to the public less
the underwriters' fees, commissions and discounts per share. In addition,
Investor has the right to purchase 19.4% of the amount of a Qualified
Underwritten Offering in excess of $40,300,000. A "Qualified Underwritten
Offering" is any underwritten, widely distributed offering of Shares or Common
Shares, the gross proceeds of which are not less than $40,300,000 and which is
distributed at least 30% to retail investors and at least to eight institutional
investors. Upon completion of a Qualified Underwritten Offering, each
outstanding Preferred Unit or Series A Preferred Share (and any unpaid
distributions or dividends in respect thereof) will be converted into Common
Shares at a conversion price of $17.50 per Common Share. Subject to certain
limited exceptions, the conversion price for the Common Shares will be subject
to adjustment to prevent dilution of the Advancing Party's investment in the
event the Trust issues or sells Common Shares (or securities convertible into or
exchangeable for Common Shares) at a price below $17.50 per share. See "-- Terms
of Series A Preferred Shares -- Anti-Dilution Rights" below.
Until the Trust has completed a Qualified Underwritten Offering, Investor
has preemptive rights to purchase its pro rata share (based on the percentage of
Shares that the Advancing Party owns, assuming the investment of the full $35
million contemplated by the Purchase Agreement and the Kimco Purchase Agreement
and conversion of the Preferred Units or Series A Preferred Shares into Shares)
of any Shares, options to purchase Shares or securities convertible into or
exchangeable for Shares. Shares, options or convertible securities issued in
connection with the Trust's existing share option plans, certain issuances
pursuant to the Trust's dividend reinvestment plan and issuances of interests in
the Operating Partnership ("OP Units") in the ordinary course which are
exchangeable solely for Shares (or Common Shares) as a result of which the
Trust's (or in the case of Common Shares, the Maryland Trust's) partnership
interest in the Operating Partnership will increase by the amount of such OP
Units so exchanged will not be subject to the Advancing Party's preemptive
rights.
CONDITIONS TO CLOSINGS OF SUBSEQUENT PURCHASES
As described above, on October 3, 1997, the Initial Closing was completed
and Investor purchased an aggregate of $10 million of Preferred Units. On
October 8, 1997, Investor purchased an additional $1,666,675 of Preferred Units
on behalf of Kimco. Each subsequent closing of Preferred Units and Series A
Preferred Shares is subject to the satisfaction of certain conditions precedent
including, that the representations and warranties of the Trust in the Purchase
Agreement remain accurate, that there be no material adverse change to the
business, operations and assets of the Trust and its subsidiaries, that there be
no order, decree or injunction which enjoins or prohibits the consummation of
such subsequent purchase, that the Trust continue to be in compliance with all
applicable laws necessary to qualify as a real estate investment trust under the
Code and that it continue to elect such treatment, and that Investor shall have
received all required opinions of counsel and other appropriate closing
documents. Although the Trust believes that it will be able to satisfy such
conditions precedent prior to each subsequent purchase of Preferred Units or
Series A Preferred Shares, no assurance can be given that the Trust will be
successful in doing so.
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USE OF PROCEEDS
Under the terms of the Purchase Agreement, the Trust is required to use the
funds received from the sale of the Preferred Units and the Series A Preferred
Shares for the acquisition, development or redevelopment by the Operating
Partnership of retail properties of the nature operated by the Operating
Partnership on September 30, 1997 or for the repayment of current or future
indebtedness (of either the Trust or the Operating Partnership). The Trust is
not permitted to use such funds to purchase Shares or Common Shares or to
replenish funds used to purchase Shares or Common Shares.
REPRESENTATIONS AND WARRANTIES
Pursuant to the terms of the Purchase Agreement, the Trust made a number of
representations and warranties to Investor, the Advancing Party and Kimco
regarding its business, assets, financial position and operations. In addition,
Investor, the Advancing Party and Kimco made certain representations and
warranties to the Trust concerning their due organization and authorization to
enter into the Purchase Agreement and the other agreements and documents
contemplated thereby and concerning their investment intent and sophistication.
The representations and warranties of each of the parties to the Purchase
Agreement expire on the earlier to occur of (i) a Qualified Underwritten
Offering and (ii) the conversion of all Preferred Units and Series A Preferred
Shares into Shares or Common Shares.
INDEMNIFICATION
In addition to making representations and warranties to the other, the
Trust and the Operating Partnership, on the one hand, and Investor, the
Advancing Party and Kimco, on the other hand, agreed, subject to the
satisfaction of certain threshold amounts, to indemnify the other for the breach
of any representation or warranty or the failure to perform any covenant or
agreement.
RESTRICTION ON COMPETING TRANSACTION
Prior to the date on which Investor and Kimco have completed their
investment in the Trust, the Trust may not, directly or indirectly, solicit or
encourage any transactions which may reasonably be expected to lead to a
competing transaction to the transaction contemplated by the Purchase Agreement,
unless such provision is waived by Investor.
TERMS OF SERIES A PREFERRED SHARES
The Series A Preferred Shares will have the following rights, preferences
and privileges:
Dividend Rights. Holders of Series A Preferred Shares will be entitled to
receive cumulative dividends, payable quarterly in arrears, at an annual rate
equal to the greater of (i) 9.60% of the Stated Value and (ii) the dividend rate
expressed as an annual rate which is implicit in the amount of dividends
actually paid with respect to Common Shares, based on a $17.50 per share price
for the Common Shares, determined as of each quarterly dividend payment date
(such dividends being referred to as the "Payable Component"). Unpaid dividends
will be compounded quarterly at the rate then in effect (as so outstanding from
time to time, "Unpaid Dividends").
The Payable Component of dividends, computed in accordance with clauses (i)
and (ii) of the prior paragraph, will be increased by an amount equal to an
annual rate of 3%, or 0.75% quarterly, as described in
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this paragraph. Upon the occurrence of a "Rate Event" (as described below), the
holders of Series A Preferred Shares will be entitled to receive an additional
quarterly dividend calculated from the date of issuance at the per annum rate of
3% of the Stated Value (the "Additional Dividend"). Upon the occurrence of a
Rate Event, the Additional Dividend with respect to periods subsequent to the
date of occurrence of the Rate Event will be currently payable in cash. The
holders of Series A Preferred Shares will be entitled to receive the Additional
Dividend for periods prior to the occurrence of the Rate Event upon redemption
or conversion of the Series A Preferred Shares, except that, if the conversion
is being effected in connection with a Qualified Underwritten Offering, then
only to the extent that the cumulative total return received by Investor, Kimco
and the Advancing Party on their investment in the Trust and the Operating
Partnership does not exceed 15% (or 3.75% on a quarterly basis). If the Series A
Preferred Shares are converted into Common Shares prior to the occurrence of a
Rate Event, the Additional Dividend shall not be added to Stated Value for
purposes of conversion, and shall not otherwise be payable. In general, a "Rate
Event" consists of (i) the Trust's failure to pay when due dividends on the
Series A Preferred Shares, (ii) certain material defaults on the Trust's
indebtedness having an aggregate outstanding principal balance in excess of
$15,000,000, (iii) the failure of the Trust to complete a Qualified Underwritten
Offering by the Maturity Date (as defined below), (iv) the Trust using the
proceeds of the investment for purposes other than those set forth in the
Purchase Agreement, (v) the Trust's taking of any action in violation of the
class voting rights of the shareholders of the Series A Preferred Shares (as
described below), (vi) the occurrence of a "Change of Control" (as defined
below) transaction (except that, to the extent holders of Series A Preferred
Shares vote in favor of the Change of Control transaction, such holders will not
be entitled to the payment of the Additional Dividend on account of this clause
(vi)), or (vii) the failure of Dennis Gershenson or a replacement reasonably
satisfactory to MSAM to hold the office of President and chief executive officer
of the Maryland Trust, other than as a result of his death or disability
extending for a continuous period of not less than 180 days.
Rank. The Series A Preferred Shares will rank senior to the Common Shares
and all equity securities issued by the Maryland Trust with respect to dividends
and distributions and upon liquidation, dissolution or winding up of the
Maryland Trust. Unpaid Dividends (including the payable component of any
Additional Dividend after the occurrence of a Rate Event) must be paid prior to
the payment of any dividends or distributions on (or redemption or purchase by
the Maryland Trust of) any of the Maryland Trust's other capital stock or
securities representing an interest in the Maryland Trust (except for any
deficiency dividend made by the Maryland Trust to holders of Common Shares as a
result of the Tax Case for which the Maryland Trust has received all funds
required therefor from Atlantic, under the Tax Agreement between the Trust and
Atlantic) or any of its assets, including OP Units in the Operating Partnership.
To the extent the Maryland Trust desires to make a deficiency dividend in
connection with the resolution of the Tax Case prior to receipt of any indemnity
payments from Atlantic, such deficiency dividend must first be paid to holders
of Series A Preferred Shares for the payment of any Unpaid Dividends then due,
then to holders of Series A Preferred Shares and Common Shares on a pro rata
basis.
Maturity Date. The Series A Preferred Shares shall be subject to mandatory
redemption by the Maryland Trust on the fifth anniversary of the date on which
Series A Preferred Shares are first issued to Investor and/or the Advancing
Party (the "Maturity Date"), subject to acceleration of the Maturity Date as
provided below.
Mandatory Conversion.All outstanding Series A Preferred Shares will be
subject to mandatory conversion on that date which is the earlier of the
occurrence of a Qualified Underwritten Offering and the Maturity Date, subject
to the obligation of the Maryland Trust to redeem the Series A Preferred Shares
for cash on an acceleration of the Maturity Date as provided below, and subject
to earlier conversion at the option of
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Investor. Each Series A Preferred Share shall be convertible into Common Shares
at the Stated Value plus Unpaid Dividends, if any, for each Series A Preferred
Share so converted, for Common Shares issued on conversion priced at $17.50 per
Common Share.
Optional Conversion. At the option of Investor and the Advancing Party,
exercised by notice to such effect at any time or from time to time prior to the
date of mandatory conversion or the Maturity Date, the Series A Preferred Shares
will be convertible in whole or in part into Common Shares. Each of the Series A
Preferred Shares shall be convertible into Common Shares at the Stated Value
plus Unpaid Dividends, if any, for each Series A Preferred Share so converted,
for Common Shares issued on conversion priced at $17.50 per Common Share,
subject to adjustment under certain circumstances to prevent the dilution of the
Series A Preferred Shares, including certain issuances of Common Shares by the
Maryland Trust at prices less than $17.50. See "-- Anti-Dilution Rights" below.
Redemption on Acceleration of the Maturity Date. The Maturity Date will be
accelerated and all Series A Preferred Shares will be redeemed in cash at the
Stated Value plus Unpaid Dividends (including the Additional Dividend if then
payable) in the event that it is determined by the IRS that it will, for any
period, deny to the Trust or the Maryland Trust the tax benefits associated with
REIT qualification and either or both of the following circumstances arise: (i)
the Maryland Trust does not receive (within a period of 60 days of the date
established by the IRS as the date of which the deficiency dividend or other
additional taxes are required to be paid) the full indemnity payment for such
loss of tax benefits that the Trust is entitled to receive from Atlantic
pursuant to the Tax Agreement with Atlantic, or (ii) counsel reasonably
satisfactory to Investor is unable to provide to the holders of the Series A
Preferred Shares affirmative advice that, commencing not later than with the
taxable year ending December 31, 1999, the Maryland Trust will, notwithstanding
such determination by the IRS, be able to elect to be qualified and taxed as a
REIT under the Code, and its proposed method of operation will enable it so to
qualify for following years.
Voting Rights. The holders of Series A Preferred Shares will have the right
to vote on all matters which holders of Commons Shares are entitled to vote upon
on an "as converted" basis, as though such holders own Common Shares. In
addition, the Maryland Trust will not be permitted to engage in or effect
certain types of transactions or actions without the approval of holders of at
least 51% of the outstanding Series A Preferred Shares voting separately as a
class. Such transaction or actions include the following:
(i) Increasing the authorized number of Series A Preferred Shares or
creating or issuing any class of Preferred Shares ranking prior to or on
parity with the Series A Preferred Shares.
(ii) Amending, altering or repealing the Maryland Trust's Declaration
of Trust.
(iii) Permitting to be amended or waiving any provision of the Tax
Agreement with Atlantic.
(iv) The voluntary liquidation, dissolution or winding up of the
Maryland Trust (except a voluntary liquidation of the Maryland Trust at the
election of the Trustees in connection with an unfavorable resolution of
the Tax Case), or the sale of substantially all of the assets of the
Maryland Trust or the merger, consolidation or recapitalization of the
Maryland Trust.
(v) The sale, transfer or assignment of assets or voting securities of
the Maryland Trust in excess of $50 million within any 90-day period or
$150 million in any 360-day period.
(vi) The Maryland Trust's termination of the election, or the taking
of any action which would cause the termination other than by election, of
the Maryland Trust's status as a REIT (except in connection with the
resolution of the Tax Case).
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(vii) Any alteration in the Maryland Trust's business such that the
real estate assets which it owns, directly or indirectly, are less than 90%
invested in retail properties (on a square foot basis) of the nature of the
predominant real estate assets of the Trust on September 30, 1997.
(viii) Any "Change of Control" transaction of the Maryland Trust or
the Operating Partnership. A Change of Control transaction will be deemed
to have occurred if any of the following occur (or, in the case of any
proposal, if any of the following could occur as a result thereof): (i) the
Maryland Trust takes or fails to take any action such that it ceases to be
required to file reports under Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any successor to that Section;
(ii) any "person" (as defined in Sections 13(d) and 14(d) of the Exchange
Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of either (a) 25% or more of the
outstanding Common Shares, or (b) 25% (by right to vote or grant or
withhold any approval) of the outstanding securities of any other class or
classes which individually or together have the power to elect a majority
of the members of the Board of Trustees; (iii) the Board of Trustees
determines to recommend, or fails to determine to recommend, the acceptance
of any proposal set forth in a tender offer statement or proxy statement
filed by any person with the Securities and Exchange Commission which
indicates the intention on the part of that person to acquire, or
acceptance of which would otherwise have the effect of that person
acquiring, either (a) 25% or more of the outstanding Common Shares or (b)
25% (by right to vote or grant or withhold any approval) of the outstanding
securities of any other class or classes which individually or together
have the power to elect a majority of the members of the Board of Trustees;
(iv) other than as a result of the death or disability of one or more of
the Trustees within a three month period, a majority of the members of the
Board of Trustees for any period of three consecutive months are not
persons who (a) had been Trustees of the Maryland Trust (or the Trust) for
at least the preceding 24 consecutive months or (b) when they initially
were elected to the Board of Trustees, (x) were nominated (if they were
elected by the shareholders) or elected (if they were elected by the
Trustees) with the affirmative concurrence of 66 2/3% of the Trustees who
were Continuing Trustees at the time of the nomination or election by the
Board of Trustees and (y) were not elected as a result of an actual or
threatened solicitation of proxies or consents by a person other than the
Board of Trustees or an agreement intended to avoid or settle such a proxy
solicitation (the Trustees described in clauses (a) and (b) of this
subparagraph (iv) being "Continuing Trustees"); (v) the Maryland Trust
ceases to be the sole General Partner of the Operating Partnership or
grants or sells to any person the power to control or direct the actions of
the Operating Partnership as if such person (A) is a general partner of the
Operating Partnership or (B) is a limited partner of the Operating
Partnership with consent or approval rights greater than the consent or
approval rights held by the limited partners of the Operating Partnership
on the date of the initial issuance of any Series A Preferred Shares; or
(vi) the Operating Partnership is a party to any entity conversion or any
merger or consolidation in which the Operating Partnership is not the
surviving entity in such merger or consolidation or in which the effect is
of the nature set forth in the next preceding clause of this subparagraph.
(ix) Prior to the date of a Qualified Underwritten Offering, the
issuance of any additional Common Shares or Preferred Shares, except in
connection with the granting or exercising of stock options pursuant to the
Trust's existing employee and trustee stock option plans, the Trust's
dividend reinvestment plan or the exchange of OP Units in the Operating
Partnership in the ordinary course solely for Common Shares as a result of
which the Maryland Trust's partnership interest in the Operating
Partnership increases by the amount of such OP Units so exchanged.
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Anti-Dilution Rights. In the event that the Maryland Trust pays a dividend
or makes a distribution on its Common Shares in Common Shares or subdivides or
combines its Common Shares, the conversion price for the Common Shares of $17.50
(the "Conversion Price") will be adjusted to reflect the effects of such
dividend, distribution, subdivision or combination. In addition, if the Maryland
Trust issues Common Shares, options or warrants to purchase Common Shares or
securities convertible into or exchangeable for Common Shares at a purchase
price which is less than the Conversion Price, or if the Maryland Trust
distributes to holders of Common Shares any shares of capital stock of the
Maryland Trust (other than Common Shares) or evidences of indebtedness or assets
(other than cash dividends or distributions) or rights or warrants to purchase
any of its securities, the Conversion Price for the Common Shares will be
reduced to prevent dilution of the Series A Preferred Shares. Notwithstanding
the foregoing, the anti-dilution rights of holders of Series A Preferred Shares
as described in this paragraph do not apply to the following: (i) issuances of
OP Units in the ordinary course which OP Units are exchangeable solely for
Common Shares as a result of which the Maryland Trust's partnership interest in
the Operating Partnership increases by the amount of such OP Units so exchanged;
(ii) grants of Common Shares or options or rights to purchase Common Shares with
exercise prices below $17.50 per Common Share to officers, employees or Trustees
of the Maryland Trust not in excess of 286,000 shares in the aggregate; (iii)
sales of Common Shares pursuant to any dividend reinvestment plan maintained by
the Maryland Trust if such Common Shares were purchased in the open market in
ordinary brokerage transactions; and (iv) the exchange of OP Units in the
Operating Partnership in the ordinary course solely for Common Shares as a
result of which the Maryland Trust's partnership interest in the Operating
Partnership increases by the amount of such OP Units so exchanged.
TERMS OF PREFERRED UNITS
In order to permit the Operating Partnership to issue the Preferred Units,
the Operating Partnership has entered into a Third Amendment to its Amended and
Restated Agreement of Limited Partnership (the Amended and Restated Agreement of
Limited Partnership, as so amended, the "Amended Partnership Agreement") to set
forth the terms and conditions of the Preferred Units.
In general, the terms of the Preferred Units will mirror the terms of the
Series A Preferred Shares as set forth elsewhere in this Proxy Statement. The
distribution preferences and liquidation preferences set forth in this Proxy
Statement with respect to the Series A Preferred Shares will apply to the
Preferred Units. In addition, the Trust, as general partner of the Operating
Partnership, is not permitted to effect transactions described elsewhere in this
Proxy Statement as requiring the separate vote of holders of Series A Preferred
Shares, without the approval of holders of 51% of the outstanding Preferred
Units. See "-- Terms of Series A Preferred Shares -- Voting Rights" above.
Similar to the rights of holders of Series A Preferred Shares as described under
"-- Terms of Series A Preferred Shares -- Optional Conversion" above, holders of
Preferred Units will be entitled to have such Preferred Units converted into
Shares of the Trust at any time prior to the completion of the Change of Venue
Merger at a conversion price of $17.50.
In addition, until approval of the Proposal and the completion of the
Change of Venue Merger, Investor has the right under the terms of the Amended
Partnership Agreement to require the Trust to redeem all or any of the Preferred
Units into (i) a number of fully paid non-assessable Shares of the Trust
determined by multiplying (x) the number of Preferred Units to be redeemed by
(y) the sum of (A) the initial per unit purchase price of the Preferred Units
and (B) all unpaid preferred distributions owing in respect of a Preferred Unit,
divided by $17.50 (subject to adjustment for certain dividends, distributions,
stock splits, combinations, reorganizations and other transactions), or (ii) at
the election of the Trust or in the event the Trust is unable to deliver to, and
Investor is unable to hold, own and vote the number of Shares determined
pursuant to clause
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(i) above, cash in an amount equal to the number of Shares which Investor would
have been delivered pursuant to clause (i) above multiplied by the current
market price of the Trust's Shares (determined by averaging the closing prices
per share of such Shares on each of the 20 consecutive trading days preceding
the redemption date).
REGISTRATION RIGHTS
In connection with the purchase by Investor of the Preferred Units and the
Series A Preferred Shares, the Trust has granted certain demand and piggy-back
registration rights to Investor (which rights transfer to the Advancing Party
upon completion of the Investor Reorganization) pursuant to a Registration
Rights Agreement which was entered into by the Trust with Investor at the
Initial Closing. The material terms of the Registration Rights Agreement are as
follows:
Shelf Registration Rights. Investor has been granted registration rights,
exercisable upon the earlier of one year after a Qualified Underwritten Offering
or the second anniversary of the Initial Closing, pursuant to which Investor may
require the Trust to file and to keep effective a "shelf" registration statement
which will allow Investor to offer Registrable Securities (as defined in the
Registration Rights Agreement) on a continuous or delayed basis. The Trust may
not be required to effect a shelf registration of fewer than 5,000,000 shares of
Registrable Securities, except that if there are less than 5,000,000 shares of
Registrable Securities outstanding, Investor may require the Trust to effect a
shelf registration of all of the remaining shares of Registrable Securities
outstanding.
