<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12482
GLIMCHER REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 31-1390518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 SOUTH THIRD STREET 43215
COLUMBUS, OHIO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (614) 621-9000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
COMMON SHARES OF BENEFICIAL INTEREST, NEW YORK STOCK EXCHANGE
PAR VALUE $.01 PER SHARE
---------------------
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
------ ------
As of July 23,1997, there were 21,907,687 Common Shares of Beneficial
Interest outstanding, par value $ .01 per share.
1 of 23 pages
<PAGE> 2
GLIMCHER REALTY TRUST
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the three months ended June 30, 1997 and 1996 4
Consolidated Statements of Operations for the six months ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 23
</TABLE>
2
<PAGE> 3
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLIMCHER REALTY TRUST
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
Investment in real estate:
Land................................................................... $ 78,364 $ 78,339
Buildings, improvements and equipment.................................. 853,665 846,500
Developments in progress:
Land............................................................ 6,632 6,852
Developments.................................................... 11,917 17,447
-------- --------
950,578 949,138
Less accumulated depreciation.............................. 94,882 86,421
-------- --------
Net investment in real estate.................................. 855,696 862,717
Cash and cash equivalents................................................ 7,648 8,968
Cash in escrow........................................................... 5,304 5,008
Investment in and advances to unconsolidated entities.................... 49,920 41,351
Tenant accounts receivable, net.......................................... 22,090 21,068
Deferred expenses, net................................................... 7,771 8,644
Prepaid and other assets................................................. 4,007 1,646
-------- --------
$952,436 $949,402
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable.................................................. $469,876 $470,929
Notes payable............................................................ 121,443 104,318
Accounts payable and accrued expenses.................................... 22,992 26,770
Distributions payable.................................................... 11,783 12,044
-------- --------
626,094 614,061
Commitments and contingencies
Minority interest in partnership......................................... 31,345 32,130
Redeemable preferred stock:
Series A convertible preferred shares of beneficial interest, 40,000
shares authorized, 34,000 shares issued and
outstanding as of June 30, 1997 and December 31, 1996.............. 34,000 34,000
Shareholders' equity:
Common shares of beneficial interest, $.01 par value, 100,000,000 shares
authorized, 21,904,249 and 21,888,931 shares issued and
outstanding at June 30, 1997 and December 31, 1996, respectively.... 219 219
Additional paid-in capital............................................. 316,939 316,673
Distributions in excess of accumulated earnings........................ (56,161) (47,681)
-------- --------
$952,436 $949,402
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
3
<PAGE> 4
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Minimum rents......................................................... $26,822 $20,784
Percentage rents...................................................... 831 740
Tenant recoveries..................................................... 5,926 5,105
Other................................................................. 1,142 466
------- -------
Total revenues ...................................................... 34,721 27,095
------- -------
Operating expenses:
Real estate taxes..................................................... 2,644 2,486
Recoverable operating expenses........................................ 3,687 3,181
Other operating expenses............................................... 831 669
------- -------
Total operating expenses............................................ 7,162 6,336
------- -------
Property net operating income....................................... 27,559 20,759
Depreciation and amortization.............................................. 6,841 5,427
General and administrative................................................. 2,140 2,331
Gain on sales of property/outparcels....................................... 155 1,119
Interest income............................................................ 133 98
Interest expense........................................................... 10,354 6,590
Equity in income (loss) of unconsolidated entities......................... (552)
Minority interest in operating partnership................................. 874 826
------- -------
Net income................................................................. 7,086 6,802
Preferred stock dividends.................................................. 726
------- -------
Net income available to common shareholders............................ $ 6,360 $ 6,802
======= =======
Earnings per share available to common shareholders........................ $ 0.29 $ 0.31
======= =======
Cash distributions declared per common share of beneficial interest........ $0.4808 $0.4808
======= =======
Weighted average number of common shares of beneficial interest
outstanding......................................................... 21,901,123 21,887,964
========== ==========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
4
<PAGE> 5
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Minimum rents......................................................... $53,726 $41,217
Percentage rents...................................................... 1,847 1,607
Tenant recoveries..................................................... 11,688 10,674
Other................................................................. 1,850 845
------- -------
Total revenues ..................................................... 69,111 54,343
------- -------
Operating expenses:
Real estate taxes..................................................... 5,207 4,917
Recoverable operating expenses........................................ 7,296 6,739
Other operating expenses.............................................. 1,620 1,333
------- -------
Total operating expenses............................................ 14,123 12,989
------- -------
Property net operating income....................................... 54,988 41,354
Depreciation and amortization.............................................. 13,657 10,701
General and administrative................................................. 4,303 4,229
Gain on sales of property/outparcels....................................... 155 1,119
Interest income............................................................ 242 211
Interest expense........................................................... 20,621 12,963
Equity in income (loss) of unconsolidated entities......................... (1,075)
Minority interest in operating partnership................................. 1,711 1,577
------- -------
Net income................................................................. 14,018 13,214
Preferred stock dividends.................................................. 1,441
------- -------
Net income available to common shareholders............................ $12,577 $13,214
======= =======
Earnings per share available to common shareholders........................ $ 0.57 $ 0.60
======= =======
Cash distributions declared per common share of beneficial interest........ $0.9616 $0.9616
======= =======
Weighted average number of common shares of beneficial interest
outstanding............................................................ 21,895,061 21,887,196
========== ==========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
5
<PAGE> 6
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................. $ 14,018 $ 13,214
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for doubtful accounts................................ 1,250 1,008
Depreciation and amortization.................................. 13,657 10,701
Gain on sales of property/outparcels........................... (155) (1,119)
Other non-cash expenses........................................ 388 428
Equity in income/loss of unconsolidated entities............... 1,075
Minority interest in operating partnership..................... 1,711 1,577
Net changes in operating assets and liabilities:
Tenant accounts receivable, net................................ (2,087) (3,028)
Prepaid and other assets....................................... (2,163) 559
Accounts payable and accrued expenses.......................... (3,328) (2,507)
-------- --------
Net cash provided by operating activities........................... 24,366 20,833
-------- --------
Cash flows from investing activities:
Proceeds of sales.............................................. 253 3,826
Additions to investment in real estate ........................ (9,714) (38,645)
Acquisition of properties...................................... (5,167)
Investment in and advances to unconsolidated entities.......... (9,863)
Additions to cash in escrow ................................... (296) (28,051)
Additions to deferred expenses................................. (700) (88)
-------- --------
Net cash used in investing activities .............................. (20,320) (68,125)
-------- --------
Cash flows from financing activities:
Proceeds from revolving line of credit, net.................... 17,800 68,600
Proceeds from issuance of mortgage and notes payable........... 3,574 2,680
Principal payments on mortgage and notes payable............... (1,752) (2,642)
Proceeds from issuance of shares............................... 273 77
Cash distributions............................................. (25,261) (23,549)
-------- --------
Net cash (used in) provided by financing activities............... (5,366) 45,166
-------- --------
Net change in cash and cash equivalents...................................... (1,320) (2,126)
Cash and cash equivalents, at beginning of period............................ 8,968 5,832
-------- --------
Cash and cash equivalents, at end of period.................................. $ 7,648 $ 3,706
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
6
<PAGE> 7
GLIMCHER REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Glimcher Realty Trust (the "Company" or "GRT"), Glimcher Properties Limited
Partnership (the "Operating Partnership") (89.4% owned by GRT as of June 30,
1997 and December 31, 1996), four Delaware limited partnerships (Glimcher
Holdings Limited Partnership, Glimcher Centers Limited Partnership, Grand
Central Limited Partnership, and Glimcher York Associates Limited Partnership)
and one Ohio limited partnership (Morgantown Mall Associates Limited
Partnership), all of which are wholly-owned, directly or indirectly by GRT. The
Operating Partnership has an investment in two corporate ventures and one other
corporation which are accounted for under the equity method. All significant
inter-company balances and transactions have been eliminated.
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The information furnished in the accompanying consolidated balance sheets,
statements of operations, and statements of cash flows reflect all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the aforementioned financial statements for the interim periods. Operating
results for the six months ended June 30, 1997, are not necessarily indicative
of the results that may be expected for the year ending December 31, 1997.
The consolidated financial statements should be read in conjunction with the
notes to the consolidated financial statements, Management's Discussion and
Analysis of Financial Condition and Results of Operations included in Glimcher
Realty Trust's Form 10-K for year ended December 31, 1996.
Supplemental disclosure of non-cash financing and investing activities:
The Company accrued accounts payable of $280 and $1,909 for real estate
improvements as of June 30, 1997 and June 30, 1996, respectively.
The Company, through the Operating Partnership, acquired one community
shopping center during the six months ended June 30, 1996. The purchase price of
$12,553 included $5,167 in cash and the assumption of net liabilities and
mortgage debt of $7,386.
2. INVESTMENT IN UNCONSOLIDATED ENTITIES
Investments in unconsolidated entities consist of preferred stock and
non-voting common stock of Glimcher Development Corporation ("GDC"), a 45.0%
interest in Great Plains Metro Mall L.L.C. ("Great Plains") and a 33.3% interest
in Johnson City Venture L.L.C.
The Company owns preferred and common stock in GDC entitling it to
approximately 95.0% of the net profits or losses of GDC and has the ability to
exercise significant influence but not voting control with respect to GDC.
The Company is accounting for its investment in GDC using the equity method of
accounting.
The net income (loss) for each unconsolidated entity is allocated in
accordance with the provisions of the applicable operating agreements. The
allocation provisions in these agreements may differ from the ownership interest
held by each member under the terms of these agreements.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENT--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The summary financial information of the Company's unconsolidated entities
accounted for using the equity method, and a summary of the Operating
Partnership's investment in and share of net income (loss) from such
unconsolidated entities which ranges from 33.3% to 95.0% are presented below:
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
Assets:
Investment properties at cost, net........................ $133,780 $110,281
Cash and cash equivalents................................. 1,284 409
Tenant accounts receivable................................ 362 228
Other assets.............................................. 5,876 673
-------- --------
$141,302 $111,591
======== ========
Liabilities and Members' Equity:
Mortgage note payable..................................... $ 78,695 $ 57,978
Accounts payable and accrued expenses..................... 15,425 5,682
-------- --------
94,120 63,660
Members' equity............................................... 47,182 47,931
-------- --------
$141,302 $111,591
======== ========
Operating Partnership's Share of:
Members' equity........................................... $ 39,364 $ 40,439
======== ========
RECONCILIATION OF MEMBERS' EQUITY TO COMPANY
INVESTMENT IN UNCONSOLIDATED ENTITIES:
Members' equity........................................... $ 39,364 $ 40,439
Advances and additional costs............ 10,556 912
-------- --------
Investment in unconsolidated entities $ 49,920 $ 41,351
======== ========
</TABLE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Total revenues $2,279 $ 4,467
Operating expenses............................................ 1,737 3,533
------ ---------
Net operating income.......................................... 542 934
Depreciation and amortization................................. 264 525
Interest expense.............................................. 554 1,082
------ -------
Net loss............................................... $ (276) $ (673)
====== =======
Operating Partnership's share of net loss..................... $ (552) $(1,075)
====== =======
</TABLE>
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
3. MORTGAGE NOTES PAYABLE
Mortgage notes payable at June 30, 1997 and December 31, 1996 consist
of the following:
<TABLE>
<CAPTION>
CARRYING
AMOUNT OF MORTGAGE
DESCRIPTION NOTES PAYABLE INTEREST RATE
- --------------------------------------------------------------------------------------------------------------------
JUNE 30, DEC. 31, JUNE 30, DEC. 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Grand Central Limited Partnership..................... $ 25,000 $ 25,000 6.935% 6.935%
Glimcher Holdings Limited Partnership - Loan A........ 40,000 40,000 6.995% 6.995%
Glimcher Holdings Limited Partnership - Loan B........ 40,000 40,000 7.505% 7.505%
Glimcher Centers Limited Partnership.................. 76,000 76,000 7.625% 7.625%
Morgantown Mall Associates Limited Partnership 50,200 50,200 7.500% 7.500%
Glimcher Properties Limited Partnership -
Mortgage Notes Payable:
Glimcher Properties Limited Partnership......... 50,000 50,000 7.470% 7.470%
Delaware Community Shopping Center.............. 8,286 8,380 7.875% 7.875%
Retail Property Investors, Inc. - Assumed loans:
Applewood Village............................ 3,797 9.000%
Artesian Square.............................. 5,336 5,340 8.000% 8.000%
Audubon Village.............................. 4,283 4,350 8.750% 8.750%
Aviation Plaza............................... 6,692 6,723 8.000% 8.000%
Barren River Plaza........................... 8,053 8,101 8.750% 8.750%
Crossing Meadows............................. 9,321 9,375 8.000% 8.000%
Crossroads Center............................ 6,590 6,590 8.000% 8.000%
Cumberland Crossing.......................... 5,106 5,137 8.750% 8.750%
East Pointe Plaza............................ 11,070 11,111 8.750% 8.750%
Lexington Parkway Plaza...................... 7,454 7,538 9.125% 9.125%
Logan Place.................................. 2,404 2,415 8.000% 8.000%
Marion Towne Center.......................... 5,705 5,740 7.375% 7.375%
Piedmont Plaza............................... 10,098 10,125 8.000% 8.000%
Roane County Plaza........................... 5,067 5,123 9.125% 9.125%
Southside Plaza.............................. 6,491 6,547 8.000% 8.000%
Village Plaza................................ 18,697 18,887 8.000% 8.000%
Retail Property Investors, Inc.- Bridge Facility 34,372 34,372 (e) (e)
Construction Loans:
Morgantown Commons ($10,500 available).......... 9,455 9,455 (f) (f)
Georgesville Square ($16,900 available)......... 15,432 13,515 (g) (g)
Meadowview Square ($9,800 available)............ 8,764 7,108 (g) (g)
-------- --------
Total Mortgage Notes Payable.......................... $469,876 $470,929
======== ========
ESTIMATED
BALLOON
PAYMENT PAYMENT AT FINAL
DESCRIPTION TERMS MATURITY MATURITY DATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grand Central Limited Partnership..................... (a) $25,000 October 1, 2000
Glimcher Holdings Limited Partnership - Loan A........ (a) 40,000 February 1, 1999
Glimcher Holdings Limited Partnership - Loan B........ (a) 40,000 February 1, 2003
Glimcher Centers Limited Partnership.................. (a) 76,000 August 1, 2000
Morgantown Mall Associates Limited Partnership (a) 50,200 April 1, 1999
Glimcher Properties Limited Partnership -
Mortgage Notes Payable:
Glimcher Properties Limited Partnership......... (a) 50,000 October 26, 2002
Delaware Community Shopping Center.............. (b) April 1, 2016
Retail Property Investors, Inc. - Assumed loans:
Applewood Village............................ (c)
Artesian Square.............................. (b) 5,190 June 1, 2000
Audubon Village.............................. (b) 3,813 July 1, 2000
Aviation Plaza............................... (b) 6,561 June 1, 1999
Barren River Plaza........................... (b) 7,592 June 10, 2001
Crossing Meadows............................. (b) 9,096 June 1, 1999
Crossroads Center............................ (a) 6,590 July 1, 2000
Cumberland Crossing.......................... (b) 4,814 June 10, 2001
East Pointe Plaza............................ (b) 10,679 June 10, 2001
Lexington Parkway Plaza...................... (b) 6,941 March 1, 2000
Logan Place.................................. (b) 1,948 May 1, 2000
Marion Towne Center.......................... (b) 5.268 July 1, 2002
Piedmont Plaza............................... (b) 9,850 March 1, 2000
Roane County Plaza........................... (b) 4,722 March 1, 2000
Southside Plaza.............................. (b) 6,452 November 5, 1997
Village Plaza................................ (b) 18,402 November 1, 1999
Retail Property Investors, Inc.- Bridge Facility (a)(d) 34,372 October 17, 1997
Construction Loans:
Morgantown Commons ($10,500 available).......... (a) June 1, 1998
Georgesville Square ($16,900 available)......... (a)(d) October 1, 1999
Meadowview Square ($9,800 available)............ (a)(d) November 1, 1999
Total Mortgage Notes Payable..........................
</TABLE>
(a) The loan requires monthly payments of interest only.
(b) The loan requires monthly payments of principal and interest only.
(c) This property was sold on April 9, 1997.
(d) The loan can be extended for up to one year.
(e) The loan bears interest at LIBOR plus 175 basis points (7.438% at June 30,
1997 and 7.375% at December 31, 1996, respectively).
(f) The loan bears interest at LIBOR plus 200 basis points (7.687% at June 30,
1997 and 7.625% at December 31, 1996, respectively).
(g) The loan bears interest at LIBOR plus 200 basis points (7.688% at June 30,
1997 and 7.625% at December 31, 1996, respectively).
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
All age notes payable are collateralized by certain properties held within
the respective partnerships. The loan agreement for Grand Central Limited
Partnership, Glimcher Holdings Limited Partnership and Glimcher Centers Limited
Partnership contains financial covenants regarding minimum net operating income
and coverage ratios.
4. NOTES PAYABLE
On May 15, 1997, the Company, through the Operating Partnership, amended its
existing line of credit (the "Credit Facility"). The amended Credit Facility
provides for an increase in the amount the Company can borrow from $175,000 to
$190,000, extends the term from June 30, 1998 to July 31, 1998, and provides an
option to extend the term to July 31, 1999. The amended Credit Facility also
provides for a reduction in the tiered interest rate schedule with borrowings
bearing interest at a variable rate of not more than LIBOR plus 170 basis
points. At June 30, 1997, the Company's interest rate under the amended
agreement was LIBOR plus 160 basis points (7.319%).
5. RECLASSIFICATIONS
Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the 1997 presentation.
6. RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128"). FAS
128 revised the method of computing and the form for presentation of earnings
per share and is effective for financial statements issued for periods ending
after December 15, 1997. Early adoption is not permitted and the statement
requires restatement of all prior-period EPS date presented after the effective
date.
The Company will adopt FAS 128 effective with its 1997 year end. The impact
of FAS 128 on GRT Earnings Per Share is not expected to be material.
