EXHIBIT 3.2
PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
TRUST AGREEMENT AS
AMENDED AND RESTATED
DECEMBER 16, 1997
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
TRUST AGREEMENT AS AMENDED
AND RESTATED DECEMBER 16, 1997
The undersigned trustees of Pennsylvania Real Estate Investment Trust
on this 16th day of December 1997, hereby amend the Trust Agreement made
December 27, 1960, and amended February 10, 1961, February 14, 1962, August 7,
1962, May 8, 1963, December 13, 1967, February 24, 1970, October 10, 1985,
November 7, 1985, February 13, 1986, December 16, 1987 and September 29, 1997
and agree that the same as amended hereby shall be restated as follows:
1. NAME OF TRUST; REGISTERED OFFICE; DEFINITIONS
Certain trustees acting under this Trust Agreement have heretofore
formed a Trust which is designated "Pennsylvania Real Estate Investment Trust"
(hereinafter referred to as the "Trust" or "PREIT"). PREIT shall conduct all
business and the Trustees, and others authorized hereby or pursuant to the
provisions hereof, shall execute all instruments necessary or desirable and
appropriate to the performance of the purposes of PREIT.
PREIT shall exist subject to 15 Pa. C.S. Chapter 95, as
amended from time to time, and any successor statute thereto.
The address of the registered office of PREIT in the Commonwealth of
Pennsylvania is 000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000.
The term "Trustees," when used herein, shall mean the undersigned
trustees of PREIT and any successor or additional trustees of PREIT hereunder.
The term "Trust Property," when used herein, shall mean all property,
of all kinds, owned by PREIT.
The term "Shareholders," when used herein, shall mean holders of record
of Shares authorized by the first paragraph of Paragraph 8 and the holders of
Preferred Shares to the extent, if any, provided in the designating amendment
effected pursuant to the provisions of the second paragraph of Paragraph 8.
2. TRUSTEES
The following provisions shall apply to Trustees serving under this
Trust Agreement:
A. NUMBER
-1-
The Trustees shall have the right at any time, and from time
to time, to increase or decrease the number of Trustees then empowered to serve
to a number not in excess of fifteen (15) nor less than five (5). Commencing
with the Annual Meeting of Shareholders in 1970 the Trustees shall be divided
into three approximately equal classes each consisting of not fewer than one (1)
nor more than five (5) individuals.
B. TERM OF OFFICE
The term of office of each Trustee serving prior to the Annual
Meeting of Shareholders in 1970 shall terminate upon the election of his
successor. At such Annual Meeting one class of Trustees ("Class A Trustees")
shall be elected, each member of which is to hold office for a term of one year,
one class of Trustees ("Class B Trustees") shall be elected, each member of
which is to hold office for a term of two years, and one class of Trustees
("Class C Trustees") shall be elected, each member of which is to hold office
for a term of three years, and in each case and in each class such members shall
serve until their respective successors shall have been duly elected and
qualified. Commencing with the Annual Meeting in 1971, and at each Annual
Meeting thereafter, one class of Trustees, which shall be the class whose terms
expire that year, shall be elected, each member of which is to hold office for a
term of three years and until his respective successor is elected and qualified.
C. NOMINATION OF TRUSTEES
Nomination for election to the office of Trustee at any Annual
or Special Meeting of Shareholders shall be made by the Trustees, or by petition
in writing delivered to the Secretary of PREIT not fewer than thirty-five (35)
days prior to such Shareholders' meeting signed by the holders of at least two
percent (2%) of the Shares outstanding on the date of such petition. Unless
nominations shall have been made as aforesaid, they shall not be considered at
such meeting unless the number of persons nominated as aforesaid shall be fewer
than the number of persons to be elected to the office of Trustee at such
meeting in which event nominations for the Trustee positions which would not
otherwise be filled may be made at the meeting by any person entitled to vote in
the election of Trustees.
D. ADDITIONAL AND SUCCESSOR TRUSTEES: VACANCIES
The death, incapacity, resignation or removal of any or all of
the Trustees shall not terminate PREIT's existence or in any way affect its
continuity.
Vacancies shall be deemed to have occurred as a result of an
increase in the number of Trustees, or by reason of the death, resignation or
incapacity of any of the Trustees (unless
-2-
the vacancy is eliminated by reduction in the number of Trustees), and they
shall be filled by persons to be elected by the remaining Trustees. Any new
Trustee so elected to fill a vacancy created by reason of the death, resignation
or incapacity of a Trustee shall hold office for the full remaining term of the
former Trustee and until his successor is elected and qualified. Any new Trustee
so elected as a result of an increase in the number of Trustees shall hold
office until the next Annual or Special Meeting of Shareholders and until his
successor is elected and qualified. A vacancy caused by the removal of any
Trustee shall be filled only by the Shareholders at an Annual or Special
Meeting, unless by reason of the removal of the Trustee the number of Trustees
is reduced to less than five (5), in which event the next succeeding paragraph
of this Paragraph 2.D shall apply.
Until vacancies are filled the remaining Trustees shall be
empowered to exercise all powers granted all Trustees hereunder, except that in
the event that the number of Trustees shall fall below five (5), the Trustees
shall forthwith nominate and elect at least as many Trustees as may be required
to bring the total number of trustees to five (5).
Upon the election of any Trustee or additional or successor
Trustee, the said Trustee so elected shall execute a written Acceptance of
Trust, which together with a certificate of such election executed by two other
Trustees, shall be filed with legal counsel for PREIT. Upon the delivery of such
Acceptance, the said Trustee shall have all the rights, powers and duties of a
Trustee hereunder.
E. RESIGNATION OF TRUSTEES
Any Trustee may resign at any time by delivering to any other
Trustee and to the office of PREIT written notification of his resignation,
which resignation shall be effective when received, but if the effect of such
resignation shall be to reduce the number of Trustees below five (5), no such
resignation shall be effective until a successor shall have been elected by the
remaining Trustees.
F. REMOVAL OF TRUSTEES
Any Trustee may be removed during his term by a vote of at
least two-thirds of all of the Trustees then in office for any cause by them
deemed sufficient, at any regular meeting of the Trustees, or at any meeting
specially called for that purpose.
Any individual Trustee may be removed for cause (as herein
defined) by a vote of the Shareholders at any meeting of Shareholders called for
the purpose by the affirmative vote of Shareholders entitled to cast at least a
majority of the votes of
-3-
the Shares then outstanding and entitled to vote at the annual election of
Trustees. Cause for removal shall exist only if the Trustee whose removal is
proposed has been convicted of a felony by a court of competent jurisdiction and
such conviction is no longer subject to direct appeal or if the Trustee has been
adjudged by a court of competent jurisdiction to be liable for negligence or
misconduct in the performance of his duty to PREIT in a matter of substantial
importance to PREIT, and such adjudication is no longer subject to direct
appeal.
No Trustee shall be removed at any meeting of Trustees or
Shareholders unless written notice of such meeting stating this purpose shall be
given or mailed to those entitled to vote thereon at least seven (7) days prior
to such meeting.
G. WAIVER OF BOND
No Trustee acting hereunder shall be required to furnish a
bond in any jurisdiction in which said Trustees may act.
H. MEETINGS
The Trustees shall hold an Annual Meeting immediately
following the Annual Meeting of Shareholders. No notice shall be required for
the Annual Meeting of Trustees. At that meeting, they shall elect officers,
including a President, a Secretary, and such other officers as they shall from
time to time deem necessary. Officers so elected by them shall remain in office
until the next Annual Meeting of Trustees, unless removed by the vote of
two-thirds of the Trustees then in office at any special meeting called on seven
(7) days notice for that purpose. Special Meetings of the Trustees shall be
called by the Chairman or by two or more of the other Trustees and shall be held
at such time and in such place as shall be designated in the notice of the
meeting. Such notice shall be given by or at the direction of the person or
persons authorized to call such meeting to each Trustee at least two (2) days
prior to the day named for the meeting, unless a different notice period is
provided for hereunder based upon the subject matter of such meeting. Any
Trustee may waive notice of any meeting of Trustees by a writing signed by the
Trustee prior to or after such meeting. Attendance by a Trustee at a meeting of
Trustees without objecting to the lack of notice shall constitute a waiver of
notice of such meeting.
I. QUORUM
A majority of the Trustees, provided that the majority
consists of at least four (4) Trustees, shall constitute a quorum. Trustees
shall be deemed present at a meeting if by means of conference telephone or
similar communications equipment
-4-
all persons participating in the meeting can hear each other. If there are fewer
than five (5) Trustees, the remainder constitutes a quorum and must act to fill
vacancies to bring the total number of Trustees to at least five (5). If a
quorum is not present at any meeting, a majority of the Trustees present at the
meeting may adjourn the meeting to any later date and the meeting may be held at
such later date without any further notice.