Demand Registration Rights. Investor has been granted demand registration
rights, exercisable upon the earlier of one year after a Qualified Underwritten
Offering or the second anniversary of the Initial Closing, to require the Trust
to register a minimum of $5,000,000 in value of Registrable Securities (based on
the expected offering price) for sale to the public, unless the Trust has
already effected one demand registration for Investor during the immediately
preceding twelve-month period or unless there is a shelf registration statement
effective at the time of such request.
"Black-Out Rights." Both Investor and the Trust will have certain
"black-out" rights pursuant to which each party may require the other to not
sell securities or to postpone or suspend the exercise of the registration
rights set forth in the Registration Rights Agreement in order to permit the
other party to sell securities or, in the case of the Trust, to complete a
material financing, acquisition or other material transaction. In general,
Investor has the right (exercisable on up to four occasions in total) to prevent
the Trust from effecting a registration of its securities for a period of
approximately 15 days before and 60 days after an offering of securities by
Investor. The Trust has the right (exercisable on an unlimited number of
occasions but, in certain cases, not more frequently than twice in any
twenty-four month period) to prevent Investor from effecting a registration of
its securities for a period of approximately 30 days before and 90 days after an
offering of securities by the Trust.
Piggy-Back Registration Rights. In addition to the registration rights
described above, Investor has also been granted piggy-back registration rights
to sell securities in a proposed registration undertaken by the Trust of its own
securities. Such rights are exercisable immediately and expire on the tenth
anniversary of the Initial Closing. In the event that the managing underwriter
of such registration informs the Trust that the amount of securities requested
to be included in such offering exceeds the amount which can be sold, the number
of Registrable Securities that are to be included in the registration will be
reduced on a pro rata basis with all other holders of piggy-back registration
rights under the Trust's existing registration rights agreement (other than JCP
Realty which has been given a preference with respect to the underwriter's
cutback).
31
<PAGE> 39
Tag-Along Rights of Investor and the Advancing Party. Under the terms of
the Registration Rights Agreement, from and after September 30, 1997 until the
earlier of (i) the date on which Investor and the Advancing Party collectively
own Shares (or, upon completion of the Change of Venue Merger, Common Shares)
representing less than 15% of the then outstanding Shares (or Common Shares, as
applicable) on a fully diluted basis and (ii) September 30, 2007, Investor and
the Advancing party have the right to include Registrable Securities, on a pro
rata basis, in any sale or disposition of Shares or Common Shares to any person
in connection with an "Extraordinary Transaction" in which a portion of the
consideration for the Shares or Common Shares to be sold or disposed of by the
Trust is cash or cash equivalents. An "Extraordinary Transaction" is (i) any
merger, consolidation, sale or acquisition of assets, recapitalization, other
business combination, liquidation or other action out of the ordinary course of
the business of the Trust, or (ii) any issuance of securities, in either case
involving the sale, issuance or other disposition of capital stock of the Trust
representing, in the aggregate, at least 30% of shares of beneficial interest of
the Trust on a fully diluted basis. Any sale by the Advancing Party or Investor
pursuant to the tag-along rights in the Registration Rights Agreement must be on
the same terms and conditions as the sale of securities by the Trust giving rise
to the tag-along rights. In addition, Investor and the Advancing Party must
comply with certain notice provisions set forth in the Registration Rights
Agreement.
Indemnification Rights. Under the terms of the Registration Rights
Agreement, the Trust has agreed to indemnify, defend and hold harmless Investor,
the Advancing Party and each other holder of Registrable Securities from all
liability and losses arising out of or based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which Registrable Securities were registered, and any
preliminary or final prospectus contained therein and any amendment thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
that such misstatement or omission was made in reliance upon and in conformity
with written information provided by Investor, the Advancing Party or any other
person who participates as an underwriter in the offering.
Under the Registration Rights Agreement, the Trust may require Investor,
the Advancing Party or any other holder of Registrable Securities to provide an
indemnification to the Trust for any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which Registrable Securities were registered, and any preliminary or final
prospectus contained therein and any amendment thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, to the extent that such misstatement or
omission was made in reliance upon and in conformity with written information
provided by Investor, the Advancing Party or such holder of Registrable
Securities.
OTHER MATTERS
SOLICITATION OF PROXIES
Shareholders of record at the close of business on , 1997 are
entitled to notice of and to vote at the Special Meeting. On such date, there
were Shares issued and outstanding. A majority of the Shares entitled to
vote represented in person or by proxy constitute a quorum for the meeting. If a
quorum is not present, the Special Meeting may be adjourned to a later date at
which a quorum is present, and Shares represented by proxies may be voted for
such adjournment. The vote of a majority of the issued and
32
<PAGE> 40
outstanding Shares is required to approve the Proposal. Abstentions and broker
non-votes will have the same effect as a vote against the Proposal.
Proxies in the accompanying form which are properly executed and duly
returned to the Trust and not revoked will be voted as specified and, if no
direction is made, will be voted in favor of the Proposal. Each proxy granted is
revocable and may be revoked at any time prior to its exercise by giving notice
to the Trust of its revocation. A Shareholder who attends the Special Meeting in
person may, if such Shareholder wishes, vote by ballot at the Special Meeting,
thereby cancelling any proxy previously given.
Shares held of record by Shareholders or brokers who do not return a signed
and dated proxy or attend the Special Meeting and vote in person will not be
considered present or represented at the Special Meeting, will not be counted in
determining the presence of a quorum, and will not be voted. The presence, in
person or by proxy, of Shareholders holding a majority of the Shares entitled to
vote shall constitute a quorum for the Special Meeting. Abstentions and broker
non-votes will neither be counted in establishing a quorum nor be voted for or
against matters presented for Shareholder consideration. Because the Proposal
set forth in this Proxy Statement requires the affirmative vote of holders of a
majority in interest of the outstanding Shares of the Trust, and because
abstentions and broker non-votes with respect to the Proposal are not counted as
affirmative votes, they have the same effect as a vote against the Proposal.
A proxy executed and delivered by a Shareholder may subsequently be revoked
by written notice of revocation to the Trust. A revocation may be in any written
form validly signed by the record holder as long as it clearly states that such
holder's proxy previously given is no longer effective. To prevent confusion,
the notice of revocation must be dated. Notices of revocation should be
delivered to the Trust at 27600 Northwestern Highway, Suite 200, Southfield,
Michigan 48034, attn: Linda Anderson.
If a Shareholder signs, dates and delivers a proxy card to the Trust, and
thereafter, on one or more occasions dates, signs and delivers a later-dated
proxy card, the latest dated proxy card is controlling as to the instructions
indicated therein and supersedes such Shareholder's prior proxy as embodied in
any previously submitted proxy card.
IF A PROXY CARD IS PROPERLY EXECUTED AND DELIVERED BUT NO INDICATION IS
MADE AS TO WHAT ACTION IS TO BE TAKEN, IT WILL BE DEEMED TO CONSTITUTE A VOTE IN
FAVOR OF THE PROPOSAL.
Management does not know of any other matters to be brought before the
Special Meeting except those set forth in the notice thereof. If other business
is properly presented for consideration at the Special Meeting, it is intended
that the proxies will be voted by the persons named therein in accordance with
their judgment on such matters.
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Trust. In addition to the solicitation of proxies by mail, the
Trustees, officers and employees of the Trust may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Trust will also request persons, firms and corporations holding Shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Trust will reimburse such holders for their reasonable expenses.
In addition, the Trust has retained The Herman Group to assist in the
solicitation of proxies through any and all methods described above. For those
services, the Trust will pay this firm certain fees estimated at $ , plus
reimbursement of out-of-pocket costs and expenses.
33
<PAGE> 41
ACCOUNTANT'S REPRESENTATIVES
It is expected that representatives of Deloitte & Touche LLP, the Trust's
independent auditors, will be present at the Special Meeting to respond to
appropriate questions of Shareholders and to make a statement if they desire.
INCORPORATION BY REFERENCE
The Trust's Annual Report on Form 10-K for the year ended December 31,
1996, together with the financial statements contained therein, the Trust's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, the Trust's
Quarterly Report on Form 10-Q for the six months ended June 30, 1997, and all
other documents subsequently filed by the Trust pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the date of the Special Meeting
are incorporated herein by reference. The Trust will provide, without charge
(other than a reasonable charge for any exhibit requested) to each Shareholder,
upon written or oral request of such Shareholder, a copy of any of the
aforementioned documents, by first class mail or other equally prompt means
within one business day of receipt of such request. Any such request should be
directed to Richard D. Gershenson, Secretary of the Trust, at 27600 Northwestern
Highway, Suite 200, Southfield, Michigan 48034, telephone number (248) 350-9900.
Your cooperation in giving this matter your immediate attention and in
returning your proxies promptly will be appreciated.
By Order of the Board of Trustees
/s/ Richard D. Gershenson
Richard D. Gershenson, Secretary
, 1997
34
<PAGE> 42
ANNEXES
<TABLE>
<S> <C>
Annex A Form of Change of Venue Merger Agreement
Annex B Form of Agreement of Merger -- Investor Reorganization
Annex C Declaration of Trust of the Maryland Trust
</TABLE>
35
<PAGE> 43
ANNEX A
CHANGE OF VENUE MERGER AGREEMENT
THIS CHANGE OF VENUE MERGER AGREEMENT (this "Agreement") is made as of the
day of 1997, between RGPT TRUST, a Maryland real estate
investment trust (the "Maryland REIT"), and RAMCO-GERSHENSON PROPERTIES TRUST, a
Massachusetts business trust (the "Massachusetts Trust").
WITNESSETH:
WHEREAS, the Maryland REIT is a real estate investment trust organized and
existing under the laws of the State of Maryland, with an authorized capital
consisting of 30,000,000 common shares of beneficial interest, par value $.01
per share (the "Common Shares") and 10,000,000 preferred shares of beneficial
interest (the "Preferred Shares"), of which 1,000 Common Shares, constituting
all of the issued and outstanding shares of beneficial interest of the Maryland
REIT, are owned by the Massachusetts Trust;
WHEREAS, the Massachusetts Trust is a business trust organized and existing
under the laws of the Commonwealth of Massachusetts, and has authorized an
unlimited number of common shares of beneficial interest, without par value,
(the "Shares"), of which Shares are issued and outstanding;
WHEREAS, the Board of Trustees of the Massachusetts Trust (the
"Massachusetts Trustees") have determined that the business and affairs
conducted by the Massachusetts Trust will be enhanced by changing the domicile
and form of organization of the Massachusetts Trust from a Massachusetts
business trust to a Maryland real estate investment trust pursuant to Title 8 of
the Corporations and Associations Article of the Annotated Code of Maryland and
have caused the organization of the Maryland REIT initially as a wholly-owned
subsidiary of the Massachusetts Trust with the intention that, subject to the
approval of the holders of a majority of the outstanding Shares of the
Massachusetts Trust entitled to vote thereon, as provided in the Amended and
Restated Declaration of Trust of the Massachusetts Trust (the "Massachusetts
Declaration of Trust"), the Massachusetts Trust will merge into the Maryland
REIT and will terminate and the Maryland REIT will succeed to and will carry on
the business and affairs of the Massachusetts Trust, as provided in, and on the
terms and conditions and with the effects set forth in, this Agreement;
WHEREAS, the Massachusetts Trustees have been advised by counsel that a
merger of a Massachusetts business trust such as the Massachusetts Trust into a
Maryland real estate investment trust is specifically permitted by Section
8-501.1 of the Corporations and Associations Article of the Annotated Code of
Maryland and that there is no provision of Massachusetts law that prohibits such
a merger;
WHEREAS the Massachusetts Trustees and the Board of Trustees of the
Maryland REIT (the "Maryland Trustees") have each determined that the
Massachusetts Trust and the Maryland REIT be merged into the Maryland REIT with
the Maryland REIT being the surviving entity, on the terms and conditions set
forth herein, all under and pursuant to the Massachusetts Declaration of Trust
and the laws of the state of Maryland; and
WHEREAS, the Massachusetts Trustees and the Maryland Trustees expect that
the Merger provided for herein will be treated for federal income tax purposes
as a reorganization described in Section 368(a)(1)(F) of the Internal Revenue
Code;
A-1
<PAGE> 44
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements herein contained, for the purpose of prescribing the terms and
conditions of the merger, the parties hereto agree as follows:
I. TERMS AND CONDITIONS
1.1 Merger. At the Effective Date (as defined in Section 2), the
Massachusetts Trust shall be merged with and into the Maryland REIT (the
"Merger"), the Maryland REIT shall be the surviving entity under the name
"Ramco-Gershenson Properties Trust," and the Massachusetts Trust shall
terminate.
1.2 Successor. At and from the Effective Date, the Maryland REIT shall
succeed to all of the rights, powers and property of the Massachusetts Trust
("Trust Property") and shall be liable for all the liabilities, debts and
obligations of the Massachusetts Trust, in the manner of and as more fully set
forth in Section 8-501.1(n) of the Corporations and Associations Article of the
Annotated Code of Maryland. The Articles of Merger evidencing the Merger shall
also constitute and evidence the sale, conveyance, transfer and assignment of
all Trust Property to the Maryland REIT and the Maryland REIT's assumption of
all of the liabilities, debts and obligations of the Massachusetts Trust,
including without implied limitation, obligations to indemnify persons who are
or may be entitled to indemnification under Article IX of the Massachusetts
Declaration of Trust to the extent that such persons are entitled to
indemnification under such Article.
1.3 Conversion of Shares of the Massachusetts Trust. At the Effective Date,
by virtue of the Merger and without any action on the part of the holder
thereof, each of the Shares outstanding immediately prior thereto shall be
converted into one fully paid and non-assessable Common Share of the Maryland
REIT and, until further action by the Maryland Trustees, each certificate
representing Shares shall continue to represent the same number of Common Shares
of the Maryland REIT.
II. EFFECTIVE DATE
2. Effective Date. The Merger shall become effective on the day and at the
time ("Effective Date") at which the last of the following actions shall have
been completed: (i) the Massachusetts Declaration of Trust shall have been
amended by the affirmative vote of the holders of at least a majority of the
aggregate number of Shares of the Massachusetts Trust then outstanding and
entitled to vote thereon in accordance with the requirements of the
Massachusetts Declaration of Trust so as to authorize the termination of the
Massachusetts Trust upon consummation of the Merger provided for in this
Agreement and this Agreement shall have been authorized by the sole shareholder
of the Maryland REIT in accordance with the requirements of the laws of the
State of Maryland; (ii) the shares of beneficial interest of the Maryland REIT
issuable to the shareholders of the Massachusetts Trust pursuant to this
Agreement shall have been authorized for listing on the New York Stock Exchange,
upon official notice of issuance; (iii) the Massachusetts Trust shall have
received all consents and/or approvals (if any) required for the Merger; and
(iv) Articles of Merger reflecting the Merger shall have been executed and filed
in accordance with Section 8-501.1(g) of the Corporations and Associations
Article of the Annotated Code of Maryland. The filing of a copy of such Articles
of Merger with the Secretary of State of the Commonwealth of Massachusetts will
conclusively evidence the termination of the Massachusetts Trust.
A-2
<PAGE> 45
III. CHARTER DOCUMENTS, TRUSTEES AND OFFICERS
3.1 Declaration of Trust and Bylaws. The Declaration of Trust of the
Maryland REIT and the Bylaws of the Maryland REIT in effect on the Effective
Date shall continue to be, respectively, the Declaration of Trust and Bylaws of
the Maryland REIT, provided, however, that the Declaration of Trust of the
Maryland REIT shall be amended, as part of the Merger, to change the name of the
Maryland REIT to "Ramco-Gershenson Properties Trust".
3.2 Trustees. Immediately upon the consummation of the Merger, those
persons who were, as of the Effective Date, Massachusetts Trustees shall be
appointed to serve (if not already so appointed) as Maryland Trustees and shall,
subject to any contrary provision in the Declaration of Trust and Bylaws of the
Maryland REIT, take such office upon and subject to the same terms and
conditions subject to which they were appointed as Massachusetts Trustees.
3.3 Officers. The officers of the Maryland REIT as of the Effective Date
shall continue to be the officers of the Maryland REIT, holding such offices in
the Maryland REIT until their successors are elected or appointed and qualified
in accordance with the Declaration of Trust and Bylaws of the Maryland REIT.
3.4 Stock Option Plans. As at and from the Effective Date, the Maryland
REIT and the Massachusetts Trust shall take such action, if any, as may be
necessary to provide that all obligations of the Massachusetts Trust under the
1996 Share Option Plan and the 1997 Non-Employee Trustee Share Option Plan (the
"Stock Option Plans") shall be assumed by the Maryland REIT and all rights of
the participants under the Stock Option Plans to receive grants of options and
to exercise the options and all other rights granted thereunder shall thereupon
be converted into substantially identical rights to receive grants of options
and to exercise the options and all other rights granted thereunder in respect
of shares of beneficial interest of the Maryland REIT on substantially identical
terms and conditions as set forth in the Stock Option Plans.
IV. MISCELLANEOUS
4.1 Further Assurances. From time to time to the extent possible, as and
when required by the Maryland REIT or by its successors and assigns, there shall
be executed and delivered on behalf of the Massachusetts Trust such deeds and
other instruments, and there shall be taken or caused to be taken by it such
further and other action as shall be appropriate or necessary in order to vest
or perfect, or to conform of record or otherwise, in the Maryland REIT the title
to and possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises, and authority of the Massachusetts Trust, and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of the Maryland REIT are fully authorized in the name of and on behalf
of the Massachusetts Trust or otherwise to take any and all such action and to
execute and deliver any and all such deeds and other instruments.
4.2 Abandonment. At any time before the Effective Date, this Agreement may
be terminated and the Merger may be abandoned by the Massachusetts Trustees
and/or the Maryland Trustees.
4.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original.
4.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
A-3
<PAGE> 46
IN WITNESS WHEREOF, this Change of Venue Merger Agreement is hereby
executed on behalf of each of the parties hereto and attested by their
respective officers thereunto duly authorized.
RGPT TRUST
a Maryland real estate investment trust
By:
- ------------------------------------------------------
Name:
Title: Attest:
------------------------------------
RAMCO-GERSHENSON PROPERTIES TRUST
a Massachusetts Business Trust
By:
- ------------------------------------------------------
Name:
Title: Attest:
------------------------------------
A-4
<PAGE> 47
ANNEX B
AGREEMENT OF MERGER
OF
RAMCO-GERSHENSON PROPERTIES TRUST
(A MARYLAND REAL ESTATE INVESTMENT TRUST)
AND
SPECIAL SITUATIONS RG REIT, INC.
(A MARYLAND CORPORATION)
AGREEMENT OF MERGER entered into on , 1997, by
RAMCO-GERSHENSON PROPERTIES TRUST ("Ramco"), a Maryland real estate investment
trust organized under the laws of the State of Maryland, and SPECIAL SITUATIONS
RG REIT, INC. ("SSRG"), a Maryland corporation.
W I T N E S S E T H:
WHEREAS, SSRG is a corporation of the State of Maryland with its registered
office therein located at c/o CSC-Lawyers Incorporating Service Company, 11 E.
Chase Street, Suite 9E, Baltimore, Maryland 21202; and
WHEREAS, the total number of shares of stock which SSRG has authority to
issue is 1,600,000, par value of $.01 each, of which 1,400,000 are classified as
Class A Common Stock (par value $.01 per share) and 200,000 are classified as
Class B Non-voting Common Stock (par value $.01 per share); and
WHEREAS, Ramco is a real estate investment trust organized under the laws
of the State of Maryland, the registered agent of which in the State of Maryland
is Charles R. Moran, c/o Ballard Spahr Andrews & Ingersoll, 300 E. Lombard
Street, Suite 1900, Baltimore, MD 21202; and
WHEREAS, the total number of shares of beneficial interests of all classes
which Ramco has authority to issue is 40,000,000 shares of beneficial interest,
par value $.01 per share of which 30,000,000 shares are initially classified as
Common Shares (par value $.01 per share) and 10,000,000 are initially classified
as Preferred Shares (par value $.01 per share); and
WHEREAS, there are shares of Class A Common Stock and shares of
Class B Non-voting Common Stock of SSRG issued and outstanding and there are
shares of beneficial interest of Ramco issued and outstanding; and
WHEREAS, this Agreement of Merger is being entered into by the parties
pursuant to that certain Preferred Units and Stock Purchase Agreement, dated as
of September 30, 1997, by and among the parties, Ramco-Gershenson Properties,
L.P., and the Advancing Party named therein; and
WHEREAS, the Board of Directors of SSRG, by resolution adopted on
approved this Agreement of Merger; and
WHEREAS, the Board of Trustees of Ramco, by resolution adopted on October
2, 1997 approved this Agreement of Merger; and
WHEREAS, the Maryland General Corporation Law ("MGCL") and Title 8 of the
Corporations and Associates Article of the Annotated Code of Maryland ("Title
8") permits the merger of a Maryland corporation with and into a real estate
investment trust organized under Maryland law; and
B-1
<PAGE> 48
WHEREAS, the Board of Trustees of Ramco and the Board of Directors of SSRG
deem it advisable and to the advantage, welfare and best interests of Ramco and
SSRG and their respective shareholders and stockholders to merge SSRG with and
into Ramco pursuant to the provisions of the MGCL and Title 8 upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties, hereby agree as follows as follows:
1. SSRG and Ramco shall, pursuant to the provisions of the MGCL and Title
8, be merged with and into a single entity (the "Merger"). Ramco shall be the
surviving entity from and after the effective time of the merger (the "Effective
Time"), and is sometimes hereinafter referred to as the "Surviving Entity", and
shall continue to exist as the Surviving Entity under its present name pursuant
to the provisions of the MGCL and Title 8. The separate existence of SSRG, which
is sometimes hereinafter referred to as the "Merging Company", shall cease at
the Effective Time (as defined in Section 8 hereof) in accordance with the
provisions of the MGCL and Title 8.