7. DISTRIBUTIONS IN EXCESS ACCUMULATED EARNINGS
The following table summarizes the change in distributions in excess of
accumulated earnings since January 1, 1997:
<TABLE>
<S> <C>
Balance, January 1, 1997......................... $(47,681)
--------
Distributions declared, $0.9616 per Share... (21,057)
Preferred stock dividends................... (1,441)
Net income.................................. 14,018
--------
Balance, June 30, 1997........................... $(56,161)
========
</TABLE>
10
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
8. PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma consolidated statements of operations
for the three and six months ended June 30, 1996, are presented as if the
acquisition of Retail Properties Investors, Inc. properties (RPI) and Delaware
Community Plaza had been made as of January 1, 1996.
The unaudited pro forma statements of operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the acquisition of RPI and Delaware Community Plaza had been
completed as of the beginning of the periods presented, nor are they indicative
of the results of operations for future periods.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1996
<S> <C> <C>
Total revenues......................................................... $33,616 $67,456
------- -------
Operating expenses:
Real estate taxes................................................... 2,862 5,665
Recoverable operating expenses...................................... 3,636 7,942
Other operating expenses............................................ 669 1,334
------- -------
Total operating expenses...................................... 7,167 14,941
------- -------
Property net operating income............................... 26,449 52,515
Depreciation and amortization........................................... 6,582 13,469
General and administrative........................................ 2,429 4,617
Gain on sales of outparcels............................................. 1,119 1,119
Interest income......................................................... 216 451
Interest expense........................................................ 10,487 20,556
Minority interest in operating partnership.............................. 881 1,635
------- -------
Net income.............................................................. $ 7,405 $13,808
======= =======
Earnings per share available to common shareholders......... $ 0.34 $ 0.63
======= =======
</TABLE>
11
<PAGE> 12
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following should be read in conjunction with the unaudited
consolidated financial statements of Glimcher Realty Trust (the "Company" or
"GRT") including the respective notes thereto, all of which are included in this
Form 10-Q.
This Form 10-Q, together with other statements and information publicly
disseminated by GRT, contains certain statements which may be deemed to be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements are based on assumptions and expectations which may
not be realized and are inherently subject to risks and uncertainties, many of
which cannot be predicted with accuracy and some of which might not even be
anticipated. Such statements are not guaranties of future performance, future
events and actual results, financial and otherwise, may differ from the results
discussed in the forward-looking statements. Risks and other factors that might
cause differences, some of which could be material, include, but are not limited
to: the effect of economic and market conditions; failure to consummate
financing and venture arrangements, including the failure of Nomura Asset
Capital Corporation ("Nomura") (as discussed below under Liquidity and Capital
Resources) to acquire preferred shares or provide permanent financing;
development risks, including lack of satisfactory financing, construction and
lease-up delays and cost overruns; the level and volatility of interest rates;
the financial stability of tenants within the retail industry; the rate of
revenue increases versus expense increases; the ability of Glimcher Development
Corporation ("GDC"), GRT's non-qualified real estate investment trust
subsidiary, to generate fees from future developments, as well as other risks
listed from time to time in this Form 10-Q and in GRT's other reports filed with
the Securities and Exchange Commission.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
REVENUES
Total revenues increased 28.1%, or $7.6 million, for the three months ended
June 30, 1997. Of the $7.6 million increase, $6.7 million was primarily the
result of increased revenues at the Community Shopping Centers ("Community
Centers"), $360,000 was the result of increased revenues at the mall properties
("Malls"), and $540,000 related to other income increases.
Minimum rents
Minimum rents increased 29.1%, or $6.0 million, for the three months ended
June 30, 1997. The summary below identifies the 29.1% increase.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -------
<S> <C> <C> <C> <C>
Same Center $0.1 $0.0 $0.1 0.9%
Acquisitions/Developments 0.0 5.9 5.9 28.2
---- ---- ---- ----
$0.1 $5.9 $6.0 29.1%
==== ==== ==== ====
</TABLE>
12
<PAGE> 13
Percentage rents
Percentage rents increased $90,000 for the three months ended June 30, 1997.
Of the $830,000 in percentage rents for the second quarter of 1997, $440,000 was
earned at the mall properties and $390,000 was earned at the community shopping
centers.
Tenant recoveries
Tenant recoveries reflect a net increase of 16.1% or $820,000 for the three
months ended June 30, 1997 compared to the second quarter of 1996. The recovery
ratio for the three months ended June 30, 1997 was 93.6% compared to 90.1% for
the second quarter of 1996. The summary below identifies the 16.1% increase by
its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -------
<S> <C> <C> <C> <C>
Same center $0.1 $(0.1) $0.0 0.4%
Acquisitions/Developments 0.0 0.8 0.8 15.7
---- ----- ---- ----
$0.1 $ 0.7 $0.8 16.1%
==== ===== ==== ====
</TABLE>
Other revenues
The $680,000 increase in other revenues was the result of an increase in
temporary tenant revenues at the Malls and increases in management fee
revenues
OPERATING EXPENSES
Total operating expenses increased 13.0%, or $830,000, for the three months
ended June 30, 1997. Recoverable expenses increased $660,000, the provision for
credit losses increased $120,000 and other operating expenses increased $50,000.
Recoverable expenses
Recoverable operating expenses increased 11.7% or $660,000 for the three
months ended June 30, 1997. The summary below identifies the 11.7% increase by
its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -------
<S> <C> <C> <C> <C>
Same center $(0.3) $0.1 $(0.2) (5.0)%
Acquisitions/Developments 0.0 0.9 0.9 16.7
----- ---- ----- ----
$(0.3) $1.0 $ 0.7 11.7%
===== ==== ===== ====
</TABLE>
The decline in the same center expenses at the Malls reflect a net $400,000
increase in real estate taxes and a $40,000 increase in other operating
expenses. Same center Community Center expenses reflected a net increase in real
estate taxes of $40,000 and an increase of $40,000 in other operating expenses.
The increase in recoverable operating expenses from acquisitions and
developments was primarily the result of the Retail Property Investors, Inc.
properties ("RPI Properties") acquisition.
13
<PAGE> 14
Provision for credit losses
The provision for credit losses was $620,000 and represented 1.8% of
total revenues for the three months ended June 30, 1997, compared to 1.9% of
total revenues for the second quarter of 1996.
Depreciation and amortization
The $1.4 million increase in depreciation and amortization was primarily the
result of an increase of $1.1 million from acquisitions (principally the RPI
Properties), $100,000 from the opening of two new Community Centers since the
end of 1996 and an increase of $180,000 in the core portfolio properties.
GENERAL AND ADMINISTRATIVE
In the second quarter of 1996, the Company began to increase its staff
levels to support the RPI Properties acquisition and expand developments and
construction activities. In addition, the Company formed GDC on October 16,
1996, and transferred 51 employees in the construction, development, leasing and
legal departments to GDC. The GDC staff provide services to the Company, to
ventures in which the Company has an ownership interest and to third parties for
a fee. GDC, an unconsolidated non-qualified REIT subsidiary, is subject to
federal income taxes. The Company also receives management fees for the services
provided by its operations staff to ventures.
As a result, portions of general and administrative expense are now
reflected both in the GDC statement operations of the Company and GDC:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------
(IN THOUSANDS)
1997 1996
---- ----
<S> <C> <C>
General and administrative expense $2,140 $2,331
Equity in loss of GDC 765 --
------ ------
$2,905 $2,331
====== ======
</TABLE>
INTEREST EXPENSE/CAPITALIZED INTEREST
Interest expense increased 57.1% or $3.8 million, for the three months
ended June 30, 1997. The summary below identifies the increase by its
various components (dollars in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------
1997 1996 INC. (DEC.)
---- ---- -----------
<S> <C> <C> <C>
Average loan balance $589,504 $367,144 $222,360
Average rate 7.69% 7.40% 0.29%
-------- -------- --------
Total interest 11,333 6,792 4,541
Less: Capitalized interest (1,240) (473) (767)
Add: Amortization of rate buydown 194 194
Other 67 77 (10)
-------- -------- --------
Interest expense $ 10,354 $ 6,590 $ 3,764
======== ======== ========
</TABLE>
The primary reason for the increase in outstanding debt from June 30, 1996
to June 30, 1997 was the RPI Properties acquisition which was financed
through loan assumptions and increased borrowings.
14
<PAGE> 15
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
REVENUES
Total revenues increased 27.2%, or $14.8 million, for the six months ended
June 30, 1997. Of the $14.8 million increase, $370,000 was primarily the result
of increased revenues at the Malls, $13.7 million was the result of increased
revenues at the Community Centers, and $660,000 related to other income
increases.
Minimum rents
Minimum rents increased 30.3%, or $12.5 million, for the six months ended
June 30, 1997. The summary below identifies the 30.3% increase.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -------
<S> <C> <C> <C> <C>
Same Center $0.4 0.2 $ 0.6 1.5%
Acquisitions/Developments $0.0 11.9 11.9 28.8
---- ----- ----- ----
$0.4 $12.1 $12.5 30.3%
==== ===== ===== ====
</TABLE>
Percentage rents
Percentage rents increased $240,000 for the six months ended June 30,
1997. Of the $1.8 million in percentage rents for 1997, $860,000 was earned at
the Malls and $990,000 was earned at the Community Centers.
Tenant recoveries
Tenant recoveries reflect a net increase of 9.5% or $1.0 million for the six
months ended June 30, 1997. The recovery ratio for the six months ended June 30,
1997 was 93.5% compared to 91.6% for the same period of 1996. The summary below
identifies the 9.5% increase by its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -------
<S> <C> <C> <C> <C>
Same center $(0.3) $(0.1) $(0.4) (3.9)%
Acquisitions/Developments 0.0 1.4 1.4 13.4
----- ----- -----
$(0.3) $ 1.3 $ 1.0 9.5%
===== ===== ===== ====
</TABLE>
15
<PAGE> 16
Other revenues
The $1.0 million increase in other revenues was the result of an increase
in temporary tenant revenues at the Malls and increases in management fee
revenues.
OPERATING EXPENSES
Total operating expenses increased 8.7%, or $1.1 million, for the six months
ended June 30, 1997. Recoverable expenses increased $850,000, the provision for
credit losses increased $240,000 and other operating expenses increased $50,000.
Recoverable expenses
Recoverable operating expenses increased 7.3% or $850,000, for the six
months ended June 30, 1997. The summary below identifies the 7.3% increase by
its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -------
<S> <C> <C> <C> <C>
Same center $(0.9) $0.0 $(0.9) (7.1)%
Acquisitions/Developments 0.0 1.7 1.7 14.4
----- ---- ----- ----
$(0.9) $1.7 $ 0.8 7.3%
===== ==== ===== ====
</TABLE>
The decline in the same center expenses at the malls reflect a net $900,000
reduction in real estate taxes, a $180,000 increase in other operating expenses,
and a $170,000 decrease in snow removal costs compared to the same period in the
prior year. Same center Community Center expenses reflect a net increase in real
estate taxes of $260,000 offset by decreases of $150,000 in snow removal costs
and $50,000 in other operating expenses. The increase in recoverable operating
expenses from acquisitions and developments was primarily the result of the RPI
Properties acquisition.
Provision for credit losses
The provision for credit losses was $1.2 million and represented 1.8% of
total revenues for the six months ended June 30, 1997, compared to 1.9% of
total revenues for the six months ended June 30, 1996.
Depreciation and amortization
The $3.0 million increase in depreciation and amortization was primarily the
result of an increase of $2.3 million from acquisitions (principally the RPI
Properties), $190,000 from the opening of two new Community Centers since the
end of 1996 and an increase of $470,000 in the core portfolio properties.
GENERAL AND ADMINISTRATIVE
In the second quarter of 1996, the Company began to increase its staff
levels to support the RPI Properties acquisition and expand developments and
construction activities. In addition, the Company formed GDC on October 16,
1996, and transferred 51 employees in the construction, development, leasing and
legal departments to GDC. The GDC staff provide services to the Company, to
ventures in which the Company has an ownership interest and to third parties for
a fee. GDC, an unconsolidated non-qualified REIT subsidiary, is subject to
federal income taxes. GDC also receives management fees for the services
provided by its operations staff to ventures.
16
<PAGE> 17
As a result, portions of general and administrative expense are now
reflected both in the GDC statement of the Company and GDC:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
(IN THOUSANDS)
1997 1996
---- ----
<S> <C> <C>
General and administrative expense $4,303 $4,229
Equity in loss of GDC 1,377
------ ------
$5,680 $4,229
====== ======
</TABLE>
INTEREST EXPENSE/CAPITALIZED INTEREST
Interest expense increased 59.1% or $7.7 million, for the six months
ended June 30, 1997. The summary below identifies the increase by its various
components (dollars in thousands).
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------------
1997 1996 INC. (DEC.)
---- ---- -----------
<S> <C> <C> <C>
Average loan balance $585,522 $358,543 $226,979
Average rate 7.65% 7.43% 0.22%
-------- -------- --------
Total interest 22,396 13,320 9,076
Less: Capitalized interest (2,274) (875) (1,399)
Add: Amortization of rate buydown 388 388
Other 111 130 (19)
-------- -------- --------
Interest expense $ 20,621 $ 12,963 $ 7,658
======== ======== ========
</TABLE>
The primary reason for the increase in outstanding debt from June 30,
1996 to June 30, 1997 was the RPI Properties acquisition. The $197.0 million
purchase price was financed through loan assumptions and increased borrowings.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company has several active development, renovation and expansion
projects and will continue to be active in these areas. Future development
projects being considered include those relating to the commitment between the
Company and Nomura, pursuant to which Nomura has agreed, subject to satisfaction
of certain conditions, to provide equity to the Company and permanent debt
financing for certain of the Company's developments. Management anticipates that
the funds available under its revolving line of credit ("Credit Facility") and
the Company's plan to utilize construction financing, long-term mortgage debt
and the venture structure to raise equity and financing for acquisitions and
developments and the issuance of preferred and common stock will provide
sufficient capital resources to carry out the Company's business strategy
relative to the acquisitions, renovations, expansions and developments discussed
herein.
At June 30, 1997 the Company's debt to total market capitalization was
52.3% which is consistent with the current policy of the Company to maintain
this ratio between 40.0% and 60.0%.
Net cash provided by operating activities for the six months ended June 30,
1997 was $24.4 million versus $20.8 million for the corresponding period of
1996. The increase reflects additional net income of $800,000 and an increase in
depreciation and amortization.
Net cash used in investing activities for the six months ended June 30, 1997
was $20.3 million, and reflects additional direct investments in real estate
assets and additional indirect investments in real estate through investments in
unconsolidated entities.
17
<PAGE> 18
Net cash used in financing activities for the six months ended June 30, 1997
was $5.4 million. Cash was provided by additional borrowings of $21.3 million
primarily used to fund the increase in real estate investments. Cash was used to
fund distributions of $25.3 million and principal payments or mortgages and
notes payable of $1.8 million.
RENOVATION, EXPANSION, DEVELOPMENT AND ACQUISITION ACTIVITY
The Company continues to be very active in its renovation, expansion,
development and acquisition activities. Its business strategy is to set in place
activities that will allow the Company's assets and cash flow to grow.
RENOVATION AND EXPANSION ACTIVITY
Grand Central Mall
The renovation and expansion of this Mall located in Parkersburg, West
Virginia, continues and will increase this property's gross leasable area
("GLA") to 887,000 square feet upon its completion. The addition of a food court
and the expansion of the existing cinema to a 37,000 square foot 12-screen
cinema were completed and opened in 1996. Additional expansion of the Mall will
include an 83,000 square foot Proffitt's which is projected to open in March
1998. The estimated cost of the Proffitt's expansion is $5.0 million of which
$3.0 million has been expended at June 30, 1997.
Indian Mound Mall
The expansion of this Mall located in Newark/Heath, Ohio, will add
approximately 120,000 square feet and increase this property's GLA to 539,000
square feet. The expansion includes the addition of a 92,000 square foot Sears,
expanding the current cinema from 18,000 square feet to 42,000 square feet and
the addition of 6,000 square feet of small shops. The opening of the new retail
space is projected for the fall of 1997. The estimated cost of the expansion is
$4.1 million of which $2.0 million has been expended at June 30, 1997.
DEVELOPMENT ACTIVITY
Georgesville Square
This development is a Community Center containing 232,000 square feet of GLA
located in Columbus, Ohio. The center is anchored by a 132,000 square foot
Lowe's and a 63,000 square foot Kroger, with the balance of the GLA in small
shops. Lowe's opened in October 1996, and Kroger and the small shops opened in
the second quarter of 1997. The estimated cost of the development is $18.4
million, of which $16.9 million is being financed from a construction loan which
bears interest at LIBOR plus 200 basis points (7.688% at June 30, 1997) and
matures October 1, 1999, subject to two extensions of six months each. As of
June 30, 1997, expended dollars totaled $17.6 million of which $15.4 million was
drawn under the construction loan. Additionally, the Company announced the
construction of a 70,000 square foot 16-screen cinema on one of the center's
outparcel lots which is scheduled to open in early 1998. The Company has also
expended an additional $2.5 million relating to land costs for future phases of
this development.
Meadowview Square
This development is a Community Center containing 151,000 square feet of GLA
located in Kent/Ravenna, Ohio. The center is anchored by a 126,000 square foot
Wal-Mart with the balance of the space in small shops. Wal-Mart opened in
January 1997 and the small shops opened in the second quarter of 1997. The
estimated cost of the development is $11.1 million, of which $9.8 million is
being financed from a construction loan which bears interest at LIBOR plus 200
basis points (7.688% at June 30, 1997) and matures November 1, 1999 subject to
two extensions of six months each. As of June 30, 1997, expended dollars totaled
$9.0 million of which
18
<PAGE> 19
$8.8 million was drawn under the construction loan. The Company has also
expended an additional $1.7 million relating to land costs for future phases of
this development.
