Exhibit 4.1
DESIGNATING AMENDMENT TO TRUST AGREEMENT
DESIGNATING THE RIGHTS, PREFERENCES, PRIVILEGES, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
11% NON-CONVERTIBLE SENIOR PREFERRED SHARES
OF
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
______________________________________________________________________________
Pennsylvania Real Estate Investment Trust, a business trust
organized and existing under the laws of the Commonwealth of Pennsylvania
("PREIT"), hereby certifies that, pursuant to the authority conferred upon the
Board of Trustees of PREIT (the "Board of Trustees") by the Trust Agreement As
Amended and Restated December 16, 1997 (the "Trust Agreement") and in accordance
with 15 Pa. C.S. Chapter 95, the Board of Trustees on May 13, 2003 duly adopted
the following resolution, which resolution remains in full force and effect as
of the date hereof:
RESOLVED, that, subject to and effective upon the Effective
Time of the Merger (as such terms are defined in that certain Agreement and Plan
of Merger dated as of May 13, 2003 by and among PREIT, PREIT Associates, L.P.,
Crown American Realty Trust and Crown American Properties, L.P.) pursuant to the
authority vested in the Board of Trustees and in accordance with the provisions
of the Trust Agreement, there is hereby created and authorized a series of
preferred shares of PREIT, and the rights, preferences, privileges,
qualifications, limitations and restrictions of such series are as follows:
11% NON-CONVERTIBLE SENIOR PREFERRED SHARES
Section 1 Number of Shares and Designation. This series of
preferred shares shall be designated as 11% Non-Convertible Senior Preferred
Shares (the "Senior Preferred Shares") and the number of shares which shall
constitute such series shall be 2,475,000 shares, par value $.01 per share,
which number may be decreased (but not below the number thereof then
outstanding) from time to time by the Board of Trustees.
Section 2 Dividend Rights.
(a) Holders of the Senior Preferred Shares shall be entitled
to receive, when, as and if declared by the Board of Trustees, out of
funds legally available for the payment of dividends, cumulative,
preferential cash dividends in an amount per Senior Preferred Share
equal to $5.50 per annum plus the amount of any Additional Dividends
(defined below) (except that the initial dividend shall accrue and be
payable as if the December 2003 quarterly dividend period, as described
below, were a full quarterly dividend period, regardless of the date of
original issuance of the Senior Preferred Shares). Each such dividend
shall be payable to holders of record as they appear on the share
transfer books of PREIT on such record dates as provided below.
Exhibit 4.1
(b) Dividends with respect to the Senior Preferred Shares will
be cumulative and will be payable quarterly (each quarterly period, a
"Dividend Period") in arrears in March, June, September and December
(on the same dates as dividends on Common Shares, par value $1.00 per
share (the "Common Shares"), beginning with the dividend payment for
the December 2003 Dividend Period (each, a "Preferred Dividend Payment
Date"). Any dividend payable on the Senior Preferred Shares for any
partial dividend period after the initial dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day
months. Dividends payable on the Senior Preferred Shares for each full
Dividend Period will be computed by dividing the annual dividend rate
by four. The initial dividend payable on the Senior Preferred Shares
will be with respect to the December 2003 Dividend Period and will
accrue for the full December 2003 Dividend Period and shall be equal to
the full quarterly dividend amount of $1.375 per share. Dividends will
be payable to holders of record as they appear in the share records of
PREIT at the close of business on the applicable record date, which
will be the first day of the calendar month in which the applicable
Preferred Dividend Payment Date falls or such other date designated by
the Board of Trustees for the payment of dividends that is no more than
thirty (30) nor less than ten (10) days prior to such Preferred
Dividend Payment Date (each, a "Preferred Dividend Record Date").
(c) No dividends on the Senior Preferred Shares will be
declared by the Board of Trustees or paid or set apart for payment by
PREIT at such time as, and to the extent that, the terms and provisions
of any agreement of PREIT, including any agreement relating to its
indebtedness, or any provisions of the Trust Agreement relating to any
series of preferred shares ranking senior to the Senior Preferred
Shares as to dividends, prohibit such declaration, payment or setting
apart for payment or provide that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment will be prohibited by
law. Notwithstanding the foregoing, dividends on the Senior Preferred
Shares will accrue whether or not PREIT has earnings, whether or not
there are funds legally available for the payment of such dividends and
whether or not such dividends are declared. Holders of the Senior
Preferred Shares will not be entitled to any dividends or distributions
in excess of full cumulative dividends as described above.