2. The present Declaration of Trust of Ramco will be the Declaration of
Trust of the Surviving Entity and will continue in full force and effect until
changed, altered, or amended as therein provided.
3. The present By-laws of Ramco will be the By-laws of the Surviving Entity
and will continue in full force and effect until changed, altered, or amended as
therein provided and in the manner prescribed by the provisions of the
Declaration of Trust of the Surviving Entity.
4. The trustees and officers in office of Ramco at the Effective Time shall
be the members of the Board of Trustees and the officers of the Surviving
Entity, all of whom shall hold their trusteeships and offices until the election
and qualification of their respective successors or until their tenure is
otherwise terminated in accordance with the Declaration of Trust and By-laws of
the Surviving Corporation.
5. The manner and basis of converting or exchanging the issued stock of the
merging Company into shares of beneficial interest in the Surviving Entity, and
the manner of dealing with any issued stock of the Merging Company not to be
converted or exchanged on the Effective Time shall be as follows:
(a) Each share of beneficial interest in the Surviving Entity which is
issued and outstanding at the Effective Time shall remain outstanding as
one share of beneficial interest (of whatever class) in the Surviving
Entity.
(b) Each share of the ( ) shares of Class A Voting
Common Stock, par value $.01 per share, of the Merging Company (hereinafter
referred to as the "Class A Common Stock") issued and outstanding at the
Effective Time shall be converted into one (1) share of the Surviving
Entity's Series A Preferred Shares, par value $.01 per share (the "Series A
Preferred Shares").
(c) Each share of the ( ) shares of Class B Non-voting
Common Stock, par value $.01 per share, of the merging Company (hereinafter
referred to as the "Class B Common Stock") issued and outstanding at the
Effective Time shall be converted into one (1) share of the Surviving
Entity's Series A Preferred Shares.
(d) After the merger transaction described above shall have become
effective, except as otherwise provided by the MGCL with respect to
dissenting stockholders, each holder of an outstanding certificate or
certificates theretofore representing capital stock of the Merging Company
shall surrender the same to Surviving Entity and each such holder thereupon
shall be entitled to receive in exchange theretofore a certificate or
certificates representing the number of shares of the Surviving Entity's
Series A Preferred
B-2
<PAGE> 49
Shares into which the capital stock of Merging Company represented by the
certificate or certificates so surrendered shall have been converted by the
provisions hereof. Until such surrender, the stock certificates of the
Merging Company shall be deemed for all corporate purposes to evidence
ownership of the number of shares of the Surviving Entity's Series A
Preferred Shares to be delivered with respect to such capital stock
certificates.
6. In the event that this Agreement of Merger shall have been fully
approved and adopted on behalf of the Merging Company and the Surviving Entity
in accordance with the provisions of the MGCL and Title 8, the said entities
agree that they will cause to be executed and filed and recorded any document or
documents prescribed by the laws of the State of Maryland, including, but not
limited to, Articles of Merger substantially in the form attached hereto as
Exhibit A and that they will cause to be performed all necessary acts within the
State of Maryland and elsewhere to effectuate the merger herein provided for.
7. The Board of Directors and the proper officers of the Merging Company
and the Board of Trustees and the proper officers of the Surviving Entity are
hereby authorized, empowered and directed to do any and all acts and things, and
to make, execute, deliver, file and record and all instruments, papers, and
documents which shall be or become necessary, proper, or convenient to carry out
or put into effect any of the provisions of this Agreement of Merger or of the
merger herein provided for.
8. The Merger contemplated hereby shall become effective on the day and
time (the "Effective Time") at which the last of the following actions have been
completed:
(a) This Agreement and the Merger contemplated hereby shall have been
authorized and approved by the stockholders of SSRG in the manner and by
the vote required by SSRG's Charter and Bylaws and the MGCL;
(b) This Agreement and the Merger contemplated hereby shall have been
authorized and approved by the shareholders of Ramco in the manner and by
the vote required by its Declaration of Trust and Bylaws and Title 8;
(c) The transactions contemplated by that certain Preferred Units and
Stock Purchase Agreement by and among Ramco-Gershenson Properties Trust, a
Massachusetts business trust ("RG"), Special Situations RG REIT, Inc.
("SSRG") and certain other parties, which transactions include the Merger,
shall have been approved by the shareholders of RG in the manner and by the
vote required by its Declaration of Trust and Bylaws and the laws of the
Commonwealth of Massachusetts; and
(d) Articles of Merger substantially in the form attached hereto as
Exhibit A reflecting the Merger shall have been executed on behalf of Ramco
and SSRG and filed with, and accepted by, the State Department of
Assessments and Taxation of Maryland.
B-3
<PAGE> 50
IN WITNESS WHEREOF, this Agreement of Merger is hereby executed on behalf
of each of the constituent parties hereto.
Date: , 199 .
Ramco-Gershenson Properties Trust
By:
--------------------------------------
Name:
Title:
Special Situations RG REIT, Inc.
By:
--------------------------------------
Name:
Title:
B-4
<PAGE> 51
ANNEX C
RGPT TRUST
ARTICLES OF AMENDMENT AND
RESTATEMENT OF DECLARATION OF TRUST
RGPT TRUST, a Maryland real estate investment trust (the "Trust") formed
under Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland, hereby certifies to the Maryland State Department of Assessments
and Taxation (the "Department") that:
FIRST: The Trust desires to and does hereby amend and restate its
Declaration of Trust as currently in effect, as hereinafter provided. The
provisions set forth in these Articles of Amendment and Restatement of
Declaration of Trust are all of the provisions of the Declaration of Trust
currently in effect, and as hereinafter amended.
SECOND: The Declaration of Trust of the Trust is hereby amended by
striking, in their entirety, Articles I through XI of the Declaration of Trust
and by substituting in lieu thereof the following:
ARTICLE I
FORMATION
The Trust is a real estate investment trust within the meaning of Title 8.
The Trust shall not be deemed to be a general partnership, limited partnership,
joint venture, joint stock company or a corporation (but nothing herein shall
preclude the Trust from being treated for tax purposes as an association under
the Internal Revenue Code of 1986, as amended from time to time (the "Code")).
ARTICLE II
NAME
The name of the Trust is:
RGPT Trust
Under circumstances in which the Board of Trustees of the Trust (the "Board
of Trustees" or "Board") determines that the use of the name of the Trust is not
practicable, the Trust may use any other designation or name for the Trust.
ARTICLE III
PURPOSES AND POWERS
SECTION 3.1 Purposes. The purposes for which the Trust is formed are to
invest in and to acquire, hold, manage, administer, control and dispose of
property, including, without limitation or obligation, engaging in business as a
real estate investment trust under the Code.
SECTION 3.2 Powers. The Trust shall have all of the powers granted to real
estate investment trusts by Title 8 and all other powers set forth in this
Declaration of Trust which are not inconsistent with law and are appropriate to
promote and attain the purposes set forth in this Declaration of Trust.
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ARTICLE IV
RESIDENT AGENT
The name of the resident in the State of Maryland is Charles R. Moran,
whose post office address is c/o Ballard Spahr Andrews & Ingersoll, 300 East
Lombard Street, Baltimore, Maryland 21202. The resident agent is a citizen of
and resides in the State of Maryland. The Trust may have such offices or places
of business within or outside the State of Maryland as the Board of Trustees may
from time to time determine.
ARTICLE V
BOARD OF TRUSTEES
SECTION 5.1 Powers. Subject to any express limitations contained in the
Declaration of Trust or in the Bylaws, (i) the business and affairs of the Trust
shall be managed under the direction of the Board of Trustees and (ii) the Board
shall have full, exclusive and absolute power, control and authority over any
and all property of the Trust. The Board may take any action that in its sole
judgment and discretion is necessary or appropriate to conduct the business and
affairs of the Trust. This Declaration of Trust shall be construed with a
presumption in favor of the grant of power and authority to the Board. Any
construction of this Declaration of Trust or determination made in good faith by
the Board concerning its powers and authority hereunder shall be conclusive. The
enumeration and definition of particular powers of the Trustees included in this
Declaration of Trust or the Bylaws shall in no way be limited or restricted by
reference to or inference from the terms of this or any other provision of the
Declaration of Trust or the Bylaws or construed or deemed by inference or
otherwise in any manner to exclude or limit the powers conferred upon the Board
or the Trustees under the general laws of the State of Maryland or any other
applicable laws.
The Board, without any action by the shareholders of the Trust, shall have
and may exercise, on behalf of the Trust, without limitation, the power to
determine that compliance with any restriction or limitation on ownership and
transfers of shares of the Trust's beneficial interest set forth in Article VII
of this Declaration of Trust is no longer required in order for the trust to
qualify as a real estate investment trust ("REIT") under the Code; to adopt,
amend and repeal (but subject to the provisions of the Bylaws limiting adoption
of provisions inconsistent with, or the amendment or repeal of, certain
specified provisions of the Bylaws) the Bylaws; to elect officers in the manner
prescribed in the Bylaws; to solicit proxies from holders of shares of
beneficial interest of the Trust; and to do any other acts and execute and
deliver any other documents necessary or appropriate to the foregoing powers.
SECTION 5.2 Number and Classification. The number of Trustees initially
shall be nine (9), which number may thereafter be increased or decreased
pursuant to the Bylaws of the Trust. Notwithstanding the foregoing, if for any
reason any or all of the Trustees cease to be Trustees, such event shall not
terminate the Trust or affect the Declaration of Trust or the powers of the
remaining Trustees. The Trustees shall be divided into three classes (other than
any Trustee elected solely by holders of one or more classes or series of
Preferred Shares) as nearly equal in number as possible designated Class I,
Class II, and Class III, with a term of three (3) years each, and the term of
one class shall expire each year. The Trustees shall be elected by the
shareholders at every third annual meeting thereof in the manner provided in the
Bylaws or, in order to fill any vacancy on the Board of Trustees, in the manner
provided in the Bylaws. The names and addresses of the initial nine (9) Trustees
(who shall serve until the annual meeting of shareholders to be held in the year
in
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which their respective classes shall expire, and until their successors are duly
elected and qualify), the class to which such Trustees are designated and the
year in which the current term of such class shall expire are:
<TABLE>
<CAPTION>
YEAR OF
NAME ADDRESS CLASS EXPIRATION
---- ------- ----- ----------
<S> <C> <C> <C>
Joel D. Gershenson..... c/o Ramco-Gershenson Properties Trust I 1998
27600 Northwestern Highway, Suite 200
Southfield, MI 48034
Dennis E. Gershenson... c/o Ramco-Gershenson Properties Trust I 1998
27600 Northwestern Highway, Suite 200
Southfield, MI 48034
Robert A. Meister...... c/o AON Risk Services Company I 1998
Two World Trade Center, 105th Floor
New York, NY 10048
Selwyn Isakow.......... c/o The Oxford Investment Group, Inc. II 1999
2000 North Woodward Ave., Suite 130
Bloomfield Hills, MI 48304
Arthur H. Goldberg..... c/o Manhattan Associates, LLC II 1999
375 Park Avenue, Suite 1606
New York, NY 10152
Mark K. Rosenfeld...... c/o KMR, Inc. II 1999
404 South Higby
Jackson, MI 49203
Stephen R. Blank....... c/o Oppenheimer & Co., Inc. III 2000
Oppenheimer Tower, 39th Floor
World Financial Center
New York, NY 10281
Herbert Liechtung...... 5500 Collins Avenue, #302 III 2000
Miami Beach, FL 33140
Joel M. Pashcow........ c/o Atlantic Realty Trust III 2000
747 Third Avenue, 10th Floor
New York, NY 10017
</TABLE>
If the number of Trustees is changed, any increase or decrease in the
number of Trustees shall be apportioned among the classes so as to maintain the
number of Trustees in each class as nearly equal in number as possible. At each
annual meeting of shareholders, the successors to the class of Trustees whose
term expires at such meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the year
of their election. Election of Trustees by shareholders shall require the vote
and be in accordance with the procedures set forth in the Bylaws.
It shall not be necessary to list in the Declaration of Trust the names and
addresses of any Trustees hereinafter elected.
SECTION 5.3 Resignation or Removal. Any Trustee may resign by written
notice to the Board of Trustees, effective upon execution and delivery to the
Trust of such written notice or upon any future date
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specified in the notice. Subject to any rights of holders of one or more classes
or series of preferred shares to elect one or more Trustees, a Trustee may be
removed at any time, with or without cause, at a meeting of the shareholders, by
the affirmative vote of the holders of not less than two-thirds of the shares
then outstanding and entitled to vote generally in the election of Trustees.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1 Authorized Shares. The beneficial interest of the Trust shall
be divided into shares of beneficial interest (the "Shares"). The Trust has the
authority to issue 30,000,000 common shares of beneficial interest, par value
$.0l per share ("Common Shares"), and 10,000,000 preferred shares of beneficial
interest, par value $.0l per share ("Preferred Shares").
The Board of Trustees, without the approval of the shareholders of the
Trust, may amend the Declaration of Trust from time to time to increase or
decrease the aggregate number of Shares or the number of Shares of any class
that the Trust has authority to issue.
SECTION 6.2 Common Shares. Subject to the provisions of Article VIII, each
Common Share shall entitle the holder thereof to one vote on each matter upon
which the holders of Common Shares are entitled to vote. The Board of Trustees
may reclassify any unissued Common Shares from time to time in one or more
classes or series of Shares.
SECTION 6.3 Preferred Shares. The Board of Trustees may classify any
unissued Preferred Shares, and reclassify any previously classified but unissued
Preferred Shares of any class or series, from time to time, in one or more
classes or series of Shares.
SECTION 6.4 Classified or Reclassified Shares. Prior to issuance of
classified or reclassified Shares of any class or series, the Board of Trustees
by resolution shall (a) designate that class or series to distinguish it from
all other classes and series of Shares; (b) specify the number of Shares to be
included in the class or series; (c) set, subject to the provisions of Article
VII and subject to the express terms of any class or series of Shares
outstanding at the time, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each class or series;
and (d) cause the Trust to file articles supplementary with the State Department
of Assessments and Taxation of Maryland (the "SDAT"). Any of the terms of any
class or series of Shares set pursuant to clause (c) of this Section 6.4 may be
made dependent upon facts or events ascertainable outside the Declaration of
Trust (including the occurrence of any event, including a determination or
action by the Trust or any other person or body) and may vary among holders
thereof, provided that the manner in which such facts, events or variations
shall operate upon the terms of such class or series of Shares is clearly and
expressly set forth in the articles supplementary filed with the SDAT.
SECTION 6.5 Authorization by Board of Share Issuance. The Board of Trustees
may authorize the issuance from time to time of Shares of any class or series,
whether now or hereafter authorized, or securities or rights convertible into
Shares of any class or series, whether now or hereafter authorized, for such
consideration (whether in cash, property, past or future services, obligations
for future payment or otherwise) as the Board of Trustees may deem advisable (or
without consideration in the case of a Share split or Share dividend), subject
to such restrictions or limitations, if any, as may be set forth in the
Declaration of Trust or Bylaws of the Trust.
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SECTION 6.6 Dividends and Distributions. The Board of Trustees may from
time to time authorize and declare to shareholders such dividends or
distributions, in cash, property or other assets of the Trust or in securities
of the Trust or from any other source, as the Board of Trustees in its
discretion shall determine. The Board of Trustees shall endeavor to declare and
pay such dividends and distributions as shall be necessary for the Trust to
qualify as a real estate investment trust under the Code; however, shareholders
shall have no right to any dividend or distribution unless or until authorized
and declared by the Board. The exercise of the powers and rights of the Board of
Trustees pursuant to this Section shall be subject to the provisions of any
class or series of Shares at the time outstanding. Notwithstanding any other
provision in the Declaration of Trust, no determination shall be made by the
Board of Trustees nor shall any transaction be entered into by the Trust which
would cause any Shares or other beneficial interest in the Trust not to
constitute "transferable shares" or "transferable certificates of beneficial
interest" under Section 856(a)(2) of the Code or which would cause any
distribution to constitute a preferential dividend as described in Section
562(c) of the Code. The receipt by any Person in whose name any Shares are
registered on the records of the Trust or by his duly authorized agent shall be
a sufficient discharge for all dividends or distributions payable or deliverable
in respect of such Shares and from all liability to see to the application
thereof.
SECTION 6.7 General Nature of Shares. All Shares shall be personal property
entitling the shareholders only to those rights provided in this Declaration of
Trust. The shareholders shall have no interest in the property of the Trust and
shall have no right to compel any partition, division, dividend or distribution
of the Trust or of the property of the Trust. The death of a shareholder shall
not terminate the Trust. The Trust is entitled to treat as shareholders only
those persons in whose names Shares are registered as holders of Shares on the
beneficial interest ledger of the Trust.
SECTION 6.8 Fractional Shares. The Trust may, without the consent or
approval of any shareholder, issue fractional Shares, eliminate a fraction of a
Share by rounding up or down to a full Share, arrange for the disposition of a
fraction of a Share by the person entitled to it, or pay cash for the fair value
of a fraction of a Share.
SECTION 6.9 Declaration and Bylaws. All shareholders are subject to the
provisions of the Declaration of Trust and the Bylaws of the Trust.
SECTION 6.10 Divisions and Combinations of Shares. Subject to an express
provision to the contrary in the terms of any class or series of beneficial
interest hereafter authorized, the Board of Trustees shall have the power to
divide or combine the outstanding shares of any class or series of beneficial
interest, without a vote of shareholders.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
SECTION 7.1 Definitions. For the purpose of this Article VII, the following
terms shall have the following meanings:
Beneficial Ownership. The term "Beneficial Ownership" shall mean ownership
of Shares by a Person, whether the interest in Shares is held directly or
indirectly (including by a nominee), and shall include interests that would be
treated as owned through the application of Section 544 of the Code, as modified
by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially
Owns" and "Beneficially Owned" shall have the correlative meanings.
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Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.
Charitable Beneficiary. The term "Charitable Beneficiary" shall mean one or
more beneficiaries of the Charitable Trust as determined pursuant to Section
7.3.6, provided that each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.
Charitable Trust. The term "Charitable Trust" shall mean any trust provided
for in Section 7.3.1.
Charitable Trustee. The term "Charitable Trustee" shall mean the Person
unaffiliated with the Trust and a Prohibited Owner, that is appointed by the
Trust to serve as trustee of the Charitable Trust.
Code The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Shares by a Person, whether the interest in Shares is held directly
or indirectly (including by a nominee), and shall include interests that would
be treated as owned through the application of Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the correlative
meanings.
Declaration of Trust. The term "Declaration of Trust" shall mean this
Declaration of Trust as filed for record with the SDAT, and any amendments
thereto.
Excepted Holder. The term "Excepted Holder" shall mean a shareholder of the
Trust for whom an Excepted Holder Limit is created by this Article VII or by the
Board of Trustees pursuant to Section 7.2.7.
Excepted Holder Limit The term "Excepted Holder Limit" shall mean, provided
that the affected Excepted Holder agrees to comply with the requirements
established by the Board of Trustees pursuant to Section 7.2.7, and subject to
adjustment pursuant to Section 7.2.8, the percentage limit established by the
Board of Trustees pursuant to Section 7.2.7 upon the affirmative vote of 75% of
the Trustees entitled to vote thereon.
Initial Date The term "Initial Date" shall mean the date upon which this
Declaration of Trust containing this Article VII is filed for record with the
SDAT.
Market Price The term "Market Price" on any date shall mean, with respect
to any class or series of outstanding Shares, the Closing Price for such Shares
on such date. The "Closing Price" on any date shall mean the last sale price for
such Shares, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, for such Shares, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if such Shares are not listed or admitted to trading on the NYSE, as reported on
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which such
Shares are listed or admitted to trading or, if such Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price,
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotation system that may then be in use or, if
such Shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in such Shares selected by the Board of Trustees or, in the event that no
trading price is
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available for such Shares, the fair market value of Shares, as determined in
good faith by the Board of Trustees.
NYSE The term "NYSE" shall mean the New York Stock Exchange.
Ownership Limit. The term "Ownership Limit" shall mean (i) with respect to
the Common Shares, 9.8% (in value or number of shares, whichever is more
restrictive) of the outstanding Common Shares of the Trust; and (ii) with
respect to any class or series of Preferred Shares, 9.8% (in value or number of
shares, whichever is more restrictive) of the outstanding shares of such class
or series of Preferred Shares of the Trust.