The Great Mall of the Great Plains
Glimcher Properties Limited Partnership (the "Operating Partnership")
maintains a 45.0% interest in Great Plains Metro Mall L.L.C. which owns The
Great Mall of the Great Plains, a single level enclosed super-regional, value
and entertainment oriented mall totaling approximately 850,000 square feet of
GLA located in Olathe, Kansas (Kansas City, Kansas metropolitan area). The cost
of the project is being financed through the member contributions of investors
and a construction loan of $74.1 million. The property will consist of 10
anchors including a 16-screen cinema, approximately 150 small shop tenants and
20 food court and kiosk units. The grand opening of the Mall Property is
scheduled for August 14, 1997.
ACQUISITION ACTIVITY
The Company continues to pursue strategic acquisitions which will complement
and enhance its existing portfolio. On July 2, 1997, the Company, in a joint
venture partnership with Nomura, completed the acquisition of the Dayton Mall in
Dayton, Ohio for a purchase price of $91.0 million. The Mall consists of
approximately 1.3 million square feet of GLA including four anchors.
Also in July 1997, the Company announced it had entered into a contract,
subject to due diligence, to acquire the entities which own Colonial Park Mall
in Harrisburg, Pennsylvania. This Mall consists of approximately 744,000 square
feet of GLA including three anchors.
PORTFOLIO DATA
Tenants reporting sales data for the twelve month period ended June 30,
1997 and June 30, 1996 represented 9.6 million square feet of GLA, or 68.4% of
the 1997/1996 "same store" population. Below is a summary of the "same store"
data:
<TABLE>
<CAPTION>
MALLS COMMUNITY CENTERS
------------------------ ------------------------
PROPERTY TYPE SALES PSF % INCREASE SALES PSF % INCREASE
-------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Anchors................... $178.93 3.0% $228.98 0.0%
Stores.................... $275.61 0.2% $206.45 2.9%
Total..................... $193.79 2.4% $226.96 0.2%
</TABLE>
The occupancy levels by property type are summarized below:
<TABLE>
<CAPTION>
OCCUPANCY
---------------------------------------------------------------
6/30/97 3/31/97 12/31/96 9/30/96 6/30/96
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Mall Anchors....................... 99.1% 99.1% 99.1% 95.7% 95.8%
Mall Stores........................ 81.1% 81.2% 82.4% 81.4% 82.6%
Total Mall portfolio .............. 92.8% 92.6% 93.0% 90.6% 91.2%
Community Centers Anchors.......... 97.9% 98.2% 98.3% 97.8% 97.0%
Community Centers Stores........... 86.0% 86.0% 87.1% 86.2% 87.1%
Total Community Centers ........... 95.4% 95.5% 95.8% 95.1% 94.7%
Single Tenant Retail Properties.... 100.0% 100.0% 100.0% 100.0% 100.0%
Total Community Center Portfolio... 95.8% 96.0% 96.2% 95.9% 95.5%
</TABLE>
19
<PAGE> 20
The Mall anchor tenant vacancy represents one space totaling 27,500 square
feet of GLA. The 2.1% Community Center anchor tenant vacancy represents 5 spaces
totaling 194,700 square feet of GLA. Mall store vacancies total 338,000 square
feet of GLA and community shopping centers store vacancies total 367,900 square
feet of GLA.
FUNDS FROM OPERATIONS
Management considers funds from operations ("FFO") to be a supplemental
measure of the Company's operating performance. FFO does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. FFO should not be
considered as an alternative to net income as the primary indicator of the
Company's operating performance or as an alternative to cash flow as a measure
of liquidity. The following table illustrates the calculation of FFO for the
three and six months ended June 30, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
1996 NAREIT FFO DEFINITION
-----------------------------------------------
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income available to common shareholders......... $ 6,360 $ 6,802 $12,577 $13,214
Less:
Gain on sale of property (155) (155)
Add back:
Real estate depreciation and amortization...... 6,238 4,859 12,482 9,583
Minority interest in partnership............... 874 826 1,711 1,577
GRT share of joint venture depreciation
and amortization 121 242
------- ------- ------- -------
Funds from operations............................... $13,438 $12,487 $26,857 $24,374
======= ======= ======= =======
Weighted average shares/units outstanding........... 24,505 24,492 24,499 24,491
======= ======= ======= =======
</TABLE>
FFO increased 7.6%, or $950,000 for the three months ended June 30, 1997.
The increase was the result of improved property net operating income of $6.8
million combined with decreased general and administrative expense of $190,000,
and partially offset by increased interest expense of $3.8 million, the loss
from unconsolidated entities of $430,000, preferred stock dividends of $730,000
and a decrease in gain on sale of outparcels of $1.1 million.
FFO increased 10.2%, or $2.5 million for the six months ended June 30, 1997.
The increase was the result of improved property net operating income of $13.6
million partially offset by increased interest expense of $7.7 million, the loss
from unconsolidated entities of $830,000, preferred stock dividends of $1.4
million and a decrease in gain on sale of out parcels of $1.1 million.
OTHER
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail sales
are typically at their highest levels. In addition, shopping malls achieve most
of their temporary tenant rents during the holiday season. As a result of the
above, earnings are generally highest in the fourth quarter of each year.
The retail industry has experienced some difficulty, which is reflected in
sales trends and in the bankruptcies and continued restructuring of several
prominent retail organizations. Continuation of these trends could impact future
earnings performance.
20
<PAGE> 21
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An Annual meeting of shareholders was held on May 12,
1997. Proxies for the meeting were solicited by the registrant
pursuant to Regulation 14 under the Securities Exchange Act of 1934.
In connection with Proposal 1 regarding the election of trustees,
there was no solicitation in opposition to the management's nominees
as listed in the proxy statement and all of such nominees were
elected. There were no broker non-votes in connection with such
proposal.
Votes of 18,697,982 Shares were cast for the election of
Herbert Glimcher as Trustee; votes of 1,789,409 Shares were withheld.
Votes of 18,697,932 Shares were cast for the election of
David J. Glimcher as Trustee; votes of 1,789,459 Shares were withheld.
In connection with Proposal 2, there was no solicitation
in opposition of the ratification of the appointment of the Company's
independent public accountants as set forth in the proxy statement and
such appointment was ratified.
Votes of 20,262,757 Shares were cast for the ratification
of the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accounts; votes of 154,217 Shares were against; and
votes of 47,290 Shares abstained.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.41 Operating Agreement of Dayton Mall Venture,
LLC dated July 1, 1997 executed by Glimcher
Properties Limited Partnership, Glimcher
Dayton Mall, Inc., and Property Acquisition
Trust 1.
10.42 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
George A. Schmidt, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
21
<PAGE> 22
10.43 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
Herbert Glimcher, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
10.44 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
David J. Glimcher, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
10.45 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
Michael P. Glimcher, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
10.46 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
William G. Cornely, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
10.47 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
William R. Husted, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
10.48 Severance Benefits Agreement by and between
Glimcher Properties Limited Partnership and
Timothy C. Getz, dated June 11, 1997
executed by Glimcher Realty Trust and
Glimcher Properties Limited Partnership.
(b) During the three months ended June 30, 1997, the
Company filed a report on Form 8-K with the Securities and Exchange
Commission on June 17, 1997, in connection with an amendment to the
Company's Credit Facility.
22
<PAGE> 23
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.
GLIMCHER REALTY TRUST
July 31, 1997 /s/ David J. Glimcher
- ---------------------- ---------------------------------------------
(Date) David J. Glimcher,
President & Chief Operating Officer
July 31, 1997 /s/ William G. Cornely
- ---------------------- ---------------------------------------------
(Date) William G. Cornely,
Senior Vice President Chief Financial Officer
23
<PAGE> 1
OPERATING AGREEMENT
OF
DAYTON MALL VENTURE, LLC
Dated as of July 1, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1: ORGANIZATIONAL MATTERS.............................................................................. 1
Section 1.1 Formation of Company.............................................................. 1
Section 1.2 Purpose of Company................................................................ 1
Section 1.3 Name and Principal Office......................................................... 1
Section 1.4 Agent for Service................................................................. 1
Section 1.5 Term of Company................................................................... 1
ARTICLE 2: CAPITAL CONTRIBUTIONS; PERMANENT FINANCING; WARRANT................................................. 2
Section 2.1 Capital Contributions............................................................. 2
Section 2.2 Use of Capital Contributions and Loans............................................ 2
Section 2.3 Return of Capital Contributions; No Interest...................................... 2
Section 2.4 Payment of Capital Contributions.................................................. 3
Section 2.5 Securitization.................................................................... 3
ARTICLE 3: CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS................................................. 3
Section 3.1 Establishment and Maintenance of Capital Accounts................................. 3
Section 3.2 Allocation of Profits and Losses.................................................. 4
Section 3.3 Special Allocations............................................................... 4
Section 3.4 Curative Allocations.............................................................. 6
Section 3.5 Other Allocation Rules............................................................ 6
Section 3.6 Tax Allocations................................................................... 7
Section 3.7 Distributions of Distributable Cash............................................... 7
Section 3.8 Distributions of Net Liquidation Proceeds......................................... 8
ARTICLE 4: OPERATION OF COMPANY................................................................................ 8
Section 4.1 Management of Company............................................................. 8
Section 4.2 Purpose Requirements; Restrictions on Managing Member's Authority................. 9
Section 4.3 Specific Obligations of Managing Member........................................... 11
Section 4.4 Protection of Third Parties....................................................... 12
Section 4.5 Outside Ventures of Members....................................................... 12
Section 4.6 Meetings of the Members........................................................... 12
Section 4.7 Decisions of the Members.......................................................... 13
Section 4.8 Actions of the Members Without a Meeting.......................................... 13
Section 4.9 Waiver of Notice.................................................................. 13
Section 4.10 Liability, Protection and Indemnity of Managing Member............................ 13
Section 4.11 Management of the Property........................................................ 15
</TABLE>
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ARTICLE 5: ACCOUNTING AND FISCAL AFFAIRS; INSPECTIONS.......................................................... 16
Section 5.1 Accounting; Fiscal Year........................................................... 16
Section 5.2 Annual Reports; Monthly Reports................................................... 16
Section 5.3 Method of Accounting.............................................................. 17
Section 5.4 Corporate Member's Books and Records.............................................. 17
ARTICLE 6: TRANSFER OF INTEREST IN COMPANY..................................................................... 17
Section 6.1 Voluntary Transfer of Interest in Company......................................... 17
Section 6.2 Withdrawal of a Member............................................................ 18
Section 6.3 Buy-Sell.......................................................................... 18
Section 6.4 Status of Third Party Transferee.................................................. 19
Section 6.5 Absolute Restriction on Transfers................................................. 19
Section 6.6 Time of Transfer.................................................................. 20
Section 6.7 Distributions and Applications in Respect of a Transfer Interest.................. 20
ARTICLE 7: DISSOLUTION, WINDING UP AND TERMINATION............................................................. 20
Section 7.1 Termination and Dissolution....................................................... 20
ARTICLE 8: REPRESENTATIONS AND WARRANTIES...................................................................... 22
Section 8.1 Representations and Warranties of Members......................................... 22
ARTICLE 9: SPECIAL COVENANTS................................................................................... 23
ARTICLE 10: MISCELLANEOUS...................................................................................... 23
Section 10.1 Additional Documents.............................................................. 23
Section 10.2 Amendment of Agreement............................................................ 23
Section 10.3 Notices and Addresses............................................................. 23
Section 10.4 Pronouns and Plurals.............................................................. 24
Section 10.5 Counterparts...................................................................... 24
Section 10.6 Applicable Law.................................................................... 24
Section 10.7 Jurisdiction; Venue............................................................... 24
Section 10.8 Successors........................................................................ 25
Section 10.9 Severability...................................................................... 25
Section 10.10 Waiver of Action for Partition.................................................... 25
Section 10.11 Headings.......................................................................... 25
Section 10.12 Entire Agreement.................................................................. 25
Section 10.13 Creditors......................................................................... 25
Section 10.14 Federal Income Tax Elections...................................................... 25
Section 10.15 Injunctive Relief................................................................. 26
Section 10.16 Dispute Resolution................................................................ 26
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ARTICLE 11: BUDGETS/PAYMENT.................................................................................... 27
Section 11.1 Annual Budget..................................................................... 27
Section 11.2 Payment Instructions.............................................................. 28
Section 11.3 Priority of Distributions......................................................... 28
ARTICLE 12: DEFINITIONS........................................................................................ 29
Section 12.1 Definitions....................................................................... 29
Section 12.2 Other Definitional Provisions..................................................... 41
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This OPERATING AGREEMENT OF DAYTON MALL VENTURE, LLC (this
"Agreement") is executed as of the 1st day of July, 1997 by and among GLIMCHER
PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership ("Glimcher"),
and GLIMCHER DAYTON MALL, INC., a Delaware corporation, ("Corporate Member" or
"Managing Member") and Property Acquisition Trust I, a Delaware investment
trust ("PAT").
ARTICLE 1: ORGANIZATIONAL MATTERS
SECTION 1.1 FORMATION OF COMPANY.
The Members hereby organize a limited liability company (the
"Company") pursuant to the Delaware Limited Liability Company Act (the "Act")
and for that purpose have caused a Certificate of Formation (the "Certificate")
to be executed and filed with the Delaware Secretary of State. Upon the written
request of any Member, the Managing Member shall, in full satisfaction of any
obligations relating thereto placed upon it by the Act, deliver a copy of the
filed Certificate and any amendments thereto to the requesting Member.
SECTION 1.2 PURPOSE OF COMPANY.
The purpose for which the Company is organized is limited solely to
acquiring, developing, expanding, owning, operating, financing and selling an
approximately 666,443 square foot regional shopping mall known as "The Dayton
Mall", located in Miami Township, Montgomery County, Ohio (the "Property").
SECTION 1.3 NAME AND PRINCIPAL OFFICE.
The name of the Company shall be "Dayton Mall Venture, LLC". The
address of the office at which the Company's records shall be kept is 20 South
Third Street, Columbus, Ohio 43215.
SECTION 1.4 AGENT FOR SERVICE.
The Company's registered agent for service of process in the State of
Delaware is Corporation Service Company. The address of the registered agent in
the State of Delaware is 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805.
SECTION 1.5 TERM OF COMPANY.
The term of the Company began upon the acceptance of the Certificate
by the Office of the Delaware Secretary of State and shall continue in
existence perpetually, unless it is earlier terminated pursuant to the
provisions of this Agreement.
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ARTICLE 2: CAPITAL CONTRIBUTIONS; PERMANENT FINANCING; WARRANT
SECTION 2.1 CAPITAL CONTRIBUTIONS.
(a) The Members have contributed or shall contribute to the capital of
the Company cash in the amounts set forth on Exhibit A hereto, which amounts
comprise a portion of the Members' respective Capital Contributions hereunder.
(b) The Members shall contribute pro-rata in accordance with their
respective Contribution Percentage, as additional capital contributions (the
"Additional Capital Contributions"), amounts necessary to fund expansions of
the Property and the capital expenditures required by the Company in connection
with the acquisition of the Property. Each Member shall make its Additional
Capital Contributions within thirty (30) days of the written request therefor
by the Managing Member.
(c) If any Member ("Defaulting Member") fails to make its required
Additional Capital Contribution (the "Requested Amount"), the nondefaulting
Members shall have all remedies available to them hereunder, at law or in
equity, and shall have the right, but not the obligation, to contribute the
Requested Amount of a Defaulting Member directly to the Company. Any such
Additional Capital Contribution shall be added to the applicable nondefaulting
Member's Preferred Capital Amount. In addition, the Percentage Interests of the
Members shall be recalculated as follows: (i) the applicable nondefaulting
Member's Percentage Interest and Liquidation Percentage shall each be increased
by the percentage obtained by dividing (a) 125% of the amount of the Requested
Amount by (b) the total amount of all Capital Contributions of the Members to
the Company, and (ii) the Defaulting Member's Percentage Interest and
Liquidation Percentage shall each be reduced by the percentage by which the
applicable nondefaulting Member's Percentage Interest and Liquidation
Percentage have been increased pursuant to (i) above.
SECTION 2.2 USE OF CAPITAL CONTRIBUTIONS AND LOANS.
The Capital Contributions of the Members, all proceeds of Company
borrowings, and any Additional Capital Contributions made pursuant to this
Agreement shall be used and applied only for the Company purpose set forth in
Section 1.2 hereof or as otherwise determined and agreed to by all of the
Members.
SECTION 2.3 RETURN OF CAPITAL CONTRIBUTIONS; NO INTEREST.
Except as otherwise expressly provided in this Agreement, no Member
shall: (a) be entitled to any interest or other fixed return with respect to
its Capital Contribution, (b) be obligated to make any Capital Contribution to
the Company, (c) have any right to demand a return of its Capital Contribution;
or (d) have a priority over any other member as to the return of a Capital
Contribution upon a dissolution of the Company.
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SECTION 2.4 PAYMENT OF CAPITAL CONTRIBUTIONS.
All Capital Contributions shall be in cash and be reflected by an
appropriate entry on the Company's books and records and on Exhibit A hereto.
SECTION 2.5 SECURITIZATION.
The Members agree to make any reasonable changes or amendments to this
Agreement required by any Rating Agencies or reasonably requested by Lender in
connection with a Securitization.
ARTICLE 3: CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
SECTION 3.1 ESTABLISHMENT AND MAINTENANCE OF CAPITAL ACCOUNTS.
A separate capital account (each, a "Capital Account") shall be
maintained for each Member in accordance with the rules of Regulations Section
1.704-(b)(2)(iv), and this Section 3.1 shall be interpreted and applied in a
manner consistent therewith. The Capital Account of each Member (a) shall be
credited with (i) the amount of such Member's Capital Contributions and any
Additional Capital Contributions made by such Member, (ii) such Member's
allocable share of Net Profits (as defined below) and (iii) such Member's share
of any other items required to be credited to such Member's Capital Account
under Regulation Section 1.704-1(b)(2)(iv) and (b) shall be debited with (i)
the amount of cash distributed to such Member, (ii) such Member's allocable
share of Net Losses (as defined below) and depreciation and (iii) such Member's
share of any other items required to be debited from such Member's Capital
Account under Regulation Section 1.704-(b)(2)(iv). A transferee of a Company
interest shall succeed to the Capital Account of the transferor relating to the
Company interest transferred. In the case of any Company property to which the
principles of Section 704(c) of the Internal Revenue Code of 1986, as amended
(the "Code"), applies, the Capital Accounts of the Members shall be adjusted in
accordance with Regulations Section 1.704-(b)(2)(iv)(g) for allocation of
depreciation, depletion, amortization and gain and loss, as computed for book
purposes pursuant to Regulation Section 1.704-1(b)(2)(iv)(g)(3)
("Depreciation"), with respect to such property.
