SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 12, 1997
AMERICAN REAL ESTATE INVESTMENT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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<CAPTION>
<S> <C> <C>
Maryland 1-12514 84-1246585
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
620 W. Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code:
(610) 834-7950
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 12, 1997, the Registrant and its operating
partnership, American Real Estate Investment, L.P. (the "Operating
Partnership"), consummated a series of transactions (the
"Transactions") that were previously announced in a press release
filed as Exhibit 99.1 to the Registrant's Current Report on Form 8-K
filed with the Securities and Exchange Commission on August 21, 1997,
and were more fully described in the Registrant's Proxy Statement
dated November 12, 1997. The Registrant's stockholders approved the
Transactions at a special meeting held on December 11, 1997.
As part of the Transactions, the Registrant amended and restated
its articles of incorporation (attached hereto as Exhibit 3.1) and
amended and restated its bylaws (attached hereto as Exhibit 3.3), and
the Operating Partnership amended and restated its agreement of
limited partnership (attached hereto as Exhibit 10.1). A copy of the
Registrant's press release dated December 15, 1997 is attached hereto
as Exhibit 99.1 and incorporated herein by reference.
ITEM 5. OTHER EVENTS.
See Item 2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable to file with this Form 8-K the financial
statements and pro forma financial information required by this Item
7 with regard to the Transactions. Those financial statements and
that pro forma financial information will be filed by amendment to
this Form 8-K as soon as practicable and, in any event, within 60
days after the required filing date for this Form 8-K.
(b) PRO FORMA FINANCIAL INFORMATION.
See Item 7(a).
(c) EXHIBITS.
3.1 Amended and Restated Articles of Incorporation of
Registrant
3.2 Articles of Merger between Fair Lawn Industrial Park, Inc.,
a New York corporation, and the Registrant, filed with the
State of Maryland on December 12, 1997
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3.3 Amended and Restated By-Laws of Registrant
10.1 Amended and Restated Agreement of Limited Partnership of
American Real Estate Investment, L.P. (the "Operating
Partnership") dated December 12, 1997
10.2 First Amendment dated December 12, 1997 to the Master
Investment Agreement (the "Master Agreement") dated August
20, 1997 by and among the Registrant, the Operating
Partnership, and the McBride Entities (as further
identified in the Master Agreement), the FLIP Shareholders
(as further identified in the Master Agreement), Jeffrey
Kelter, Penn Square Properties, Inc. and Hudson Bay
Partners II, L.P.
99.1 Press release dated December 15, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
Date: December 22, 1997 By /S/ JEFFREY E. KELTER
---------------------
Jeffrey E. Kelter
President
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EXHIBIT 3.1
AMERICAN REAL ESTATE INVESTMENT CORPORATION
AMENDED AND RESTATED ARTICLES OF INCORPORATION
DATED AS OF DECEMBER 12, 1997
ARTICLE I
NAME
The name of the corporation is:
AMERICAN REAL ESTATE INVESTMENT CORPORATION
ARTICLE II
PURPOSES AND POWERS
Section 2.1. PURPOSES.
(a) The purpose of the Company is to engage in any lawful act or
activity (including, without limitation or obligation, engaging in business
as a real estate investment trust under the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute (the "Code")) for
which corporations may be organized under the general laws of the State of
Maryland as now or hereafter in force. For purposes of the Charter, "REIT"
means a real estate investment trust as defined in Sections 856 through 860
of the Code.
Section 2.2. POWERS. The Company shall have all of the powers granted
to corporations by the Maryland General Corporation Law ("MGCL") and all
other powers set forth in the Charter which are not inconsistent with law
and are appropriate to promote and attain the purposes set forth in the
Charter.
ARTICLE III
PRINCIPAL OFFICE IN THE STATE AND RESIDENT AGENT
The post office address and principal office of the Company in the
State of Maryland is c/o The Prentice-Hall Company System, Maryland, 11
East Chase Street, Baltimore, Maryland 21202. The name and address of the
resident agent of the Company in the State of Maryland is The Prentice-Hall
Company System, Maryland, 11 East Chase Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation.
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ARTICLE IV
BOARD OF DIRECTORS
Section 4.1. CLASSIFICATION AND NUMBER.
(a) The number of directors of the Company (the "Directors") shall be
seven. The number may be increased or decreased pursuant to the Bylaws of
the Company (which action may not affect the tenure of office of any
Director), but shall never be more than fifteen nor less than the minimum
number permitted by the General Laws of the State of Maryland now or
hereafter in force.
(b) The Directors (other than any Director elected solely by holders
of one or more classes or series of Preferred Stock) shall be divided into
three classes, as nearly equal in number as possible. The first Class of
Directors (Class I) shall hold office initially for a term expiring at the
first annual meeting of stockholders after December 12, 1997 (the "Closing
Date"). The Second Class of Directors (Class II) shall hold office
initially for a term expiring at the second annual meeting of stockholders
after the Closing Date. The Third Class of Directors (Class III) shall
hold office initially for a term expiring at the third annual meeting of
stockholders after the Closing Date. Directors elected to succeed those
Directors whose terms have thereupon expired shall be elected for a term of
office of three years and until the election and qualification of their
successors. If the number of Directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain or
attain, if possible, the equality of the number of Directors in each class,
but in no case will a decrease in the number of Directors shorten the term
of any incumbent Director. If such equality is not possible, the increase
or decrease shall be apportioned among the classes in such a way that the
difference in the number of Directors in any two classes shall not exceed
one. Stockholder votes to elect Directors shall be conducted in the manner
provided in the Bylaws.
(c) The name and class of the Directors who shall serve as the
initial Directors after the Closing Date and until their successors are
duly elected and qualified is:
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NAME CLASS
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Jim Mulvihill Class III
Evan Zucker Class I
David Lesser Class III
Jeffrey Kelter Class II
David McBride Class III
Robert Branson Class II
Timothy McBride Class I
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Section 4.2. VACANCIES. Subject to the rights of the holders of any
class of stock separately entitled to elect one or more Directors, the
stockholders may elect a successor to fill a vacancy on the Board which
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results from the removal of a Director. A Director elected by the
stockholders to fill a vacancy which results from the removal of a Director
serves for the balance of the term of the removed Director. Subject to the
rights of the holders of any class of stock separately entitled to elect
one or more Directors, a majority of the remaining Directors, whether or
not sufficient to constitute a quorum, may fill a vacancy on the Board
which results from any cause except an increase in the number of Directors,
and a majority of the entire Board may fill a vacancy which results from an
increase in the number of Directors. A Director elected by the Board to
fill a vacancy serves until the next annual meeting of stockholders and
until his or her successor is elected and qualifies.
Section 4.3. RESIGNATION, REMOVAL OR DEATH. Any Director may resign
by written notice to the Board, effective upon execution and delivery to
the Company of such written notice or upon any future date specified in the
notice, and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Subject to the
rights of holders of one or more classes or series of Preferred Stock to
elect one or more Directors, any Director or the entire Board may be
removed at any time with cause, by the affirmative vote of the holders of
not less than a majority of the then outstanding voting stock.
Section 4.4. BUSINESS ACTIVITIES BY DIRECTORS. Unless otherwise
agreed between the Company and a Director, each individual Director may
engage in other business activities of the type conducted by the Company
and is not required to present to the Company any investment opportunities
presented to them even though the investment opportunities may be within
the scope of the Company's investment policies.
Section 4.5. INDEPENDENT DIRECTORS. Notwithstanding anything herein
to the contrary, at all times (except during a period not to exceed sixty
(60) days following the death, resignation, incapacity or removal from
office of a Director prior to the expiration of the Director's term or
office), two of the Directors shall be "Independent Directors."
Independent Directors shall mean Directors who are not (i) officers of the
Company, (ii) related to officers of the Company or (iii) holders, or
officers or directors of such holders, of more than 5% of the issued and
outstanding Shares of capital stock of the Company on a fully diluted
basis.
Section 4.6. GENERAL.
The Board shall, consistent with applicable law, have power in its
sole discretion to determine from time to time in accordance with sound
accounting practice or other reasonable valuation methods what constitutes
annual or other net profits, earnings, surplus or net assets in excess of
capital; to fix and vary from time to time the amount to be reserved as
working capital, or determine that retained earnings or surplus shall
remain in the hands of the Company; to set apart out of any funds of the
Company such reserve or reserves in such amount or amounts and for such
proper purpose or purposes as it shall determine and to abolish any such
reserve or any part thereof; to redeem or purchase its stock or to
distribute and pay distributions or dividends in stock, cash or other
securities or property, out of surplus or any other funds or amounts
legally available therefor, at such times and to the stockholders of record
on such dates as it may, from time to time, determine; to determine the
amount, purpose, time of creation, increase or decrease, alteration or
cancellation of any reserves or charges and the propriety thereof (whether
or not any obligation or liability for which such reserves or charges shall
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have been created shall have been paid or discharged); to determine the
fair value and any matters relating to the acquisition, holding and
disposition of any assets by the Company; and to determine whether and to
what extent and at what times and places and under what conditions and
regulations the books, accounts and documents of the Company, or any of
them, shall be open to the inspection of stockholders, except as otherwise
provided by statute or by the Bylaws, and, except as so provided, no
stockholder shall have any right to inspect any book, account or document
of the Company unless authorized so to do by resolution of the Board.
ARTICLE V
CAPITAL STOCK
Section 5.1. The total number of shares of stock of all classes which
the Company has authority to issue is sixty five million (65,000,000)
shares of capital stock, par value $.001 per share (the "Shares"),
amounting in aggregate par value to $65,000. All of such shares are
initially classified as "Common Stock". The Board may classify and
reclassify any unissued shares of capital stock by setting or changing in
any one or more respects the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications or
terms or conditions of redemption of such shares of capital stock.
Section 5.2. Subject to Article VI, the following is a description of
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of the Common Stock of the Company:
(a) Each share of Common Stock shall have one vote, and, except
as otherwise provided in respect of any class of stock hereafter
classified or reclassified, the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock. Shares
of Common Stock shall not have cumulative voting rights.
(b) Subject to the provisions of law and any preferences of any
class of stock hereafter classified or reclassified, dividends,
including dividends payable in shares of another class of the
Company's stock, may be paid ratably on the Common Stock at such time
and in such amounts as the Board may deem advisable.
(c) In the event of any liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary, the holders of the
Common Stock shall be entitled, together with the holders of any other
class of stock hereafter classified or reclassified not having a
preference on distributions in the liquidation, dissolution or winding
up of the Company, to share ratably in the net assets of the Company
remaining, after payment or provision for payment of the debts and
other liabilities of the Company and the amount to which the holders
of any class of stock hereafter classified or reclassified having a
preference on distributions in the liquidation, dissolution or winding
up of the Company shall be entitled.
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Section 5.3. Subject to Article VI and subject to the foregoing, the
power of the Board to classify and reclassify any of the shares of capital
stock shall include, without limitation, subject to the provisions of the
Charter, authority to classify or reclassify any unissued shares of such
stock into a class or classes of preferred stock, preference stock, special
stock or other stock, and to divide and classify any unissued shares of any
class into one or more series of such class, by determining, fixing, or
altering one or more of the following:
(a) The distinctive designation of such class or series and the
number of shares to constitute such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or
series, the number of shares of any class or series may be decreased
by the Board in connection with any classification or reclassification
of unissued shares and the number of shares of such class or series
may be increased by the Board in connection with any such
classification or reclassification, and any shares of any class or
series which have been redeemed, purchased, otherwise acquired or
converted into shares of Common Stock or any other class or series
shall become part of the authorized capital stock and be subject to
classification and reclassification as provided in this sub-paragraph.
(b) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on
shares of such class or series, whether any such dividends shall rank
senior or junior to or on a parity with the dividends payable on any
other class or series of stock, and the status of any such dividends
as cumulative, cumulative to a limited extent or non-cumulative and as
participating or non-participating.
(c) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and,
if so, the terms of such voting rights.
(d) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or
exchange rate in such events or at such times as the Board shall
determine.
(e) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall
be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; and whether or not there shall be any sinking fund
or purchase account in respect thereof, and if so, the terms thereof.
(f) The rights of the holders of shares of such class or series
upon the liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the Company, which rights may
vary depending upon whether such liquidation, dissolution or winding
up is voluntary or involuntary and, if voluntary, may vary at
different dates, and whether such rights shall rank senior or junior
to or on a parity with such rights of any other class or series of
stock.
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(g) Whether or not there shall be any limitations applicable,
while shares of such class or series are outstanding, upon the payment
of dividends or making of distributions on, or the acquisition of, or
the use of moneys for purchase or redemption of, any stock of the
Company, or upon any other action of the Company, including action
under this sub-paragraph, and, if so, the terms and conditions
thereof.
(h) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the Charter of the
Company.
Section 5.4. Subject to Article VI and for the purposes hereof and of
any articles supplementary to the Charter providing for the classification
or reclassification of any shares of capital stock or of any other Charter
document of the Company (unless otherwise provided in any such articles or
document), any class or series of stock of the Company shall be deemed to
rank:
(a) prior to another class or series either as to dividends or
upon liquidation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in
preference or priority to holders of such other class or series;
(b) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of such
class or series of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or priority over
the holders of such other class or series; and
(c) junior to another class or series either as to dividends or
upon liquidation, if the rights of the holders of such class or series
shall be subject or subordinate to the rights of the holders of such
other class or series in respect of the receipt of dividends or the
amounts distributable upon liquidation, dissolution or winding up, as
the case may be.
Section 5.5. AUTHORIZATION BY BOARD OF STOCK ISSUANCE. The Board is
hereby empowered to authorize the issuance from time to time of shares of
its stock of any class, whether now or hereafter authorized, or securities
convertible into shares of its stock of any class or classes, whether now
or hereafter authorized, for such consideration as may be deemed advisable
by the Board and without any action by the stockholders. Notwithstanding
any other provision in the Charter, no determination shall be made by the
Board nor shall any transaction be entered into by the Company which would
cause any Shares or other equity interest in the Company 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.
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Section 5.6. FRACTIONAL SHARES OF STOCK. The Company may, without the
consent or approval of any stockholder, issue fractional Shares of stock,
eliminate a fraction of a share by rounding up or down to a full share of
stock, arrange for the disposition of a fraction of a share of stock by the
person entitled to it, or pay cash for the fair value of a fraction of a
share of stock.
Section 5.7. PREEMPTIVE RIGHTS. No holder of any stock or any other
securities of the Company, whether now or hereafter authorized, shall have
any preemptive right to subscribe for or purchase any stock or any other
securities of the Company other than such, if any, as the Board, in its
sole discretion, may determine and at such price or prices and upon such
other terms as the Board, in its sole discretion, may fix; and any stock or
other securities which the Board may determine to offer for subscription
may, as the Board in its sole discretion shall determine, be offered to the
holders of any class, series or type of stock or other securities at the
time outstanding to the exclusion of the holders of any or all other
classes, series or types of stock or other securities at the time
outstanding.
Section 5.8. CONTROL SHARES. Pursuant to Section 3-702(b) of the
MGCL, the terms of Subtitle 7 of Title 3 of such law (the "Control Shares
Statute") shall be inapplicable to any acquisition of Control Shares (as
that term is defined in the Control Shares Statute) that is not prohibited
by the terms of Article VI of the Charter.
ARTICLE VI
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 6.1. DEFINITIONS. For the purpose of this Article VI, the
following terms shall have the following meanings:
(a) AMEX. The term "AMEX" shall mean the American Stock Exchange,
Inc.
(b) 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.
(c) 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, New York authorized or required by
law, regulation or executive order to close.
(d) Charitable Beneficiary. The term "Charitable Beneficiary" shall
mean one or more beneficiaries of the Charitable Trust as determined
pursuant to Section 6.3.7, provided that each such organization must be
described in Sections 501(c)(3), 170(b)(1)(A) and 170(c)(2) of the Code.
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(e) Charitable Trust. The term "Charitable Trust" shall mean any
trust provided for in Section 6.2.1(b)(i) and Section 6.3.1.
(f) Charitable Trustee. The term "Charitable Trustee" shall mean the
Person unaffiliated with the Company and a Prohibited Owner, that is
appointed by the Company to serve as trustee of the Charitable Trust.
(g) 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.
(h) Excepted Holder. The term "Excepted Holder" shall mean a
stockholder of the Company for whom an Excepted Holder Limit is created by
the Board pursuant to Section 6.2.7.
(i) 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 pursuant to Section 6.2.7 and subject
to adjustment pursuant to Section 6.2.7, the percentage limit established
by the Board for such Excepted Holder pursuant to Section 6.2.7.
(j) Hudson Bay Excepted Holder Limit. The term "Hudson Bay Excepted
Holder Limit" shall mean, subject to adjustment pursuant to Section 6.2.7,
40% of the Common Stock outstanding or treated as outstanding under Section
544 of the Code; provided that no Person that is a Beneficial Owner of
Hudson Bay may Beneficially Own more than 4.9% of the Common Stock
outstanding or treated as outstanding under Section 544 of the Code.
Hudson Bay shall be subject to the Ownership Limit with respect to any
Preferred Stock acquired.
(k) Initial Date. The term "Initial Date" shall mean the date upon
which the Charter containing this Article VI is filed for record with the
State Department of Assessments and Taxation of Maryland.
(l) 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 AMEX or, if such Shares are
not listed or admitted to trading on the AMEX, 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 NASDAQ Stock Market 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
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the Board or, in the event that no trading price is available for such
Shares, the fair market value of Shares, as determined in good faith by the
Board.
(m) McBride Family. The term "McBride Family" shall mean David
McBride, Michael McBride and Timothy McBride, each of their parents,
brothers, sisters, spouses and children, any lineal descendants of any of
the foregoing, any estates of any of the foregoing and any trusts now or
hereafter established for the benefit of any of the foregoing. As referred
to herein, a "branch" of the McBride Family shall mean all Persons referred
to in the preceding sentence whose ownership of Common Stock is
Beneficially Owned by one individual who is part of the McBride Family (as
the term "individual" is defined in Section 542(a)(2) of the Code, as
modified by Section 856(h)(3) of the Code); provided that a Person shall be
treated as part of the "branch" that results in the greatest Beneficial
Ownership by an individual who is part of the McBride Family and such
Person shall not be treated as part of any other "branch."
(n) McBride Family Excepted Holder Limit. The term "McBride Family
Excepted Holder Limit" shall mean, subject to adjustment pursuant to
Section 6.2.7 and this Section 6.1(n), 39.9% of the Common Stock
outstanding. The McBride Family Excepted Holder Limit shall be reduced to
35% at such time as any branch of the McBride Family Beneficially Owns less
than 4.9% of the outstanding Common Stock, provided that if three or more
branches of the McBride Family each Beneficially Own 4.9% or more of the
outstanding Common Stock, the McBride Family Excepted Holder Limit shall
not be reduced pursuant to this sentence. The McBride Family Excepted
Holder Limit shall be further reduced to 30.1% at such time as any two
branches of the McBride Family each Beneficially Owns less than 4.9% of the
outstanding Common Stock, provided that if two or more branches of the
McBride Family each Beneficially Own 4.9% or more of the outstanding Common
Stock, the McBride Family Excepted Holder Limit shall not be reduced
pursuant to this sentence. At such time as any branch of the McBride
Family Beneficially Owns 4.9% or less of the outstanding Common Stock, the
Person included in such branch will be subject to the Ownership Limit and
the Common Stock Beneficially Owned by such Person shall no longer be
considered in determining the McBride Family's Beneficial Ownership for
purposes of the McBride Family Excepted Holder Limit. The McBride Family
shall be subject to the Ownership Limit with respect to any Preferred Stock
acquired.
(o) Ownership Limit. The term "Ownership Limit" shall mean (i) with
respect to the Common Stock, 4.9% (in value or number of shares, whichever
is more restrictive) of the outstanding shares of Common Stock; and (ii)
with respect to any class or series of Preferred Stock, 9.9% (in value or
number of shares, whichever is more restrictive) of the outstanding shares
of such class or series of Preferred Stock.
(p) Person. The term "Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under Sections
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.
(q) Prohibited Owner. The term "Prohibited Owner" shall mean, with
respect to any purported Transfer, any Person who, but for the provisions
of Section 6.2.1, 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.
(r) Restriction Termination Date. The term "Restriction Termination
Date" shall mean the first day after the Initial Date on which the Board
determines that it is no longer in the best interests of the Company to
attempt to, or continue to, qualify as a REIT or 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 Company to qualify as a REIT.
(s) 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
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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 Company, (b)
a change in the relationship between two or more Persons which causes a
change in Beneficial Ownership or Constructive Ownership of Shares, (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 VI, the right
of a limited partner in American Real Estate Investment, L.P., a Delaware
limited partnership, to require the Company to issue, at the Company's
option, cash or Common Stock in exchange for such limited partner's units
of partnership interest pursuant to Article XII of the Agreement of Limited
Partnership of American Real Estate Investment, L.P. shall not be
considered to be an option or similar right to acquire Shares of the
Company, but any actual issuance shall be a Transfer of Common Stock.) The
terms "Transferring" and "Transferred" shall have the correlative meanings.
Section 6.2. SHARES.
Section 6.2.1. 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; (2) no Excepted Holder shall Beneficially Own or Constructively Own
Shares in excess of the Excepted Holder Limit for such Excepted Holder; (3)
the McBride Family shall not Beneficially Own or Constructively Own Shares
in excess of the McBride Family Excepted Holder Limit; and (4) Hudson Bay
shall not Beneficially Own or Constructively Own Shares in excess of the
Hudson Bay Excepted Holder Limit.
(ii) No Person shall Beneficially or Constructively Own
Shares to the extent that (1) such Beneficial Ownership of Shares would
result in the Company 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 (2) such Beneficial or
Constructive Ownership of Shares would result in the Company otherwise
failing to qualify as a REIT (including, but not limited to, Constructive
Ownership that would result in the Company owing (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 Company from such
tenant would cause the Company 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
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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 AMEX 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 AMEX or any other national securities exchange or
automated inter-dealer quotation system) occurs which, if effective, would
result in any Person Beneficially Owning or Constructively Owning Shares in
violation of Section 6.2.1(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 6.2.1(a)(i) or (ii) (rounded to the higher whole share)
shall be automatically transferred to a Charitable Trust for the benefit of
a Charitable Beneficiary, as described in Section 6.3, 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 6.2.1(a)(i) or (ii), then the Transfer of
that number of Shares that otherwise would cause any Person to violate
Section 6.2.1(a)(i) or (ii) shall be void AB INITIO, and the intended
transferee shall acquire no rights in such Shares.
Section 6.2.2. REMEDIES FOR BREACH. If the Board 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 6.2.1 or that a Person intends to acquire or has attempted to
acquire Beneficial or Constructive Ownership of any Shares in violation of
Section 6.2.1 (whether or not such violation is intended), the Board or a
committee thereof shall take such action as it deems advisable to refuse to
give effect to or to prevent such Transfer or other event, including,
without limitation, causing the Company to redeem Shares, refusing to give
effect to such Transfer on the books of the Company or instituting
proceedings to enjoin such transfer or other event; provided, however, that
any Transfer or attempted Transfer or other event in violation of Section
6.2.1 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 or a committee thereof.
Section 6.2.3. 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 6.2.1(a),
or any Person who would have owned Shares that resulted in a transfer to
the Charitable Trust pursuant to the provisions of Section 6.2.1(b), shall
immediately give written notice to the Company of such event, or in the
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case of such a proposed or attempted transaction, give at least 15 days
prior written notice, and shall provide to the Company such other
information as the Company may request in order to determine the effect, if
any, of such acquisition or ownership on the Company's status as a REIT.
Section 6.2.4. OWNERS REQUIRED TO PROVIDE INFORMATION FROM THE
INITIAL DATE AND PRIOR TO THE RESTRICTION TERMINATION DATE:
(a) every owner of more than 1% (or such other 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 Company stating the name and address of
such owner, the number of Shares Beneficially and Constructively Owned and
a description of the manner in which such Shares are held; provided that a
stockholder 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 Company stating the name and address of such Actual Owner and
the number of Shares of such Actual Owner with respect to which the
stockholder of record is nominee. Each owner shall provide to the Company
such additional information as the Company may request in order to
determine the effect, if any, of such Beneficial and Constructive Ownership
on the Company'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 stockholder of record) who is holding
Shares for a Beneficial or Constructive Owner shall provide to the Company
such information as the Company may request, in good faith, in order to
determine the Company's status as a REIT and to comply with requirements of
any taking authority or governmental authority or to determine such
compliance.
Section 6.2.5. REMEDIES NOT LIMITED.Subject to Section 4.1 of the
Charter, nothing contained in this Section 6.2 shall limit the authority of
the Board to take such other action as it deems necessary or advisable to
protect the Company and the interests of its stockholders in preserving the
Company's status as a REIT.
Section 6.2.6. AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of this Section 6.2, Section 6.3 or
any definition contained in Section 6.1, the Board shall have the power to
determine the application of the provisions of this Section 6.2 or Section
6.3 with respect to any situation based on the facts known to it. If
Section 6.2 or 6.3 requires an action by the Board and the Charter fails to
provide specific guidance with respect to such action, the Board shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Sections 6.1, 6.2 or 6.3.
Section 6.2.7. EXCEPTIONS.
(a) The Board, in its sole and absolute discretion, may grant to
any Person who makes a request therefor an exception to the Ownership Limit
if: (i) such Person submits to the Board information satisfactory to the
Board, in its reasonable discretion, demonstrating that such Person is not
an individual for purposes of Section 542(a)(2) of the Code (determined
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taking into account Section 856(h)(3)(A) of the Code); (ii) such Person
submits to the Board information satisfactory to the Board, 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 (a); (iii) such
Person submits to the Board information satisfactory to the Board, in its
reasonable discretion, demonstrating that clause (2) of subparagraph
(a)(ii) of Section 6.2.1 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 (a); and (iv) such Person
provides to the Board such representations and undertakings, if any, as the
Board 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 Share in excess of the Ownership Limit pursuant to any exception
thereto granted under this subparagraph (a), 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 6.2 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 (a)).
(b) Prior to granting any exception pursuant to subparagraph
(a), the Board 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, in its sole and absolute discretion necessary or advisable in
order to determine or ensure the Company's status as a REIT; provided,
however, that the Board shall not be obligated to require obtaining a
favorable ruling or opinion in order to grant an exception hereunder.
(c) Subject to Section 6.2.1(a)(ii), an underwriter that
participates in a public offering or a private placement of Shares (or
securities convertible into or exchangeable for Shares) may Beneficially 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.
(d) The Board 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.
(e) The Board may only reduce the McBride Family Excepted Holder
Limit below 39.9%: (i) with the written consent of the McBride Family, or
(ii) pursuant to the terms and conditions of Section 6.1(n).
(f) The Board may only reduce the Hudson Bay Excepted Holder
Limit below 40% with the written consent of Hudson Bay.
13
Section 6.2.8. INCREASE IN OWNERSHIP LIMIT. The Board may from
time to time increase the Ownership Limit, subject to the limitations
provided in this Section 6.2.8.
(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 6.2.8, the Board may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or
advisable in order to determine or ensure that Company's status as a REIT
if the modification in the Ownership Limit were to be made.
Section 6.2.9. LEGEND. Each certificate for Shares shall bear
substantially 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 Company's
maintenance of its status as 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 Company's Charter, (i) no Person may
Beneficially or Constructively Own Common Stock of the
Company in excess of 4.9% (in value or number of
shares, whichever is more restrictive) of the
outstanding shares of Common Stock unless such Person
is an Excepted Holder (in which case the Excepted
Holders Limit shall be applicable); (ii) with respect
to any class or series of Preferred Stock, no Person
may Beneficially or Constructively Own more than 9.9%
(in value or number of shares, whichever is more
restrictive) of the outstanding shares of such class or
series of Preferred Stock of the Company, unless such
Person 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 Company being "closely held"
under Section 856(h) of the Code or otherwise cause the
Company to fail to quality as a REIT; and (iv) no
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Person may Transfer Shares if such Transfer would
result in Shares of the Company 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 Company. 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. A
Person who attempts to Beneficially or Constructively
Own Shares in violation of the ownership limitations
described above shall have no claim, cause of action,
or any recourse whatsoever against a transferor of such
Shares. All capitalized terms in this legend have the
meanings defined in the Company's Charter, as the same
may be amended from time to time, a copy of which,
including the restrictions on transfer and ownership,
will be furnished to each holders of Shares of the
Company on request and without change.
