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EXHIBIT 99.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN REALTY TRUST, INC.
(ART)
AND
ART NEWCO, LLC
(NEWCO)
AND
BASIC CAPITAL MANAGEMENT, INC.
(BCM)
AND
EQK REALTY INVESTORS I
(EQK)
AND
LEND LEASE PORTFOLIO MANAGEMENT, INC.
(LLPM)
DATED AS OF AUGUST 25, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGER
1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04. Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05. Trustees' Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06. Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07. Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08. Merger Agent; Merger Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.09. Termination of Advisor; Successor Advisor; Additional Consideration . . . . . . . . . . . . . . . . . 3
1.10. ART Shares; Listing of ART Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12. EQK Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15. Block Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16. Halperin Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
CLOSING
2.01. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02. Deliveries by EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.03. Deliveries by Newco and ART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EQK
3.01. Organization and Qualification of EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02. Power and Capacity; Charter Documents of EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.03. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.04. Capitalization and Ownership of EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.05. No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.06. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.07. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.08. EQK Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.09. Redemptions of EQK Shares by EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▇▇
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▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇▇ D)
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
NEWCO AND ART
4.01. Organization and Qualification - Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.02. Organization and Qualification - ART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.03. Power and Capacity of Newco; Charter Documents of Newco . . . . . . . . . . . . . . . . . . . . . . 12
4.04. Power and Capacity of ART; Charter Documents of ART . . . . . . . . . . . . . . . . . . . . . . . . 12
4.05. No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.06. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.07. No Material and Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
OTHER OBLIGATIONS OF THE PARTIES
5.01. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.02. Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.03. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.04. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.05. Solicitation Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.06. Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.07. Covenant to Satisfy Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.08. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.09. Shareholder Meeting of EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10. Information Delivered to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11. Resignation and Election of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12. SEC Filings; Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.13. Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
CONDITIONS PRECEDENT
6.01. Conditions Precedent to Obligations of Newco and ART . . . . . . . . . . . . . . . . . . . . . . . . 18
6.02. Conditions Precedent to Obligations of EQK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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TABLE OF CONTENTS
(CONT'D)
PAGE
ARTICLE VII
TERMINATION, AMENDMENT, WAIVER
7.01. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.02. Procedure Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
MISCELLANEOUS
8.01. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.02. Acknowledgment by ART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.03. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.05. Definition of Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.07. No Third-Party Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.08. Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.09. Reformation and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.11. Discretionary Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
EXHIBITS:
Exhibit A - Form of Amended Declaration of Trust
Exhibit B - Form of New Advisory Agreement
Exhibit C - Copy of Amended and Restated Articles of Amendment
Exhibit D-1 - List of EQK Exceptions
Exhibit D-2 - List of ART Exceptions
Exhibit E - Copy of Amended and Restated Cost Sharing Agreement
Exhibit F - Form of Standstill Agreement
Exhibit G - Form of Purchase and Sale Agreement
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"AGREEMENT"), dated as of August 25, 1998, is by and among American Realty
Trust, Inc., a Georgia corporation ("ART"), Basic Capital Management, Inc., a
Nevada corporation ("BCM"), ART Newco, LLC, a Massachusetts limited liability
company ("NEWCO"), EQK Realty Investors I, a Massachusetts business trust
("EQK" and sometimes the "SURVIVING ENTITY"), and Lend Lease Portfolio
Management, Inc., a Delaware corporation ("LLPM").
INTRODUCTORY STATEMENTS
ART, BCM, Newco, EQK, LLPM and Compass Retail, Inc. entered into that
certain Agreement and Plan of Merger, dated as of December 23, 1997, and now
desire to amend and restate such agreement herein in its entirety.
EQK, Newco and ART desire to effect the merger of Newco with and into
EQK, with EQK as the Surviving Entity, pursuant to the terms hereof (the
"MERGER").
Accordingly, for and in consideration of the foregoing and the mutual
agreements, representations, warranties, covenants and conditions herein set
forth, and other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Upon the terms and subject to the
conditions hereof, the Merger shall be consummated in
accordance with the applicable laws of the
Commonwealth of Massachusetts (the "MASSACHUSETTS
LAW") as soon as practicable following the
satisfaction or waiver of the conditions set forth in
Article VI hereof. At the Effective Time (as
hereinafter defined) and subject to and upon the
terms and conditions of this Agreement and the
Massachusetts Law, Newco shall be merged with and
into EQK, the separate corporate existence of Newco
shall cease, and EQK shall continue as the Surviving
Entity.
1.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in
Article VI hereof, the parties hereto shall cause the
Merger to be consummated by filing a certificate of
merger with the Office of the State Secretary of the
Commonwealth of Massachusetts in such form as
required by, and executed in accordance with the
relevant provisions of, the Massachusetts Law, which
form shall be mutually agreeable to ART and EQK. The
Merger shall become
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effective upon the filing of such certificate of
merger with the Office of the State Secretary of the
Commonwealth of Massachusetts (the "EFFECTIVE TIME").
1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger in Massachusetts shall be as
provided by Massachusetts Law.
1.04. Declaration of Trust. Immediately prior to the
Effective Time, the Second Amended and Restated
Declaration of Trust of ART Realty Investors I, as
approved by EQK's current Board of Trustees and by
EQK's shareholders at the EQK Meeting (as defined
below), a copy of which is attached hereto as EXHIBIT
A, shall be filed in accordance with Massachusetts
Law (the "AMENDED DECLARATION OF TRUST"). The
Amended Declaration of Trust shall continue to be the
declaration of trust of the Surviving Entity until
thereafter amended in accordance with the provisions
of the Amended Declaration of Trust and Massachusetts
Law.
1.05. Trustees' Regulations. The Trustees' Regulations of
EQK, as in effect immediately prior to the Effective
Time, shall be the Trustees' Regulations of the
Surviving Entity until thereafter amended in
accordance with Massachusetts Law and the Amended
Declaration of Trust.
1.06. Additional Actions. If, at any time after the
Effective Time, the Surviving Entity shall consider
or be advised that any deeds, bills of sale,
assignments, assurances, or any other actions or
things are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving
Entity its right, title or interest in, to or under
any of the rights, properties or assets of EQK or
Newco acquired or to be acquired by the Surviving
Entity as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the
officers and trustees of the Surviving Entity shall
be authorized to execute and deliver, in the name and
on behalf of EQK and Newco, all such deeds, bills of
sale, assignments and assurances and to take and do,
in the name and on behalf of EQK and Newco or
otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and
under such rights, properties or assets in the
Surviving Entity or otherwise to carry out this
Agreement.
1.07. Merger Consideration. At the Effective Time, by
virtue of the Merger and without any action on the
part of EQK, ART, Newco or the holder of any of the
following securities:
(a) Each holder of shares of beneficial
interest of EQK (each, an "EQK
SHARE") issued and outstanding as of
the record date for the EQK Meeting
(as defined in Section 1.09) (the
"RECORD DATE"), other than ART and
its affiliates, LLPM, Greenspring
Fund Inc. ("GREENSPRING"), Summit
Venture, L.P. ("SUMMIT"), ▇▇▇▇▇▇
Opportunity Fund, LLC ("▇▇▇▇▇▇") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇.
▇▇▇▇▇▇▇▇"), will be entitled to
receive for each EQK Share owned by
such holder 0.0140 shares of Series
F Cumulative Convertible
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Preferred Stock, par value $2.00 per
share, of ART (the "ART SHARES")
with a stated liquidation value of
$10.00 per share (the "LIQUIDATION
VALUE") (the ART Shares, with
respect to each EQK Share, the "EQK
MERGER CONSIDERATION"). Each EQK
Share outstanding immediately prior
to the Effective Time shall remain
outstanding without increase or
decrease.
(b) As consideration for the Merger, ART
will be entitled to receive 673,976
newly-issued EQK Shares (the "ART
MERGER CONSIDERATION" and, together
with the EQK Merger Consideration,
the "MERGER CONSIDERATION").
1.08. Merger Agent; Merger Fund.
(a) Prior to the Effective Time, ART and
EQK shall designate a bank or trust
company to act as agent for the
holders (other than ART or its
affiliates) of EQK Shares (the
"MERGER AGENT") to receive the ART
Shares necessary to transfer the EQK
Merger Consideration contemplated by
Section 1.07(a) hereof.
(b) Immediately prior to the Effective
Time, ART shall distribute to the
Merger Agent, for the benefit of
holders (other than ART or its
affiliates) of the EQK Shares the
EQK Merger Consideration to be paid
to such holders pursuant to Section
1.07(a) (the "MERGER FUND"). As
soon as practicable after the
Effective Time, the Merger Agent
shall, pursuant to irrevocable
instructions, pay the EQK Merger
Consideration out of the Merger Fund
to each holder of record of EQK
Shares, other than ART or its
affiliates, LLPM, Greenspring,
Summit, ▇▇▇▇▇▇ and, if the Halperin
Purchase (as defined in Section
1.16) is consummated, ▇▇. ▇▇▇▇▇▇▇▇.
(c) At the Effective Time, there shall
be no further registration of
transfers of interests in Newco
("NEWCO INTERESTS") created prior to
the Merger on the records of Newco
or the Surviving Entity. At the
Effective Time all Newco Interests
shall be canceled.
(d) Any unclaimed EQK Merger
Consideration shall be disbursed by
the Merger Agent in accordance with
the applicable provisions of
Massachusetts Law.
1.09. Termination of Advisor; Successor Advisor; Additional
Consideration. LLPM currently serves as an advisor to
EQK pursuant to the terms and conditions of an
advisory agreement (the "ADVISORY AGREEMENT") between
LLPM and EQK. Contemporaneously with the Closing,
the Advisory Agreement will be terminated and EQK and
BCM shall enter into a new advisory agreement (the
"NEW ADVISORY AGREEMENT"), in substantially the form
attached hereto as EXHIBIT B, subject to the approval
of the New Advisory Agreement by the holders of
three-quarters of the outstanding EQK Shares at the
next meeting of shareholders of EQK (the "EQK
MEETING"). In its capacity as successor advisor to
EQK, BCM shall be entitled to
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receive the fees and other compensation specified in
the New Advisory Agreement. LLPM hereby releases
EQK, effective as of the Closing Date, from any and
all obligations under the Advisory Agreement,
including without limitation for deferred fees or
disposition fees, it being agreed that LLPM shall be
entitled to receive on or prior to the Closing Date
all fees due and payable to it in accordance with the
terms of the Advisory Agreement.
1.10. ART Shares; Listing of ART Shares. The ART Shares
will be issued pursuant to the Amended and Restated
Articles of Amendment of the Articles of
Incorporation of ART (the "ARTICLES OF AMENDMENT"), a
copy of which is attached hereto as EXHIBIT C and
shall have the designations, preferences and rights
set forth in the Articles of Amendment. Following
the execution of this Agreement by EQK, ART will
promptly take such actions as are necessary and
within its control to cause the ART Shares to become
listed, and thereafter to continue to be listed, for
trading on the New York Stock Exchange (the "NYSE").
1.11. Intentionally Omitted.
1.12. EQK Shares. The ART Merger Consideration shall be
issued pursuant to the Amended Declaration of Trust.
As of the date of this Agreement, there are 9,632,212
issued and outstanding EQK Shares.
1.13. Intentionally Omitted.
1.14. Name of Surviving Entity. Pursuant to the Amended
Declaration of Trust, the name of the Surviving
Entity shall be changed to "ART Realty Investors I".
1.15. Block Purchase. Immediately prior to the Merger, ART
will purchase an aggregate of 3,521,856 EQK Shares
from LLPM, Greenspring, Summit and ▇▇▇▇▇▇ pursuant to
the terms of stock purchase agreements (the "BLOCK
PURCHASE"), which shall also require LLPM, Summit,
▇▇▇▇▇▇ and Greenspring to vote in favor of all
matters voted upon at the EQK Meeting.
1.16. Halperin Purchase. Upon declaration of the
effectiveness of the S-4 Registration Statement (as
defined in Section 4.06), ART will offer to purchase
from ▇▇. ▇▇▇▇▇▇▇▇ the 854,200 EQK Shares owned by ▇▇.
▇▇▇▇▇▇▇▇ pursuant to substantially the same terms as
the Block Purchase (such purchase, the "HALPERIN
PURCHASE"). Such purchase, if the related offer is
accepted by ▇▇. ▇▇▇▇▇▇▇▇, will be consummated
simultaneously with the Block Purchase immediately
prior to the Merger. The refusal of ▇▇. ▇▇▇▇▇▇▇▇ to
accept such offer will not affect the terms and
conditions of the Merger as set forth herein.
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ARTICLE II
CLOSING
2.01. Closing. The Closing of the transactions
contemplated hereby (the "CLOSING") shall, subject to
the satisfaction or waiver of the conditions set
forth in Article VI hereof, take place within ten
Business Days after the later of (i) the EQK Meeting,
or (ii) the consummation by EQK of the sale of the
Harrisburg East Mall (the "MALL"), but in no event
before the acquisition of the New Property (defined
herein), at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or
at such other date, time and place as EQK, ART and
Newco mutually agree. The date on which the Closing
actually occurs is referred to herein as the "CLOSING
DATE". As used herein, the term "BUSINESS DAY" shall
mean any day other than a Saturday, a Sunday or any
day on which banks in the State of Texas are
permitted or required by law to be closed.
2.02. Deliveries by EQK. At the Closing, EQK shall
deliver, or cause to be delivered, to Newco and ART
(unless delivered previously) the following:
(a) the Officers' Certificate referred
to in Section 6.01(d) hereof;
(b) the Certificate of the Secretary of
EQK referred to in Section 6.01(e)
hereof;
(c) the opinions of counsel referred to
in Section 6.01(f) hereof;
(d) executed counterparts of any
consents required to be obtained by
EQK pursuant to Section 5.04 hereof;
(e) the certificate regarding
non-foreign status referred to in
Section 6.01(i) hereof; and
(f) all other previously undelivered
documents, instruments and writings
required to be delivered by EQK to
Newco or ART at or prior to the
Closing pursuant to this Agreement
or otherwise required in connection
herewith.