SECTION 3.2 ALLOCATION OF PROFITS AND LOSSES.
(a) "Profits" and "Losses" of the Company in respect of each taxable
year shall mean the Company's taxable income or loss for such year 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), except that (i)
income or gain that is exempt from federal income tax shall be included as
income
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or gain, (ii) any expenditure described in Code Section 705(a)(2)(B) or treated
as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section
1.704-l(b)(2)(iv)(i), and not otherwise take into account in computing Net
Profits or Net Losses pursuant to this Section 3.2(a), shall be treated as a
deduction, (iii) at any time the Gross Asset Value of any Company property is
adjusted pursuant to the definition of Gross Asset Value in Section 12.1, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such property for purposes of computing Net Profits or Net
Losses, (iv) gain or loss resulting from the disposition of any Company 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
property differs from its Gross Asset Value, and (v) notwithstanding any other
provision of this Section 3.2(a), any items which are specially allocated
pursuant to Sections 3.3 or 3.4 of this Agreement shall not be taken into
account in computing Net Profits or Net Losses.
(b) Net Profits shall be allocated first, to any Member receiving a
Monthly Preferred Yield Amount in an amount equal to the amount of cash (if
any) distributed to the Member for such taxable year with respect to Monthly
Preferred Yield Amounts, and any remaining Net Profits for such taxable year
shall be allocated among the Members in accordance with their Percentage
Interests; provided, however, that if the Net Profits of the Company for any
taxable year are less than the amount distributed to any Member for such
taxable year on account of Monthly Preferred Yield Amounts, then the amount of
such shortfall shall be carried forward to the next succeeding taxable year and
shall (to the extent of such shortfall) increase the amount of Net Profits to
be allocated to that Member for such taxable year pursuant to this Section 3.2
so that on a cumulative basis, any Member receiving a Monthly Preferred Yield
Amount shall be allocated Net Profits equal to (but not in excess of) the total
amount of cash distributed to it on account of Monthly Preferred Yield Amounts;
provided further, that in no event shall less than one percent (1%) of the Net
Profits be allocated to the Managing Member for any taxable year. Net Losses of
the Company for the taxable year shall be allocated among the Members in
accordance with their Percentage Interests.
SECTION 3.3 SPECIAL ALLOCATIONS.
The following special allocations shall be made in the following
order:
(a) Notwithstanding any other provision of this Article 3, if there is
a net decrease in Company Minimum Gain during any fiscal year, except as
otherwise permitted by Sections 1.704-2(f)(2),(3),(4) and (5) of the
Regulations, items of income and gain for such fiscal year (and subsequent
years, if necessary) in the order provided in Section 1.704-2(j)(2)(i) of the
Regulations shall be allocated among all Members whose shares of Company
Minimum Gain decreased during that year in proportion to and to the extent of
such Member's share of the net decrease in Company Minimum Gain during such
year. The allocation contained in this Section 3.3(a) is intended to be a
"minimum gain chargeback" within the meaning of Section 1.704-2 of the
Regulations, and shall be interpreted consistently therewith.
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(b) Notwithstanding any other provision of this Article 3, if there is
a net decrease in "Partner nonrecourse debt minimum gain", except as provided
in Section 1.704-2(i) of the Regulations, items of Company income and gain for
such fiscal year (and subsequent years, if necessary) in the order provided in
Section 1.704 2(j)(2)(ii) of the Regulations shall be allocated among all
Members whose share of "Partner nonrecourse debt minimum gain" decreased during
that year in proportion to and to the extent of such Member's share of the net
decrease in Section 3.3(b) is intended to comply with the "partner nonrecourse
debt minimum gain" chargeback requirement in Section 1.704-2 of the Regulations
and shall be interpreted consistently therewith.
(c) In the event any Member unexpectedly receives any adjustments,
allocations or distributions described in Section 1.704-2(b)(2)(ii)(d)(4), (5)
and (6) of the Regulations, items of income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit of
such Member as quickly as possible, provided that an allocation pursuant to
this Section 3.3(c) shall be made only if and to the extent that such Member
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article 3 have been tentatively made as if this Section
3.3(c) were not in this Agreement.
(d) In the event any Member has an Adjusted Capital Account Deficit at
the end of any fiscal year, each such Member shall be specially allocated items
of Company income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 3.3(d) shall be made only
if and to the extent that, such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article 3 have been
made as if this Section 3.3(d) were not in this Agreement.
(e) Nonrecourse Deductions and Nonrecourse Liabilities for any fiscal
year or other period shall be specifically allocated to the Members in
accordance with their respective Percentage Interests.
(f) Member Nonrecourse Deductions and Member Nonrecourse Debt for any
fiscal year or other period shall be allocated among the Members in accordance
with applicable Regulations under Sections 704 and 705 of the Code.
(g) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulations Section 1.704-1(b)(ii)(4)(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 Members in a
manner consistent with the manner in which their Capital Accounts are required
to be adjusted pursuant to such section of the Regulations.
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SECTION 3.4 CURATIVE ALLOCATIONS.
The allocations set forth in Sections 3.3(a), (b), (c), (d), (e), (f)
and (g) above (the "Regulatory Allocations") are intended to comply with
certain of the requirements of Section 1.704-1(b) of the Regulations. The
Regulatory Allocations may not be consistent with the manner in which the
Members intend to share distributions from the Company. Accordingly, the
Managing Member hereby is authorized to divide other allocations, income, gain,
deduction or loss among the Members so as to prevent the Regulatory Allocations
from distorting the manner in which distributions from the Company are intended
to be shared among the Members pursuant to this Agreement. The Managing Member
shall have the discretion to accomplish this result in any reasonable manner.
SECTION 3.5 OTHER ALLOCATION RULES.
(a) For purposes of determining the Net Profits, Net Losses or any
other items allocable to any period, Net Profits and Net Losses and any such
other items shall be deemed to have been earned ratably over the period of the
fiscal year of the Company, except that Net Profits, Net Losses and any other
items arising from the sale or other disposition of Company assets, other than
in the ordinary course of business, shall be taken into account as of the date
of such sale or other disposition.
(b) Except as otherwise provided in this Agreement, all items of
income, gain, loss and deduction, and any other allocations not otherwise
provided for, shall be allocated among the Members in the same proportions as
they share Net Profits or Net Losses (as the case may be) for each fiscal year.
SECTION 3.6 TAX ALLOCATIONS.
(a) Except as provided in Sections 3.6(b) and (c) below, Company
income, gain, loss and deduction for tax purposes for any year or other fiscal
period shall be divided among the Members in the same proportions as they share
Net Profits or Net Losses, as the case may be, for such year or other period.
(b) Notwithstanding Section 3.6(a), in accordance with Code Section
704(c) and the regulations thereunder, income, gain, loss and deduction with
respect to any property contributed to the capital of the Company shall, solely
for tax purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the Company for
federal income tax purposes and its initial Gross Asset Value.
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(c) Notwithstanding Section 3.6(a), in the event the Gross Asset Value
of any Company asset is adjusted as specified in the definition of "Gross Asset
Value" in Section 12.1, subsequent allocations of income, gain, loss and
deduction for tax purposes with respect to such asset shall take into account
any variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the regulations thereunder.
SECTION 3.7 DISTRIBUTIONS OF DISTRIBUTABLE CASH.
On each Distribution Date, Distributable Cash shall be distributed in
the following amounts in the following priority:
(a) To PAT, all Monthly Preferred Yield Amounts (or portions thereof)
with respect to prior Distribution Dates that have not previously been paid (in
the order of the Distribution Dates to which such amounts relate, amounts with
respect to the earliest Distribution Dates being paid first) plus additional
yield thereon at the Preferred Rate accruing from the Distribution Date on
which the unpaid Monthly Preferred Yield Amount would have been distributed had
there been funds available to make such distribution;
(b) To PAT, the Monthly Preferred Yield Amount with respect to the
current Distribution Date;
(c) To Glimcher and the Corporate Member, pro rata based on their
respective Percentage Interests, all Monthly Preferred Yield Amounts (or
portions thereof) with respect to prior Distribution Dates that have not
previously been paid (in the order of the Distribution Dates to which such
amounts relate, amounts with respect to the earliest Distribution Dates being
paid first) plus additional yield thereon at the Preferred Rate accruing from
the Distribution Date on which the unpaid Monthly Preferred Yield Amount would
have been distributed had there been funds available to make such distribution;
(d) To Glimcher and the Corporate Member, pro rata based on Percentage
Interests, the Monthly Preferred Yield Amount with respect to the current
Distribution Date; and
(e) To the Members in accordance with their respective Percentage
Interests.
SECTION 3.8 DISTRIBUTIONS OF NET LIQUIDATION PROCEEDS.
All Net Liquidation Proceeds, if any, realized by or available to the
Company shall be distributed in the following order of priority to the extent
available:
(a) To the payment and discharge of all of the Company's debts and
liabilities and the expenses of liquidation and dissolution;
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(b) To the setting up of any reserves reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Company;
(c) To PAT all Monthly Preferred Yield Amounts (or portions thereof)
that have not been previously paid;
(d) To Glimcher and the Corporate Member, pro rata based on their
respective Percentage Interests, all Monthly Preferred Yield Amounts (or
portions thereof) that have not been previously paid;
(e) To PAT in repayment of any Preferred Capital Amount;
(f) To Glimcher and Corporate Member, pro rata based on their
respective Percentage Interests, in repayment of any Preferred Capital Amounts;
(g) To all Members in accordance with their respective Percentage
Interests.
ARTICLE 4: OPERATION OF COMPANY
SECTION 4.1 MANAGEMENT OF COMPANY.
Subject to Section 4.2 hereof (and such other provisions of this
Agreement that require the approval or consent of one or more Members), all the
authority of the Company shall be exercised by or under the direction of the
Managing Member. The Managing Member shall devote such time as it considers
necessary, in its commercially reasonable discretion, to conduct the business
of the Company. The Corporate Member shall be the Managing Member. In dealing
with third parties with respect to the Company's business or on behalf of the
Company, the Members shall act in accordance with policies established by the
Managing Member. No Member shall, in the name of or on behalf of the Company,
sign or execute any contract, instrument or document, or perform any other act,
engage in any other transaction, commit or bind the Company to any act,
contract, instrument or document, or incur any debt, except as expressly
permitted by this Agreement, or with the written concurrence of the Managing
Member.
SECTION 4.2 PURPOSE REQUIREMENTS; RESTRICTIONS ON MANAGING MEMBER'S AUTHORITY.
(a) Notwithstanding anything in this Agreement to the contrary, the
Managing Member shall be a Single Purpose Entity and the Managing Member shall
act in a manner to cause the Company to be a Single Purpose Entity.
(b) Without the prior written consent of PAT which shall not be
unreasonably withheld or delayed, the Company shall not be authorized to enter
into or commence (and the Managing Member shall not permit):
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(i) the payment of any Affiliated Party Expense or entering
into any Contractual Obligation that provides for the payment of any
Affiliated Party Expense except as set forth in the Management
Agreement;
(ii) the distribution to the Members of any Company
property (except cash distributions pursuant to Sections 3.7 and 3.8
hereof);
(iii) the transfer, sale, option, conveyance or other
disposition in one transaction or in any combination of transactions
of substantially all of the Property;
(iv) any replacement of the Manager or any amendment,
modification, termination or waiver of the Management Agreement which
has a Material Adverse Effect on the Company;
(v) any amendment of any documents evidencing or securing
any loans to the Company which has a Material Adverse Effect on the
Company or PAT, individually;
(vi) the issuance or Transfer of any shares of stock in the
Corporate Member or securities other than shares of stock outstanding
on the date hereof;
(vii) any Bankruptcy Action of the Company, or the
Corporate Member;
(viii) to engage in any business activity not described in
Section 1.2;
(ix) any amendments to this Agreement or the Certificate;
(x) the incurrence of any indebtedness by the Company in
excess of $250,000.00;
(xi) any lease for space in the Property in excess of
twenty thousand (20,000) rentable square feet; provided, however, that
a lease shall be deemed to have been approved if PAT does not notify
the Managing Member of its objections thereto within two (2) Business
Days from PAT's receipt of such lease or lease abstract. The Managing
Member shall forward to PAT, or its assignee, a lease order form for
leases subject to PAT's approval once the initial draft of such lease
has been sent to a prospective tenant;
(xii) any expenditure in excess of the Approved Annual
Operating Budget, if such expenditure exceeds one hundred ten percent
(110%) of the expenditure limits set forth in the Approved Annual
Operating Budget for such category or the Approved Annual Operating
Budget for such year is increased by more than 5% in total; provided,
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however, that in the event of an emergency which does not permit
consultation with PAT and which Managing Member believes requires an
expenditure not covered by, or in excess of, one hundred ten percent
(110%) of an Approved Annual Operating Budget category, Managing
Member shall be authorized to spend up to an aggregate of One Hundred
Thousand Dollars ($100,000.00) in connection with each such emergency.
Managing Member shall notify PAT in the event of such emergency as
soon as possible (but in no event later than five (5) days after the
occurrence thereof) setting forth the details of the emergency and the
expenditure made in connection therewith; and
(xiii) any amendment or modification to the Collection
Account Agreement or the Equity Cash Management Agreement.
(c) The Managing Member shall cause the Company to (i) maintain the
Property in a good and safe condition and repair, (ii) promptly comply with all
laws, orders and ordinances affecting the Property, or the use thereof, (iii)
promptly repair, replace or rebuild any part of the Property that is destroyed
by any casualty, or becomes damaged, worn or dilapidated or that is affected by
any condemnation or eminent domain proceeding, (iv) complete and pay for any
structure at any time in the process of construction or repair on the Property
and (v) not initiate, join in, acquiesce in, or consent to any change in any
private restrictive covenant, zoning law or other public or private
restriction, limiting or defining the uses which may be made of the Property or
any part thereof. If under applicable zoning provisions the use of all or any
portion of the Property is or shall become a nonconforming use, the Managing
Member will not cause or permit such nonconforming use to be discontinued or
abandoned without the express written consent of PAT. The Managing Member shall
not (i) permit the Company to change the use of the Property, (ii) permit or
suffer to occur any physical waste on or to the Property or to any portion
thereof or (iii) permit the Company to take any steps whatsoever to convert the
Property, or any portion thereof, to a condominium or cooperative form of
management. Neither the Managing Member nor the Company will install or permit
to be installed on the Property any underground storage tank without the prior
written consent of PAT; provided that PAT recognizes the existence of the
underground storage tanks as set forth in the Environmental Report.
(d) The Managing Member is hereby authorized to cause the Company to
enter into the First Mortgage Loan with Lender and the Managing Member is
hereby authorized to execute such Loan Documents on behalf of the Company as
Lender shall require. In addition, the Managing Member is authorized to cause
the Company to accept an assignment of the Real Estate Purchase Agreement by
and between JMB Group Trust I, as "Seller," and Glimcher, as "Purchaser" dated
March 18, 1997, and to cause the Company to perform Purchaser's obligations
thereunder.
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SECTION 4.3 SPECIFIC OBLIGATIONS OF MANAGING MEMBER.
The Managing Member shall, on behalf of and in the name of the Company
and in addition to the obligations of the Managing Member provided for
elsewhere in this Agreement or by law, have the following specific obligations:
(a) Subject to the Loan Documents, the Managing Member (i) shall cause
all tenants or other occupants of the Property to pay all rents or other monies
relating to the Property and cause any other Person owing money to the Company
to pay said money to the Collection Account Bank, and (ii) without limiting the
obligations under clause (i), shall pay or caused to be paid all items of Gross
Revenue which are received by the Company, one (1) Business Day after receipt
thereof directly to the Collection Account Bank. The Managing Member shall
otherwise deposit all of the Company's funds in segregated bank accounts or
other segregated investment accounts in accordance with the Lockbox Agreements.
(b) The Managing Member shall file certificates and do such other acts
as may be required to qualify and maintain the Company as a limited liability
company under the Act and to qualify the Company to transact business in all
such jurisdictions as may be required under applicable provisions of law, and
shall do such other acts as the Managing Member shall deem necessary or
appropriate to comply with all other applicable provisions of law.
(c) The Managing Member shall serve as the "tax matters partner" of
the Company and, as such, shall have all of the rights and obligations given to
a tax matters partner under the Code. Each Member, by its execution of this
Agreement, consents to the Managing Member serving as the tax matters partner
and agrees to execute, acknowledge or verify, and deliver, such written
instruments as may be necessary or appropriate to evidence such consent.
SECTION 4.4 PROTECTION OF THIRD PARTIES.
Any Person doing any business with or otherwise dealing in any
transaction whatsoever with the Managing Member within the scope of its power
and authority under this Agreement shall be entitled to rely fully upon the
Managing Member's power and authority to bind the Company in that business or
transaction.
SECTION 4.5 OUTSIDE VENTURES OF MEMBERS.
Any Member (except the Managing Member) may engage in or possess an
interest in any other business venture of any type or description,
independently or with others, including without limitation, ventures involving
the acquisition, development, and operation of real property or any interest
therein (whether or not the same may be competitive with any investment
property in which the Company may have an interest), and neither the Company
nor the other Members will, by virtue of this Agreement, have any right, title,
or interest in or to such outside ventures or the income or other benefits
derived therefrom.
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SECTION 4.6 MEETINGS OF THE MEMBERS.