Person. The term "Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and a group to which an Excepted Holder Limit applies.
Prohibited Owner. The term "Prohibited Owner" shall mean, with respect to
any purported Transfer, any Person who, but for the provisions of Section 7.2.1,
would Beneficially Own or Constructively Own Shares, and if appropriate in the
context, shall also mean any Person who would have been the record owner of
Shares that the Prohibited Owner would have so owned.
REIT The term "REIT" shall mean a real estate investment trust within the
meaning of Section 856 of the Code.
Restriction Termination Date The term "Restriction Termination Date" shall
mean the first day after the Initial Date on which the Board determines (i) that
it is no longer in the best interests of the Trust to attempt to, or continue to
qualify as, a REIT or (ii) that compliance with the restrictions and limitations
on Beneficial Ownership, Constructive Ownership and Transfers of Shares set
forth herein is no longer required in order for the Trust to qualify as a REIT.
SDAT. The term "SDAT" shall mean the State Department of Assessments and
Taxation of Maryland.
Transfer. The term "Transfer" shall mean any issuance, sale, transfer,
gift, assignment, devise or other disposition, as well as any other event that
causes any Person to acquire Beneficial Ownership or Constructive Ownership, or
any agreement to take any such actions or cause any such events, of Shares or
the right to vote or receive dividends on Shares, including (a) a change in the
capital structure of the Trust, (b) a change in the relationship between two or
more Persons which causes a change in ownership of Shares by application of
Section 544 of the Code, as modified by Section 856(h) of the Code, (c) the
granting or exercise of any option or warrant (or any disposition of any option
or warrant), pledge, security interest or similar right to acquire Shares (d)
any disposition of any securities or rights convertible into or exchangeable for
Shares or any interest in Shares or any exercise of any such conversion or
exchange right and (e) Transfers of interests in other entities that result in
changes in Beneficial or Constructive Ownership of Shares; in each case, whether
voluntary or involuntary, whether owned of record, Constructively Owned or
Beneficially Owned and whether by operation of law or otherwise. For purposes of
this Article VII, the right of a limited partner in Ramco-Gershenson Properties,
L.P., a Delaware limited partnership (the "Partnership"), to require the
Partnership to redeem such limited partner's units of Partnership interest
pursuant to Section (or any successor section thereto) of the Amended and
Restated Agreement of Limited Partnership of Ramco-Gershenson Properties, L.P.,
as amended, shall not be considered to be an option or similar right to acquire
Shares of the Trust. The terms "Transferring" and "Transferred" shall have the
correlative meanings.
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SECTION 7.2 Shares.
SECTION 7.2.1 Ownership Limitations. During the period commencing on the
Initial Date and prior to the Restriction Termination Date:
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder, shall Beneficially
Own or Constructively Own Shares in excess of the Ownership Limit and (2)
no Excepted Holder shall Beneficially Own or Constructively Own Shares in
excess of the Excepted Holder Limit for such Excepted Holder.
(ii) No Person shall Beneficially or Constructively own Shares to the
extent that such Beneficial or Constructive Ownership of Shares would
result in the Trust (A) being "closely held" within the meaning of Section
856(h) of the Code (without regard to whether the ownership interest is
held during the last half of a taxable year), or (B) otherwise failing to
qualify as a REIT (including, but not limited to, Beneficial or
Constructive Ownership that would result in the Trust owning (actually or
Constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Trust from such
tenant would cause the Trust to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code).
(iii) No person shall Transfer any Shares if, as a result of the
Transfer, the Shares would be beneficially owned by less than 100 Persons
(determined without reference to the rules of attribution under Section 544
of the Code). Notwithstanding any other provisions contained herein, any
Transfer of Shares (whether or not such Transfer is the result of a
transaction entered into through the facilities of the NYSE or any other
national securities exchange or automated inter-dealer quotation system)
that, if effective, would result in Shares being beneficially owned by less
than 100 Persons (determined under the principles of Section 856(a)(5) of
the Code) shall be void ab initio, and the intended transferee shall
acquire no rights in such Shares.
(b) Transfer in Trust. If any Transfer of Shares (whether or not such
Transfer is the result of a transaction entered into through the facilities of
the NYSE or any other national securities exchange or automated interdealer
quotation system) occurs which, if effective, would result in any Person
Beneficially Owning or Constructively Owning Shares in violation of Section
7.2.1(a)(i) or (ii);
(i) then that number of Shares the Beneficial or Constructive
Ownership of which otherwise would cause such Person to violate Section
7.2.1(a)(i) or (ii) (rounded to the nearest whole share so that such
violation is not in existence) shall be automatically transferred to a
Charitable Trust for the benefit of a Charitable Beneficiary, as described
in Section 7.3, effective as of the close of business on the Business Day
prior to the date of such Transfer, and such Person shall acquire no rights
in such Shares; or
(ii) if the transfer to the Charitable Trust described in clause (i)
of this sentence would not be effective for any reason to prevent the
violation of Section 7.2.1(a)(i) or (ii), then the Transfer of that number
of Shares that otherwise would cause any Person to violate Section
7.2.1(a)(i) or (ii) shall be void ab initio, and the intended transferee
shall acquire no rights in such Shares.
SECTION 7.2.2 Remedies for Breach. If the Board of Trustees or any duly
authorized committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place that results in a violation of Section
7.2.1 or that a Person intends to acquire or has attempted to acquire Beneficial
or Constructive Ownership of any Shares in violation of Section 7.2.1 (whether
or not such violation is intended), the Board of Trustees or a committee thereof
shall take such action as it deems advisable to refuse
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to give effect to or to prevent such Transfer or other event, including, without
limitation, causing the Trust to redeem Shares, refusing to give effect to such
Transfer on the books of the Trust or instituting proceedings to enjoin such
Transfer or other event; provided, however, that any Transfers or attempted
Transfers or other events in violation of Section 7.2.1 shall automatically
result in the transfer to the Charitable Trust described above, and, where
applicable, such Transfer (or other event) shall be void ab initio as provided
above irrespective of any action (or non-action) by the Board of Trustees or a
committee thereof.
SECTION 7.2.3 Notice of Restricted Transfer. Any Person who acquires or
attempts or intends to acquire Beneficial ownership or Constructive Ownership of
Shares that will or may violate Section 7.2.1(a), or any Person who would have
owned Shares that resulted in a transfer to the Charitable Trust pursuant to the
provisions of Section 7.2.1(b), shall immediately give written notice to the
Trust of such event, or in the case of such a proposed or attempted transaction,
give at least 15 days prior written notice, and shall provide to the Trust such
other information as the Trust may request in order to determine the effect, if
any, of such Transfer on the Trust's status as a REIT.
SECTION 7.2.4 Owners Required To Provide Information. From the Initial Date
and prior to the Restriction Termination Date:
(a) every owner of more than five percent (or such lower percentage as
required by the Code or the Treasury Regulations promulgated thereunder) of the
outstanding Shares, within 30 days after the end of each taxable year, shall
give written notice to the Trust stating the name and address of such owner, the
number of Shares and other Shares Beneficially Owned and a description of the
manner in which such shares are held; provided that a shareholder of record who
holds outstanding Shares as nominee for another Person, which other Person is
required to include in gross income the dividends received on such Shares (an
"Actual Owner"), shall give written notice to the Trust stating the name and
address of such Actual Owner and the number of Shares of such Actual Owner with
respect to which the shareholder of record is nominee. Each such owner shall
provide to the Trust such additional information as the Trust may request in
order to determine the effect, if any, of such Beneficial Ownership on the
Trust's status as a REIT and to ensure compliance with the Ownership Limit.
(b) each Person who is a Beneficial or Constructive Owner of Shares and
each Person (including the shareholder of record) who is holding Shares for a
Beneficial or Constructive Owner shall provide to the Trust such information as
the Trust may request, in good faith, in order to determine the Trust's status
as a REIT and to comply with requirements of any taxing authority or
governmental authority or to determine such compliance.
SECTION 7.2.5 Remedies Not Limited. Nothing contained in this Section 7.2
shall limit the authority of the Board of Trustees to take such other action as
it deems necessary or advisable to protect the Trust and the interests of its
shareholders in preserving the Trust's status as a REIT.
SECTION 7.2.6 Ambiguity. In the case of an ambiguity in the application of
any of the provisions of this Section 7.2, Section 7.3 or any definition
contained in Section 7.1, the Board of Trustees shall have the power to
determine the application of the provisions of this Section 7.2 or Section 7.3
with respect to any situation based on the facts known to it. In the event
Section 7.2 or 7.3 requires an action by the Board of Trustees and the
Declaration of Trust fails to provide specific guidance with respect to such
action, the Board of Trustees shall have the power to determine the action to be
taken so long as such action is not contrary to the provisions of Sections 7.1,
7.2 or 7.3.
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SECTION 7.2.7 Exceptions.
(a) The Board of Trustees, in its sole discretion and upon the vote of 75%
of the members of the Board of Trustees entitled to vote thereon, may grant to
any Person who makes a request therefor an exception to the Ownership Limit with
respect to the ownership of any series or class of Preferred Shares, subject to
the following conditions and limitations: (A) the Board of Trustees shall have
determined that (x) assuming such Person would Beneficially or Constructively
Own the maximum amount of Shares permitted as a result of the exception to be
granted and (y) assuming that all other Persons who would be treated as
"individuals" for purposes of Section 542(a)(2) of the Code (determined taking
into account Section 856(h)(3)(A) of the Code) would Beneficially or
Constructively Own the maximum amount of Common Shares and Preferred Shares
permitted under this Article VII (taking into account any exception, waiver or
exemption granted under this Section 7.2.7 to (or with respect to) such
Persons), the Trust would not be "closely held" within the meaning of Section
856(h) of the Code (assuming that the ownership of Shares is determined during
the second half of a taxable year) and would not otherwise fail to qualify as a
REIT; and (B) such Person provides to the Board of Trustees such representations
and undertakings, if any, as the Board of Trustees may, in its reasonable
discretion, determine to be necessary in order for the Board of Trustees to make
the determination that the conditions set forth in clause (A) above of this
Section 7.2.7(a) have been and/or will continue to be satisfied (including,
without limitation, an agreement as to a reduced Ownership Limit or Excepted
Holder Limit for such Person with respect to the Beneficial or Constructive
Ownership of one or more other classes of Shares not subject to the exception),
and such Person agrees that any violation of such representations and
undertakings or any attempted violation thereof will result in the application
of the remedies set forth in Section 7.2 with respect to Shares held in excess
of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with
respect to such Person (determined without regard to the exception granted such
Person under this subparagraph (a)). If a member of the Board of Trustees
requests that the Board of Trustees grant an exception pursuant to this
subparagraph (a) with respect to such member or with respect to any other Person
if such Board member would be considered to be the Beneficial or Constructive
Owner of Shares owned by such Person, such member of the Board shall not
participate in the decision of the Board of Trustees as to whether to grant any
such exception.
(b) In addition to exceptions permitted under subparagraph (a) above, the
Board of Trustees, in its sole discretion and upon the vote of 75% of the
members of the Board of Trustees entitled to vote thereon, may except a Person
from the Ownership Limit and any Excepted Holder Limit if: (i) such Person
submits to the Board of Trustees information satisfactory to the Board of
Trustees, in its reasonable discretion, demonstrating that such Person is not an
individual for purposes of Section 542(a)(2) of the Code (determined taking into
account Section 856(h)(3)(A) of the Code); (ii) such Person submits to the Board
of Trustees information satisfactory to the Board of Trustees, in its reasonable
discretion, demonstrating that no Person who is an individual for purposes of
Section 542(a)(2) of the Code (determined taking into account Section
856(h)(3)(A) of the Code) would be considered to Beneficially Own Shares in
excess of the Ownership Limit by reason of the Excepted Holder's ownership of
Shares in excess of the Ownership Limit pursuant to the exception granted under
this subparagraph (b); (iii) such Person submits to the Board of Trustees
information satisfactory to the Board of Trustees, in its reasonable discretion,
demonstrating that clause (2) of subparagraph (a)(ii) of Section 7.2.1 will not
be violated by reason of the Excepted Holder's ownership of Shares in excess of
the Ownership Limit pursuant to the exception granted under this subparagraph
(b); and (iv) such Person provides to the Board of Trustees such representations
and undertakings, if any, as the Board of Trustees may, in its reasonable
discretion, require to ensure that the conditions in clauses (i), (ii) and (iii)
hereof are satisfied and will continue to be satisfied throughout the period
during which such Person owns Shares in excess of the Ownership Limit pursuant
to any exception thereto granted under this subparagraph (b), and such Person
agrees that any violation of such representations and undertakings or any
attempted
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violation thereof will result in the application of the remedies set forth in
Section 7.2 with respect to Shares held in excess of the Ownership Limit with
respect to such Person (determined without regard to the exception granted such
Person under this subparagraph (b)).
(c) Prior to granting any exception pursuant to Section 7.2.7(a) or (b),
the Board of Trustees may require a ruling from the Internal Revenue Service, or
an opinion of counsel, in either case in form and substance satisfactory to the
Board of Trustees in its sole discretion, as it may deem necessary or advisable
in order to determine or ensure the Trust's status as a REIT. Notwithstanding
the receipt of any ruling or opinion, the Board of Trustees may impose such
conditions or restrictions as it deems appropriate in connection with granting
such exception as may be necessary or desirable so that such exception does not
adversely affect the Trust's ability to qualify, or to continue to qualify, as a
REIT.
(d) Subject to Section 7.2.1(a)(ii), an underwriter or placement agent
which participates in a public offering or a private placement of Shares (or
securities convertible into or exchangeable for Shares) may Beneficially Own or
Constructively Own Shares (or securities convertible into or exchangeable for
Shares) in excess of the Ownership Limit, but only to the extent necessary to
facilitate such public offering or private placement.
(e) The Board of Trustees may only reduce the Excepted Holder Limit for an
Excepted Holder: (1) with the written consent of such Excepted Holder at any
time, or (2) pursuant to the terms and conditions of the agreements and
undertakings entered into with such Excepted Holder in connection with the
establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted
Holder Limit shall be reduced to a percentage that is less than the Ownership
Limit.
SECTION 7.2.8 Increase in Ownership Limit. The Board of Trustees may from
time to time increase the Ownership Limit other than as to persons which are
Exempted Holders, subject to the limitations provided in this Section 7.2.8.
(a) The Ownership Limit may not be increased if, after giving effect to
such increase, five Persons who are considered individuals pursuant to Section
542 of the Code, as modified by Section 856(h)(3) of the Code (taking into
account all of the Excepted Holders), could Beneficially Own, in the aggregate,
more than 49.5% of the value of the outstanding Shares.
(b) Prior to the modification of the Ownership Limit pursuant to this
Section 7.2.8, the Board of Trustees may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or advisable in
order to determine or ensure the Trust's status as a REIT if the modification in
the Ownership Limit were to be made.
SECTION 7.2.9 Legend. Each certificate for Shares shall bear the following
legend:
The shares represented by this certificate are subject to restrictions
on Beneficial and Constructive Ownership and Transfer for the purpose
of the Trust's maintenance of its status as a real estate investment
trust (a "REIT") under the Internal Revenue Code of 1986, as amended
(the "Code"). Subject to certain further restrictions and except as
expressly provided in the Trust's Declaration of Trust, (i) no Person
may Beneficially or Constructively Own Common Shares of the Trust in
excess of 9.8 percent (in value or number of shares) of the
outstanding Common Shares of the Trust unless such Person is an
Excepted Holder (in which case the Excepted Holder Limit shall be
applicable); (ii) no Person may Beneficially or Constructively Own any
class or series of Preferred Shares of the Trust in excess of 9.8
percent (in value or number of shares) of the outstanding Shares of
such class or series of Preferred Shares of the Trust, unless such
Person
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is an Excepted Holder (in which case the Excepted Holder Limit shall
be applicable); (iii) no Person may Beneficially or Constructively Own
Shares that would result in the Trust being "closely held" under
Section 856(h) of the Code or otherwise cause the Trust to fail to
qualify as a REIT; and (iv) no Person may Transfer Shares if such
Transfer would result in Shares of the Trust being owned by fewer than
100 Persons. Any Person who Beneficially or Constructively Owns or
attempts to Beneficially or Constructively Own Shares which cause or
will cause a Person to Beneficially or Constructively Own Shares in
excess or in violation of the above limitations must immediately
notify the Trust. If any of the restrictions on transfer or ownership
are violated, the Shares represented hereby will be automatically
transferred to a Charitable Trustee of a Charitable Trust for the
benefit of one or more Charitable Beneficiaries. In addition, upon the
occurrence of certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. All capitalized
terms in this legend have the meanings defined in the Trust's
Declaration of Trust, as the same may be amended from time to time, a
copy of which, including the amended from restrictions on transfer and
ownership, will be furnished to each holder of Shares of the Trust on
request and without charge.
SECTION 7.3 Transfer of Shares in Trust.
SECTION 7.3.1 Ownership in Trust. Upon any purported Transfer or other
event described in Section 7.2.1(b) that would result in a transfer of Shares to
a Charitable Trust, such Shares shall be deemed to have been transferred to the
Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of
one or more Charitable Beneficiaries. Such transfer to the Charitable Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the purported Transfer or other event that results in the transfer to
the Charitable Trust pursuant to Section 7.2.1(b). The Charitable Trustee shall
be appointed by the Trust and shall be a Person unaffiliated with the Trust and
any Prohibited Owner. Each Charitable Beneficiary shall be designated by the
Trust as provided in Section 7.3.6.
SECTION 7.3.2 Status of Shares Held by the Charitable Trustee. Shares held
by the Charitable Trustee shall be issued and outstanding Shares of the Company.
The Prohibited Owner shall have no rights in the shares held by the Charitable
Trustee. The Prohibited Owner shall not benefit economically from ownership of
any shares held in trust by the Charitable Trustee, shall have no rights to
dividends and shall not possess any rights to vote or other rights attributable
to the shares held in the Charitable Trust.
SECTION 7.3.3 Dividend and Voting Rights. The Charitable Trustee shall have
all voting rights and rights to dividends or other distributions with respect to
Shares held in the Charitable Trust, which rights shall be exercised for the
exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Trust that Shares have been
transferred to the Charitable Trustee shall be paid with respect to such Shares
to the Charitable Trustee upon demand and any dividend or other distribution
authorized but unpaid shall be paid when due to the Charitable Trustee. Any
dividends or distributions so paid over to the Charitable Trustee shall be held
in trust for the Charitable Beneficiary. The Prohibited Owner shall have no
voting rights with respect to shares held in the Charitable Trust and, subject
to Maryland law, effective as of the date that Shares have been transferred to
the Charitable Trustee, the Charitable Trustee shall have the authority (at the
Charitable Trustee's sole discretion) (i) to rescind as void any vote cast by a
Prohibited Owner prior to the discovery by the Trust that Shares have been
transferred to the Charitable Trustee and (ii) to recast such vote in accordance
with the desires of the Charitable Trustee acting for the benefit of the
Charitable Beneficiary. Notwithstanding the provisions of this Article VII,
until the Trust has received notification that Shares have been transferred into
a Charitable Trust, the Trust shall be entitled to rely on its share transfer
and other shareholder records for purposes of preparing lists of shareholders
entitled
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to vote at meetings, determining the validity and authority of proxies and
otherwise conducting votes of shareholders.
SECTION 7.3.4 Rights Upon Liquidation. Upon any voluntary or involuntary
liquidation, dissolution or winding up of or any distribution of the assets of
the Trust, the Charitable Trustee shall be entitled to receive, ratably with
each other holder of Shares of the class or series of Shares that is held in the
Charitable Trust, that portion of the assets of the Trust available for
distribution to holders of such class or series (determined based upon the ratio
that the number of Shares or such class or series of Shares held by Charitable
Trustee bears to the total number of Shares of such class or series of Shares
then outstanding). The Charitable Trustee shall distribute any such assets
received in respect of the Shares held in the Charitable Trust in any
liquidation, dissolution or winding up of, or distribution of the assets of the
Trust, in accordance with Section 7.3.5.
SECTION 7.3.5 Sale of Shares by the Charitable Trustee. Within 20 days of
receiving notice from the Trust that Shares have been transferred to the
Charitable Trust, the Charitable Trustee of the Charitable Trust shall sell the
shares held in the Charitable Trust to a person, designated by the Charitable
Trustee, whose ownership of the shares will not violate the ownership
limitations set forth in Section 7.2.1(a). Upon such sale, the interest of the
Charitable Beneficiary in the shares sold shall terminate and the Charitable
Trustee shall distribute the net proceeds of the sale to the Prohibited Owner
and to the Charitable Beneficiary as provided in this Section 7.3.5. The
Prohibited Owner shall receive the lesser of (1) the price paid by the
Prohibited Owner for the shares or, if the Prohibited Owner did not give value
for the shares in connection with the event causing the shares to be held in the
Charitable Trust (e.g., in the case of a gift, devise or other such
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Charitable Trust and (2) the price per share received
by the Charitable Trustee from the sale or other disposition of the shares held
in the Charitable Trust. Any net sales proceeds in excess of the amount payable
to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.