(d) If any Senior Preferred Shares are outstanding, no full
dividends will be declared or paid or set apart for payment on the
capital shares of PREIT of any other series ranking, as to dividends,
on a parity with or junior to the Senior Preferred Shares for any
period unless full cumulative dividends (including any Additional
Dividends) have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for
such payment on the Senior Preferred Shares for all past Dividend
Periods and the then current Dividend Period. When dividends are not
paid in full (or a sum sufficient for such full payment is not so set
apart) upon the Senior Preferred Shares and any series of preferred
shares ranking on a parity as to dividends with the Senior Preferred
Shares, all dividends declared upon the Senior Preferred Shares and any
series of preferred shares ranking on a parity as to dividends with the
Senior Preferred Shares will be declared pro rata so that the amount of
dividends declared per Senior Preferred Share and such other series of
preferred shares will in all cases bear to each other the same ratio
that accrued and unpaid dividends per Senior Preferred Share and such
other series of preferred shares bear to each other. No interest, or
sum of money in lieu of interest, will be payable in respect of any
dividend payment or payments on the Senior Preferred Shares which may
be in arrears.
Exhibit 4.1
(e) Except as provided in the immediately preceding paragraph,
unless full cumulative dividends (including any Additional Dividends)
on the Senior Preferred Shares have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for all past Dividend Periods and the
then current Dividend Period, no dividends (other than distributions
payable in Common Shares or other capital shares ranking junior to the
Senior Preferred Shares as to dividends and upon liquidation,
dissolution or winding up of PREIT) will be declared or paid or set
aside for payment, and no other distribution will be declared or made,
upon the Common Shares or any other capital shares of PREIT ranking
junior to or on a parity with the Senior Preferred Shares as to
dividends, nor will any Common Shares or any other capital shares of
PREIT ranking junior to or on a parity with the Senior Preferred Shares
as to dividends or upon liquidation, dissolution or winding up of PREIT
be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the
redemption of any such shares) by PREIT (except by conversion into or
exchange for other capital shares of PREIT ranking junior to the Senior
Preferred Shares as to dividends and upon liquidation, dissolution and
winding up).
(f) Any dividend payment made on Senior Preferred Shares shall
first be credited against the earliest accrued but unpaid dividend due
with respect to the Senior Preferred Shares which remains payable.
(g) The Holders of the Senior Preferred Shares may be eligible
to receive additional dividends ("Additional Dividends") from time to
time in the event that PREIT exceeds the defined leverage ratio
requirement in Clause 2(g)(i) below.
(i) Additional Dividends in the amounts described in
this Section 2(g) shall be paid quarterly to the holders of
the Senior Preferred Shares if PREIT's "Total Debt" (defined
below) exceeds the product of 6.5 times "EBITDA" (defined
below) (the "Leverage Ratio") without the consent of the
holders of at least 50% of the Senior Preferred Shares
outstanding at that time. Holders who consent to a waiver of
such restriction will be paid a consent fee amount to be
negotiated at the time of such consent.
Exhibit 4.1
(ii) "Total Debt" means PREIT's consolidated debt
from income producing properties determined as a weighted
average based on the number of days such debt was outstanding.
"EBITDA" means PREIT's consolidated earnings before interest,
taxes, depreciation and amortization. Total Debt, EBITDA and
the Leverage Ratio will be calculated quarterly, on a trailing
four quarters basis, and PREIT's independent auditors will
audit or perform agreed upon procedures on the calculation
commencing with the quarter ending December 31, 2003. PREIT
will promptly deliver copies of such calculations, together
with the related report of independent accountants to all
holders of the Senior Preferred Shares.
(iii) If required to be paid, Additional Dividends
will be for an amount per Senior Preferred Share equal to
0.25% of the Preferred Liquidation Preference Amount (defined
below) on an annualized basis for the first quarter with
respect to which an Additional Dividend is due. For each
quarter thereafter that PREIT continues to exceed the
permitted Leverage Ratio, the Additional Dividend will
increase by an amount per Senior Preferred Share equal to an
additional 0.25% of the Preferred Liquidation Preference
Amount (defined below) on an annualized basis. However, the
maximum total dividend on the Senior Preferred Shares,
including any Additional Dividends, will not at any time
exceed 13.00% of the Preferred Liquidation Preference Amount
per annum.