2.03. Deliveries by Newco and ART. At the Closing, Newco
and ART shall deliver, or cause to be delivered, to
EQK (unless delivered previously) the following:
(a) the Officers' Certificates referred
to in Section 6.02(d) hereof;
(b) the Secretary's Certificates
referred to in Section 6.02(e)
hereof,
(c) the opinions of counsel referred to
in Section 6.02(f) hereof;
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(d) all other previously undelivered
documents, instruments and writings
required to be delivered by Newco or
ART to EQK at or prior to the
Closing pursuant to this Agreement
or otherwise required in connection
herewith.
Furthermore, ART shall deliver, or cause to be
delivered, the Merger Fund to the Merger Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EQK
EQK hereby represents and warrants to Newco and ART as follows:
3.01. Organization and Qualification of EQK. EQK is (a) a
business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth
of Massachusetts and (b) duly qualified to do
business as a foreign business trust and in good
standing in each jurisdiction in which the character
of the properties and assets now owned or leased by
it or the nature of the business transacted by it
requires it to be so qualified, except where the
failure to be so qualified, individually or in the
aggregate, would not materially and adversely affect
EQK or the consummation of the transactions
contemplated hereby. No jurisdiction in which EQK is
not qualified or licensed has claimed, in writing or
otherwise, that EQK is required to qualify or be
licensed therein.
3.02. Power and Capacity; Charter Documents of EQK.
(a) Subject to the approval of the
shareholders of EQK in accordance
with the terms of Massachusetts Law,
the Declaration of Trust and this
Agreement, EQK has all requisite
power and authority to enter into,
execute and deliver this Agreement
and perform its obligations
hereunder. EQK has the power and
authority to carry on its business
as now being conducted and to own
and lease its properties. This
Agreement has been duly authorized,
executed and delivered by EQK and is
a valid and binding obligation of
EQK, enforceable in accordance with
its terms.
(b) Subject to approval of the Merger,
the Amended Declaration of Trust and
the New Advisory Agreement at the
EQK Meeting and the filing of the
Amended Declaration of Trust in
accordance with Massachusetts Law,
the execution, delivery and
performance of this Agreement and
the consummation of the transactions
contemplated hereby by EQK will not
result in a violation or breach of
or constitute a default under any
term or provision of the Declaration
of Trust, the Amended Declaration of
Trust or the Trustee Regulations.
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11
3.03. Subsidiaries. EQK does not (i) own, beneficially or
of record, any shares of any other corporation or
entity or any interests in any partnerships or
limited liability companies or (ii) participate in
any manner in any joint ventures, corporate alliance
agreements or corporate partnering agreements. EQK
has no interest in, and is not subject to, any
agreement, obligation or commitment to make any
equity investment in or loan or advance to, any other
Person (as defined herein).
3.04. Capitalization and Ownership of EQK. The
capitalization of EQK as of the date hereof is as
follows:
Authorized EQK Shares . . . . . . . . . . . . . . . . 10,055,555
Issued and Outstanding EQK Shares . . . . . . . . . . 9,632,212
Number of EQK Shares owned by each holder of 5% or more of the Issued
and Outstanding Shares:
LLPM . . . . . . . . . . . . . . . . . . . . 1,685,556 (17.5%)
▇.▇. ▇▇▇▇▇▇ de Nemours Co. Inc. Trust Fund . 906,600 (9.4%)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ . . . . . . . . . . . . 854,200 (8.9%)
Greenspring Fund, Inc. . . . . . . . . . . . 583,800 (6.1%)
▇▇▇▇▇▇ Opportunity Fund, LLC. . . . . . . . 627,500 (6.5%)
Summit Venture, L.P. . . . . . . . . . . . . 625,000 (6.5%)
All of the outstanding EQK Shares are validly issued,
fully paid and non-assessable. All such EQK Shares
are owned free and clear of any lien, claim or
encumbrance of any type whatsoever imposed by EQK or
any other Person. There are no outstanding options,
warrants or other rights to acquire any EQK Shares,
there are no outstanding securities authorized,
granted or issued by EQK that are convertible into or
exchangeable for EQK Shares and there are no phantom
share rights, share appreciation rights or similar
rights regarding EQK.
3.05. No Conflicts. Subject to the exceptions listed on
EXHIBIT D-1 attached hereto (the "LIST OF
EXCEPTIONS"), the execution, delivery and performance
of this Agreement by EQK and the consummation of the
transactions contemplated hereby will not:
(a) result in the creation or imposition
of any security interest, lien,
charge or other encumbrance against
any real or personal property owned
by EQK on the Closing Date
(collectively, the "EQK PROPERTY"),
with or without the giving of notice
and/or the passage of time, or
(b) violate, conflict with, affect
acceleration of, or result in
termination, cancellation or
modification of, or constitute a
default under (i) any contract,
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12
agreement or other instrument to
which EQK is a party or by which EQK
or its assets is bound or (ii) any
note, bond, mortgage, indenture, deed
of trust, license, lease, contract,
commitment, understanding,
arrangement, agreement or restriction
of any kind or character to which EQK
is a party or by which EQK may be
bound or affected, or to which EQK
may be subject, or
(c) violate any statute or Law or any
judgment, decree, order, writ,
injunction, regulation or rule of
any court or any local, state or
federal governmental or regulatory
authority,
which violation, conflict, acceleration, requirement,
termination, modification or default described in (a),
(b), or (c) above could materially and adversely
affect EQK or the transactions contemplated by this
Agreement.
3.06. Consents and Approvals. Assuming that the sale of
the Mall and the repayment of all of the related
indebtedness with respect thereto occurs prior to the
Closing hereunder, EQK is not required to obtain,
transfer or cause to be obtained or transferred any
consent, approval, license, permit or authorization
of, or make any declaration, filing or registration
with, any third party or any public body or authority
in connection with (a) the execution and delivery by
EQK of this Agreement, or (b) the consummation of the
Merger and the other transactions contemplated
hereby, other than (i) the approval of the Merger,
the Amended Declaration of Trust, and the New
Advisory Agreement by its shareholders, (ii) a
certificate of merger pursuant to Massachusetts Law,
or (iii) those that may be required solely by reason
of Newco's or ART's participation in the transactions
contemplated hereby.
3.07. Absence of Certain Changes. From June 30, 1998
through the date hereof, except as may be reflected
in filings with the SEC, EQK has not:
(a) suffered any material adverse effect
in respect of its business,
operations, condition (financial or
otherwise), liabilities, EQK
Property or earnings and there has
not been any event (whether
occurring before or after June 30,
1998) that could reasonably be
expected to have a material adverse
effect on the business, operations,
condition (financial or otherwise),
liabilities, EQK Property or
earnings of EQK; or
(b) experienced any material decrease in
the book value of the EQK Property
from the amounts reflected in public
filings with the Commission, other
than decreases resulting from
depreciation in accordance with
accounting practices in effect at
all times since January 1, 1997; or
(c) except as set forth in the List of
Exceptions set forth in EXHIBIT D-1
attached hereto, incurred any
liabilities or obligations of any
nature (whether absolute, accrued,
contingent or otherwise and whether
due or to become due), except
liabilities or obligations for items
incurred in the ordinary course of
business
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of EQK and consistent with past
practice, none of which other items
exceeds $25,000 (considering
liabilities or obligations arising
from one transaction or a series of
similar transactions, and all
periodic installments or payments
under any lease) or other agreement
providing for periodic installments
or payments, as a single obligation
or liability); or
(d) increased (other than increases
resulting from the calculation of
reserves in the ordinary course of
business and in a manner consistent
with past practice), or experienced
any change in any assumptions
underlying or methods of
calculating, any bad debt,
contingency or other reserves; or
(e) paid, discharged or satisfied any
claims, encumbrances, liabilities or
obligations (whether absolute,
accrued, contingent or otherwise and
whether due or to become due) other
than the payment, discharge or
satisfaction in the ordinary course
of business and consistent with past
practice of liabilities and
obligations reflected or reserved
against in public filings with the
Commission or incurred in the
ordinary course of business and
consistent with past practice since
June 30, 1998; or
(f) permitted, allowed or suffered any
of the EQK Property (as defined
herein) to be subjected to any
mortgage, pledge, lien, encumbrance,
restriction or charge of any kind
(except for the Mortgage Note and
the Term Loan described in the
Prospectus/Proxy Statement (as
defined in Section 5.06) and any
liens for Taxes not yet owing).
"TAX RETURN" means any report,
statement, form, return or other
document or information required to
be supplied to a taxing authority in
connection with Taxes. "TAX" or
"TAXES" means any United States or
foreign federal, state, or local
tax, including without limitation
income tax, ad valorem tax, excise
tax, sales tax, use tax, franchise
tax, gross receipts tax, withholding
tax, social security tax, occupation
tax, service tax, license tax,
payroll tax, transfer and recording
tax, severance tax, customs tax,
import tax, export tax, employment
tax, or any similar or other tax,
assessment, duty, fee, levy or other
governmental charge, together with
and including, without limitation,
any and all interest, fines,
penalties, assessments and additions
to tax resulting from, relating to,
or incurred in connection with any
such tax or any contest or dispute
thereof; or
(g) determined as collectible any notes
or accounts receivable or any
portion thereof which were
previously considered uncollectible,
or written off as uncollectible any
notes or accounts receivable or any
portion thereof, except for
write-downs in the ordinary course
of business, consistent with past
practice, in accordance with GAAP
consistently applied; or
(h) canceled any material amount of
indebtedness or waived any material
claims or rights; or
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14
(i) sold, transferred or otherwise
disposed of any EQK Property except
in the ordinary course of business
and consistent with past practice;
or
(j) disposed of or permitted to lapse
any right to the use of any patent,
trademark, assumed name, service
▇▇▇▇, trade name, copyright, license
or application therefor or disposed
of or disclosed to any corporation,
association, partnership,
organization, business, individual,
government or political subdivision
thereof or government agency (each,
a "PERSON") other than
representatives of Newco and ART any
trade secret, formula, process or
know-how not theretofore a matter of
public knowledge; or
(k) granted any increase in the salary,
compensation, rate of compensation,
commissions or bonuses payable to or
to become payable by EQK to any
officer or trustee of EQK
(including, without limitation, any
increase or change pursuant to any
bonus, pension, profit-sharing,
retirement or other plan or
commitment); or
(l) paid, loaned or advanced any amount
to any officer, trustee, or
shareholder of EQK, or sold,
transferred or leased any EQK Assets
to, or entered into any agreement
(other than this Agreement) or
arrangement with, any officer,
trustee, or shareholder of EQK
(except for agreements or
arrangements made in the ordinary
course of business and consistent
with past practice); or
(m) except as set forth in the List of
Exceptions set forth in EXHIBIT D-1
attached hereto, made any single
capital expenditure or commitment in
excess of $10,000 for additions to
property, plant, equipment or for
any other purpose or made aggregate
capital expenditures or commitments
in excess of $25,000 for additions
to property, plant, equipment or for
any other purpose; or
(n) made any change in any method of
accounting or accounting practice or
policy; or
(o) suffered any casualty loss in excess
of $10,000 (whether or not insured
against) or suffered aggregate
casualty losses in excess of $25,000
(whether or not insured against); or
(p) issued any additional shares of
beneficial interest of EQK or any
option, warrant, right or other
security exercisable for,
convertible into or exchangeable for
EQK Shares other than in connection
with the issuance of EQK Shares in
connection with the exercise of
certain warrants held by The
Prudential Insurance Company of
America; or
(q) paid dividends on or made other
distributions or payments in respect
of the EQK Shares; or
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15
(r) taken any other action not either in
the ordinary course of business and
consistent with past practice or
provided for in this Agreement; or
(s) entered into or agreed to any
transaction not in the ordinary
course of business or provided for
in this Agreement; or
(t) agreed, whether in writing or
otherwise, to take any of the
actions set forth in this Section
3.07.
3.08. EQK Information. All information regarding EQK or
LLPM and their respective businesses and operations
that is included or incorporated by reference into
the Registration Statement (as defined in Section
4.06), as of the date thereof and hereof, is true and
accurate in all material respects, and does not
contain any untrue statement of a material fact, or
omit to state a material fact necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading.
3.09. Redemptions of EQK Shares by EQK. There have been no
redemptions of EQK Shares by EQK in the past ten
years.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
NEWCO AND ART
Newco and ART hereby jointly represent and warrant to EQK as follows:
4.01. Organization and Qualification - Newco. Newco is (a)
a limited liability company duly organized, validly
existing and in good standing under the laws of the
State of Massachusetts and (b) duly qualified to do
business as a foreign limited liability company and
in good standing in each jurisdiction in which the
character of the properties and assets now owned or
leased by it or the nature of the business transacted
by it requires it to be so qualified, except where
the failure to be so qualified, individually or in
the aggregate, would not materially and adversely
affect Newco or the consummation of the transactions
contemplated hereby.
4.02. Organization and Qualification - ART. ART is (a) a
corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia
and (b) duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction
in which the character of the properties and assets
now owned or leased by it or the nature of the
business transacted by it requires it to be so
qualified, except where the failure to be so
qualified, individually or in the aggregate, would
not materially and adversely affect ART or the
consummation of the transactions contemplated hereby.
-11-
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4.03. Power and Capacity of Newco; Charter Documents of
Newco.
(a) Newco has all requisite power and
authority (corporate and otherwise)
to enter into, execute and deliver
this Agreement and perform its
obligations hereunder. Newco has
the corporate power and authority to
carry on its business as now being
conducted and to own and lease its
properties. This Agreement has been
duly authorized, executed and
delivered by Newco and is a valid
and binding obligation of Newco,
enforceable in accordance with its
terms.
(b) The execution, delivery and
performance of this Agreement and
the consummation of the transactions
contemplated hereby by Newco will
not result in a violation or breach
of or constitute a default under any
term or provision of the Certificate
of Organization or Operating
Agreement of Newco. Newco has
delivered to EQK true and complete
copies of the Certificate of
Organization and the Operating
Agreement of Newco, as in effect on
the date hereof.
4.04. Power and Capacity of ART; Charter Documents of ART.
(a) ART has all requisite power and
authority (corporate and otherwise)
to enter into, execute and deliver
this Agreement and perform its
obligations hereunder. ART has the
corporate power and authority to
carry on its business as now being
conducted and to own and lease its
properties. This Agreement has been
duly authorized, executed and
delivered by ART and is a valid and
binding obligation of ART,
enforceable in accordance with its
terms.