Section 6.3. TRANSFER OF SHARES IN COMPANY.
Section 6.3.1. OWNERSHIP IN COMPANY. Upon any purported Transfer or
other event described in Section 6.2.1(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 6.2.1(b). The Charitable Trustee shall be appointed by
the Company and shall be a Person unaffiliated with the Company and any
Prohibited Owner. Each Charitable Beneficiary shall be designated by the
Company as provided in Section 6.3.7.
Section 6.3.2. 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 or other
distributions and shall not possess any rights to vote or other rights
attributable to the Shares held in the Charitable Trust. The Prohibited
Owner shall have no claim, cause of action, or any other recourse
whatsoever against the purported transferor of such Shares.
Section 6.3.3. 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 Company
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
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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 Company 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; provided, however, that if the
Company has already taken irreversible action, then the Charitable Trustee
shall not have the power to rescind and recast such vote. Notwithstanding
the provisions of this Article VI, until the Company has received
notification that Shares have been transferred into a Charitable Trust, the
Company shall be entitled to rely on its share transfer and other
stockholder records for purposes of preparing lists of stockholders
entitled to vote at meetings, determining the validity and authority of
proxies and otherwise conducting votes of stockholders.
Section 6.3.4. RIGHTS UPON LIQUIDATION. Upon any voluntary or
involuntary liquidation dissolution or winding up of or any distribution of
the assets of the Company, 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 Company available for distribution to the 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 the 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 Company, in accordance
with Section 6.3.5.
Section 6.3.5. SALE OF SHARES BY CHARITABLE TRUSTEE. Within 20 days
of receiving notice from the Company 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 one or more Persons,
designated by the Charitable Trustee, whose ownership of the Shares will
not violate the ownership limitations set forth in Section 6.2.1(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 6.3.5. 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 Company 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 that amount that such
Prohibited Owner was entitled to receive pursuant to this Section 6.3.5,
such excess shall be paid to the Charitable Trustee upon demand. The
Charitable Trustee shall have the right and power to offer any Shares held
in trust for sale to the Company on such terms and conditions as the
Charitable Trustee shall deem appropriate.
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Section 6.3.6. 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 Company, 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 Company, or its
designee, accepts such offer. The Company shall have the right to accept
such offer until the Charitable Trustee has sold the Shares held in the
Charitable Trust pursuant to Section 6.3.5. Upon such a sale to the
Company, the interest of the Charitable Beneficiary in the Shares sold
shall terminate and the Charitable Trustee shall distributed the net
proceeds of the sale to the Prohibited Owner.
Section 6.3.7. DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Charitable Trustee, the Company 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 6.2.1(a) in the
hands of such Charitable Beneficiary and (ii) each such organization must
be described in Section 501(c)(3), 170(b)(1)(A) or 170(c)(2) of the Code.
Section 6.4. AMEX TRANSACTIONS. Nothing in this Article VI shall
preclude the settlement of any transaction entered into through the
facilities of the AMEX or any other national securities exchange or
automated inter-dealer quotation system. The fact that the settlement of
any transaction is so permitted shall not negate the effect of any other
provisions of this Article VI and any transferee in such a transaction
shall be subject to all of the provisions and limitations set forth in this
Article VI.
Section 6.5. ENFORCEMENT. The Company is authorized specifically to
seek equitable relief, including injunctive relief, to enforce the
provisions of this Article VI.
Section 6.6. NON-WAIVER. No delay or failure on the part of the
Company or the Board in exercising any right hereunder shall operate as a
waiver of any right of the Company or the Board, as the case may be, except
to the extent specially waived in writing.
ARTICLE VII
STOCKHOLDERS
Section 7.1. ACTIONS BY STOCKHOLDERS. Notwithstanding any provision
of law requiring the authorization of any action by a greater proportion
than a majority of the total number of shares of all classes of capital
stock or of the total number of shares of any class of capital stock, such
action shall be valid and effective if authorized by the affirmative vote
of the holders of a majority of the total number of shares of all classes
outstanding and entitled to vote thereon, voting as a single class, except
as otherwise provided in the Charter.
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Section 7.2. STOCKHOLDERS PROPOSAL. For any stockholder proposal to
be presented in connection with an annual meeting of stockholders of the
Company, including any proposal relating to the nomination of a Director to
be elected to the Board, the stockholders must have given timely written
notice thereof in writing to the Secretary of the Company in the manner and
containing the information required by the Bylaws. Stockholder proposals
to be presented in connection with a special meeting of stockholders will
be presented by the Company only to the extent required by Section 2-502 of
the MGCL and the Bylaws.
Section 7.3. ANNUAL MEETING OF STOCKHOLDERS. The first annual meeting
of the stockholders of the Company after the Closing Date shall be held in
the fourth calendar quarter of 1998.
Section 7.4. LIMITATION OF DIRECTOR AND OFFICER LIABILITY. To the
fullest extent permitted by Maryland statutory or decisional law, as
amended or interpreted, no Director or officer of the Company shall be
personally liable to the Company or its stockholders for money damages. No
amendment of the Charter of the Company or repeal of any of its provisions
shall limit or eliminate the limitation on liability provided to Directors
and officers hereunder with respect to any act or omission occurring prior
to such amendment or repeal.
Section 7.5. INDEMNIFICATION. The Company shall indemnify (A) its
Directors and officers, whether serving the Company or at its request any
other entity, to the full extent required or permitted by the General Laws
of the State of Maryland now or hereafter in force, including the advance
of expenses under the procedures and to the full extent permitted by law
and (B) other employees and agents to such extent as shall be authorized by
the Board or the Company's Bylaws and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board may take
such action as is necessary to carry out these indemnification provisions
and is expressly empowered to adopt, approve and amend from time to time
such by-laws, resolutions or contract implementing such provisions or such
further indemnification arrangements as may be permitted by law. No
amendment of the Charter of the Company or repeal of any of its provisions
shall limit or eliminate the right to indemnification provided hereunder
with respect to acts or omissions occurring prior to such amendment or
repeal.
Section 7.6. TRANSACTIONS BETWEEN THE COMPANY AND ITS DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS. Subject to any express restrictions in the
Charter or adopted by the Directors in the Bylaws or by resolution, the
Company may enter into any contract or transaction of any kind with any
person, including any Director, officer, employee or agent of the Company
or any person affiliated with a Director, officer, employee or agent of the
Company, whether or not any of them has a financial interest in such
transaction.
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ARTICLE VIII
AMENDMENTS
The Company reserves the right from time to time to make any
amendments of the Charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as
expressly set forth in the Charter, of any of its outstanding stock by
classification, reclassification or otherwise, but no such amendment which
changes such terms or contract rights of any of its outstanding stock shall
be valid unless such amendment shall have been authorized by not less than
a majority of the aggregate number of the votes entitled to be cast
thereon, by a vote at a meeting or in writing with or without a meeting.
ARTICLE IX
DURATION AND DISSOLUTION OF COMPANY
The duration of the Company shall be perpetual.
ARTICLE X
SEVERABILITY
The provisions of the Charter are severable, and if the Board shall
determine, with the advice of counsel, that any one or more of such
provisions (the "Conflicting Provisions") are in conflict with the Code 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
the Charter, even without any amendment of the Charter pursuant to Article
VIII and without affecting or impairing any of the remaining provisions of
the Charter or rendering invalid or improper any action taken or omitted
prior to such determination. No Director shall be liable for making or
failing to make such a determination. In the event of any such
determination by the Board, the Board shall amend the Charter in the manner
provided in Article VIII.
If any provision of the Charter 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 the Charter in any jurisdiction.
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EXHIBIT 3.2
ARTICLES OF MERGER
BETWEEN
AMERICAN REAL ESTATE INVESTMENT CORPORATION
(a Maryland Corporation)
AND
FAIR LAWN INDUSTRIAL PARK, INC.
(a New York Corporation)
American Real Estate Investment Corporation, a corporation duly
organized and existing under the laws of the State of Maryland ("American
Real Estate"), and Fair Lawn Industrial Park, Inc., a corporation duly
organized and existing under the laws of the State of New York ("Fair
Lawn"), do hereby certify that:
FIRST: American Real Estate and Fair Lawn agree to merge.
SECOND: The name and place of incorporation of each party to these
Articles are American Real Estate Investment Corporation, a Maryland
corporation, and Fair Lawn Industrial Park, Inc., a New York corporation.
American Real Estate shall be the successor corporation in the merger and
shall continue under its current name as a corporation of the State of
Maryland.
THIRD: Fair Lawn was incorporated on April 3, 1939 under Article 2
of the Stock Corporation Law of the State of New York under the name
O'Connor Realty, Inc., which name was changed to Fair Lawn Industrial Park,
Inc. on July 30, 1953 pursuant to an Amendment to the Certificate of
Incorporation of Fair Lawn. Fair Lawn is not registered or qualified to do
business in Maryland and owns no interest in land in Maryland.
FOURTH: American Real Estate has its principal office in Baltimore
City, Maryland. Fair Lawn has no principal office in Maryland.
FIFTH: The terms and conditions of the transaction set forth in
these Articles were advised, authorized, and approved by each corporation
party to these Articles in the manner and by the vote required by its
Charter or Certificate of Incorporation, as the case may be, and the laws
of the state of its incorporation. The manner of approval was as follows:
(a) The directors and stockholders of Fair Lawn by unanimous
written consent dated August 20, 1997 adopted a resolution approving the
proposed merger.
(b) The Board of Directors of American Real Estate at a meeting
held on August 20, 1997 adopted a resolution which declared that the
proposed merger was advisable on substantially the terms and conditions set
forth or referred to in the resolution and directed that the proposed
merger be submitted for consideration at a special meeting of the
stockholders of American Real Estate.
<PAGE>
(c) Notice which stated that a purpose of the meeting was to act on
the proposed merger was given by American Real Estate as required by law.
(d) The proposed merger was approved by the stockholders of
American Real Estate at a special meeting of stockholders held December 11,
1997 by the affirmative vote of a majority of all the votes entitled to be
cast on the matter.
SIXTH: The Charter of American Real Estate, the survivor
corporation, shall be amended and restated as a part of the merger to read
as set forth in Exhibit A to these Articles.
SEVENTH: The total number of shares of stock of all classes which
Fair Lawn has authority to issue is 3,034.75 shares of Common Stock, no par
value.
EIGHTH: (a) As of immediately before the merger the total number
of shares of stock of all classes which American Real Estate has authority
to issue is 65,000,000 shares, of which 5,000,000 shares are Preferred
Stock, par value $.01 per share, 30,000,000 shares are Common Stock, par
value $.001 per share, and 30,000,000 shares are Excess Stock, par value
$.001 per share.
(b) As changed by the merger the total number of shares of stock
of all classes which American Real Estate has authority to issue is
65,000,000 shares, all of which are classified as shares of Common Stock,
par value $.001 per share.
(c) The aggregate par value of all shares of stock of all classes
of American Real Estate is $110,000 before the merger and $65,000 as
changed by the merger.
NINTH: The manner and basis of converting or exchanging issued
stock of the merging corporations into different stock of a corporation, or
other consideration, and the treatment of any issued stock of the merging
corporations not to be converted or exchanged are as follows:
(a) Each issued and outstanding share of the Common Stock, par
value $.001 per share, of American Real Estate on the effective date of the
merger shall continue, without change, to be an issued and outstanding
share of Common Stock, par value $.001 per share, of American Real Estate.
(b) Each issued and outstanding share of Common Stock, no par
value, of Fair Lawn on the effective date of the merger, shall upon
effectiveness and without further act, be converted into, and become 654.11
shares of Common Stock, par value $.001 per share, of American Real Estate.
(c) As soon as practicable following the effective date of the
merger, each holder of issued and outstanding shares of Common Stock, no
par value, of Fair Lawn shall be entitled to surrender to American Real
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Estate the certificates representing the shares of Common Stock, no par
value, of Fair Lawn held by such holder immediately prior to effectiveness
of the merger, and, upon such surrender, shall be entitled to receive in
exchange therefor a certificate or certificates representing the number of
shares of Common Stock, par value $.001 per share, of American Real Estate
deliverable in respect thereof.
TENTH: The merger shall become effective upon acceptance for record
by the Maryland State Department of Assessments and Taxation.
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IN WITNESS WHEREOF, American Real Estate Investment Corporation and
Fair Lawn Industrial Park, Inc. have caused these presents to be signed in
their respective names and on their respective behalves by their respective
presidents and witnessed by their respective secretaries on December 12,
1997.
WITNESS: AMERICAN REAL ESTATE
INVESTMENT CORPORATION
/S/ RICK A. BURGER By: /S/ EVAN ZUCKER
- ------------------------- ------------------------
Rick A. Burger, Secretary Evan Zucker, President
WITNESS: FAIR LAWN INDUSTRIAL PARK, INC.
/S/ RAYMOND J. BREITWEISER By: /S/ DAVID F. MCBRIDE
- -------------------------- -----------------------
Raymond J. Breitweiser, David F. McBride,
Secretary President and Chief Executive Officer
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THE UNDERSIGNED, President of American Real Estate Investment
Corporation, who executed on behalf of the Corporation the foregoing
Articles of Merger of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles of Merger to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information and belief the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
/S/ EVAN ZUCKER
- ----------------------
Evan Zucker, President
THE UNDERSIGNED, President and Chief Executive Officer of Fair Lawn
Industrial Park, Inc., who executed on behalf of the Corporation the
foregoing Articles of Merger of which this certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles of Merger to be the corporate act of said Corporation
and hereby certifies that to the best of his knowledge, information and
belief the matters and facts set forth therein with respect to the
authorization and approval thereof are true in all material respects under
the penalties of perjury.
/S/ DAVID F. MCBRIDE
- -------------------------------------
David F. McBride,
President and Chief Executive Officer
5
EXHIBIT 3.3
BYLAWS
AMERICAN REAL ESTATE INVESTMENT CORPORATION
ARTICLE I
OFFICES
Section 1.1. PRINCIPAL EXECUTIVE OFFICE. The principal office of
American Real Estate Investment Corporation (the "Company") shall be
located at such place or places as the Board of Directors of the Company
(the "Board") may designate.
Section 1.2. ADDITIONAL OFFICES. The Company may have additional
offices at such places as the Board may from time to time determine or the
business of the Company may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. PLACE. All meetings of the stockholders shall be
held at the principal executive office of the Company or at such other
place within the United States as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2.2. ANNUAL MEETING. The annual meeting of the
stockholders of the Company shall be held on such date and at such time as
may be determined by the Board. The first annual meeting of the
stockholders after the Closing Date (as defined below) shall be held
pursuant to Section 7.3 of the Company's Charter. At each annual meeting,
the stockholders shall elect Directors in the manner provided by the
Company's Charter and these Bylaws, as in effect from time to time, and
shall transact such other business as may properly come before the meeting.
Section 2.3. SPECIAL MEETINGS. Subject to the rights of the
holders of any series of preferred stock of the Company (the "Preferred
Stock"), the President of the Company or the Board, pursuant to a
resolution adopted by a majority of the total number of Directors, may call
special meetings of the stockholders. Special meetings of stockholders
shall also be called by the Secretary of the Company upon the written
request of the stockholders holding not less than 25% of all the shares
entitled to vote at such meeting. Such request shall state the purpose of
such meeting and the matters proposed to be acted on at such meeting.
Within ten (10) days of the receipt of such a request, the Secretary shall
inform said stockholders of the reasonably estimated cost of preparing and
mailing notice of the meeting (including all proxy materials that may be
required in connection therewith) and, upon payment to the Company of such
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costs, the Secretary shall within thirty (30) days of such payment, or such
longer period as may be necessitated by compliance with any applicable
statutory or regulatory requirements, give notice to each stockholder
entitled to notice of the meeting. Unless requested by the holders of a
majority of the issued and outstanding shares of capital stock entitled to
be voted at such meeting, the special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at
any meeting of the stockholders held during the preceding twelve (12)
months.
Section 2.4. NOTICE OF MEETINGS. Written notice of every meeting
of stockholders, stating the purpose or purposes for which the meeting is
called, the date, hour and place of the meeting, and, unless it is an
annual meeting, indicating that it is being issued by or at the direction
of the person or persons calling the meeting, shall be given, not less than
ten (10) nor more than ninety (90) days before the date of the meeting, to
each stockholder of record entitled to vote at such meeting. Such notice
shall be directed to a stockholder at his address as it shall appear on the
records of the Company or its transfer agent.
Section 2.5. SCOPE OF NOTICE; PROCEDURE. Any business of the
Company may be transacted at an annual meeting of the stockholders without
being specifically designated in the notice, except such business as is
required by statute to be stated in such notice. Business transacted at
all special meetings shall be confined to that which is related to the
purpose or purposes stated in the notice of the meeting. At every meeting
of the stockholders, the Chairman of the Board, if there is one, shall
conduct the meeting or, in the case of vacancy in office or absence of the
Chairman of the Board, one of the following officers present shall conduct
the meeting in the order stated: the Vice Chairman of the Board, if there
be one, the President, the Vice-Presidents in their order of rank and
seniority.
Section 2.6. QUORUM; VOTING. Except as otherwise provided by any
statute or the Charter, the holders of a majority of the issued and
outstanding shares of capital stock entitled to be voted at the meeting,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business, provided that
when a specified item of business is required to be voted on by a class or
series voting as a class, the holders of a majority of the issued and
outstanding shares of capital stock entitled to be voted at the meeting by
such class or series on the matter shall constitute a quorum for the
transaction of such specified item of business. When there is a quorum to
organize a meeting, it shall not be deemed broken by the subsequent
withdrawal of any stockholders. Whether or not there is a quorum present,
the stockholders entitled to vote thereat, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time to a
date not more than 120 days after the original record date, without notice
other than announcement at the meeting of the time and place to which the
meeting shall be adjourned. At such adjourned meeting at which there shall
be a quorum, any business may be transacted which might have been
transacted on the original date of the meeting. Unless any statute or the
Charter provides otherwise, a majority of all the votes cast at a meeting
at which a quorum is present is sufficient to approve any matter which
properly comes before the meeting, except that a plurality of all the votes
cast at a meeting at which a quorum is present shall be sufficient to elect
a Director.
Section 2.7. GENERAL RIGHT TO VOTE; PROXIES. Unless the Charter
provides for a greater or lesser number of votes per share or limits or
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denies voting rights, each outstanding share of stock, regardless of class,
is entitled to one vote on each matter submitted to a vote at a meeting of
stockholders. In all elections for Directors, each share of stock may be
voted for as many individuals as there are Directors to be elected and for
whose election the share is entitled to be voted. A stockholder may vote
the stock the stockholder owns of record either in person or by proxy. A
stockholder may sign a writing authorizing another person to act as proxy.
Signing may be accomplished by the stockholder or the stockholder's
authorized agent signing the writing or causing the stockholder's signature
to be affixed to the writing by any reasonable means, including facsimile
signature. A stockholder may authorize another person to act as proxy by
transmitting, or authorizing the transmission of, a telegram, cablegram,
datagram, or other means of electronic transmission to the person
authorized to act as proxy or to a proxy solicitation firm, proxy support
service organization, or other person authorized by the person who will act
as proxy to receive the transmission. Unless a proxy provides otherwise,
it is not valid more than 11 months after its date. A proxy is revocable
by a stockholder at any time without condition or qualification unless the
proxy states that it is irrevocable and the proxy is coupled with an
interest. A proxy may be made irrevocable for so long as it is coupled
with an interest. The interest with which a proxy may be coupled includes
an interest in the stock to be voted under the proxy or another general
interest in the Company or its assets or liabilities.
Section 2.8. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS.
(A) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board and
the proposal of business to be considered by the stockholders may
be made at an annual meeting of stockholders (a) pursuant to the
Company's notice of meeting delivered pursuant to Article II,
Section 2.4 of these Bylaws, (b) by or at the direction of the
President or (c) by any stockholder of the Company who is
entitled to vote at the meeting, who complies with the notice
procedures set forth in clauses (2) and (3) of this paragraph (A)
of this Bylaw and who was a stockholder of record at the time
such notice is delivered to the Secretary of the Company.
(2) For nominations or other business to be properly
brought before the annual meeting by a stockholder pursuant to
clause (c) of Paragraph (A) (1) of this Bylaw the stockholder
must have given timely notice thereof in writing to the Secretary
of the Company. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of
the Company not less than sixty days nor more than ninety days
prior to the first anniversary of the preceding year's annual
meeting; PROVIDED, however, that in the event that the date of
the annual meeting is advanced by more than thirty days or
delayed by more than sixty days from such anniversary date,
notice by the stockholder to be timely must be so delivered not
earlier than the ninetieth day prior to such annual meeting and
not later than the close of business on the later of the sixtieth
day prior to such annual meeting or the tenth day following the
day on which public announcement of the date of meeting is first
made. Such stockholder's notice shall set forth (a) as to each
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<PAGE>
person whom the stockholder proposes to nominate for election or
reelection as a Director all information relating to such person
that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including such person's
written consent to being named in the proxy statement as a
nominee and to serving as a Director if elected; (b) as to any
other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on
whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose
behalf the nominations or proposal is made (i) the name and
address of such stockholder, as they appear on the Company's
books, and of such beneficial owner and (ii) the class and number
of shares of the Company which are owned beneficially and of
record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A) (2) of this Bylaw to the contrary, in the event
that the number of Directors to be elected to the Board is
increased and there is no public announcement naming all of the
nominees for Director or specifying the size of the increased
Board made by the Company at least seventy days prior to the
first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to
the Secretary at the principal executive offices of the Company
not later than the close of business on the tenth day following
the day on which such public announcement is first made by the
Company.
(B) Special Meetings of Stockholders. Only such business shall
be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Company's notice of meeting
pursuant to Article II, Section 2.4 of these Bylaws. Nominations of
persons for election to the Board may be made at a special meeting of
stockholders at which Directors are to be elected pursuant to the
Company's notice of meeting by or at the direction of the Board.
Nominations by stockholders of persons for election to the Board may
be made at such a special meeting of stockholders if the stockholder's
notice as required by paragraph (A) (2) of this Bylaw shall be
delivered to the Secretary at the principal executive offices of the
Company not earlier than the ninetieth day prior to such special
meeting and not later than the close of business on the later of the
seventieth day prior to such special meeting or the tenth day
following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board
to be elected at such meeting.
(C) General.
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(1) Only persons who are nominated in accordance with the
procedures set forth in this Bylaw shall be eligible to serve as
Directors. Except as otherwise provided by Maryland law, the
Charter or these Bylaws, the Chairman of the meeting shall have
the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Bylaw and, if
any proposed nomination or business is not in compliance with
this Bylaw, to declare that such defective proposal or nomination
shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or
in a document publicly filed by the Company with the Securities
and Exchange Commission pursuant to Section 13, 14 or 15(d) of
the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw,
a stockholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Bylaw. Nothing in this
Bylaw shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Company's proxy statement
pursuant to Rule 14a-5 under the Exchange Act.
Section 2.9. CONDUCT OF BUSINESS AND VOTING. At all meetings of
stockholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions touching the qualification of
voters and the validity of proxies, the acceptance or rejection of votes
and procedures for the conduct of business not otherwise specified by these
Bylaws, the Charter or law, shall be decided or determined by the Chairman
of the meeting. If demanded by stockholders, present in person or by
proxy, entitled to cast 10% in number of votes entitled to be cast, or if
ordered by the Chairman, the vote upon any election or question shall be
taken by ballot and, upon like demand or order, the voting shall be
conducted by two inspectors, in which event the proxies and ballots shall
be received, and all questions touching the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be
decided, by such inspectors. Unless so demanded or ordered, no vote need
be by ballot and voting need not be conducted by inspectors. The
stockholders at any meeting may choose an inspector or inspectors to act at
such meeting, and in default of such election the Chairman of the meeting
may appoint an inspector or inspectors. No candidate for election as a
Director at a meeting shall serve as an inspector thereat.
Section 2.10. INFORMAL ACTION BY STOCKHOLDERS. Any action
required or permitted to be taken at a meeting of stockholders may be taken
without a meeting if there is filed with the records of stockholders
meetings a unanimous written consent which sets forth the action and is
signed by each stockholder entitled to vote on the matter and a written
waiver of any right to dissent signed by each stockholder entitled to
notice of the meeting but not entitled to vote at it.
5
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ARTICLE III
BOARD OF DIRECTORS
Section 3.1. GENERAL POWERS. The business and affairs of the
Company shall be managed under the direction of its Board, which may
exercise all such powers of the Company and do all such lawful act and
things as are not by statute, by the Charter or by these Bylaws conferred
on or reserved to the stockholders.
Section 3.2. NUMBER, TENURE AND QUALIFICATIONS. Subject to the
rights of the holders of any series of Preferred Stock, the number of
Directors shall be fixed from time to time exclusively pursuant to a
resolution adopted by a majority of the Board, but shall consist of not
more than fifteen nor less than three Directors. The initial Board after
December 12, 1997 (the "Closing Date") shall be set forth in the Charter.
The Directors, other than any who may be elected by the holders of any
series of Preferred Stock, shall be divided, with respect to the time for
which they severally hold office, into three classes, as nearly equal in
number as possible, with the term of office of the first class to expire at
the first annual meeting of stockholders after the Closing Date, the term
of office of the second class to expire at the second annual meeting of
stockholders after the Closing Date and the term of office of the third
class to expire at the third annual meeting of stockholders after the
Closing Date. Each Director shall hold office until his or her successor
shall have been duly elected and qualified. At each annual meeting of
stockholders, commencing with the first annual meeting after the Closing
Date, Directors elected to succeed those Directors whose terms then expire
shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election, with each Director to
hold office until his or her successor shall have been duly elected and
qualified.
Section 3.3. RESIGNATION. Any Director may resign at any time by
giving written notice to the Board. Such resignation shall take effect
upon the execution and delivery to the Company of such notice or upon any
future date specified in the notice, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make
it effective.
Section 3.4. VACANCIES. Subject to the rights of the holders of
any class of stock separately entitled to elect one or more Directors, the
stockholders may elect a successor to fill a vacancy on the Board which
results from the removal of a Director. A Director elected by the
stockholders to fill a vacancy which results from the removal of a Director
serves for the balance of the term of the removed Director. Subject to the
rights of the holders of any class of stock separately entitled to elect
one or more Directors, a majority of the remaining Directors, whether or
not sufficient to constitute a quorum, may fill a vacancy on the Board
which results from any cause except an increase in the number of Directors,
and a majority of the entire Board may fill a vacancy which results from an
increase in the number of Directors. A Director elected by the Board to
fill a vacancy serves until the next annual meeting of stockholders and
until his or her successor is elected and qualifies.
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Section 3.5. REMOVAL. Subject to the rights of the holders of
any series of Preferred Stock, any Director, or the entire Board, may be
removed from office at any time with cause by the affirmative vote of the
holders of not less than a majority of the then outstanding voting stock.
Section 3.6. COMPENSATION. Directors shall not receive any
stated salary for their services as Directors but, by resolution of the
Board, the Directors may receive fixed sums per year and/or per meeting and
for any service or activity they perform or engage in as Directors. Such
fixed sums may be paid either in cash or in shares of the Company.
Directors may be reimbursed for expenses of attendance, if any, at each
annual, regular or special meeting of the Directors or of any committee
thereof; and for their expenses, if any, in connection with each property
visit and any other service or activity performed or engaged in as
Directors, but nothing herein contained shall be construed to preclude any
Directors from serving the Company in any other capacity and receiving
compensation therefor.