J. VOTING REQUIREMENTS
Except as otherwise required by law and except as otherwise
contemplated by paragraph 3.R, the concurrence of a majority of the Trustees
present at any meeting at which a quorum is present shall be necessary to the
validity of any action taken by them. In lieu of a meeting, action may be taken
by the consent in writing of at least seventy-five (75%) of the Trustees then
serving. In any event, the concurrence or consent in writing of at least four
(4) Trustees shall be necessary to the validity of any action taken. The minimum
voting requirements specified in this paragraph shall apply, as a minimum
requirement, with respect to any and all action taken by the Trustees under this
Trust Agreement.
K. TRUSTEES' DEALINGS WITH PREIT
Any Trustee may be employed by PREIT to hold any office, to
perform any special business, financial or other service, and shall be entitled
to receive such additional reasonable compensation as the Trustees may fix and
determine. Moreover, no Trustee shall be disqualified by his position as a
Trustee from selling to, buying from or dealing with PREIT either directly or
indirectly as a director, officer, member, affiliate, shareholder or fiduciary
of any other party to such a transaction. No such contract or transaction shall
be void or voidable solely because of such a relationship with or interest of a
Trustee, or solely because such a Trustee is present at or participates in the
meeting of the Board of Trustees that authorizes (or ratifies) the transaction,
or solely because his or her votes are counted for that purpose if the material
facts as to the relationship or interest are disclosed or are known to the
Trustees and the Board of Trustees authorizes (or ratifies) such contract or
transaction by the affirmative votes of a majority of the Trustees not having an
interest therein, even though the Trustees not having an interest in the
contract or transaction are less than a quorum. No Trustee shall have any
liability for such a contract or transaction so approved (or ratified) by a
majority of the Trustees not having an interest in such contract or transaction
except for bad faith or gross negligence. Those Trustees having an interest in
such a transaction may be counted in determining the existence of a quorum at
any meeting of the Board of Trustees which shall authorize (or ratify) any such
contract or transaction.
-5-
3. ACTIVITIES OF PREIT; POWERS OF THE TRUSTEES
The business activities of PREIT, which shall be conducted by or under
the direction of the Trustees on behalf of PREIT, shall be (i) the acquisition,
ownership, operation, leasing, management, development and disposition of real
property and related personal property, either directly or indirectly, and the
ownership of interests in trusts, partnerships or other entities which acquire
own, operate, lease, manage, develop and dispose of real property and related
personal property, and (ii) all things that the Trustees shall deem necessary or
desirable and appropriate to the foregoing.
In furtherance of the business activities of PREIT and in addition to
any powers conferred upon the Trustees by law and by other provisions of this
Trust Agreement, the Trustees shall have the following powers, unless otherwise
restricted by any other provision of this Trust Agreement.
A. To invest in assets of any kind and nature without being limited to
so-called "legal investments," provided the amount, type or classification will
not disqualify PREIT from qualifying as a Real Estate Investment Trust under the
pertinent provisions of the Internal Revenue Code and Regulations thereunder.
B. To make investments incorporating a variety of real property
financing techniques, including, without limitation, sale and leasebacks, net
lease financings, purchase and installment salebacks, high credit lease-secured
mortgages, convertible mortgages and mortgages of special interests including,
without limitation, leaseholds, air rights and condominiums. PREIT's investment
policy may also include new investment techniques subsequently developed which
satisfy the real estate investment trust requirements of the Internal Revenue
Code and Regulations thereunder.
C. To improve, manage, protect, subdivide, sell, mortgage, pledge,
encumber, grant easements or charges against or otherwise deal in real estate
assets and interests in real property.
D. To make such contracts as they deem expedient in the conduct of the
business of PREIT and to engage in any type of business necessary or incidental
thereto, except such business as would disqualify PREIT as a Real Estate
Investment Trust under the pertinent provisions of the Internal Revenue Code and
Regulations thereunder.
E. To borrow money to further PREIT's purposes and to pledge the Trust
Property as security therefor, provided, however, that no liability shall be
incurred except such as may
-6-
be incidental to the proper management of the property and business of PREIT and
the proper execution of PREIT's purposes.
F. To raise monies or acquire assets consistent with the purposes of
PREIT by the issuance of securities and subscriptions, options and warrants
relating thereto.
G. To receive or xxx for all monies at any time becoming due to PREIT.
H. To compromise or refer to arbitration any claims against or rights
of PREIT.
I. To employ any persons (including Trustees) to assist the Trustees in
the conduct of the business of PREIT and to confer upon such persons such
titles, power and authority as the Trustees may deem expedient. Those persons
who are elected and serve as officers of PREIT in accordance with Paragraph 2.H
of this Trust Agreement or otherwise shall have such powers and duties as a
resolution adopted by the Trustees or PREIT's By-laws may provide.
J. To execute and deliver any and all instruments in writing which they
may deem advisable to carry out the purposes of PREIT. In connection with the
execution of any documents, the Trustees may, from time to time, designate one
or more of the Trustees as such or as officers of PREIT, or such other officer
or person or officers or persons to execute documents on behalf of PREIT, and
such execution shall be valid for all purposes.
K. To manage, conduct and operate PREIT under such assumed or
fictitious name or names as they, from time to time, designate and in connection
therewith, to do all things necessary to register such fictitious name or names
on behalf of PREIT and its Shareholders.
L. In accordance with applicable law, to determine whether monies or
things shall, for the purposes of these presents, be considered as principal or
income, or what constitutes gross income or net income in any year, or part of
the year, and to determine the mode in which expenses or disbursements shall be
charged between principal or income.
M. To do all and such other things and incur such other obligations as
in their judgment will advance PREIT's purposes.
N. To execute and deliver any regulatory agreement or assumption of
regulatory agreement and any other instrument approved by the Trustees required
by the Federal Housing Commissioner in case of the purchase of any property
subject to a mortgage insured by the Federal Housing Administration.
-7-
O. To adopt, amend and repeal such By-Laws for the conduct of the
business of their meetings and of PREIT as they shall deem necessary, but all
such By-Laws shall be subordinate to and not inconsistent with the provisions of
this Agreement.
P. To determine the value of all or any part of the Trust Property and
of any services, securities, property or other consideration to be furnished to
or acquired by PREIT, and to revalue all or any part of the foregoing.
Q. To sell, assign, or otherwise transfer all or substantially all or
any part of the Trust Property, to merge PREIT with another business trust or
entity, and, to the extent permitted by law, to elect not to have PREIT exist
subject to 15 Pa. C.S. CHAPTER 95, or any successor thereto; provided that,
unless (i) in the case of a merger, either (a) the merger is with an entity in
which PREIT owned, directly or indirectly, prior to the merger ownership
interests having at least 80% of the voting power of all ownership interests or
(b) the persons that were the Shareholders of PREIT immediately prior to the
merger will own, directly or indirectly, immediately following the merger all of
the ownership interests in the surviving entity, and (ii) in the case of such a
sale, assignment or other transfer, the transferee is an entity directly or
indirectly controlled by PREIT, no such merger or sale, assignment or other
transfer shall be effected without the affirmative vote of the holders of a
majority of votes cast by all Shareholders entitled to vote thereon (excluding
holders of Preferred Shares that are entitled to vote thereon exclusively as a
class) at a meeting called for that purpose pursuant to a resolution adopted by
a majority of the Trustees then in office. If any class or series of Preferred
Shares is entitled to vote thereon as a class, the affirmative vote of a
majority of the votes cast in each class vote shall also be required. No vote of
Shareholders shall be required under this Xxxxxxxxx 0.X if there shall have
previously been an affirmative vote of the Shareholders to dissolve the Trust
pursuant to Paragraph 16.
R. To establish one or more committees to consist of one or more
Trustees and to delegate such authority of the Trustees to those committees as
is permitted by law. The establishment of such committees and the delegation of
authority thereto shall be done only by resolution of a majority of all of the
Trustees then serving, and no such committee shall have the authority to (i)
amend or repeal any provision of this Agreement or the By-laws, (ii) remove any
Trustee from the Board of Trustees, or (iii) create or fill any vacancies in the
Board of Trustees.