(b) The execution, delivery and
performance of this Agreement and
the consummation of the transactions
contemplated hereby by ART will not
result in a violation or breach of
or constitute a default under any
term or provision of the Articles of
Incorporation or Bylaws of ART. ART
has delivered to EQK true and
complete copies of the Articles of
Incorporation and the Bylaws of ART,
as in effect on the date hereof.
4.05. No Conflicts. The execution, delivery and
performance of this Agreement by Newco and ART and
the consummation of the transactions contemplated
hereby will not:
(a) result in the creation or imposition
of any security interest, lien,
charge or other encumbrance against
Newco's assets or ART's assets, with
or without the giving of notice
and/or the passage of time, or
(b) violate, conflict with, affect
acceleration of, or result in
termination, cancellation or
modification of, or constitute a
default under (i) any contract,
-12-
17
agreement or other instrument to
which Newco or ART is a party or by
which Newco or ART or their
respective assets is bound or (ii)
any note, bond, mortgage, indenture,
deed of trust, license, lease,
contract, commitment, understanding,
arrangement, agreement or restriction
of any kind or character to which
Newco or ART is a party or by which
Newco or ART may be bound or affected
or to which any of their respective
assets may be subject, or
(c) violate any statute or law or any
judgment, decree, order, writ,
injunction, regulation or rule of
any court or any local, state or
federal governmental or regulatory
authority, which violation,
conflict, acceleration, requirement,
termination, modification or default
described in (a), (b), or (c) above
could materially and adversely
affect Newco or ART or the
transactions contemplated by this
Agreement.
4.06. Consents and Approvals. Neither Newco nor ART is
required to obtain, transfer or cause to be
transferred any consent, approval, license, permit or
authorization of, or make any declaration, filing or
registration with, any third party or any public body
or authority in connection with (a) the execution and
delivery by Newco and ART of this Agreement, or (b)
the consummation of the Merger and the other
transactions contemplated hereby or (c) the future
conduct by the Surviving Entity of EQK Business,
other than (i) the filing by ART of a registration
statement on Form S-4 (the "S-4 REGISTRATION
STATEMENT") with the Securities & Exchange Commission
(the "COMMISSION") for registration of 99,098 ART
Shares under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), (ii) the filing by ART of a
registration statement on Form S-3 (the "S-3
REGISTRATION STATEMENT" and, together with the S-4
Registration Statement, the "REGISTRATION
STATEMENTS") with the Commission for registration of
105,655 ART Shares under the Securities Act in
connection with the Block Purchase, (iii) the filing
a certificate of merger, or (iv) that may be required
solely by reason of EQK's (as opposed to any other
third party's) participation in the transactions
contemplated hereby.
4.07. No Material and Adverse Changes. Since June 30, 1998,
except as may be reflected in filings with the SEC,
there has not been any material adverse change in the
business, operations, properties or financial
condition of Newco or ART.
4.08. ART Information. All information regarding Newco and
ART and their respective businesses and operations
that is included or incorporated by reference into
the Registration Statement, as of the date thereof
and hereof, is true and accurate in all material
respects, and does not contain any untrue statement
of a material fact, or omit to state a material fact
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading.
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ARTICLE V
OTHER OBLIGATIONS OF THE PARTIES
5.01. Further Assurances.
(a) From the date hereof through the
Closing, ART (on its own behalf and
on behalf of Newco) will take every
action reasonably required of it in
order to satisfy the conditions to
closing set forth in this Agreement
and otherwise to ensure the prompt
and expedient consummation of the
transactions substantially as
contemplated hereby, and will exert
all reasonable efforts to cause the
Merger to be promptly consummated,
provided in all instances that the
covenants and agreements of EQK are
honored and that the conditions to
the obligations of ART and Newco set
forth in this Agreement are
satisfied or appear capable of being
satisfied.
(b) From the date hereof through the
Closing Date, EQK will take every
action reasonably requested of it to
satisfy the conditions to closing
set forth in this Agreement and
otherwise to ensure the prompt and
expedient consummation of the
Merger, and will exert all
reasonable efforts to cause the
Merger to be consummated, provided
in all instances that the covenants
and agreements of ART in this
Agreement are honored, subject at
all times to the right and ability
of the trustees of EQK to satisfy
their fiduciary obligations, if any,
under Massachusetts Law.
5.02. Conduct of Business Pending the Merger.
(a) EQK covenants and agrees with ART
that, except as provided in
subsection (b) of this Section 5.02,
below, prior to the Closing Date or
the termination of this Agreement
pursuant to its terms, unless ART
shall otherwise consent in writing,
EQK will conduct its operations
according to its ordinary and usual
course of business and will not (i)
enter into or agree to any
transaction outside the ordinary
course of business, (ii) incur any
additional indebtedness for borrowed
money except pursuant to existing
lines of credit and in the ordinary
course of business, (iii) pay
dividends on or make other
distributions or payments in respect
of its capital stock, (iv) issue any
additional equity securities or any
option, warrant, right or other
security exercisable for,
convertible into or exchangeable for
any equity securities, (v) increase
or agree to increase the salary,
compensation, bonus or benefits of
any officer, trustee or employee of
EQK other than in the ordinary
course of business (except for
reasonable consideration to be
granted to trustees upon their
retirement from the board of
trustees) or (vi) sell or otherwise
dispose of any of its properties
other than in the ordinary course of
business.
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(b) For all purposes of this Agreement,
ART hereby consents to the
acquisition by EQK of that certain
retail shopping center known as the
"Oak Tree Village"(the "NEW
PROPERTY") from ART or an affiliate
of ART pursuant to the terms and
conditions set forth in that certain
Purchase and Sale Agreement attached
hereto as EXHIBIT G (the "PURCHASE
AND SALE AGREEMENT") and ART hereby
agrees to transfer (or cause the
transfer of) the New Property to EQK
on such terms immediately after the
filing of the Amended Declaration of
Trust and immediately prior to the
Closing hereunder. ART also hereby
consents to the prior sale of the
Mall upon terms and conditions
determined by EQK, the retirement of
the mortgage debt thereon, the
payment of all other obligations of
EQK (other than those associated
with the New Property), the
distribution of EQK's remaining net
liquid assets to the EQK
Shareholders prior to the
consummation of the Merger, and all
actions that EQK determines are
necessary and appropriate to
effectuate the foregoing.
5.03. Access and Information. EQK shall afford to Newco
and ART and to ART's accountants, counsel, and other
representatives reasonable access during normal
business hours throughout the period prior to the
Closing, to all of its properties, books, contracts,
commitments, records (including, but not limited to,
tax returns), and personnel and, during such period,
EQK shall promptly furnish to ART (1) all written
communications to its trustees or to its shareholders
generally, (2) internal monthly financial statements
when and as available, and (3) all other information
concerning its business, properties, and personnel as
ART may reasonably request. Any such information so
obtained by ART will be subject to the terms of the
Confidentiality Agreement. ART and its
representatives shall assert their rights hereunder
in such manner as to minimize interference with the
business of EQK and LLPM.
5.04. Consents. EQK agrees to use its reasonable efforts
to obtain prior to the Closing all consents
necessary, in the reasonable determination of Newco
and ART, to consummate the transactions contemplated
hereby, including without limitation each of the
consents, approvals, licenses, permits and
authorizations (and the declarations, filings and
registrations) listed or referred to in Section 3.06.
All such consents shall be in writing and in form and
substance reasonably satisfactory to Newco and ART,
and executed counterparts thereof shall be delivered
to Newco and ART promptly after receipt thereof by
EQK but in no event later than the Closing.
5.05. Solicitation Permitted. Prior to the Closing or the
termination of this Agreement pursuant to its terms,
EQK and those acting on its behalf may solicit,
encourage, or initiate any discussions with, or
negotiate or otherwise deal with, or provide any
information to, any person or entity concerning any
merger, sale of substantial assets, or similar
transaction involving EQK, or any sale of any of the
EQK Shares. EQK will notify ART immediately upon
receipt of any inquiry, offer, or proposal relating
to any of the foregoing. In the event that EQK
accepts such an offer or proposal from
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a party other than ART or its affiliates (a "THIRD
PARTY OFFER") and elects to terminate this Agreement
pursuant to Section 7.01(e) hereof, EQK will pay to
ART a termination or "break-up" fee of $200,000, plus
EQK's share of any Merger Related Expenses pursuant
to Section 5.16 hereof, and upon such payment, this
Agreement shall be terminated.
5.06. Governmental Filings. As soon as practicable after
the date this Agreement is executed by the parties
hereto, EQK and ART shall prepare and file the
Registration Statement with the SEC. A
prospectus/proxy statement (the "PROSPECTUS/PROXY
STATEMENT") shall be filed as part of the
Registration Statement. ART shall use its best
efforts to have the Registration Statement declared
effective by the SEC under the Securities Act as
promptly as practicable after such filing, and will
promptly thereafter make the Prospectus/Proxy
Statement available to the shareholders of EQK. EQK
shall furnish to ART, and ART shall furnish to EQK,
such information and assistance as the other party or
parties may reasonably request in connection with the
preparation of the Prospectus/Proxy Statement and the
Registration Statement.
5.07. Covenant to Satisfy Conditions. EQK and ART shall
each use their reasonable efforts to insure that the
conditions set forth in Article VI hereof are
satisfied, insofar as such matters are within their
respective control. ART hereby guarantees the
performance by Newco of its obligations hereunder.
5.08. Confidentiality. All information exchanged between
ART, Newco and EQK and their respective
representatives, as well as the existence of
negotiations regarding the Merger, shall be subject
to the terms of, and ART and EQK hereby acknowledge
and affirm their obligations regarding
confidentiality set forth in, their mutual
confidentiality letters dated April 21, 1997 (the
"CONFIDENTIALITY AGREEMENT"). No party shall release
any information regarding this Agreement or the
transactions contemplated hereby without the prior
written consent of each other party hereto, except as
provided in the Confidentiality Agreement.
5.09. Shareholder Meeting of EQK. EQK shall, at a meeting
of its shareholders duly called by its Board of
Trustees to be held as soon as practicable following
execution of this Agreement, submit this Agreement,
the Amended Declaration of Trust and the New Advisory
Agreement to a vote of its shareholders in accordance
with the Declaration of Trust and Massachusetts Law.
LLPM shall vote in favor of the Merger, the Amended
Declaration of Trust and the New Advisory Agreement.
5.10. Information Delivered to Shareholders. EQK shall
submit all shareholder notices, proxy solicitation
material, written consents and other information
(other than the proxy solicitation material included
as part of the Prospectus/Proxy Statement) to Newco
and ART for its written approval (which approval
shall not be unreasonably withheld) at least four
days prior to delivering such materials to EQK's
shareholders. All such materials (including the
proxy solicitation material included in the
Prospectus/Proxy Statement) shall comply with the
Massachusetts Law and all
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applicable state and federal securities Laws
(including, without limitation, the anti-fraud
provisions thereof). Newco and ART shall be provided
with the opportunity to have one or more
representatives attend shareholder meetings, if any,
of EQK.
5.11. Resignation and Election of Trustees. Upon
consummation of the Merger, pursuant to the terms of
each Resignation Agreement (as defined in Section
6.01(s)), ART shall direct and EQK shall cause all of
the members of EQK's current board of trustees to
resign and the related vacancies shall be filled with
(i) two persons designated by ART who are
"independent of management" as such phrase is used in
Section 303.0 of the NYSE Listed Company Manual (such
persons are referred to as the "ART INDEPENDENT
TRUSTEES") and (ii) five persons designated by ART
who may be affiliated with ART or its affiliates
(such five persons are referred to herein as the "ART
AFFILIATED TRUSTEES" and, together with the ART
Independent Trustees, the "ART DESIGNATED TRUSTEES").
The ART Designated Trustees shall constitute the
seven person board of trustees of EQK (the "NEW EQK
BOARD"). As used herein, the term "New EQK Board"
shall include the board of any successor entity to
EQK, including the Surviving Entity. The composition
of the New EQK Board and the procedures pursuant to
which the ART Designated Trustees are nominated and
elected, through filling vacancies or otherwise,
shall be consistent with the requirements of the
Amended Declaration of Trust (as the same may be
amended from time to time), including, without
limitation, requirements related to Unaffiliated
Trustees (as defined in the Amended Declaration of
Trust).
5.12. SEC Filings; Publicity. Prior to the Closing, any
filings with the SEC or written news releases by
either ART or EQK pertaining to this Agreement or the
Merger shall be submitted to the other party for
review and approval prior to filing or release, as
applicable, by that other party and shall be filed or
released only in a form approved by that other party,
provided, however, that in either case (1) the
applicable approval shall not be unreasonably
withheld, and (2) such review and approval shall not
be required of releases by ART or EQK if prior review
and approval would prevent the timely and accurate
dissemination of such SEC filing or press release as
required to comply, in the judgment of counsel, with
any applicable law, rule, or policy.
5.13. Compliance with Applicable Laws. To the extent
legally possible, EQK will take such actions as are
reasonably requested by ART so that EQK and the
Merger is exempt from any requirements of any state
takeover law, whether by action of EQK's Board of
Trustees or otherwise.
5.14. Preservation of Net Operating Losses. ART will use
its reasonable efforts to take or refrain from taking
such actions (including, without limitation, giving
its consent to the amendment of EQK's Declaration of
Trust, to implement ownership restrictions therein)
as are mutually agreeable between EQK and ART to
avoid impairing the availability of EQK's net
operating losses.
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22
5.15. Listing of ART Shares. Following execution of this
Agreement by EQK, ART shall take such actions as are
necessary and within its control to cause the ART
Shares to become listed, and thereafter continue to
be listed, for trading on the NYSE.
5.16. Expenses. The parties hereto agree that the expenses
of the Merger and the other transactions contemplated
hereby (the "MERGER RELATED EXPENSES") shall be borne
by ART and EQK in accordance with the terms of the
amended and restated cost sharing agreement attached
hereto as EXHIBIT E (the "COST SHARING AGREEMENT").
5.17. Continued Registration of EQK Shares. Following
execution of this Agreement by the parties hereto,
EQK shall refrain from taking any actions which would
result in the deregistration of the EQK Shares under
the Securities Exchange Act of 1934, as amended.