Section 3.7. LOSS OF DEPOSITS. No Director shall be liable for
any loss which may occur by reason of the failure of the bank, trust
company, savings and loan association, or other institution with whom
moneys or shares have been deposited.
Section 3.8. SURETY BONDS. Unless required by law, no Director
shall be obligated to give any bond or surety or other security for the
performance of any of his duties.
Section 3.9. RELIANCE. Each Director, officer, employee and
agent of the Company shall, in the performance of his duties with respect
to the Company, be fully justified and protected with regard to any act or
failure to act in reliance in good faith upon the books of account or other
records of the Company, upon an opinion of counsel or upon reports made to
the Company by any of its officers or employees or by the adviser,
accountants, appraisers or other experts or consultants selected by the
Directors or officers of the Company, regardless of whether such counsel or
expert may also be a Director.
ARTICLE IV
MEETINGS OF DIRECTORS
Section 4.1. PLACE. The Directors may hold meetings, both
regular and special, at the principal executive offices of the Company, or
at such other place or places, within the United States as they may from
time to time determine.
Section 4.2. REGULAR MEETINGS. A regular meeting of the Board
shall be held without notice immediately after, and at the same place as,
each annual meeting of stockholders. The Board may, by resolution, provide
the time and place for the holding of additional regular meetings without
other notice than such resolution.
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Section 4.3. SPECIAL MEETINGS. Special meetings of the Board
shall be called at the request of the President or a majority of the Board.
The person or persons authorized to call special meetings of the Board may
fix the place and time of the meetings.
Section 4.4. QUORUM. A whole number of Directors equal to at
least a majority of the Board shall constitute a quorum for the transaction
of business, but if at any meeting of the Board there shall be less than a
quorum present, a majority of the Directors present may adjourn the meeting
from time to time without further notice. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the
act of the Board. The Directors present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough Directors to leave less than a quorum.
Section 4.5. NOTICE. Notice of any special meeting shall be
given to each Director at his business or residence in writing or by
telegram or by telephone communication. If mailed, such notice shall be
deemed adequately delivered when deposited in the United States mails so
addressed, with postage thereon prepaid, at least five days before such
meeting. If by telegram, such notice shall be deemed adequately delivered
when the telegram is delivered to the telegraph company at least twenty-
four hours before such meeting. If by telephone, the notice shall be given
at least twelve hours prior to the time set for the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in the notice of such meeting,
except for amendments to these Bylaws as provided under Article XII hereof.
A meeting may be held at any time without notice if all the Directors are
present or if those not present waive notice of the meeting in writing,
either before or after such meeting.
Section 4.6. COMMITTEES. The Board may, by resolution or
resolutions passed by a majority of the Board, designate one or more
committees composed of one or more Directors and delegate to these
committees any of the powers of the Board, except the power to authorize
dividends on stock, elect Directors, issue stock other than as provided in
the next sentence, recommend to the stockholders any action which requires
stockholder approval, amend the Bylaws, or approve any merger or share
exchange which does not require stockholder approval. If the Board has
given general authorization for the issuance of stock providing for or
establishing a method or procedure for determining the maximum number of
shares to be issued, a committee of the Board, in accordance with that
general authorization or any stock option or other plan or program adopted
by the Board, may authorize or fix the terms of stock subject to
classification or reclassification and the terms on which any stock may be
issued, including all terms and conditions required or permitted to be
established or authorized by the Board. Among the committees the Board may
appoint are the following:
(A) An Executive Committee, which shall have such authority as
shall be delegated by the Board (except those powers which may not be
delegated to a committee under the Maryland General Corporation Law
(the "MGCL")) and shall advise the Board from time to time with
respect to such matters as the Board shall direct.
(B) An Audit Committee, which shall consist solely of
Independent Directors (as defined below), unless otherwise changed by
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resolution adopted by a majority of the Board. The Audit Committee
shall make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the
plans and results of the audit engagement, approve professional
services provided by the independent public accountants, review the
independence of the independent public accountants, consider the range
of audit and non-audit fees and review the adequacy of the Company's
internal accounting controls.
(C) A Compensation Committee, which shall determine compensation
for the Company's executive officers and shall administer a stock
incentive plan adopted by the Company.
For purposes of this Section 4.6, "Independent Directors" shall mean
Directors who are not (i) officers of the Company, (ii) related to officers
of the Company, (iii) holders of more than 5% of the issued and outstanding
Shares of capital stock of the Company or (iv) with reference to any
particular transaction, independent directors within the meaning of Section
2-419 of the MGCL.
The Board may designate one or more Directors as alternate members of
any committee, who may replace any absent or disqualified member at any
meeting of such committee. Each committee may fix rules of procedure for
its business. A majority of the members of a committee shall constitute a
quorum for the transaction of business and the act of a majority of those
present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or
not they constitute a quorum, may appoint a Director to act in the place of
an absent member. Any action required or permitted to be taken at a
meeting of a committee may be taken without a meeting, if an unanimous
written consent which sets forth the action is signed by each member of the
committee and filed with the minutes of the committee.
Section 4.7. TELEPHONE MEETINGS. Any one or more members of the
Board or any committee thereof may participate in a meeting of the Board or
such committee by means of a conference telephone or other similar
communications equipment if all members participating in the meeting can
hear each other at the same time. Participation in a meeting by such means
shall constitute presence in person at a Board or committee meeting.
Section 4.8. PRESUMPTION OF ASSENT. A Director who is present at
a meeting of the Board at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his or her
dissent or abstention shall be entered in the minutes of the meeting or
unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary
of the Company within twenty-four hours after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who votes in
favor of such action.
Section 4.9. INFORMAL ACTION BY THE BOARD. Any action required
or permitted to be taken at any meeting of the Board or any committee
thereof may be taken without a meeting, if an unanimous written consent
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which sets forth the action is signed by each member of the Board or
committee and such written consent is filed with the minutes of the
proceedings of the Board or committee.
ARTICLE V
OFFICERS
Section 5.1. EXECUTIVE AND OTHER OFFICERS. The Company shall
have a Chairman of the Board, a President, a Secretary and a Treasurer.
The Board may also designate a Chief Executive Officer, and may appoint one
or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers.
Any two or more offices except President and Vice-President may be held by
the same person. The Chairman of the Board shall be a Director, and the
other officers may be Directors. The Board may elect or appoint such other
officers, agents and employees as it shall deem necessary who shall have
such authority and shall perform such duties as from time to time shall be
prescribed by the Board.
Section 5.2. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be an executive position which shall perform such duties and have
such powers as are from time to time assigned by the Board.
Section 5.3. PRESIDENT. The President shall have general powers
of supervision and management of the business and affairs of the Company
subject to the control of the Executive Committee and the Board, and shall
see that all orders and resolutions of the Board are carried into effect.
He or she may execute, in the name of the Company, all authorized deeds,
mortgages, bonds, contracts or other instruments, except in cases in which
the signing and execution thereof shall have been expressly delegated to
some other officer or agent of the Company. In general, he or she shall
perform such other duties customarily performed by a President of a
corporation and shall perform such other duties and have such other powers
as are from time to time assigned to him or her by the Board or the
Executive Committee of the Board.
Section 5.4. SECRETARY AND ASSISTANT SECRETARY. The Secretary or
at the request of the Board, the Assistant Secretary, shall attend all
meetings of the Board or the stockholders, keep the minutes thereof in
appropriate books, give or cause to be given notice of all meetings of the
Board and of the stockholders, keep in safe custody the records and seal of
the Company, affix such seal to any instrument when authorized by the Board
and perform such other duties incidental to the office or as may be
prescribed by the Board.
Section 5.5. TREASURER AND ASSISTANT TREASURERS. The Treasurer
shall have the custody of the corporate funds and securities and shall be
responsible for the keeping of full and accurate accounts of receipts and
disbursements in books belonging to the Company, the deposit of all moneys
and other valuable effects in the name and to the credit of the Company and
the disbursement of the funds of the Company subject to the order of the
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Board. The Treasurer shall render to the President and Directors whenever
they may so require an account of all his transactions as Treasurer and of
the financial condition of the Company. The Treasurer shall, if required
by the Board, give the Company a bond in such sum or sums and with such
surety or sureties as shall be satisfactory to the board, conditioned upon
the faithful performance of his duties. The Assistant Treasurer shall
perform such duties and have such power as the Board may from time to time
prescribe. At the request of the Treasurer or in his absence or
disability, the Assistant Treasurer shall in their order of designated rank
or seniority perform all the duties and exercise the powers of Treasurer.
Section 5.6. VICE-PRESIDENTS. The Vice-President(s) shall have
such powers as the Board may determine.
Section 5.7. ELECTION; TERM OF OFFICE. All officers shall be
elected annually by the Board and shall hold office at the pleasure of the
Board. Election of an officer, employee or agent shall not of itself
create contract rights. Each officer shall hold office until his or her
successor is elected and qualifies or until his or her death, resignation
or removal.
Section 5.8. COMPENSATION. The salaries of all officers of the
Company shall be fixed by the Board or, if appointed, the Compensation
Committee.
Section 5.9. REMOVAL. Any officer elected by the Board may be
removed by a majority of the members of the Board whenever, in their
judgement, the best interests of the Company would be served thereby. No
elected officer shall have any contractual rights against the Company for
compensation by virtue of such election beyond the date of the election of
his successor, his death, his resignation or his removal, whichever event
shall first occur, except as otherwise provided in an employment contract
or under an employee deferred compensation plan.
Section 5.10. VACANCIES. A newly created office and a vacancy in
any office because of death, resignation, or removal may be filled by the
Board for the unexpired portion of the term at any meeting of the Board.
ARTICLE VI
CONTRACTS AND FINANCE
Section 6.1. CONTRACTS AND AGREEMENTS. To the extent permitted
by applicable law, and except as otherwise prescribed by the Charter or
these Bylaws, the Board may authorize any officer, employee or agent of the
Company to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Company. Such authority may be general or
confined to specific instances. A person who holds more than one office in
the Company may not act in more than one capacity to execute, acknowledge,
or verify an instrument required by law to be executed, acknowledged, or
verified by more than one officer.
Section 6.2. CHECKS AND DRAFTS. All checks, drafts and orders
for the payment of money, notes and other evidences of indebtedness, issued
in the name of the Company, shall, unless otherwise provided by resolution
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of the Board, be signed by the Chairman of the Board, the President, a
Vice-President or an Assistant Vice-President and countersigned by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
Section 6.3. DEPOSITS. All funds of the Company not otherwise
employed shall be deposited from time to time to the credit of the Company
in such banks, trust companies or other depositories as the Directors may
designate.
ARTICLE VII
STOCK
Section 7.1. CERTIFICATES FOR STOCK. Each stockholder is
entitled to certificates which represent and certify the shares of stock he
or she holds in the Company. Each stock certificate shall include on its
face the name of the Company, the name of the stockholder or other person
to whom it is issued, and the class of stock and number of shares it
represents. It shall also include on its face or back (a) a statement of
any restrictions on transferability and (b) a statement which provides in
substance that the Company will furnish to any stockholder on request and
without charge a full statement of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the
stock of each class which the Company is authorized to issue, of the
differences in the relative rights and preferences between the shares of
each series of a preferred or special class in series which the Company is
authorized to issue, to the extent they have been set, and of the authority
of the Board to set the relative rights and preferences of subsequent
series of a preferred or special class of stock and any restrictions on
transferability. Such request may be made to the Secretary or to its
transfer agent. It shall be in such form, not inconsistent with law or with
the Charter, as shall be approved by the Board or any officer or officers
designated for such purpose by resolution of the Board. Each stock
certificate shall be signed by the Chairman of the Board, the President, or
a Vice-President, and countersigned by the Secretary, an Assistant
Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may
be sealed with the actual corporate seal or a facsimile of it or in any
other form and the signatures may be either manual or facsimile signatures.
A certificate is valid and may be issued whether or not an officer who
signed it is still an officer when it is issued. A certificate may not be
issued until the stock represented by it is fully paid.
Section 7.2. RECORD DATES OR CLOSING OF TRANSFER BOOKS. The
Board may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper
determination with respect to stockholders, including which stockholders
are entitled to notice of a meeting, vote at a meeting, receive a dividend,
or be allotted other rights. The record date may not be prior to the close
of business on the day the record date is fixed nor more than 90 days
before the date on which the action requiring the determination will be
taken; the transfer books may not be closed for a period longer than 20
days; and, in the case of a meeting of stockholders, the record date or the
closing of the transfer books shall be at least ten days before the date of
the meeting.
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When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except when (i) the
determination has been made through the closing of the transfer books and
the stated period of closing has expired or (ii) the meeting is adjourned
to a date more than 120 days after the record date fixed for the original
meeting, in either of which case a new record date shall be determined as
set forth herein.
Section 7.3. LOST CERTIFICATES. The Board (or any officer
designated by it) may direct a new certificate to be issued in place of any
certificate theretofore issued by the Company, alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate, or his legal
representative, to give the Company a bond in such sum and with such surety
or sureties as it may direct as indemnity agent any claim that may be made
against the Company with respect to the certificate alleged to have been
lost,stolen or destroyed.
Section 7.4. TRANSFERS OF SHARES. Upon surrender to the Company
or the transfer agent of the Company of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, subject to compliance with all applicable laws and
the requirements of the Company's transfer agent, it shall be the duty of
the Company or its agents to issue a new certificate to the person entitled
thereto, to cancel the old certificate and to record the transaction upon
its transfer books.
Section 7.5. REGISTERED STOCKHOLDERS. The Company shall be
entitled to treat the holder of record of any share or shares as the holder
in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of any person whether or not it shall have express or other notice thereof,
except as expressly provided by the laws of the State of Maryland.
Section 7.6. STOCK LEDGER. The Company shall maintain at its
principal executive office or at the office of its counsel, accountants or
transfer agent, an original or a duplicate share ledger containing the name
and address of each stockholder and the number of shares of each class held
by such stockholder.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. FISCAL YEAR. The Board shall have the power to fix,
and from time to time change, the fiscal year of the Company. The fiscal
year of the Company shall initially be the calendar year.
Section 8.2. BOOKS AND RECORDS. The Company shall keep correct
and complete books and records of its accounts and transactions and minutes
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of the proceedings of its stockholders and Board and of any executive or
other committee when exercising any of the powers of the Board. The books
and records of the Company may be in written form or in any other form
which can be converted within a reasonable time into written form for
visual inspection. Minutes shall be recorded in written form but may be
maintained in the form of a reproduction. The original or a certified copy
of these Bylaws shall be kept at the principal office of the Company.
Section 8.3. CORPORATE SEAL. The Board may provide a suitable
seal, bearing the name of the Company, which shall be in the charge of the
Secretary. The Board may authorize one or more duplicate seals and provide
for the custody thereof. If the Company is required to place its corporate
seal to a document, it is sufficient to meet the requirement of any law,
rule, or regulation relating to a corporate seal to place the word "(seal)"
adjacent to the signature of the person authorized to sign the document on
behalf of the Company.
Section 8.4. VOTING STOCK IN OTHER CORPORATIONS. Stock of other
corporations or associations, registered in the name of the Company, may be
voted by the President, a VicePresident, or a proxy appointed by either of
them. The Board, however, may by resolution appoint some other person to
vote such shares, in which case such person shall be entitled to vote such
shares upon the production of a certified copy of such resolution, or
otherwise direct the voting of such shares.
Section 8.5. ANNUAL STATEMENT OF AFFAIRS. The President or chief
accounting officer shall prepare annually a full and correct statement of
the affairs of the Company, to include a balance sheet and a financial
statement of operations for the preceding fiscal year. The statement of
affairs shall be submitted at the annual meeting of the stockholders and,
within 20 days after the meeting, placed on file at the Company's principal
office.
ARTICLE IX
DISTRIBUTIONS
If declared by the Board at any meeting thereof, the Company may
pay dividends or distributions on its shares in cash, property, or in
shares of the capital stock of the Company, unless such dividend or
distribution is contrary to law or to a restriction contained in the
Charter.
ARTICLE X
INDEMNIFICATION OF OFFICERS AND DIRECTORS;
INSURANCE
Section 10.1. INDEMNIFICATION.
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(A) PROCEDURE. Any indemnification, or payment of expenses in
advance of the final disposition of any proceeding, shall be made
promptly, and in any event within 60 days, upon the written request of
the Director or officer entitled to seek indemnification (the
"Indemnified Party"). The right to indemnification and advances
hereunder shall be enforceable by the Indemnified Party in any court
of competent jurisdiction, if (i) the Company denies such request, in
whole or in part, or (ii) no disposition thereof is made within 60
days. The Indemnified Party's costs and expenses incurred in
connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
reimbursed by the Company. It shall be a defense to any action for
advance for expenses that (a) a determination has been made that the
facts then known to those making the determination would preclude
indemnification or (b) the Company has not received both (i) an
undertaking as required by law to repay such advances in the event it
shall ultimately be determined that the standard of conduct has not
been met and (ii) a written affirmation by the Indemnified Party of
such Indemnified Party's good faith belief that the standard of
conduct necessary for indemnification by the Company has been met.
(B) EXCLUSIVITY, ETC. The indemnification and advance of
expenses provided by the Charter and these Bylaws shall not be deemed
exclusive of any other rights to which a person seeking
indemnification or advance of expenses may be entitled under any law
(common or statutory), or any agreement, vote of stockholders or
disinterested Directors or other provision that is consistent with
law, both as to action in his or her official capacity and as to
action in another capacity while holding office or while employed by
or acting as agent for the Company, shall continue in respect of all
events occurring while a person was a Director or officer after such
person has ceased to be a Director or officer, and shall inure to the
benefit of the estate, heirs, executors and administrators of such
person. The Company shall not be liable for any payment under this
Bylaw in connection with a claim made by a Director or officer to the
extent such Director or officer has otherwise actually received
payment under insurance policy, agreement, vote or otherwise, of the
amounts otherwise indemnifiable hereunder. All rights to
indemnification and advance of expenses under the Charter of the
Company and hereunder shall be deemed to be a contract between the
Company and each Director or officer of the Company who serves or
served in such capacity at any time while this Bylaw is in effect.
Nothing herein shall prevent the amendment of this Bylaw, provided
that no such amendment shall diminish the rights of any person
hereunder with respect to events occurring or claims made before its
adoption or as to claims made after its adoption in respect of events
occurring before its adoption. Any repeal or modification of this
Bylaw shall not in any way diminish any rights to indemnification or
advance of expenses of such Director or officer or the obligations of
the Company arising hereunder with respect to events occurring, or
claims made, while this Bylaw or any provision hereof is in force.
(C) Following any "change in control" of the Company of the type
required to be reported under Item 1 of Form 8-K promulgated under the
Exchange Act, to the extent permitted by the MGCL, any determination
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as to entitlement to indemnification shall be made by independent
legal counsel selected by the claimant, which such independent legal
counsel shall be retained by the Board on behalf of the Company and
whose fees and disbursements shall be paid by the Company.
Section 10.2. INSURANCE. The Company may maintain insurance, at
its expense, to protect itself and any Director, officer, employee or agent
of the Company or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Company would have the power to indemnify such person against such expense,
liability or loss under the MGCL.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the
Charter or Bylaws or pursuant to applicable law, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the waiver of notice, unless
specifically required by statute. The attendance of any person at any
meeting shall constitute a waiver of notice of such meeting, except where
such person attends a meeting for the express purpose of objecting to the
transaction of any business of the ground that the meeting is not lawfully
called or convened.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended or repealed, or new Bylaws may be
adopted, by the stockholders at any meeting of the stockholders or pursuant
to Section 2.10 of these Bylaws, or by the Board at any meeting of the
Board or pursuant to Section 4.9 of these Bylaws; provided that the Board
may not amend or repeal this Article XII or Section 2.10 or any part of
these Bylaws that has been adopted by the stockholders subject to the
express condition that it may not be amended or repealed except by holders
of a majority of the issued and outstanding shares of Common Stock.
16
EXHIBIT 10.1
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is made
and entered into as of December 12, 1997 by and among American Real Estate
Investment Corporation, a Maryland corporation ("the COMPANY") as general
partner, and the Persons whose names are set forth on EXHIBIT A as attached
hereto, as the limited partners, together with any other Persons who become
Partners in the Partnership as provided herein.
ARTICLE I
DEFINED TERMS
Except as otherwise herein expressly provided, the following
terms and phrases shall have the meanings set forth below:
"ACCOUNTANTS" shall mean the firm or firms of independent
certified public accountants selected by the General Partner on behalf of
the Partnership to audit the books and records of the Partnership and to
prepare statements and reports in connection therewith.
"ACT" shall mean the Revised Uniform Limited Partnership Act as
enacted in the State of Delaware, and as the same may hereafter be amended
from time to time.
"ADDITIONAL PARTNERSHIP INTERESTS" shall have the meaning set
forth in Section 4.2(a) hereof.
"ADDITIONAL LIMITED PARTNER" shall have the meaning set forth in
Section 4.2(b) hereof.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of the relevant Partnership Fiscal Year, after giving effect
to the following adjustments:
(i) Credit to such Capital Account any amounts
which such Partner is obligated to restore pursuant to this Agreement or is
deemed to be obligated to restore to the Partnership pursuant to the second
to last sentences of Regulations <section><section> 1.704-2(g)(1) and
1.704-2(i)(5).
(ii) Debit to such Capital Account the items
described in Regulations <section><section> 1.704-1(b)(2)(ii)(d)(4), (5)
and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with Regulation <section> 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"ADJUSTED CURRENT PER SHARE MARKET PRICE" shall mean the Current
Per Share Market Price multiplied by the Conversion Factor.
<PAGE>
"ADJUSTMENT DATE" shall have the meaning set forth in Section
4.2(b) hereof.
"AFFILIATE" shall mean, with respect to any Partner (or as to
any other person the affiliates of whom are relevant for purposes of any of
the provisions of this Agreement), (i) any member of the Immediate Family
of such Partner; (ii) any trustee or beneficiary of a Partner; (iii) any
legal representative, successor, or assignee of any Person referred to in
the preceding clauses (i) and (ii); (iv) any trustee or trust for the
benefit of any Person referred to in the preceding clauses (i) through
(iii); or (v) any Entity which directly or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control
with, any Person referred to in the preceding clauses (i) through (iv).
"AFFILIATE FINANCING" shall mean financing or refinancing
obtained from a Partner or an Affiliate of a Partner by the Partnership.
"AGREEMENT" shall mean this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated from
time to time, as the context requires.
"ASSIGNEE" shall mean a Person to whom one or more Partnership
Units have been transferred in a manner permitted under this Agreement, but
who has not become a Substituted Limited Partner, and who has the rights
set forth in Section 9.5.
"BANKRUPTCY" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal or
state law relating to insolvency, bankruptcy or reorganization; (ii) an
adjudication that such Partner is insolvent or bankrupt; (iii) the entry of
an order for relief under the federal Bankruptcy Code with respect to such
Partner; (iv) the filing of any such petition or the commencement of any
such case or proceeding against such Partner, unless such petition and the
case or proceeding initiated thereby are dismissed within one hundred
twenty (120) days from the date of such filing; (v) the filing of an answer
by such Partner admitting the allegations of any such petition; (vi) the
appointment of a trustee, receiver or custodian for all or substantially
all of the assets of such Partner unless such appointment is vacated or
dismissed within ninety (90) days from the date of such appointment but not
less than five (5) days before the proposed sale of any assets of such
Partner; (vii) the insolvency of such Partner or the execution by such
Partner of a general assignment for the benefit of creditors; (viii) the
failure of such Partner to pay its debts as they mature; (ix) the levy,
attachment, execution or other seizure of substantially all of the assets
of such Partner where such seizure is not discharged within thirty (30)
days thereafter, or (x) the admission by such Partner in writing of its
inability to pay its debts as they mature or that it is generally not
paying its debts as they become due.
"CAPITAL ACCOUNT" shall mean a book account established and
maintained for each Partner in accordance with the following provisions:
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(i) To each Partner's Capital Account there shall
be credited such Partner's Capital Contributions, such Partner's
distributive share of Profits and any items in the nature of income
or gain which are allocated to such Partner pursuant to Section 5.2,
and the amount of any Partnership liabilities that are assumed by
such Partner or that are secured by any Partnership property
distributed to such Partner.
(ii) To each Partner's Capital Account there shall
be debited the amount of cash and the Gross Asset Value of any
Partnership asset distributed to such Partner pursuant to any
provision of this Agreement (except for distributions made in
repayment of loans made by such Partner to the Partnership), such
Partner's distributive share of Losses and any items in the nature of
expenses or losses which are allocated to such Partner pursuant to
Section 5.2, and the amount of any liabilities of such Partner that
are assumed by the Partnership or which are secured by any property
contributed to the Partnership by such Partner (except to the extent
already reflected in the amount of the Partner's Capital
Contributions).
In the event that the Gross Asset Value of Partnership assets
are adjusted pursuant to paragraph (ii), (iii) or (iv) of the definition of
Gross Asset Value, the Capital Accounts of the Partners shall be adjusted
to reflect the aggregate net adjustments as if the Partnership sold all of
its assets for their fair market values, and recognized gain or loss for
federal income tax purposes equal to the aggregate amount of such net
adjustment.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Code <section> 704(b) and the Regulations thereunder, and shall
be interpreted and applied in a manner consistent with such Regulations.
In the event the General Partner determines that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto,
are computed in order to comply with such Regulations, the General Partner
may make such modification, PROVIDED THAT it is not likely to have a
material effect on the amounts distributable to any Partner pursuant to
Section 8.2 upon the liquidation of the Partnership. Any questions with
respect to a Partner's Capital Account shall be resolved by the General
Partner in its reasonable discretion, applying principles consistent with
this Agreement.
Any transferee of a Partnership Interest or a portion thereof
shall succeed to the Capital Account relating to the Partnership Interest
transferred or the corresponding portion thereof.
"CAPITAL CONTRIBUTIONS" shall mean, with respect to any Partner,
the amount of cash and the initial Gross Asset Value of any other property
contributed to the capital of the Partnership by or on behalf of such
Partner reduced by the amount of any liability assumed by the Partnership
relating to such property and any liability to which such property is
subject.
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"CERTIFICATE" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Delaware
Secretary of State, as it may be amended from time to time in accordance
with the terms of this Agreement and the Act.
"CHARTER" shall mean the Company's Articles of Incorporation, as
amended from time to time.
"CLOSING DATE" shall mean December 12, 1997.
"CLOSING PRICE" on any date shall mean (A) the last reported
sale price of the Shares on the principal stock exchange on which the
Shares are listed, or (B) if the Shares are not listed on a stock exchange,
the last reported sale price of the Shares on the principal automated
securities price quotation system on which sale prices of the Shares are
reported, or (C) if the Shares are not listed on a stock exchange and sale
prices of the Shares are not reported on an automated quotation system, the
mean of the high bid and low asked price quotations for the Shares as
reported by National Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and asked quotations for the
Shares on at least five of the ten preceding Trading Days. If the Shares
are not traded or quoted as described in any of clause (A), (B) or (C), the
Closing Price of the Shares on a day will be the fair market value of the
Shares on that day as determined by a member firm of the New York Stock
Exchange, Inc. selected by the Board of Directors of the General Partner.
In the event that the Shares received upon exercise of the Conversion
Rights include rights that a holder of Shares would be entitled to receive,
then the value of such rights shall be determined by the General Partner
acting in good faith on the basis of such quotations and other information
as it considers, in its reasonable judgment, appropriate.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSENT OF THE LIMITED PARTNERS" shall mean the written consent
of a Majority-In-Interest of the Limited Partners, which consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by a Majority-In-Interest of the
Limited Partners, unless otherwise expressly provided herein, in their sole
and absolute discretion.
"CONSENTING PARTNERS" shall have the meaning set forth in
Section 8.1(a) hereof.
"CONTRIBUTED FUNDS" shall have the meaning set forth in Section
4.2(b) hereof.