(iv) If Additional Dividends are payable at any time
and thereafter the Leverage Ratio for any quarter is 6.5 or
less, the requirement to pay Additional Dividends will
terminate beginning with the quarter in which compliance is
achieved. Subsequent non-compliance, however, will result in
the Additional Dividends again becoming due commencing with
the quarter in which the Leverage Ratio is exceeded,
calculated as described above in an amount per Senior
Preferred Share initially equal to 0.25% of the Preferred
Liquidation Preference Amount on an annualized basis and
increasing thereafter in quarterly increments as described in
clause (iii) above.
Section 3 Distribution Upon Liquidation, Dissolution or
Winding Up.
(a) In the event of any liquidation, dissolution or winding up
of PREIT, subject to the prior rights of any series of capital shares
of PREIT ranking senior to the Senior Preferred Shares, the holders of
Senior Preferred Shares will be entitled to be paid out of the assets
of PREIT legally available for distribution to its shareholders a
liquidation preference equal to the sum of $50.00 per Senior Preferred
Share plus an amount equal to any accrued and unpaid dividends thereon
(including any Additional Dividends and whether or not earned or
declared) to the date of payment (the "Preferred Liquidation Preference
Amount"), before any distribution of assets is made to holders of
Common Shares or any other capital shares that rank junior to the
Senior Preferred Shares as to liquidation rights. After payment of the
full amount of the liquidating distributions to which they are
entitled, the holders of the Senior Preferred Shares will have no right
or claim to any of the remaining assets of PREIT.
Exhibit 4.1
(b) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up of PREIT, the remaining legally
available assets of PREIT are insufficient to pay the Preferred
Liquidation Preference Amount on all outstanding Senior Preferred
Shares and the corresponding amounts payable on all shares of other
classes or series of capital shares of PREIT ranking on a parity with
the Senior Preferred Shares in the distribution of assets upon
liquidation, dissolution or winding up of PREIT, then the holders of
the Senior Preferred Shares and all other such classes or series of
capital shares will share ratably in any such distribution of assets,
or the proceeds thereof, in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
(c) After payment of any liquidating distributions has been
made in full to all holders of Senior Preferred Shares, the remaining
assets of PREIT will be distributed among the holders of any other
classes or series of capital shares ranking junior to Senior Preferred
Shares upon liquidation, dissolution or winding up of PREIT, according
to their respective rights and preferences and in each case according
to their respective number of shares, and the holders of Senior
Preferred Shares shall not be entitled to share therein.
(d) The consolidation or merger of PREIT with or into any
other corporation or other entity, the consolidation or merger of
another corporation or other entity with or into PREIT, and the sale,
lease, transfer or conveyance of all or any part of the property or
business of PREIT, will not be deemed to constitute a liquidation,
dissolution or winding up of PREIT for these purposes.
Section 4 Redemption by PREIT.
(a) The Senior Preferred Shares will not be redeemable prior
to July 31, 2007, except under certain limited circumstances to
preserve PREIT's status as a REIT. On and after July 31, 2007, PREIT,
at its option (to the extent PREIT has funds legally available
therefor) upon not less than 30 nor more than 60 days written notice,
may redeem the Senior Preferred Shares, in whole or in part, at any
time or from time to time, for cash at the redemption price per share
as set forth in the table below, plus all accrued and unpaid dividends,
if any, thereon (whether or not earned or declared) to the date fixed
for redemption (the "Redemption Date").