ARTICLE VI
CONDITIONS PRECEDENT
6.01. Conditions Precedent to Obligations of Newco and ART.
The obligations of Newco and ART under this Agreement
are subject to the satisfaction or, unless prohibited
by law, the waiver by Newco and ART, at or before the
Closing, of each of the following conditions:
(a) Representations and Warranties. The
representations and warranties of
EQK contained herein shall be true,
complete and accurate in all
material respects as of the date
when made and at and as of the
Closing Date (with such updating of
the List of Exceptions set forth on
EXHIBIT D-1 as shall be necessary or
appropriate) as though such
representations, warranties and
statements were made at and as of
such date.
(b) Performance. EQK and LLPM shall
have performed and complied in all
material respects with all
agreements, obligations and
conditions required by this
Agreement to be so performed or
complied with by it at or prior to
the Closing.
(c) No Injunction. On the Closing Date,
there shall be no effective
injunction, writ, preliminary
restraining order or any order of
any nature issued by a court of
competent jurisdiction restraining
or prohibiting the consummation of
the Merger or the other transactions
contemplated hereby. There shall
not be threatened, instituted or
pending any suit, action,
investigation, inquiry or other
proceeding by or before any court or
governmental or other regulatory or
administrative agency or commission
requesting or looking toward an
order, judgment or decree that (i)
restrains or prohibits the
consummation of the transactions
contemplated hereby, (ii) would
adversely affect ART's ability to
exercise control over the Surviving
Entity after the Closing, or (iii)
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would materially and adversely affect
the business, operations, condition
(financial or otherwise),
liabilities, EQK Property or
earnings of the Surviving Entity.
(d) Officers' Certificate. EQK shall
have delivered to Newco and ART a
certificate, dated the Closing Date,
executed by its Chief Executive
Officer and Chief Financial Officer
certifying the fulfillment of the
conditions specified in Section
6.01(a) and (b) hereof.
(e) Secretary's Certificate. EQK shall
have delivered to Newco and ART a
certificate, dated the Closing Date,
executed by its Secretary or an
Assistant Secretary and certifying
as to EQK's Declaration of Trust,
Trustee Regulations, enabling
resolutions, incumbency of officers
and other reasonably related
matters.
(f) Opinions of Counsel. Newco and ART
shall have received an opinion,
dated the Closing Date, of ▇▇▇▇▇▇ &
Dodge, special Massachusetts counsel
to EQK, in a form and substance that
is reasonably satisfactory to Newco
and ART.
(g) Documents. All documents to be
delivered by EQK to Newco and ART
at the Closing shall be duly
executed and in form and substance
reasonably satisfactory to Newco
and ART.
(h) Consents and Approvals. All
licenses, permits, consents,
approvals and authorizations of all
third parties and governmental
bodies and agencies (other than
approvals from EQK's Board of
Trustees and shareholders, which are
provided for elsewhere in this
Agreement) shall have been obtained
which are necessary, in the
reasonable determination of counsel
to Newco and ART, in connection with
(a) the execution and delivery by
each of the parties, as appropriate,
of this Agreement, (b) the
consummation by each of the parties
of the transactions contemplated
hereby or thereby or (c) the conduct
by the Surviving Entity of the
business of EQK (the "EQK Business")
substantially as conducted on the
date hereof.
(i) Non-Foreign Status. At or prior to
Closing, EQK shall have delivered to
Newco and ART a statement certifying
that it is not a foreign person,
which statement shall comply with
the requirements of Treasury
regulation Section 1.1445-2(b).
(j) Intentionally Omitted.
(k) Shareholder Approval. Shareholders
of EQK representing at least three-
quarters of the issued and
outstanding EQK Shares shall have
duly approved
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this Agreement, the Amended
Declaration of Trust and the New
Advisory Agreement.
(l) Dissenters Rights. At or prior to
Closing, holders of no more than 3%
of the shareholders of outstanding
EQK Shares will have notified EQK
that they intend to seek to exercise
dissenter's rights in connection
with the Merger.
(m) Block Purchase. At or prior to
Closing, the Block Purchase shall
have been consummated.
(n) Standstill Agreements. At or prior
to Closing, each holder (other than
ART or its affiliates, LLPM,
Greenspring, Summit, ▇▇▇▇▇▇ and, if
the Halperin Purchase is
consummated, ▇▇. ▇▇▇▇▇▇▇▇) of five
percent (5%) or more of the EQK
Shares (each, a "5% Holder") shall
have executed an agreement (a
"Standstill Agreement") in
substantially the form attached
hereto as EXHIBIT F restricting the
rights of such 5% Holder to sell any
of its EQK Shares or purchase any
additional EQK Shares for a period
of 42 months after the Closing Date.
(o) Intentionally Omitted.
(p) Board Resignations. At or prior to
Closing, ART shall have received
written resignations from all of the
members of EQK's current board of
trustees.
(q) NYSE Listing. The ART Shares shall
have been authorized for listing on
the NYSE, subject to official notice
of issuance.
(r) No Legal Impediment; No Stop Order.
No statute, rule, regulation, order,
injunction or decree shall have been
enacted, entered, promulgated or
enforced by any court,
administrative agency or commission
or other governmental authority or
instrumentality which prohibits,
restricts or makes illegal the
consummation of the Merger. The
Registration Statements shall have
been declared effective by the SEC
and no stop order suspending the
effectiveness thereof shall have
been issued.
(s) Governmental Authorizations. All
required material governmental
authorizations, permits, consents,
orders or approvals which do not
impose terms or conditions that
could reasonably be expected to have
a material adverse effect on EQK or
ART have been received.
(t) EQK Shares. The number of
outstanding EQK Shares being
9,632,212 and no additional EQK
Shares or other equity interests or
or any option, warrant, right or
other security exercisable for,
convertible into or exchangable for
EQK Shares or other equity interests
in EQK being issued since June 30,
1998.
-20-
25
(u) No Adverse Change. EQK operating in
all respects in its ordinary course
of business without any material
adverse change in its business,
properties or financial condition
subsequent to the date hereof.
(v) Intentionally Omitted.
(w) Acquisition and Sale of Property.
(i) EQK shall have acquired the New
Property from ART pursuant to
the Purchase and Sale
Agreement.
(ii) EQK shall have disposed of the
Mall, paid off the related
mortgages thereon, and
distributed the net proceeds
of such disposition to the
EQK Shareholders.
(x) Other. Newco and ART shall have
received such other documents or
certificates as Newco and ART may
reasonably have requested,
including, without limitation,
certificates of good standing with
respect to EQK from the appropriate
authority in its jurisdiction of
organization and certificates of
good standing with respect to EQK
from the appropriate authority in
each jurisdiction in which it is
qualified to do business.
6.02. Conditions Precedent to Obligations of EQK. The
obligations of EQK under this Agreement are subject
to the satisfaction or, unless prohibited by law, the
waiver by EQK at or before the Closing, of each of
the following conditions:
(a) Representations and Warranties.
The representations and warranties
of Newco and ART contained herein
shall be true, complete and accurate
in all material respects as of the
date when made and at and as of the
Closing Date (with such updating of
the List of Exceptions set forth on
EXHIBIT D-2 as shall be necessary or
appropriate) as though such
representations and warranties were
made at and as of such date.
(b) Performance. Newco and ART shall
have performed and complied in all
material respects with all
agreements, obligations and
conditions required by this
Agreement to be so performed or
complied with by them at or prior to
the Closing.
(c) No Injunction. On the Closing Date,
there shall be no effective
injunction, writ, preliminary
restraining order or any order of
any nature issued by a court of
competent jurisdiction restraining
or prohibiting consummation of the
Merger or the other transactions
contemplated hereby. There shall
not be threatened, instituted or
pending any suit, action,
investigation, inquiry or other
proceeding by or before any court or
governmental or other regulatory
-21-
26
or administrative agency or
commission requesting or looking
toward an order, judgment or decree
that restrains or prohibits the
consummation of the transactions
contemplated hereby.
(d) Officers' Certificates. Each of
Newco and ART shall have delivered
to EQK a certificate, dated the
Closing Date and executed by its
Chief Executive Officer and Chief
Financial Officer certifying the
fulfillment of the conditions
specified in Sections 6.02(a) and
(b) hereof.
(e) Secretary's Certificates. Each of
Newco and ART shall have delivered
to EQK a certificate, dated the
Closing Date, executed by its
Secretary or Assistant Secretary and
certifying as to its organizational
documents, enabling resolutions,
incumbency of officers and other
related matters.
(f) Opinions of Counsel. EQK shall have
received such opinions, if any, as
they have reasonably requested in
writing to Newco and ART regarding
Newco and ART, in form and substance
satisfactory to EQK.
(g) Board Approval. The Board of
Directors of ART and the Board of
Trustees of EQK shall have duly
approved the Merger, the Amended
Declaration of Trust, the New
Advisory Agreement and the other
transactions contemplated hereby,
and the Board of Trustees shall not
subsequently have made a
determination (a "Negative
Determination") in the exercise of
its fiduciary duty that it can no
longer recommend approval of the
Merger and the related transactions
to the holders of EQK Shares.
(h) Shareholder Approval. Shareholders
of EQK representing at least three-
quarters of the issued and
outstanding EQK Shares shall have
duly approved this Agreement, the
Amended Declaration of Trust and the
New Advisory Agreement.
(i) Dissenters Rights. At or prior
to Closing, holders of no more than
3% of the outstanding EQK Shares
will have notified EQK that they
intend to seek to exercise
dissenters rights in connection with
the Merger.
(j) Member Approval. The members of
Newco shall have duly approved the
Merger, and the other transactions
contemplated hereby.
(k) Documents. All documents to be
delivered by each of Newco and ART
to EQK at the Closing shall be duly
executed and in form and substance
reasonably satisfactory to EQK.
(l) Consents and Approvals. All
licenses, permits, consents,
approvals and authorizations of all
third parties and governmental
bodies and agencies (other than
approvals from ART's Board of
Directors and Newco's members,
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which are provided for elsewhere in
this Agreement) shall have been
obtained which are necessary, in the
reasonable determination of counsel
to EQK, in connection with (a) the
execution and delivery by each of the
parties, as appropriate, of this
Agreement, (b) the consummation by
each of the parties of the
transactions contemplated hereby or
thereby or (c) the conduct by the
Surviving Entity of the EQK Business
substantially as conducted on the
date hereof.
(m) Block Purchase. At or prior to
Closing, the Block Purchase shall
have been consummated.
(n) Acquisition and Sale of Property.
(i) EQK shall have acquired the New
Property from ART pursuant to
the Purchase and Sale
Agreement.
(ii) EQK shall have disposed of the
Mall, paid off the related
mortgages thereon, and
distributed the net proceeds
of such disposition to the
EQK Shareholders.
(o) Registration Rights Agreement. The
Registration Rights Agreement, in
form and substance reasonably
satisfactory to LLPM, shall have
been duly executed by ART and LLPM.
(p) No Legal Impediment; No Stop Order.
No statute, rule, regulation, order,
injunction or decree shall have been
enacted, entered, promulgated or
enforced by any court,
administrative agency or commission
or other governmental authority or
instrumentality which prohibits,
restricts or makes illegal the
consummation of the Merger. The
Registration Statements shall have
been declared effective by the SEC
and no stop order suspending
effectiveness thereof shall have
been issued by the Commission.
(q) NYSE Listing. The ART Shares shall
have been authorized for listing on
the NYSE, subject to official notice
of issuance.
(r) Governmental Authorizations. All
required material governmental
authorizations, permits, consents,
orders or approvals which do not
impose terms or conditions that
could reasonably be expected to have
a material adverse effect on EQK or
ART have been received.
(s) No Adverse Change. ART, operating
in all respects in its ordinary
course of business without any
material adverse change in its
business, properties or financial
condition subsequent to the date
hereof.
(t) Intentionally Omitted.
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(u) Other. EQK shall have received such
other documents or certificates as
EQK may reasonably have requested,
including, without limitation,
certificates of good standing with
respect to Newco and ART from the
appropriate authority in its
jurisdiction of organization and
certificates of good standing with
respect to Newco and ART from the
appropriate authority in each
jurisdiction in which it is
qualified to do business.
ARTICLE VII
TERMINATION, AMENDMENT, WAIVER
7.01. Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of EQK, Newco
and ART, prior to the Closing;
(b) by Newco or ART, on or after
December 15, 1998, if any of the
conditions provided in Section 6.01
hereof have not been met or, to the
extent permitted by applicable law,
have not been waived in writing by
Newco and ART prior to such date;
(c) by EQK, on or after December 15,
1998, if any of the conditions
provided in Section 6.02 hereof have
not been met or, to the extent
permitted by applicable law, have
not been waived in writing by EQK
prior to such date;
(d) by EQK upon a Negative
Determination;
(e) pursuant to Section 5.05 hereof; or
(f) by EQK if the EQK Board determines,
in its sole discretion, that
compliance with this Agreement is
reasonably likely to (i) materially
impair or delay its ability to
dispose of the Mall (regardless of
the form of such disposition), or
(ii) result in a material reduction
in the consideration that would be
received by EQK or its shareholders
in connection with such disposition.
7.02. Procedure Upon Termination. In the event of
termination by EQK, Newco or ART pursuant to Section
7.01 hereof, written notice thereof shall promptly be
given to the other parties and the transactions
contemplated by this Agreement shall be terminated,
without further action by any party. If the
transactions contemplated by this Agreement are
terminated as provided herein:
(a) each of EQK, Newco and ART shall
return all documents, work papers
and other material of any other
party relating to the transactions
contemplated
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hereby, whether so obtained before or
after the execution hereof, to the
party furnishing the same; and
(b) all confidential information
received by EQK, Newco or ART with
respect to the business of any other
party or its subsidiaries or
affiliates shall be treated in
accordance with Section 5.08 hereof,
and Section 5.08 hereof shall remain
in full force and effect
notwithstanding the termination of
this Agreement.
7.03. Amendment. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by
each of the parties hereto.