S. In addition to the authority in Paragraph 8, to create and issue
(whether or not in connection with the issuance of Shares or other securities),
and to authorize the creation and issuance by subsidiaries and affiliates of
PREIT of, option
-8-
rights or securities having conversion or option rights entitling the holders
thereof to purchase or acquire Shares, option rights, securities having
conversion or option rights, or obligations, of any class or series, or assets
of PREIT, or to purchase or acquire from PREIT equity securities, option rights,
securities having conversion or option rights, or obligations, of any class or
series, owned by PREIT and issued by any other person or entity. The securities,
contracts, warrants or other instruments evidencing Shares, option rights,
securities having option or conversion rights, or obligations of PREIT, may
contain such terms as are fixed by the Trustees, including, without limiting the
generality of such authority, restrictions, provisions providing for adjustment
of terms upon the happening of certain events, pricing and payment terms, and
conditions, including, but not limited to, conditions that preclude any person
or persons owning or offering to acquire a specified number or percentage of
Shares or any class or series thereof or option rights, securities having
conversion or option rights, or obligations of PREIT or any class or series of
the foregoing or any transferee or transferees of the person or persons from
exercising, converting, transferring or receiving the Shares or other equity
securities, option rights, securities having conversion or option rights,
obligations or assets. The provisions of this Paragraph 3.S shall not be
construed to effect a change in the fiduciary relationship between a Trustee and
PREIT or to change the standard of care of a Trustee as provided for in
Paragraph 5 of this Agreement, 15 Pa. C.S. Section 9506, as amended from time to
time, and Subchapter B of Chapter 17 of the Pennsylvania Business Corporation
Law of 1988, as amended from time to time.
T. To adopt and implement executive compensation, pension, profit
sharing, share option, share bonus, share purchase, share appreciation rights,
savings, thrift, retirement, incentive or benefit plans, trusts or provisions
applicable to any or all Trustees, officers, employees or agents of PREIT or
trustees, directors, officers, employees or agents of any of PREIT's
subsidiaries or affiliates or other entities in which PREIT maintains an
investment and, without limiting the foregoing authority, to create and issue
rights and options to Trustees, officers, employees and agents of PREIT and
trustees, directors, officers, employees or agents of any of PREIT's
subsidiaries or affiliates or other entities in which PREIT maintains an
investment as an incentive for service or continued service with PREIT or any of
its subsidiaries or affiliates or other entities in which PREIT maintains an
investment or for such other purposes and upon such terms as the Trustees, who
may benefit by their action, deem advantageous to PREIT.
U. To determine and alter, from time to time, the fiscal year of PREIT.
-9-
V. To grant rights to holders of equity interests in entities
controlled by PREIT to vote on matters to be voted upon by the Shareholders of
PREIT, either as a separate class or with the Shareholders and on any such basis
as the Board shall determine.
4. PROTECTION OF PERSONS DEALING WITH TRUSTEES
A resolution of the Trustees, certified by any Trustee or by any
officer of PREIT, authorizing a particular act shall be conclusive evidence to
anyone, including strangers to PREIT, that such act is within the powers of the
Trustees. Any instrument executed by any Trustee or by the Chief Executive
Officer, President, Chief Operating Officer or any Vice President of PREIT shall
be conclusive evidence to anyone, including strangers to PREIT, that said
persons are in fact authorized to execute said instrument on behalf of PREIT and
a resolution accompanying such instrument shall not be necessary for this
purpose. A certification of incumbency of Trustees and officers of PREIT,
executed by any other Trustee or by any other officer of PREIT shall be
conclusive evidence to anyone, including strangers to PREIT, that the Trustees
and the officers of PREIT named therein are at the time stated therein then
serving under this Trust Agreement. No purchaser from PREIT shall be bound to
see to the application of the money or other consideration paid by the purchaser
to PREIT.
5. LIMITATION OF TRUSTEES' AND OFFICERS' LIABILITY
A. The Trustees, when acting in such capacity, shall not be personally
liable to any person or entity for any act, omission or obligation of PREIT.
B. The Trustees shall stand in a fiduciary relationship to PREIT. The
provisions of 15 Pa. C.S. Subchapter B and, specifically, Section 1715, shall be
applicable to the Trustees with respect to the fiduciary relationship and the
discharge of duties arising therefrom. No Trustee shall be personally liable for
monetary damages for any action taken, or any failure to take any action, except
that a Trustee shall remain personally liable for monetary damages to the same
extent that a director of a Pennsylvania business corporation remains liable
under the provisions of 15 Pa. C.S. Section 1713. In furtherance of the purposes
of the preceding sentence, such sentence shall be deemed to have the effect of a
bylaw adopted by the Shareholders (as that term is used in 15 Pa. C.S. Section
1713).
C. An officer of PREIT shall perform his duties as an
officer of PREIT in good faith, in a manner he reasonably
believes to be in the best interests of PREIT and with such care,
including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances. A
-10-
person who so performs his duties shall not be liable by reason of having been
an officer of PREIT.
D. It is the intention of this Trust Agreement to limit the
liability of the Trustees to the fullest extent permitted by applicable law, as
amended or supplemented. No amendment of this Agreement or repeal of any of its
provisions shall adversely affect any right or protection of any Trustee or
officer of PREIT provided for hereunder for or with respect to any acts,
omissions or obligations of PREIT or any Trustee or officer of PREIT occurring
or incurred prior to such amendment or repeal.
6. RECORDS
The Trustees shall keep a record of all meetings of the Trustees and
committees of the Trustees and of the Shareholders and the officers of PREIT
shall keep books of account showing the receipts and disbursements of PREIT. The
Trustees shall arrange for the preparation, as soon as practicable, after the
close of PREIT's fiscal year, which shall be determined by the Trustees, of a
complete report of the business of PREIT during the preceding fiscal year. A
copy of this report shall be sent to each Shareholder. In addition, the
Trustees, or their appointed institutional agents, shall maintain proper
transfer books and a register of the names and interests of the Shareholders
hereunder and any other security holders of PREIT.
7. LEGAL TITLE
Legal title to all Trust Property shall be held by PREIT (to the extent
permitted by law) or by Trustees as such, or by any of them or by such other
nominee or nominees as the Trustees may from time to time designate to hold
legal title for PREIT. The Trustees shall have absolute control over the
management and disposition of the Trust Property, subject only to such
limitations as are set forth herein. The Trustees shall have complete control of
the conduct of PREIT.
Any enumeration of specific duties and powers shall not be deemed a
limitation upon the general powers herein conferred.
8. BENEFICIAL INTERESTS
The beneficial interests in PREIT, in addition to Preferred Shares
issued pursuant to the following paragraph of this Paragraph 8 and Excess Shares
issued pursuant to Paragraph 9.C that may be outstanding, shall be divided into
a maximum of One-Hundred Million (100,000,000) shares outstanding at any time,
each having a par value of $1.00 per share (herein referred to as "Shares"). The
Trustees may sell or exchange such Shares for such sums or other consideration
and on such terms as they may
-11-
deem expedient, provided that in no event shall Shares be sold for a
consideration less than par, and the Shares shall be issued only upon the
payment of an amount at least equal to such par value; provided that, in the
case of Shares sold for non-cash consideration, the value received shall be
deemed to be an amount at least equal to the par value thereof if the sale was
authorized by the Trustees and, in the case of Shares issued upon conversion or
upon exercise of rights to acquire Shares, such Shares shall be deemed to have
been issued for an amount at least equal to the par value thereof if, at the
time such convertible security was issued or at the time such exercise right was
granted, such issuance or grant was authorized by the Trustees. The said Shares
when so issued shall be fully paid and non-assessable. PREIT shall issue or
cause to be issued to subscribers for or purchasers of such Shares, certificates
in such form as the Trustees deem proper evidencing the beneficial interest of
such Share owners. The certificates shall be personal property and, except as
otherwise provided herein and subject to the rights of holders of Preferred
Shares, shall entitle the owners thereof to participate in all dividends and
other distributions of income or principal in the proportion which the number of
Shares of each owner bears to the total number of Shares issued and outstanding.
Shareholders' rights shall be limited to those specifically set forth in the
certificate, in this Trust Agreement or in any resolution or resolutions adopted
by the Trustees with respect thereto.
The Trustees shall have the power from time to time by a designating
amendment to this Agreement (a) to issue, classify or reclassify shares
(separately referred to herein as "Preferred Shares"), in one or more series or
classes, (b) to determine and alter the par value of each series or class of
Preferred Shares and to determine and alter all rights, preferences, privileges,
qualifications, limitations and restrictions thereof (including, without
limitation, voting, distribution, liquidation, conversion and/or redemption
rights, and limitations and/or exclusions thereof) granted to or imposed upon
any wholly unissued series or class of Preferred Shares and the number of
Preferred Shares constituting any such series or class, and (c) to increase or
decrease (but not below the number of Preferred Shares of such series or class
then outstanding) the number of Preferred Shares of any series or class
subsequent to the issue of Preferred Shares of that series or class. No more
than twenty-five million (25,000,000) Preferred Shares may be outstanding at any
time. The rights of a holder of Preferred Shares shall be limited to those
specifically set forth in the designating amendment effected by the Trustees
with respect to the relevant series or class of Preferred Shares. A holder of
Preferred Shares shall be deemed a Shareholder under this Agreement only to the
extent that the designating Amendment to this Agreement designating the relevant
series or class of Preferred Shares held by such holder so provides. Preferred
Shares shall be included within the term
-12-
"Shares" for purposes of the provisions of this Agreement only to the extent
that the designating amendment to this Agreement designating the relevant series
or class so provides.