If, prior to the discovery by the Trust that Shares have been transferred to the
Charitable Trustee, such shares are sold by a Prohibited Owner, then (i) such
shares shall be deemed to have been sold on behalf of the Charitable Trust and
(ii) to the extent that the Prohibited Owner received an amount for such shares
that exceeds the amount that such Prohibited Owner was entitled to receive
pursuant to this Section 7.3.5, such excess shall be paid to the Charitable
Trustee upon demand.
SECTION 7.3.6 Purchase Right in Shares Transferred to the Charitable
Trustee. Shares transferred to the Charitable Trustee shall be deemed to have
been offered for sale to the Trust, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Charitable Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Trust, or its designee, accepts such offer. The Trust shall have
the right to accept such offer until the Charitable Trustee has sold the shares
held in the Charitable Trust pursuant to Section 7.3.5. Upon such a sale to the
Trust, the interest of the Charitable Beneficiary in the shares sold shall
terminate and the Charitable Trustee shall distribute the net proceeds of the
sale of the Prohibited Owner.
SECTION 7.3.7 Designation of Charitable Beneficiaries. By written notice to
the Charitable Trustee, the Trust shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Charitable
Trust such that (i) shares held in the Charitable Trust would not violate the
restrictions set forth in Section 7.2.1(a) in the hands of such Charitable
Beneficiary and (ii) each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.
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SECTION 7.4 NYSE Transactions. Nothing in this Article VII shall preclude
the settlement of any transaction entered into through the facilities of the
NYSE or any other national securities exchange or automated inter-dealer
quotation system. The fact that the settlement of any transaction is permitted
shall not negate the effect of any other provision of this Article VII and any
transferee in such a transaction shall be subject to all of the provisions and
limitations set forth in this Article VII.
SECTION 7.5 Enforcement. The Trust is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of this
Article VII.
SECTION 7.6 Non-Waiver. No delay or failure on the part of the Trust or the
Board of Trustees in exercising any right hereunder shall operate as a waiver of
any right of the Trust or the Board of Trustees, as the case may be, except to
the extent specifically waived in writing.
ARTICLE VIII
SHAREHOLDERS
SECTION 8.1 Meetings. There shall be an annual meeting of the shareholders,
to be held on proper notice at such time (after delivery of the Trust's annual
report) and convenient location as shall be determined by or in the manner
prescribed in the Bylaws, for the election of Trustees, if required, and for the
transaction of any other business within the powers of the Trust. Except as
otherwise provided in this Declaration of Trust, special meetings of
shareholders may be called in the manner provided in the Bylaws. If there are no
Trustees, the officers of the Trust shall promptly call a special meeting of the
shareholders entitled to vote for the election of successor Trustees. Any
meeting may be adjourned and reconvened as the Trustees determine or as provided
in the Bylaws.
SECTION 8.2 Voting Rights. Subject to the provisions of any class or series
of Shares then outstanding, the shareholders shall be entitled to vote only on
the following matters: (a) election of Trustees as provided in Section 5.2 and
the removal of Trustees as provided in Section 5.3; (b) amendment of this
Declaration of Trust as provided in Article X and amendment of the Bylaws, to
the extent that the Bylaws provide that certain provisions thereof may not be
amended without the consent of the shareholders; (c) termination of the Trust as
provided in Section 10.3; (d) merger or consolidation of the Trust or the sale
or other disposition of substantially all of the property of the Trust, as
provided in Article XI; (e) such other matters with respect to which the Board
of Trustees has adopted a resolution declaring that a proposed action is
advisable and directing that the matter be submitted to the shareholders for
approval or ratification; and (f) such other matters as may be properly brought
before a meeting by a shareholder pursuant to the Bylaws. Except with respect to
the foregoing matters, no action taken by the shareholders will in any way bind
the Board of Trustees.
SECTION 8.3 Preemptive and Appraisal Rights. Except as may be provided by
the Board of Trustees in setting the terms of classified or reclassified Shares
pursuant to Section 6.4 or by way of contract in connection therewith, no holder
of Shares shall, as such holder, (a) have any preemptive right to purchase or
subscribe for any additional Shares of the Trust or any other security of the
Trust which it may issue or sell or (b), except as expressly required by Title
8, have any right to require the Trust to pay him the fair value of his Shares
in an appraisal or similar proceeding.
SECTION 8.4 Extraordinary Actions. Except as otherwise specifically
provided in this Declaration of Trust (including without limitation, in those
provisions relating to election and removal of Trustees and as provided in
Article XI), notwithstanding any provision of law permitting or requiring any
action to be taken or
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authorized by the affirmative vote of the holders of a greater number of votes,
any action shall be effective and valid if taken or authorized by the
affirmative vote of not less than a majority of all the votes entitled to be
cast on the matter, including without limitation any transaction, approval of
which requires by law the affirmative vote of shareholders and pursuant to which
the Trust's business and assets will be combined with those of one or more other
entities (whether by merger, sale or other transfer of assets, consolidation or
share exchange) (a "Business Combination").
ARTICLE IX
LIABILITY LIMITATION, INDEMNIFICATION AND
TRANSACTIONS WITH THE TRUST
SECTION 9.1 Limitation of Shareholder Liability. No shareholder shall be
liable for any debt, claim, demand, judgment or obligation of any kind of,
against or with respect to the Trust by reason of his being a shareholder, nor
shall any shareholder be subject to any personal liability whatsoever, in tort,
contract or otherwise, to any person or entity in connection with the property
or the affairs of the Trust by reason of his being a shareholder.
SECTION 9.2 Limitation of Trustee and Officer Liability. To the maximum
extent that Maryland law in effect from time to time permits limitation of the
liability of trustees and officers of a real estate investment trust, no Trustee
or officer of the Trust shall be liable to the Trust or to any shareholder for
money damages. Neither the amendment nor repeal of this Section 9.2, nor the
adoption or amendment of any other provision of this Declaration of Trust
inconsistent with this Section 9.2, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption. In the absence
of any Maryland statute limiting the liability of trustees and officers of a
Maryland real estate investment trust for money damages in a suit by or on
behalf of the Trust or by any shareholder, no Trustee or officer of the Trust
shall be liable to the Trust or to any shareholder for money damages except to
the extent that (a) the Trustee or officer actually received an improper benefit
or profit in money, property, or services, for the amount of the benefit or
profit in money, property, or services actually received, or (b) a judgment or
other final adjudication adverse to the Trustee or officer is entered in a
proceeding based on a finding in the proceeding that the Trustee's or officer's
action or failure to act was the result of active and deliberate dishonesty and
was material to the cause of action adjudicated in the proceeding.
SECTION 9.3 Indemnification. The Trust shall have the power, to the maximum
extent permitted by Maryland law in effect from time to time, to obligate itself
to indemnify, and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to, (a) any individual who is a present or former
shareholder, Trustee or officer of the Trust or (b) any individual who, while a
Trustee of the Trust and at the request of the Trust, serves or has served as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or any other
enterprise, from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his status as a
present or former shareholder, trustee or officer of the Trust. The Trust shall
have the power, with the approval of its Board of Trustees, to provide such
indemnification and advancement of expenses to a person who served a predecessor
of the Trust in any of the capacities described in (a) or (b) above and to any
employee or agent of the Trust or a predecessor of the Trust.
SECTION 9.4 Transactions Between the Trust and its Trustees, Officers,
Employees and Agents. Subject to any express restrictions in this Declaration of
Trust or adopted by the Trustees in the
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Bylaws or by resolution, the Trust may enter into any contract or transaction of
any kind with any person, including any Trustee, officer, employee or agent of
the Trust or any person affiliated with a Trustee, officer, employee or agent of
the Trust, whether or not any of them has a financial interest in such
transaction.
SECTION 9.5 Express Exculpatory Clauses in Instruments. The Board of
Trustees shall cause to be inserted in every written agreement, undertaking or
obligation made or issued on behalf of the Trust, an appropriate provision to
the effect that neither the shareholders nor the Trustees, officers, employees
or agents of the Trust shall be liable under any written instrument creating an
obligation of the Trust, and all Persons shall look solely to the property of
the Trust for the payment of any claim under or for the performance of that
instrument. The omission of the foregoing exculpatory language from any
instrument shall not affect the validity or enforceability of such instrument
and shall not render any shareholder, Trustee, officer, employee or agent liable
thereunder to any third party nor shall the Trustees or any officer, employee or
agent of the Trust be liable to anyone for such omission.
ARTICLE X
AMENDMENTS
SECTION 10.1 General. The Trust reserves the right from time to time to
make any amendment to the Declaration of Trust, now or hereafter authorized by
law, including any amendment altering the terms or contract rights, as expressly
set forth in this Declaration of Trust, of any Shares. All rights and powers
conferred by this Declaration of Trust on shareholders, Trustees and officers
are granted subject to this reservation. An amendment to the Declaration of
Trust (a) shall be signed and acknowledged by at least a majority of the
Trustees, or an officer duly authorized by at least a majority of the Trustees,
(b) shall be filed for record as provided in Section 13.5 and (c) shall become
effective as of the later of the time the SDAT accepts the amendment for record
or the time established in the amendment, not to exceed 30 days after the
amendment is accepted for record. All references to the Declaration of Trust
shall include all amendments thereto.
SECTION 10.2 By Trustees. In addition to the rights of the Trustees to
amend the Declaration of Trust as provided in Section 6.1, the Trustees may
amend the Declaration of Trust from time to time, in the manner provided by
Title 8, without any action by the shareholders, to qualify as a real estate
investment trust under the Code or under Title 8.
SECTION 10.3 By Shareholders. Except as provided in Section 6.1 and 10.2 of
this Declaration of Trust, any amendment to the Declaration of Trust, other than
an amendment to Article XI or Section 12.2 of this Declaration of Trust, shall
be valid only if approved by the affirmative vote of not less than a majority of
all the votes entitled to be cast on the matter. Any amendment to Article XI or
to Section 12.2 of this Declaration of Trust shall be valid only if approved by
the affirmative vote of not less than sixty-six and two-thirds percent (66 2/3%)
of all the votes entitled to be cast on such matter.
ARTICLE XI
MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY
Subject to the provisions of any class or series of Shares at the time
outstanding, the Trust may (a) merge the Trust into another entity, (b)
consolidate the Trust with one or more other entities into a new entity or (c)
sell, lease, exchange or otherwise transfer all or substantially all of the
property of the Trust. Any such action must be approved by the Board of Trustees
and, after notice to all shareholders entitled to vote on the
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matter, by the affirmative vote of not less than sixty-six and two thirds
percent (66 2/3%) of all the votes entitled to be cast on the matter.
ARTICLE XII
DURATION AND TERMINATION OF TRUST
SECTION 12.1 Duration of Trust. The Trust shall continue perpetually unless
terminated pursuant to Section 12.2 or pursuant to any applicable provision of
Title 8.
SECTION 12.2 Termination.
(a) Subject to the provisions of any class or series of Shares at the time
outstanding, the Trust may be terminated at any meeting of shareholders, by the
affirmative vote of not less than sixty-six and two thirds percent (66 2/3%) of
all the votes entitled to be cast on the matter. Upon the termination of the
Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Declaration of Trust shall
continue, including the powers to fulfill or discharge the Trusts
contracts, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining property of the Trust
to one or more persons or entities at public or private sale for
consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities and do all
other acts appropriate to liquidate its business; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and agreements
as they deem necessary for their protection, the Trust may distribute the
remaining property of the Trust, among the shareholders so that after
payment in full or the setting apart for payment of such preferential
amounts, if any, to which the holders of any Shares at the time outstanding
shall be entitled, the remaining property of the Trust shall, subject to
any participating or similar rights of Shares at the time outstanding, be
distributed ratably among the holders of Common Shares at the time
outstanding.
(b) After termination of the Trust, the liquidation of its business, and
the distribution to the shareholders as herein provided, a majority of the
Trustees shall execute and file with the Trust's records a document certifying
that the Trust has been duly terminated, and the Trustees shall be discharged
from all liabilities and duties hereunder, and the rights and interests of all
shareholders shall cease.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Governing Law. This Declaration of Trust is executed by the
undersigned Trustees and delivered in the State of Maryland with reference to
the laws thereof, and the rights of all parties and the validity, construction
and effect of every provision hereof shall be subject to and construed according
to the laws of the State of Maryland without regard to conflicts of laws
provisions thereof.
SECTION 13.2 Reliance by Third Parties. Any certificate shall be final and
conclusive as to any persons dealing with the Trust if executed by the
President, Secretary or an Assistant Secretary of the Trust or a Trustee, and if
certifying to: (a) the number or identity of Trustees, officers of the Trust or
shareholders; (b) the due authorization of the execution of any document; (c)
the action or vote taken, and the existence of a quorum, at a meeting of the
Board of Trustees or shareholders; (d) a copy of this Declaration of Trust or of
the Bylaws as a true and complete copy as then in force; (e) an amendment to
this Declaration of Trust; (f)
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the termination of the Trust; or (g) the existence of any fact or facts which
relate to the affairs of the Trust. No purchaser, lender, transfer agent or
other person shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made on behalf of the Trust by the Trustees or by
any officer, employee or agent of the Trust.
SECTION 13.3 Severability.
(a) The provisions of this Declaration of Trust are severable, and if the
Board of Trustees shall determine, with the advice of counsel, that any one or
more of such provisions (the "Conflicting Provisions") are in conflict with the
Code, Title 8 or other applicable federal or state laws, the Conflicting
Provisions, to the extent of the conflict, shall be deemed never to have
constituted a part of this Declaration of Trust, even without any amendment of
this Declaration of Trust pursuant to Article X and without affecting or
impairing any of the remaining provisions of this Declaration of Trust or
rendering invalid or improper any action taken or omitted prior to such
determination. No Trustee shall be liable for making or failing to make such a
determination. In the event of any determination by the Board of Trustees, the
Board of Trustees shall amend the Declaration of Trust in the manner provided in
Article X, Section 10.2.
(b) If any provision of this Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such holding shall apply only to the extent
of any such invalidity or unenforceability and shall not in any manner affect,
impair or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.
SECTION 13.4 Construction. In this Declaration of Trust, unless the context
otherwise requires, words used in the singular or plural include both the plural
and singular and words denoting any gender include all genders. The title and
headings of different parts are inserted for convenience and shall not affect
the meaning, construction or effect of this Declaration of Trust. In defining or
interpreting the powers and duties of the Trust and its Trustees and officers,
reference may be made by the Trustees or officers, to the extent appropriate and
not inconsistent with the Code or Title 8, to Titles 1 through 3 of the
Corporations and Associations Article of the Annotated Code of Maryland. In
furtherance and not in limitation of the foregoing, in accordance with the
provisions of Title 3, Subtitles 6 and 7, of the Corporations and Associations
Article of the Annotated Code of Maryland, the Trust shall be included within
the definition of "corporation" for purposes of such provisions.
SECTION 13.5 Recordation. This Declaration of Trust and any amendment
hereto shall be filed for record with the SDAT and may also be filed or recorded
in such other places as the Trustees deem appropriate, but failure to file for
record this Declaration of Trust or any amendment hereto in any office other
than in the State of Maryland shall not affect or impair the validity or
effectiveness of this Declaration of Trust or any amendment hereto. A restated
Declaration of Trust shall, upon filing, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration of Trust and the various amendments thereto.
THIRD: These Articles of Amendment and Restatement of Declaration of Trust
were duly adopted by the Board of Trustees of the Trust by unanimous written
consent, and were duly approved by the sole shareholder of the Trust by written
consent, pursuant to and in accordance with the Declaration of Trust and Bylaws
of the Trust and applicable law.
FOURTH: The name and address of the Trust's current resident agent is set
forth in Paragraph SECOND of these Articles of Amendment and Restatement of
Declaration of Trust in Article IV.
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FIFTH: Immediately prior to the amendments contained in these Articles of
Amendment and Restatement of Declaration of Trust, the number of trustees of the
Trust was two (2) and the names of those trustees were Dennis Gershenson and
Richard Gershenson. Immediately following the amendments contained in these
Articles of Amendment and Restatement of Declaration of Trust, the number of
trustees of the Trust will be nine (9) and the names of those trustees are set
forth in Paragraph SECOND of these Articles of Amendment and Restatement of
Declaration of Trust in Section 5.2 of Article V. Trustee Richard Gershenson has
resigned as a trustee of the Trust effective as of the date of filing with, and
acceptance by, the Department of these Articles of Amendment and Restatement of
Declaration of Trust.
SIXTH: Immediately prior to the amendments contained in these Articles of
Amendment and Restatement of Declaration of Trust, the Trust had authority to
issue 100,000 common shares of beneficial interest, par value $0.01 per share,
and the aggregate par value of all such authorized common shares of beneficial
interest of the Trust having par value was $1,000. Immediately following the
amendments contained in these Articles of Amendment and Restatement of
Declaration of Trust, the Trust will have authority to issue 40,000,000 shares
of beneficial interest, consisting of 30,000,000 common shares of beneficial
interest, par value $0.01 per share ("Common Shares"), and 10,000,000 preferred
shares of beneficial interest, par value $.01 per share ("Preferred Shares"),
and the aggregate par value of all such authorized shares of beneficial interest
of the Trust having par value will be $400,000.00.
SEVENTH: A description of each class of shares of beneficial interest of
the Trust, including the preferences, conversion and other rights, voting powers
and restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption to the extent said are set forth in paragraph SECOND of
these Articles of Amendment and Restatement of Declaration of Trust in Article
VI entitled "Shares of Beneficial Interest."
IN WITNESS WHEREOF, RGPT Trust, a Maryland real estate investment trust,
has caused these Articles of Amendment and Restatement of Declaration of Trust
to be signed in its name and on its behalf by its President on this 2nd day of
October, 1997, and each of the undersigned officers acknowledges that these
Articles of Amendment and Restatement of Declaration of Trust are the trustees'
act of said Trust and as to all matters or facts required to be verified under
oath, each of the undersigned officers acknowledges, under penalties of perjury,
to the best of his knowledge, information and belief such matters and facts are
true in all material respects.
<TABLE>
<S> <C> <C>
ATTEST: RGPT TRUST,
a Maryland real estate investment trust (SEAL)
/s/ Richard Gershenson By /s/ Dennis Gershenson
---------------------------------------- -----------------------------------------
Name: Richard Gershenson Name: Dennis Gershenson
Title: Secretary Title: President
</TABLE>
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RGPT TRUST
ARTICLES SUPPLEMENTARY
CLASSIFYING 1,400,000 PREFERRED SHARES OF
BENEFICIAL INTEREST AS
SERIES A CONVERTIBLE PREFERRED
OF BENEFICIAL INTEREST
RGPT TRUST, a Maryland real estate investment trust ("Trust") formed under
Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland ("Title 8"), hereby certifies to the Maryland State Department of
Assessments and Taxation ("Department") that:
FIRST: Pursuant to the authority expressly conferred upon the Board of
Trustees by Article VI of its Declaration of Trust (the "Declaration of Trust")
in accordance with Section 8-203 of Title 8, the Board of Trustees by unanimous
written consent in lieu of meeting as permitted by the Bylaws of the Trust duly
adopted resolutions classifying 1,400,000 authorized but unissued Preferred
Shares of the Trust, par value $.01 per share, as a separate series of Preferred
Shares to be known as "Series A Convertible Preferred Shares," setting the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption of the Series A Convertible Preferred Shares, as
set forth in Article Second of these Articles Supplementary, and authorizing the
issuance of up to 1,400,000 Series A Convertible Preferred Shares.
SECOND: The Series of Preferred Shares of the Trust created by the
resolutions duly adopted by the Board of Trustees of the Trust and referred to
in Article FIRST of these Articles Supplementary shall have the following
designation, number of shares, preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption:
SECTION 1. Designation, Amount and Price.
A series of Preferred Shares designated as "Series A Convertible Preferred
Shares" (the "Series A Convertible Preferred Shares") is hereby established. The
number of Series A Convertible Preferred Shares shall be 1,400,000.
SECTION 2. Maturity Date.
The date on which all Series A Convertible Preferred Shares will be
converted into common shares of beneficial interest of the Trust, par value $.01
per share ("Common Shares"), by the Trust as provided in Section 6 of these
Articles Supplementary shall be the fifth anniversary of the date on which
shares of Series A Convertible Preferred Shares are first issued to the holders
thereof (the "Stated Maturity Date"), subject to earlier conversion as set forth
in Section 6 and subject to Section 8 of these Articles Supplementary
establishing a date on which all Series A Convertible Preferred Shares will be
redeemed in cash by the Trust (the "Accelerated Maturity Date").
SECTION 3. Dividends and Distributions.