7.04. Waiver. At any time prior to the Closing Date, Newco
or ART may (1) waive compliance with any of the
agreements or conditions contained herein or (2)
extend the time for the performance of any of the
obligations or other acts of EQK. In addition, at
any time prior to the Closing Date, EQK may (1) waive
compliance with any of the agreements or conditions
contained herein or (2) extend the time for the
performance of any of the obligations or other acts
of Newco or ART. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed
on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
8.01. Survival. The representations, warranties, covenants
and agreements of EQK shall survive any investigation
made by or on behalf of any party hereto but shall
not survive the Closing; provided however, that the
covenants of EQK set forth in Section 8.04
(Indemnification) shall continue so long as ART owns
EQK Shares, unless the approval of holders of a
majority of EQK Shares (other than those EQK Shares
held by ART or its affiliates) is obtained for the
termination of any such covenant. The
representations, warranties, covenants and agreements
of ART and Newco contained herein shall survive for
the longer of three (3) years from the Closing Date
or one (1) year after they were to have been
performed and were capable of performance; provided
that Sections 5.11 (Resignation and Election of
Trustees), 5.14 (Preservation of Net Operating
Losses), and 5.15 (Listing of ART Shares) shall
continue so long as ART owns EQK Shares, unless and
until (i) the approval of holders of a majority of
EQK Shares (other than those EQK Shares held by ART
or its affiliates) is obtained for the termination of
any such covenant, or (ii) ART acquires 80% or more
of the then outstanding EQK Shares.
8.02. Acknowledgment by ART. Assuming that market
conditions, industry conditions and EQK's business or
financial conditions do not suffer adversely in the
interim, ART hereby acknowledges that it is the
present intention (but not the obligation) of ART to
seek to acquire the remaining outstanding EQK Shares
at some time after the
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third anniversary of the Closing Date for
consideration of 0.0486 ART Shares per then
outstanding EQK Share.
8.03. Commissions. No party hereto has employed any
investment banker, broker, finder or similar agent in
connection with any transaction contemplated by this
Agreement.
8.04. Indemnification. ART and BCM, jointly and severally,
agree to indemnify and hold harmless EQK and its
officers, directors, trustees, employees and
controlling persons from and against any and all
claims, losses, penalties, fines, forfeitures, legal
fees and related costs, judgments, and any other
costs, fees and expenses that EQK may sustain
directly resulting from (i) the breach of any of the
covenants or obligations of ART or BCM hereunder, or
(ii) any claims by third parties arising from any
untrue statement or alleged untrue statement of a
material fact contained (or incorporated by
reference) in the Prospectus/Proxy Statement, the
Registration Statement or any amendment with respect
thereto (collectively, the "OFFERING DOCUMENTS"), or
the omission or alleged omission therefrom of a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, with respect to any information provided
by ART or BCM in connection with the Merger. EQK
agrees to indemnify and hold harmless each of ART and
BCM and their respective officers, directors,
trustees, employees and controlling persons from and
against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that ART or
BCM may sustain directly resulting from any claims by
third parties arising from any untrue statement or
alleged untrue statement of a material fact contained
(or incorporated by reference) in the Offering
Documents, or the omission or alleged omission
therefrom of a material fact required to be stated
therein or necessary to make the statements therein
not misleading, with respect to any information
provided by EQK to ART in connection with the Merger.
In addition, LLPM agrees to indemnify and hold
harmless each of ART and BCM and their respective
officers, directors, trustees, employees and
controlling persons from and against any and all
claims, losses, penalties, fines, forfeitures, legal
fees and related costs, judgments, and any other
costs, fees and expenses that ART or BCM may sustain
directly resulting from any claims by third parties
arising from any untrue statement or alleged untrue
statement of a material fact contained (or
incorporated by reference) in the Offering Documents,
or the omission or alleged omission therefrom of a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, with respect to any information provided
by LLPM in connection with the Merger.
8.05. Definition of Knowledge. For the purpose of this
Agreement and the Exhibits and Appendices to this
Agreement, the phrases "to the best knowledge" of any
party and "known" and words of like effect shall mean
to the knowledge of such party and any officer,
director or manager of any such party, as such
knowledge has been, or should have been, obtained in
the performance of their duties in the ordinary
course of business in a prudent and diligent manner,
which knowledge shall also include information
existing in the records and files of such party.
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8.06. Successors and Assigns. No party shall have the
right to assign all or any part of its interest in
this Agreement without the prior written consent of
the other parties, and any attempted transfer without
such consent shall be null and void.
8.07. No Third-Party Benefit. Nothing in this Agreement
shall be deemed to create any right or obligation in
any Person not a party hereto and this Agreement
shall not be construed in any respect to be a
contract or agreement in whole or in part for the
benefit of or binding upon any Person not a party
hereto, except that the holders of EQK Shares shall
be third party beneficiaries of the obligations of
ART after the Closing Date.
8.08. Entire Agreement; Amendment. This Agreement, the
Exhibits and the Appendices hereto constitute the
entire agreement among the parties hereto with
respect to the transactions contemplated herein and
supersede all prior oral and written agreements,
memoranda, understandings and undertakings between
the parties hereto relating to the subject matter
hereof. This Agreement may not be modified, amended,
altered or supplemented except by a written
instrument executed and delivered by each of the
parties hereto.
8.09. Reformation and Severability. If any provision of
this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective
during the term hereof and such illegality,
invalidity or unenforceability does not result in a
material failure of consideration, then:
(a) in lieu of such illegal, invalid or
unenforceable provision, there shall
be added automatically as a part of
this Agreement a provision as
similar in terms to such illegal,
invalid or unenforceable provision
as may be possible and be legal,
valid and enforceable; and
(b) the legality, validity and
enforceability of the remaining
provisions hereof shall not in any
way be affected or impaired thereby.
8.10. Notices. All notices, claims, certificates,
requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed
(registered or certified mail, postage prepaid,
return receipt requested) as follows:
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If to BCM, ART or Newco:
c/o Basic Capital Management, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
If to EQK or LLPM:
c/o Lend Lease Portfolio Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
with a copy to:
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
Twelfth Floor, Packard Building
Philadelphia, Pennsylvania 19102-2678
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice
is to be given may have previously furnished to the
other in writing in the manner set forth above,
provided that notice of a change of address shall be
deemed given only upon receipt.
8.11. Discretionary Actions. Any reference in this
Agreement to the exercise of discretion or a
determination by EQK or the EQK Board shall mean the
reasonable exercise of such discretion or the making
of such determination in good faith.
8.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT
REGARD TO ITS CONFLICTS OF LAW RULES.
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8.13. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed
an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by parties hereto on the date first above written.
AMERICAN REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Senior Vice President
--------------------------------------
ART NEWCO, LLC
By: American Realty Trust, Inc., as Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Senior Vice President
--------------------------------------
BASIC CAPITAL MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Senior Vice President
--------------------------------------
EQK REALTY INVESTORS I
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------------
Title: Vice President
--------------------------------------
LEND LEASE PORTFOLIO MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------------
Title: Vice President
--------------------------------------
34
EXHIBIT A
Form of Amended Declaration of Trust
[begins on next page]
35
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EXHIBIT A
ART REALTY INVESTORS I
(FORMERLY EQK REALTY INVESTORS I)
--------------------
SECOND
AMENDED AND RESTATED
DECLARATION OF TRUST
--------------------
AS EXECUTED AND AMENDED AS OF [___________], 1998
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36
INDEX
Page
ARTICLE I
THE TRUST DEFINITIONS
1.1 Name..............................................................2
1.2 Places of Business................................................2
1.3 Nature of Trust...................................................2
1.4 Definitions.......................................................3
ARTICLE II
TRUSTEES
2.1 Number, Term of Office and Qualifications of Trustees.............7
2.2 Compensation and Other Remuneration...............................7
2.3 Resignation, Removal and Death of Trustees........................7
2.4 Vacancies.........................................................8
2.5 Successor and Additional Trustees.................................8
2.6 Actions by Trustees...............................................9
2.7 Certification of Changes in Trustees..............................9
2.8 Committees.......................................................10
ARTICLE III
TRUSTEES' POWERS
3.1 Power and Authority of Trustees..................................10
3.2 Specific Powers and Authority....................................10
3.3 Trustees' Regulations............................................15
3.4 Additional Powers................................................15
ARTICLE IV
ADVISOR
4.1 Employment of Advisor............................................15
4.2 Term.............................................................16
4.3 Other Activities of Advisor......................................16
4.4 Advisor Compensation.............................................17
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4.5 Annual Total Operating Expenses..............................................18
ARTICLE V
INVESTMENT POLICY
5.1 Statement of Policy..........................................................18
5.2 Prohibited Investments and Activities........................................19
5.3 Appraisals...................................................................20
ARTICLE VI
THE SHARES AND SHAREHOLDERS
6.1 Shares.......................................................................20
6.2 Legal Ownership of Trust Estate..............................................21
6.3 Shares Deemed Personal Property..............................................21
6.4 Share Record; Issuance and Transferability of Shares.........................21
6.5 Dividends or Distributions to Shareholders...................................22
6.6 Transfer Agent, Dividend Disbursing Agent and Registrar......................22
6.7 Shareholders' Meetings.......................................................22
6.8 Proxies......................................................................23
6.9 Reports to Shareholders......................................................23
6.10 Fixing Record Date...........................................................24
6.11 Notice to Shareholders.......................................................24
6.12 Shareholders' Disclosures; Trustees' Right to Refuse to Transfer Shares;
Limitation on Holdings; Redemption of Shares.................................24
6.13 Issuance of Shares...........................................................25
6.14 Ownership Limitation.........................................................26
6.15 Changes in Ownership Limit...................................................26
6.16 Waivers by Board.............................................................27
ARTICLE VII
LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS
EMPLOYEES AND AGENTS, AND OTHER MATTERS
7.1 Exculpation of Trustees, Officers, Employees and Agents......................27
7.2 Limitation of Liability of Shareholders, Trustees, Officers, Employees
and Agents...................................................................27
7.3 Express Exculpatory Clauses and Instruments..................................28
7.4 Indemnification and Reimbursement of Trustees, Officers, Employees
and Agents...................................................................28
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7.5 Right of Trustees, Officers, Employees and Agents to Own Shares or
Other Property and to Engage in Other Business.................................29
7.6 Transactions Between Trustees, Officers, Employees or Agents and the Trust.....29
7.7 Restriction of Duties and Liabilities..........................................31
7.8 Persons Dealing with Trustees, Officers, Employees or Agents...................31
7.9 Reliance.......................................................................31
7.10 Income Tax Status..............................................................31
ARTICLE VIII
DURATION, AMENDMENT AND TERMINATION OF TRUST
8.1 Duration of Trust..............................................................32
8.2 Termination of Trust...........................................................32
8.3 Amendment Procedure............................................................33
8.4 Transfer to Successor; Merger..................................................33
ARTICLE IX
MISCELLANEOUS
9.1 Applicable Law.................................................................34
9.2 Index and Headings for Reference Only..........................................34
9.3 Successors in Interest.........................................................34
9.4 Inspection of Records..........................................................34
9.5 Counterparts...................................................................34
9.6 Provisions of the Trust in Conflict with Law or Regulations; Severability......35
9.7 Certifications.................................................................35
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SECOND AMENDED AND RESTATED
DECLARATION OF TRUST
of
ART REALTY INVESTORS I
(formerly EQK Realty Investors I)
Executed as of [_____________], 1998
--------------------
This is a Second Amended and Restated Declaration of Trust made as of
the date set forth above by the undersigned Trustees. The Trust was formed
pursuant to a Declaration of Trust executed as of October 8, 1984 which was
filed with the Secretary of State of the Commonwealth of Massachusetts (the
"Secretary of State") on October 9, 1984 (the "Original Declaration of Trust").
The Original Declaration of Trust was amended and restated by an Amended and
Restated Declaration of Trust dated as of February 27, 1985 which was filed with
the Secretary of State of the Commonwealth of Massachusetts on March 4, 1985,
and was further amended by an amendment thereto dated as of March 5, 1986 which
was filed with the Secretary of State on April 14, 1986. The Original
Declaration of Trust, as so amended, is hereby referred to as the "Existing
Declaration of Trust". The undersigned desire to continue the Trust on the terms
and for the purposes hereinafter stated. They desire that such Trust continue to
qualify as a "real estate investment trust" under the REIT Provisions of the
Internal Revenue Code. They may hereafter acquire, hold, manage and dispose of
certain assets as Trustees in the manner hereinafter stated. It is proposed that
the beneficial interest in the Trust assets shall be divided into transferable
Shares of Beneficial Interest, evidenced by certificates therefor, as
hereinafter provided. Accordingly, the undersigned hereby declare that they will
hold any and all property of every type and description which they are acquiring
or may hereafter acquire as Trustees, together with the proceeds thereof, in
trust, to manage and dispose of the same for the benefit of the holders from
time to time of the Shares of Beneficial Interest (as more specifically defined
below, the "Shareholders") previously issued and to be issued hereunder in the
manner and subject to the stipulations contained herein.
This Second Amended and Restated Declaration of Trust amends and
restates, as of the date hereof, the Existing Declaration of Trust in its
entirety, and has been approved by the Shareholders concurrently and in
connection with the merger (the "Merger") of ART Newco, LLC, a Massachusetts
limited liability company ("ART Newco"), and indirect, wholly owned subsidiary
of American Realty Trust, Inc., a Georgia corporation ("ART"), with and into the
Trust, with the Trust as the surviving entity.
The undersigned do hereby (i) certify, pursuant to Section 8.3 of the
Existing Declaration of Trust, that at a meeting of the Shareholders of the
Trust duly called and held on [____________], 1998, at which meeting a quorum
was present and acting throughout, the holders of at least three-quarters of the
outstanding Shares of Beneficial Interest of the Trust entitled to vote thereon
voted that the Existing Declaration of Trust be amended in certain respects as
reflected herein and authorized the filing with the Secretary of State of the
Commonwealth of Massachusetts of a Second Amended and Restated Declaration of
Trust restating in a single document the Existing Declaration
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of Trust as amended at such meeting; and (ii) further certify that the Trustees
of the Trust, including a majority of the Unaffiliated Trustees, by a written
consent dated as of [________], 1998, duly authorized the filing with the
Secretary of State of the Commonwealth of Massachusetts of this SECOND AMENDED
AND RESTATED DECLARATION OF TRUST made as of [_____________], 1998, which
restates the Existing Declaration of Trust, as so amended, in its entirety to
read as set forth herein.