The Managing Member or Members holding at least twenty-five percent
(25%) of the outstanding Percentage Interests of the Company may call a meeting
of the Members upon fifteen (15) days notice in writing (which may be by
facsimile), which notice shall specify the date, time and purpose or purposes
of the meeting. Meetings of the Members shall be held at the Company's
principal executive offices, unless a Majority-in-Interest of the Members agree
to meet at another location. Members may be present at any meeting of the
Members by telephone or other means of communication, provided that each Member
can hear all the other present Members. Members may also attend a meeting by
proxy executed in writing by such Member. Except in the case of any action
requiring the approval of a greater number of the Members hereunder, if any,
with respect to which such number of Members shall constitute a quorum for the
transaction of business at a meeting, a Majority-in-Interest of the Members
shall constitute a quorum of the Members for the transaction of business at any
meeting.
SECTION 4.7 DECISIONS OF THE MEMBERS.
Except in the case of any action requiring the approval of a greater
number or Percentage Interests of the Members hereunder, if any, decisions of
the Members shall be made by a Majority-in-Interest of the Members.
SECTION 4.8 ACTIONS OF THE MEMBERS WITHOUT A MEETING.
Any action which may be taken by the Members at a meeting may be taken
in writing without a meeting if approved by Members holding not less than the
minimum Percentage Interests necessary to approve such action at a meeting,
provided that such writing setting forth such action shall be kept with the
minutes of the meetings of the Members. Prompt notice of the taking of any
action without a meeting by less than unanimous written consent shall be given
to those Members who have not consented in writing to such action. Such notice
shall include a copy of the writing setting forth such action, as recorded in
the minutes of the meetings of the Members.
SECTION 4.9 WAIVER OF NOTICE.
Notice of any meetings of the Members may be waived by Member by
waiver of notice in writing signed by the Member entitled to the notice,
whether before, at or after the time stated for the meeting. Attendance of a
Member at any meeting, whether in person, by proxy as provided above, or by
telephone as provided above, shall constitute waiver of notice of such meeting.
Any waiver of notice of a meeting by a Member hereunder shall be equivalent to
the giving of such notice.
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SECTION 4.10 LIABILITY, PROTECTION AND INDEMNITY OF MANAGING MEMBER.
(a) A Member or the Managing Member shall not be deemed to have
violated any standard of conduct under this Section 4.10 unless such violation
is approved, by clear and convincing evidence, in an action brought against
such Person. The termination of any action, suit or proceeding by judgment,
order, settlement or upon a plea of nolo contendere, or its equivalent shall
not of itself constitute proof or create a presumption that the appropriate
standard of conduct has been violated.
(b) No Member and no Managing Member shall be liable to the Company,
or derivatively to any Member, in damages for any action that such Member or
such Managing Member takes or fails to take in such capacity, unless it is
proved, by clear and convincing evidence, in a court of competent jurisdiction
that such action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the Company or undertaken with reckless
disregard for the best interests of the Company.
(c) The Company shall indemnify (i) each Member, and (ii) the Managing
Member (each an "indemnified party"), to the fullest extent permitted by law,
and save and hold each indemnified party harmless from, and in respect of, all
(1) fees, costs and expenses incurred in connection with or resulting from a
claim, action or demand against such indemnified party or the Company that
arises out of or in any way relate to the Company, its properties, business or
affairs, and (2) such claims, actions and demands, and any losses or damages
resulting from such claims, actions and demands, including amounts paid in
settlement or compromise (if recommended by attorneys for the Company) of any
such claim, action or demand; provided, however, that this indemnification
shall apply only so long as the indemnified party has acted in good faith on
behalf of the Company, in a manner reasonably believed by it to be within the
scope of its authority under this Agreement and in the best interest of the
Company, and only if such action or failure to act did not constitute willful
misconduct, fraud or gross negligence. Expenses, including attorneys' fees,
incurred by a Member or the Managing Member of the Company in defending any
proceeding referred to in this Section 4.10(c), shall be paid by the Company,
in advance of the final disposition of such proceeding, upon receipt of an
undertaking by or on behalf of the Member or the Managing Member to repay such
amount, if it shall ultimately be determined that such person is not entitled
to be indemnified by the Company as authorized in this Section 4.10(c), which
undertaking may be secured or unsecured at the discretion of the Managing
Member.
(d) To the extent approved by a Majority-in-Interest of the Members,
the Company may, in its sole discretion, indemnify (i) each officer of the
Company, if any, and (ii) each employee of the Company, if any (each an
"indemnified party"), and save and hold harmless each indemnified party from,
and in respect of, all (1) fees, costs and expenses incurred in connection with
or resulting from any claim, action or demand against such indemnified party or
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the Company that arises out of or in any way relate to the Company, its
properties, business or affairs, and (2) such claims, actions or demands, and
any losses or damages resulting from such claims, actions and demands,
including amounts paid in settlement or compromise (if recommended by attorneys
for the Company) of any such claim, action, or demand; provided, however, that
this indemnification shall apply only so long as the indemnified party has
acted in good faith on behalf of the Company, in a manner reasonably believed
by such Person to be within the scope of his or her authority under this
Agreement and in the best interests of the Company, and only if such action or
failure to act did not constitute willful misconduct, fraud or gross
negligence. Indemnification in one case or event under this Section 4.10(d)
shall not be construed as requiring an indemnification in any other case or
event.
(e) The fact that the Member or the Managing Member has obtained the
advice of legal counsel selected in good faith that any action or inaction by
it is within the scope of the authority conferred upon the Member or the
Managing Member by this Agreement and in, or not opposed to, the best interests
of the Company, shall be conclusive evidence that the Member or the Managing
Member reasonably believed in good faith that such action or inaction was
within the scope of the authority conferred upon it by this Agreement and was
in, or not opposed to, the best interests of the Company. The Member or the
Managing Member shall not, however, be required to procure such advice of legal
counsel in order to be entitled to the benefit of the exculpation or
indemnification provided hereunder.
(f) The Company shall indemnify and hold harmless each of the Members
and the Managing Member against and from any personal loss, liability, or
damage incurred by it as a result of any action or inaction by it in connection
with the operation of the business of the Company (excluding actions or
inactions for which the Member or the Managing Member is not protected under
Section 4.6(a)), except that the Member shall not in any way be excused from
bearing as a Member the same portion of any such indemnification payment by the
Company as it would bear of any other payment by the Company. The
indemnification of the Members hereunder shall be limited to and recoverable
only out of the assets of the Company.
(g) The indemnification provided for in this Section 4.10, and any
obligation of the Company to indemnify a Member under this Agreement or any
applicable statute, regulation or court decision, shall be subordinate to the
obligations of the Company under the First Mortgage Loan. Such indemnification
shall only constitute a claim against the Company to the extent of, and shall
only be paid by the Company in monthly installments and only from the excess of
Excess Cash Flow.
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SECTION 4.11 MANAGEMENT OF THE PROPERTY.
(a) The Property will be managed at all times by the Company or, if
not, by the Manager pursuant to a Management Agreement. The Management
Agreement shall be terminated by the Company at PAT's request and only upon the
written consent of the Lender, upon thirty (30) days prior written notice to
the Company and the Manager but only if the Manager commits any act which would
permit termination by the Company under the Management Agreement.
(b) In the event that the Manager is terminated pursuant hereto, the
Company shall immediately seek to appoint a replacement Manager acceptable to
PAT. The Company may from time to time appoint a Manager to manage the Property
which successor Manager shall be approved in writing by PAT in PAT's reasonable
discretion. Notwithstanding the foregoing, any successor Manager selected
hereunder by the Company to serve as Manager shall be a reputable management
company having at least five (5) years' experience in the management of
commercial properties with similar uses as the Property.
ARTICLE 5: ACCOUNTING AND FISCAL AFFAIRS; INSPECTIONS
SECTION 5.1 ACCOUNTING; FISCAL YEAR.
The Managing Member shall keep or cause to be kept proper records and
books of account for the Company. Such records and books of account shall be
kept at the principal office of the Company and shall be open for the
reasonable examination and copying by any Member or any Member's authorized
representative. The Managing Member shall retain such books of account for
three (3) years after the termination of the Company. The fiscal year of the
Company shall end on December 31.
SECTION 5.2 ANNUAL REPORTS; MONTHLY REPORTS.
(a) The Managing Member will furnish to each Member annually, (i)
within ninety (90) days following the end of the Company's fiscal year, a
preliminary unaudited financial statement and (ii) within one hundred twenty
(120) days following the end of the Company's fiscal year, a complete copy of
the Company's annual financial statement audited by an independent certified
public accountant reasonably acceptable to PAT in accordance with GAAP, or such
other accounting basis reasonably acceptable to PAT, containing statements of
profit and loss and the balance sheet for the Company. Such statements shall
set forth the financial condition and income and expenses for the Company for
the immediately preceding fiscal year, including, without limitation,
statements of annual net operating income.
(b) The Managing Member will furnish to each Member, within thirty
(30) days after the end of each month, an unaudited monthly financial statement
for such month.
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(c) The Managing Member shall furnish or cause to be furnished to PAT
each financial statement and information required to be delivered to any Lender
under the Loan Agreement (and at the same time that such financial statements
and information are required to be delivered to Lender under the Loan
Agreement) and PAT shall have the same rights with respect to such financial
statements and information as Lender has under the Loan Documents.
(d) The Managing Member shall furnish or caused to be furnished to
PAT, within ten (10) Business Days of the date of filing, a copy of the
Company's "annual partnership information return" for PAT's review.
(e) The Managing Member will furnish to each of the Members, promptly
but within ten (10) Business Days after request (or if more than ten (10)
Business Days is reasonably necessary, as soon thereafter as may be reasonably
possible), such further detailed information with respect to the Company's
financial affairs as may be reasonably requested by any Member.
SECTION 5.3 METHOD OF ACCOUNTING.
All statements and financial information provided hereunder shall be
prepared in accordance with GAAP. The Managing Member shall not change the
Company's method of accounting without the prior written consent of PAT.
SECTION 5.4 CORPORATE MEMBER'S BOOKS AND RECORDS.
The Corporate Member shall keep or cause to be kept proper records and
books of account for itself. The Company and the Corporate Member shall (i)
keep proper books of records and accounts in which full, true and correct
entries shall be made of all dealings and transactions in relation to their
business and activities in accordance with all Legal Requirements and (ii)
permit representatives of PAT upon reasonable notice to visit and inspect any
of their properties and examine, copy and make abstracts from any of their
books and records at any reasonable time during normal business hours and as
often as may reasonably be desired, and to discuss the business and financial
and other condition of the Company with the Corporate Member and its
accountants and other representatives. The books and records and books of
account of the Company shall be kept at the Corporate Member's principal
office.
ARTICLE 6: TRANSFER OF INTEREST IN COMPANY
SECTION 6.1 VOLUNTARY TRANSFER OF INTEREST IN COMPANY.
(a) As a material condition to entering into this Agreement, each
Member hereby agrees that its shall not Transfer all or any part of its
Membership Interest without the prior
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written consent of a Majority-in-Interest of the remaining Members. Any
attempted Transfer of all or any part of a Membership Interest in the Company
in violation of this Section 6.1 shall be null and void and of no force and
effect. Any Transfer of a Membership Interest shall be made only in compliance
with all applicable securities laws and the Loan Documents, and the Company
shall have the right to require the transferor to obtain and deliver to the
Company the opinion of counsel (reasonably acceptable, as to both the opinion
and the counsel, to the Company) that such proposed Transfer so complies.
(b) Notwithstanding the first sentence of Section 6.1(a) above, (i) a
Member may Transfer its Membership Interest to any Person as permitted under
the Loan Agreement, with the written approval of the other Members and (ii) PAT
may Transfer its Membership Interest to any Person. In such event, the
transferee of such Member shall be admitted to the Company as a substitute
Member upon the request of the transferring Member and shall hold its
Membership Interest subject to all the terms and conditions and be entitled to
all the benefits and rights of this Agreement, including, without limitation,
the provisions of this Section 6.1(b).
SECTION 6.2 WITHDRAWAL OF A MEMBER.
(a) No Member may withdraw from the Company except in connection with
a Transfer of such Member's interest in the Company pursuant to, and in
accordance with, Section 6.1 above.
(b) Immediately upon the occurrence of an Involuntary Withdrawal, the
successor of the withdrawn Member shall thereupon become an Interest Holder but
shall not become a Member. If the Company is continued by a
Majority-in-Interest of the remaining Members, the successor Interest Holder
shall have all the rights of an Interest Holder but shall not be entitled to
receive in liquidation of the Interest the fair market value of the Member's
Interest as of the date of the Member's Involuntarily Withdrawal from the
Company.
SECTION 6.3 BUY-SELL.
At any time, (a) after the fourth (4th) anniversary of the closing of
acquisition of the Property, PAT or (b) upon the occurrence of a Major
Deadlock, any Member may deliver a written notice (the "Buy-Sell Notice") to
the other Member(s) (the party delivering such notice being the "Offeror" and
the other party being the ("Offeree") pursuant to which the Offeror offers to
either, at the Offeree's election, buy the Offeree's Membership Interest or
sell to the Offeree the Offeror's Interest. For the purposes of this Section
6.3 Glimcher and the Corporate Member shall be deemed to be a single Member and
Glimcher shall act on behalf of both the Corporate Member and Glimcher.
Notwithstanding anything in this Agreement to the contrary, no Member shall
have the right to initiate this provision (i.e., be the Offeror) if it is in
default of any material provision of this Agreement, including without
limitation its obligations to make Additional Capital Contributions. The
Buy-Sell Notice shall specify a dollar amount for the Property (the
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"Buy-Sell Price") which shall be used for purposes of establishing the purchase
price at which the Offeror will either (i) buy all of the Offeree's Membership
Interest or (ii) sell to the Offeree all of the Offeror's Membership Interest.
Only one Buy-Sell Price shall be identified in the Buy-Sell Notice and the
Buy-Sell Price need not be the fair market value of the Property. The Offeree
may accept either (x) the offer to sell or (y) the offer to buy, in either case
by delivering written notice (the "Acceptance Notice") to the Offeror, within
sixty (60) days (the "Acceptance Period") after receipt of the Buy-Sell Notice,
indicating that the Offeree accepts such offer either to buy or to sell. If the
Offeree does not so accept within the Acceptance Period, then the Offeree shall
be deemed, without need of any further action by any party, to have agreed to
sell the Offeree's Membership Interest to the Offeror, and have the Offeror
purchase Offeree's Membership Interest, at the Buy-Sell Price. The purchase and
sale of Membership Interest resulting from the foregoing shall occur, and
payment of the purchase price for the Membership Interest shall be made, on or
before the sixtieth (60th) day after the earlier of the date of delivery of the
Acceptance Notice to the Offeror and the expiration of the Acceptance Period.
The purchase price for the Membership Interest shall be the total amount (not
less than zero) that would be distributed to the Selling Member if the Company
sold the Property for the Buy-Sell Price in an all cash transaction.
SECTION 6.4 STATUS OF THIRD PARTY TRANSFEREE.
Except as provided in Section 6.1(b), no third party transferee of a
Membership Interest shall, without the prior written consent of a
Majority-in-Interest of the remaining Members, acquire the status of a
substituted Member of the Company under the Act or this Agreement, but shall
have solely the rights of an Interest Holder. In the event a substitute Member
is admitted to the Company in accordance with Section 6.1(b) or this Section
6.4, such substitute Member shall be responsible for the payment of all fees
and expenses associated with the Transfer and such substitution as the Managing
Member may deem reasonable and appropriate.
SECTION 6.5 ABSOLUTE RESTRICTION ON TRANSFERS.
Notwithstanding any provision of this Agreement to the contrary,
Transfer of a Membership Interest to any Person other than the Company or a
Member will not be permitted if the Membership Interest sought to be
transferred, when added to the total of all other Membership Interests
transferred within the period of twelve (12) consecutive months ending with the
proposed date of the Transfer, results in the termination of the Company under
Section 708 of the Code, without the prior written consent of a majority of the
Percentage Interest of the Members. At the request, and at the sole cost and
expense of the transferring Member, the Company will cooperate with such
transferring Member in any reasonable manner in order to determine whether the
prospective Transfer will result in a termination of the Company under Section
708 of the Code.
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SECTION 6.6 TIME OF TRANSFER.
Any Transfer of Membership Interest to a third party or to a Member
effected under this Article 6 shall be effective as of midnight the last day of
the calendar month in which it is made, or at the election of the Managing
Member, as of 7:00 a.m. the day following the date of the Transfer (the
"Effective Transfer Date").
SECTION 6.7 DISTRIBUTIONS AND APPLICATIONS IN RESPECT OF A TRANSFER INTEREST.
If any Interest is transferred to a third party or to a Member in
compliance with the provisions of this Article 6, Net Profits, Net Losses, each
item thereof and all other items attributable to such Interest for such period
shall be divided and allocated between the transferor and the transferee by
taking in account their bearing interest during the period in accordance with
Article 3 hereof and Code Section 706(d), using the Effective Transfer Date as
the date upon which the change in ownership of the Interest occurred, and using
any conventions permitted by the Code or the Regulations and selected by a
majority of the Percentage Interest of the remaining Members. All distributions
on or before the Effective Transfer Date shall be made to the transferor and
all distributions thereafter shall be made to the transferee. Neither the
Company nor the Managing Member or any Member shall incur any liability for
making allocations and distributions in accordance with the provisions of this
Section 6.7, whether or not any of them has knowledge of any transfer of
ownership of any Interest.
ARTICLE 7: DISSOLUTION, WINDING UP AND TERMINATION
SECTION 7.1 TERMINATION AND DISSOLUTION.
(a) The Company shall be terminated and dissolved upon the occurrence
of any of the following events:
(i) Expiration of the term of the Company set forth in
Section 1.5 hereof;
(ii) Bankruptcy Action of the last remaining Member and if
such Bankruptcy Action occurs, the Members hereby agree and covenant
to reconstitute the Company with a Member that is a Single Purpose
Entity; or
(iii) Entry of a decree of judicial dissolution under the
Act; or
(iv) Upon the sale or transfer of all of the assets of the
Company.