(a) From and after the date of issuance, holders of Series A Convertible
Preferred Shares will be entitled to receive, when, as and if declared by the
Board of Trustees out of funds legally available for the payment of dividends,
cumulative quarterly cash dividends (rounded to the nearest whole cent, and if
no nearest whole cent, then rounded up to the nearest whole cent) equal to the
greater of (i) 2.40% of $25.00 per share (such
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$25.00, the "Stated Value"), and (ii) the Common Shares Dividend Amount payable
in arrears on the third Tuesday of January, April, July and October of each
year, commencing on the first such day after the issuance of a Series A
Convertible Preferred Share (each a "Dividend Payment Date"). The "Common Shares
Dividend Amount" applicable as of any Dividend Payment Date shall mean the
amount which is the product of (i) the dollar amount of the dividend paid per
Common Share on the dividend payment date with respect to the Common Shares
which occurs on such Dividend Payment Date or is the dividend payment date with
respect to the Common Shares next preceding such Dividend Payment Date and (ii)
the number of Common Shares into which each Series A Convertible Preferred Share
is entitled to be converted, at the Conversion Price then in effect and
otherwise as set forth in these Articles Supplementary, as of the record date
established for such Dividend Payment Date (determined, for purposes of this
computation, to the fifth decimal place). Such dividends will accrue daily on
the basis of a 365/366 day year and actual days elapsed, and will, to the extent
not paid in full on a Dividend Payment Date, compound quarterly at a rate of
2.40% per quarter (commencing on the last day of the month next preceding a
Dividend Payment Date), whether or not the Trust has earnings or surplus. The
dividend under Section 3(a) or 3(b), or both, of these Articles Supplementary
payable to a holder of a Series A Convertible Preferred Share on the first
Dividend Payment Date after the share is issued will be the accrued dividend
calculated from the day the share is issued to such Dividend Payment Date. If
any Dividend Payment Date is not a Business Day, the dividend due on that
Dividend Payment Date will be paid on the Business Day immediately succeeding
that Dividend Payment Date. No payment of quarterly dividends with respect to
the Common Shares shall be made on a date other than Dividend Payment Date or a
date not more than five Business Days prior to a Dividend Payment Date. As used
with regard to the Series A Convertible Preferred Shares, the term "Business
Day" means a day on which both state and federally chartered banks in New York,
New York are required to be open for general banking business, and all accrued
and compounded dividends together with all accrued but not yet due dividends
(whether or not authorized) are referred to as "Accrued Dividends".
(b) From and after the date of issuance, holders of Series A Convertible
Preferred Shares will be entitled to receive, when, as and if declared by the
Board of Trustees out of funds legally available for the payment of dividends,
in addition to dividends as set forth in Section 3(a), cumulative quarterly cash
dividends (rounded to the nearest whole cent, and if no nearest whole cent, then
rounded up to the nearest whole cent) equal to 0.74171% of Stated Value, payable
in arrears on any Dividend Payment Date other than a Dividend Payment Date on
which payment is not required to be made as provided in this Section 3(b). Such
dividends will accrue daily on the basis of a 365/366 day year and actual days
elapsed, and will, to the extent not paid in full on a Dividend Payment Date,
compound quarterly at a rate of 3.14171% per quarter (commencing on the last day
of the month next preceding a Dividend Payment Date), whether or not the Trust
has earnings or surplus.
Notwithstanding the foregoing, dividends which holders of Series A
Convertible Preferred Shares are entitled to receive as set forth in this
Section 3(b) will not be payable as to Series A Convertible Preferred Shares
except as set forth below, but will accrue and compound as set forth above, and
shall be included in Accrued Dividends, on each Dividend Payment Date.
(1) On and after the occurrence of a Rate Event, holders of Series A
Convertible Preferred Shares will be entitled to receive quarterly
cash dividends as set forth in this Section 3(b) on each Dividend
Payment Date, except to the extent of such dividends as shall have
previously been included in Accrued Dividends prior to the
occurrence of a Rate Event (such portion of Accrued Dividends the
"Section 3(b) Suspended Dividends").
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(2) On and after the occurrence of a Rate Event, Section 3(b)
Suspended Dividends will be payable as to each Series A
Convertible Preferred Share on the earlier of (i) the Accelerated
Maturity Date, and (ii) the Stated Maturity Date, in cash, or may,
in the event of conversion at the Stated Maturity Date, at the
election of the Trust, be added to Accrued Dividends to determine
the aggregate amount of Stated Value and the per share amount of
Accrued Dividends for purposes of conversion. Upon conversion
after the occurrence of a Rate Event and prior to the Stated
Maturity Date, Section 3(b) Suspended Dividends will be added to
Accrued Dividends to determine for each outstanding Series A
Convertible Preferred Share the aggregate of Stated Value and the
per share amount of Accrued Dividends for purposes of conversion;
provided, however, that at the election of the Company, upon
conversion after the occurrence of a Rate Event and prior to the
Stated Maturity Date, the amount of Section 3(b) Suspended
Dividends included in Accrued Dividends may be paid in cash at the
effective time of conversion in lieu of being included in Accrued
Dividends for purposes of conversion.
(3) On and after the occurrence of a Rate Event, Section 3(b)
Suspended Dividends will be payable (and for purposes of
interpretation, will not be included in Accrued Dividends at the
time of application or payment of Accrued Dividends prior to the
occurrence of a Rate Event) (i) as to each Series A Convertible
Preferred Share (determined at the time of printing of the initial
preliminary or "red herring" prospectus in connection with the
Qualified Underwritten Offering, but as at a time immediately
before conversion), on the Mandatory Conversion Date (as defined
in Section 6(b) below) which occurs by reason of the Qualified
Underwritten Offering, but only to the extent of the amount of the
Per Share IRR Lookback Amount (defined below), and shall be paid
in cash or may, upon conversion at the election of the Trust, be
added to Accrued Dividends to determine the aggregate amount of
Stated Value and the per share amount of Accrued Dividends for
purposes of conversion, and (ii) as to each Series A Convertible
Preferred Share at the time of payment of any liquidation
preference. As used herein, the "Per Share IRR Lookback Amount"
shall be the IRR Lookback Amount (as defined below) divided by the
number of Series A Convertible Preferred Shares outstanding on the
date of such determination. As used herein, the "IRR Lookback
Amount" shall mean, as of the date of such determination, an
amount payable to all holders of Series A Convertible Preferred
Shares which is sufficient for the holders, considered in the
aggregate, to receive an IRR (as defined below) equal to 3.55581%
per calendar quarter, compounded quarterly, over the period from
September 30, 1997 to said Mandatory Conversion Date. As used
herein, "IRR" shall mean, as of said Mandatory Conversion Date, a
rate equal to a compounded quarterly rate which results in (a) the
sum of all (1) dividends paid on Series A Convertible Preferred
Shares outstanding on the date of such determination, (2)
distributions paid on such number of Preferred Units (defined
below) which is equal to the number of Series A Convertible
Preferred Shares outstanding on the date of such determination),
and (3) Assumed Common Shares Sales Proceeds (defined below),
discounted on a quarterly basis at such rate from the Mandatory
Conversion Date back to the day on which such amounts were paid,
or, in the case of Assumed Common Shares Sales Proceeds, assumed
received as at the Mandatory Conversion Date, minus (b) the sum of
all amounts paid as "Purchase Price" under that certain Preferred
Units and Stock Purchase Agreement dated as of September 30, 1997,
among Ramco-Gershenson Properties, L.P., Ramco-Gershenson
Properties Trust, Special Situations RG REIT, Inc., and the
Advancing Party named therein (as the same may be amended or
supplemented, the "Purchase Agreement"), discounted on a quarterly
basis at such rate from
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said Mandatory Conversion Date to the date or dates on which such
amounts of Purchase Price were paid, being equal to zero. As used
herein, "Assumed Common Shares Sales Proceeds" means the sale, at the
Current Market Price (as defined in Section 6(e) (vii)), determined
on the date of printing of the initial preliminary or "red herring"
prospectus in connection with the Qualified Underwritten Offering, of
that number of Common Shares into which all outstanding Series A
Convertible Preferred Shares are, as provided herein, convertible if
converted on such date of determination. As used herein, "Preferred
Units" shall mean the Preferred Units of the Operating Partnerships,
as each of such terms is defined in the Purchase Agreement.
As used with regard to the Series A Convertible Preferred Shares, the term
"Rate Event" means each of the following events: (i) the Trust shall fail to pay
in full when due any dividend on the Series A Convertible Preferred Shares; (ii)
the Trust shall (A) fail to pay in full when due any principal, premium or
interest with respect to any Indebtedness (defined below) having an outstanding
aggregate principal amount in excess of $15,000,000 (but excluding, for purposes
of this clause (ii)(A), Indebtedness which is without recourse to any Person and
the sole remedy of the lender thereof is the enforcement of a mortgage lien on
real estate, if the amount secured by such lien is in excess of the fair market
value of the real estate so encumbered (with fair market value being determined
without regard to the amount secured by the mortgage lien so to be enforced or
as to any other obligations or Indebtedness encumbering or enabling the holders
thereof to make a claim against such real estate to the extent that such other
obligations or Indebtedness are not secured by a mortgage lien which is senior
and prior to the lien so to be enforced), (B) allow such Indebtedness (excluding
as aforesaid) to be declared due and payable, or to be required to be repaid
(other than by a regularly scheduled required prepayment) prior to the stated
maturity thereof, or (C) fail to observe or perform any agreement or condition
relating to such Indebtedness, or contained in any instrument or agreement
evidencing, securing or relating thereto, and such failure shall continue beyond
any applicable grace period such that it could reasonably be expected to have a
material adverse effect on the financial condition, results of operations or
business of the Trust, together with Ramco-Gershenson Properties, L.P. (together
with any successor thereto, the "Operating Partnership") and any other
Subsidiary (as used herein, "Subsidiary" shall mean any entity and
"Subsidiaries" shall mean more than one of the entities in which the Trust has a
direct or indirect equity interest) taken as a whole; (iii) there shall have
occurred an IRS Termination Determination (as defined in Section 4(c) below) and
the Trust does not receive (within 90 days of the date established in the IRS
Termination Determination as the date on which the Deficiency Dividend (as
defined in Section 3(g) hereof) is required to be paid), pursuant to the Tax
Agreement, full payment by way of indemnity for any amount paid or to be paid as
a Deficiency Dividend; (iv) there shall have not occurred prior to the Stated
Maturity Date an underwritten, Widely Distributed (defined below) offering of
Common Shares, the gross proceeds of which are not less than $40,300,000 (a
"Qualified Underwritten Offering"); (v) the Trust shall use the proceeds of the
sale of the Series A Convertible Preferred Shares (or the proceeds of the sale
of the Preferred Units pursuant to the Purchase Agreement) other than for the
repayment of the principal amount of Indebtedness or to meet its operating
objectives in purchasing or redeveloping retail properties of the nature
operated by Ramco-Gershenson Properties Trust on September 30, 1997; (vi) there
shall occur any event which, under Section 4 of these Articles Supplementary,
requires the approval of holders of Series A Convertible Preferred Shares,
without such approval having been previously obtained; (vii) there shall have
occurred an event as described in Section 4(c)(iv), except as set forth below,
regardless of whether or not there shall have been obtained the approval thereof
as established in Section 4 of these Articles Supplementary; or (viii) neither
Dennis Gershenson, nor a replacement reasonably acceptable to Morgan Stanley
Asset Management Inc., shall hold the office and function in the capacity of
president and chief executive officer of the Trust, other than as a result of
the death or a condition of disability extending for a continuous period of not
less than 180
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days of Dennis Gershenson. As used herein, "Widely Distributed" shall mean, in
the context of an underwritten public offering, an offering in which (i) a
minimum of 30% of the Common Shares included in such offering is purchased by
retail individual brokerage customers brought into the transaction by the
members of the underwriting syndicate and (ii) a minimum of eight institutions
shall have purchased Common Shares. With respect to a Rate Event of the nature
set forth in clause (vii) of this paragraph, such event shall not result in an
increase in dividends as provided in this Section 3(b) with respect to the
holder of Series A Convertible Preferred Shares if and to the extent such holder
shall have voted such Series A Convertible Preferred Shares affirmatively for a
matter set forth in the definition of "Change of Control" set forth below. As
used herein, "Indebtedness" shall mean all obligations, contingent and
otherwise, that in accordance with generally accepted accounting principles
should be classified upon the obligor's balance sheet as liabilities, or to
which reference should be made by footnotes thereto, but without any double
counting, including in any event and whether or not so classified: (a) all debt
and similar monetary obligations, whether direct or indirect; (b) all
liabilities secured by any Lien on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; and (c)
all guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest directly or indirectly in a Person,
to purchase indebtedness, or to assure the owner of indebtedness against loss
through an agreement to purchase goods, supplies or services for the purpose of
enabling the debtor to make payment of the indebtedness held by such owner or
otherwise, and the obligation to reimburse the issuer in respect of any letter
of credit. As used herein, "Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, security interest,
lien (statutory or other) or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
capitalized lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of any of the
foregoing). As used herein, "Person" shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government or other entity of whatever nature.
(c) Each dividend will be payable to holders of record of the Series A
Convertible Preferred Shares on a date (a "Record Date") selected by the Board
of Trustees which is not less than 10 nor more than 45 days before the Dividend
Payment Date on which the dividend is to be paid. No Record Date will precede
the close of business on the date the Record Date is fixed.
(d) Unless and until all Accrued Dividends on the Series A Convertible
Preferred Shares under Section 3(a) through the last preceding Dividend Payment
Date have been paid, and unless and until all Accrued Dividends on the Series A
Convertible Preferred Shares under Section 3(b) (but excluding Section 3(b)
Suspended Dividends, which shall be paid only as provided in subparagraphs (2)
and (3) of the second paragraph of Section 3(b)) through the last Dividend
Payment Date have been paid, the Trust may not (i) declare or pay any dividend,
make any distribution (other than a distribution payable solely in Common
Shares), or set aside any funds or assets for payment or distribution with
regard to any Junior Shares (as herein defined), (ii) redeem or purchase
(directly or through the Operating Partnership or subsidiaries), or set aside
any funds or other assets for the redemption or purchase of, any Junior Shares
or (iii) authorize, take or cause or permit to be taken any action as general
partner of the Operating Partnership, that will result in (A) the declaration or
payment by the Operating Partnership of any distribution to its partners (other
than distributions payable to the Trust as general partner that will be used by
the Trust to fund the payment of
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dividends on the Series A Convertible Preferred Shares (such distributions to
the Trust being referred to as "Authorized GP Distributions")), or set aside any
funds or assets for payment of any distributions (other than Authorized GP
Distributions) or (B) the redemption or purchase (directly or through the
Operating Partnership or subsidiaries), or the setting aside of any funds or
other assets for the redemption or purchase of, any partnership interests in the
Operating Partnership, except for exchanges of partnership interests in the
Operating Partnership in the ordinary course solely for Common Shares as a
result of which the Trust's partnership interest in the Operating Partnership
increases by the amount of such partnership interest so exchanged. As used with
regard to the Series A Convertible Preferred Shares, the term "Junior Shares"
means all Common Shares and all shares of all other classes or series of the
Trust to which the Series A Convertible Preferred Shares are prior in rank with
regard to payment of dividends or payments upon the liquidation, dissolution or
winding-up of the Trust.
(e) While any Series A Convertible Preferred Shares are outstanding, the
Trust may not pay any dividend, or set aside any funds for the payment of a
dividend, with regard to any shares of any class or series of the Trust which
ranks on a parity with Series A Convertible Preferred Shares as to payment of
dividends unless at least a proportionate payments is made with regard to all
Accrued Dividends on the Series A Convertible Preferred Shares (except that
portion of Accrued Dividends which, as Section 3(b) Suspended Dividends, are
required to be paid only upon the Stated Maturity Date, the Accelerated Maturity
Date, or, as to any Series A Convertible Preferred Shares as to which a notice
of conversion has been furnished by the holder thereof, at the effective time of
conversion). A payment of dividends with regard to the Series A Convertible
Preferred Shares will be proportionate to a payment of a dividend with regard to
another class or series of shares if the dividend per Series A Convertible
Preferred Share is the same percentage of the Accrued Dividends (except as
aforesaid) with regard to a Series A Convertible Preferred Share that the
dividend paid with regard to shares of the other class or series is of the
Accrued Dividends (except as aforesaid) with regard to a share of stock of that
other class or series.
(f) Any dividend paid with regard to Series A Convertible Preferred Shares
will be paid equally with regard to each outstanding Series A Convertible
Preferred Share, except to the extent that the Series A Convertible Preferred
Shares are outstanding for differing amounts of time during the relevant
dividend period.
(g) Except as provided below in this Section 3(g) to the contrary, to the
extent that Federal income tax for the Trust's taxable years ending December 31,
1991, 1992, 1993 and 1994 may be avoided by the declaration and distribution of
a deficiency dividend as provided in Section 860 of the Code (a "Deficiency
Dividend"), the Trust, if, but only if, the Trust has received all funds
required therefor from Atlantic Realty Trust under the Tax Agreement (defined
below), may distribute such Deficiency Dividend to holders of record of Common
Shares at a record date established in connection therewith, whether or not all
or any Accrued Dividends have been paid on the Series A Convertible Preferred
Shares, and any such distribution of a Deficiency Dividend to holders of Common
Shares shall be disregarded in, and any such Deficiency Dividend shall be
excluded from, the determination of the Common Shares Dividend Amount. In the
event the Trust determines to make a distribution of a Deficiency Dividend not
all of the funds for which (together with all of the funds for any previous
Deficiency Dividend) have theretofore been paid to the Trust under the
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Tax Agreement, then any such Deficiency Dividend amounts may be paid only in the
following order of priority:
first, in the payment of all Accrued Dividends then due,
second, in the payment equally with regard to the holders of record of
Series A Convertible Preferred Shares and the Common Shares at a record
date established in connection therewith, with the amount so payable with
respect to each Series A Convertible Preferred Share being determined in
accordance with the procedures established with respect to the Common
Shares Dividend Amount.
SECTION 4. Voting Rights.
The voting rights of the holders of Series A Convertible Preferred Shares
will be only the following:
(a) The holders of Series A Convertible Preferred Shares will have the
right to vote on all matters in which the holders of Common Shares are entitled
to vote on an "as converted" basis with holders of the Common Shares, as though
part of the same class as holders of Common Shares, with such number of Common
Shares deemed held of record by a holders of Series A Convertible Preferred
Shares on any Record Date as would be the number of Common Shares into which the
Series A Convertible Preferred Shares held by such holder would be entitled to
be converted on such Record Date. The holders of Series A Convertible Preferred
Shares shall receive all notices of meetings of the holders of shares Common
Shares, and all other notices and correspondences to the holders of Common
Shares provided by the Trust and shall be entitled to take such actions, and
shall have such rights, as are accorded the holders of Common Shares in the
Declaration of Trust and in the by-laws of the Corporation as are in effect on
the date hereof, in each case with the same effect as would be taken by holders
of such number of Common Shares as determined as aforesaid.
(b) While any Series A Convertible Preferred Shares are outstanding, the
Trust will not, directly or indirectly, including through a merger or
consolidation with any other corporation or otherwise, without approval of
holders of at least 51% of the outstanding Series A Convertible Preferred
Shares, voting separately as a class, (i) issue any Series A Convertible
Preferred Shares except pursuant to the Purchase Agreement or increase the
number of authorized shares of Series A Convertible Preferred Shares, (ii)
combine, split or reclassify the outstanding shares of Series A Convertible
Preferred Shares into a smaller or larger number of shares; (iii) exchange or
convert any Series A Convertible Preferred Shares for other securities or the
right to receive cash, or to propose or require an exchange or conversion, or to
require a conversion other than as expressly provided hereby, or to reclassify
any Series A Convertible Preferred Shares, or to authorize, create, classify,
reclassify or issue any class or series of stock ranking prior to or on a parity
with the Series A Convertible Preferred Shares either as to dividends or upon
liquidation, dissolution or winding-up of the Trust, (iv) amend, alter or
repeal, or permit to be amended, altered or repealed, any of the provisions of
these Articles Supplementary, the By-laws of the Trust, the agreement of limited
partnership of the Operating Partnership or the organizational document of any
Subsidiary in such a manner as would affect adversely the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption of the Series A Convertible Preferred Shares (including, without
limitation, taking any such action the result of which could be to alter the
manner or rate of exchange of partnership interests in the Operating Partnership
for securities of Ramco-Gershenson Properties Trust, a Massachusetts business
trust, as in effect on September 30, 1997) or, in the case of a proposed
amendment to the agreement of limited partnership of the Operating Partnership,
or any organizational document of any Subsidiary, in such a manner as would
affect adversely the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions, and
qualifications of the holders of the Common Shares and the Series A Convertible
Preferred Shares, considered
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as a whole; (v) permit to be amended or waive any provision of that certain Tax
Agreement dated May 10, 1996 between the Trust and Atlantic Realty Trust (the
"Tax Agreement"); or (vi) other than a result of a Trustee Election (defined
below) adopt a plan for or effect a voluntary liquidation, dissolution or
winding up of the Trust, the sale of substantially all of the assets of the
Trust, or the merger, consolidation or recapitalization of the Trust. As used
herein, "Trustee Election" shall mean an election by the Trustees to liquidate
the Operating Partnership and the Trust as provided in Section 12.7 of the
Amended and Restated Master Agreement, dated as of December 27, 1995 by and
among Ramco-Gershenson, Inc., Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A. Ward U/T/A dated
2/22/77 as amended, Ramco-Gershenson Properties, L.P. and each of the Ramco
Contributing Parties set forth on schedule A thereto.