ARTICLE I
THE TRUST DEFINITIONS
1.1 Name. The name of the Trust created by this Second Amended and
Restated Declaration of Trust shall be "ART Realty Investors I" and, so far as
may be practicable, the Trustees shall conduct the Trust's activities, execute
all documents and ▇▇▇ or be sued under that name, which name (and the word
"Trust" wherever used in this Declaration of Trust, except where the context
otherwise requires) shall refer to the Trustees collectively but not
individually or personally or to the officers, agents, employees or Shareholders
of the Trust or of such Trustees. Under circumstances under which the Trustees
determine that the use of such name is not practicable or under circumstances in
which the Trustees are contractually bound to change the name, they may use such
other designation or they may adopt another name under which the Trust may hold
property or conduct its activities.
If Basic Capital Management, Inc., a Nevada corporation ("BCM"), or any
subsidiary, affiliate or successor of such corporation shall cease, for any
reason, to render to the Trust the services of Advisor, as defined in Section
1.4 hereof, to be rendered pursuant to the contract referred to in Article IV
hereof, and any renewal or extension of such contract, then the Trustees shall,
upon request of BCM or such successor and without any vote or consent of the
Shareholders being required, promptly amend this Declaration of Trust to change
its name to one which does not, in the reasonable opinion of BCM, include any
reference to BCM or any of its Affiliates.
1.2 Places of Business. The Trust shall maintain an office in
Massachusetts at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, c/o ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc.,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place in Massachusetts as the
Trustees may determine from time to time. The Trust may have such other offices
or places of business within or without the Commonwealth of Massachusetts as the
Trustees may from time to time determine.
1.3 Nature of Trust. The Trust shall be of the type commonly termed a
Massachusetts business trust. It is intended that the Trust shall carry on a
business as a "real estate investment trust" as described in the REIT Provisions
of the Internal Revenue Code. The Trust is not intended to be, shall not be
deemed to be, and shall not be treated as a general partnership, limited
partnership, joint venture, corporation or joint stock company (but nothing
herein shall preclude the Trust from being treated for tax purposes as an
association under the REIT Provisions of the Internal Revenue Code) nor shall
the Trustees or Shareholders or any of them for any purposes be, nor be deemed
to
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be, nor be treated in any way whatsoever to be, liable or responsible hereunder
as partners or joint venturers. The relationship of the Shareholders to the
Trustees shall be solely that of beneficiaries of the Trust in accordance with
the rights conferred upon them by this Declaration.
1.4 Definitions. The terms defined in this Section 1.4 wherever used in
this Declaration shall, unless the context otherwise requires, have the
respective meanings hereinafter specified. Whenever the singular number is used
in this Declaration and when required by the context, the same shall include the
plural, and the masculine gender shall include the feminine and neuter genders.
Where applicable, calculations to be made pursuant to any such definition shall
be made in accordance with generally accepted accounting principles as in effect
on the date hereof except as otherwise provided in such definition.
(a) Advisor. "Advisor" shall mean the Person employed by the
Trustees in accordance with the provisions of Article IV.
(b) Affiliate. "Affiliate" shall mean, as to any Person, (i)
any other Person directly or indirectly controlling, controlled by or
under common control with such Person, (ii) any other Person that owns
beneficially, directly or indirectly, five percent (5%) or more of the
outstanding capital stock, shares or equity interests of such Person,
or (iii) any officer, director, employee, general partner or trustee of
such Person or of any Person controlling, controlled by or under common
control with such Person (excluding trustees and persons serving in
similar capacities who are not otherwise an Affiliate of such Person).
(c) Affiliated Trustee. "Affiliated Trustee" shall mean a
Trustee who is not an Unaffiliated Trustee.
(d) Annual Meeting of Shareholders. "Annual Meeting of
Shareholders" shall mean the meeting described in the first sentence of
Section 6.7.
(e) Annual Report. "Annual Report" shall have the meaning set
forth in Section 6.9(a).
(f) Average Invested Assets. "Average Invested Assets" for any
period shall mean the average of the values of the Invested Assets on
the last day of each month during such period.
(g) Book Value. "Book Value" of an asset or assets shall mean
the value of such asset or assets of the Trust on the books of the
Trust, without deduction for depreciation or other asset valuation
reserves and without deduction for mortgages or other security
interests to which such asset or assets are subject, except that no
asset shall be valued at more than its fair market value as determined
by the Trustees.
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(h) Controlling Shareholder. "Controlling Shareholder" shall
mean, subsequent to the Merger, ART.
(i) Declaration. "Declaration" or "this Declaration" shall
mean this Second Amended and Restated Declaration of Trust, as amended,
restated or modified from time to time. References in this Declaration
to "herein" and "hereunder" shall be deemed to refer to this
Declaration and shall not be limited to the particular text, article or
section in which such words appear.
(j) Internal Revenue Code. "Internal Revenue Code" shall mean
the Internal Revenue Code of 1986, as now enacted or hereafter amended,
or successor statutes.
(k) Invested Assets. "Invested Assets" shall mean the Book
Value of all the Real Estate Investments of the Trust.
(l) Mortgage Loans. "Mortgage Loans" shall mean notes,
debentures, bonds and other evidences of indebtedness or obligations
which are negotiable or nonnegotiable and which are secured or
collateralized by Mortgages.
(m) Mortgages. "Mortgages" shall mean mortgages, deeds of
trust or other security interests in Real Property or in rights or
interests, including leasehold interests, in Real Property.
(n) Net Income. "Net Income" for any period shall mean the net
income of the Trust (calculating the net income of the Trust from any
partnership, joint venture or other form of indirect ownership as if
the Trust directly received its proportionate share of such entity's
income, gains, expenses and losses, including non-cash charges and
imputed interest) for such period (i) excluding realized gains and
losses from the disposition of the Trust assets (after attributing to
such disposition the taxes and fees paid in connection therewith); (ii)
before deducting additions to reserves or provisions for depreciation,
amortization, provision for bad debts and other similar noncash charges
and imputed interest; (iii) less the amount of any bad debts actually
charged to the provision therefor.
(o) Ownership Limit. "Ownership Limit" shall have the meaning
set forth in Section 6.14.
(p) Permitted Investments. "Permitted Investments" shall mean
the types of investments specified in Section 5.1.
(q) Person. "Person" shall mean and include individuals,
corporations, limited liability companies, limited partnerships,
general partnerships, joint stock companies or associations, joint
ventures, associations, companies, trusts, banks, trust companies, land
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trusts, business trusts, or other entities and governments and agencies
and political subdivisions thereof.
(r) Real Property. "Real Property" shall mean and include
land, leasehold interests (including but not limited to interests of a
lessor or lessee therein), rights and interests in land, and any
buildings, structures, improvements, furnishings, fixtures and
equipment located on or used in connection with land, leasehold
interests or rights in land or interests therein, but does not include
investments in Mortgages, Mortgage Loans or interests therein.
(s) REIT. "REIT" shall mean a real estate investment trust as
defined in the REIT Provisions of the Internal Revenue Code.
(t) REIT Provisions of the Internal Revenue Code. "REIT
Provisions of the Internal Revenue Code" shall mean Parts II and III of
Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code,
and regulations thereunder and rulings with respect thereto.
(u) Securities. "Securities" shall mean any stock, shares,
voting trust certificates, bonds, debentures, notes or other evidences
of indebtedness or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations
in temporary or interim certificates for, receipts for, guarantees of,
or warrants, options or rights to subscribe to, purchase or acquire any
of the foregoing.
(v) Shareholders. "Shareholders" shall mean as of any
particular time all holders of record of outstanding Shares at such
time.
(w) Shares. "Shares" shall mean the transferable Shares of
Beneficial Interest, without par value, of the Trust as described in
Section 6.1.
(x) Total Assets. "Total Assets" shall mean the Book Value of
all the assets of the Trust, as such Book Value appears on the most
recent quarterly balance sheet of the Trust.
(y) Total Operating Expenses. "Total Operating Expenses" for
any period shall mean all operating expenses (including additional
expenses paid directly or indirectly by the Trust to the Advisor,
Affiliates of the Advisor or third parties based upon their
relationship with the Trust) including loan administration, servicing,
engineering, inspection and all other expenses paid by the Trust,
exclusive of (i) interest and discounts, (ii) taxes and license fees,
(iii) expenses connected directly with the issuance, sale and
distribution, or listing on a stock exchange, of Securities of the
Trust, including without limitation underwriting and brokerage
discounts and commissions, private placement fees and expenses, legal
and accounting costs, printing, engraving and mailing costs, and
listing and registration fees; (iv) expenses
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connected directly with the acquisition, disposition, operation or
ownership of Trust assets, including without limitation costs of
foreclosure; maintenance, repair and improvement of property;
maintenance and protection of the lien of mortgages; property
management fees; legal fees; premiums for insurance on property owned
by or mortgaged to the Trust; taxes; brokerage and acquisition fees and
commissions; appraisal fees; title insurance and abstract expenses;
provisions for depreciation, depletion and amortization; disposition
fees and real estate commissions; and losses on the disposition of
assets and provisions for such losses; (v) fees and expenses payable to
public accountants, legal counsel, consultants, managers or agents,
employed for the Trust directly by the Trustees; (vi) legal and other
expenses in connection with formal or informal administrative action or
legal proceedings which involve a challenge to the status of the Trust
as a REIT, or advice concerning obtaining or maintaining such status,
or the determination by the Trust of its taxable income or involving a
claim that the activities of the Trust or any Trustee, Shareholder,
officer or agent of the Trust were improper; (vii) expenses of
organizing, revising, amending, converting, modifying, reorganizing or
terminating the Trust; (viii) the cost of insurance in the nature of
directors' or officers' liability insurance covering Trustees and
officers of the Trust; (ix) fees and expenses of transfer agents,
registrars, warrant agents, rights agents, dividend payment and
dividend reinvestment agents, escrow holders and indenture trustees;
(x) all printing and distribution expenses connected with
communications to holders of Securities of the Trust and other
necessary costs in maintaining relations with holders of Securities,
including the costs of printing and mailing the certificates for
Securities, proxy solicitation materials and reports to such holders
and the cost of holding meetings of holders of the Securities of the
Trust; (xi) legal, accounting, printing and other costs of reports
required to be filed with state or Federal government agencies; and
(xii) all fees paid to the Advisor during such period; provided,
however, that the foregoing exclusions shall not include any allocation
of costs of the Advisor's overhead incurred in performing its duties
under its advisory agreement with the Trust.
(z) Trust. "Trust" shall mean the Trust created by this
Declaration.
(aa) Trustees. "Trustees" shall mean, as of any particular
time, original signatories hereto as long as they hold office hereunder
and additional and successor trustees, and shall not include the
officers, employees or agents of the Trust or the Shareholders. Nothing
herein shall be deemed to preclude the Trustees from also serving as
officers, employees or agents of the Trust or owning Shares.
(bb) Trust Estate. "Trust Estate" shall mean as of any
particular time any and all property, real, personal or otherwise,
tangible or intangible, which is transferred, conveyed or paid to or
purchased by the Trust or Trustees and all rents, income, profits and
gains therefrom and which at such time is owned or held by or for the
Trust or the Trustees.
(cc) Trustees' Regulations. "Trustees' Regulations" shall have
the meaning set forth in Section 3.3.
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(dd) Unaffiliated Trustee. "Unaffiliated Trustee" shall mean a
Trustee who, in his individual capacity, (i) is not an Affiliate of the
Advisor or the Controlling Shareholder, (ii) does not own any interest
in the Advisor or the Controlling Shareholder, and (iii) does not
perform any services for the Trust except as Trustee; provided that
officers or employees of Compass Retail, Inc. shall also be deemed
"Unaffiliated Trustees" for purposes of this definition.
ARTICLE II
TRUSTEES
2.1 Number, Term of Office and Qualifications of Trustees. There shall
be no fewer than five (5) nor more than seven (7) Trustees. The initial Trustees
under this Second Amended and Restated Declaration of Trust are the five
signatories hereto. Within the limits set forth in this Section 2.1, the number
of Trustees may be increased and decreased from time to time by the Trustees or
by the vote or consent of the holders of a majority of the outstanding Shares
then entitled to vote thereon. Subject to the provisions of Section 2.3, each
Trustee shall hold office until the next annual meeting of Shareholders and
until the election and qualification of his successor. There shall be no
cumulative voting in the election for Trustees. A Trustee shall be an individual
at least twenty-one (21) years of age who is not under legal disability. Subject
to the provisions regarding vacancies set forth in Section 2.4, there shall be
at least one (1) Unaffiliated Trustee at all times. Upon the resignation,
removal or death of a Trustee who is an Affiliated Trustee, the remaining
Affiliated Trustees shall appoint a person to replace such Affiliated Trustee.
Nominees to serve as Affiliated Trustees shall be nominated by the then current
Affiliated Trustees, if any. Unless otherwise required by law, no Trustee shall
be required to give bond, surety or security in any jurisdiction for the
performance of any duties or obligations hereunder. The Trustees in their
capacity as trustees shall not be required to devote their entire time to the
business and affairs of the Trust.
2.2 Compensation and Other Remuneration. The Trustees shall be entitled
to receive such reasonable compensation for their services as Trustees as the
Trustees may determine from time to time. The Trustees and Trust officers shall
be entitled to receive remuneration for services rendered to the Trust in any
other capacity. Subject to Sections 7.5 and 7.6, such services may include,
without limitation, services as an officer of the Trust, legal, accounting or
other professional services, or services as a broker, transfer agent or
underwriter, whether performed by a Trustee or any person affiliated with a
Trustee.
2.3 Resignation, Removal and Death of Trustees. A Trustee may resign at
any time by giving written notice in recordable form to the remaining Trustees
at the principal office of the Trust. Such resignation shall take effect on the
date such notice is given, or at any later time specified in such notice,
without need for prior or subsequent accounting. A Trustee may be removed at any
time, with or without cause, by vote or consent of holders of a majority of the
outstanding Shares
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then entitled to vote thereon or by a majority of the remaining Trustees;
provided that, subject to the provisions regarding vacancies set forth in
Section 2.4, there shall be at least one (1) Unaffiliated Trustee at all times.