Exhibit 4.1
Redemption Price
Redemption Period Per Senior Preferred Share
----------------- --------------------------
July 31, 2007 through July 30, 2009 $52.50
July 31, 2009 through July 30, 2010 $51.50
On or after July 31, 2010 $50.00
(b) Notwithstanding the foregoing, unless full cumulative
dividends on all Senior Preferred Shares have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for all past Dividend Periods and the
then current Dividend Period, no Senior Preferred Shares will be
redeemed unless all outstanding Senior Preferred Shares are
simultaneously redeemed; provided, however, that the foregoing will not
prevent the purchase or acquisition of Senior Preferred Shares pursuant
to a purchase or exchange offer made on the same terms to holders of
all outstanding Senior Preferred Shares, and unless full cumulative
dividends on all outstanding Senior Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
Dividend Periods and the then current Dividend Period, PREIT will not
purchase or otherwise acquire directly or indirectly through a
subsidiary or otherwise, any Senior Preferred Shares.
(c) If fewer than all of the outstanding Senior Preferred
Shares are to be redeemed, the number of shares to be redeemed will be
determined by PREIT and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such
shares held by such holders (as nearly as may be practicable without
creating fractional Senior Preferred Shares) or any other equitable
method determined by PREIT.
(d) Notice of redemption will be given by publication in a
newspaper of general circulation in the City of New York, such
publication to be made once a week for two successive weeks commencing
not less than 30 nor more than 60 days prior to the Redemption Date. A
similar notice will be mailed by PREIT, postage prepaid, not less than
30 nor more than 60 days prior to the Redemption Date, addressed to the
respective holders of record of the Senior Preferred Shares to be
redeemed at their respective addresses as they appear on the share
transfer records of PREIT. No failure to give such notice or any defect
therein or in the mailing thereof will affect the validity of the
proceeding for the redemption of any Senior Preferred Shares except as
to the holder to whom notice was defective or not given. Each notice
will state: (i) the Redemption Date; (ii) the redemption price; (iii)
the aggregate number of Senior Preferred Shares to be redeemed and, if
less than all Senior Preferred Shares held by the shareholder are to be
redeemed, the number of Senior Preferred Shares to be redeemed; (iv)
the place or places where the certificates for such Senior Preferred
Shares are to be surrendered for payment of the redemption price; and
(v) that dividends on the Senior Preferred Shares to be redeemed will
cease to accrue on such Redemption Date. If fewer than all the Senior
Preferred Shares held by any holder are to be redeemed, the notice
mailed to such holder will also specify the number of Senior Preferred
Shares to be redeemed from such holder. If notice of redemption of any
Senior Preferred Shares has been properly given and if funds necessary
for such redemption have been irrevocably set aside by PREIT in trust
for the benefit of the holders of any of the Senior Preferred Shares so
called for redemption, then from and after the Redemption Date
dividends will cease to accrue on such Senior Preferred Shares, such
Senior Preferred Shares will no longer be deemed to be outstanding and
all rights of the holders of such Senior Preferred Shares will
terminate except for the right to receive the applicable redemption
price and other amounts payable in respect of such Senior Preferred
Shares.
Exhibit 4.1
(e) The holders of the Senior Preferred Shares at the close of
business on a Preferred Dividend Record Date will be entitled to
receive the dividend payable with respect to such Senior Preferred
Shares on the corresponding Preferred Dividend Payment Date
notwithstanding the redemption thereof between such Preferred Dividend
Record Date and the corresponding Preferred Dividend Payment Date or
PREIT's default in the payment of the dividend due. Except as provided
above, PREIT will make no payment or allowance for unpaid dividends,
whether or not in arrears, on Senior Preferred Shares called for
redemption.
(f) All Senior Preferred Shares redeemed shall be retired and
shall be restored to the status of authorized and unissued preferred
shares, without designation as to series, and subject to the applicable
limitations set forth herein may thereafter be reissued as any series
of preferred shares.
(g) The Senior Preferred Shares have no stated maturity and
will not be subject to any sinking fund.
Section 5 Voting Rights.
(a) Holders of the Senior Preferred Shares will not have any
voting rights, except as set forth below or as otherwise from time to
time required by law. Subject to the provisions in the Trust Agreement
regarding Excess Shares (as defined in the Trust Agreement), in any
matter in which the Senior Preferred Shares may vote, including any
action by written consent, each Senior Preferred Share will be entitled
to one vote. The holders of each Senior Preferred Share may separately
designate a proxy for the vote to which that Senior Preferred Share is
entitled.