(c) While any Series A Convertible Preferred Shares are outstanding, the
Trust will not, directly or indirectly, including through a merger or
consolidation with any other corporation or otherwise, without the approval of
the holders of 51% of the outstanding the Series A Convertible Preferred Shares,
voting separately as a class, propose, authorize, take, or cause to be taken or
allow to occur any of the following actions: (i) with the exception of (A) the
public market trading of Common Shares in unsolicited transactions or (B) a
Qualified Underwritten Offering, the sale, transfer or assignment, in a single
transaction or series of transactions, of beneficial interests in or voting
rights with respect to assets of the Trust or the Operating Partnership or any
Subsidiary, or any other person (except that with respect to any subsidiary in
which the Trust or the Operating Partnership has a minority interest such that a
sale, transfer or assignment is not within the Trust's or Operating
Partnership's control, this prohibition shall not apply), owned directly or
indirectly by the Trust to the extent of the Trust's attributed interest in such
other person, having a fair market value (based on the value of the total
consideration of each such transaction, including, without limitation, any debt
assumed by any purchaser in connection therewith) in excess of $50,000,000
within any 90-day period or $150,000,000 within any 360-day period, (ii) the
Trust's termination of the election, or the taking of any action by the Trust
which would cause termination other than by election, of the Trust as a real
estate investment trust under the Internal Revenue Code of 1986, as amended,
other than a determination by the Internal Revenue Service that it will for any
period deny the Company the tax benefits associated with the election as a real
estate investment trust due solely and directly to the Tax Case (an "IRS
Termination Determination"); (iii) any alteration in the Trust's or the
Operating Partnership's business such that the real estate assets owned directly
or indirectly by the Trust are, on a square foot basis, less than 90% invested
in retail properties of the nature of the predominant real estate assets of the
Trust the on date hereof; or (iv) any Change in Control (as defined below) of
the Trust or the Operating Partnership, or any response to a proposal the effect
of which, if consummated, could be a Change of Control. As used herein, "Tax
Case"shall mean the Internal Revenue Service's tax investigation dealing with
the Trust's tax status, as described in the Trust's SEC Reports to the extent
the Trust has incurred or will incur, directly or indirectly, voluntarily or
involuntarily, any liability for which it is entitled to be reimbursed under the
Tax Agreement. As used herein "SEC Reports" shall mean each registration
statement, report, proxy statement or information statement and all exhibits
thereto prepared by the Trust or relating to its properties filed with the
Securities and Exchange Commission.
As used herein, a "Change of Control" of the Trust or the Operating
Partnership shall be deemed to have occurred if any of the following occur (or,
in the case of any proposal, if any of the following could occur as a result
thereof): (i) the Trust takes or fails to take any action such that it ceases to
be required to file reports under Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any successor to that Section; (ii)
any "person" (as defined in Sections 13(d) and 14(d) of the Exchange Act)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of either (a)
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25% or more of the outstanding Common Shares, or (b) 25% (by right to vote or
grant or withhold any approval) of the outstanding securities of any other class
or classes which individually or together have the power to elect a majority of
the members of the Board of Trustees of the Trust (the "Board"); (iii) the Board
determines to recommend, or fails to determine to recommend, the acceptance of
any proposal set forth in a tender offer statement or proxy statement filed by
any person with the Securities and Exchange Commission which indicates the
intention on the part of that person to acquire, or acceptance of which would
otherwise have the effect of that person acquiring, either (a) 25% or more of
the outstanding the Common Shares, or (b) 25% (by right to vote or grant or
withhold any approval) of the outstanding securities of any other class or
classes which individually or together have the power to elect a majority of the
members of the Board; (iv) other than as a result of the death or disability of
one or more of the directors within a three-month period, a majority of the
members of the Board for any period of three consecutive months are not persons
who (a) had been directors of the Trust for at least the preceding 24
consecutive months or (b) when they initially were elected to the Board, (x)
were nominated (if they were elected by the shareholders) or elected (if they
were elected by the directors) with the affirmative concurrence of 66 2/3% of
the directors who were Continuing Directors at the time of the nomination or
election by the Board and (y) were not elected as a result of an actual or
threatened solicitation of proxies or consents by a person other than the Board
or an agreement intended to avoid or settle such a proxy solicitation (the
directors described in clauses (a) and (b) of this subsection (iv) being
"Continuing Directors"); (v) the Trust ceases to be the sole General Partner of
the Operating Partnership or grants or sells to any person the power to control
or direct the actions of the Operating Partnership as if such person (A) is a
general partner of the Operating Partnership or (B) is a limited partner of the
Operating Partnership with consent or approval rights greater than the consent
or approval rights held by the limited partners of the Operating Partnership on
the date hereof; or (vi) the Operating Partnership is a party to any entity
conversion or any merger or consolidation in which the Operating Partnership is
not surviving entity in such merger or consolidation or in which the effect is
of the nature set forth in the next preceding clause (v) of this Section 4(c).
(d) Prior to the occurrence after the date hereof of a Qualified
Underwritten Offering, the Trust will not, directly or indirectly, without the
approval of the holders of 51% of the outstanding Series A Convertible Preferred
Shares, voting separately as a class, issue any additional Common Shares or
Preferred Shares of the Trust. Notwithstanding the foregoing, the Trust will be
permitted to issue Common Shares as part of an acquisition, or as follows: (i)
issuances of Common Shares to officers, employees or trustees of the Trust not
in excess of that number of shares permitted to be issued pursuant to the 1996
Stock Option Plan and the 1997 Non-Employee Trustee Stock Option Plan, as each
such plan is in effect as at September 30, 1997; (ii) issuances of Common Shares
pursuant to any dividend reinvestment plan maintained by the Trust; and (iii)
issuances of Common Shares with respect to exchanges of partnership interests in
the Operating Partnership in the ordinary course solely for Common Shares as a
result of which the Trust's partnership interest in the Operating Partnership
increases by the amount of such partnership interest so exchanged.
SECTION 5. Liquidation.
Upon the liquidation, dissolution or winding-up of the Trust, whether
voluntary or involuntary, the holders of the Series A Convertible Preferred
Shares, will be entitled to receive out of the assets of the Trust available for
distribution to its shareholders, whether from capital, surplus or earnings,
before any distributions made to holders of any Junior Shares, an amount per
share (the "Liquidation Preference") equal to the sum of (i) Stated Value plus
(ii) the per share amount of Accrued Dividends with regard to the Series A
Convertible Preferred Shares to the date of final distribution (whether or not
declared). If, upon any liquidation, dissolution or winding-up of the Trust, the
assets of the Trust, or proceeds of those assets, available
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for distribution to the holders of Series A Convertible Preferred Shares and of
shares of all other classes or series which are on a parity as to distributions
on liquidation with the Series A Convertible Preferred Shares are not sufficient
to pay in full the Liquidation Preference to the holders of the Series A
Convertible Preferred Shares and any liquidation preference of all other classes
or series which are on a parity as to distributions on liquidation with the
Series A Convertible Preferred Shares, then the assets, or the proceeds of those
assets, which are available for distribution to the holders of Series A
Convertible Preferred Shares and of the shares of all other classes or series
which are on a parity as to distributions on liquidation with the Series A
Convertible Preferred Shares will be distributed to the holders of the Series A
Convertible Preferred Shares and of the shares of all other classes or series
which are on a parity as to distributions on liquidation with the Series A
Convertible Preferred Shares ratably in accordance with the respective amounts
of the liquidation preferences of the shares held by each of them. After payment
of the full amount of the Liquidation Preference, the holders of Series A
Convertible Preferred Shares will not be entitled to any further distribution of
assets of the Trust. For the purposes of this Section, neither a consolidation
or merger of the Trust with another corporation, nor a sale or transfer of all
or any part of the Trust's assets for cash or securities, will be considered a
liquidation, dissolution or winding-up of the Trust.
SECTION 6. Conversion Into Common Shares.
(a) Optional Conversion. (i) Each holder of Series A Convertible Preferred
Shares will have the right, at the holder's option, exercised by notice to such
effect (the "Notice of Election to Convert"), to convert all or any of the
Series A Convertible Preferred Shares held of record by the holder into Common
Shares, such that each Series A Convertible Preferred Share will be entitled to
be converted into (A) a number of fully paid and non-assessable Common Shares
(calculated as to each conversion to the nearest 1/100th of a share) equal to
Stated Value plus the amount, if any, of the per share amount of Accrued
Dividends (subject, to the extent of Section 3(b) Suspended Dividends, to the
proviso in the last sentence of subparagraph 2 of the second paragraph of
Section 3(b) hereof) as of the effective time of the conversion, divided by the
Conversion Price, as defined below, then in effect, or (B) such other securities
or assets as the holder is entitled to receive in accordance with Section 6(e).
(ii) The holder of each Series A Convertible Preferred Share to be
converted must surrender the certificate representing that share to the
conversion agent for the Series A Convertible Preferred Shares appointed by the
Trust (which may be the Trust itself), with the Notice of Election to Convert on
the back of that certificate duly completed and signed, at the principal office
of the conversion agent. If the shares issuable on conversion are to be issued
in a name other than the name in which the Series A Convertible Preferred Shares
is registered, each share surrendered for conversion must be accompanied by an
instrument of transfer, in form reasonably satisfactory to the Trust, duly
executed by the holder or the holder's duly authorized attorney and by funds in
an amount sufficient to pay any transfer or similar tax which is required to be
paid in connection with the transfer or evidence that such tax has been paid or
is not payable.
(b) Mandatory Conversion. All, but not less than all, outstanding Series A
Convertible Preferred Shares will be subject to conversion on that date which is
the earlier of the occurrence of a Qualified Underwritten Offering and the
Stated Maturity Date (the earlier of such to occur, the "Mandatory Conversion
Date"), subject to the obligation of the Trust to redeem the Series A
Convertible Preferred Shares for cash on an Accelerated Maturity Date as
provided in Section 8, and subject to earlier conversion at the option of the
holders as set forth in this Section 6. Each Series A Convertible Preferred
Share shall be convertible into a Common Share at Stated Value plus the per
share amount of Accrued Dividends, if any (subject, to the extent of Section
3(b) Suspended Dividends, to the proviso in the last sentence of subparagraph 2
of the second paragraph of Section 3(b) hereof), for each Series A Convertible
Preferred Share so converted, for
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Common Shares issued on conversion priced at the Conversion Price calculated in
accordance with Section 6(e) of these Articles Supplementary. In order to effect
the mandatory conversion of the Series A Convertible Preferred Shares, the Trust
shall mail a notice (the "Notice of Mandatory Conversion") to all holders of
outstanding Series A Convertible Preferred Shares on a date (the "Mandatory
Conversion Notice Date") at least 60 but not more than 90 days prior to the
Mandatory Conversion Date, except that in the case of the Mandatory Conversion
Date which is occasioned by a Qualified Underwritten Offering, the Trust may
provide the Notice of Mandatory Conversion which references an expected date of
such occurrence provided that the Trust confirms the Mandatory Conversion Date
in a supplemental notice to all holders of Series A Convertible Preferred Shares
immediately upon the occurrence of a Qualified Underwritten Offering. If the
Trust gives a Notice of Mandatory Conversion, the outstanding Series A
Convertible Preferred Shares will be automatically converted into Common Shares
at the close of business on the Mandatory Conversion Date regardless of whether
the holders of Series A Convertible Preferred Shares actually surrender the
certificates representing their Series A Convertible Preferred Shares for
conversion. At the close of business on the Mandatory Conversion Date, (i) the
certificates representing the Series A Convertible Preferred Shares will cease
to represent anything other than the right to receive the Common Shares into
which the Series A Convertible Preferred Shares were automatically converted and
(ii) the Trust may, at its option (the exercise of which will be described in
the Notice of Mandatory Conversion), either (A) deliver certificates
representing the Common Shares to which the holders of the Series A Convertible
Preferred Shares are entitled without requiring the surrender of the
certificates which formerly represented Series A Convertible Preferred Shares,
or (B) deliver certificates representing the Common Shares when the holder
surrenders the certificates which formerly represented the Series A Convertible
Preferred Shares and complies with the other requirements of subparagraph
6(a)(ii) (excluding the completion of the Notice of Election to Convert).
(c) Conversion Procedures. (i) The effective time of the conversion under
Section 6(a) shall be immediately prior to the close of business on the day when
all the conditions in Section 6(a)(ii) have been satisfied. The effective time
of the conversion under Section 6(b) shall, subject to the rights of holders
under Section 6(a) and Section 8, be immediately prior to the close of business
on the Mandatory Conversion Date.
(ii) If shares are surrendered between the close of business on a dividend
payment Record Date and the opening of business on the corresponding Dividend
Payment Date ("Ex Record Date Shares"), the dividend with respect to those
shares will be payable on the Dividend Payment Date to the holder of record of
the Ex Record Date Shares on the dividend payment Record Date notwithstanding
the surrender of the Ex Record Date Shares for conversion after the dividend
payment Record Date and prior to the Dividend Payment Date. The Trust will make
no payment or adjustment for Accrued Dividends on Ex Record Date Shares, whether
or not in arrears, or for dividends on the Common Shares issued upon conversion
of the Ex Record Date Shares, other than to make payment to the holder of record
thereof on the Record Date. The provisions of this Section 6(c)(ii) shall not
limit the obligation of the Trust to issue Common Shares in conversion of Series
A Convertible Preferred Shares, including Ex Record Date Shares, at Stated Value
plus Accrued Dividends, as elsewhere provided in these Articles.
(iii) Except as otherwise permitted in clause (ii)(B) of the last sentence
of Section 6(b), as promptly as practicable after the effective time for
conversion of Series A Convertible Preferred Shares, the Trust will issue and
will deliver to the holder at the office of the holder set forth in the Notice
of Election to Convert, or on the holder's written order, a certificate or
certificates representing the number of full Common Shares issuable upon the
conversion of the Series A Convertible Preferred Shares. Any fractional interest
in respect of a Common Share arising upon a conversion will be settled as
provided in Section 6(d).
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(iv) Each conversion will be deemed to have been effected at the effective
time provided in Section 6(c)(i), and the person in whose name a certificate for
Common Shares is to be issued upon a conversion will be deemed to have become
the holder of record of the Common Shares represented by that certificate at
such effective time. All Common Shares delivered upon conversion of Series A
Convertible Preferred Shares will upon delivery be duly and validly issued and
fully paid and nonassessable, free of all liens and charges and not subject to
any preemptive rights except such preemptive rights as may exist pursuant to the
Purchase Agreement. The Series A Convertible Preferred Shares so converted will
no longer be deemed to be outstanding and all rights of the holder with respect
to those shares will immediately terminate, except the right to receive the
Common Shares or, if applicable, other securities, cash or other assets to be
issued or distributed as a result of the conversion.
(d) Fractional Shares. No fractional Common Shares will be issued upon
conversion of Series A Convertible Preferred Shares. Any fractional interest in
a Common Share resulting from conversion of Series A Convertible Preferred
Shares will be paid in cash (computed to the nearest cent) based on the Current
Market Price (as herein defined) of the Common Shares on the Trading Date next
preceding the date of conversion. If more than one Series A Convertible
Preferred Share is surrendered for conversion at substantially the same time by
the same holder, the number of full shares of Common Shares issuable upon the
conversion will be computed on the basis of all the Series A Convertible
Preferred Shares surrendered at that time by that holder.
(e) Conversion Price. The "Conversion Price" per Series A Convertible
Preferred Share will initially be $17.50, and will be adjusted as follows from
time to time if any of the events described below occurs:
(i) If the Trust (A) pays a dividend or makes a distribution on its
Common Shares in its Common Shares or (B) subdivides, splits or
reclassified its outstanding Common Shares into a greater number of shares,
the Conversion Price in effect immediately prior to that event will be
reduced so that the holder of a Series A Convertible Preferred Share
surrendered for conversion after that event will receive the number of
Common Shares which the holder would have received if the Series A
Convertible Preferred Shares had been converted immediately before the
happening of the event (or, if there is more than one such event, if the
Series A Convertible Preferred Shares had been converted immediately before
the first of those events and the holder had retained all the Common Shares
or other securities or assets received after the conversion). If the Trust
combines its outstanding Common Shares into a smaller number of shares, the
Conversion Price in effect immediately prior to that event will be
increased so that the holder of a Series A Convertible Preferred Shares
surrendered for conversion after that event will receive the number of
Common Shares which the holder would have received if the Series A
Convertible Preferred Shares had been converted immediately before the
happening of the event (or, if there is more than one such event, if the
Series A Convertible Preferred Shares had been converted immediately before
the first of those events and the holder had retained all the Common Shares
or other securities or assets received after the conversion). An adjustment
made pursuant to this Section 6(e)(i) will become effective immediately
after the Record Date in the case of a dividend or distribution, and will
become effective immediately after the effective date in the case of a
subdivision, split, reclassification or combination. If such dividend or
distribution is declared but is not paid or made, the Conversion Price then
in effect will be appropriately readjusted. However, a readjustment of the
Conversion Price will not affect any conversion which takes place before
the readjustment.
(ii) If the Trust issues rights or warrants to the holders of its
Common Shares as a class entitling them to subscribe for or purchase Common
Shares at a price per share less than the Conversion Price at the Record
Date for the determination of shareholders entitled to receive the rights
or warrants, the
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Conversion Price in effect immediately before the issuance of the rights or
warrants will be reduced in accordance with the equation set forth on
Exhibit A hereto, which is hereby incorporated by reference herein. The
adjustment provided for in this Section 6(e)(ii) will be made successively
whenever any rights or warrants are issued, and will become effective
immediately after each Record Date. In determining whether any rights or
warrants entitle the holders of the Common Shares to subscribe for or
purchase Common Shares at less than the Conversion Price, and in
determining the aggregate sale price of the Common Shares issuable on the
exercise of rights or warrants and any consideration to be received by the
Trust for the exercise of such rights or warrants, there will be taken into
account any consideration received by the Trust for the rights or warrants,
with the value of that consideration, if other than cash, to be determined
by the Board of Trustees of the Trust (whose determination, if made in good
faith, will be conclusive). If any rights or warrants which lead to an
adjustment of the Conversion Price expire or terminate without having been
exercised, the Conversion Price then in effect will be appropriately
readjusted. However, a readjustment of the Conversion Price will not affect
any conversion which takes place before the readjustment.
(iii) If the Trust distributes to the holders of its Common Shares as
a class any shares of stock of the Trust (other than Common Shares) or
evidences of indebtedness or assets (other than cash dividends or
distributions) or rights or warrants (other than those referred to in
Section 6(e)(ii)) to subscribe of or purchase any of its securities, then,
in each such case, the Conversion Price will be reduced so that it will
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Record Date for the distribution by a fraction of
which the numerator is the Current Market Price of the Common Shares on the
Record Date for the distribution less the then fair market value (as
determined by the Board of Trustees, whose determination, if made in good
faith, will be conclusive) of the stock, evidences of indebtedness, assets,
rights or warrants which are distributed with respect to one Common Share,
and of which the denominator is the Current Market Price of the Common
Shares on that Record Date. Each adjustment will become effective
immediately after the Record Date for the determination of the shareholders
entitled to receive the distribution. If any distribution is declared but
not made, or if any rights or warrants expire or terminate without having
been exercised, effective immediately after the decision is made not to
make the distribution or the rights or warrants expire or terminate, the
Conversion Price then in effect will be appropriately readjusted. However,
a readjustment will not affect any conversion which takes place before the
readjustment.