"CONTRIBUTED LIMITED PARTNER ASSETS" shall mean properties or
interests in entities owning such properties, interests in certain property
management and related assets, or cash, contributed by the Limited
Partners.
"CONTRIBUTION DATE" shall have the meaning set forth in Section
4.2(b) hereof.
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"CONTROL" shall mean the ability, whether by the direct or
indirect ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to select
the managing partner of a partnership, or otherwise to select, or have the
power to remove and then select, a majority of those persons exercising
governing authority over an Entity. In the case of a limited partnership,
the sole general partner, all of the general partners to the extent each
has equal management control and authority, or the managing general partner
or managing general partners thereof shall be deemed to have control of
such partnership and, in the case of a trust, any trustee thereof or any
Person having the right to select any such trustee shall be deemed to have
control of such trust.
"CONVERSION FACTOR" means 1.0; PROVIDED THAT, in the event that
the General Partner (i) declares or pays a dividend on its outstanding
Shares in Shares or makes a distribution to all holders of its outstanding
Shares in Shares; (ii) subdivides its outstanding Shares, or (iii) combines
its outstanding Shares into a smaller number of Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor then in
effect by a fraction, the numerator of which shall be the number of Shares
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination (assuming for such purposes that such dividend,
distribution, subdivision or combination has occurred as of such time), and
the denominator of which shall be the actual number of Shares (determined
without the above assumption) issued and outstanding on the record date for
such dividend, distribution, subdivision or combination. Any adjustment to
the Conversion Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for
such event; PROVIDED, HOWEVER, that if the General Partner receives an
Exercise Notice after the record date, but prior to the effective date of
such dividend, distribution, subdivision or combination, the Conversion
Factor shall be determined as if the General Partner has received the
Exercise Notice immediately prior to the record date for such dividend,
distribution, subdivision or combination.
"CONVERSION RIGHT" shall have the meaning set forth in Section
12.1 hereof.
"CURRENT PER SHARE MARKET PRICE" on any date shall mean the
average of the Closing Price for the ten (10) consecutive Trading Days
ending on such date.
"DEPRECIATION" shall mean for each Partnership Fiscal Year or
other period, an amount equal to the depreciation, amortization, or other
cost recovery deduction allowable under the Code with respect to an asset
for such year or other period, except that if the Gross Asset Value of an
asset differs from its adjusted basis for federal income tax purposes at
the beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery
deduction for such year or other period bears to such beginning adjusted
tax basis; PROVIDED, HOWEVER, that if the federal income tax depreciation,
amortization, or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
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"DESIGNATED PROPERTIES" shall mean those properties known as
1655 Valley Road, 5 Thornton Road and Urban Farms Shopping Center.
"ENTITY" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE NOTICE" shall have the meaning set forth in Section
12.2 hereof.
"EXERCISING PARTNERS" shall have the meaning set forth in
Section 12.2 hereof.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"GENERAL PARTNER" shall mean American Real Estate Investment
Corporation, a Maryland corporation, its duly admitted successors and
assigns and any other Person who is a general partner of the Partnership at
the time of reference thereto.
"GENERAL PARTNER CAPITAL CONTRIBUTION" shall have the meaning
set forth in Section 4.1 hereof.
"GENERAL PARTNER INTEREST" shall mean a Partnership Interest
held by the General Partner. A General Partner Interest shall be expressed
as a number of Partnership Units.
"GROSS ASSET VALUE" shall mean, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be (a) in the case
of any asset described on attached EXHIBIT A, the gross fair market
value ascribed thereto on such EXHIBIT A and (b) in the case of any
other asset hereafter contributed by a Partner, the gross fair market
value of such asset at the time of contribution, as reasonably
determined by the General Partner;
(ii) The Gross Asset Values of all Partnership
assets shall be adjusted to equal their respective gross fair market
values, as reasonably determined by the General Partner, as of the
following times: (a) the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for more
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than a DE MINIMIS Capital Contribution; (b) the distribution by the
Partnership to a Partner of more than a DE MINIMIS amount of property
as consideration for an interest in the Partnership; and (c) the
liquidation of the Partnership within the meaning of Regulations
<section> 1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Partnership Asset
distributed to any Partner shall be the gross fair market value of
such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership Assets
shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code <section> 734(b) or
Code <section> 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant to
Regulations <section> 1.704-1(b)(2)(iv)(m).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to this provision, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset
for purposes of computing Profits and Losses. Any adjustment to the Gross
Asset Values of Partnership Assets shall require an adjustment to the
Partner's Capital Account as provided in the definition of Capital Account.
"HART-SCOTT ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"IMMEDIATE FAMILY" shall mean, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants by blood or adoption,
nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and
children-in-law.
"INCAPACITY" or "INCAPACITATED" shall mean, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him or her incompetent to manage his or
her Person or estate; (ii) as to any corporation which is a Partner, the
filing of a certificate or articles of dissolution, or its equivalent, for
the corporation or the revocation of its charter; (iii) as to any
partnership which is a Partner, the dissolution and commencement of winding
up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or
(vi) as to any Partner, the Bankruptcy of such Partner.
"INCENTIVE OPTION" shall mean an option to purchase Shares
granted under the Stock Incentive Plan.
"INCENTIVE OPTION AGREEMENT" shall mean the form or forms of
Incentive Option Agreement to be used under the Stock Incentive Plan.
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"INDEMNITEE" shall mean (i) any Person made a party to a
proceeding by reason of his status as (a) a General Partner, (b) a director
or officer of a General Partner, or (c) an officer of the Partnership, and
(ii) such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time
(whether before or after the event giving rise to potential liability), in
its sole discretion.
"LIEN" shall mean any liens, security interests, mortgages,
deeds of trust, charges, claims, encumbrances, restrictions, pledges,
options, rights of first offer or first refusal and any other rights or
interests of others of any kind or nature, actual or contingent, or other
similar encumbrances of any nature whatsoever.
"LIMITED PARTNER" shall mean any Person listed under the heading
"Limited Partners" on the signature page hereto who have executed (in
person or pursuant to power of attorney) this Agreement in their respective
capacities as limited partners of the Partnership, their permitted
successors or assigns as a limited partner hereof, or any Person who, at
the time of reference thereto, is a limited partner of the Partnership.
"LIMITED PARTNER INTEREST" shall mean a Partnership Interest of
a Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled
as provided in this Agreement, together with all obligations of such Person
to comply with the terms and provisions of this Agreement. A Limited
Partner Interest shall be expressed as a number of Partnership Units
designated as OP Units.
"LIQUIDATING TRUSTEE" shall mean such individual or Entity as is
selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner, PROVIDED such Liquidating Trustee agrees in writing to be
bound by the terms of this Agreement. The Liquidating Trustee shall be
empowered to give and receive notices, reports and payments in connection
with the dissolution, liquidation and/or winding-up of the Partnership and
shall hold and exercise such other rights and powers as are necessary or
required to permit all parties to deal with the Liquidating Trustee in
connection with the dissolution, liquidation and/or winding-up of the
Partnership.
"MAJOR DECISIONS" shall have the meaning set forth in Section
7.2 hereof.
"MAJORITY-IN-INTEREST OF THE LIMITED PARTNERS" shall mean
Limited Partner(s) who hold in the aggregate more than fifty percent (50%)
of the Percentage Interests then allocable to and held by the Limited
Partners, as a class.
"NASD" means the National Association of Securities Dealers,
Inc.
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"NET FINANCING PROCEEDS" shall mean the cash proceeds received
by the Partnership in connection with any borrowing by or on behalf of the
Partnership (whether or not secured), after deduction of all costs and
expenses incurred by the Partnership in connection with such borrowing, and
after deduction of that portion of such proceeds used to repay any other
indebtedness of the Partnership, or any interest or premium thereon.
"NET OPERATING CASH FLOW" shall mean, with respect to any fiscal
period of the Partnership, the excess, if any, of "Receipts" over
"Expenditures". For purposes hereof, the term "Receipts" means the sum of
all cash receipts of the Partnership from all sources for such period,
including Net Sale Proceeds and Net Financing Proceeds but excluding
Capital Contributions, and any amounts held as reserves as of the last day
of such period which the General Partner reasonably deems to be in excess
of necessary reserves as determined below. The term "Expenditures" means
the sum of (i) all cash expenses of the Partnership for such period; (ii)
the amount of all payments of principal and interest on account of any
indebtedness of the Partnership, or amounts due on such indebtedness during
such period; and (iii) such additional cash reserves as of the last day of
such period as the General Partner deems necessary for any capital or
operating expenditure permitted hereunder.
"NET SALE PROCEEDS" shall mean the cash proceeds received by the
Partnership in connection with a sale of any asset by or on behalf of the
Partnership after deduction of any costs or expenses incurred by the
Partnership, or payable specifically out of the proceeds of such sale
(including, without limitation, any repayment of any indebtedness required
to be repaid as a result of such sale or which the General Partner elects
to repay out of the proceeds of such sale, together with accrued interest
and premium, if any, thereon and any sales commissions or other costs and
expenses due and payable to any Person in connection with a sale).
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Regulations <section> 1.704-2(b)(1). The amount of Nonrecourse Deductions
for a Partnership Fiscal Year equals the net increase, if any, in the
amount of Partnership Minimum Gain during such Partnership Fiscal Year
reduced by any distributions during such Partnership Fiscal Year of
proceeds of a Nonrecourse Liability that are allocable to an increase in
Partnership Minimum Gain, determined according to the provisions of
Regulations <section><section> 1.704-2(c) and 1.704-2(h).
"NONRECOURSE LIABILITY" shall have the meaning set forth in
Regulations <section> 1.704-2(b)(3).
"OP UNITS" shall have the meaning set forth in Section 4.1.
"OFFERED UNITS" shall have the meaning set forth in Section
12.2.
"ORIGINAL PROPERTIES" means the Americana Lakewood apartments,
the Emerald Pointe apartments, the Sedona apartments and the Quadrangles
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Village apartments (or any property the federal income tax basis of which
is determined in whole or in part by reference to the basis of the
foregoing).
"OWNERSHIP LIMIT" shall have the meaning set forth in Section
12.4 hereof.
"PARTNERS" shall mean the General Partner and the Limited
Partners, their duly
admitted successors or assigns or any Person who is a partner of the
Partnership at the time of reference thereto.
"PARTNER MINIMUM GAIN" shall mean an amount, with respect to
each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that
would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Regulations <section> 1.704-
2(i)(3).
"PARTNER NONRECOURSE DEBT" shall have the meaning set forth in
Regulations <section> 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set
forth in Regulations <section> 1.704-2(i)(2). The amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Fiscal Year equals the net increase, if any, in the amount of
Partner Minimum Gain during such Partnership Fiscal Year attributable to
such Partner Nonrecourse Debt, reduced by any distributions during that
Partnership Fiscal Year to the Partner that bears the economic risk of loss
for such Partner Nonrecourse Debt to the extent that such distributions are
from the proceeds of such Partner Nonrecourse Debt and are allocable to an
increase in Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined according to the provisions of Regulations
<section><section> 1.704-2(h) and 1.704-2(i).
"PARTNERSHIP" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to time be
constituted.
"PARTNERSHIP FISCAL YEAR" shall mean the calendar year.
"PARTNERSHIP INTEREST" shall mean with respect to a Partner,
such Partner's right to the allocations (and each item thereof), specified
in Section 5.1 hereof and all distributions from the Partnership, and its
rights of management, consent, approval, or participation, if any, as
provided in this Agreement.
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in
Regulations <section> 1.704-2(d).
"PARTNERSHIP UNIT" shall mean a fractional, undivided share of
the Partnership Interests of all Partners. As of the date of this
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Agreement, there shall be considered to be a total of 9,421,551 Partnership
Units outstanding consisting of 5,280,354 Partnership Units held by the
General Partner and 4,141,197 OP Units.
"PERCENTAGE INTEREST" shall mean, with respect to any Partner,
the percentage ownership interest of such Partner in the Partnership, which
shall be calculated by dividing such Partner's total number of Partnership
Units by the total number of Partnership Units owned by all Partners. The
initial Percentage Interest of each Partner is as set forth opposite its
respective name on attached EXHIBIT A.
"PERSON" shall mean any individual or Entity.
"PLEDGE shall mean a pledge or grant of a mortgage, security
interest, lien or other encumbrance in respect of a Partnership Interest.
"PRIOR AGREEMENT" shall mean the Agreement of Limited
Partnership of the Partnership, dated as of November 10, 1993, and amended
as of June 30, 1997 and August 11, 1997, between the Company, as the sole
general partner, and the limited partners listed on the signature page
thereto, which Prior Agreement is amended and restated in its entirety by
this Agreement as of the Closing Date.
"PROFITS" and "LOSSES" shall mean, for each Partnership Fiscal
Year or other period, an amount equal to the Partnership's taxable income
or loss for such Partnership Fiscal Year or period, determined in
accordance with Code <section> 703(a) (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant
to Code <section> 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Partnership that is
exempt from federal income tax or excluded from federal gross income
and not otherwise taken into account in computing Profits or Losses
pursuant to this Section shall be added to such taxable income or
loss;
(ii) Any expenditures of the Partnership
described in Code <section> 705(a)(2)(B) or treated as Code
<section> 705(a)(2)(B) expenditures pursuant to Regulations
<section> 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this Section, shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Partnership Asset is adjusted pursuant to any provision of this
Agreement in accordance with the definition of Gross Asset Value, the
amount of such adjustment shall be taken into account as gain or loss
from the disposition of such Asset for purposes of computing Profits
or Losses;
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(iv) Gain or loss resulting from any
disposition of any Partnership Asset with respect to which gain or
loss is recognized for federal income tax purposes shall be computed
by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such Asset differs
from its Gross Asset Value;
(v) In lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account
Depreciation for such Partnership Fiscal Year or other period,
computed in accordance with the definition of Depreciation; and
(vi) Notwithstanding any other provision of
this Section, any items which are allocated pursuant to Section 5.2
shall not be taken into account in computing Profits or Losses.
"PROPERTY" shall mean any real estate in which the Partnership,
directly or
indirectly, acquires ownership of a fee or leasehold interest.
"PROSPECTUS" means a prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by
reference therein.
"PURCHASE PRICE" shall have the meaning set forth in Section
12.2.
"REGISTRABLE SECURITIES" means Shares issued or issuable to
Limited Partners upon exchange of their OP Units, excluding (i) Shares for
which the Shelf Registration Statement shall have become effective under
the Securities Act and which have been disposed of under the Shelf
Registration Statement, and (ii) Shares sold or otherwise distributed
pursuant to Rule 144 under the Securities Act.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with Article XV of this Agreement, including,
without limitation: (i) all SEC, stock exchange or NASD registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualification
of any of the Registrable Securities and the preparation of a Blue Sky
Memorandum, if necessary) and compliance with the rules of the NASD, (iii)
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all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing the Shelf Registration Statement, any
Prospectus, certificates and other documents relating to the performance of
and compliance with Article XV of this Agreement, (iv) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges pursuant to
Section 3(k) hereof, and (v) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company, including
the expenses of any special audits or "cold comfort" letters, if any,
required by or incident to such performance and compliance. Registration
Expenses shall specifically exclude underwriting discounts and commissions,
brokerage or dealer fees, the fees and disbursements of counsel,
accountants or other representatives of a selling Limited Partner, and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a selling Limited Partner, all of which shall be borne by
such Limited Partner in all cases.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Agreement dated November 10, 1993 by and between the Company and the
Partnership, relating to the registration of Shares issued upon exercise of
the Conversion Rights granted herein.
"REGULATIONS" shall mean the Income Tax Regulations promulgated
under the Code as such regulations may be amended from time to time
(including Temporary Regulations).
"REIT" shall mean a real estate investment trust as defined in
Section 856 of the Code.
"REQUIRED FUNDS" shall have the meaning set forth in Section 4.2
hereof.
"RIGHTS" shall have the meaning set forth in Section 12.1
hereof.
"SALE PERIOD" shall mean the 45-day period immediately following
the filing with the SEC by the Company of an annual report of the Company
on Form 10-K or a quarterly report of the Company on Form 10-Q or such
other period as the Company may determine.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECTION 1031 EXCHANGE" means, with respect to any property, the
exchange of such property for property of like kind in a transaction
qualifying under Section 1031 of the Code in which not more than 10% of the
built-in gain associated with such property is required to be recognized by
the partners of the Operating Partnership for federal income tax purposes.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES" shall mean the shares of Common Stock, par value $.001
per share, of the Company.
"SHARE VALUE" as of any date shall mean the total number of
Shares issued and outstanding at the close of business on such date (and
excluding any treasury shares) multiplied by the Current Per Share Market
Price on such date.
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"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company and any other entity required to be a registrant
with respect to such shelf registration statement pursuant to the
requirements of the Securities Act which covers all of the Registrable
Securities on an appropriate form under Rule 415 under the Securities Act,
or any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all materials incorporated by reference therein.
"SPECIAL CONSENTING PARTNERS" means, initially, McBride Hudson
Bay, L.P., until McBride Hudson Bay, L.P. notifies the Partnership of its
successors to the rights of the Special Consenting Partners under this
Agreement.
"STOCK INCENTIVE PLAN" shall mean the General Partner's 1993
Omnibus Incentive Plan, and any other stock incentive plan adopted in the
future by the General Partner.
"SUBSTITUTED LIMITED PARTNER" shall have the meaning set forth
in Section 9.4 hereof.
"THIRD PARTY" or "THIRD PARTIES" shall mean a Person or Persons
who is or are neither a Partner or Partners nor an Affiliate or Affiliates
of a Partner or Partners.
"THIRD PARTY FINANCING" shall mean financing or refinancing
obtained from a Third Party by the Partnership.
"TRADING DAY" shall mean (x) if the Shares are listed on at
least one stock exchange, a day on which there is trading on the principal
stock exchange on which the Shares are listed, (y) if the Shares are not
listed on a stock exchange, but sale prices of the 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 Shares are
reported, or (z) if the Shares are not listed on a stock exchange and sale
prices of the Shares are not reported on an automated quotation system, a
day on which quotations are reported by National Quotation Bureau
Incorporated.
"TRANSFER" shall mean any assignment, sale, transfer,
conveyance, Pledge, grant of an option or proxy, or other disposition or
act of alienation, whether voluntary or involuntary, or by operation of
law.
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ARTICLE II
ORGANIZATIONAL MATTERS
2.1 ORGANIZATION AND CONTINUATION. The Partnership is
continued as a limited partnership organized pursuant to the provisions of
the Act and upon the terms and conditions set forth in the Prior Agreement.
The Partners hereby amend and restate the Prior Agreement in its entirety
as of the Closing Date. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration
and termination of the Partnership shall continue to be governed by the
Act. The Partnership Interest of each Partner shall be personal property
for all purposes.
2.2 NAME. The name of the Partnership is American Real Estate
Investment, L.P. The Partnership's business may be conducted under any
other name or names deemed advisable by the General Partner, including the
name of the General Partner or any Affiliate thereof. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included
in the Partnership's name where necessary for the purposes of complying
with the laws of any jurisdiction that so requires. Subject to the
condition set forth in the second sentence of this Section 2.2, the General
Partner in its sole discretion may change the name of the Partnership at
any time and from time to time and shall notify the Limited Partners of
such change in the next regular communication by the Partnership to the
Limited Partners.
2.3 REGISTERED OFFICE AND AGENT, PRINCIPAL OFFICE. The name
and address of the Partnership's registered agent is Corporation Service
Company, 1013 Centre Road, Wilmington, Delaware 19805. Such registered
agent may be changed as the General Partner may from time to time designate
by notice to the Limited Partners. The principal executive office of the
Partnership is located at 620 West Germantown Pike, Plymouth Meeting,
Pennsylvania 19462, and may be changed to such other place as the General
Partner may from time to time designate. The Partnership may maintain
offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
2.4 POWER OF ATTORNEY; COMPLIANCE WITH ACT.
(a) The Limited Partners hereby irrevocably constitute
and appoint the General Partner, with full power of substitution and
resubstitution, as the Limited Partners' true and lawful attorney-in-fact
with full power and authority to act in the Limited Partners' name, place
and stead to:
(1) make, execute, swear to, seal, acknowledge,
deliver, file and record in the appropriate public offices (a) all
certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidating
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Trustee deems appropriate or necessary to form, qualify or continue
the existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have
limited liability to the extent provided by applicable law) in the
State of Delaware and in all other jurisdictions in which the
Partnership may or plans to conduct business or own property; (b) all
instruments that the General Partner deems appropriate or necessary
to reflect any amendment or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments
or documents that the General Partner deems appropriate or necessary
to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Articles VIII or
IX, or the Capital Contribution of any Partner; (e) any agreements,
waivers or other instruments required by any state or local tax
authority to enable the Partnership to file combined, consolidated or
similar state or local income tax returns and/or to pay state and
local taxes on behalf of the Partnership or all of the Partners;
(f) all documents and other instruments relating to the determination
of the rights, preferences and privileges of Partnership Interests;
and (g) the Registration Rights Agreement and all amendments to such
agreement approved in accordance with its respective terms; and
(2) execute, swear to, seal, acknowledge and file
all ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole discretion of the
General Partner, to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is made or given
by the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion of the
General Partner, to effectuate the terms or intent of this Agreement.
(b) The foregoing power of attorney is irrevocable and
coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner to act as
contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer
of all or any portion of such Limited Partner's or Assignee's Partnership
Interest and shall extend to such Limited Partner's or Assignee's heirs,
successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by
the General Partner, acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee hereby waives any and
all defenses which may be available to contest, negate or disaffirm the
action of the General Partner, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidating Trustee, within fifteen (15) days
after receipt of the General Partner's or Liquidating Trustee's request
therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidating Trustee, as the case
may be, deems necessary to effectuate this power of attorney.
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2.5 TERM. The term of the Partnership commenced on the date
the Certificate was filed in the office of the Delaware Secretary of State
in accordance with the Act and shall continue until dissolved and
terminated pursuant to the provisions of Article VIII or as otherwise
provided by law.
2.6 FILING OF CERTIFICATE AND PERFECTION OF LIMITED
PARTNERSHIP. The General Partner shall execute, acknowledge, record and
file at the expense of the Partnership, the Certificate and any and all
amendments thereto and all requisite fictitious name statements and notices
in such places and jurisdictions as may be necessary to cause the
Partnership to be treated as a limited partnership under, and otherwise to
comply with, the laws of each state or other jurisdiction in which the
Partnership conducts business.
2.7 CERTIFICATES DESCRIBING PARTNERSHIP UNITS. At the request
of a Limited Partner, the General Partner, at its option, may issue a
certificate summarizing the terms of such Limited Partner's interest in the
Partnership, including the number of Partnership Units owned and the
Percentage Interest represented by such Partnership Units as of the date of
such certificate. Any such certificate (i) shall be in form and substance
as approved by the General Partner; (ii) shall not be negotiable and (iii)
shall bear a legend to the following effect:
This certificate is not negotiable. The Partnership
Units represented by this certificate are governed by
and transferable only in accordance with the
provisions of the Amended and Restated Agreement of
Limited Partnership of American Real Estate
Investment, L.P., as amended and restated.
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the
business to be conducted by the Partnership is as follows: (i) to conduct
any business that may be lawfully conducted by a limited partnership
organized pursuant to the Act, including, without limitation, investing in
(either directly or through the acquisition of interest in partnerships or
other entities), purchasing (either directly or through the acquisition of
interest in partnerships or other entities), developing, owning, managing,
leasing and disposing of real estate and any improvements thereon, entering
into any partnership, joint venture, or similar arrangement to engage in
any of the foregoing, or to own interests in any entity engaged in any of
the foregoing, as well as any other activity as the General Partner may
from time to time approve, and to do anything necessary or appropriate to
accomplish the foregoing; PROVIDED THAT, such business shall be limited to
and conducted in such a manner as to permit the General Partner at all
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times to be classified as a REIT, unless the General Partner ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership; (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or to own interests
in any entity engaged in any of the foregoing; and (iii) to do anything
necessary or incidental to the foregoing. In connection with the
foregoing, the Partners acknowledge that the General Partner's status as a
REIT inures to the benefit of all the Partners and not solely the General
Partner.
3.2 POWERS. The Partnership shall be empowered to do any and
all acts and things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the
Partnership; PROVIDED THAT, the Partnership shall not take, or refrain from
taking, any action which, in the judgment of the General Partner, in its
sole discretion, (i) could adversely affect the ability of the General
Partner to continue to qualify as a REIT, unless the General Partner
determines to terminate its qualification as a REIT; (ii) could subject the
General Partner to any additional taxes under Code <section> 857 or 4981,
or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over the General Partner or its securities,
unless such action (or inaction) shall have been specifically consented to
by the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS. The General
Partner has contributed to the capital of the Partnership the amount set
forth on EXHIBIT A (the "General Partner Capital Contribution"). Each
Limited Partner has contributed or has caused to be contributed as its
initial Capital Contribution to the capital of the Partnership, the
Contributed Limited Partner Assets, with the values as set forth opposite
their names on attached EXHIBIT A. The agreed-to gross fair market value
of each of the Contributed Limited Partner Assets, which shall be their
initial Gross Asset Value, is as set forth opposite the contributing
Limited Partner's name on attached EXHIBIT A. Each Partner shall own
Partnership Units, which if such Partner is a Limited Partner shall be
designated under this Agreement as "OP Units," in the amount set forth for
such Partner in EXHIBIT A and shall have a Percentage Interest in the
Partnership as set forth for such Partner in EXHIBIT A, which Percentage
Interest shall be adjusted in EXHIBIT A from time to time by the General
Partner to the extent necessary in accordance with the terms of this
Agreement to reflect (a) exchanges of Partnership Units for Shares in
accordance with Article XII; (b) transfers of Partnership Units that result
in the admission of a Substituted Limited Partner; (c) withdrawals of
Partners; (d) Capital Contributions or (e) issuances of additional
Partnership Units (pursuant to any merger or otherwise). Except as
otherwise provided herein, the Partners shall have no obligation to make
any additional Capital Contributions or loans to the Partnership.
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4.2 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS; ADDITIONAL
PARTNERS.
(a) The General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests ("Additional
Partnership Interests") in the form of Partnership Units for any
Partnership purpose at any time or from time to time, to the Partners
(including the General Partner) or to other Persons for such consideration
and on such terms and conditions as shall be established by the General
Partner in its sole and absolute discretion, all without the approval of
any Limited Partners. Any Additional Partnership Interests issued thereby
may be issued in one or more classes, or one or more series of any of such
classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties, including rights,
powers and duties senior to Limited Partnership Interests, all as shall be
determined by the General Partner in its sole and absolute discretion and
without the approval of any Limited Partner, subject to Delaware law,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests; (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; PROVIDED, HOWEVER, that no
additional Partnership Units or other Partnership Interests shall be issued
to the General Partner unless either:
(1) (A) the Additional Partnership Interests are
issued in connection with an issuance of shares of capital stock of
or other interests in the General Partner, which shares or interests
have designations, preferences and other rights, all such that the
economic interests are substantially similar to the designations,
preferences and other rights of the Additional Partnership Interests
issued to the General Partner by the Partnership and (B) the General
Partner shall make a Capital Contribution to the Partnership in an
amount equal to the proceeds raised in connection with the issuance
of such shares of capital stock of or other interests in the General
Partner, or
(2) the Additional Partnership Interests are issued
to all Partners in proportion to their respective Percentage
Interests, or
(3) the General Partner makes an additional Capital
Contribution to the Partnership, other than as specified in (1)
above.
If as a result of (3) above the number of Partnership Units held by the
General Partner would not equal the number of Shares then outstanding, the
number of Partnership Units outstanding shall be adjusted so that the
General Partner will own its Percentage Interest of the total Partnership
Units outstanding by owning a number of Partnership Units equal to the
number of Shares then outstanding, and the number of Partnership Units
owned by each Limited Partner will accordingly be adjusted to equal its
current Percentage Interest.