Any Trustee hereunder may acquire, hold and dispose of Shares to the
same extent and in the same manner as if such person were not a Trustee and
without affecting in any way such person's status or powers as such.
A. CHANGE IN PAR VALUE OF SHARES
The Trustees may from time to time change the par value of the
Shares outstanding or unissued, or any class or series thereof, if in their
opinion the same shall be necessary or desirable and appropriate to further
PREIT's purposes.
B. PRE-EMPTIVE RIGHTS WAIVED
No Shareholder shall have any pre-emptive right because of his
shareholdings to have first offered to him any part of any Shares or debentures,
bonds or securities convertible into or exchangeable, with or without further
consideration, for Shares of PREIT hereinafter issued, including those now
authorized and those authorized by amendments hereto.
C. TRANSFER OF SHARES
Shares may be transferred by the holders thereof in person, or
by duly authorized attorney. The transferee shall surrender such certificate to
PREIT or, if applicable, to the transfer agent designated by the Trustees for
such Shares, duly endorsed for transfer, or with an appropriate power affixed
(accompanied by the requisite documentary transfer stamps if any are required)
which shall execute a new certificate representing the Share or Shares so
transferred. The acceptance by the transferee of a certificate so assigned, or
any certificate issued in place thereof, shall constitute the transfer, and each
transferee by acceptance of the certificate shall be deemed to have agreed to be
bound by the provisions of this Trust Agreement, as the same may be amended or
supplemented, and any other document or instrument authorized hereunder
pertaining to such Shares or such transferee. No such transfer shall be binding
upon PREIT until it has been recorded on the transfer books maintained by PREIT
or its transfer agent. Moreover, PREIT may deem the person in whose name the
Share certificate is at the time registered upon the books maintained by the
transfer agent designated by PREIT to be the absolute owner of the Shares for
all purposes whatsoever, and shall not be affected by any notice to the
contrary. All transfers of Shares shall be subject to Paragraph 9 of this Trust
Agreement.
-13-
D. DEATH OF A SHAREHOLDER
The death of a Shareholder during the continuance of PREIT
shall not terminate PREIT's existence or entitle the legal representative of
such Shareholder to any action in the courts or otherwise against the Trust
Property, PREIT or the Trustees by virtue of the fact of death alone. The
executors, administrators, heirs, legatees or assigns of a deceased Shareholder
shall succeed to the rights and be subject to the liabilities of the deceased
Shareholder as a holder of Shares.
E. LOST OR DESTROYED CERTIFICATES
In the event of the loss or destruction of a certificate,
PREIT may, in its discretion, issue a new certificate representing the interest
evidenced by the lost or destroyed certificate upon satisfactory proof of its
loss or destruction and the furnishing of sufficient indemnity, in the form of a
bond, if required, for the benefit of all interested parties.
9. RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES; EXCHANGE
FOR EXCESS SHARES
A. Definitions. For the purposes of this Paragraph 9, the
following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 544 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), as modified by Section
856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially Owns" and
"Beneficially Owned" shall have correlative meanings. Accordingly, for purposes
hereof, Beneficial Ownership expressed as a percentage shall be calculated for
any Person by dividing two numbers (determined, separately, for Common Shares
and for each class or series of Preferred Shares), (a) the number that is the
numerator being the sum of (i) the number of outstanding Shares beneficially
owned by such Person plus (ii) the maximum number of Shares issuable upon the
exercise or conversion of outstanding warrants, options or other securities
exercisable for or convertible into Shares beneficially owned by such Person and
(b) the number that is the denominator being the sum of (i) all outstanding
Shares plus (ii) the maximum number of Shares issuable upon the exercise or
conversion of outstanding warrants, options or other securities exercisable for
or convertible into Shares beneficially owned by such Person; provided that the
Trustees shall retain full authority to adopt such other formula for determining
Beneficial Ownership as they may deem appropriate.
-14-
"Common Shares" shall mean all Shares authorized by the first paragraph
of Paragraph 8 hereof, exclusive of Preferred Shares.
"Constructive Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have correlative
meanings. Accordingly, for purposes hereof, Constructive Ownership expressed as
a percentage shall be calculated for any Person by dividing two numbers
(determined, separately, for Common Shares and for each class or series of
Preferred Shares), (a) the number that is the numerator being the sum of (i) the
number of outstanding Shares beneficially owned by such Person plus (ii) the
maximum number of Shares issuable upon the exercise or conversion of outstanding
warrants, options or other securities exercisable for or convertible into Shares
owned by such Person and (b) the number that is the denominator being the sum of
(i) all outstanding Shares plus (ii) the maximum number of Shares issuable upon
the exercise or conversion of outstanding warrants, options or other securities
exercisable for or convertible into Shares owned by such Person; provided that
the Trustees shall retain full authority to adopt such other formula for
determining Constructive Ownership as it may deem appropriate.
"Event" shall have the meaning assigned to it in Paragraph
9.C(iii).
"Excess Common Shares" shall mean Excess Shares that would, under
Paragraph 9.N(v)(a), automatically be exchanged for Common Shares in the event
of a transfer of an interest in the Special Trust in which such Excess Shares
are held.
"Excess Preferred Shares" shall mean Excess Shares that would, under
Paragraph 9.N(v)(a), automatically be exchanged for Preferred Shares in the
event of a transfer of an interest in the Special Trust in which such Excess
Shares are held.
"Excess Shares" shall mean, as applicable, Excess Common
Shares or Excess Preferred Shares.
"Market Price" shall mean the last reported sales price reported on the
New York Stock Exchange of the Shares on the trading day immediately preceding
the relevant date, or if the Shares are not then traded on the New York Stock
Exchange, the last reported sales price of the Shares on the trading day
immediately preceding the relevant date as reported on any exchange or quotation
system over which the Shares may be traded, or if the Shares are not then traded
over any exchange or quotation system, then the fair market value of the Shares
on the relevant date as determined in good faith by the Trustees.
-15-
"Ownership Limit" shall mean, separately as to the Common Shares and
each class or series of Preferred Shares, 9.9% in value of the outstanding
Common Shares or outstanding Preferred Shares of such class or series.
"Ownership Limitation Termination Date" shall mean the first day after
the date on which the Trustees determine that it is no longer in the best
interests of PREIT to attempt to, or continue to, qualify as a REIT.
"Person" shall mean an individual, corporation, partnership, limited
liability company, estate, trust (including a trust qualified under Section
401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity or any government or agency or
political subdivision thereof and also includes a group as that term is used for
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
but does not include an underwriter which participates in a public offering of
Shares for a period of 25 days following the purchase by such underwriter of
those Shares.
"Purported Beneficial Holder" shall mean, with respect to any event
other than a purported Transfer which results in Excess Shares, the Person for
whom the Purported Record Holder of the Shares that were, pursuant to Paragraph
9.C, automatically exchanged for Excess Shares upon the occurrence of such event
held such Shares.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in Excess Shares, the purported beneficial
transferee for whom the Purported Record Transferee would have acquired Shares,
if such Transfer had been valid under Paragraph 9.B.
"Purported Record Holder" shall mean, with respect to any event other
than a purported Transfer which results in Excess Shares, the record holder of
the Shares that were, pursuant to Paragraph 9.C, automatically exchanged for
Excess Shares upon the occurrence of such event.
"Purported Record Transferee" shall mean, with respect to any purported
Transfer which results in Excess Shares, the record holder of the Shares if such
Transfer had been valid under Paragraph 9.C.
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
-16-
"Section 544 Subsidiary" of any individual or entity shall mean any
entity, over 50% of the ownership interest in which is owned, directly or
indirectly (applying the principles of Section 544 of the Code) by the
individual or entity in question.
"Special Beneficiary" shall mean the beneficiary of the Special Trust
as determined pursuant to Paragraph 9.N(v).
"Special Trust" shall mean the trust created pursuant to
Paragraph 9.N(i).
"Transfer" shall mean any issuance, sale, transfer, gift, assignment,
devise or other disposition of Shares or capital stock of any Person (including
but not limited to (i) the granting of any option or entering into any agreement
for the sale, transfer or other disposition of Shares, (ii) the sale, transfer,
exercise, assignment or other disposition of any securities or rights
convertible into or exchangeable for Shares or (iii) the establishment of a put
or the granting to a third party of a call right with respect to Shares),
whether voluntary or involuntary, whether of record or beneficially and whether
by operation of law or otherwise.
B. Restrictions on Ownership and Transfer.
(i) Except as provided in Paragraph 9.K, prior to the
Ownership Limitation Termination Date, no Person shall Beneficially Own or
Constructively Own any Shares to the extent such ownership would exceed the
Ownership Limit.