A Trustee judged incompetent or bankrupt, or for whom a guardian or conservator
has been appointed, shall be deemed to have resigned as of the date of such
adjudication or appointment. Upon the resignation or removal of any Trustee, or
upon his otherwise ceasing to be a Trustee, he shall execute and deliver such
documents as the remaining Trustees shall require for the conveyance of any
Trust property held in his name and shall account to the remaining Trustee or
Trustees, as they require, for all property which he holds as Trustee and shall
thereupon be discharged as Trustee. Upon the incapacity or death of any Trustee,
his legal representative shall perform the acts set forth in the preceding
sentence, and the discharge mentioned therein shall run to such legal
representative and to the incapacitated Trustee or the estate of the deceased
Trustee, as the case may be.
2.4 Vacancies. If any or all of the Trustees cease to be Trustees
hereunder, whether by reason of resignation, removal, incapacity, death or
otherwise, such event shall not terminate the Trust or affect its continuity.
Until vacancies are filled, the remaining Trustee or Trustees (even though fewer
than five (5)) may exercise the powers of the Trustees hereunder. Vacancies
(including vacancies created by increases in number) may be filled by the
remaining Trustee or by a majority of the remaining Trustees (or the Controlling
Shareholder, if the vacant position was formerly held by an Affiliated Trustee)
or by the vote and consent of holders of a majority of the outstanding Shares
entitled to vote thereon. If at any time there shall be no Trustees in office,
successor Trustees shall be elected by the Shareholders as provided in Section
6.7. Any Trustee elected to fill a vacancy created by the resignation, removal
or death of a former Trustee shall hold office for the unexpired term of such
former Trustee. Successors of the Unaffiliated Trustees shall be nominated by
the remaining Unaffiliated Trustees, if there are any remaining Unaffiliated
Trustees.
2.5 Successor and Additional Trustees. The right, title and interest of
the Trustees in and to the Trust Estate shall also vest in successor and
additional Trustees upon their qualification, and they shall thereupon have all
the rights and obligations of Trustees hereunder. Such right, title and interest
shall vest in the Trustees whether or not conveyancing documents have been
executed and delivered pursuant to Section 2.3 or otherwise. Appropriate written
evidence of the election and qualification of successor and additional Trustees
shall be filed with the records of the Trust and in such other offices or places
as the Trustee may deem necessary, appropriate or desirable.
2.6 Actions by Trustees. The Trustees may act with or without a
meeting. A quorum for all meetings of the Trustees shall be a majority of the
Trustees. Affiliated Trustees may be counted in determining the presence of a
quorum at a meeting of the Trustees. Except as provided below in this Section
2.6 or in Section 7.6 hereof, any action of the Trustees may be taken at a
meeting by vote of a majority of the Trustees present (a quorum being present)
or without a meeting by written consents of a majority of the Trustees, which
consents shall be filed with the records of meetings of the Trustees. Every act
or decision done or made by a majority of the Trustees present at a meeting duly
held at which a quorum is present shall be the act of the Trustees. Any action
or actions permitted to be taken by the Trustees in connection with the business
of the Trust may be taken
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pursuant to authority granted by a meeting of the Trustees conducted by a
telephone conference call, and the transaction of Trust business represented
thereby shall be of the same authority and validity as if transacted at a
meeting of the Trustees held in person or by written consent. The minutes of any
Trustees' meeting held by telephone shall be prepared in the same manner as a
meeting of the Trustees held in person. Any agreement, Mortgage or other
instrument or writing executed by one or more of the Trustees or by any
authorized Person shall be valid and binding upon the Trustees and upon the
Trust when authorized or ratified by action of the Trustees or as provided in
the Trustees' Regulations.
With respect to the actions of the Trustees, Trustees who have, or are
Affiliates of Persons who have, any direct or indirect interest in or connection
with any matter being acted upon may be counted for all quorum purposes under
this Section 2.6 and, subject to the provisions of Section 7.6, may vote on the
matter as to which they or their Affiliates have such interest or connection.
Approval of the following transactions shall require the approval of a
committee consisting of at least one Unaffiliated Trustee and at least two
Affiliated Trustees: (i) transactions between the Trust (including any
subsidiaries of the Trust) and ART and any of ART's Affiliates and other related
persons (other than transactions between related parties pursuant to a new
advisory agreement which has been approved or ratified by the holders of a
majority of the outstanding shares of beneficial interest of EQK, including
holders of a majority of the Shares not held by ART or any of its Affiliates,
that actually vote at the applicable meeting) and other transactions requiring
approval as set forth in Section 7.6; (ii) amendments to this Declaration of
Trust; and (iii) amendments to the Trustees' Regulations.
Any action hereunder which requires the affirmative vote of a majority
of the Unaffiliated Trustees may be taken upon the affirmative vote of the sole
Unaffiliated Trustee if only one such Trustee exists.
2.7 Certification of Changes in Trustees. No removal of a Trustee and
no election or appointment of any individual as Trustee (other than an
individual who was serving as a Trustee immediately prior to such election or
appointment) shall become effective unless and until there shall be delivered to
the chief executive officer or the secretary of the Trust an instrument in
writing signed by a majority of the Trustees, certifying to such removal of a
Trustee and or naming the individual so elected or appointed as Trustee,
together with his written acceptance thereof and agreement to be bound thereby.
2.8 Committees. The Trustees may appoint from among their own number an
audit committee, a nominating committee and such other standing committee as the
Trustees determine. Each standing committee shall consist of two or more
members. At least one member of the audit committee and each other standing
committee shall be an Unaffiliated Trustee; provided, however, that upon a
failure to comply with this requirement because of the resignation, removal or
death of an Unaffiliated Trustee, such requirement shall not be applicable for a
period of sixty (60) days.
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Each committee shall have such powers, duties and obligations as the Trustees
may deem necessary or appropriate. The standing committees shall report their
activities periodically to the Trustees.
ARTICLE III
TRUSTEES' POWERS
3.1 Power and Authority of Trustees. The Trustees, subject only to the
specific limitations contained in this Declaration, shall have, without further
or other authorization, and free from any power or control on the part of the
Shareholders, full, absolute and exclusive power, control and authority over the
Trust Estate and over the business and affairs of the Trust to the same extent
as if the Trustees were the sole owners thereof in their own right, and may do
all such acts and things as in their sole judgment and discretion are necessary
for or incidental to or desirable for the carrying out of any of the purposes of
the Trust or the conducting of the business of the Trust. Any determination made
in good faith by the Trustees of the purposes of the Trust or the existence of
any power or authority hereunder shall be conclusive. In construing the
provisions of this Declaration, a presumption shall favor the grant of powers
and authority to the Trustees. The enumeration of any specific power or
authority herein shall not be construed as limiting the general powers or
authority or any other specified power or authority conferred herein upon the
Trustees.
3.2 Specific Powers and Authority. Subject only to the express
limitations contained in this Declaration and in addition to any powers and
authorities conferred by this Declaration or which the Trustees may have by
virtue of any present or future statute or rule or law, and also subject to the
REIT Provisions of the Internal Revenue Code, the Trustees, without any action
or consent by the Shareholders, shall have and may exercise at any time and from
time to time the following powers and authorities which may or may not be
exercised by them in their sole judgment and discretion and in such manner and
upon such terms and conditions as they may from time to time deem proper:
(a) to retain, invest and reinvest the capital or other funds
of the Trust in, and to acquire, purchase, or own, mortgage and/or
equity interests in real or personal property of any kind, all without
regard to whether any such property is authorized by law for the
investment of Trust funds or whether any investments may mature before
the possible termination of the Trust, and to possess and exercise all
the rights, powers, and privileges appertaining to the ownership of the
Trust Estate and to increase the capital of the Trust at any time by
the issuance of additional Shares or Securities of the Trust for such
consideration as they deem appropriate;
(b) without limitation of the powers set forth in paragraph
(a) above, for such consideration as they deem proper, to invest in,
purchase, or otherwise acquire for cash or other property or through
the issuance of Shares or through the issuance of notes, debentures,
bonds, or other obligations of the Trust and hold for investment real,
personal or mixed, tangible or intangible, property of any kind
wherever located in the world, including without
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limitation: (i) the entire or any participating interest in rents,
lease payments, or other income from, or the entire or any
participating interest in the profits from, or the entire or any
participating interest in the equity or ownership of, Real Property;
(ii) the entire or any participating interest in notes, bonds, or other
obligations which are secured by Mortgages; (iii) in connection with
any such investment, purchase or acquisition, a share of rents, lease
payments, or other gross income from or a share of the profits from or
a share in the equity or ownership of Real Property, either directly or
through joint venture, general or limited partnership, or other lawful
combinations or associations; (iv) loans secured by the pledge or
transfer of Mortgages; and (v) Securities of every nature, whether or
not secured by Mortgage Loans. The Trustees shall also have the power
to develop, operate, pool, unitize, grant production payments out of or
lease or otherwise dispose of mineral, oil, and gas properties and
rights;
(c) to sell, rent, lease, hire, exchange, release, partition,
assign, mortgage, pledge, hypothecate, grant security interests in,
encumber, negotiate, convey, transfer or otherwise dispose of any and
all of the Trust Estate by deeds (including deeds in lieu of
foreclosure), trust deeds, assignments, bills of sale, transfers,
leases, mortgages, financing statements, security agreements and other
instruments for any of such purposes executed and delivered for and on
behalf of the Trust or the Trustees by one or more of the Trustees or
by a duly authorized officer, employee, agent or any nominee of the
Trust;
(d) to issue Shares, bonds, debentures, notes or other
evidences of indebtedness which may be secured or unsecured and may be
subordinated to any indebtedness of the Trust and may be convertible
into Shares and which include options, warrants and rights to subscribe
to, purchase or acquire any of the foregoing, all without vote of or
other action by the Shareholders to such Persons for such cash,
property or other consideration (including Securities issued or created
by, or interests in any Person) at such time or times and on such terms
as the Trustees in their sole discretion and in good faith may deem
advisable and to list any of the foregoing Securities issued by the
Trust on any securities exchange and to purchase or otherwise acquire,
hold, cancel, reissue, sell and transfer any of such Securities, and to
cause the instruments evidencing such Securities to bear an actual or
facsimile imprint of the seal of the Trust and to be signed by manual
or facsimile signature or signatures (and to issue such Securities,
whether or not any Person whose manual or facsimile signature shall be
imprinted thereon shall have ceased to occupy the office with respect
to which such signature was authorized), provided that, where only
facsimile signatures for the Trust are used, the instrument shall be
countersigned manually by a transfer agent, registrar or other
authentication agent. Any of such Securities of different types may be
issued in combinations or units with such restrictions on the separate
transferability thereof as the Trustees shall determine;
(e) to enter into leases of real and personal property as
lessor or lessee and to enter into contracts, obligations and other
agreements for a term, and to invest in obligations
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having a term, extending beyond the term of office of the Trustees and
beyond the possible termination of the Trust, or having a lesser term;
(f) to borrow money and give negotiable or non-negotiable
instruments therefor; to guarantee, indemnify or act as surety with
respect to payment or performance of obligations of third parties; to
enter into other obligations on behalf of the Trust; and to assign,
convey, transfer, mortgage, subordinate, pledge, grant security
interests in, encumber or hypothecate the Trust Estate to secure any
indebtedness of the Trust or any other of the foregoing obligations of
the Trust;
(g) to lend money, whether secured or unsecured;
(h) to create reserve funds for any purpose;
(i) to incur and pay out of the Trust Estate any charges or
expenses, and disburse any funds of the Trust, which charges, expenses
or disbursements are, in the opinion of the Trustees, necessary for or
incidental to or desirable for the carrying out of any of the purposes
of the Trust or the conducting of the business of the Trust, including
without limitation taxes and other governmental levies, charges and
assessments, of whatever kind or nature, imposed upon or against the
Trustees in connection with the Trust or the Trust Estate or upon or
against the Trust Estate or any part thereof, and for any of the
purposes herein;
(j) to deposit funds or Securities held by the Trust in banks,
trust companies, savings and loan associations and other depositories,
whether or not such deposits will draw interest, the same to be subject
to withdrawal on such terms and in such manner and by such Person or
Persons (including any one or more Trustees, officers, agents or
representatives) as the Trustees may determine;
(k) to possess and exercise all the rights, powers and
privileges appertaining to the ownership of all or any interests in
Mortgages or Securities issued or created by any Person, forming part
of the Trust Estate, to the same extent that an individual might, and,
without limiting the generality of the foregoing, to vote or give any
consent, request or notice, or waive any notice, either in person or by
proxy or power of attorney, with or without power of substitution, to
one or more Persons, which proxies and powers of attorney may be for
meetings or actions generally, or for any particular meeting or action,
and may include the exercise of discretionary powers;
(l) to cause to be organized or assist in organizing any
Person under the laws of any jurisdiction to acquire the Trust Estate
or any part or parts thereof or to carry on any business in which the
Trust shall directly or indirectly have any interest and to sell, rent,
lease, hire, convey, negotiate, assign, exchange or transfer the Trust
Estate or any part or parts thereof to or with any such Person or any
existing Person in exchange for the Securities
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thereof or otherwise, and to merge or consolidate the Trust with or
into any Person or merge or consolidate any Person into the Trust, and
to lend money to, subscribe for the Securities of, and enter into any
contracts with, any Person in which the Trust holds or is about to
acquire Securities or any other interest;
(m) to enter into joint ventures, general or limited
partnerships, participation or agency arrangements and any other lawful
combinations or associations;
(n) to elect, appoint, engage or employ such officers for the
Trust as the Trustees may determine, who may be removed or discharged
at the discretion of the Trustees, such officers to have such powers
and duties, and to serve such terms and at such compensation as may be
prescribed by the Trustees or by the Trustees' Regulations, to engage
or employ any Persons (including, subject to the provisions of Sections
7.5 and 7.6, any Trustee, officer or agent and any Person in which any
Trustee, officer or agent is directly or indirectly interested or with
which he is directly or indirectly connected) as agents,
representatives, employees, or independent contractors (including
without limitation real estate advisors, investment advisors, transfer
agents, registrars, underwriters, accountants, attorneys at law, real
estate agents, managers, appraisers, brokers, architects, engineers,
construction managers, general contractors or otherwise) in one or more
capacities, and to pay compensation from the Trust for services in as
many capacities as such Person may be so engaged or employed and,
except as prohibited by law, to delegate any of the powers and duties
of the Trustees to any one or more Trustees, agents, representatives,
officers, employees, independent contractors or other Persons;
(o) to determine whether moneys, Securities or other assets
received by the Trust shall be charged or credited to income or capital
or allocated between income and capital, including the power to
amortize or fail to amortize any part or all of any premium or
discount, to treat any part or all the profit resulting from the
maturity or sale of any asset, whether purchased at a premium or at a
discount, as income or capital, or to apportion the same between income
and capital; to apportion the sales price of any asset between income
and capital, and to determine in what manner any expenses or
disbursements are to be borne as between income and capital, whether or
not in the absence of the power and authority conferred by this
subsection such monies, Securities or other assets would be regarded as
income or as capital or such expense or disbursement would be charged
to income or to capital; to treat any dividend or other distribution on
any investment as income or capital or apportion the same between
income and capital; to provide or fail to provide reserves for
depreciation, amortization or obsolescence in respect of all or any
part of the Trust Estate subject to depreciation, amortization or
obsolescence in such amounts and by such methods as they shall
determine; to allocate to the share of beneficial interest account less
than all of the consideration received for the Shares and to allocate
the balance thereof to capital surplus; and to determine the method or
form in which the accounts and records of the Trust shall be kept and
to change from time to time such method or form;
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(p) to determine from time to time, the value of all or any
part of the Trust Estate and of any services, Securities, assets or
other consideration to be furnished to or acquired by the Trust, and
from time to time to revalue all or any part of the Trust Estate in
accordance with such appraisals or other information as are, in the
Trustees' sole judgment, necessary and/or satisfactory;
(q) to collect, ▇▇▇ for, and receive all sums of money or
other assets coming due to the Trust, and to engage in, intervene in,
prosecute, join, defend, compound, compromise, abandon or adjust, by
arbitration or otherwise, any actions, suits, proceedings, disputes,
claims, controversies, demands or other litigation relating to the
Trust, the Trust Estate or the Trust's affairs, to enter into
agreements therefor, whether or not any suit is commenced or claim
accrued or asserted and, in advance of any controversy, to enter into
agreements regarding arbitration, adjudication or settlement thereof;
(r) to renew, modify, release, compromise, extend, consolidate
or cancel, in whole or in part, any obligation to or of the Trust or
participate in any reorganization of obligors to the Trust;
(s) to purchase and pay for out of the Trust Estate insurance
contracts and policies insuring the Trust Estate against any and all
risks and insuring the Trust and/or any or all of the Trustees, the
Shareholders, officers, employees, agents, investment advisors or
independent contractors of the Trust against any and all claims and
liabilities of every nature asserted by any Person arising by reason of
any action alleged to have been taken or omitted by the Trust or by any
such Person as Trustee, Shareholder, officer, employee, agent,
investment advisor or independent contractor, whether or not the Trust
would have the power to indemnify such Person against such claim or
liability;
(t) to cause legal title to any of the Trust Estate to be held
by and/or in the name of the Trustees, or except as prohibited by law,
by and/or in the name of the Trust or one or more of the Trustees or
any other Person, on such terms, in such manner, with such powers in
such Person as the Trustees may determine, and with or without
disclosure that the Trust or Trustees are interested therein;
(u) to adopt a fiscal year for the Trust, and from time to
time to change such fiscal year without the approval of the
Shareholders;
(v) to adopt and use a seal (but the use of a seal shall not
be required for the execution of instruments or obligations of the
Trust);
(w) to make, perform, and carry out, or cancel and rescind,
contracts of every kind for any lawful purpose without limit as to
amount, with any Person, firm, trust, association, corporation,
municipality, county, parish, state, territory, government or other
municipal or
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governmental subdivision, such contracts to be for such duration and
upon such terms as the Trustees in their sole discretion shall
determine;
(x) to confess judgment against the Trust;
(y) to discontinue the operations of the Trust;
(z) to repurchase or redeem Shares; and
(aa) to do all other such acts and things as are necessary or
incidental to the foregoing, and to exercise all powers which are
necessary or useful to carry on the business of the Trust, to promote
any of the purposes for which the Trust is formed and to carry out the
provisions of this Declaration.