(b) No other act with respect to any Member, including, without
limitation, the death, bankruptcy, withdrawal or expulsion of any Member,
except as otherwise set forth above, shall cause the dissolution of the
Company.
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(c) Dissolution of the Company shall be effective on the date on which
an event requiring dissolution or liquidation of the Company occurs, but the
Company shall not terminate until the Certificate of Formation shall have been
canceled and the assets of the Company shall have been distributed as provided
below.
(d) Upon dissolution, the Managing Member or, if there is no Managing
Member, a liquidating agent or trustee selected by a majority of the Percentage
Interests of the Members (the Managing Member in such capacity or such
liquidating agent or trustee, the "Liquidating Trustee"), as promptly as
possible, shall liquidate the assets of the Company, and allocate and
distribute the proceeds, in cash, in the following order of priority:
(i) First, to the payment of the expenses of liquidating
including the reasonable expenses of the Liquidating Trustee;
(ii) Second, to the payment of all debts, liabilities and
other obligations of the Company owed to third parties;
(iii) Third, to the Members in the amounts due in the same
order as is set forth in Section 3.8 hereof with respect to
application of Net Liquidation Proceeds; and
(iv) Fourth, the balance to each of the Members, in
accordance with their respective positive Capital Account balances.
(e) Notwithstanding Section 7.1(d) above and except as otherwise
required by applicable law, the proceeds from liquidation of the Company's
assets shall be utilized to satisfy fully any and all of the Borrower's
obligations and liabilities to Lender in accordance with the Loan Documents
prior to paying or distributing any of such proceeds to satisfy other
obligations or liabilities of the Company.
(f) Notwithstanding the dissolution of the Company, prior to
termination of the Company, the business of the Company and the affairs of the
Members shall continue to be governed by this Agreement.
ARTICLE 8: REPRESENTATIONS AND WARRANTIES
SECTION 8.1 REPRESENTATIONS AND WARRANTIES OF MEMBERS.
Each Member makes the following representations and warranties to the
other Members as of the date of this Agreement:
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(a) ORGANIZATION. The Member (i) is a duly organized and validly
existing partnership, corporation or business trust in good standing under the
laws of the State of its formation or incorporation, (ii) has the requisite
power and authority to carry on its business as now being conducted, and (iii)
has the requisite power to execute and deliver, and perform its obligations
under, this Agreement.
(b) AUTHORIZATION. The execution, delivery and performance by the
Member of this Agreement, its performance of its obligations hereunder (i) have
been duly authorized by all requisite corporate or other action on the part of
the Member (ii) will not violate any provision of any applicable Legal
Requirements, any order of any court or other Governmental Authority,
organizational documents of the Member or any indenture or agreement or other
instrument to which it is a party or by which it is bound, and (iii) has been
duly executed and delivered by the Member. The Member is not required to obtain
any consent, approval or authorization from, or to file any declaration or
statement with, any Governmental Authority or other agency in connection with
or as a condition to the execution, delivery or performance of this Agreement,
other than consents, approvals or authorizations that have been obtained.
(c) AGREEMENTS. The Member is not a party to any agreement or
instrument or subject to any restriction which is likely to have a Material
Adverse Effect. The Member is not in default in any respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which the
Member, its properties is bound which is likely to have a Material Adverse
Effect.
(d) NO BANKRUPTCY FILING. The Member is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of the Member's assets or
property, and the Member has no knowledge of any Person contemplating the
filing of any such petition against the Member.
(e) ENFORCEABILITY. This Agreement is the legal, valid and binding
obligation of the Member enforceable against the Member in accordance with its
terms, subject to bankruptcy, insolvency and other limitations on creditors'
rights generally and to equitable principles.
ADDITIONAL REPRESENTATIONS AND WARRANTIES. Glimcher and Managing
Member hereby make to PAT, mutatis mutandis, the following representations and
warranties made by the Company to Lender in the Loan Agreement, with respect to
the Property, as if such representations and warranties were set forth at
length herein: Sections 4.1(D), (E), (I), (Q), (T), (U), (AC) (except with
respect to use of the Property, which representation is limited to Glimcher and
Managing Member's knowledge), and (AD).
ARTICLE 9: SPECIAL COVENANTS
The Company and the Corporate Member covenant that each shall be a
Single Purpose Entity and each shall act in a manner to cause the other to be a
Single Purpose Entity.
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ARTICLE 10: MISCELLANEOUS
SECTION 10.1 ADDITIONAL DOCUMENTS.
Whenever the Managing Member may from time to time reasonably request,
each Member shall execute, acknowledge or verify, and deliver such written
instruments (including amended certificates of limited liability company and
fictitious name certificates) as the Managing Member may reasonably deem
necessary or appropriate to carry out the purposes and intent of this Agreement
so long as such documents do not materially change any substantive term of this
Agreement and, are not otherwise adverse to the interests of PAT.
SECTION 10.2 AMENDMENT OF AGREEMENT.
This Agreement may not be amended without the prior written consent of
all the Members.
SECTION 10.3 NOTICES AND ADDRESSES.
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or (d) by telecopier (with answer back
acknowledged) provided that such telecopied notice must also be delivered by
one of the means set forth in (a), (b) or (c:) above, addressed if to PAT at
c/o Nomura Asset Capital Corporation, Two World Financial Center, Building B,
New York, NY 10281 1198, Attn: Stuart Silberberg, Vice President, Telefax
Number (212) 667-1522 and if to the Company, Managing Member or Corporate
Member at c/o Glimcher Properties Limited Partnership, 20 South Third Street,
Columbus, Ohio 43215, Attn: George A. Schmidt, Esq., telefax number (614)
621-8863, or at such other address as shall be designated from time to time by
any party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section. A copy of all notices,
consents, approvals and requests directed to PAT shall be delivered
concurrently to each of the following: (i) Joseph Heil, Esquire, Dechert Price
& Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, PA
19103-2793, Telefax Number (215) 994-2222; (ii) Two World Financial Center,
Building B, New York, NY 10281-1198, Attn: Sheryl McAfee, Telefax Number (212)
667-1022; and (iii) Two World Financial Center, Building B, New York, NY
10281-1198, Attn: Legal Counsel, Telefax Number (212) 667-1022. A notice shall
be deemed to have been given: (a) in the case of hand delivery, at the time of
delivery; (b) in the case of registered or certified mail, when delivered or
the first attempted delivery on a Business Day; (c) in the case of expedited
prepaid delivery upon the first attempted delivery on a Business Day; or (d) in
the case of telecopier, upon receipt of answer back
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confirmation, provided that such telecopied notice was also delivered as
required in this Section. A party receiving a notice which does not comply with
the technical requirements for notice under this Section may elect to waive any
deficiencies and treat the notice as having been properly given.
SECTION 10.4 PRONOUNS AND PLURALS.
All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
person or persons may require.
SECTION 10.5 COUNTERPARTS.
This Agreement may be executed in several counterparts all of which
shall constitute one agreement, binding on all parties hereto, notwithstanding
that all the parties are not signatories to the same counterpart. Facsimile
signatures shall be binding upon such signatories.
SECTION 10.6 APPLICABLE LAW.
This Agreement and the rights of the Members hereunder shall be
interpreted in accordance with the Act to the extent the Act is applicable.
SECTION 10.7 JURISDICTION; VENUE.
The Members agree that there are sufficient minimum contacts of the
Company with New York County and the State of New York for the purpose of
conferring jurisdiction upon the federal and state courts presiding in such
county and state. Each Member consents that any legal action or proceeding
arising hereunder may be brought in any federal or state court in New York, New
York and assents and submits to personal jurisdiction of any such court in any
action or proceeding involving the Company, any Member or this Agreement.
SECTION 10.8 SUCCESSORS.
This Agreement shall inure to the benefit of, be binding upon, and be
enforceable by and against the parties hereto, their heirs, executors,
administrators, successors and assigns.
SECTION 10.9 SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions herein, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
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SECTION 10.10 WAIVER OF ACTION FOR PARTITION.
Member irrevocably waives any right that it may have to maintain any
action for partition with respect to the property of the Company.
SECTION 10.11 HEADINGS.
The headings in this Agreement are for convenience only and are in no
way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any of its provisions.
SECTION 10.12 ENTIRE AGREEMENT.
This Agreement contains the entire understanding among the parties
with respect to the subject matter hereof and supersede any prior
understandings and agreements, whether written or oral, with respect to such
subject matter.
SECTION 10.13 CREDITORS.
None of the provisions of this Agreement shall be for the benefit of
or enforceable by any creditors of the Company.
SECTION 10.14 FEDERAL INCOME TAX ELECTIONS.
In the event of a transfer of all or any portion of the Membership
Interest of any Member, the Company may elect (by a majority of the percentage
interest of the remaining members) pursuant to Section 754 of the Code to
adjust the basis of assets of the Company upon written request of the
transferee.
SECTION 10.15 INJUNCTIVE RELIEF.
Each Member acknowledges that it will be impossible to measure in
money the damage to the Company and to the other Members if there is a failure
to comply with this Agreement. It is therefore agreed that the Company or any
other Member, in addition to any other rights or remedies which they may have,
shall be entitled to immediate injunctive relief and to specific performance to
enforce this Agreement, and that if any action or proceeding is brought in
equity to enforce it, no party will urge, as a defense, that there is an
adequate remedy at law. Each Member hereby waives the requirement that the
party seeking an injunction post a bond.
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SECTION 10.16 DISPUTE RESOLUTION.
Any dispute or failure to agree arising out of or relating to this
Agreement (including if any Member consents to any matter relating to this
Agreement under protest) shall be resolved in accordance with the procedures
specified in this Section 10.16.
(a) NEGOTIATION BETWEEN EXECUTIVES. The Members shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between the Members through executives who, if
practical, are at a higher level of management than the persons with direct
responsibility for administration of this Agreement. Any party may give the
other party written notice of any dispute not resolved in the normal course of
business. Within fifteen (15) days after deliver of the notice, the receiving
party shall submit to the other a written response. The notice and response
shall include (i) a statement of each party's position and a summary of
arguments supporting that position and (ii) the name and title of the executive
who will represent that party and of any other person who will accompany the
executive. Within thirty (30) days after delivery of the disputing party's
notice, the executives of both parties shall meet at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to
attempt to resolve the dispute. All reasonable requests for information made by
one party to the other will be honored.
(b) LITIGATION. If the dispute has not been resolved by negotiation as
provided herein within sixty (60) days of the disputing parties notice or if
the parties fail to meet within such thirty (30) days, either party may
exercise any rights under this Agreement relative to such dispute and/or
initiate and pursue litigation.
(c) PROVISIONAL REMEDIES. Notwithstanding the foregoing, a party,
without prejudice to the above procedure, may file a complaint (for statute of
limitations or venue reasons) or to seek preliminary injunction or other
provisional judicial relief, if in its sole judgment such action is necessary
to avoid irreparable damage or to preserve the status quo. Despite such action
the parties will continue to participate in good faith in the procedure
specified in this Section 10.16.
(d) PERFORMANCE TO CONTINUE. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
ARTICLE 11: BUDGETS/PAYMENT
SECTION 11.1 ANNUAL BUDGET.
Simultaneously with the execution of this Agreement for the period
commencing on the
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date hereof and ending on December 31, 1997, and thereafter for each calendar
year, the Company shall submit to PAT, for PAT's written approval, an annual
budget, broken down on a month-by-month basis (an "Annual Operating Budget")
for the Company not later than November 30th of each calendar year, provided,
that the Managing Member shall use good faith efforts to provide the Annual
Operating Budget for the initial fiscal year of the Company to PAT by the end
of the first quarter of such initial fiscal year, in form reasonably
satisfactory to PAT setting forth in reasonable detail budgeted monthly
operating income and monthly operating capital and other expenses for the
Property. Each Annual Operating Budget shall contain, among other things,
limitations on management fees, third party service fees, and other expenses as
the Company may reasonably determine and shall include a separate statement
comparing Affiliated Party Expense, and management fees for such period to
amounts paid with respect thereto for the previous fiscal year. PAT shall have
the right to reasonably approve such Annual Operating Budget and, in the event
that PAT objects to the proposed Annual Operating Budget submitted by the
Company, PAT shall advise the Company of such objections within twenty (20)
days after receipt thereof (and deliver to the Company a reasonably detailed
description of such objection) and the Company shall promptly revise such
Annual Operating Budget and resubmit the same to PAT. PAT shall advise the
Company of any objections to such revised Annual Operating Budget within ten
(10) days after receipt thereof (and deliver to the Company a reasonably
detailed description of such objection) and the Company shall promptly revise
the same in accordance with the process described in this sentence until PAT
approves an Annual Operating Budget; provided that if the proposed Annual
Operating Budget is not finalized on or prior to the date on which such Annual
Operating Budget is required to be submitted to the Lender pursuant to the
terms of the Loan Documents (and the Company and PAT have acted in good faith
to resolve any disputes they have with respect to such Annual Operating Budget
in accordance with Section 10.16, then the Company shall submit its original
Annual Operating Budget to the Lender for informational purposes under the Loan
Documents. Each such Annual Operating Budget approved by PAT in accordance with
terms hereof shall hereinafter be referred to as an "Approved Annual Operating
Budget." Until such time that PAT approves a proposed Annual Operating Budget,
the most recently Approved Annual Operating Budget shall apply; provided that,
such Approved Annual Operating Budget shall be adjusted to reflect actual
increases in real estate taxes, insurance premiums and utilities expenses and
increases in revenues.
SECTION 11.2 PAYMENT INSTRUCTIONS.
(a) With respect to any amounts due to PAT hereunder, PAT shall have
the right to deliver monthly irrevocable payment instructions ("Payment
Instructions"), with copies to the Company, to the Cash Management Bank, which
Payment Instructions shall be consistent with the terms of this Agreement and
shall authorize and instruct the Cash Management Bank to cause the amounts held
in the account established pursuant to the Equity Cash Management Agreement to
be disbursed as set forth in such Payment Instructions.
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(b) The Company agrees that the Cash Management Bank shall be fully
protected in complying with the terms of such Payment Instructions.
(c) Each of the Managing Member, Glimcher and the Company hereby agree
that, in the event that the First Mortgage Loan shall have been satisfied, (i)
the Cash Collateral Account shall be terminated, and (ii) the Company shall,
within ten (10) days after the satisfaction of the First Mortgage Loan, enter
into a substitute collection account agreement with substantially the same
terms as the agreements entered into as of the date hereof in connection with
the First Mortgage Loan. Such substitute agreement shall provide that the
collection account bank thereunder shall transfer all funds on a daily basis
into the Equity Cash Management Account. Thereafter, the parties hereto shall
make all necessary modifications and amendments to the Equity Cash Management
Agreement to reflect the termination of the Cash Collateral Account Agreement
and the execution of the substitute cash collateral account agreement.
SECTION 11.3 PRIORITY OF DISTRIBUTIONS.
(a) At all times, Company's assets shall be utilized to satisfy fully
any and all of the Company's obligations and liabilities to Lender in
accordance with the Loan Documents prior to paying or distributing any of such
proceeds to satisfy other obligations or liabilities of the Company.
(b) To the extent that this Section 11.3 conflicts with any other
provision of this Agreement, this Section 11.3 shall control. To the extent
that this Section 11.3 or this Agreement conflicts with any Loan Documents,
such Loan Documents shall control.
ARTICLE 12: DEFINITIONS
SECTION 12.1 DEFINITIONS.
Capitalized words and phrases used in this Agreement have the
following respective meanings:
"ACCEPTANCE NOTICE" has the meaning set forth in Section 6.3 hereof.
"ACCEPTANCE PERIOD" has the meaning set forth in Section 6.3 hereof.
"ACT" has the meaning set forth in Section 1.1 hereof.
"ADDITIONAL CAPITAL CONTRIBUTION" has the meaning set forth in Section
2.1(b) hereof.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year, after
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(i) crediting to such Capital Account any amounts which such Member is
obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Section 1.704-2(e)(1) and 1.704-2(i)(5);
and (ii) debiting to such Capital Account the items described in Sections
1.704-l(b)(2)(ii)(d)(4), (5) and (6) of the Regulations. The foregoing
definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Section 1.704-l(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
"AFFILIATE" when used with respect to a specified Person, means a
Person that (a) is a partner, director or officer of such Specified Person or
of any Person specified in clause (b) hereof, or (b) directly, or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with such specified Person. For purposes of this definition, the
term "control" (and any derivative thereof) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting stock, by
contract or otherwise.
"AFFILIATED PARTY EXPENSE" means any expense incurred pursuant to any
contract or otherwise with any Affiliate of the Company, or any constituent
party of the Company.
"AGREEMENT" means this Operating Agreement, as originally executed and
as amended from time to time in accordance with Section 10.2 hereof.
"ANNUAL OPERATING BUDGET" shall have the meaning set forth in Section
11.1 hereof.
"APPROVED ANNUAL OPERATING BUDGET" shall have the meaning set forth in
Section 11.1.
"BANKRUPTCY ACTION" means:
Taking any action that might cause the Company or the Managing Member
to become insolvent; or
(a) Commencing any case, proceeding or other action on behalf of the
Company or the Managing Member under any existing or future law or any
jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors;
(b) Instituting proceedings to have the Company or the Managing Member
adjudicated a bankrupt or insolvent;
(c) Consenting to, or acquiescing in, the institution of bankruptcy
or insolvency proceedings against the Company or the Managing Member;
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(d) Filing a petition or consenting to a petition seeking
reorganization, arrangement, adjustment, or other relief on behalf of the
Company or the Managing Member of its debts under federal or state law relating
to bankruptcy;
(e) Seeking or consenting to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official
for the Company or the Managing Member or a substantial portion of any of their
properties;
(f) Making any assignment for the benefit of the Company's or the
Managing Member's creditors; or
(g) Taking any action or causing the Company or the Managing Member to
take any action in furtherance of any of the foregoing.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York or Chicago, Illinois
are authorized or required to close.
"BUY-SELL NOTICE" has the meaning set forth in Section 6.3 hereof.
"BUY-SELL PRICE" has the meaning set forth in Section 6.3 hereof.