(ii) Except as provided in Paragraph 9.K, prior to
the Ownership Limitation Termination Date, any Transfer that, if effective,
would result in any Person Beneficially Owning or Constructively Owning Shares
in excess of the Ownership Limit shall be void ab initio as to the Transfer of
such Shares which would be otherwise Beneficially Owned or Constructively Owned
by such Person in excess of such Ownership Limit; and the intended transferee
shall acquire no rights in or to such Shares.
(iii) Prior to the Ownership Limitation Termination
Date, any Transfer that, if effective, would result in Shares being beneficially
owned by less than 100 Persons (determined without reference to any rules of
attribution) shall be void ab initio as to the Transfer of such Shares which
would be otherwise beneficially owned by the transferee; and the intended
transferee shall acquire no rights in such Shares.
(iv) Prior to the Ownership Limitation Termination
Date, any Transfer that, if effective, would result in PREIT being "closely
held" within the meaning of Section 856(h) of the Code shall be void ab initio
as to the Transfer of the Shares which would cause PREIT to be "closely held"
within the meaning
-17-
of Section 856(h) of the Code; and the intended transferee shall acquire no
rights in such Shares.
(v) The Trustees shall have the authority to select
the Ownership Limitation Termination Date.
C. Exchange For Excess Shares.
(i) If, notwithstanding the other provisions
contained in this Paragraph 9, at any time prior to the Ownership Limitation
Termination Date, there is a purported Transfer such that any Person would
Beneficially Own or Constructively Own Shares in excess of the Ownership Limit,
then, except as otherwise provided in Paragraph 9.K, such number of Shares in
excess of such Ownership Limit (rounded up to the nearest whole Share), shall be
automatically exchanged for an equal number of Excess Shares. Such exchange
shall be effective as of the close of business on the business day prior to the
date of the Transfer.
(ii) If, notwithstanding the other provisions
contained in this Paragraph 9, at any time prior to the Ownership Limitation
Termination Date, there is a purported Transfer which, if effective, would cause
PREIT to become "closely held" within the meaning of Section 856(h) of the Code,
then the Shares being Transferred which would cause PREIT to be "closely held"
within the meaning of Section 856(h) of the Code (rounded up to the nearest
whole Share) shall be automatically exchanged for an equal number of Excess
Shares. Such exchange shall be effective as of the close of business on the
business day prior to the date of the Transfer.
(iii) If, notwithstanding the other provisions
contained in this Paragraph 9, at any time prior to the Ownership Limitation
Termination Date, an event other than a purported Transfer (an "Event") occurs
which would cause any Person to Beneficially Own or Constructively Own Shares in
excess of the Ownership Limit, then, except as otherwise provided in Paragraph
9.K, Shares Beneficially Owned or Constructively Owned by such Person (rounded
up to the nearest whole Share) shall be automatically exchanged for an equal
number of Excess Shares to the extent necessary to eliminate such excess
ownership. Such exchange shall be effective as of the close of business on the
business day prior to the date of the Event. In determining which Shares are
exchanged, Shares directly held or Beneficially Owned by any Person who caused
the Event to occur shall be exchanged before any Shares not so held are
exchanged. Where several such Persons exist, the exchange shall be pro rata
based upon the number of Shares Beneficially Owned and Constructively Owned by
such Persons.
-18-
D. Remedies For Breach. If the Trustees or their designee(s) shall at
any time determine that a Transfer has taken place in violation of Paragraph 9.B
or that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution) of any
Shares that would result in Shares being beneficially owned by less than 100
persons as contemplated by Paragraph 9.B(iii), or in Beneficial Ownership or
Constructive Ownership of any Shares in violation of Paragraph 9.B, the Trustees
or their designee(s) shall take such action as they deem advisable to refuse to
give effect to or to prevent such Transfer (or any Transfer related to such
intent), including, but not limited to, refusing to give effect to such Transfer
on the books of PREIT or instituting proceedings to enjoin such Transfer;
provided, however, that any Transfers or attempted Transfers in violation of
Paragraphs 9.B (ii), (iii) or (iv) shall automatically result in the exchange
described in Paragraph 9.C, irrespective of any action (or non-action) by the
Trustees or its designees.
E. Notice of Ownership or Attempted Ownership in Violation of Paragraph
9.B. Any Person who acquires or attempts to acquire Beneficial Ownership or
Constructive Ownership of Shares in violation of Paragraph 9.B shall immediately
give written notice to PREIT of such acquisition or attempted acquisition and
shall provide to PREIT such other information as PREIT may request in order to
determine the effect, if any, of such acquisition or attempted acquisition on
PREIT's status as a REIT.
F. Owners Required to Provide Information. Prior to the Ownership
Limitation Termination Date:
(i) every Beneficial Owner or Constructive Owner of
1% or more in value of outstanding Common Shares or Shares of any class or
series of Preferred Shares shall, within 30 days after January 1 of each year,
give written notice to PREIT stating the name and address of such Beneficial
Owner or Constructive Owner, the number of Shares Beneficially Owned or
Constructively Owned, and a description of how such Shares are held. Each such
Beneficial Owner or Constructive Owner shall provide to PREIT such additional
information as PREIT may request in order to determine the effect, if any, of
such Beneficial Ownership or Constructive Ownership on PREIT's status as a REIT.
(ii) Each Person who is a Beneficial Owner or
Constructive Owner of Shares and each Person (including the shareholder of
record) who is holding Shares for a Beneficial Owner or Constructive Owner shall
provide to PREIT such information as PREIT may request in order to determine
PREIT's status as a REIT or to comply with regulations promulgated under the
REIT provisions of the Code.
-19-
G. Remedies Not Limited. Nothing contained in this Paragraph 9 shall
limit the authority of the Trustees to take such other action as it deems
necessary or advisable to protect PREIT and the interests of Shareholders by
preserving PREIT's REIT status.
H. Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Paragraph 9 including any definition contained in
Paragraph 9.A and any ambiguity with respect to which Shares are to be exchanged
for Excess Shares in a given situation, the Trustees shall have the authority to
determine the application of the provisions of this Paragraph 9 with respect to
any situation based on the facts known to the Trustees.
I. Increase in Ownership Limit. Subject to the limitations provided in
Paragraph 9.J the Trustees may from time to time increase the Ownership Limit.
J. Limitations on Modifications.
(i) The Ownership Limit may not be increased if,
after giving effect to such increase, five (5) Beneficial Owners of Shares would
Beneficially Own, in the aggregate, more than 49.9% of the value of the
outstanding Shares.
(ii) Prior to an increase in the Ownership Limit
pursuant to Paragraph 9.I, the Trustees may require such opinions of counsel or
PREIT's tax accountants, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure PREIT's status as a REIT.
K. Exceptions. The Trustees, with a ruling from the Internal Revenue
Service or an opinion of counsel or PREIT's tax accountants to the effect that
such exemption will not result in PREIT being "closely held" within the meaning
of Section 856(h) of the Code, may exempt a Person from the Ownership Limit if
the Trustees obtain such representations and undertakings from such Person as
the Trustees may deem appropriate and such Person agrees that any violation or
attempted violation of any of such representations or undertakings will result
in, to the extent necessary or otherwise deemed appropriate by the Trustees, the
exchange of Shares held by such Person for Excess Shares in accordance with
Paragraph 9.C.
L. New York Stock Exchange Transactions. Nothing in this Paragraph 9
shall preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange, any successor exchange or quotation
system thereto, or any other exchange or quotation system over which the Shares
may be traded from time to time.
-20-
M. Legend.
(i) Each certificate for Common Shares hereafter
issued shall bear the following legend:
"The Shares represented by this certificate are
subject to restrictions on ownership and transfer for the
purpose of the Trust's maintenance of its status as a real
estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person may Beneficially own
or Constructively Own Shares in excess of 9.9% in value (or
such greater percentage as may be determined by the Board of
Trustees) of the outstanding Shares (exclusive of any
Preferred Shares) of the Trust. Any Person who attempts to
Beneficially Own or Constructively Own Shares in excess of the
above limitation must immediately notify the Trust. In
addition, if any Person attempts to acquire beneficial
ownership of any Shares and the result of such acquisition
would be Shares being beneficially owned by fewer than 100
persons, such purported transfer shall be void ab initio and
the intended transferee shall acquire no rights to such
Shares. All capitalized terms used in this legend have the
meanings set forth in the Trust Agreement, a copy of which,
including the restrictions on ownership and transfer, will be
sent without charge to each Shareholder who so requests. If
the restrictions on ownership and transfer are violated, the
Shares represented hereby will be automatically exchanged for
Excess Shares which will be held in trust by the Trust."