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Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units for less
than fair market value, so long as the General Partner concludes in good
faith that such issuance is in the best interests of the General Partner
and the Partnership.
(b) The General Partner may cause the Partnership to
issue additional Partnership Units to and admit as an additional Limited
Partner ("Additional Limited Partner"), any Person in exchange for the
Capital Contribution by such Person of cash and/or property. In the event
that the Partnership issues Additional Partnership Units pursuant to this
Section 4.2, the number of Partnership Units issued shall be determined by
dividing the U.S. dollar amount of cash plus the agreed value of the
property contributed as of the date of contribution to the Partnership (the
"CONTRIBUTION DATE") by the Adjusted Current Per Share Market Price,
computed as of the Trading Day immediately preceding the Contribution Date.
(c) Notwithstanding anything contained herein to the
contrary, an Additional Limited Partner that acquires an Additional
Partnership Interest pursuant to this Section 4.2 shall not acquire any
interest in, and may not exercise or otherwise participate in, any
Conversion Rights pursuant to Article XII, without the Agreement of the
General Partner.
4.3 ISSUANCE OF SHARES.
(a) UPON ISSUANCE OF ADDITIONAL SECURITIES. The Company
shall not issue any additional Shares (other than Shares issued in
connection with an exchange pursuant to Article XII hereof) or rights,
options, warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase Shares (collectively, "Additional
Securities") other than to all holders of Shares, unless (A) the Company
shall cause the Partnership to issue to the Company, Partnership Interests
or rights, options, warrants or convertible or exchangeable securities of
the Partnership having designations, preferences and other rights, all such
that the economic interests are substantially similar to those of the
Additional Securities, and (B) the Company contributes the proceeds from
the issuance of such Additional Securities and from any exercise of rights
contained in such Additional Securities, directly and through the Company,
to the Partnership; PROVIDED, HOWEVER, that the Company is allowed to issue
Additional Securities in connection with an acquisition of a property to be
held directly by the Company, but if and only if, such direct acquisition
and issuance of Additional Securities have been approved and determined to
be in the best interests of the Company and the Partnership by a majority
of the Directors (as defined in the Charter). Without limiting the
foregoing, the Company is expressly authorized to issue Additional
Securities for less than fair market value, and to cause the Partnership to
issue to the Company corresponding Partnership Interests, so long as (x)
the Company concludes in good faith that such issuance is in the best
interests of the Company and the Partnership, including without limitation,
the issuance of Shares and corresponding Partnership Units pursuant to an
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employee share purchase plan providing for employee purchases of Shares at
a discount from fair market value or employee stock options that have an
exercise price that is less than the fair market value of the Shares,
either at the time of issuance or at the time of exercise, and (y) the
Company contributes all proceeds from such issuance to the Partnership.
For example, in the event the Company issues Shares for a cash purchase
price and contributes all of the proceeds of such issuance to the
Partnership as required hereunder, the Company shall be issued a number of
additional Partnership Units equal to the product of (A) the number of such
Shares issued by the Company, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is 100%, and the
denominator of which is the Conversion Factor in effect on the date of such
contribution.
(b) CERTAIN DEEMED CONTRIBUTIONS OF PROCEEDS OF ISSUANCE
OF SHARES. In connection with any and all issuance of Shares, the Company
shall make Capital Contributions to the Partnership of the proceeds
therefrom, PROVIDED THAT if the proceeds actually received and contributed
by the Company are less than the gross proceeds of such issuance as a
result of any underwriter's discount or other expenses paid or incurred in
connection with such issuance, then the Company shall be deemed to have
made Capital Contributions to the Partnership in the aggregate amount of
the gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have paid such offering expenses in accordance with
Section 7.7 hereof and in connection with the required issuance of
additional Partnership Units to the Company for such Capital Contributions
pursuant to Section 4.3(a) hereof.
4.4 STOCK INCENTIVE PLAN. If at any time or from time to time
Incentive Options granted in connection with the Company's Stock Incentive
Plan are exercised in accordance with the terms of the Incentive Option
Agreement, the Company shall, as soon as practicable after such exercise,
contribute to the capital of the Partnership an amount equal to the
exercise price paid to the Company by such exercising party in connection
with the exercise of the Incentive Option.
4.5 NO THIRD PARTY BENEFICIARY. No creditor or other third
party having dealings with the Partnership shall have the right to enforce
the right or obligation of any Partner to make Capital Contributions or to
pursue any other right or remedy hereunder or at law or in equity, it being
understood and agreed that the provisions of this Agreement shall be solely
for the benefit of, and may be enforced solely by, the parties hereto and
their respective successors and assigns. None of the rights or obligations
of the Partners herein set forth to make Capital Contributions to the
Partnership shall be deemed an asset of the Partnership for any purpose by
any creditor or other third party, nor may such rights or obligations be
sold, transferred or assigned by the Partnership or pledged or encumbered
by the Partnership to secure any debt or other obligation of the
Partnership or of any of the Partners. Notwithstanding the foregoing, the
stockholders of the Company shall not be considered creditors or third
parties for the purposes of this Agreement but shall be considered third
party beneficiaries with the right to enforce this Agreement.
4.6 NO INTEREST; NO RETURN. No Partner shall be entitled to
interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to
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withdraw any part of its Capital Account or to demand or receive the return
of its Capital Contribution from the Partnership.
4.7 NO PREEMPTIVE RIGHTS. No Person shall have any
preemptive, preferential or other similar right with respect to (i)
additional Capital Contributions or loans to the Partnership; or (ii)
issuance or sale of any Partnership Interests.
4.8 PERCENTAGE INTERESTS. If the number of outstanding
Partnership Units increases or decreases during the taxable year, each
Partner's Percentage Interest shall be adjusted by the General Partner
effective as of the effective date of each such increase or decrease to a
percentage equal to the number of Partnership Units held by such Partner
divided by the aggregate number of Partnership Units outstanding after
giving effect to such increase or decrease. If the Partners' Percentage
Interests are adjusted pursuant to this Section 4.8, the Profits and Losses
for the taxable year in which the adjustment occurs shall be allocated
between the part of the year ending on the day when the Partnership's
property is revalued by the General Partner and the part of the year
beginning on the following day either (i) as if the taxable year had ended
on the date of the adjustment or (ii) based on the number of days in each
part. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part
shall be based on the adjusted Percentage Interests.
ARTICLE V
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND
ACCOUNTING MATTERS
5.1 PROFITS AND LOSSES.
After giving effect to the mandatory Partnership
allocations set forth in Section 5.2, Profits and Losses for any Fiscal
Year or other applicable period shall be allocated to the Partners PRO RATA
in accordance with their Percentage Interests.
5.2 MANDATORY ALLOCATIONS
(a) (1) Minimum Gain Chargeback. Notwithstanding
any other provision of this Article 5, if there is a net
decrease in Partnership Minimum Gain during any Partnership Fiscal
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Year or other applicable period, then, subject to the
exceptions set forth in Regulations <section> 1.704-2(f)(2),
(3), (4) and (5), each Partner shall be specially allocated items
of Partnership income and gain for such Partnership Fiscal Year
(and, if necessary, subsequent Partnership Fiscal Years) in an
amount equal to such Partner's share of the net decrease
in Partnership Minimum Gain, as determined in accordance with
Regulations <section> 1.704-2(g). Allocations pursuant to the
previous sentence shall be determined in accordance with
Regulations <section> 1.704-2(f). This Section 5.2(a)(1) is
intended to comply with the minimum gain chargeback requirement
in Regulations <section> 1.704-2(f) shall be interpreted
consistently therewith.
(2) Partner Minimum Gain Chargeback.
Notwithstanding any other provision of this Article 5 except Section
5.2(a)(1), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any
Partnership Fiscal Year or other applicable period, then, subject
to the exceptions set forth in Regulations <section> 1.704-
2(i)(4), each Partner who has a share of the Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations <section> 1.704-2(i)(5) shall be
specially allocated items of Partnership income and gain for such
Partnership Fiscal Year (and, if necessary, subsequent Partnership
Fiscal Years) in an amount equal to such Partner's share of
the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with
Regulations <section> 1.704-2(i)(4). Allocations pursuant to
the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations <section> 1.704-2(i)(4).
This Section 5.2(a)(2) is intended to comply with the
minimum gain chargeback requirement in Regulations <section>
1.704-2(i)(4) and shall be interpreted consistently therewith.
(b) Qualified Income Offset. Notwithstanding any
provision of this Article 5, except Section 5.2(a), in the event any
Partner receives any adjustments, allocations, or distributions described
in Regulations <section><section> 1.704-1(b)(2)(ii)(d)(4), (5) or (6), that
cause or increase an Adjusted Capital Account Deficit of such Partner,
items of Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of such
Partner as quickly as possible. This Section 5.2(b) is intended to comply
with the qualified income offset provision of Regulations <section> 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) No Excess Deficit. To the extent that any Partner
has or would have, as a result of an allocation of Loss (or item thereof),
an Adjusted Capital Account Deficit, such amount of Loss (or item thereof)
shall be allocated to the other Partners in accordance with Section 5.1,
but in a manner which will not produce an Adjusted Capital Account Deficit
as to such Partner. To the extent such allocation would result in all
Partners having Adjusted Capital Account Deficits, such Loss shall be
allocated to the General Partner. Any allocations of Loss pursuant to this
Section 5.2(c) shall be reversed with a corresponding amount of Profits in
subsequent years.
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(d) Nonrecourse Deductions. Nonrecourse Deductions for
any Partnership Fiscal Year or other applicable period shall be allocated
to the Partners pro rata in accordance with their Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Partnership Fiscal Year or other applicable
period shall be specially allocated to the Partner who bears the economic
risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with
Regulations <section> 1.704-2(i)(1).
(f) Code <section> 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Code <section> 734(b) or Code <section> 743(b) is required, pursuant to
Regulations <section><section> 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specially allocated to the Partners
in a manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Section of the Regulations.
Each Partner hereby agrees to provide the Partnership with all
information necessary to give effect to an election made under Code
<section> 754 if the General Partner determines to make such an election.
With respect to such election:
(1) Any change in the amount of the depreciation
deducted by the partnership and any change in the gain or loss of the
Partnership, for federal income tax purposes, resulting from an
adjustment pursuant to Section 743(b) or the Code shall be allocated
entirely to the transferee of the Partnership Interest or portion
thereof so transferred. Neither the capital contribution obligations
of, nor the Partnership Interest of, nor the amount of any cash
distributions to, the Partners shall be affected as a result of such
election, and except as provided in Regulations <section> 1.704-
1(b)(2)(iv)(m), the making of such election shall have no effect
except for federal and (if applicable) state and local income tax
purposes.
(2) Solely for federal and (if applicable) state
and local income tax purposes and not for the purpose of maintaining
the Partners' Capital Accounts (except as provided in Regulations
Section 1.704-1(b)(2)(iv)(m)), the Partnership shall keep a written
record for those assets, the bases of which is adjusted as a result
of such election, and the amount at which such assets are carried on
such record shall be debited (in the case of an increase in basis) or
credited (in the case of a decrease in basis) by the amount of such
basis adjustment. Any change in the amount of the depreciation
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deducted by the Partnership and any change in the gain or loss of the
Partnership, for federal and (if applicable) state and local income
tax purposes, attributable to the basis adjustment made as a result
of such election shall be debited or credited, as the case may be, on
such record.
(g) Curative Allocations. Any mandatory allocations of
items of income, gain, loss or deduction pursuant to Sections 5.2(a), (b),
(c) and (e) above shall be taken into account for the purpose of equitably
adjusting subsequent allocations of income, gain, loss or deduction so that
the net allocations, in the aggregate, allocated to each Partner pursuant
to this Article 5, and the Capital Accounts of each Partner, shall as
quickly as possible and to the extent possible, be the same as if no
mandatory allocations had been made.
5.3 OTHER ALLOCATION RULES
(a) Pursuant to Regulations <section> 1.752-3(a), for the
purpose of determining each Partner's share of excess Nonrecourse
Liabilities of the Partnership, and solely for such purpose, each Partner's
interest in partnership profits shall equal such Partner's Percentage
Interest.
(b) The allocation of Profits and Losses for any
Partnership Year during which a person acquires a Partnership Interest
(other than upon formation of the Partnership), or during which there is a
change in the Partners' Percentage Interests, shall take into account the
Partners' varying interests for such Partnership Year pursuant to any
method permissible under Code <section> 706 that is selected by the General
Partner. The method selected by the General Partner shall not apply
notwithstanding any agreement between the assignor and assignee of such
Partnership Interest although the General Partner may recognize any such
agreement.
(c) To the extent permitted by Regulations
<section> 1.704-2(h)(3) and 1.704-2(i)(6), the General Partner shall
endeavor to treat distributions as having been made from the proceeds of
Nonrecourse Liabilities or Partner Nonrecourse Debt only to the extent that
such distributions would cause or increase a deficit balance in any
Partner's Capital Account that exceeds the amount such Partner is otherwise
obligated to restore (within the meaning of Regulations
<section> 1.704-1(b)(ii)(c)) as of the end of the Partnership's taxable
year in which the distribution occurs.
5.4 ALLOCATIONS FOR TAX PURPOSES
(a) Except as otherwise provided in this Section 5.4, for
federal income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its correlative
item of "book" income, gain, loss or deduction is allocated pursuant to
Sections 5.1, 5.2 and 5.3 above.
(b) In accordance with Code <section> 704(b) and 704(c)
and the Regulations thereunder, income, gain, loss and deduction with
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respect to any property contributed to the capital of the Partnership
shall, solely for federal income tax purposes, be allocated among the
Partners so as to take into account any variation between the adjusted
basis of such property to the Partnership for federal income tax purposes
and the initial Gross Asset Value of such property. If the Gross Asset
Value of any Partnership property is adjusted as described in the
definition of Gross Asset Value, subsequent allocations of income, gain,
loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and the Gross Asset Value of such asset in the manner prescribed
under Code <section> 704(b) and 704(c) and the Regulations thereunder. In
accordance with the foregoing, the Partnership shall elect to use the
"traditional method" set forth in Regulation <section>1.704-3(b) with
respect to the properties contributed by or on behalf of the Special
Consenting Partners.
5.5 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS.
In the event that the Partnership issues Additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant
to Article IV hereof, the General Partner shall make such revisions to this
Article V as it deems necessary to reflect the terms of the issuance of
such Partnership Interests, including any preferential allocations to
classes of Partnership Interests that are entitled thereto.
5.6 DISTRIBUTIONS. Except with respect to a liquidation of
the Partnership pursuant to Article VIII hereof:
(a) The General Partner shall cause the Partnership to
distribute all or a portion of Net Operating Cash Flow to the Partners from
time to time as determined by the General Partner, but in any event not
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less frequently than quarterly in such amounts as the General Partner shall
determine;
(b) For each Partnership Fiscal Year, all distributions
made pursuant to this Section 5.6 shall be made to the Partners in
proportion to their respective Percentage Interests; PROVIDED that the
General Partner shall use its best efforts to cause the Partnership to make
distributions such that the cumulative distributions per OP Unit shall
equal the cumulative distributions per Share; PROVIDED FURTHER that in no
event may a Partner receive a distribution of Net Operating Cash Flow with
respect to a Partnership Unit if such Partner is entitled to receive a
distribution out of such Net Operating Cash Flow with respect to a Share
for which such Partnership Unit has been exchanged and such distribution
shall be made to the Company; and
(c) Notwithstanding the provisions of Section 5.6 (a) and
(b), the General Partner shall use its best efforts to cause the
Partnership to distribute sufficient amounts to enable the General Partner
to pay shareholder dividends that will (1) satisfy the requirements for
qualification as a REIT under the Code and the Regulations (the "REIT
Requirements") and (2) avoid any federal income or excise tax liability of
the General Partner.
ARTICLE VI
TAX MATTERS
6.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety
(90) days of the close of each taxable year, the tax information reasonably
required by Limited Partners for federal and state income tax reporting
purposes.
6.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall,
in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code; PROVIDED THAT the General Partner
shall make the election under Code <section> 754 in accordance with
applicable Regulations thereunder. The General Partner shall have the
right to seek to revoke any such elections (including, without limitation,
the election under Code <section> 754) upon the General Partner's
determination in its sole and absolute discretion that such revocation is
in the best interests of the Partners.
6.3 TAX MATTERS PARTNER
(a) The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes within the
meaning of Code <section> 6231(a)(7). Pursuant to Code
<section> 6223(c)(3), upon receipt of notice from the IRS of the beginning
of an administrative proceeding with respect to the Partnership, the tax
matters partner shall furnish the IRS with the name, address and profit
interest of each of the Limited Partners and the Assignees to the extent
that such information is provided to the Partnership by the Limited
Partners and the Assignees. The General Partner is authorized to take any
action in connection with any tax audit or continuing judicial action as it
determines in good faith is in the best interests of the Partners.
The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding, except
to the extent required by law, is a matter in the sole and absolute
discretion of the tax matters partner and the provisions relating to
indemnification of the General Partner set forth in Section 7.5 of this
Agreement shall be fully applicable to the tax matters partner in its
capacity as such.
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(b) The tax matters partner shall receive no compensation
for its services. All third party costs and expenses incurred by the tax
matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an
independent accounting firm or the accountants for the Partnership to
assist the tax matters partner in discharging its duties hereunder, so long
as the compensation paid by the Partnership for such services is
reasonable.
6.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred
by it in organizing the Partnership ratably over a sixty (60) month period
as provided in Code <section> 709.
6.5 WITHHOLDING; COMBINED RETURNS
(a) Each Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Partner and
Assignee any amount of federal, state, local, or foreign taxes that the
General Partner reasonably determines that the Partnership is required to
withhold or pay with respect to any amount distributable or allocable to
such Partner or Assignee pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Code <section> 1441, 1442, 1445, or 1446. Any amount paid on
behalf of or with respect to a Partner or Assignee shall constitute a loan
by the Partnership to such Partner or Assignee, which loan shall be repaid
through withholding of subsequent distributions to such Partner or
Assignee. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 6.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment
to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting
Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without
limitation, in such event the General Partner shall have the right to
receive distributions that would otherwise be distributable to such
defaulting Limited Partner until such time as such loan, together with all
interest thereon, has been paid in full; and any such distributions so
received by the General Partner shall be treated as having been distributed
to the defaulting Limited Partner and immediately paid by the defaulting
Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the
lesser of (i) the base rate on corporate loans at large United States money
center commercial banks, as published from time to time in THE WALL STREET
JOURNAL or (ii) the maximum lawful rate of interest on such obligation,
such interest to accrue from the date such amount is due (which shall be
fifteen (15) days after demand) until such amount is paid in full.
(b) The General Partner is authorized, if it determines
in good faith that such action is in the interests to both it and the
Limited Partners, to negotiate with state and local tax authorities and/or
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file state and local combined or consolidated income tax returns on behalf
of the Partnership and for all of the Partners and Assignees in respect of
income of the Partnership. To the extent any payment or accrual of state
or local income taxes result in a federal, state or local tax credit to one
or more Partners, such credit shall be allocated between the Partners in
proportion to their respective average daily Percentage Interests for the
Partnership Fiscal Year for which such tax is paid or accrued and the
amount allocated to each Partner shall be treated as a distribution to such
Partner and shall reduce the amount of available cash otherwise
distributable to such Partners under Article 5.
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
7.1 MANAGEMENT. The General Partner shall be responsible for
the management of the Partnership's business and affairs. Except as
otherwise herein expressly provided, and subject to the limitations
contained in Section 7.2 hereof with respect to Major Decisions, the
General Partner shall have, and is hereby granted, full and complete power
to the fullest extent permissible under the Act, authority and discretion
to take such action for and on behalf of the Partnership and in its name as
the General Partner shall, in its sole and absolute discretion, deem
necessary or appropriate to carry out the purposes for which the
Partnership was organized. Except as otherwise expressly provided herein,
and subject to Section 7.2 hereof, the General Partner shall have the
right, power and authority:
(a) To manage, control, invest, lend, reinvest, acquire
by purchase, lease or otherwise, sell, contract to purchase or sell, grant,
obtain, or exercise options to purchase, options to sell or conversion
rights, assign, transfer, convey, deliver, endorse, exchange, pledge,
mortgage, abandon, improve, repair, maintain, insure, lease for any term
and otherwise deal with any and all property of whatsoever kind and nature,
and wheresoever situated, in furtherance of the purposes of the
Partnership;
(b) To acquire, directly or indirectly, interests in real
or personal property of any kind and of any type, and any and all kinds of
interests therein, and to determine the manner in which title thereto is to
be held; to manage, insure against loss, protect and subdivide any of the
real or personal property, interests therein or parts thereof; to improve,
develop or redevelop any such real or personal property; to participate in
the ownership and development of any property; to dedicate for public use,
to vacate any subdivisions or parts thereof, to resubdivide, to contract to
sell, to grant options to purchase or lease, to sell on any terms; to
convey, to mortgage, pledge or otherwise encumber said property, or any
part thereof; to lease said property or any part thereof from time to time,
upon any terms and for any period of time, and to renew or extend leases,
to amend, change or modify the terms and provisions of any leases and to
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grant options to lease and options to renew leases and options to purchase;
to partition or to exchange said real property, or any part thereof, for
other real or personal property; to grant easements or charges of any kind;
to release, convey or assign any right, title or interest in or about or
easement appurtenant to said property or any part thereof; to construct and
reconstruct, remodel, alter, repair, add to or take from buildings on said
property; to insure any Person having an interest in or responsibility for
the care, management or repair of such property; to direct the trustee of
any land trust to mortgage, lease, convey or contract to convey the real
estate held in such land trust or to execute and deliver deeds, mortgages,
notes, and any and all documents pertaining to the property subject to such
land trust or in any matter regarding such trust; to execute assignments of
all or any part of the beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss from
employment or engagement Persons to the extent deemed necessary by the
General Partner for the operation and management of the Partnership
business, including but not limited to, contractors, subcontractors,
engineers, architects, surveyors, mechanics, consultants, accountants,
attorneys, insurance brokers, real estate brokers and others;
(d) To enter into contracts on behalf of the
Partnership;
(e) To borrow or lend money, procure loans and advances
from any Person for Partnership purposes, and to apply for and secure, from
any Person, credit or accommodations; to contract liabilities and
obligations, direct or contingent and of every kind and nature with or
without security; and to repay, discharge, settle, adjust, compromise, or
liquidate any such loan, advance, credit, obligation or liability;
(f) To Pledge, hypothecate, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give as
security or as additional or substitute security, or for sale or other
disposition any and all Partnership property, tangible or intangible,
including, but not limited to, real estate and beneficial interests in land
trusts, and to make substitutions thereof, and to receive any proceeds
thereof upon the release or surrender thereof; to sign, execute and deliver
any and all assignments, deeds and other contracts and instruments in
writing; to authorize, give, make, procure, accept and receive moneys,
payments, property, notices, demands, vouchers, receipts, releases,
compromises and adjustments; to waive notices, demands, protests and
authorize and execute waivers of every kind and nature; to enter into,
make, execute, deliver and receive written agreements, undertakings and
instruments of every kind and nature; to give oral instructions and make
oral agreements; and generally to do any and all other acts and things
incidental to any of the foregoing or with reference to any dealings or
transactions which any attorney may deem necessary, proper or advisable;
(g) To acquire and enter into any contract of insurance
which the General Partner deems necessary or appropriate for the protection
of the Partnership, for the conservation of the Partnership's assets or for
any purpose convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on behalf
of the Partnership; to adjust and settle checking, savings, and other
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accounts with such institutions as the General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse, guarantee, deliver,
receive and pay any checks, drafts, bills of exchange, acceptances, notes,
obligations, undertakings and other instruments for or relating to the
payment of money in, into, or from any account in the Partnership's name;
to execute, procure, consent to and authorize extensions and renewals of
the same; to make deposits and withdraw the same and to negotiate or
discount commercial paper, acceptances, negotiable instruments, bills of
exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise take steps
to collect or recover all debts, rents, proceeds, interests, dividends,
goods, chattels, income from property, damages and all other property, to
which the Partnership may be entitled or which are or may become due the
Partnership from any Person; to commence, prosecute or enforce, or to
defend, answer or oppose, contest and abandon all legal proceedings in
which the Partnership is or may hereafter be interested; and to settle,
compromise or submit to arbitration any accounts, debts, claims, disputes
and matters which may arise between the Partnership and any other Person
and to grant an extension of time for the payment or satisfaction thereof
on any terms, with or without security;
(j) To make arrangements for financing, including the
taking of all action deemed necessary or appropriate by the General Partner
to cause any approved loans to be closed;
(k) To take all reasonable measures necessary to insure
compliance by the Partnership with applicable arrangements, and other
contractual obligations and arrangements entered into by the Partnership
from time to time in accordance with the provisions of this Agreement,
including periodic reports as required to lenders and using all due
diligence to insure that the Partnership is in compliance with its
contractual obligations;
(l) To maintain the Partnership's books and records; and
(m) To prepare and deliver, or cause to be prepared and
delivered by the Accountants, all financial and other reports with respect
to the operations of the Partnership, and preparation and filing of all
federal and state tax returns and reports.
Except as otherwise provided herein, to the extent the
duties of the General Partner require expenditures of funds to be paid to
third parties, the General Partner shall not have any obligations hereunder
except to the extent that Partnership funds are reasonably available to it
for the performance of such duties, and nothing herein contained shall be
deemed to authorize or require the General Partner, in its capacity as
such, to expend its individual funds for payment to third parties or to
undertake any individual liability or obligation on behalf of the
Partnership.
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7.2 MAJOR DECISIONS. The General Partner shall not, without
the prior Consent of the Limited Partners, on behalf of the Partnership,
undertake any of the following actions (the "Major Decisions"):
(a) Amend, modify or terminate this Agreement other than
to reflect the admission of Additional Limited Partners pursuant to Section
4.2 hereof or as otherwise described in Article XIV.
(b) Make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment of a custodian,
receiver or trustee for all or any part of the assets of the Partnership.
(c) Take title to any personal or real property, other
than in the name of the Partnership or pursuant to Section 7.10 hereof.
(d) Institute any proceeding for Bankruptcy on behalf of
the Partnership.
(e) Act or cause the taking of any action with respect to
the following matters:
(1) the dissolution and winding up of the
Partnership or an election to continue the Partnership or to continue
the business of the Partnership;
(2) a change in the nature of the business of the
Partnership.
7.3 PROSCRIPTIONS. The General Partner shall not have the
authority to:
(a) Do any act in contravention of this Agreement or
which would make it impossible to carry on the ordinary business of the
Partnership;
(b) Possess any Partnership property or assign rights in
specific Partnership property for other than Partnership purposes; or
(c) Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on any Person or firm
doing business with the Partnership to inquire as to whether or not the
General Partner has properly exercised its authority in executing any
contract, lease, mortgage, deed or any other instrument or document on
behalf of the Partnership, and any such Third Person shall be fully
protected in relying upon such authority.
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7.4 OUTSIDE ACTIVITIES OF GENERAL PARTNER. Without Consent of
the Limited Partners, the General Partner shall not, directly or
indirectly, enter into or conduct any business other than in connection
with the ownership, acquisition and disposition of Partnership Interests as
a General Partner or Limited Partner and the management of the business of
the Partnership and such activities as are incidental thereto. Without the
Consent of the Limited Partners, the assets of the General Partner shall be
limited to Partnership Interests and permitted debt obligations of the
Partnership, so that Shares and Partnership Units are completely fungible
except as otherwise specifically provided herein; PROVIDED, THAT the
General Partner shall be permitted to (i) hold such bank accounts or
similar instruments or accounts in its own name as it deems necessary to
carry out its responsibilities and purposes as contemplated under this
Agreement and its organizational documents; (ii) acquire, directly or
through any subsidiary of the General Partner that is a qualified REIT
subsidiary within the meaning of <section> 856(i) of the Code, up to a one
percent (1%) interest in any partnership or limited liability company at
least ninety-nine percent (99%) of the equity of which is owned by the
Partnership; and (iii) own all of the equity interest in FLIP/BRE II, Inc.,
and the property known as 100 Oak Hill Road. The General Partner and any
of its Affiliates may acquire Limited Partner Interests and shall be
entitled to exercise all rights of a Limited Partner relating to such
Limited Partner Interests.