"CAPITAL ACCOUNT" shall have the meaning set forth in Section 3.1
hereof.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the
cumulative sum of the Member's contributions to the capital of the Company
pursuant to Article 2.
"CASH MANAGEMENT BANK" means LaSalle National Bank or such other bank
as is reasonably acceptable to Lender.
"CERTIFICATE" has the meaning set forth in Section 1.1 hereof.
"CLOSING DATE" means the date the Members are required to contribute
their Initial Capital Contributions to the Company.
"CODE" has the meaning set forth in Section 3.1 hereof.
"COLLECTION ACCOUNT BANK" has the meaning provided in the Loan
Agreement.
"COMPANY" has the meaning set forth in Section 1.1 hereof.
"COMPANY MINIMUM GAIN" has the meaning of "partnership minimum gain"
as set forth in Section 1.704-2(d) of the Regulations.
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"CONTRACTUAL OBLIGATION" means, as to any Person, any security issued
by such Person or any agreement, instrument or undertaking to which such Person
is a party or by which it or any of its property is bound, or any provision of
any of the foregoing.
"CONTRIBUTION PERCENTAGE" means with respect to any Member, the
Member's required percentage of Additional Capital Contributions, as set forth
on Exhibit A.
"CORPORATE MEMBER" has the meaning set forth in the preamble to this
Agreement.
"DAILY PREFERRED YIELD AMOUNT" means, with respect to PAT or Glimcher
and with respect to any day, the product of (i) the Preferred Rate, and (ii)
the Preferred Capital Amount of the Member on such day (after giving effect to
any distributions in respect of the Preferred Capital Amount made on such day),
increased by any Monthly Preferred Yield Amount (or portions thereof) with
respect to Distribution Dates occurring on or prior to such day that remain
unpaid on such day, and (iii) 1/360.
"DEFAULTING MEMBER" has the meaning set forth in Section 2.1(c)
hereof.
"DEPRECIATION" has the meaning set forth in Section 3.1 hereof.
"DETERMINATION DATE" with respect to any Yield Accrual Period means
the date which is two London Business Days before the commencement of such
Yield Accrual Period.
"DISTRIBUTABLE CASH" means cash on hand of the Company from all
sources available for distribution to the Members after taking into account all
Company expenses, debts, liabilities and obligations then due and payable, and
less any Reserves.
"DISTRIBUTION DATE" means the 11th day of each month, or, if such day
shall not be a Business Day, the next succeeding Business Day.
"EFFECTIVE TRANSFER DATE" has the meaning set forth in Section 6.6
hereof.
"EQUITY CASH MANAGEMENT ACCOUNT" has the meaning set forth in the
Equity Cash Management Agreement.
"EQUITY CASH MANAGEMENT AGREEMENT" means that certain Equity Cash
Management Agreement to be entered into by and among the Cash Management Bank,
the Company, and the Members.
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"EXCESS CASH FLOW" means, with respect to any Distribution Date, an
amount equal to the greater of (a) (i) the amount disbursed to the Company
pursuant to Section 2.11(g)(vii) of the Loan Agreement during the Collection
Period ended in the month in which such Distribution Date occurs minus (ii) any
amounts payable to PAT pursuant to Section 3.7(a) and (b) with respect to such
Yield Accrual Period and (b) zero.
"FIRST MORTGAGE LOAN" means the mortgage loan to be made by the Lender
to the Company in the original principal amount set forth in the First Mortgage
Note and secured by the Property.
"FIRST MORTGAGE NOTE" means the promissory note to be executed in
connection with the First Mortgage Loan.
"GAAP" means generally accepted accounting principles consistently
applied in the United States of America as of the date of the applicable
financial report.
"GLIMCHER" has the meaning set forth in the preamble to this
Agreement.
"GOVERNMENTAL AUTHORITY" means any national or federal government, any
state, regional, local or other political subdivision thereof with jurisdiction
and any Person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"GROSS ASSET VALUE" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows: (a) the
Gross Asset Values of all assets contributed to the Company by the Members
shall be the gross fair market values of such assets as determined in the
mutual agreement of the contributing Member and the Managing Member, and as set
forth on Exhibit A attached hereto; b) the Gross Asset Values of all Company
assets shall be adjusted to equal their respective gross fair market values as
of the following times: (i) the acquisition of an additional Membership
Interest (other than pursuant to Section 2.1(a) hereof) by any new or existing
Member in exchange for more than a de minimis Capital Contribution; (ii) the
distribution by the Company to a Member of more than a de minimis amount of
Company Property (including cash) as consideration for a Membership Interest,
if the Managing Member reasonably determines that such adjustment is necessary
or appropriate to reflect the relative interest of the Members in the Company;
and (iii) the liquidation of the Company within the meaning of Regulation
Section 1.704-2(b)(2)(ii)(g); (c) the Gross Asset Values of Company 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-l(b)(2)(4)(m); provided, however, that Gross Asset Value shall not be
adjusted pursuant to this paragraph to the extent the Managing Member shall
determine that an adjustment pursuant to this paragraph is necessary or
appropriate in connection with a transaction which would otherwise result in an
adjustment pursuant to this paragraph; (d) the Gross Asset Value of any Company
asset distributed to any Member shall be adjusted to the gross fair market
value of the asset on the day of distribution, as determined in good faith by
the Managing Member.
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"GROSS REVENUE" means, with respect to the Property, the total dollar
amount of all income and receipts, whatsoever, received by or to be paid to the
Company in the ordinary course of business.
"INDEBTEDNESS" of a Person, at a particular date, means the sum
(without duplication) at such date of (a) indebtedness or liability for
borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (c) obligations for the deferred purchase price of
property or services (including trade obligations); (d) obligations under
letters of credit; (e) obligations under acceptance facilities; (f) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase to provide
funds for payment, to supply funds to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (g) obligations secured by any
Liens, whether or not the obligations have been assumed.
"INDEPENDENT DIRECTOR" means a duly appointed member of the board of
directors of the relevant entity who shall not have been, at the time of such
appointment or at any time in the preceding five (5) years, (a) a direct or
indirect legal or beneficial owner in such entity or any of its affiliates, (b)
a creditor, supplier, employee, officer, director, Corporate Member or
contractor of such entity or any of its affiliates, (c) a person who controls
such entity or its affiliates, or (d) a member of the immediate family of a
person defined in (a), (b) or (c) above.
"INITIAL CAPITAL CONTRIBUTIONS" are as set forth on Exhibit A.
"INTEREST" means solely an interest in the Company's Net Income, Net
Losses, allocations of other items of income, gain, loss, deduction and credit,
and the right to receive distributions from the Company; an Interest does not
confer the rights of a Member under this Agreement or as a "Member" under the
Act.
"INTEREST HOLDER" means a Person who holds an Interest.
"INVOLUNTARY WITHDRAWAL" means, with respect to any Member, the
bankruptcy, insolvency, liquidation or dissolution of such Member under
applicable federal or state law.
"LEGAL REQUIREMENTS" means all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Company or a Member.
"LENDER" means Nomura Asset Capital Corporation and any subsequent
holder of the First Mortgage Note.
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"LIQUIDATING TRUSTEE" has the meaning set forth in Section 7.1(d).
"LIQUIDATION EVENT" means (i) any sale, transfer or other disposition
or liquidation of the Property or any portion thereof (including a foreclosure
sale), (ii) any casualty to the Property or any portion thereof, (iii) any
condemnation of the Property or any portion thereof or (iv) any refinancing of
the Property.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidation Event,
all amounts paid to or received by or on behalf of the Company in connection
with such Liquidation Event, including, without limitation, proceeds of any
sale, refinancing or other disposition or liquidation, the amount of any award
or payment in connection with any condemnation or taking by eminent domain, and
the amount of any insurance proceeds paid in connection with any casualty loss,
as applicable.
"LOAN AGREEMENT" means the loan agreement to be executed by the
Company and Lender in connection with the First Mortgage Loan.
"LOAN DOCUMENTS" means all documents to be executed or delivered in
connection with the First Mortgage Loan.
"LOCKBOX AGREEMENTS" means the clearing agreements, lockbox agreements
and similar agreements required under the First Mortgage Loan.
"LOSSES" has the meaning set forth in Section 3.2 hereof.
"MAJOR DEADLOCK" means a failure to agree by the Members upon any
material items requiring PAT's consent or a Majority-in-Interest approval,
after following the procedures outlined in Section 10.16.
"MAJORITY-IN-INTEREST" means Members holding more than fifty percent
(50%) of the Percentage Interests held in aggregate by the Members entitled to
vote or approve such action.
"MANAGEMENT AGREEMENT" means the Management Agreement to be entered
into by and between the Company and Manager, subsequent to the approval of PAT,
for the management of the Property.
"MANAGER" means the "Manager" under and as defined in the Management
Agreement.
"MANAGING MEMBER" has the meaning set forth in the preamble to this
Agreement.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the
business or the financial position or results of operation of the Member or
Company, (ii) the ability of the Members to perform this Agreement, or (iii)
the value of the Property.
"MEMBER MINIMUM GAIN" has the meaning of "partner minimum gain" as set
forth in Sections 1.704-2(i)(3) and of the Regulations, determined in
accordance with Sections 1.7042(g)(1) of the Regulations.
"MEMBER NONRECOURSE DEBT" has the meaning of "partner nonrecourse
debt" as set forth in Section 1.704-2(b)(4) of the Regulations.
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning of "partner
nonrecourse deductions" as set forth in Section 1.704-2(i)(2) of the
Regulations. The amount of Member Nonrecourse Deductions with respect to a
Member Nonrecourse Debt for a fiscal year of the Company equals the excess, if
any, of the net increase, if any, in the amount Member Minimum Gain
attributable to such Member Nonrecourse Debt during such fiscal year over the
aggregate amount of any distributions during such fiscal year to the Member
that bears the economic risk of loss for such Member Nonrecourse Debt, to the
extent such distributions are from the proceeds of such Member Nonrecourse Debt
and are allocable to an increase in Member Minimum Gain attributable to such
Member Nonrecourse Debt determined in accordance with Section 1 704-2(i)(2) of
the Regulations.
"MEMBERS" means any Person signing this Agreement and any other Person
who is subsequently admitted as an additional or substitute Member of the
Company pursuant to the terms of this Agreement.
"MEMBERSHIP INTEREST" means all of the rights of a Member in the
Company to the extent provided by law, subject, however, to the provisions of
this Agreement, including a Member": (i) Interest; (ii) right to inspect the
Company's books and records; and (iii) right to participate in the management
of and vote on matters before the Company.
"MONTHLY PREFERRED YIELD AMOUNT" means, with respect to each
Distribution Date, the sum of the Daily Preferred Yield Amounts for each day in
the related Yield Accrual Period.
"NET LIQUIDATION PROCEEDS" means all Liquidation Proceeds less (i) in
the case of a sale, such reasonable and customary costs and expenses of sale
(including brokerage commissions) as shall be approved by PAT which shall not
be unreasonably withheld or delayed, (ii) in the case of a casualty loss or
condemnation, such costs and expenses of collection of the related insurance
proceeds or condemnation award as shall be approved PAT which shall not be
unreasonably withheld or delayed, and (iii) in the case of a refinancing of the
Property, such costs and expenses of such refinancing as shall be approved by
PAT which shall not be unreasonably withheld or delayed.
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"NET LOSSES" shall have the meaning set forth in Section 3.2 hereof.
"NET PROFITS" shall have the meaning set forth in Section 3.2 hereof.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a
fiscal year equals the net increase, if any, in the amount of Company Minimum
Gain during that fiscal year over the aggregate distributions made during the
fiscal year of proceeds of any Nonrecourse Liabilities that are allocable to an
increase in Company Minimum Gain.
"NONRECOURSE LIABILITIES" has the meaning set forth in Section
1.704-2(b)(3) and 1.752(a)(2) of the Regulations.
"OFFEREE" has the meaning set forth in Section 6.3 hereof.
"OFFEROR" has the meaning set forth in Section 6.3 hereof.
"PAT" has the meaning set forth in the preamble to this Agreement.
"PAYMENT INSTRUCTIONS" has the meaning set forth in Section 11.2
hereof.
"PERCENTAGE INTEREST" means, with respect to any Member, the Member's
percentage interest in Company distributions and allocations made to the
Members as set forth on Exhibit A (as such percentage may be adjusted from time
to time as provided in this Agreement).
"PERSON" means any individual, corporation, limited liability company,
Company, joint venture, estate, trust, unincorporated association, or any other
entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on
behalf of any of the foregoing.
"PREFERRED AMOUNT" at any date means the sum of (i) the sum of all
Monthly Preferred Yield Amounts for all Distribution Dates on or prior to such
date that have not previously been paid, (ii) the sum of all Daily Preferred
Yield Amounts for each day occurring in the period from the last Distribution
Date on or prior to such date (or if no Distribution Date has yet occurred,
from the Admittance Date) to such date and (iii) the Preferred Capital Amount.
"PREFERRED CAPITAL AMOUNT" means, with respect to each Member, the
Capital Contributions of the Member less all distributions made to the Member
pursuant to Section 3.7(c) and Sections 3.8(d), (f) and (g), plus any
Additional Capital Contributions made by the Member.
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"PREFERRED RATE" means nine percent (9%) per annum.
"PROFITS" has the meaning set forth in Section 3.2 hereof.
"PROPERTY" has the meaning set forth in Section 1.2 hereof.
"RATING AGENCY(IES)" means Fitch Investors Service, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Standard & Poor's
Ratings Services, or any successor thereto, and any other nationally recognized
statistical rating organization to the extent that any of the foregoing have or
will be engaged by Lender or its designees in connection with a Securitization.
"REGULATORY ALLOCATIONS" has the meaning set forth in Section 3.4
hereof:
"REGULATIONS" means the regulations promulgated under the Code, as the
same may be amended from time to time, including corresponding provisions of
any succeeding regulations.
"REQUESTED AMOUNT" has the meaning set forth in Section 2.1(c) hereof.
"SECURITIZATION" has the meaning provided in the Loan Agreement.
"SELLING MEMBER" shall mean the Member selling its Membership Interest
to the other Member pursuant to Section 6.3 hereof.
"SINGLE-PURPOSE ENTITY" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and
thereafter (i) was and will be organized solely for the purpose of (w) owning
the Property or (x) acting as the managing member of the limited liability
company which owns the Facility or (y) acting as the general partner of a
limited partnership which owns the Facility or (z) acting as the managing
member of the limited liability company which acts as managing member of the
limited liability company which owns the Facility, (ii) has not and will not
engage in any business unrelated to the (w) the ownership of the Facility or
(x) acting as a member of a limited liability company which owns the Facility
or (y) acting as a general partner of a limited partnership which owns the
Facility or (z) acting as a member of a limited liability company which acts as
the managing member of the limited liability company which owns the Facility,
(iii) has not and will not have any assets other than (w) those related to the
Facility or (x) its member interest in the limited liability company which owns
the Facility or (y) its general partnership interest in the limited partnership
which owns the Facility, as applicable or (z) its member interest in the
limited liability company which acts as managing member of the limited
liability company which owns the Facility, (iv) has not and will not engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation or
merger, and, except as otherwise expressly permitted by the Loan Agreement, has
not and will not engage in, seek or consent to any asset sale, transfer of
partnership or membership or
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<PAGE> 41
shareholder interests, or amendment of its limited partnership agreement,
articles of incorporation, articles of organization, certificate of formation
or operating agreement (as applicable), (v) if such entity is a limited
partnership, has and will have as its only general partners, general partners
which are and will be Single-Purpose Entities which are corporations, (vi) if
such entity is a corporation, at all relevant times, has and will have at least
one Independent Director, (vii) the board of directors of such entity has not
taken and will not take any action requiring the unanimous affirmative vote of
100% of the members of the board of directors unless all of the directors,
including without limitation all Independent Directors, shall have participated
in such vote, (viii) has not and will not fail to correct any known
misunderstanding regarding the separate identity of such entity, (ix) if such
entity is a limited liability company, has and will have as its only managing
members (y) one or more corporations which are and will be Single-Purpose
Entities or (z) one or more limited liability companies which are and will be
Single-Purpose Entities and which have and will have as their only managing
members, one or more corporations which are and will be Single-Purpose
Entities, (x) without the unanimous consent of all of the partners, directors
(including without limitation all Independent Directors) or members, as
applicable, has not and will not with respect to itself or to any other entity
in which it has a direct or indirect legal or beneficial ownership interest (a)
file a bankruptcy, insolvency or reorganization petition or otherwise institute
insolvency proceedings or otherwise seek any relief under any laws relating to
the relief from debts or the protection of debtors generally; (b) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for such entity or all or any
portion of such entity's properties; (c) make any assignment for the benefit of
such entity's creditors; or (d) take any action that might cause such entity to
become insolvent, (xi) has maintained and will maintain its accounts, books and
records separate from any other person or entity, (xii) has maintained and will
maintain its books, records, resolutions and agreements as official records,
(xiii) has not commingled and will not commingle its funds or assets with those
of any other entity, (xiv) has held and will hold its assets in its own name,
(xv) has conducted and will conduct its business in its name, (xvi) has
maintained and will maintain its financial statements, accounting records and
other entity documents separate from any other person or entity, (xvii) has
paid and will pay its own liabilities out of its own funds and assets, (xviii)
has observed and will observe all partnership, corporate or limited liability
company formalities as applicable, (xix) has maintained and will maintain an
arms-length relationship with its affiliates, (xx) (a) if such entity owns the
Facility, has and will have no indebtedness other than the Indebtedness and
unsecured trade payables in the ordinary course of business relating to the
ownership and operation of the Facility, which unsecured trade payables (1) do
not exceed, at any time, a maximum amount of one percent (1%) of the Loan
Amount and (2) are paid within thirty (30) days of the date incurred, or (b) if
such entity acts as the general partner of a limited partnership which owns the
Facility, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner of the
limited partnership which owns the Facility which (1) do not exceed, at any
time, $10,000 and (2) are paid within thirty (30) days of the date incurred, or
(c) if such entity acts as a member of a limited liability company which owns
the Facility, has and will have no indebtedness other than unsecured trade
payables in the ordinary course of business relating to acting as a member of
the limited liability company which owns the Facility which (1) do not exceed,
at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within thirty
(30) days of the date incurred, or (d) if such entity acts as a member of a
limited liability company which is the managing member of the limited liability
company which owns the Facility, has and will have no indebtedness other than
unsecured trade
-37-
<PAGE> 42
payables in the ordinary course of business relating to acting as a member of
the limited liability company which owns the Facility which (1) do not exceed,
at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within thirty
(30) days of the date incurred, (xxi) has not and will not assume or guarantee
or become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity except for the
Indebtedness, (xxii) has not acquired and will not acquire obligations or
securities of its partners, members or shareholders, (xxiii) has allocated and
will allocate fairly and reasonably shared expenses, including, without
limitation, shared office space and uses separate stationery, invoices and
checks, (xxiv) except pursuant to the Loan Agreement, has not and will not
pledge its assets for the benefit of any other person or entity, (xxv) has held
and identified itself and will hold itself out and identify itself as a
separate and distinct entity under its own name and not as a division or part
of any other person or entity, (xxvi) has not made and will not make loans to
any person or entity, (xxvii) has not and will not identify its partners,
members or shareholders, or any affiliates of any of them as a division or part
of it, (xxviii) if such entity is a limited liability company, such entity
shall dissolve only upon the bankruptcy of the managing member, and such
entity's articles of organization, certificate of formation and/or operating
agreement, as applicable, shall contain such provision, (xxix) has not entered
and will not enter into or be a party to, any transaction with its partners,
members, shareholders or its affiliates except in the ordinary course of its
business and on terms which are intrinsically fair and are no less favorable to
it than would be obtained in a comparable arms-length transaction with an
unrelated third party, (xxx) has paid and will pay the salaries of its own
employees from its own funds, (xxxi) has maintained and will maintain adequate
capital in light of its contemplated business operations and (xxxii) if such
entity is a limited liability company or limited partnership, and such entity
has one or more managing members or general partners, as applicable, then such
entity shall continue (and not dissolve) for so long as a solvent managing
member or general partner, as applicable, exists and such entity's
organizational documents shall contain such provision.