(ii) Each certificate for Preferred Shares hereafter
issued shall bear the following legend:
"The Preferred Shares represented by this certificate
are subject to restrictions on ownership and transfer for the
purpose of the Trust's maintenance of its status as a real
estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person may Beneficially Own
or Constructively Own Shares of any series or class of
Preferred Shares in excess of 9.9% in value (or such greater
percentage as may be determined by the Board of Trustees) of
the outstanding Shares of such series or class. Any Person who
attempts to Beneficially Own or Constructively Own Shares in
excess of the above limitations must immediately notify the
Trust. All
-21-
capitalized terms used in this legend have the meanings set
forth in the Trust Agreement, a copy of which, including the
restrictions on ownership and transfer, will be sent without
charge to each Shareholder who so requests. If the
restrictions on ownership and transfer are violated, the
Preferred Shares represented hereby will be automatically
exchanged for Excess Shares which will be held in trust by the
Trust."
N. Excess Shares.
(i) Ownership in Trust. Upon any purported Transfer
or Event that results in an exchange of Shares for Excess Shares pursuant to
Paragraph 9.C, such Excess Shares shall be deemed to have been transferred to
PREIT, as trustee of a Special Trust for the exclusive benefit of the Special
Beneficiary or Special Beneficiaries to whom an interest in such Excess Shares
may later be transferred pursuant to Paragraph 9.N(v). Excess Shares so held in
trust shall be issued and outstanding Shares of PREIT. The Purported Record
Transferee or Purported Record Holder shall have no rights in such Excess Shares
except as and to the extent provided in this Paragraph 9.N.
(ii) Dividend Rights. Excess Shares shall not be
entitled to any dividends or distributions. Any dividend or distribution paid
prior to the discovery by PREIT that the Shares with respect to which the
dividend or distribution was made had been exchanged for Excess Shares shall be
repaid to PREIT upon demand. Any dividend or distribution declared by PREIT and
not yet paid with respect to Shares that have been exchanged for Excess Shares
shall be void ab initio with respect to such Shares.
(iii) Rights Upon Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of, PREIT, (a) subject to the preferential rights of
the Preferred Shares, if any, as may be determined by the Board of Trustees
pursuant to Paragraph 8 and the preferential rights of the Excess Preferred
Shares, if any, each holder of Excess Common Shares shall be entitled to
receive, ratably with each other holder of Common Shares and Excess Common
Shares, that portion of the assets of PREIT available for distribution to the
holders of Common Shares or Excess Common Shares which bears the same relation
to the total amount of such assets of PREIT as the number of Excess Common
Shares held by such holder bears to the total number of Common Shares and Excess
Common Shares then outstanding and (b) each holder of Excess Preferred Shares
shall be entitled to receive that portion of the assets of PREIT which a holder
of the
-22-
Preferred Shares that were exchanged for such Excess Preferred Shares would have
been entitled to receive had such Preferred Shares remained outstanding. PREIT,
as holder of the Excess Shares in trust, or if PREIT shall have been dissolved,
any trustee appointed by PREIT prior to its dissolution, shall distribute
ratably to the Special Beneficiaries of the Special Trust, when determined, any
such assets received in respect of the Excess Shares in any liquidation,
dissolution or winding up of, or any distribution of the assets of PREIT.
(iv) Voting Rights. The holders of Excess Shares
shall not be entitled to vote with respect to such Shares on any matters (except
as required by law).
(v) Restrictions On Transfer: Designation of Special
Beneficiary.
(a) Excess Shares shall not be
transferrable. The Purported Record Transferee or Purported Record Holder may
freely designate a Special Beneficiary of an interest in the Special Trust
(representing the number of Excess Shares held by the Special Trust attributable
to a purported Transfer or Event that resulted in the Excess Shares) if (i) the
Excess Shares held in the Special Trust would not be Excess Shares in the hands
of such Special Beneficiary and (ii) the Purported Beneficial Transferee or
Purported Beneficial Holder does not receive a price, as determined on a
Share-by-Share basis, for designating such Special Beneficiary that reflects a
price for such Excess Shares that, (I) in the case of a Purported Beneficial
Transferee, exceeds (x) the price such Purported Beneficial Transferee paid for
the Shares in the purported Transfer that resulted in the exchanges of Shares
for Excess Shares, or (y) if the Purported Beneficial Transferee did not give
value for such Shares (having received such Shares pursuant to a gift, devise or
other transaction), the Market Price of such Shares on the date of the purported
Transfer that resulted in the exchange of Shares for Excess Shares or (II) in
the case of a Purported Beneficial Holder, exceeds the Market Price of the
Shares that were automatically exchanged for such Excess Shares on the date of
such exchange. Upon such a transfer of an interest in the Special Trust, the
corresponding shares of Excess Shares in the Special Trust shall be
automatically exchanged for an equal number of Common Shares or Preferred Shares
(depending upon the character of the Shares that was originally exchanged for
such Excess Shares), and such Common Shares or Preferred shall be transferred of
record to the transferee of the interest in the Special Trust if such Common
Shares or Preferred Shares would not be Excess Shares in the hands of such
transferee. Prior to any transfer of any interest in the Special Trust, the
Purported Record Transferee or Purported Record Holder, as the case may be, must
give advance notice to PREIT of the intended transfer and
-23-
PREIT must have waived in writing its purchase rights under Paragraph 9.N(vi).
(b) Notwithstanding the foregoing, if a
Purported Beneficial Transferee or Purported Beneficial Holder receives a price
for designating a Special Beneficiary of an interest in the Special Trust that
exceeds the amounts allowable under Paragraph 9.N(v)(a), such Purported
Beneficial Transferee or Purported Beneficial Holder shall pay, or cause such
Special Beneficiary to pay, such excess to PREIT.
(vi) Purchase Right in Excess Shares. Excess Shares
shall be deemed to have been offered for sale to PREIT, or its designee, at a
price per share equal to, (I) in the case of Excess Shares resulting from a
purported Transfer, the lesser of (i) the price per share in the transaction
that created such Excess Shares (or, in the case of a gift, devise or other
transaction, the Market Price at the time of such gift, devise or other
transaction) or (ii) the Market Price on the date PREIT, or its designee,
accepts such offer or (II) in the case of Excess Shares created by an Event, the
lesser of (i) the Market Price of the Shares originally exchanged for the Excess
Shares on the date of such exchange or (ii) the Market Price of such Shares on
the date PREIT, or its designee, accepts such offer. PREIT shall have the right
to accept such offer for a period of ninety (90) days after the later of (i) the
date of the purported Transfer or Event which resulted in an exchange of Shares
for such Excess Shares and (ii) the date the Trustees determine that a purported
Transfer or other event resulting in an exchange of Shares for such Excess
Shares has occurred, if PREIT does not receive a notice of any such Transfer
pursuant to Paragraph 9.E.
O. Severability; Agent for Trust. If any provision of this Paragraph 9
or any application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issue, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court. In any event, to the extent such court holds the
Purported Record Transferee to be the record and beneficial owner of Shares
which, had the provisions of Paragraph 9 been enforced, would have been
exchanged for Excess Shares, such Purported Record Transferee shall be deemed,
at the option of PREIT, to have acted as agent on behalf of PREIT in acquiring
such transferred Shares and to hold such Shares on behalf of PREIT.
10. DISTRIBUTIONS
PREIT shall distribute to the Shareholders from the income or capital
of PREIT such sums as they shall determine. The amounts to be distributed and
the time of the distribution shall
-24-
rest in the discretion of the Trustees. However, the Trustees shall attempt to
make such distribution so that PREIT will continue to qualify as a real estate
investment trust under pertinent provisions of the Internal Revenue Code and
Regulations thereunder. All other income may be distributed or accumulated in
the Trustees' sole discretion. The Shareholders shall share in all distributions
from PREIT on the record date established by the Trustees for the purpose of
determining the percentage ownership of the holders; or, if required for tax
purposes, they shall share such distributions in such manner as may be necessary
so that PREIT continues to so qualify as a real estate investment trust.
11. SHAREHOLDERS
A. ANNUAL MEETINGS
The Annual Meeting of the Shareholders entitled to vote in the
election of Trustees shall be held at the principal office of PREIT or at such
other place as the Trustees shall by notice designate, no later than the second
Wednesday of the sixth month following the end of each fiscal year (other than
the fiscal period ending December 31, 1997), or, if that day falls on a holiday,
the next business day following, or on such other day as may be fixed by the
Trustees. If the Annual Meeting has not been held during a calendar year (other
than the 1998 calendar year), any Shareholder may call such meeting at any time
thereafter, by following the procedure set forth in Paragraph 11.B hereof.
At said Annual Meeting, the Shareholders entitled to vote
thereat shall elect individuals to the office of Trustee as provided in
Paragraph 2.B of this Trust Agreement and shall at such meeting exercise and
discharge any other powers or duties vested in them by the Trust Agreement.