7.5 INDEMNIFICATION.
(a) The Partnership shall indemnify each Indemnitee from
and against any and all losses, claims, damages, liabilities, joint or
several, expenses (including, without limitation, reasonable attorney's
fees and other legal fees and expenses), judgments, fines, settlements, and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate
to the operations of the Partnership or the activities of such Indemnitee
acting on behalf of the Partnership, an Affiliate of the Partnership or an
entity in which the Partnership holds an interest as set forth in this
Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise; PROVIDED THAT, the Partnership shall not
indemnify an Indemnitee for any such losses, claims, damages, liabilities,
expenses, judgments, fines, settlements or other amounts arising out of or
resulting from (i) fraud, gross negligence, intentional misconduct by such
Indemnitee, or a violation of law by such Indemnitee when the Indemnitee
has reasonable cause to believe such action was unlawful; (ii) the
violation or breach by such Indemnitee of the provisions of this Agreement
or (iii) any transaction from which such Indemnitee received a personal
benefit in violation or breach of any provision of this Agreement. The
termination of any proceeding by judgment, order or settlement does not
create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.5(a). The termination of
any proceeding by conviction of an Indemnitee or upon a plea of NOLO
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CONTENDERE or its equivalent by an Indemnitee, or an entry of an order of
probation against an Indemnitee prior to judgment, creates a rebuttable
presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 7.5(a) with respect to the subject matter of such
proceeding. Any indemnification pursuant to this Section 7.5 shall be made
only out of the assets of the Partnership, and neither the General Partner
nor any Limited Partners shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the
Partnership to fund its obligations under this Section 7.5.
(b) Reasonable expenses incurred by an Indemnitee who is
a party to a proceeding may be paid or reimbursed by the Partnership in
advance of the final disposition of the proceeding upon receipt by the
Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in Section 7.5(a) has been
met; and (ii) a written undertaking by or on behalf of the Indemnitee to
repay the amount if it shall ultimately be determined that the standard of
conduct has not been met.
(c) The indemnification provided by this Section 7.5
shall be in addition to any other rights to which an Indemnitee may be
entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
(d) The Partnership may, but shall not be obligated to,
purchase and maintain insurance on behalf of any of the Indemnities and
such other Persons as the General Partner shall determine, against any
liability that may be asserted against or expenses that may be incurred by
such Person in connection with the Partnership's activities, regardless of
whether the Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) Any liabilities which an Indemnitee incurs as a
result of acting on behalf of the Partnership or the General Partner
(whether as a fiduciary or otherwise) in connection with the operation,
administration or maintenance of an employee benefit plan or any related
trust or funding mechanism (whether such liabilities are in the form of
excise taxes, penalties, restitutions or other funding mechanism or to a
participant or beneficiary of such plan, trust or other funding mechanism,
or otherwise) shall be treated as liabilities or judgments or fines under
this Section 7.5.
(f) The provisions of this Section 7.5 are for the
benefit of the Indemnities, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit
of any other Persons. Any amendment, modification or repeal of this
Section 7.5 or any provision hereof shall be prospective only and shall not
in any way affect the limitations on the Partnership's liability to any
Indemnitee under this Section 7.5 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise
or be asserted.
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7.6 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner shall not be liable for monetary
damages to the Partnership, any Partners or any Assignees for any losses,
claims, damages, liabilities, expenses, judgments, fines, settlements or
other amounts incurred due to acts or omissions of the General Partner,
except if such losses, claims, damages, liabilities, expenses, judgments,
fines, settlements or other amounts arose out of or resulted from
(i) fraud, gross negligence, intentional misconduct or a knowing violation
of law by the General Partner when it had reasonable cause to believe such
action giving rise to the violation was unlawful; (ii) the violation or
breach by the General Partner of the provisions of this Agreement or
(iii) any transaction in which the General Partner received a personal
benefit in violation or breach of any provision of this Agreement.
(b) Subject to its obligations and duties as General
Partner set forth in Section 7.1 hereof, the General Partner may exercise
any of the powers granted to it by this Agreement and perform any of the
duties imposed upon it hereunder either directly or by or through its
agents. The General Partner shall not be responsible for any acts or
omissions on the part of any agent appointed by it in good faith.
(c) Any amendment, modification or repeal of this Section
7.6 or any provision hereof shall be prospective only and shall not in any
way affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 7.6 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
(d) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General
Partner's stockholders collectively, that the General Partner is under no
obligation to consider the separate interest of the Limited Partners
(including, without limitation, the tax consequences to Limited
Partnerships or Assignees) in deciding whether to cause the Partnerships to
take (or decline to take) any actions, and that the General Partner shall
not be liable for monetary damages to the Partnership or any Partner for
Losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, so long as the General Partner
has acted in good faith.
7.7 REIMBURSEMENT OF THE GENERAL PARTNER.
(a) No Compensation. Except as provided in this Section
7.7 and elsewhere in this Agreement, the General Partner shall not be
compensated for its services as general partner to the Partnership.
(b) Responsibility for Partnership Expenses. The
Partnership shall be responsible for and shall pay all expenses relating to
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the Partnership's organization, the ownership of its assets and its
operations. The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole and
absolute discretion, for all expenses it incurs relating to the ownership
and operation of, or for the benefit of, the Partnership (including,
without limitation, expenses related to the management and administration
of any subsidiaries of the General Partner or the Partnership or Affiliates
of the Partnership such as auditing expenses and filing fees); PROVIDED
THAT, the amount of any such reimbursement shall be reduced by (i) any
interest earned by the General Partner with respect to bank accounts or
other instruments or accounts held by it as permitted elsewhere in this
Agreement and (ii) any amount derived by the General Partner from any
investments as permitted elsewhere in this Agreement (including, without
limitation, amounts derived from its ownership of those subsidiaries
described in Section 7.4) and; PROVIDED FURTHER, that the General Partner
shall not be reimbursed for (i) income tax liabilities or (ii) filing or
similar fees in connection with maintaining the General Partner's continued
corporate existence that are incurred by the General Partner. The General
Partner shall determine in good faith the amount of expenses incurred by it
related to the ownership and operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the
benefit of the Partnership and other entities (including the General
Partner), such expenses will be allocated to the Partnership and such other
entities in such a manner as the General Partner in its sole and absolute
discretion deems fair and reasonable. Such reimbursements shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.5. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as
expenses of the Partnership incurred on its behalf, and not as expenses of
the General Partner.
(c) Partnership Interest Issuance Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating to any
issuance of Additional Partnership Interests, Shares, debt of the
Partnership or the General Partner or rights, options, warrants or
convertible or exchangeable securities pursuant to this Agreement
(including, without limitation, all costs, expenses, damages and other
payments resulting from or arising in connection with litigation related to
any of the foregoing), all of which expenses are considered by the Partners
to constitute expenses of, and for the benefit of, the Partnership.
(d) Purchases of Shares by the General Partner. In the
event that the General Partner exercises its obligation under Article XII
hereof to purchase Shares or otherwise elects to purchase from its
shareholders Shares in connection with a stock repurchase or similar
program or for the purpose of delivering such Shares to satisfy an
obligation under any dividend reinvestment or stock purchase program
adopted by the General Partner, any employee stock purchase plan adopted by
the General Partner or any similar obligation or arrangement undertaken by
the General Partner in the future, the purchase price paid by the General
Partner for such Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of
the Partnership and shall be reimbursable to the General Partner, subject
to the conditions that: (i) if such Shares subsequently are to be sold by
the General Partner, the General Partner pays to the Partnership any
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proceeds received by the General Partner for such Shares (PROVIDED THAT a
transfer of Shares for Partnership Units pursuant to Section 12.5 hereof
would not be considered a sale for such purposes); and (ii) if such Shares
are not retransferred by the General Partner within thirty (30) days after
the purchase thereof, the General Partner shall cause the Partnership to
cancel a number of Partnership Units of the appropriate class (rounded to
the nearest whole Partnership Unit) held by the General Partner equal to
the product attained by multiplying the number of such Shares by a
fraction, the numerator of which is one and the denominator of which is the
Conversion Factor.
(e) Reimbursement not a Distribution. If and to the
extent any reimbursement made pursuant to this Section 7.7 is determined
for federal income tax purposes not to constitute a payment of expenses of
the Partnership, the amount so determined shall constitute a guaranteed
payment with respect to capital within the meaning of Section 707(c) of the
Code, shall be treated consistently therewith by the Partnership and all
Partners and shall not be treated as a distribution for purposes of
computing the Partners' Capital Accounts.
7.8 REIT QUALIFICATION OF THE GENERAL PARTNER.
Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to avoid the General
Partner incurring any taxes under Code <section> 857 or 4981, is expressly
authorized under this Agreement and is deemed approved by all of the
Limited Partners. Nothing, however, in this Agreement shall be deemed to
give rise to any liability on the part of the Limited Partners for the
General Partner's failure to qualify or continue to qualify as a REIT or
failure to avoid incurring any taxes under the foregoing Sections of the
Code, or to give rise to any liability of the General Partner for such
failure so to qualify.
7.9 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed
or retained by the Partnership and may otherwise deal with the Partnership
(whether as a buyer, lessor, lessee, manager, furnisher of goods or
services, broker, agent, lender or otherwise) and may receive from the
Partnership any compensation, price, or other payment therefor which the
General Partner determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its
subsidiaries or other Persons in which it has an equity investment, and
such Persons may borrow funds from he Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner.
The foregoing authority shall not create any right or benefit in favor of
any subsidiary or any other Person.
(c) The Partnership may transfer assets to joint
ventures, other partnerships, corporations or other business entities in
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which it is or thereby becomes a participant upon such terms and subject to
such conditions as the General Partner deems are consistent with this
Agreement and applicable law.
(d) Except as expressly permitted by this Agreement,
neither the General Partner nor any of its Affiliates shall sell, transfer
or convey any property to, or purchase any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are on terms
that are fair and reasonable to the Partnership.
7.10 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall
be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby
declares and warrants that any Partnership assets for which legal title is
held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner, or such nominee or
Affiliate for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; PROVIDED THAT, the General Partner shall use
its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the Partnership in
its books and records, irrespective of the name in which legal title to
such Partnership assets is held
7.11 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it in good faith to be
genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers,
architects, engineers, environmental consultants and other consultants and
advisers selected by it and any act taken or omitted to be taken in
reliance upon the opinion of such Persons as to matters which such General
Partner reasonably believes to be with such Person's professional or expert
competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect
of any of its powers or obligations hereunder, to act through any of its
duly authorized officers and a duly appointed attorney or attorney-in-fact.
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Each such attorney shall, to the extent provided by the General Partner in
the power of attorney, have full power and authority to do and perform all
and every act and duty which is permitted or required to be done by the
General Partner hereunder.
7.12 ORIGINAL PROPERTIES. The General Partner shall use all
commercially reasonable efforts in disposing of any of the Original
Properties to structure such transaction as one or more Section 1031
Exchanges.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
8.1 DISSOLUTION. The Partnership shall not be dissolved by
the admission of Substituted Limited Partners or Additional Limited
Partners or by the admission of a successor General Partner in accordance
with the terms of this Agreement. Upon the withdrawal of the General
Partner, any successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be
wound up, upon the first to occur of any of the following ("LIQUIDATING
EVENTS"):
(a) an event of withdrawal of the last remaining General
Partner, as defined in the Act, unless within ninety (90) days following
such event of withdrawal, the remaining Partners representing a majority of
the Partnership Units held by such remaining Partners (the "CONSENTING
PARTNERS") (i) agree in writing to continue the Partnership and designate a
successor General Partner whose Partnership Interest in the Partnership
shall be derived, on an equitable basis, from the Partnership Interests of
all remaining Partners on terms to be determined by the Consenting Partners
and (ii) provide written notice of such agreement and designation to all
other Partners;
(b) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(c) the sale or other disposition of all or substantially
all of the assets and properties of the Partnership;
(d) the exchange of all Limited Partnership Interests; or
(e) the election by the General Partner that the
Partnership should be dissolved (in accordance with Section 7.2(e)(1).
8.2 DISTRIBUTION ON DISSOLUTION. Upon the occurrence of a
Liquidating Event, the Partnership shall continue solely for the purposes
of winding up its affairs in an orderly manner, liquidating its assets, and
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satisfying the claims of its creditors and Partners. No Partner shall take
any action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Partnership's business and affairs. The
Liquidating Trustee shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall
be liquidated as promptly as is consistent with obtaining the fair value
thereof, and the proceeds therefrom shall be applied and distributed in the
following order:
(a) Payment of creditors of the Partnership (other than
Partners) in the order of priority as provided by law;
(b) Establishment of reserves as provided by the General
Partner to provide for contingent liabilities, if any;
(c) Payment of debts of the Partnership to Partners, if
any, in the order of priority provided by law;
(d) To the Partners in accordance with the positive
balances in their Capital Accounts (after giving effect to all
contributions, distributions and allocations for all periods pursuant to
this Section 8.2(d) hereof).
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall
be distributed to the Partners in accordance with the above provisions.
8.3 SALE OF PARTNERSHIP ASSETS. In the event of the
liquidation of the Partnership in accordance with the terms of this
Agreement, the Liquidating Trustee may sell Partnership property; PROVIDED,
HOWEVER, all sales, leases, encumbrances or transfers of Partnership assets
shall be made by the Liquidating Trustee solely on an "arm's-length" basis,
at the best price and on the best terms and conditions as the Liquidating
Trustee in good faith believes are reasonably available at the time and
under the circumstances and on a non-recourse basis to the Limited
Partners. The liquidation of the Partnership shall not be deemed finally
terminated until the Partnership shall have received cash payments in full
with respect to obligations such as notes, purchase money mortgages,
installment sale contracts or other similar receivables received by the
Partnership in connection with the sale of Partnership assets and all
obligations of the Partnership have been satisfied or assumed by the
General Partner. The Liquidating Trustee shall continue to act to enforce
all of the rights of the Partnership pursuant to any such obligations until
paid in full.
8.4 DISTRIBUTIONS IN KIND. In the event that it becomes
necessary to make a distribution of Partnership property in kind, the
General Partner may, with the Consent of the Limited Partners, transfer and
convey such property to the distributees as tenants in common, subject to
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any liabilities attached thereto, so as to vest in them undivided interests
in the whole of such property in proportion to their respective rights to
share in the proceeds of the sale of such property (other than as a
creditor) in accordance with the provisions of Section 8.2 hereof.
8.5 DOCUMENTATION OF LIQUIDATION. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall
terminate and the Liquidating Trustee shall have the authority to execute
and record any and all documents or instruments required to effect the
dissolution, liquidation and termination of the Partnership.
8.6 LIABILITY OF THE LIQUIDATING TRUSTEE. The Liquidating
Trustee shall be indemnified and held harmless by the Partnership from and
against any and all claims, demands, liabilities, costs, damages and causes
of action of any nature whatsoever arising out of or incidental to the
Liquidating Trustee' s taking of any action authorized under or within the
scope of this Agreement; PROVIDED, HOWEVER, that the Liquidating Trustee
shall not be entitled to indemnification, and shall not be held harmless,
where the claim, demand, liability, cost, damage or cause of action at
issue arose out of:
(a) A matter entirely unrelated to the Liquidating
Trustee's action or conduct pursuant to the provisions of this Agreement;
or
(b) The proven misconduct or negligence of the
Liquidating Trustee.
8.7 ACCOUNTING. In the event of the dissolution, liquidating
and winding-up of the Partnership, a proper accounting (which shall be
certified) shall be made of the Capital Account of each Partner and of the
Profits or Losses of the Partnership from the date of the last previous
accounting to the date of dissolution. Financial statements presenting
such accounting shall include a report of a certified public accountant
selected by the Liquidating Trustee.
8.8 NEGATIVE CAPITAL ACCOUNTS. No Partner shall be liable to
the Partnership or to any other Partner for any deficit or negative balance
which may exist in such Partner's Capital Account, whether such negative
Capital Account results from the allocation of Losses or other items of
deduction and loss to such Partner or from distribution to such Partner.
8.9 RIGHTS OF PARTNERS. Except as otherwise provided in this
Agreement, each Partner shall look solely to the assets of the Partnership
for the return of such Partner's Capital Contributions and shall have no
right or power to demand or receive property other than cash from the
Partnership. Except as otherwise provided in this Agreement, no Partner
shall have priority over any other Partner as to the return of his Capital
Contributions, distributions, or allocations.
8.10 NOTICE OF DISSOLUTION. In the event a Liquidating Event
occurs or an event occurs that would result in a dissolution of the
Partnership, the General Partner shall, within 30 days thereafter, provide
written notice thereof to each of the Partners.
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8.11 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE
OF LIMITED PARTNERSHIP. Upon the completion of the liquidation of the
Partnership and the distribution of all cash and property as provided in
Section 8.2 hereof, the Partnership shall be terminated, a certificate of
cancellation shall be filed, and all qualifications of the Partnership as a
foreign limited partnership in any jurisdiction other than the State of
Delaware shall be cancelled and such other actions as may be necessary to
terminate the Partnership shall be taken.
8.12 WAIVER OF PARTITION. Each Partner hereby waives any right
to partition of the Partnership property.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS
9.1 GENERAL.
(a) The term "transfer," when used in this Article IX
with respect to a Partnership Unit, shall be deemed to refer to a
transaction by which the General Partner purports to assign all or any part
of its General Partner Interest to another Person or by which a Limited
Partner purports to assign all or any part of its Limited Partner Interest
to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by
law or otherwise. The term "transfer" when used in this Article IX does
not include any redemption of Partnership Units by the Partnership from a
Limited Partner or acquisition of Partnership Units from a Limited Partner
by the General Partner pursuant to the Conversion Rights.
(b) No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set
forth in this Article IX. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article IX shall be
null and void.
9.2 GENERAL PARTNER TRANSFER.
(a) The General Partner shall not withdraw from the
Partnership and shall not sell, assign, pledge, encumber or otherwise
dispose of all or any portion of its interest in the Partnership without
the Consent of the Limited Partners, which shall not be unreasonably
withheld.
(b) Except for the merger with Fairlawn Industrial Park,
Inc. effected on the Closing Date, the General Partner shall not engage in
any merger, consolidation or other combination with or into another Person,
or sale of all or substantially all of its assets, or any reclassification,
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or recapitalization or change of outstanding Shares (other than a
reincorporation, a change in par value, or from par value to no par value,
or as a result of a subdivision or combination as described in the
definition of "Conversion Factor," which require no Consent of the Limited
Partners under this Agreement) ("Transaction"), unless the Transaction
either:
(i) includes a merger of the Partnership or sale of
substantially all of the assets of the Partnership, as a result of
which all Limited Partners will receive for each Partnership Unit an
amount of cash, securities, or other property equal to the product of
the Conversion Factor and the greatest amount of cash, securities or
other property paid to a holder of one Share in consideration of one
Share at any time during the period from and after the date on which
the Transaction is consummated, PROVIDED THAT if, in connection with
the Transaction, a purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than fifty percent (50%)
of the outstanding Shares, the holders of Partnership Units shall
receive the greatest amount of cash, securities, or other property
which a Limited Partner would have received had it exercised the
Conversion Right and received Shares in exchange for all of its
Partnership Units immediately prior to the expiration of such
purchase, tender or exchange offer; or
(ii) provides that the Partnership shall continue as a
separate entity and grants to the Limited Partners exchange rights
with respect to the ownership interests in the new entity that are
substantially equivalent to the Conversion Rights provided for in
Section 12.1.
(c) Upon any transfer of a Partnership Interest in
accordance with the provisions of this Section 9.2, the successor General
Partner shall become vested with the powers and rights of the transferor
General Partner, and shall be liable for all obligations and responsible
for all duties of the General Partner, once such successor has executed
such instruments as may be necessary to effectuate such admission and to
confirm the agreement of such successor to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any transfer otherwise permitted hereunder
that the successor assumes by operation of law or express agreement all of
the obligations of the transferor General Partner under this Agreement with
respect to such transferred Partnership Interest.
(d) In the event the General Partner withdraws from the
Partnership, in violation of this Agreement or otherwise, or dissolves,
terminates or upon the Bankruptcy of the General Partner, a Majority-In-
Interest of the Limited Partners may elect to continue the Partnership
business by selecting a successor general partner.
9.3 TRANSFERS BY LIMITED PARTNERS.
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(a) No Limited Partner shall sell, assign, pledge,
encumber, or otherwise dispose of all or any portion of its Partnership
Interest to any transferee without the consent of the General Partner,
which consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that
each Limited Partner may at any time, without the consent of the General
Partner, transfer all or a portion of its Partnership Interest to an
Affiliate of such Limited Partner, subject to the provisions of this
Section 9.3 and Section 9.6 hereof.
(b) Nothing herein shall preclude a Limited Partner from
transferring its Limited Partnership Interest upon exercise of its
Conversion Rights under Article XII hereof.
(c) It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express
agreement all of the obligations of the transferor Limited Partner under
this Agreement with respect to such transferred Partnership Interest and no
such transfer (other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor Partner are
assumed by a successor corporation by operation of law) shall relieve the
transferor Partner of its obligations under this Agreement without the
approval of the General Partner, in its reasonable discretion. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall
take subject to the obligations of the transferor hereunder.
(d) If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or
receiver of such Limited Partner's estate shall have all the rights of a
Limited Partner, but not more rights than those enjoyed by other Limited
Partners, for the purpose of settling or managing the estate and such power
as the Incapacitated Limited Partner possessed to transfer all or any part
of his or its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the Partnership.
9.4 SUBSTITUTED LIMITED PARTNERS.
(a) A Limited Partner shall have the right to substitute
a transferee as a Limited Partner in his place without the consent of the
General Partner in cases of transfer of all or a portion of its Partnership
Interest to an Affiliate of such Limited Partner, subject to the provisions
of Section 9.6. In all other situations, the General Partner shall have
the right to consent to the admission of a transferee of the interest of a
Limited Partner as a Substituted Limited Partner, which consent shall not
be unreasonably withheld, subject to the provisions of Section 9.6.
(b) A transferee who has been admitted as a Substituted
Limited Partner shall have all the rights and powers, including rights with
respect to the Conversion Rights, of the transferor Limited Partner, and be
subject to all the restrictions and liabilities of a Limited Partner under
this Agreement; PROVIDED, HOWEVER, that notwithstanding the foregoing, any
transferee shall be subject to any and all ownership limitations contained
in the Charter.
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(c) Unless admitted as a Substituted Limited Partner, no
transferee of a Partnership Interest pursuant to this Section 9.4, whether
by a voluntary transfer, by operation of law or otherwise, shall have
rights hereunder, other than to receive such portion of the distributions
made by the Partnership as are allocable to the Percentage Interest
transferred.
9.5 ASSIGNEES. If the General Partner does not consent to the
admission of any permitted transferee as a Substituted Limited Partner,
such transferee shall be considered an Assignee for purposes of this
Agreement. An Assignee shall be deemed to have had assigned to it, and
shall be entitled to receive, distributions from the Partnership and the
share of Profits, Losses, and any other items of income, gain, loss,
deduction and credit of the Partnership attributable to the Partnership
Units assigned to such transferee, but shall not be deemed to be a holder
of Partnership Units for any other purpose under this Agreement, and shall
not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote, such Partnership Units continuing to be
voted by the Partner appearing in the records of the Partnership as owning
the same. In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject
to all the provisions of this Article IX to the same extent and in the same
manner as any Limited Partner desiring to make an assignment of Partnership
Units.
9.6 RESTRICTIONS ON TRANSFER. In addition to any other
restrictions on transfer herein contained, in no event may any transfer or
assignment of a Partnership Interest by any Partner be made (i) to any
person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of any provision of any mortgage or
trust deed (or the note or bond secured thereby) constituting a Lien
against a Property or any part thereof, or other instrument, document or
agreement to which the Partnership or any Property is a party or otherwise
bound; (iii) in violation of applicable law; (iv) of any component portion
of a Partnership Interest, such as the Capital Account, or rights to
distributions, separate and apart from all other components of a
Partnership Interest; (v) in the event such transfer would immediately or
with the passage of time cause the Company to fail to comply with the REIT
Requirements, such determination to be made assuming that the Company does
comply with the REIT Requirements immediately prior to the proposed
transfer; (vi) if such transfer would cause a termination of the
Partnership for federal income tax purposes; (vii) if such transfer would,
in the opinion of counsel to the Partnership, cause the Partnership to
cease to be classified as a partnership, or to be classified as a "publicly
traded partnership," for federal income tax purposes; (viii) if such
transfer would cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a "party-in-interest"
(as defined in Section 3(14) of ERISA) or a "disqualified person" (as
defined in Section 4975(e) of the Code); (ix) if such transfer would, in
the opinion of counsel to the Partnership, cause any portion of the
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underlying assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.3-101
or (x) if such transfer would, in the opinion of counsel to the
Partnership, violate the Securities Act or applicable state blue sky laws.
ARTICLE X
ADMISSION OF PARTNERS
10.1 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor to
all of the General Partner Interest pursuant to Section 9.2 hereof shall be
admitted to the Partnership as the General Partner, effective as of the
date of such transfer. The successor General Partner shall carry on the
business of the Partnership without dissolution. In each case, the
admission shall be subject to the successor General Partner executing and
delivering to the Partnership an acceptance of all of the terms and
conditions of this Agreement and such other documents or instruments as may
be required to effect the admission. In the case of such admission on any
day other than the first day of a Partnership Year, all items attributable
to the General Partner Interest for such Partnership Year shall be
allocated between the transferring Partner(s) and such successor as
provided in Section 5.1(g).
10.2 ADMISSION OF SUBSTITUTED OR ADDITIONAL LIMITED PARTNERS.
(a) An Additional Limited Partner shall be admitted only
upon furnishing to the General Partner (i) a written agreement of
acceptance in form satisfactory to the General Partner accepting all of the
terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 2.4 hereof and the Registration Rights
Agreement; and (ii) such other documents or instruments as may be required
in the sole discretion of the General Partner in order to effect such
Person's admission as a Substituted or Additional Limited Partner.
(b) The admission of any Person as a Substituted or
Additional Limited Partner shall become effective on the date upon which
the name of such Person is recorded in the books and records of the
Partnership, following the consent of the General Partner to such
admission.
(c) If any Substituted or Additional Limited Partner is
admitted to the Partnership on any day other than the first day of a
Partnership Year, then Profits, Losses, each item thereof and all other
items allocable among Partners and Assignees for such Partnership Year
shall be allocated among such Additional Limited Partner and all other
Partners and Assignees in accordance with Section 5.1.
10.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP. The General Partner shall take all steps necessary and
appropriate under the Act to amend the books and records of the Partnership
and to prepare as soon as practical an amendment of this Agreement
(including an amendment of EXHIBIT A) to reflect the admission to the
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Partnership of any Partner and any corresponding changes in the Percentage
Interests of the Partners, and, if required by law, shall prepare and file
an amendment to the Certificate and may for the purposes of amending the
Certificate exercise the power of attorney granted pursuant to Section 2.4
hereof. The General Partner shall promptly deliver a copy of any
amendments to this Agreement or the Certificate to each Limited Partner.
ARTICLE XI
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
11.1 NO PARTICIPATION IN MANAGEMENT. Except as expressly
permitted hereunder, the Limited Partners shall not take part in the
management of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise
bind the Partnership.
11.2 BANKRUPTCY OF A LIMITED PARTNER. The Bankruptcy of any
Limited Partner shall not cause a dissolution of the Partnership, but the
rights of such Limited Partner to share in the Profits or Losses of the
Partnership and to receive distributions of Partnership funds shall, on the
happening of such event, devolve on its successors or assigns, subject to
the terms and conditions of this Agreement, and the Partnership shall
continue as a limited partnership. However, in no event shall such
assignee(s) become a Substituted Limited Partner.