(iv) If the Trust issues or sells (or the Operating Partnership issues
or sells, other than the issuance of partnership interests in the Operating
Partnership in the ordinary course for the purpose of the acquisition of
real property or real property interests, which partnership interests are
exchangeable solely for Common Shares as a result of which the Trust's
partnership interest in the Operating Partnership increases by the amount
of such partnership interest so exchanged), any equity or debt securities
which are convertible, directly or indirectly into or exchangeable for
Common Shares ("Convertible Securities") or any rights, options (other than
the issuance or exercise after the date hereof of stock options covering no
more than 286,000 Common Shares, subject to appropriate adjustment to the
extent that the Trust (A) pays a dividend or makes a distribution on its
Common Shares in shares of its Common Shares, (B) subdivides its
outstanding Common Shares into a greater number of shares or (C) combines
its outstanding Common Shares into a smaller number of shares, issued to
employees or directors of the Trust or its Subsidiaries under the Trust's
existing employee stock incentive plans) or warrants to purchase Common
Shares at conversion, exchange or exercise price per share which is less
than the Conversion Price, unless the provisions of Section 6(e)(ii) or
(iii) are applicable, the Trust will be deemed to have issued or sold, on
the later of the date on which the Convertible Securities, rights, options
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or warrants are issued and the date on which they first may be converted,
exchanged or exercised, the maximum number of Common Shares into or for
which the Convertible Securities may then be converted or exchanged or
which are then issuable upon the exercise of the rights, options or
warrants immediately prior to the close of business on the later of the
date on which the Convertible Securities, rights, options or warrants are
issued or the date on which they may first be converted, exchanged or
exercised, and the Conversion Price shall be adjusted downward as if it
were an event covered by Section 6(e)(v). However, no further adjustment of
the Conversion Price will be made as a result of the actual issuance of
Common Shares upon conversion, exchange or exercise of the Convertible
Securities, rights, options or warrants. If any Convertible Securities,
rights, options or warrants to which this Section applies are redeemed,
retired or otherwise extinguished or expire without any Common Shares
having been issued upon conversion, exchange or exercise thereof, effective
immediately after the Convertible Securities, rights, options or warrants
expire, the Conversion Price then in effect will be readjusted to what it
would have been if those Convertible Securities, rights, options or
warrants had not been issued. However, a readjustment will not affect any
conversion which takes place before the readjustment. For the purposes of
this Section 6(e)(iv), (x) the price of Common Shares issued or sold upon
conversion or exchange of Convertible Securities or upon exercise of
rights, options or warrants will be (A) the consideration paid to the Trust
for the Convertible Securities, rights, options or warrants, plus (B) the
consideration paid to the Trust upon conversion, exchange or exercise of
the Convertible Securities, rights, options or warrants, with the value of
the consideration, if other than cash, to be determined by the Board of
Trustees of the Trust (whose determination, if made in good faith, will be
conclusive) and (y) any change in the conversion or exchange price of
Convertible Securities or the exercise price of rights, options or warrants
will be treated as an extinguishment, when the change becomes effective, of
the Convertible Securities, rights, options or warrants which had the old
conversion, exchange or exercise price and an immediate issuance of new
Convertible Securities, rights, options or warrants with the new
conversion, exchange or exercise price.
(v) If the Trust issues or sells any Common Shares (other than (X) on
conversion or exchange of Convertible Securities or exercise of rights,
options or warrants to which Section 6(e)(ii), (iii) or (iv) applies, (Y)
the exchange of partnership interests in the Operating Partnership in the
ordinary course solely for Common Stock as a result of which the Trust's
partnership interest in the Operating Partnership increases by the amount
of such partnership interest so exchanged or, (Z) the sale of Common Shares
under a dividend reinvestment program if such Common Shares were purchased
on the open market in ordinary brokerage transactions) for a consideration
per share less than the Conversion Price on the date of the issuance or
sale (or on exercise of options or warrants, for less than the Conversion
Price on the date the options or warrants are issued), upon consummation of
the issuance or sale, the Conversion Price in effect immediately prior to
the issuance or sale will be reduced in accordance with the equation set
forth on Exhibit A hereto, which is hereby incorporated by reference
herein.
(vi) If there is a reclassification or change of outstanding Common
Shares (other than a change in par value, or as a result of a subdivision
or combination), or a merger or consolidation of the Trust with any other
entity that results in a reclassification, change, conversion, exchange or
cancellation of outstanding Common Shares, or a sale or transfer of all or
substantially all of the assets of the Trust, upon any subsequent
conversion of Series A Convertible Preferred Shares, each holder of the
Series A Convertible Preferred Shares will be entitled to receive the kind
and amount of securities, cash and other property which the holder would
have received if the holder had converted the Series A Convertible
Preferred Shares into Common Shares immediately before the first of those
events and had retained all
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the securities, cash and other assets received as a result of all those
events. In the event that a transaction may be viewed as causing this
Section 6(e)(vi) to be applicable and 6(e)(iii) is also applicable, then
Section 6(e)(iii) will be applied and this Section 6(e)(vi) will not be
applied.
(vii) For the purpose of any computation under this Section 6(e), the
"Current Market Price" of the Common Shares on any date will be the average
of the last reported sale prices per share of the Common Shares on each of
the twenty consecutive Trading Days (as defined below) preceding the date
of the computation. The last reported sale price of the Common Shares on
each day will be (A) the last reported sale price of the Common Shares on
the principal stock exchange on which the Common Shares are listed, or (B)
if the Common Shares are not listed on a stock exchange, the last reported
sale price of the Common Shares on the principal automated securities price
quotation system on which sale prices of the Common Shares are reported, or
(C) if the Common Shares are not listed on a stock exchange and sale prices
of the Common Shares are not reported on an automated quotation system, the
mean of the high bid and low asked price quotations for the Common Shares
as reported by National Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and asked quotations for the
Common Shares on at least five of the ten preceding Trading Days. If the
Common Shares is not traded or quoted as described in any of clause (A),
(B) or (C), the Current Market Price of the Common Shares on a day will be
the fair market value of the Common Shares on that day as determined by a
member firm of the New York Stock Exchange, Inc., selected by the Board of
Trustees. As used with regard to the Series A Convertible Preferred Shares,
the term "Trading Day" means (x) if the Common Shares is listed on at least
one stock exchange, a day on which there is trading on the principal stock
exchange on which the Common Shares are listed, (y) if the Common Shares
are not listed on a stock exchange, but sale prices of the Common Shares
are reported on an automated quotation system, a day on which trading is
reported on the principal automated quotation system on which sales of the
Common Shares are reported, or (z) if the Common Shares are not listed on a
stock exchange and sale prices of the Common Shares are not reported on an
automated quotation system, a day on which quotations are reported by
National Quotation Bureau Incorporated.
(viii) No adjustment in the Conversion Price will be required unless
the adjustment would require a change of at least 1% in the Conversion
Price; provided, however, that any adjustments which are not made because
of this Section 6(e)(viii) will be carried forward and taken into account
in any subsequent adjustment; and provided, further, that any adjustment
must be made in accordance with this Section 6 (without regard to this
Section 6(e)(viii)) not later than the time the adjustment may be required
in order to preserve the tax-free nature of a distribution to the holders
of Common Shares. All calculations under this Section 6 will be made to the
nearest cent or to the nearest one hundredth of a share, as the case may
be.
(ix) Whenever the Conversion Price is adjusted, the Trust will
promptly send each holder of record of Series A Convertible Preferred
Shares a notice of the adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which the adjustment becomes
effective and containing a brief description of the events which caused the
adjustment.
(x) If any one of the events in Sections 6(e)(i) through 6(e)(vi)
occurs, then the Trust will mail to the holders of record of the Series A
Convertible Preferred Shares, at least 15 days before the applicable date
specified below, a notice stating the applicable one of (i) the date on
which a record is to be taken for the purpose of the dividend, distribution
or grant of rights or warrants, or, if no record is to be taken, the date
as of which the holders of Common Shares of record who will be entitled to
the dividend, distribution or rights or warrants will be determined, (ii)
the date on which it is expected the Convertible
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Securities will be issued or the date on which the change in the
conversion, exchange or exercise price of the Convertible Securities,
rights, options or warrants will be effective, (iii) the date on which the
Trust anticipates selling Common Shares for less than the Conversion Price
on the date of the sale (except that no notice need be given of the
anticipated date of sale of Common Shares upon exercise of options or
warrants which have been described in a notice to the holders of record of
the Series A Convertible Preferred Shares given at least 15 days before the
options or warrants are exercised), or (iv) the date on which the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and
the date as of which it is expected that holders of record of Common Shares
will be entitled to exchange their Common Shares for securities or other
property deliverable upon the reclassification, consolidation, merger,
share exchange, sale, transfer, dissolution, liquidation or winding up.
Failure to give any such notice or any defect in the notice will not affect
the legality or validity of the reclassification, consolidation, merger,
share exchange, sale, transfer, dissolution, liquidation or winding up.
(f) (i) The Trust will at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common Shares, for the
purpose of effecting conversion of the Series A Convertible Preferred Shares,
the maximum number of Common Shares which the Trust would be required to deliver
upon the conversion of all the outstanding Series A Convertible Preferred
Shares. For the purposes of this Section 6(f)(i), the number of Common Shares
which the Trust would be required to deliver upon the conversion of all the
outstanding Series A Convertible Preferred Shares will be computed as if at the
time of the computation all the outstanding Series A Convertible Preferred
Shares were held by a single holder.
(ii) Before taking any action would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the Common Shares
deliverable upon conversion of the Series A Convertible Preferred Shares, the
Trust will take all corporate action which may, in the opinion of its counsel,
be necessary in order that the Trust may validly and legally issue fully paid
and non-assessable Common Shares at the adjusted Conversion Price.
(iii) The Trust will seek to list the Common Shares required to be
delivered upon conversion of the Series A Convertible Preferred Shares, prior to
the delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of delivery.
(g) In connection with the conversion of any Series A Convertible Preferred
Shares into Common Shares pursuant to Section 6(a) or (b), in determining the
number of Common Shares to be issued upon conversion of each Series A
Convertible Preferred Share, there shall be excluded from Accrued Dividends the
amount of any Accrued Dividends (the "Deferred Accrued Dividends") which were
accrued on each such share in respect of the period from the last day of the
month next preceding the last Dividend Payment Date to the effective date of the
conversion (such period being referred to as the "Deferral Period"). Following
the end of the Deferral Period, on the next date which would have been a
Dividend Payment Date had such Series A Convertible Preferred Share not been
converted, the Company shall pay in cash to the person or entity that was the
holder of such converted Series A Convertible Preferred Share on the conversion
date, the amount of Deferred Accrued Dividends reduced, but in no event to less
than zero, by the amount of dividends paid on the Common Shares into which such
Series A Preferred Share was converted in respect of the Deferral Period. To the
extent that a dividend is paid on such Common Shares for a period which
includes, but is longer than, the Deferral Period, the amount of dividends paid
in respect of the Deferral Period shall be deemed to be a pro rata portion of
the aggregate amount of accrued dividends paid for such longer period, based on
the number of calendar days in the Deferral Period and the total number of days
in the applicable dividend accrual period.
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(h) The Trust will pay any documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of Common Shares on conversion
of Series A Convertible Preferred Shares; provided, however, that the Trust will
not be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of Common Shares in a name other than that of
the holder of record of Series A Convertible Preferred Shares to be converted
and no such issue or delivery will be made unless and until the person
requesting the issue or delivery has paid to the Trust the amount of any such
tax or has established, to the satisfaction of the Trust, that the tax has been
paid or is not payable.
SECTION 7. Status.
Series A Convertible Preferred Share converted pursuant to the terms hereof
or otherwise acquired by the Trust shall automatically be retired upon such
conversion or other acquisition, as the case may be, shall not be reissued as
Series A Convertible Preferred Shares and shall be restored to the status of
authorized but unissued shares of Preferred Shares, undesignated as to series.
Section 8. Redemption after Acceleration of the Maturity Date .
(a) Notwithstanding anything to the contrary contained in Section 6, each
holder of Series A Convertible Preferred Shares will have the right, exercisable
at any time prior to the Mandatory Conversion Date, to require the Trust to
redeem (the date required for such redemption, the "Accelerated Maturity Date")
any and all of the Series A Convertible Preferred Shares owned of record by the
holder at a redemption price per share (the "Redemption Price") equal to the sum
of (i) Stated Value plus (ii) the per share sum of all Accrued Dividends
(including, without limitation, Section 3(b) Suspended Dividends) through the
Redemption Date, as herein deferred, in the event that the Internal Revenue
Service makes an IRS Termination Determination such that the Internal Revenue
Service will for any period deny to the Trust the tax benefits associated with
qualification as a real estate investment trust and either or both of the
following circumstances arise: (i) the Trust does not receive (within 60 days of
the date established in the IRS Termination Determination as the date on which
the Deficiency Dividend or any other amount required to be paid by the Trust to
the IRS is required to be paid) the full indemnity payment as a result thereof
to which the Trust is entitled pursuant to the Tax Agreement, and (ii) counsel
reasonably satisfactory to Morgan Stanley Asset Management Inc. is unable to
provide to the holders of Series A Convertible Preferred Shares affirmative
advice that, commencing not later than with the taxable year ending December 31,
1999, the Trust will, notwithstanding such IRS Termination Determination, be
able to elect to be qualified and taxed as a real estate investment trust under
the Internal Revenue Code of 1986, as amended, and its proposed method of
operation will enable it so to qualify for following years.
(b) In order to exercise its right of redemption pursuant to this Section
8, the holder must deliver a written request for redemption, accompanied by the
certificates representing the shares to be redeemed, to the Trust at any time
prior to the Mandatory Conversion Date. If, on or before the 180th day after the
date of the IRS Termination Determination, a request for redemption pursuant to
Section 8(a) is given with respect to Series A Convertible Preferred Shares,
promptly (but in no event more than ten Business Days) after the request for
redemption is given to the Trust, the Trust will pay the holder of such shares
cash equal to the Redemption Price of such shares. If, on or after the 181st day
after the date of the IRS Termination Determination, a request for redemption
pursuant to Section 8(a) is given with respect to Series A Convertible Preferred
Shares, not more than 30 Business Days after the request for redemption is given
to the Trust, the Trust will pay the holder of such shares cash equal to the
Redemption Price of such shares. The date of any such payment is referred to
herein as the "Redemption Date."
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(c) If a request for redemption accompanied by the certificates
representing the shares to be redeemed is delivered to the Trust, on the
Redemption Date dividends will cease to accrue with regard to the Series A
Convertible Preferred Shares to be redeemed, and at the close of business on
that date the holders of those shares will cease to be shareholders with respect
to those shares, will have no interest in or claims against the Trust by virtue
of such shares (other than as described in Section 8(c) hereof) and will have no
voting or other rights with respect to such shares.
(d) The dividend with respect to a Series A Convertible Preferred Share
which is the subject of a request for redemption delivered on a day which falls
between the close of business on a dividend payment Record Date and the opening
of business on the corresponding Dividend Payment Date will be payable on the
Dividend Payment Date to the holder of record of the Series A Convertible
Preferred Shares on the dividend payment Record Date notwithstanding the
redemption of the Series A Convertible Preferred Shares after the dividend
payment Record Date and prior to the Dividend Payment Date.
SECTION 9. Ranking.
Subject to Section 4(b), the Series A Convertible Preferred Shares will,
with respect to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding-up of the Trust, rank prior to any other
series of Preferred Shares, prior to Common Shares and prior to any other class
or series of capital stock of the Trust.
Section 10. Miscellaneous.
(a) Except as otherwise expressly provided in these Articles Supplementary,
whenever a notice or other communication is required or permitted to be given to
holders of Series A Convertible Preferred Shares, the notice or other
communication will be deemed properly given if deposited in the United States
mail, postage prepaid, addressed to the persons shown on the books of the Trust
as the holders of the Series A Convertible Preferred Shares at the addresses as
they appear on the books of the Trust, as of the Record Date or dates determined
in accordance with applicable law and with the Declaration of Trust and Bylaws,
as in effect from time to time, with a copy sent to Morgan Stanley Asset
Management Inc., 1221 Avenue of the Americas, New York, New York 10020 by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service.
(b) Series A Convertible Preferred Shares will not have any designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications or terms and
conditions of redemption, other than those specifically set forth herein, in the
Charter, and as may be provided under applicable law insofar as any such
provision does not conflict with the terms hereof.
(c) The headings of the various subdivisions herein are for convenience
only and will not affect the meaning or interpretation of any of the provisions
herein.
(d) Notwithstanding Section 4 hereof, and provided that the Trust's Board
of Trustees determines that it is appropriate to submit to a vote of the holders
of Series A Convertible Preferred Shares, the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of the
Series A Convertible Preferred Shares may be waived, and any of such provisions
of the Series A Convertible Preferred Shares may be amended, only with the
approval of holders of at least 60% of the outstanding Series A Convertible
Preferred Shares, voting separately as a class.
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<PAGE> 88
(e) Notwithstanding anything to the contrary contained in Section 3, 4, 6
or 8 hereof, each holder of record of Series A Convertible Preferred Shares
hereby agrees (subject to relinquishment by Morgan Stanley Asset Management Inc.
as provided below) that, in determining whether any holder of Series A
Convertible Preferred Shares has (i) approved a replacement to Dennis Gershenson
as contemplated by clause (viii) of the last sentence of Section 3(b), (ii)
approved any action by the Trust under Section 4, (iii) elected to cause the
conversion of such holder's Series A Convertible Preferred Shares into Common
Shares or other assets under Section 6, (iv) received any notice of the Trust
required by these Articles Supplementary, including without limitation notices
required by Section 6(e)(ix), Section 6(e)(x) and Section 6(f), or (v) elected
to cause the redemption by the Trust of such holder's Series A Convertible
Preferred Shares in the circumstance provided by Section 8, until such holder
shall have notified in writing the Trust otherwise, Morgan Stanley Asset
Management Inc. shall have the right to grant or deny such approvals, make or
decline any such elections or receive any such notices with regard to all the
Series A Convertible Preferred Shares held of record by such holder, and a
notice received by Morgan Stanley Asset Management Inc. and a document executed
by Morgan Stanley Asset Management Inc. granting or denying approval to any
action by the Trust under Section 4, or electing or declining to the Trust to
effect the conversion as to any Series A Convertible Preferred Shares under
Section 6, or electing or declining to the Trust to effect the redemption as to
any Series A Convertible Preferred Shares shall determine the matter for such
holders as Morgan Stanley Asset Management Inc. may indicate. Upon written
notice by Morgan Stanley Asset Management Inc. to the Trust, Morgan Stanley
Asset Management Inc. may relinquish such rights and powers of any or all Series
A Convertible Preferred Shares. The foregoing may, but need not, be implemented
by execution by each holder of Series A Convertible Preferred Shares of a proxy
in favor of Morgan Stanley Asset Management Inc.
SECTION 11. Permissible Distributions.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other acquisition of shares
or otherwise, is permitted under the Maryland General Corporation Law, amounts
that would be needed, if the Trust were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
Series A Convertible Preferred Shares whose preferential rights upon dissolution
are superior to those receiving the distribution shall be added to the Trust's
total liabilities.
SECTION 12. Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted in a manner
as to be effective and valid under applicable law, but if any provision hereof
is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining provisions
hereof. If a court of competent jurisdiction should determine that a provision
hereof would be valid or enforceable if a period of time were extended or
shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
THIRD: The Series A Convertible Preferred Shares have been classified by
the Board of Trustees of the Trust under the authority contained in the
Declaration of Trust.
FOURTH: These Articles Supplementary have been approved by the Board of
Trustees in the manner and by the vote required by law.
FIFTH: The undersigned officers acknowledge these Articles Supplementary to
be the trust act of the Trust and, as to all matters or facts required to be
verified under oath, the undersigned officers each certify, under penalties of
perjury, that to the best of his knowledge and information and belief these
matters and facts are true in all material respects.
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<PAGE> 89
IN WITNESS WHEREOF, RGPT Trust has caused these Articles Supplementary to
be executed under seal in its name and on its behalf by its President and
attested to by its Secretary as of October 2, 1997
<TABLE>
<S> <C> <C>
ATTEST: RGPT TRUST, (SEAL)
/s/ Richard Gershenson By /s/ Dennis Gershenson
---------------------------------------- -----------------------------------------
Name: Richard Gershenson Name: Dennis Gershenson
Title: Secretary Title: President
</TABLE>
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<PAGE> 90
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
SPECIAL MEETING OF SHAREHOLDERS
RAMCO-GERSHENSON PROPERTIES TRUST
_______, 1997
<TABLE>
<S><C>
- Please Detach and Mail in the Envelope Provided -
A /X/ Please mark your
vote as in this
example.
FOR AGAINST ABSTAIN
1. The approval of (i) the changing of the Trust's state of / / / / / /
organization from Massachusetts to Maryland through the
termination of the Trust's current Amended and Restated
Declaration of Trust, the merger (the "Change of Venue
Merger") of the Trust into a newly-formed Maryland real
estate investment trust subsidiary (the "Maryland Trust"),
and the conversion of each outstanding share of beneficial
interest of the Trust into a common share of beneficial
interest of the surviving Maryland Trust, and (ii) the
future issuance of Series A Convertible Preferred Shares
of the Maryland Trust and common shares of beneficial
interest of the Maryland Trust to holders of Series A
Convertible Preferred Shares issued by the Maryland
Trust upon the conversion or redemption of such Series A
Convertible Preferred Shares.
2. In accordance with their judgment with respect to any
other business that may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED FOR THE APPROVAL OF PROPOSAL 1.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN
THE ENCLOSED ENVELOPE.
SIGNATURE(S) __________________________________________________________________________DATE _______________________________ , 1997
NOTE: This Proxy must be signed exactly as your name appears. Executor, administrator, trustee, partners, etc. should give full
title as such. If the signer is a corporation, please sign full corporation name by duly authorized officer, who should state his
title.
</TABLE>
<PAGE> 91
RAMCO-GERSHENSON PROPERTIES TRUST
27600 NORTHWESTERN HIGHWAY, SUITE 200
SOUTHFIELD, MICHIGAN 48034
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
ON _______, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints BRUCE A. GERSHENSON and RICHARD D.
GERSHENSON or either of them, each with full power of substitution, proxies of
the undersigned to vote all shares of beneficial interest of Ramco-Gershenson
Properties Trust (the "Trust") which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Trust to be held on the ____ day of ____,
1997 at 10:00 a.m., at ______________________, _____________________, ________,
_________ and all adjournments thereof, as fully and with the same force and
effect as the undersigned might or could do if personally present thereat.
Said proxies are instructed to vote as follows:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