B. SPECIAL MEETINGS
Special Meetings of Shareholders may be called at any time by
the Chairman, or by the Trustees, or by the Shareholders entitled to cast at
least forty percent (40%) of the votes at the particular meeting. Upon written
request of any person or persons who have duly called a Special Meeting, the
Secretary shall affix the date of the meeting to be held not more than sixty
(60) days after receipt of the request and give due notice to the Shareholders
entitled to vote thereat. If the Secretary shall neglect or refuse to fix such
date or give such notice, the person or persons calling the meeting may do so.
C. NOTICE OF MEETINGS
Written notice shall, unless otherwise provided, be
given to the Shareholders entitled to vote at the meeting, not
-25-
less than ten (10) nor more than forty-five (45) days prior to the date of said
meeting, either personally or by sending a copy thereof through the mail, or by
telegram, charges prepaid, to the address of the Shareholder appearing on the
books of PREIT. In said notice, the Trustees may specify the date selected by
them as a record date for the determination of Shareholders entitled to notice
of or to vote at any such meeting; only such Shareholders as were Shareholders
of record on the date so fixed and are entitled to vote at such meeting shall be
entitled to notice of such meeting.
In addition, the Trustees shall in the case of Special
Meetings notify all Shareholders of the purpose or purposes of the meeting and
the nature of the business to be considered thereat, and such Special Meeting
shall be limited to the business specified in the notice. Any notice addressed
to a Shareholder at the address given on the books of PREIT and mailed to such
address shall be deemed properly addressed.
When a meeting of Shareholders is adjourned it shall not be
necessary to give any notice of the adjourned meeting or of the business to be
transacted at an adjourned meeting, other than by announcement at the meeting at
which the adjournment is taken, unless the Trustees fix a new record date for
the adjourned meeting.
D. RECORD DATE
The Trustees may fix in advance a date as the record date for
the determination of Shareholders entitled to notice of, or to vote at, any
meeting of Shareholders or Shareholders entitled to receive payment of any
dividend or distribution, or in order to make a determination of Shareholders
for any other purpose, such date in any case to be not more than sixty (60) days
and, in case of a meeting of Shareholders, not less than ten (10) days, prior to
the date for which such determination of Shareholders is necessary or proper. In
the absence of such record date fixed by the Trustees, all Shareholders entitled
to vote thereat shall be entitled to notice, except transferees of shares
transferred on the books within thirty (30) days next preceding the date of the
said meeting. The Trustees shall not be required to set a new record date with
respect to an adjourned meeting of Shareholders.
E. QUORUM
The owners of a majority of the Shares entitled to vote
thereat or their proxies shall constitute a quorum for the purpose of any
meeting. At any meeting where a quorum is present, a majority of the Shares
present and voting shall be required to adopt any resolution which is within the
province of the Shareholders unless a greater or different vote shall be
-26-
required by this Agreement or by the Board in its authorizing resolution. In the
event that a quorum is not present at the time designated for any Shareholders
Meeting, annual or special, the same shall be adjourned without any further
notice until a quorum shall be present.
F. VOTING RIGHTS AND ACTS OF SHAREHOLDERS
Unless otherwise provided in this Agreement, the certificate
for the relevant Shares or the resolutions of the Trustees with respect to
certain Shares, at all Shareholders Meetings, annual or special, each
Shareholder shall be entitled to one vote for each Share standing in his name on
the books of PREIT.
Unless a greater or different vote shall be required by this
Agreement or by the Board in its authorizing resolution as to a particular
matter or under any agreement authorized by the Board pursuant to Paragraph 3.V,
an act authorized by the vote of the holders of a majority of Shares present in
person or by proxy and casting a vote on the matter at a duly organized meeting
shall be the act of the Shareholders. For purposes of the foregoing, abstentions
and non-votes on a particular matter shall not be deemed to be votes cast on the
matter.
G. PROXIES
At all meetings of Shareholders, a Shareholder entitled to
vote on a particular matter may vote in person or may authorize another person
or persons to act for him by proxy. Every proxy shall be executed in writing by
the Shareholder, or by his duly authorized attorney in fact. Such proxies shall
be filed with the Secretary of PREIT before or at the time of the meeting. A
proxy, unless coupled with an interest, shall be revocable at will,
notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of the proxy shall not be effective until notice
thereof has been given to the Secretary of PREIT.
H. VOTING FOR TRUSTEES
Cumulative voting shall not be permitted. The candidates
receiving the highest number of votes shall be elected.
I. ADJOURNMENT
Any annual, regular or special meeting of Shareholders,
including one at which Trustees are to be elected, may be adjourned for such
period as the Shareholders present and entitled to vote shall direct.
-27-
12. LIMITED LIABILITY OF SHAREHOLDERS
A. The Trustees shall have no power to bind the Shareholders to
personal liability. All persons dealing with PREIT, or with any agent of PREIT
and/or the Trustees, shall look only to the Trust Property for the payment of
any sums due as a result of such dealing and personal liability shall not attach
to any Shareholder for any act, omission or liability of a Trustee or PREIT.
B. An obligation of PREIT based upon a writing may be limited to a
specific fund or other identified pool or group of assets of PREIT.
It is the intention of this Trust Agreement to limit the liability of
Shareholders for the obligations of PREIT to the fullest extent permitted by
applicable law, as amended or supplemented.
13. EXPRESS EXCULPATORY LANGUAGE IN INSTRUMENTS
Neither the Shareholders nor the Trustees, officers, employees or
agents of PREIT shall be liable under any written agreement or instrument
creating an obligation of PREIT, and all persons shall look solely to the Trust
Property for the payment of any claim under or for the performance of that
agreement or instrument. The omission of the exculpatory language from any
agreement or instrument shall not affect the validity or enforceability of such
agreement or instrument and shall not render any Shareholder, Trustee, officer,
employee or agent of PREIT liable thereunder to any third party; nor shall the
Trustees or any officer, employee or agent of PREIT be liable to anyone for such
omission.
14. INDEMNITY; INSURANCE
A. RIGHT TO INDEMNIFICATION OF TRUSTEES AND OFFICERS
Every Trustee and officer of PREIT shall be entitled as of
right to be indemnified by PREIT against reasonable expense and any liability
paid or incurred by such person in connection with an actual (whether pending or
completed) or threatened claim, action, suit or proceeding, civil, criminal,
administrative, investigative or other, whether brought by or in the right of
PREIT or otherwise, in which he or she may be involved, as a party or otherwise,
by reason of such person's being or having been a Trustee or officer of PREIT or
by reason of the fact that such person is or was serving in any capacity at the
request of PREIT as a trustee, director, officer, employee, agent, partner,
fiduciary or other representative of another real estate investment trust,
corporation, partnership, joint venture, trust, employee benefit plan or other
entity (such claim, action,
-28-
suit or proceeding hereinafter being referred to as "action"); provided,
however, that no such right of indemnification shall exist with respect to an
action brought by a Trustee or Officer against PREIT (other than a suit for
indemnification as provided in Paragraph B of this Paragraph 14). Such
indemnification shall include the right to have expenses incurred by such person
in connection with an action paid in advance by PREIT prior to final disposition
of such action, subject to such conditions as may be prescribed by law provided
that the payment of such expenses incurred by such person in advance of the
final disposition of the action shall be made only upon delivery to PREIT of an
undertaking by or on behalf of such person, to repay all amounts so advanced
without interest if it shall ultimately be determined that such person is not
entitled to be indemnified under this Paragraph 14.A or otherwise. Persons who
are not Trustees or officers of PREIT may be indemnified in respect of service
to PREIT or to another such entity at the request of PREIT to the extent the
Board of Trustees at any time denominates such person as entitled to some or all
of the benefits of this Paragraph as the Trustees shall determine as to each
such Person. As used herein, "expense" shall include fees and expenses of
counsel selected by such person; and "liability" shall include amounts of
expenses, liability, loss, judgments, excise taxes, fines and penalties and
amounts paid in settlement. No indemnification pursuant to this Paragraph 14.A
shall be made, however, in any case where the act or failure to act giving rise
to the claim for indemnification is determined by the final judgment of a court
of competent jurisdiction to have constituted willful misconduct or
recklessness.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph 14.A is not paid in full by PREIT
within 60 days after a written claim has been received by PREIT, the claimant
may at any time thereafter bring suit against PREIT to recover the unpaid amount
of the claim, and, if successful in whole or in part, the claimant shall also be
entitled to be paid the expense of prosecuting such claim. It shall be a defense
to any such action that the conduct of the claimant was such that under law
PREIT would be prohibited from indemnifying the claimant for the amount claimed,
but the burden of proving such defense shall be on PREIT. Neither the failure of
PREIT (including its Board of Trustees, independent legal counsel and its
Shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the conduct of the claimant was not such that indemnification would be
prohibited by law, nor an actual determination by PREIT (including, its Board of
Trustees, independent legal counsel or its Shareholders) that the conduct of the
claimant was such that indemnification would be prohibited by law, shall be a
defense to the action or create a presumption that the conduct of the
-29-
claimant was such that indemnification would be prohibited by
law.