11.3 NO WITHDRAWAL. No Limited Partner may withdraw from the
Partnership without the prior written consent of the General Partner, other
than as expressly provided in this Agreement.
11.4 DUTIES AND CONFLICTS. The General Partner recognizes that
the Limited Partners and their Affiliates have or may have other business
interests, activities and investments, some of which may be in conflict or
competition with the business of the Partnership, and that, such persons
are entitled to carry on such other business interests, activities and
investments. The Limited Partners and their Affiliates may engage in or
possess an interest in any other business or venture of any kind,
independently or with others, on their own behalf or on behalf of other
entities with which they are affiliated or associated, and such persons may
engage in any activities, whether or not competitive with the Partnership,
without any obligation to offer any interest in such activities to the
Partnership or to any Partner. Neither the Partnership nor any Partner
shall have any right, by virtue of this Agreement, in or to such
activities, or the income or profits derived therefrom, and the pursuit of
such activities, even if competitive with the business of the Partnership,
shall not be deemed wrongful or improper.
11.5 CONSENT OF CERTAIN LIMITED PARTNERS. At any time during
the 7 year period following the Closing Date, the Partnership may not sell
or otherwise dispose of a Designated Property or a Successor Designated
Property (as hereinafter defined) in a transaction that causes gain
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recognition under Sections 704(c) or 752 (or any other section) of the Code
for the Special Consenting Partners without the consent of the Special
Consenting Partners. For purposes of this Section 11.5, the term
"Successor Designated Property" means a property acquired by the
Partnership upon the disposition of a Designated Property in a Section 1031
like kind exchange or any other exchange transaction that does not result
in gain recognition. The provisions of this Section 11.5 shall not be
applicable with respect to any Special Consenting Partner if at any time
such Special Consenting Partner beneficially owns fewer than 30% of the
number of Partnership Units beneficially owned by such Special Consenting
Partner on the Closing Date.
ARTICLE XII
CONVERSION RIGHT
12.1 GRANT OF RIGHTS. The General Partner does hereby grant to
each of the Limited Partners and the Limited Partners do hereby accept the
right, but not the obligation (hereinafter such right sometimes referred to
as the "Rights" or "Conversion Rights"), to convert all or any portion of
their Partnership Interests into Shares or cash, as selected by the General
Partner, at any time or from time to time, on the terms and subject to the
conditions and restrictions contained in this Article XII. In the event
the General Partner elects to cause the Offered Units to be converted into
Shares, upon the closing of the acquisition of the Offered Units, the
General Partner shall become the owner of such Offered Units and be a
Substituted Limited Partner pursuant to Section 9.4 hereof. In the event
the General Partner elects to cause the Offered Units to be converted into
cash, upon the closing of the acquisition of the Offered Units, the General
Partner shall effect such conversion by causing the Partnership to redeem
the Offered Units for cash.
12.2 DELIVERY OF EXERCISE NOTICES. The Conversion Rights
granted hereunder may be exercised by any one or more of the Limited
Partners ("Exercising Partners"), on the terms and subject to the
conditions and restrictions contained in this Article XII, upon delivery to
the General Partner of a Exercise Notice (the "Exercise Notice") in the
form of EXHIBIT B, which notice shall specify the number of OP Units to be
sold by such Limited Partner (the "Offered Units"). Once delivered, the
Exercise Notice shall be irrevocable, subject to payment by the General
Partner or the Partnership of the purchase price in Shares or cash (the
"Purchase Price") in respect of such Partnership Interests in accordance
with the terms hereof.
12.3 LIMITATION ON DELIVERY OF EXERCISE NOTICES. The ability
of Limited Partners to exercise Conversion Rights shall be restricted so
that only one (1) Exercise Notice may be delivered to the General Partner
during each calendar quarter period; PROVIDED, HOWEVER, such Exercise
Notice may be delivered by or on behalf of one or more Exercising Parties.
12.4 LIMITATION ON EXERCISE OF CONVERSION RIGHTS. Conversion
Rights may be exercised at any time and from time to time, subject to the
limitation contained in Section 12.3 above and as provided herein. To the
extent that the delivery of Shares to an Exercising Partner would violate
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the ownership limitations set forth in the Charter (the "Ownership Limit"),
including without limitation the restrictions set forth in Section 6.2.1 of
the Charter, the General Partner shall not deliver Shares to such
Exercising Partner but may, in its sole and absolute discretion, elect to
either (i) pay the Purchase Price to the Exercising Partner in cash, or
(ii) refuse, in whole or in part, to accept the Exercise Notice. A Limited
Partner may not exercise the Conversion Right for less than 1,000
Partnership Units, or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner.
12.5 PURCHASE PRICE UPON CONVERSION. If the General Partner
elects to pay the Purchase Price in Shares, then the General Partner shall
acquire the Offered Units in exchange for that number of Shares equal to
the number of Offered Units multiplied by the Conversion Factor. If the
General Partner elects to cause the Purchase Price to be paid in cash, then
the Partnership shall acquire the Offered Units in exchange for that amount
of cash equal to such number of Offered Units multiplied by the Adjusted
Current Per Share Market Price as of the date of the Exercise Notice.
12.6 CLOSING; DELIVERY OF ELECTION NOTICE. The closing of the
acquisition of Offered Units shall, unless otherwise mutually agreed, be
held at the principal offices of the General Partner, on the date agreed to
by the General Partner and the Exercising Partners, which date shall be as
soon as practicable but in no event be later than the date which is the
later of (i) twenty (20) days after the date of the Exercise Notice and
(ii) the expiration or termination of the waiting period applicable to each
Exercising Partner, if any, under the Hart-Scott Act. Notwithstanding the
foregoing, in the event that the General Partner elects to cause the
Purchase Price to be paid in cash because payment in Shares would violate
the Ownership Limit, then the General Partner shall have up to one hundred
eighty (180) days after the date of the Exercise Notice to close the
acquisition of the Offered Units; PROVIDED THAT after twenty (20) days,
interest shall be paid on the Purchase Price at the prime rate as reported
in the WALL STREET JOURNAL.
12.7 CLOSING DELIVERIES. At the closing of the acquisition of
Offered Units, payment of the Purchase Price shall be accompanied by proper
instruments of transfer and assignment to transfer and vest ownership of
the Offered Units in the General Partner or the Partnership, as the case
may be, and by the delivery of (i) representations and warranties of (A)
the Exercising Partner with respect to its due authority to sell all of the
right, title and interest in and to such Offered Units to the General
Partner or the Partnership, as the case may be, and with respect to the
status of the Offered Unit being sold, free and clear of all Liens, and (B)
the General Partner with respect to its due authority to acquire such
Offered Units for Shares or to cause the Partnership to redeem such Offered
Units for cash; and (ii) to the extent that any Shares are issued in
payment of the Purchase Price or any portion thereof, (A) an opinion of
counsel for the General Partner, reasonably satisfactory to the Exercising
Partners, to the effect that such Shares have been duly authorized, are
validly issued, fully paid and non-assessable, and (B) a stock certificate
or certificates evidencing the Shares to be issued and registered in the
name of the Exercising Partner or its designee.
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12.8 COVENANTS OF THE GENERAL PARTNER. To facilitate the
General Partner's ability to fully perform its obligations hereunder, the
General Partner covenants and agrees as follows:
(a) At all times during the pendency of the Conversion
Rights, the General Partner shall reserve for issuance such number of
Shares as may be necessary to enable the General Partner to issue such
Shares in full payment of the Purchase Price in regard to all Limited
Partners' Partnership Interests which are from time to time outstanding.
(b) As long as the General Partner shall be obligated to
file periodic reports under the Exchange Act, the General Partner will
timely file such reports in such manner as shall enable any recipient of
Shares issued to Limited Partners hereunder in reliance upon an exemption
from registration under the Securities Act to continue to be eligible to
utilize Rule 144 promulgated by the SEC pursuant to the Securities Act, or
any successor rule or regulation or statute thereunder, for the resale
thereof.
(c) During the pendency of the Conversion Rights, the
Limited Partners shall receive in a timely manner all reports filed by the
General Partner with the SEC and all other communications transmitted from
time to time by the General Partner to the owners of its Shares.
(d) The General Partner shall, within five days after
request by a Limited Partner, notify such Limited Partner of the then
current Conversion Factor.
12.9 LIMITED PARTNERS' COVENANT. Each Limited Partner
covenants and agrees with the General Partner that all Offered Units
tendered to the General Partner or the Partnership, as the case may be, in
accordance with the exercise of Rights herein provided shall be delivered
free and clear of all Liens and should any Liens exist or arise with
respect to such Offered Units, the General Partner or the Partnership, as
the case may be, shall be under no obligation to acquire or redeem the
same. Each Limited Partner further agrees that, in the event any state or
local property transfer tax is payable as a result of the transfer of its
Offered Units to the General Partner, the Partnership or their respective
designees, such Limited Partner shall assume and pay such transfer tax.
ARTICLE XIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
13.1 RECORDS AND ACCOUNTING.
(a) The General Partner, at the cost and expense of the
Partnership, shall keep or cause to be kept at the principal executive
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office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General
Partner to be appropriate with respect to the Partnership's business,
including, without limitation, all books and records necessary to provide
to the Limited Partners any information, lists and copies of documents
required to be provided pursuant to Section 13.2 hereof. The books of the
Partnership shall be maintained, for financial and tax reporting purposes,
on an accrual basis in accordance with GAAP, or on such other basis as the
General Partner determines to be necessary or appropriate.
(b) All books and records of the Partnership shall be
open to inspection by any Limited Partner or duly authorized representative
of such Limited Partner on reasonable notice at any reasonable time during
business hours, for any purpose reasonably related to the Limited Partner's
interest as a Limited Partner, and such Limited Partner or its
representative at its expense shall have the further right to make copies
or excerpts therefrom.
13.2 REPORTS.
(a) As soon as practicable after the close of each
Partnership Year, the General Partner shall cause to be mailed to each
Limited Partner as of the close of the Partnership Year, an annual report
containing financial statements of the Partnership, or of the General
Partner if such statements are prepared solely on a consolidated basis with
the General Partner, for such Partnership Year, presented in accordance
with GAAP, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.
(b) As soon as practicable after the close of each
calendar quarter (except the last calendar quarter of each year), the
General Partner shall cause to be mailed to each Limited Partner as of the
last day of the calendar quarter, a report containing unaudited financial
statements of the Partnership, or of the General Partner, if such
statements are prepared solely on a consolidated basis with the General
Partner, and such other information as may be required by applicable law or
regulation, or as the General Partner determines to be appropriate.
13.3 BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested
shall be deposited in one or more accounts maintained in such banking or
brokerage institutions as the General Partner shall determine, and
withdrawals shall be made only on such signature or signatures as the
General Partner may, from time to time, determine.
(b) All deposits and other funds not needed in the
operation of the business of the Partnership may be invested by the General
Partner in investment grade instruments (or investment companies whose
portfolio consists primarily thereof), government obligations, certificates
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of deposit, bankers' acceptances and municipal notes and bonds. The funds
of the Partnership shall not be commingled with the funds of any other
Person except for such commingling as may necessarily result from an
investment in those investment companies permitted by this Section 13.3
(b).
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 GENERAL. This Agreement may not be amended without the
approval of the General Partner and by the Consent of the Limited Partners,
except as provided below in this Article XIV.
14.2 AMENDMENT WITHOUT CONSENT. Notwithstanding Section 14.1,
the General Partner shall have the power, without the Consent of the
Limited Partners, to amend this Agreement as may be required to facilitate
or implement any of the following purposes:
(a) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners;
(b) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this Agreement;
(c) to set forth the rights, powers, duties, and
preferences of the holders of any Additional Partnership Interests issued
pursuant to Section 4.2 hereof;
(d) to reflect a change that does not adversely affect
the Limited Partners in any material respect, or to cure any ambiguity,
correct or supplement any provision in this Agreement not inconsistent with
law or with other provisions; and
(e) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or regulation
of a federal or state agency or contained in federal or state law. The
General Partner will provide notice to the Limited Partners promptly after
any action under this Section 14.2(e) is taken.
14.3 SPECIAL CONSENT RIGHTS. Notwithstanding Section 14.1
hereof, this Agreement shall not be amended without the consent of each
Partner adversely affected if such amendment would (i) convert a Limited
Partner's interest in the Partnership into a general partner's interest;
(ii) modify the limited liability of a Limited Partner; (iii) alter rights
of the Partners to receive allocations and distributions pursuant to
Articles V or VIII hereof (except as permitted pursuant to Section 4.2 and
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Section 14.2(c) hereof); (iv) alter or modify the Rights set forth in
Article XII hereof, (v) alter or modify the rights set forth in Article XV
hereof; (vi) cause a termination of the Partnership prior to the time set
forth in Section 8.1; (vii) alter or modify Section 11.5; or (viii) amend
this Section 14.3.
ARTICLE XV
REGISTRATION RIGHTS
15.1 SHELF REGISTRATION UNDER THE SECURITIES ACT. (a) Filing
of Shelf Registration Statement. Within 24 months following the Closing
Date, the Company shall cause to be filed a Shelf Registration Statement
providing for the sale by the Limited Partners of all of the Registrable
Securities in accordance with the terms hereof and will use its reasonable
best efforts to cause such Shelf Registration Statement to be declared
effective by the SEC as soon as reasonably practicable. The Company agrees
to use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective under the Securities Act until such time as the
aggregate number of OP Units and Registrable Securities outstanding is less
than 10% of the aggregate number of OP Units outstanding on the Closing
Date and, subject to Section 15.2(b) and Section 15.2(i), further agrees to
supplement or amend the Shelf Registration Statement, if and as required by
the rules, regulations or instructions applicable to the registration form
used by the Company for such Shelf Registration Statement or by the
Securities Act or by any other rules and regulations thereunder for Shelf
Registration. Each Limited Partner who sells Shares as part of the Shelf
Registration shall be deemed to have agreed to all of the terms and
conditions of this Article XV and to have agreed to perform any and all
obligations of a Limited Partner hereunder.
(b) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 15.1(a).
Each Limited Partner shall pay all underwriting discounts and commissions,
brokerage or dealer fees, the fees and disbursements of counsel,
accountants or other representatives of such Limited Partner and transfer
taxes, if any, relating to the sale or disposition of such Limited
Partner's Registrable Securities pursuant to the Shelf Registration
Statement or Rule 144 under the Securities Act.
(c) Inclusion in Shelf Registration Statement. Not later
than 30 days prior to filing the Shelf Registration Statement with the SEC,
the Company shall notify each Limited Partner of its intention to make such
filing and request advice from each Limited Partner as to whether such
Limited Partner desires to have Registrable Securities held by it or which
it is entitled to receive not later than the last day of the first Sale
Period occurring in whole or in part after the date of such notice included
in the Shelf Registration Statement at such time. Any Limited Partner who
does not provide the information reasonably requested by the Company in
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connection with the Shelf Registration Statement as promptly as practicable
after receipt of such notice, but in no event later than 20 days
thereafter, shall not be entitled to have its Registrable Securities
included in the Shelf Registration Statement at the time it becomes
effective, but shall have the right thereafter to deliver to the Company a
Registration Notice as contemplated by Section 15.2(b). The provisions of
this Article XV, and the obligations of the Company hereunder, apply only
to those Limited Partners who were Limited Partners as of the Closing Date,
and their permitted transferees and assignees.
15.2 REGISTRATION PROCEDURES. In connection with the
obligations of the Company with respect to the Shelf Registration Statement
pursuant to Section 15.1 hereof, the Company shall:
(a) prepare and file with the SEC, within the time period
set forth in Section 15.1(a) hereof, a Shelf Registration Statement, which
Shelf Registration Statement (i) shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution by the selling Limited Partners thereof and (ii) shall comply
as to form in all material respects with the requirements of the applicable
form and include all financial statements required by the SEC to be filed
therewith;
(b) subject to the last three sentences of this Section
15.2(b) and to Section 15.2(i) hereof, (i) prepare and file with the SEC
such amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary to keep the Shelf Registration Statement
effective for the applicable period; (ii) cause each Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 or any similar rule that may be adopted
under the Securities Act; (iii) respond promptly to any comments received
from the SEC with respect to the Shelf Registration Statement, or any
amendment, post-effective amendment or supplement relating thereto; and
(iv) comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the Shelf Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the selling Limited Partners thereof.
Notwithstanding anything to the contrary contained herein, the Company
shall not be required to take any of the actions described in clauses (i),
(ii) or (iii) above with respect to each particular Limited Partner holding
Registrable Securities unless and until the Company has received either a
written notice (a "Registration Notice") from a Limited Partner that such
Limited Partner intends to make offers or sales under the Shelf
Registration Statement as specified in such Registration Notice or a
written response from such Limited Partner of the type contemplated by
Section 15.1(c); provided, however, that the Company shall have 7 business
days to prepare and file any such amendment or supplement after receipt of
a Registration Notice. Offers or sales under the Shelf Registration
Statement may be made only during a Sale Period. Such Limited Partner also
shall notify the Company in writing upon completion of such offer or sale
or at such time as such Limited Partner no longer intends to make offers or
sales under the Shelf Registration Statement;
(c) furnish to each Limited Partner holding Registrable
Securities that has delivered a Registration Notice to the Company, without
charge, as many copies of each applicable Prospectus, including each
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preliminary Prospectus and any amendment or supplement thereto, and such
other documents as such Limited Partner may reasonably request, in order to
facilitate the public sale or other disposition of the Registrable
Securities; the Company consents to the use of such Prospectus, including
each preliminary Prospectus, by each such Limited Partner in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus or the preliminary Prospectus;
(d) use its reasonable best efforts to register or
qualify the Registrable Securities by the time the Shelf Registration
Statement is declared effective by the SEC under all applicable state
securities or "blue sky" laws of such jurisdictions as any Limited Partner
holding Registrable Securities covered by the Shelf Registration Statement
shall reasonably request in writing, keep each such registration or
qualification effective during the period the Shelf Registration Statement
is required to be kept effective or during the period offers or sales are
being made by a Limited Partner that has delivered a Registration Notice to
the Company, whichever is shorter, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Limited
Partner to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Limited Partner; provided, however,
that the Company shall not be required (i) to qualify generally to do
business in any jurisdiction or to register as a broker or dealer in such
jurisdiction where it would not be required so to qualify or register but
for this Section 15.2(d), (ii) to subject itself to taxation in any such
jurisdiction or (iii) to submit to the general service of process in any
such jurisdiction;
(e) notify each Limited Partner when the Shelf
Registration Statement has become effective and notify each Limited Partner
holding Registrable Securities that has delivered a Registration Notice to
the Company promptly and, if requested by such Limited Partner, confirm
such advice in writing (i) when any post-effective amendments and
supplements to the Shelf Registration Statement become effective, (ii) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iii) if the Company
receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation of any proceeding for such purpose and (iv) of the happening
of any event during the period the Shelf Registration Statement is
effective as a result of which the Shelf Registration Statement or a
related Prospectus contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading;
(f) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration
Statement at the earliest possible moment;
(g) furnish to each Limited Partner holding Registrable
Securities that has delivered a Registration Notice to the Company, without
charge, at least one conformed copy of the Shelf Registration Statement and
any post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
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(h) cooperate with the selling Limited Partners holding
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing
any Securities Act legend; and enable certificates for such Registrable
Securities to be issued for such numbers of shares and registered in such
names as the selling Limited Partners may reasonably request at least two
business days prior to any sale of Registrable Securities;
(i) subject to the last three sentences of Section
15.2(b) hereof, upon the occurrence of any event contemplated by Section
15.2(e)(iv) hereof, use its reasonable best efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of a post-
effective amendment to the Shelf Registration Statement or a related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(j) a reasonable time prior to the filing of any
Prospectus, any amendment to the Shelf Registration Statement or amendment
or supplement to a Prospectus, provide copies of such document (not
including any documents incorporated by reference therein unless requested)
to the Limited Partners holding Registrable Securities that have provided a
Registration Notice to the Company;
(k) use its reasonable best efforts to cause all
Registrable Securities to be listed on any securities exchange on which
similar securities issued by the Company are then listed;
(l) otherwise use its reasonable efforts to comply with
all applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering at least 12 months which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder; and
(m) use its reasonable best efforts to cause the
Registrable Securities covered by the Shelf Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company to enable Limited Partners that have delivered Registration
Notices to the Company to consummate the disposition of such Registrable
Securities.
The Company may require each Limited Partner holding
Registrable Securities to furnish to the Company in writing such
information regarding the proposed distribution by such Limited Partner as
the Company may from time to time reasonably request in writing.
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In connection with and as a condition to the Company's
obligations with respect to the Shelf Registration Statement pursuant to
Section 15.1 hereof and this Section 15.2, each Limited Partner agrees that
(i) it will not offer or sell its Registrable Securities under the Shelf
Registration Statement until (A) it has either (1) provided a Registration
Notice pursuant to Section 15.2(b) hereof or (2) had Registrable Securities
included in the Shelf Registration Statement at the time it became
effective pursuant to Section 15.1(c) hereof and (B) it has received copies
of the supplemented or amended Prospectus contemplated by Section 15.2(b)
hereof and receives notice that any post-effective amendment has become
effective; (ii) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 15.2(b)(iv) hereof,
such Limited Partner will forthwith discontinue disposition of Registrable
Securities pursuant to the Shelf Registration Statement until such Limited
Partner receives copies of the supplemented or amended Prospectus
contemplated by Section 15.2(i) hereof and receives notice that any post-
effective amendment has become effective, and, if so directed by the
Company, such Limited Partner will deliver to the Company (at the expense
of the Company) all copies in its possession, other than permanent file
copies then in such Limited Partner's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice; and (iii) all offers and sales under the Shelf Registration
Statement shall be completed within forty-five (45) days after the first
date on which offers or sales can be made pursuant to clause (i) above, and
upon expiration of such forty-five (45) day period the Limited Partner will
not offer or sell its Registrable Securities under the Shelf Registration
Statement until it has again complied with the provisions of clause (i)(B)
above, except that if the applicable Registration Notice was delivered to
the Company at a time which was not part of a Sale Period, such forty-five
(45) day period shall be the next succeeding Sale Period.
15.3 RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE
SECURITIES. Each Limited Partner agrees with the Company that:
(a) If the Board of Directors of the Company determines
in its good faith judgment that the filing of the Shelf Registration
Statement under Section 15.1 hereof or the use of any Prospectus would
materially impede, delay or interfere with any pending material financing,
acquisition or corporate reorganization or other material corporate
development involving the Company or any of its subsidiaries, or require
the disclosure of important information which the Company has a bona fide
business purpose for preserving as confidential or the disclosure of which
would impede the Company's ability to consummate a significant transaction,
upon written notice of such determination by the Company, the rights of the
Limited Partners to offer, sell or distribute any Registrable Securities
pursuant to the Shelf Registration Statement or to require the Company to
take action with respect to the registration or sale of any Registrable
Securities pursuant to the Shelf Registration Statement (including any
action contemplated by Section 15.2 hereof) will be suspended until the
date upon which the Company notifies the Limited Partners in writing that
suspension of such rights for the grounds set forth in this Section 15.3(a)
is no longer necessary, but no such period shall extend for longer than 90
days.
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(b) In the case of the registration of any underwritten
equity offering proposed by the Company (other than any registration by the
Company on Form S-8, or a successor or substantially similar form, of (i)
an employee stock option, stock purchase or compensation plan or of
securities issued or issuable pursuant to any such plan or (ii) a dividend
reinvestment plan), each Limited Partner agrees, if requested in writing by
the managing underwriter or underwriters administering such offering, not
to effect any offer, sale or distribution of Registrable Securities (or any
option or right to acquire Registrable Securities) during the period
commencing on the 7th day prior to the expected effective date (which date
shall be stated in such notice) of the registration statement covering such
underwritten primary equity offering and ending on the date specified by
such managing underwriter in such written request to such Limited Partner,
which date shall not be later than 90 days after such expected date of
effectiveness.
(c) In the event that any Limited Partner uses a
Prospectus in connection with the offering and sale of Registrable
Securities covered by such Prospectus, such Limited Partner will use only
the latest version of such Prospectus provided to it by the Company.
15.4 INDEMNIFICATION; CONTRIBUTION. (a) Indemnification by
the Company. The Company agrees to indemnify and hold harmless each
Limited Partner and its officers and directors and each person, if any, who
controls any Limited Partner within the meaning of Section 15 of the
Securities Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement (or any amendment thereto) or any
Prospectus, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
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or body, commenced or threatened, in each case whether or not a
party, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or (ii)
above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this
Section 15.4(a) does not apply to any Limited Partner with respect to
any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written
information furnished to the Company by such Limited Partner
expressly for use in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus.
(b) Indemnification by Limited Partners. Each Limited
Partner severally agrees to indemnify and hold harmless the Company and the
other selling Limited Partners, and each of their respective directors and
officers (including each director and officer of the Company who signed the
Shelf Registration Statement), and each person, if any, who controls the
Company or any other selling Limited Partner within the meaning of Section
15 of the Securities Act, to the same extent as the indemnity contained in
Section 15.4(a) hereof (except that any settlement described in Section
15.4(a)(2) shall be effected with the written consent of such Limited
Partner), but only insofar as such loss, liability, claim, damage or
expense arises out of or is based upon any untrue statement or omission, or
alleged untrue statement or omission, made in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus in reliance upon and
in conformity with written information furnished to the Company by such
selling Limited Partner expressly for use in the Shelf Registration
Statement (or any amendment thereto) or such Prospectus. In no event shall
the liability of any Limited Partner under this Section 15.4(b) be greater
in amount than the dollar amount of the proceeds received by such Limited
Partner upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Each indemnified party shall give reasonably prompt
notice to each indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party (i) shall not relieve it from
any liability which it may have under the indemnity agreement provided in
Section 15.4(a) or (b) unless and to the extent it did not otherwise learn
of such action and the lack of notice by the indemnified party results in
the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification
obligation provided under Section 15.4(a) or (b). If the indemnifying
party so elects within a reasonable time after receipt of such notice, the
indemnifying company may assume the defense of such action or proceeding at
such indemnifying party's own expense with counsel chosen by the
indemnifying party; PROVIDED, HOWEVER, that, if such indemnified party or
parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by
separate counsel or that, upon advice of counsel, there may be legal
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defenses available to them which are different from or in addition to those
available to the indemnifying party, then the indemnifying party shall not
be entitled to assume such defense and the indemnified party or parties in
the aggregate shall be entitled to one separate counsel at the indemnifying
party's expense. If an indemnifying party is not so entitled to assume the
defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this Section
15.4(c), the indemnifying party or parties will pay the reasonable fees and
expenses of counsel for the indemnified party or parties. In such event
however, no indemnifying party will be liable for any settlement effected
without the written consent of such indemnifying party. If an indemnifying
party is entitled to assume, and assumes, the defense of such action or
proceeding in accordance with this paragraph, such indemnifying party shall
not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for
in this Section 15.4 is for any reason held to be unenforceable although
applicable in accordance with its terms, the Company and the selling
Limited Partners shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Company and the selling Limited Partners, in such
proportion as is appropriate to reflect the relative fault of and benefits
to the Company on the one hand and the selling Limited Partners on the
other (in such proportions that the selling Limited Partners are severally,
not jointly, responsible for the balance), in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable
considerations. The relative benefits to the indemnifying party and
indemnified parties shall be determined by reference to, among other
things, the total proceeds received by the indemnifying party and
indemnified parties in connection with the offering to which such losses,
liabilities, claims, damages, or expenses relate. The relative fault of
the indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether the action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or the indemnified
parties, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such action.
The Company and the Limited Partners agree that it would
not be just or equitable if contribution pursuant to this Section 15.4(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of
this Section 15.4(d), no selling Limited Partner shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities of such selling Limited Partner were sold
to the public, exceeds the amount of any damages which such selling Limited
Partner is otherwise required to pay by reason of such untrue statement or
omission.