"TRANSFER" means any conveyance, transfer, sale, lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security interest, or hypothecation, whether by
law or otherwise, of any transfer of any direct or indirect legal or beneficial
interest in such Person.
"YIELD ACCRUAL PERIOD" means with respect to any Distribution Date,
the period from and including the eleventh (11th) day of the month immediately
preceding the month in which such Distribution Date occurs up to and including
the tenth (10th) day of the month preceding the month in which such
Distribution Date occurs. The first Yield Accrual Period shall commence on and
include the Closing Date and end on and include the tenth (10th) day of the
calendar month in which the Closing Date occurs.
-38-
<PAGE> 43
SECTION 12.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(b) All references herein to any agreement or document shall be deemed
to refer to such agreement as amended from time to time, other than by an
amendment not permitted under this Agreement.
(c) The meanings given to terms defined herein shall be equally
applicable to both singular and plural forms of such terms.
[signatures on Next Page]
-39-
<PAGE> 44
The parties hereto have executed this Operating Agreement as of the
date first set forth above.
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: GLIMCHER PROPERTIES
CORPORATION, its
General Partner
By: /s/ George A. Schmidt
---------------------------
George A. Schmidt
Senior Vice President
GLIMCHER DAYTON MALL, INC.
By: /s/ George A. Schmidt
---------------------------
George A. Schmidt
Senior Vice President
PROPERTY ACQUISITION TRUST I
By: /s/ Stuart Silberberg
---------------------------
Stuart Silberberg
Vice President
-40-
<PAGE> 45
EXHIBIT A
INITIAL CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
<TABLE>
<CAPTION>
Initial Percentage
Member Contribution Interest
- ------ ------------ --------
<S> <C> <C>
Glimcher Properties
Limited Partnership $ 49%
---------
Glimcher Dayton Mall, Inc. $ 1%
---------
Property Acquisition
Trust I $ 50%
--------- ---
TOTAL $ 100%
---------
</TABLE>
-41-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and GEORGE A. SCHMIDT, an individual
residing at 695 Vivian Court, Gahanna, Ohio, 43230 (the "Executive").
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii) GRT acquires assets of another company or a subsidiary
of GRT merges or consolidates with another company (each, an "Other
Transaction") and (a) the shareholders of GRT, immediately before such
Other Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the Executive is
an employee of the Company at the moment immediately prior to a Change in
Control of GRT, the Executive shall be entitled to receive the compensation and
benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ David J. Glimcher
----------------------
David J. Glimcher
President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /s/ David J. Glimcher
---------------------
David J. Glimcher
President
EXECUTIVE:
/s/ George A. Schmidt
- ---------------------
George A. Schmidt
-7-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and HERBERT GLIMCHER, an individual
residing at 10 North Drexel, Bexley, Ohio, 43209, (the "Executive")
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii) GRT acquires assets of another company or a subsidiary
of GRT merges or consolidates with another company (each, an "Other
Transaction") and (a) the shareholders of GRT, immediately before such
Other Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive the
compensation and benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ David J. Glimcher
---------------------
David J. Glimcher
President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /s/ David J. Glimcher
---------------------
David J. Glimcher
President
EXECUTIVE:
/s/ Herbert Glimcher
- --------------------
Herbert Glimcher
-7-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and DAVID J. GLIMCHER, an individual
residing at 336 South Columbia, Bexley, Ohio, 43209, (the "Executive")
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii) GRT acquires assets of another company or a
subsidiary of GRT merges or consolidates with another company (each,
an "Other Transaction") and (a) the shareholders of GRT, immediately
before such Other Transaction own, directly or indirectly, immediately
following such Other Transaction 50% or less of the combined voting
power of the outstanding voting securities of the corporation or other
entity resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive the
compensation and benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ George A. Schmidt
--------------------------
George A. Schmidt
Senior Vice President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /s/ George A. Schmidt
--------------------------
George A. Schmidt
Senior Vice President
EXECUTIVE:
/s/ David J. Glimcher
- --------------------------
David J. Glimcher
-7-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and MICHAEL P. GLIMCHER, an individual
residing at 216 South Columbia, Columbus, Ohio, 43209 (the "Executive").
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii) GRT acquires assets of another company or a subsidiary
of GRT merges or consolidates with another company (each, an "Other
Transaction") and (a) the shareholders of GRT, immediately before such
Other Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive the
compensation and benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GLIMCHER REALTY TRUST
By: /S/ DAVID J. GLIMCHER
---------------------
David J. Glimcher
President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /S/ DAVID J. GLIMCHER
---------------------
David J. Glimcher
President
EXECUTIVE:
/S/ MICHAEL P. GLIMCHER
- -----------------------
Michael P. Glimcher
-7-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and WILLIAM G. CORNELY, an individual
residing at 215 Woodedge Circle West, Powell, Ohio, 43065, (the "Executive")
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii)GRT acquires assets of another company or a subsidiary
of GRT merges or consolidates with another company (each, an "Other
Transaction") and (a) the shareholders of GRT, immediately before such
Other Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive the
compensation and benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ David J. Glimcher
------------------------
David J. Glimcher
President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /s/ David J. Glimcher
------------------------
David J. Glimcher
President
EXECUTIVE:
/s/ William G. Cornely
- --------------------------
William G. Cornely
-7-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and WILLIAM R. HUSTED, an individual
residing at 8212 Millhouse Lane, Dublin, Ohio, 43016, (the "Executive")
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii) GRT acquires assets of another company or a
subsidiary of GRT merges or consolidates with another company (each,
an "Other Transaction") and (a) the shareholders of GRT, immediately
before such Other Transaction own, directly or indirectly, immediately
following such Other Transaction 50% or less of the combined voting
power of the outstanding voting securities of the corporation or other
entity resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive the
compensation and benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ David J. Glimcher
-------------------------
David J. Glimcher
President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /s/ David J. Glimcher
-------------------------
David J. Glimcher
President
EXECUTIVE:
/s/ William R. Husted
- ------------------------
William R. Husted
-7-
<PAGE> 1
SEVERANCE BENEFITS AGREEMENT
AGREEMENT, dated as of June 11, 1997, by and among GLIMCHER
REALTY TRUST, a Maryland real estate investment trust, with offices at 20 South
Third Street, Columbus, Ohio, 43215 ("GRT"), GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, with offices at 20 South Third
Street, Columbus, Ohio, 43215 ("GPLP"), and TIMOTHY GETZ, an individual
residing at 1201 Clubview Blvd., N., Columbus, Ohio, 43235, (the "Executive").
WHEREAS, GRT, GPLP and/or their subsidiaries and affiliates,
including entities in which GRT or GPLP own a majority of any non-voting stock
(collectively, the "Company"), have employed, or may employ in the future, the
Executive as an employee of the Company to perform certain services to the
Company upon terms and conditions upon which the Company and the Executive have
previously agreed, or may in the future agree (the "Services");
WHEREAS, the Company recognizes that the Executive's
contributions to the past and future growth of the Company have been and will
be substantial; and
WHEREAS, to induce the Executive to remain in the employ of
the Company, the parties hereto desire to set forth certain severance benefits
which GPLP will pay to the Executive in the event of a Change in Control of GRT
(as defined in Section 2 hereof).
IT IS AGREED:
1. TERM. This Agreement shall commence on the date hereof and
shall terminate upon the earlier of (a) the date on which GPLP and GRT have
satisfied all of their obligations hereunder, or (b) the date on which the
Executive is no longer an employee of the Company for any reason whatsoever
including, without limitation, termination without cause. Notwithstanding the
termination of this Agreement subsequent to a Change in Control of GRT, in the
event that the Executive is an employee of the Company at the moment
immediately prior to a Change in Control of GRT, the Executive shall be
entitled to receive all benefits described hereunder and the provisions hereof
related thereto shall survive such termination.
<PAGE> 2
2. CHANGE IN CONTROL OF GRT. For purposes of this Agreement,
a "Change in Control of GRT" shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date hereof, whether or not GRT is then subject to such reporting
requirement, provided, however, that there shall not be deemed to be a
Change in Control of GRT if immediately prior to the occurrence of
what would otherwise be a Change in Control of GRT (a) the Executive
is the other party to the transaction (a "Control of GRT Event") that
would otherwise result in a Change in Control of GRT or (b) the
Executive is an Executive officer, trustee, director or more than 5%
equity holder of the other party to the Control of GRT Event or of any
entity, directly or indirectly, controlling such other party;
(ii) GRT merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a Change in Control of GRT if (a) immediately
prior thereto the circumstances in (i)(a) or (i)(b) above exist, or
(b) (1) the shareholders of GRT, immediately before such Transaction
own, directly or indirectly, immediately following such Transaction in
excess of fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the voting
securities of GRT immediately before such Transaction and (2) the
individuals who were members of GRT's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation; or
-2-
<PAGE> 3
(iii) GRT acquires assets of another company or a
subsidiary of GRT merges or consolidates with another company (each,
an "Other Transaction") and (a) the shareholders of GRT, immediately
before such Other Transaction own, directly or indirectly, immediately
following such Other Transaction 50% or less of the combined voting
power of the outstanding voting securities of the corporation or other
entity resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of GRT immediately before such Other
Transaction or (b) the individuals who were members of GRT's Board of
Trustees immediately prior to the execution of the agreement providing
for such Other Transaction constitute less than a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Other Surviving Corporation, or of a corporation
or other entity beneficially directly or indirectly owning a majority
of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be
deemed to result in a Change in Control of GRT if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
3. COMPENSATION UPON A CHANGE IN CONTROL OF GRT. If the
Executive is an employee of the Company at the moment immediately prior to a
Change in Control of GRT, the Executive shall be entitled to receive the
compensation and benefits set forth below.
(a) GPLP shall pay to the Executive, not later than the date
of any Change in Control of GRT, unless otherwise agreed to in writing, a lump
sum severance payment (the "Severance Payment") equal to three (3) times the
Base Amount (as defined below). For purposes of this Section 3(a), the Base
Amount shall mean the Executive's annual compensation during the calendar year
period preceding the calendar year in which the Change in Control of GRT
occurs. For purposes of determining annual compensation in the preceding
sentence, there shall be included (i) all base salary and bonuses paid or
payable to the Executive by the Company with respect to the preceding calendar
year, (ii) all grants of restricted common shares of beneficial interest of GRT
(the "Shares"), if any, with respect to such preceding calendar year, which
Shares shall be valued based on their date of grant Fair Market Value (as
defined in Section 7.2 of the GRT's 1993 Employee Share Option Plan or 1993
Trustee Share Option Plan, as the case may be, or any other plan or agreement
pursuant to which they are issued), and (iii) the fair market value of any
other property or rights given or awarded to the Executive by the Company with
respect to such preceding calendar year.
(b) Any Shares now or hereafter issued to the Executive
pursuant to any restricted Share grant shall vest on the day immediately prior
to the date of a Change in Control of GRT and no longer be subject to
repurchase or any other forfeiture restrictions.
-3-
<PAGE> 4
(c) GRT and GPLP shall cause the Company to maintain in full
force and effect for the Executive's continued benefit for 18 months following
a Change in Control of GRT, all life, accident, medical and dental insurance
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of a Change in Control of GRT;
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs; and provided, further,
that in the event that the Executive becomes employed by any third party during
such 18-month period, then upon the date of such employment the Executive shall
no longer be entitled to any of the accident, medical or dental insurance
benefits described in the preceding clause. Subject to the preceding sentence,
in the event that the Executive's participation in any such plan or program is
barred, GRT and GPLP shall arrange to cause the Company to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans and programs. Subject to the first
sentence of this paragraph, at the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost to the Executive and
with no apportionment of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to the Executive.
(d) All options to purchase Shares now or hereafter granted
to the Executive shall vest on the day immediately prior to the date of a
Change in Control of GRT and become fully exercisable in accordance with their
terms.
(e) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 3 be reduced by any compensation earned by him as
the result of employment by another employer or by retirement benefits after
the date of termination, or otherwise, except as specifically provided in this
Section 3.
4. ADDITIONAL AMOUNT. Whether or not Section 3 hereof is
applicable, if in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated) which constitutes an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") (or for which a tax is
otherwise payable under Section 4999 of the Code), then GPLP shall pay the
Executive an additional amount (the "Additional Amount") equal to the sum of
(i) all taxes payable by the Executive under Section 4999 of the Code with
respect to all such excess parachute payments (or otherwise), including without
limitation the Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to the Additional Amount. The amounts
payable pursuant to this Section 4 shall be paid by GPLP to the Executive not
later than the date of any Change in Control of GRT, unless otherwise agreed to
in writing.
-4-
<PAGE> 5
5. EXPENSES. GPLP shall pay or reimburse the Executive, as
the case may be, for all legal fees and related expenses (including the costs
of experts, evidence and counsel) paid by the Executive as a result of (i) the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement, or (ii) any action taken by the Company against the Executive in
enforcing its rights hereunder; provided, however, that GPLP shall reimburse
the legal fees and related expenses described in this Section 5 only if and
when a final judgement has been rendered in favor of the Executive and all
appeals related to any such action have been exhausted.
6. NO EMPLOYMENT RIGHTS OR OBLIGATIONS. Nothing contained
herein shall confer upon the Executive the right to continue in the employment
or service of the Company or affect any right that the Company may have to
terminate the employment or service of the Executive at any time for any
reason.
7. GRT GUARANTY. GRT guarantees the satisfaction of all
obligations of, and the full and prompt payment of all amounts payable by, GPLP
hereunder. In addition, GRT guarantees the satisfaction of all obligations of
the Company hereunder.
8. GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Maryland, without regard to Maryland's conflicts of law principles. Any
dispute or controversy arising under this Agreement, or out of the
interpretation hereof, or based upon the breach hereof, shall be resolved by
arbitration held at the offices of the American Arbitration Association in the
City of Philadelphia in accordance with the rules and regulations of such
association prevailing at the time of the demand for arbitration by either
party hereto, and the decision of the arbitrator or arbitrators shall be final
and binding upon both parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret, and not to
modify or amend, the terms and provisions hereof. Judgment upon an award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. Notwithstanding anything contained in this Section 8,
either party shall have the right to seek preliminary injunctive relief in any
court in the City of Philadelphia in aid of, and pending the final decision in,
the arbitration proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties and is intended to supersede all prior negotiations,
understandings and agreements with respect to the subject matter hereof. No
provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
10. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by GRT and GPLP, their
successors and assigns and the Executive, and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
-5-
<PAGE> 6
11. NOTICES. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when given by telex, telegram or
mailgram, or when mailed first class postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to receive the
same at his or its address above set forth, or such other address as the party
to receive the same shall have specified by written notice given in the manner
provided for in this Section 11. All notices shall be deemed to have been given
as of the date of personal delivery, transmittal or mailing thereof.
12. SEVERABILITY. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or enforceability of
any of the other remaining provisions hereof.
13. GRT EXCULPATION. This Agreement and all documents,
agreements, understandings and arrangements relating to the matters described
herein have been executed by the undersigned representative of GRT in his/her
capacity as an officer or trustee of GRT which has been formed as a Maryland
real estate investment trust pursuant to an Amended and Restated Declaration of
Trust of GRT, as amended, and not individually, and neither the trustees,
officers or shareholders of GRT shall be bound or have any personal liability
hereunder or thereunder. The Executive shall look solely to the assets of GRT
for satisfaction of any liability of GRT in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the trustees, officers or shareholders of GRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GLIMCHER REALTY TRUST
By: /s/ David J. Glimcher
--------------------------
David J. Glimcher
President
GLIMCHER PROPERTIES LIMITED PARTNERSHIP
By: Glimcher Properties Corporation
Its: General Partner
By: /s/ David J. Glimcher
--------------------------
David J. Glimcher
President
EXECUTIVE:
/s/ Timothy C. Getz
- --------------------------
Timothy Getz
-7-
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