(b) Whenever dividends on any Senior Preferred Shares have
been in arrears for six or more Dividend Periods (regardless of whether
such periods are consecutive), the holders of such Senior Preferred
Shares (voting separately as a class with all other series of preferred
shares upon which rights to vote on such matter with Senior Preferred
Shares have been conferred and are then exercisable) will be entitled
to vote for the election of two additional trustees of PREIT at a
special meeting called by the holders of record of at least 10% of the
Senior Preferred Shares and such other preferred shares, if any (unless
such request is received less than 45 days before the date fixed for
the next annual or special meeting of the shareholders), or at the next
annual meeting of shareholders, and at each subsequent annual meeting
until all dividends accumulated on such Senior Preferred Shares for the
past Dividend Periods and the then current Dividend Period have been
fully paid or declared and a sum sufficient for the payment thereof set
aside for payment. In such event, the entire Board of Trustees will be
increased by two trustees. Each of such two trustees will be elected to
serve until the earlier of (i) the election and qualification of such
trustee's successor or (ii) payment of the dividend arrearage for the
Senior Preferred Shares.
Exhibit 4.1
(c) If any trustee so elected by the holders of the Senior
Preferred Shares shall cease to serve as a trustee before such
trustee's term shall expire, the holders of the Senior Preferred Shares
(and any other series of preferred shares, if any, entitled to vote on
such matter, as described above) then outstanding may, at a special
meeting of the holders called as provided above, elect a successor to
hold office for the unexpired term of the trustee whose place shall be
vacant.
(d) So long as any Senior Preferred Shares remain outstanding,
PREIT will not (i) without the affirmative vote or consent of the
holders of all the Senior Preferred Shares outstanding at the time,
given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), authorize, create or issue, or
increase the authorized or issued amount of, any class or series of
capital shares ranking senior to the Senior Preferred Shares with
respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, or create, authorize or issue
any obligation or security convertible into or evidencing the right to
purchase any such shares; or (ii) without the affirmative vote or
consent of the holders of at least two-thirds of the Senior Preferred
Shares outstanding at the time, given in person or by proxy, either in
writing or at a meeting (such series voting separately as a class),
amend, alter or repeal the provisions of the Trust Agreement, whether
by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of
the Senior Preferred Shares or the holders thereof; provided, however,
that any increase in the amount of the authorized preferred shares, or
the creation or issuance of any other series of preferred shares, or
any increase in the amount of authorized shares of preferred shares or
any other series of preferred shares, in each case ranking on a parity
with or junior to the Senior Preferred Shares with respect to payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up of PREIT, will not be deemed to materially
and adversely affect such rights, preferences, privileges or voting
powers.
(e) The foregoing voting provisions will not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required is effected, all outstanding Senior Preferred
Shares have been redeemed or called for redemption upon proper notice
and sufficient funds have been deposited in trust to effect such
redemption.
Section 6 Ranking.
The Senior Preferred Shares will, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of PREIT,
rank senior to all existing or future classes or series of equity
securities of PREIT, except that PREIT may issue additional preferred
shares which are pari passu with the Senior Preferred Shares so long as
the aggregate liquidation preference of all of the Senior Preferred
Shares, together with any such additional preferred shares outstanding,
does not exceed $123,750,000.
Exhibit 4.1
Section 7 Restrictions on Transfer.
The Senior Preferred Shares shall be subject to the
limitations on ownership and transfer set forth the Trust Agreement,
including, without limitation, Paragraph 9 thereof.
Section 8 Status of Senior Preferred Shares and Holders
Thereof.
In accordance with Section 8 of the Trust Agreement, the
Senior Preferred Shares shall be included within the term "Shares" and
the holders of Senior Preferred Shares shall be included within the
term "Shareholders" for purposes of all provisions of the Trust
Agreement, other than Paragraph 2.C., the third sentence of Xxxxxxxxx
0, Xxxxxxxxx 10, the second sentence of Paragraph 11.A., the second
paragraph of Paragraph 11.C., and Paragraph 11.F. thereof.
IN WITNESS WHEREOF, Pennsylvania Real Estate Investment Trust
has caused this Certificate of Designation to be executed and delivered on its
behalf by its Chairman and Chief Executive Officer and attested to by its
Secretary on this 14th day of November, 2003.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: Chairman and Chief Executive Officer
Attest:
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Name: Xxxxxxx X. Xxxx
Title: Secretary