C. INSURANCE AND FUNDING FOR PAYMENT OF EXPENSES
PREIT may purchase and maintain insurance, at its expense, to protect
itself and any person eligible to be indemnified hereunder against any liability
or expense asserted or incurred by such person in connection with any action,
whether or not PREIT would have the power to indemnify such person against such
liability or expense by law or under the provisions of this Paragraph 14. PREIT
may create a trust fund, grant a security interest, cause a letter of credit to
be issued or use other means (whether or not similar to the foregoing), to
insure the payment of such sums as may become necessary to effect
indemnification as provided in this Paragraph 14.
D. NON-EXCLUSIVITY OF RIGHTS
The provisions of Paragraph 5 relating to the limitation of
Trustees' liability and the right to indemnification and to the advancement of
expenses provided in this Paragraph 14 shall not be exclusive of any other
rights that any person may have or hereafter acquire under any statute,
provision of this Trust Agreement, By-Laws, other agreement, vote of
Shareholders or Trustees or otherwise.
E. EXTENT OF RIGHTS
The provisions of Paragraph 5 relating to the limitations of
Trustees' liability, and the provisions of this Paragraph 14 relating to or
providing for indemnification and to the advancement of expenses (1) shall be
deemed to create contractual rights in favor of each of the Trustees, Officers
and other persons entitled to indemnification hereunder and may be modified as
to any Trustee, officer or other person only with said Trustee's, Officer's or
other such person's written consent; (2) shall continue as to persons who have
ceased to have the status pursuant to which they were entitled or were
denominated as entitled to indemnification hereunder and shall enure to the
benefit of the heirs and legal representatives of persons entitled to
indemnification hereunder; and (3) shall be applicable to actions, suits or
proceedings commenced after the adoption hereof, whether arising from acts or
omissions occurring before or after the adoption hereof. The right of
indemnification provided for herein may not be amended, modified or repealed so
as to limit in any way the indemnification provided for herein with respect to
any acts or omissions occurring prior to the adoption of such amendment or
repeal.
-30-
15. CONTROLLING LAW
This Trust Agreement has been executed in the Commonwealth of
Pennsylvania and shall be construed in accordance with the laws of that
Commonwealth.
16. TERM
The term of PREIT's existence shall be perpetual unless sooner
terminated as provided below:
PREIT may be dissolved, its affairs wound-up and its existence
terminated by the affirmative vote of holders of a majority of votes cast by all
Shareholders entitled to vote thereon (excluding holders of Preferred Shares
that are entitled to vote thereon exclusively as a class) at a meeting called
for that purpose pursuant to a resolution adopted by a majority of the Trustees
then in office. If any class or series of Preferred Shares is entitled to vote
thereon as a class, the affirmative vote of a majority of the votes cast in each
class vote shall also be required. Upon PREIT's dissolution, the Trustees may
wind up PREIT's business, liquidate its assets, make adequate provision for
payment of liabilities and funding of contingencies and distribute the net
proceeds among the Shareholders in the same proportions that the Shareholders
own Shares in PREIT at the time for distribution, subject, if applicable, to
Paragraph 9.N(iii) and to distinctions, preferences and rights among different
types, classes or series of outstanding Shares; or convey the property of PREIT
to, or in any way merge, consolidate or combine with, one or more persons,
entities, trusts or corporations, for consideration consisting in whole or part
of cash, shares of stock or beneficial interest, or other property of any kind,
and distribute the net proceeds among the Shareholders ratably, subject, if
applicable, to Paragraph 9.N(iii) and to distinctions, preferences and rights
among different types, classes or series of outstanding Shares. The Trustees in
office at the time of such dissolution shall continue in office until the
process of dissolving, winding-up, terminating the business and the distribution
to the Shareholders is completed. PREIT shall not dissolve and the term of
PREIT's existence shall not terminate for the reason that it fails to qualify,
or after qualification as such to continue to qualify, as a real estate
investment trust under the applicable tax laws.
17. AMENDMENT
This Agreement may be amended by the Trustees in any particular,
including, without limitation, such designating amendments as may be necessary
or desirable from time to time to implement the authority granted in the second
paragraph of Paragraph 8, except:
-31-
(A) no amendment shall be effected to increase the liability
of the Shareholders;
(B) no amendment may be adopted requiring additional
contributions from or assessments against the Shareholders;
(C) without the affirmative vote of the holders of a majority
of votes cast by (i) all Shareholders entitled to vote thereon
(excluding holders of Preferred Shares that are entitled to vote
thereon exclusively as a class) and (ii) the holders of any class or
series of Preferred Shares entitled to vote thereon as a class, no
amendment (other than a designating amendment to implement the
authority granted under the second paragraph of Paragraph 8) may be
effected if the purpose or reasonably foreseeable effect of such
amendment is to prevent or impede a "control transaction." A "control
transaction" shall mean the acquisition by a person or a group of
persons acting in concert of voting control over voting shares of PREIT
that would entitle the holders thereof to cast at least 20% of the
votes that all Shareholders would be entitled to cast in an election of
Trustees of PREIT;
(D) no amendment to Paragraph 8 which increases the number of
Shares which may be outstanding under the first or second paragraph
thereof shall be effected without the affirmative vote of the holders
of a majority of the votes cast by (i) all Shareholders entitled to
vote thereon (excluding Preferred Shares that are entitled to vote
thereon exclusively as a class) and (ii) the holders of any class or
series of Preferred Shares entitled to vote thereon as a class; and
(E) no amendment to this Paragraph 17 or to Xxxxxxxxxx 0.X or
16 shall be effected without the affirmative vote of Shareholders whose
votes are at the time of such amendment necessary to effect the
pertinent action hereunder or thereunder.
No amendment which may be effected without a vote of Shareholders may be
considered at any meeting of the Trustees unless notice of the proposed
amendment is included in the call for the meeting. No such amendment may be
considered unless the total number of Trustees is five (5) or more, in which
event, the consent of two-thirds of the Trustees, but not fewer than four (4),
shall be necessary to adopt any such amendment. No amendment may be effected by
a vote of Shareholders unless, prior to such vote, the Board of Trustees shall
have authorized the submission of the amendment to a vote of the Shareholders.
Each amendment under this Paragraph 17 shall be certified by the secretary. As
soon as may be possible, after adoption and certification, a copy of the
amendment shall be recorded in every public office where this
-32-
Agreement has been recorded, but no failure to certify or record such amendment
shall affect its validity.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
TRUSTEES:
/s/ Xxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------- ------------------------
Xxxxxx X. Xxxxx Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Orleans
----------------------------- ------------------------
Xxxxxxx X. Xxxxxxxx Xxxxxxx X. Orleans
/s/ Xxxxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
----------------------------- ------------------------
Xxxxxxxxx X. Xxxxx Xxxxxx X. Xxxxx
/s/ Xxx X. Xxxxxxx /s/ Xxxxxx Xxxxx
----------------------------- ------------------------
Xxx X. Xxxxxxx Xxxxxx Xxxxx
/s/ Xxxxxxxx X. Xxxxxx
----------------------------
Xxxxxxxx X. Xxxxxx
All signatures need not appear on the same page hereof, and this Trust
Agreement, as amended and restated, may be executed in counterpart signature
pages with the same effect as if all signatures had appeared on the same page.
-00-
XXXXXXXXXXXXXXX
XXXXXXXXXXXX XX XXXXXXXXXXXX :
: ss.
COUNTY OF XXXXXXXXXX :
On this, the 16th day of December, 1997, before me, the undersigned
Officer, personally appeared XXXXXX X. XXXXX, XXXXXXX X. XXXXXXXX, XXXXXXXXX X.
XXXXX, XXX X. XXXXXXX, XXXXXXX X. XXXXXX, XXXXXXX X. ORLEANS, XXXXXX X. XXXXX,
XXXXXX XXXXX and XXXXXXXX X. XXXXXX, known to me (or satisfactorily proved) to
be the persons whose names were subscribed to the foregoing instrument and
acknowledged that they executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I have hereunto signed my name and official seal.
NOTARY PUBLIC
----------------------------------------------
My Commission Expires:
-34-
CERTIFICATION
The undersigned hereby certify the adoption of this Amended and
Restated Trust Agreement dated December 16, 1997.
/s/ Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx X. Xxxxx, Chairman
/s/ Xxxxxxx X. Xxxx
-----------------------------
Xxxxxxx X. Xxxx, Secretary
Dated: December 16, 1997
-35-