Notwithstanding the foregoing, no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
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Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 15.4(d), each Person, if any, who controls a Limited Partner within
the meaning of Section 15 of the Securities Act and directors and officers
of a Limited Partner shall have the same rights to contribution as such
Limited Partner, and each director of the Company, each officer of the
Company who signed the Shelf Registration Statement and each Person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as the Company.
15.5 RULE 144 SALES. (a) The Company covenants that it will
file the reports required to be filed by the Company under the Securities
Act and the Exchange Act, so as to enable any Limited Partner to sell
Registrable Securities pursuant to Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other
disposition by any Limited Partner of any Registrable Securities pursuant
to Rule 144 under the Securities Act, the Company shall cooperate with such
Limited Partner to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing
any Securities Act legend, and enable certificates for such Registrable
Securities to be for such number of shares and registered in such names as
the selling Limited Partners may reasonably request at least two business
days prior to any sale of Registrable Securities.
ARTICLE XVI
GENERAL PROVISIONS
16.1 NOTICE. Any notice, demand, request or report required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in
person, received by facsimile or overnight courier, or upon deposit in the
United States mail, registered or certified, postage prepaid, and properly
addressed to the Partner or Assignee at the address set forth in EXHIBIT A,
or such other address of which the Partner or Assignee shall notify the
General Partner in writing.
16.2 BINDING EFFECT. This Agreement and all the terms and
provisions hereof shall be binding upon and shall inure to the benefit of
all Partners, and their legal representatives, heirs, successors and
permitted assigns, except as expressly herein otherwise provided.
16.3 LIABILITY OF LIMITED PARTNERS. The liability of the
Limited Partners for their obligations, covenants, representations and
warranties under this Agreement shall be several and not joint.
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16.4 EFFECT AND INTERPRETATION. This Agreement shall be
governed by and construed in conformity with the laws of the State of
Delaware.
16.5 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
16.6 PARTNERS NOT AGENTS. Nothing contained herein shall be
construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Partners in the
carrying on of their own respective businesses or activities.
16.7 TITLES AND CAPTIONS. All article or section titles or
captions in this Agreement are for convenience only. They shall not be
deemed part of this Agreement and in no way define, limit, extend or
describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to "Articles" and "Sections"
are to Articles and Sections of this Agreement.
16.8 PRONOUNS AND PLURALS. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
16.9 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid by such court, shall not be
affected thereby.
16.10 ENTIRE AGREEMENT. This Agreement and all documents and
agreements referred to herein and therein contain the entire understanding
and agreement among the Partners with respect to the subject matter hereof
and supersede the Prior Agreement and any other prior written or oral
understandings or agreements among them with respect thereto.
16.11 ASSURANCES. Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as
may be required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed as of the date and year
first above written.
GENERAL PARTNER:
American Real Estate Investment Corporation
By:/S/ EVAN ZUCKER
--------------------------------
Evan Zucker, President
LIMITED PARTNERS:
Executed by the below named Limited Partners
constituting a Majority-In-Interest of
the Limited Partners:
/S/ JAMES MULVIHILL
- ---------------------------------
James Mulvihill
/S/ GAIL MULVIHILL
- ---------------------------------
Gail Mulvihill
/S/ ROSALIND DAVIDOWITZ
- ---------------------------------
Rosalind Davidowitz
/S/ EVAN ZUCKER
- ---------------------------------
Evan Zucker
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ADMITTED LIMITED PARTNERS:
/S/ JEFFREY KELTER
- --------------------------------------------
Jeffrey Kelter
MCBRIDE HUDSON BAY, L.P.
By: Urban Farms Shopping Center, Inc.,
its General Partner
By: /S/ DAVID MCBRIDE
-----------------------------------
David McBride
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EXHIBIT A
<TABLE>
<CAPTION>
Gross Asset Value of
Contributed Limited Opening
NAME AND ADDRESS Cash Partner Assets (Net of Capital Partnership Percentage
OF PARTNER CONTRIBUTIONS SECURED LIABILITIES) ACCOUNT UNITS/OP UNITS INTEREST
<S> <C> <C> <C> <C> <C> <C>
GENERAL PARTNER
American Real Estate
Investment Corporation 5,280,354 56.0455%
620 W. Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
LIMITED PARTNERS
McBride Hudson Bay, L.P. 2,998,867(1) 31.8299%
c/o McBride Enterprises, Inc.
808 High Mountain Road
Franklin Lakes, NJ 07417
Jeffrey E. Kelter 363,636 3.8596%
40 Duck Pond Road
Glencove, NY 11542
John Blumberg 20,224 0.2147%
1670 Broadway, Suite 3350
Denver, CO 80202
Rosalind Davidowitz 212,129 2.2515%
c/o DH Blair
44 Wall Street, 2d Floor
New York, NY 10005
Mariano DeCola 16,916 0.1795%
790 Washington Street
Suite 1403
Denver, CO 80203
John Dell 35,938 0.3814%
JEDCO Property Partnership L.P.
c/o Mason, Briody, Gallagher
104 Carnegie Center
Suite 201
Princeton, NJ 08540
Jim Fleming 1,731 0.0184%
304 S. Columbus Street
Alexandria, VA 22314
Floyd Hall 13,838 0.1469%
190 Upper Mountain Avenue
Upper Montclair, NJ 07042
Hord Hardin, III 5,106 0.0542%
Nooney-Krombeck
7701 Forsythe, Suite 800
St. Louis, MO 63105
65
<PAGE>
JKP Family Associates 53,624 0.5692%
c/o Joseph Pagano
Prime Cellular
100 First Stamford Place
3d Floor
Stamford, CT 06902
David Jones 23,625 0.2508%
P.O. Box 529
Pine, CO 80470
Lervo Investments, LLC 3,110 0.0330%
c/o Andy Miller
3600 S. Yosemite, 10th Floor
Denver, CO 80237
James Marshall 26,000 0.2760%
1670 Broadway, Suite 3350
Denver, CO 80202
Houston McCollough 6,917 0.0734%
159 Gates Avenue
Monteclair, NJ 07042
Anthony Miele 8,407 0.0892%
124 Valley Road, Apt. K
Monteclair, NJ 07042
Matt Moran 685 0.0073%
365 Cervantes Road
Portola Valley, CA 94028
Andrew Mulvihill 2,056 0.0218%
4 Farmbrook Road
Sparta, NY 07871
Christopher Mulvihill 3,363 0.0357%
c/o Madison Avenue Management
355 Madison Avenue
Morristown, NJ 07960
Gail Mulvihill 178,456 1.8941%
Fox Hunt Road
New Vernon, NJ 07976
Gene Mulvihill, Jr. 138 0.0015%
12 Shady Lawn Drive
Madison, NJ 07940
Heather Mulvihill 76,389 0.8108%
1670 Broadway, Suite 3350
Denver, CO 80202
James Mulvihill 9,363 0.0994%
1670 Broadway, Suite 3350
Denver, CO 80202
66
<PAGE>
New Jersey Real Estate
Liquidation Corp. 19,624 0.2083%
c/o Madison Avenue Management
355 Madison Avenue
Morristown, NJ 07960
Property Asset Equities 9,206 0.0977%
c/o Steve Ira
1873 Bellaire Street
Suite 1700
Denver, CO 80222
Michael Rotchford 6,919 0.0734%
21 Park Place
Saratoga Springs, NY 12866
Barbara Zucker Zarett 308 0.0033%
7 Tiffany Court
Monteville, NJ 07045
Brian Zucker 308 0.0033%
4 Longfellow Place, #2305
Boston, MA 02114
Evan Zucker 29,654 0.3148%
1670 Broadway, Suite 3350
Denver, CO 80202
Marshall Zucker 411 0.0044%
8835 Fairview Oaks Place
Lone Tree, CO 80124
Blue Mesa Capital, LLC 13,071 0.1387%
c/o John Blumberg
1670 Broadway, Suite 3350
Denver, CO 80202
Webb Waring Institute
for Biomedical Research 1,178 0.0125%
c/o Virginia Parker
4200 E. 9th Avenue
Box C-321
Denver, CO 80262
Total 9,421,551 100.0000%
--------- ---------
</TABLE>
- --------------------
(1) 149,943 of these OP Units (the "Restricted Units") shall be subject to
the post-Closing adjustments and Prorations as contemplated in the
McBride Contribution Agreement dated as of August 20, 1997, among the
General Partner, the Partnership and the other parties thereto (the
"McBride Agreement") and the letter agreement among such parties dated
December 12, 1997. Such OP Units are restricted in lieu of the escrow
arrangement contemplated by Section 2(c)(ii) of the McBride Agreement,
and the provisions of the McBride Agreement relating to such escrow
arrangement shall apply to the Restricted Units.
67
<PAGE>
EXHIBIT B
FORM OF EXERCISE NOTICE
Pursuant to Article XII of the Agreement of Limited Partnership of
American Real Estate Investment, L.P., a Delaware limited partnership (the
"Partnership"), the undersigned hereby irrevocably elects to exercise the right
to sell to American Real Estate Investment Corporation, a Maryland corporation
and the general partner of the Partnership, _________ OP Units of the
Partnership (the "Offered Units") and requests that certificates for the
Purchase Price be issued in the name of _________________ (social security
number ___________).
All terms used herein not otherwise defined shall be defined as set
forth in the aforesaid Agreement of Limited Partnership.
Dated:
(Signature)
Signature Guaranteed:
- ------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINED TERMS.......................... 1
ARTICLE II
ORGANIZATIONAL MATTERS...................... 15
2.1 ORGANIZATION AND CONTINUATION .......................... 15
2.2 NAME ................................................... 15
2.3 REGISTERED OFFICE AND AGENT, PRINCIPAL OFFICE .......... 15
2.4 POWER OF ATTORNEY; COMPLIANCE WITH ACT ................. 15
2.5 TERM ................................................... 17
2.6 FILING OF CERTIFICATE AND PERFECTION OF LIMITED
PARTNERSHIP.......................................... 17
2.7 CERTIFICATES DESCRIBING PARTNERSHIP UNITS .............. 17
ARTICLE III
PURPOSE............................. 17
3.1 PURPOSE AND BUSINESS ................................... 17
3.2 POWERS ................................................. 18
ARTICLE IV
CAPITAL CONTRIBUTIONS...................... 18
4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS .................. 18
4.2 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS; ADDITIONAL
PARTNERS................................................ 19
4.3 ISSUANCE OF SHARES ..................................... 20
4.4 STOCK INCENTIVE PLAN. .................................. 21
4.5 NO THIRD PARTY BENEFICIARY. ............................ 21
4.6 NO INTEREST; NO RETURN ................................. 21
4.7 NO PREEMPTIVE RIGHTS ................................... 22
4.8 PERCENTAGE INTERESTS ................................... 22
ARTICLE V
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND
ACCOUNTING MATTERS........................ 22
5.1 PROFITS AND LOSSES ..................................... 22
5.2 MANDATORY ALLOCATIONS .................................. 22
5.3 OTHER ALLOCATION RULES ................................. 25
5.4 ALLOCATIONS FOR TAX PURPOSES ........................... 25
5.5 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS................................... 26
5.6 DISTRIBUTIONS .......................................... 26
<PAGE>
ARTICLE VI
TAX MATTERS........................... 27
6.1 PREPARATION OF TAX RETURNS ............................. 27
6.2 TAX ELECTIONS .......................................... 27
6.3 TAX MATTERS PARTNER .................................... 27
6.4 ORGANIZATIONAL EXPENSES ................................ 28
6.5 WITHHOLDING; COMBINED RETURNS .......................... 28
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER...... 29
7.1 MANAGEMENT ............................................. 29
7.2 MAJOR DECISIONS ........................................ 32
7.3 PROSCRIPTIONS .......................................... 32
7.4 OUTSIDE ACTIVITIES OF GENERAL PARTNER .................. 33
7.5 INDEMNIFICATION ........................................ 33
7.6 LIABILITY OF THE GENERAL PARTNER ....................... 35
7.7 REIMBURSEMENT OF THE GENERAL PARTNER ................... 35
7.8 REIT QUALIFICATION OF THE GENERAL PARTNER .............. 37
7.9 EMPLOYMENT OR RETENTION OF AFFILIATES .................. 37
7.10 TITLE TO PARTNERSHIP ASSETS. ........................... 38
7.11 OTHER MATTERS CONCERNING THE GENERAL PARTNER ........... 38
7.12 ORIGINAL PROPERTIES .................................... 39
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP............. 39
8.1 DISSOLUTION ............................................ 39
8.2 DISTRIBUTION ON DISSOLUTION. ........................... 39
8.3 SALE OF PARTNERSHIP ASSETS ............................. 40
8.4 DISTRIBUTIONS IN KIND .................................. 40
8.5 DOCUMENTATION OF LIQUIDATION ........................... 41
8.6 LIABILITY OF THE LIQUIDATING TRUSTEE ................... 41
8.7 ACCOUNTING ............................................. 41
8.8 NEGATIVE CAPITAL ACCOUNTS .............................. 41
8.9 RIGHTS OF PARTNERS ..................................... 41
8.10 NOTICE OF DISSOLUTION .................................. 41
8.11 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE OF
LIMITED PARTNERSHIP..................................... 42
8.12 WAIVER OF PARTITION .................................... 42
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS................ 42
9.1 GENERAL ................................................ 42
9.2 GENERAL PARTNER TRANSFER ............................... 42
ii
<PAGE>
9.3 TRANSFERS BY LIMITED PARTNERS .......................... 43
9.4 SUBSTITUTED LIMITED PARTNERS ........................... 44
9.5 ASSIGNEES .............................................. 45
9.6 RESTRICTIONS ON TRANSFER ............................... 45
ARTICLE X
ADMISSION OF PARTNERS...................... 46
10.1 ADMISSION OF SUCCESSOR GENERAL PARTNER ................. 46
10.2 ADMISSION OF SUBSTITUTED OR ADDITIONAL LIMITED PARTNERS 46
10.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
46
ARTICLE XI
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS.......... 47
11.1 NO PARTICIPATION IN MANAGEMENT ......................... 47
11.2 BANKRUPTCY OF A LIMITED PARTNER ........................ 47
11.3 NO WITHDRAWAL .......................................... 47
11.4 DUTIES AND CONFLICTS ................................... 47
11.5 CONSENT OF CERTAIN LIMITED PARTNERS .................... 47
ARTICLE XII
CONVERSION RIGHT......................... 48
12.1 GRANT OF RIGHTS ........................................ 48
12.2 DELIVERY OF EXERCISE NOTICES ........................... 48
12.3 LIMITATION ON DELIVERY OF EXERCISE NOTICES ............. 48
12.4 LIMITATION ON EXERCISE OF CONVERSION RIGHTS ............ 48
12.5 PURCHASE PRICE UPON CONVERSION ......................... 49
12.6 CLOSING; DELIVERY OF ELECTION NOTICE ................... 49
12.7 CLOSING DELIVERIES ..................................... 49
12.8 COVENANTS OF THE GENERAL PARTNER ....................... 50
12.9 LIMITED PARTNERS' COVENANT ............................. 50
ARTICLE XIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS.............. 50
13.1 RECORDS AND ACCOUNTING ................................. 50
13.2 REPORTS ................................................ 51
13.3 BANK ACCOUNTS .......................................... 51
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT................ 52
14.1 GENERAL. ............................................... 52
14.2 AMENDMENT WITHOUT CONSENT. ............................. 52
14.3 SPECIAL CONSENT RIGHTS. ................................ 52
iii
<PAGE>
ARTICLE XV
REGISTRATION RIGHTS....................... 53
15.1 SHELF REGISTRATION UNDER THE SECURITIES ACT. ........... 53
15.2 REGISTRATION PROCEDURES. ............................... 54
15.3 RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE
SECURITIES.............................................. 57
15.4 INDEMNIFICATION; CONTRIBUTION. ......................... 58
15.5 RULE 144 SALES. ........................................ 61
ARTICLE XVI
GENERAL PROVISIONS........................ 61
16.1 NOTICE ................................................. 61
16.2 BINDING EFFECT ......................................... 61
16.3 LIABILITY OF LIMITED PARTNERS .......................... 61
16.4 EFFECT AND INTERPRETATION .............................. 61
16.5 COUNTERPARTS ........................................... 62
16.6 PARTNERS NOT AGENTS .................................... 62
16.7 TITLES AND CAPTIONS .................................... 62
16.8 PRONOUNS AND PLURALS ................................... 62
16.9 SEVERABILITY ........................................... 62
16.10 ENTIRE AGREEMENT ....................................... 62
16.11 ASSURANCES ............................................. 62
EXHIBITS
EXHIBIT A Partner Ownership Table
EXHIBIT B Form of Exercise Notice
iv
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN REAL ESTATE INVESTMENT, L.P.
EXHIBIT 10.2
FIRST AMENDMENT TO
MASTER INVESTMENT AGREEMENT
---------------------------
This FIRST AMENDMENT TO MASTER INVESTMENT AGREEMENT dated as of
December 12, 1997 ("Amendment") is made and entered into by and among THE
MCBRIDE ENTITIES LISTED ON THE SIGNATURE PAGES HERETO, THE FLIP
SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HERETO, JEFFREY KELTER, PENN
SQUARE PROPERTIES, INC., a Pennsylvania corporation, HUDSON BAY PARTNERS
II, L.P., a Delaware limited partnership, AMERICAN REAL ESTATE INVESTMENT,
L.P., a Delaware limited partnership and AMERICAN REAL ESTATE INVESTMENT
CORPORATION, a Maryland corporation.
RECITALS
A. The parties hereto are parties to that certain Master
Investment Agreement dated as of August 20, 1997 (the "Agreement"); and
B. The parties hereto desire to amend and restate certain
provisions of the Agreement as set forth below. Capitalized terms not
otherwise defined herein have the meanings set forth in the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the material covenants and
agreements set forth herein and in the Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows.
1. AMENDMENT OF SECTION 5.10. Section 5.10 of the Agreement is
hereby amended and restated in its entirety to read as follows:
5.10 PROXY STATEMENT. The Company shall prepare (and the
parties hereto shall cooperate in the preparation of) and file with
the SEC as soon as reasonably practicable after the date of the
Agreement a proxy statement with respect to the meeting of the
stockholders of the Company in connection with the Transactions (as
amended or supplemented from time to time, the "PROXY STATEMENT").
The Company shall cause the Proxy Statement to comply as to form in
all material respects with the applicable provisions of the Exchange
Act. The Company shall, as promptly as practicable, provide copies of
any written comments received from the SEC with respect to the Proxy
Statement to the parties hereto and advise them of any verbal comments
with respect to the Proxy Statement received from the SEC. The
Company shall use its best efforts to obtain, prior to the mailing
date of the Proxy Statement, all necessary state securities law or
"blue sky" permits or approvals required to carry out the transactions
contemplated by this Agreement. The Company agrees that the Proxy
<PAGE>
Statement at the time of mailing thereof and at the time of the
Company Stockholders' Meeting (as defined below), will not include an
untrue statement of a material fact or omit to state 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; PROVIDED, HOWEVER, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or
omission to state a material fact was made by the Company in reliance
upon and in conformity with written information concerning the
Investors hereto furnished to the Company by an Investor specifically
for use in the Proxy Statement. Each Investor agrees that the written
information concerning it provided by it for inclusion in the Proxy
Statement, at the time of mailing thereof and at the time of the
Company Stockholders' Meeting, will not include an untrue statement of
a material fact or omit to state 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. No
amendment or supplement to the Proxy Statement will be made by the
Company without the reasonable approval of the Investors.
2. AMENDMENT OF SECTION 7.01. Subsection (b) of Section 7.01
of the Agreement is hereby amended and restated in its entirety to read as
follows:
(b) [INTENTIONALLY LEFT BLANK]
3. AMENDMENT OF SECTION 10.01. The definition of "PROPERTIES"
contained in Subsection (a) of Section 10.01 of the Agreement is hereby
amended and restated in its entirety to read as follows:
"PROPERTIES" means (i) from August 20, 1997 to August 29, 1997,
the assets held through Virginia Street Associates Limited
Partnership, American Emerald Partners, L.P., American Quadrangles
Partners, L.P. or American Sedona Partners, L.P., including without
limitation the Americana Lakewood apartments, the Sedona apartments,
the Emerald Pointe apartments and the Quadrangles Village apartments;
(ii) from August 29, 1997 to September 26, 1997, the assets held
through Virginia Street Associates Limited Partnership, American
Emerald Partners, L.P. or American Quadrangles Partners, L.P.,
including without limitation the Americana Lakewood apartments, the
Emerald Pointe apartments and the Quadrangles Village apartments; and
(iii) from and after September 26, 1997, the assets held through
Virginia Street Associates Limited Partnership or American Quadrangles
Partners, L.P., including without limitation the Americana Lakewood
apartments and the Quadrangles Village apartments.
4. OTHER PROVISIONS. This Amendment shall be governed by and
construed in accordance with the Laws of the State of New York applicable
to a Contract executed and performed in such State without giving effect to
the conflicts of laws principles thereof. In all other respects, the
Agreement shall continue in full force and effect as amended hereby.
2
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this
Amendment on this 11th day of December, 1997.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
By:/S/ EVAN ZUCKER
______________________________
Evan Zucker
President
AMERICAN REAL ESTATE INVESTMENT, L.P.
By: American Real Estate Investment Corporation,
its General Partner
By:/S/ EVAN ZUCKER
------------------------------
Evan Zucker
President
HUDSON BAY PARTNERS II, L.P.
By: Hudson Bay Partners, Inc., its General
Partner
By: /S/ DAVID LESSER
_______________________________
David Lesser
President
3
<PAGE>
JEFFREY KELTER
/S/ JEFFREY KELTER
------------------------------
PENN SQUARE PROPERTIES, INC.
By: /S/ JEFFREY KELTER
--------------------------
Jeffrey Kelter
President
MCBRIDE ENTITIES:
MCBRIDE HUDSON BAY, L.P.
By: Urban Farms Shopping Center, Inc.,
its General Partner
By: /S/ DAVID MCBRIDE
---------------------------
David McBride
FAIR LAWN INDUSTRIAL PARK, INC.
By:/S/ DAVID MCBRIDE
----------------------------
David McBride
URBAN FARMS SHOPPING CENTER, INC.
By:/S/ DAVID MCBRIDE
----------------------------
David McBride
4
<PAGE>
OAKLAND INDUSTRIAL PARK, INC.
By:/S/ DAVID MCBRIDE
----------------------------
David McBride
MCBRIDE PROPERTIES
By:/S/ DAVID MCBRIDE
----------------------------
David McBride
NEW JERSEY ASSOCIATES
By:/S/ DAVID MCBRIDE
----------------------------
David McBride
RAMAPO RIDGE MCBRIDE OFFICE PARK
By:/S/ DAVID MCBRIDE
-----------------------------
David McBride
FAIRLAWN INVESTMENTS, L.L.C.
By:/S/ DAVID MCBRIDE
David McBride
FLIP SHAREHOLDERS (but only for the purposes of
the agreements contained in Section 6.02):
FRANCIS V. MCBRIDE
REVOCABLE TRUST, UID 4/22/96
5
<PAGE>
By:/S/ ANTOINETTE R. MCBRIDE
---------------------------------
Antoinette R. McBride
Trustee
/S/ JOAN H. MCBRIDE
------------------------------------
JOAN H. MCBRIDE
/S/ MARY V. DEKORTE
---------------------------------
MARY V. DEKORTE
/S/ TIMOTHY B. MCBRIDE
---------------------------------
TIMOTHY B. MCBRIDE
/S/ KATHRYN M. KRUCKEL
---------------------------------
KATHRYN M. KRUCKEL
/S/ MORIA MCBRIDE MURPHY
---------------------------------
MORIA MCBRIDE MURPHY
/S/ J. NEVINS MCBRIDE, JR.
---------------------------------
J. NEVINS MCBRIDE, JR.
/S/ W. PETER MCBRIDE
---------------------------------
W. PETER MCBRIDE
6
<PAGE>
/S/ DAVID F. MCBRIDE
---------------------------------
DAVID F. MCBRIDE
/S/ TERENCE A. MCBRIDE
---------------------------------
TERENCE A. MCBRIDE
/S/ SHEILA JAMES
---------------------------------
SHEILA JAMES
/S/ MICHAEL X. MCBRIDE
---------------------------------
MICHAEL X. MCBRIDE
/S/ MARK J. MCBRIDE
---------------------------------
MARK J. MCBRIDE
7
EXHIBIT 99.1
AMERICAN REAL ESTATE COMPLETES COMBINATION WITH HUDSON BAY PARTNERS, MCBRIDE
ENTERPRISES AND PENN SQUARE PROPERTIES AND ANNOUNCES INVESTMENT BY CRA REAL
ESTATE SECURITIES
Shareholders in American Real Estate Investment Corporation (the "Company"), a
real estate investment trust (AMEX:REA), overwhelmingly approved at a special
shareholders' meeting held in Denver on Thursday, December 11, a proposal to
transform the Company into an office and industrial REIT whereby the Company
would enter into a combination transaction with McBride Enterprises ("McBride")
and Penn Square Properties, Inc. ("Penn Square") and would receive cash
investments from Hudson Bay Partners II, L.P. ("Hudson Bay") and CRA Real
Estate Securities ("CRA") (collectively the "Investor Group").
The reorganization, which was completed on Friday, December 12, involved
(i) the acquisition by the Company of 15 properties totaling 1.2 million square
feet from McBride in exchange for approximately 4.2 million shares of common
stock and units in the operating partnership ("OP Units") and the assumption of
$45.0 million in long term debt, (ii) the contribution by Jeffrey E. Kelter of
a 95% non-voting equity interest in Penn Square, a full service real estate
development, management, construction and brokerage company, in exchange for
approximately 363,000 OP Units, and (iii) $30.0 million in cash investments, in
exchange for common stock and OP Units, led by Hudson Bay along with CRA,
McBride and Robert Branson. The Company also acquired one property and assumed
contracts to acquire six additional properties, which are expected to close
over the next 30 days, totaling approximately 1.2 million square feet for an
aggregate cost of $39.0 million. The Investor Group now owns approximately 78%
of the Company's outstanding common stock (assuming conversion of all OP Units
to stock). The equity market capitalization of the Company as of the closing
is approximately $140.0 million.
"We are extremely pleased with the level of shareholder support for the
combination," said Jeffrey Kelter, who will assume the responsibilities of
President of the Company. "We believe we have a unique combination of
strengths among the Investor Group, which will enable us to rapidly expand from
a small-cap REIT to a significant presence in the office and industrial real
estate sector. We are anxious to capitalize on the opportunities in our
acquisition pipeline, which we have built over the past several months, now
that the reorganization is complete."
"The addition of CRA to the Investor Group is yet another example of our
ability to attract the highest quality capital sources and partners to the
Company, and we look forward to their involvement," commented David McBride,
who will become Chairman of the Board. CRA, based in Radnor, Pennsylvania is
one of the largest investment management firms focused exclusively on
investments in real estate securities and manages in excess of $1.3 billion on
behalf of its institutional investor clients.
<PAGE>
David Lesser, President of Hudson Bay, added "As a result of this transaction,
public stockholders will have the unique opportunity to participate at an early
stage in the growth and creation in stockholder value that management and the
Board of Directors hope to achieve. We believe the Company has the potential
to grow substantially through acquisitions over the near term." Hudson Bay is
a discretionary investment fund capitalized primarily by Crescent Real Estate
Equities (NYSE: CEI) and formed by David Lesser to make strategic investments
in real estate and real estate related securities.
Evan Zucker, President of the Company, said "we are delighted to welcome the
Investor Group into the Company and look forward to participating with them in
the Company's new direction." Mr. Zucker and James Mulvihill, Chairman of the
Company, will be resigning from their executive positions with the Company but
will remain directors of the Company.
The Company's corporate offices have been relocated to:
620 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Contact: Jeffrey E. Kelter, President (610) 834-3440