3.3 Trustees' Regulations. The Trustees may make, adopt, amend or
repeal regulations (the "Trustees' Regulations") containing provisions relating
to the business of the Trust, the conduct of its affairs, its rights or powers
and the rights or powers of its Shareholders, Trustees or officers not
inconsistent with law or with this Declaration. Notwithstanding anything to the
contrary in the Trustees' Regulations, any amendment of the Trustees'
Regulations shall require the approval of a majority of the Unaffiliated
Trustees.
3.4 Additional Powers. The Trustees shall additionally have and
exercise all the powers conferred by the laws of Massachusetts upon business
trusts or real estate investment trusts formed under such laws, insofar as such
laws are not in conflict with the provisions of this Declaration.
ARTICLE IV
ADVISOR
4.1 Employment of Advisor. The Trustees are responsible for the general
policies of the Trust and for such general supervision of the business of the
Trust conducted by all officers, agents, employees, advisors, managers or
independent contractors of the Trust as may be necessary to ensure that such
business conforms to the provisions of this Declaration. However, the Trustees
are not and shall not be required personally to conduct all of the business of
the Trust, and, consistent with their ultimate responsibility as stated above,
the Trustees shall have the power to appoint, employ or contract with any Person
(including one or more of themselves or any corporation, partnership, or trust
in which one or more of them may be directors, officers, stockholders, partners
or trustees) as the Trustees may deem necessary or proper for the transaction of
the business of the Trust. The Trustees may therefor employ or contract with
such Person (herein referred to as the "Advisor") and, consistent with their
ultimate responsibility as set forth in this Section 4.1, the Trustees may grant
or delegate such authority to the Advisor as the Trustees may in their sole
discretion deem necessary or desirable without regard to whether such authority
is normally granted or delegated by trustees.
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Subject to the provisions of Sections 4.2 and 4.4 hereof, the Trustees
shall have the power to determine the terms and compensation of the Advisor or
any other Person whom they may employ or with whom they may contract; provided,
however, that any determination to employ or contract with any Trustee or any
Person such that a Trustee would be an Affiliated Trustee shall be valid only if
made, approved or ratified, after disclosure of such interests, by the
affirmative vote or written consent of a majority of the Unaffiliated Trustees.
The Trustees may exercise broad discretion in allowing the Advisor to administer
and regulate the operations of the Trust, to act as agent for the Trust, to
execute documents on behalf of the Trustees and to make executive decisions
which conform to general policies and general principles previously established
by the Trustees.
4.2 Term. The Trustees shall not enter into any advisory contract with
the Advisor unless such contract has an initial term of no more than two (2)
years, provides for annual renewal or extension thereafter and for termination
thereof by the Trustees without cause at any time without penalty upon sixty
(60) days' written notice by the Trustees, either by affirmative vote or written
consent of a majority of the Unaffiliated Trustees, requires for renewal or
extension thereof the affirmative vote or written consent of a majority of the
Unaffiliated Trustees and provides for termination thereof by the Advisor
without cause at any time after the expiration of a period specified in such
contract (which period shall not be shorter than the original term) without
penalty upon one hundred and eighty (180) days' written notice by the Advisor.
In the event of the termination of an advisory contract, the terminated Advisor
shall be required to cooperate with the Trust and take all reasonable steps
requested to assist the Trustees in making an orderly transition of the advisory
function. It shall be the duty of the Trustees to evaluate the performance of
the Advisor before entering into or renewing an advisory contract, and the
Unaffiliated Trustees have a fiduciary duty to the Shareholders to supervise the
relationship of the Trust with the Advisor.
4.3 Other Activities of Advisor. The Advisor shall not be required to
administer the investment activities of the Trust as its sole and exclusive
function and may have other business interests and may engage in other
activities similar or in addition to those relating to the Trust, including the
rendering of services and advice to other Persons (including other REITs) and
the management of other investments (including investments of the Advisor and
its Affiliates). The Trustees may request the Advisor to engage in other
activities which complement the Trust's investments, and the Advisor may receive
compensation or commissions therefor from the Trust or other Persons.
The Advisor shall be required to use its best efforts to supervise the
operation of the Trust in a manner consistent with the investment policies and
objectives of the Trust, but neither the Advisor nor (subject to any applicable
provisions of Section 7.5) any Affiliate of the Advisor shall be obligated to
present any particular investment opportunity to the Trust, even if such
opportunity is of a character such that, if presented to the Trust, could be
taken by the Trust, and, subject to the foregoing, shall be protected in taking
for its own account or recommending to others any such particular investment
opportunity.
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Upon request of any Trustee, the Advisor shall from time to time
promptly furnish the Trustees with such information on a confidential basis as
to any investments within the Trust's investment policies made by the Advisor
for its own account as may be provided in the advisory contract with the Advisor
in effect from time to time.
4.4 Advisor Compensation. The Trustees, including a majority of the
Unaffiliated Trustees, shall at least annually review generally the performance
of the Advisor in order to determine whether the compensation which the Trust
has contracted to pay to the Advisor is reasonable in relation to the nature and
quality of services performed and whether the provisions of the advisory
contract with the Advisor are being carried out. Each such determination shall
be based on such of the following and other factors as the Trustees (including
the Unaffiliated Trustees) deem relevant and shall be reflected in the minutes
of the meetings of the Trustees:
(a) the size of the advisory fee in relation to the size,
composition and profitability of the portfolio of the Trust;
(b) the success of the Advisor in generating opportunities
that meet the investment objectives of the Trust;
(c) the rates charged to other REITs and to investors other
than REITs by Advisors performing similar services;
(d) additional revenues realized by the Advisor and its
Affiliates through their relationship with the Trust, including loan
administration, underwriting or brokerage commissions, servicing,
engineering, inspection and other fees, whether paid by the Trust or by
others with whom the Trust does business;
(e) the quality and extent of service and advice furnished by
the Advisor;
(f) the performance of the investment portfolio of the Trust,
including income, conservation or appreciation of capital, frequency of
problem investments and competence in dealing with distress situations;
and
(g) the quality of the portfolio of the Trust in relationship
to any investments generated by the Advisor for its own account.
4.5 Annual Total Operating Expenses. The Total Operating Expenses of
the Trust shall not exceed in any twelve-month period the greater of two percent
(2%) of the Average Invested Assets for such twelve-month period and twenty-five
percent (25%) of the Net Income for such twelve (12) month period (calculated
before the deduction therefrom of such Total Operating Expenses), or such
greater amount, with respect to any year, as shall have been found by a majority
of the Trustees, including a majority of the Unaffiliated Trustees, based upon
such unanticipated, unusual or nonrecurring factors as they may deem sufficient,
to be justified for such year, and any
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such finding and the reasons in support thereof shall be reflected in the
minutes of the meetings of the Trustees.
The Unaffiliated Trustees shall at least annually determine whether the
total fees and expenses of the Trust are reasonable in light of the investment
experience of the Trust, its Net Assets, its Net Income and the fees and
expenses of comparable REITs. Each such determination shall be reflected in the
minutes of meetings of the Trustees.
Within sixty (60) days after the end of any fiscal quarter of the Trust
ending on or after December 31, 1985 for which Total Operating Expenses (for the
twelve (12) months then ended) exceed both two percent (2%) of the Average
Invested Assets for such twelve (12) month period and twenty-five percent (25%)
of the Net Income for such twelve (12) month period (calculated before the
deduction therefrom of such Total Operating Expenses), there shall be sent to
the Shareholders a written disclosure of such fact, together with an explanation
of the factors, if any, which the Trustees (including a majority of the
Unaffiliated Trustees) have concluded were sufficiently unanticipated, unusual
or nonrecurring to justify such higher Total Operating Expenses.
Each advisory contract with the Advisor shall provide that in the event
that the Total Operating Expenses exceed the limitations provided in this
Section 4.5, then, unless the Trustees (including a majority of the Unaffiliated
Trustees) shall have found such excess to be justified as provided above, the
Advisor shall reimburse the Trust (which reimbursement may be accomplished by,
at the option of the Trust, a reduction of the Advisor's compensation) for the
amount by which the aggregate annual Total Operating Expenses paid or incurred
by the Trust exceed the limitations herein provided.
ARTICLE V
INVESTMENT POLICY
5.1 Statement of Policy. It shall be the general objectives of the
Trust that the Trustees invest the Trust Estate in equity interests in Real
Property (including equity Securities of real estate-related entities), leases,
joint venture development projects and partnerships and participate in the
financing of real estate and real estate-related activities through investments
in mortgage loans, including first, wraparound and junior mortgage loans
(collectively, the "Permitted Investments"). The Trustees shall pursue a
balanced investment policy, seeking both current income and capital
appreciation. These general objectives shall be pursued in a manner consistent
with the investment policies specified in the remainder of this Section 5.1.
The Trustees intend to hold the Permitted Investments for up to
eighteen years after the date of this Second Amended and Restated Declaration of
Trust and, after the eighteenth year, the Trustees will dispose of any remaining
investments of the Trust in an orderly fashion within a period of two years in
order to achieve a complete liquidation of the Trust within twenty years after
the date of this Second Amended and Restated Declaration of Trust. The Trust's
existence and the maximum
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holding period for its investments may be extended beyond the 20-year period
only if (i) at any time after the 18th year after the date of this Second
Amended and Restated Declaration of Trust, a majority of the Trustees, including
a majority of the Unaffiliated Trustees, affirmatively determines that such
extension would be in the best interests of the Shareholders, taking into
consideration the then prevailing conditions in the relevant real estate
markets, and recommends to the Shareholders a single specified extension of the
aforesaid 20-year period and (ii) the holders of a majority of the Shares then
outstanding and entitled to vote thereon approve such extension.
To the extent that the Trust Estate has assets not otherwise invested
in accordance with this Section 5.1, it shall be the policy of the Trustees to
invest such assets in (i) government Securities, (ii) Securities of government
agencies, (iii) bankers' acceptances, (iv) certificates of deposit, (v)
interest-bearing deposits in commercial banks, (vi) participations in pools of
mortgages or bonds and notes (such as Federal Home Loan Mortgage Corporation
participation sale certificates, Government National Mortgage Association
modified pass-through certificates and Federal National Mortgage Association
bonds and notes); (vii) bank repurchase agreements covering the Securities of
the United States or agencies or instrumentalities thereof and (viii) other
similarly secured short-term investment Securities.
Subject to the investment restrictions in Section 5.2, the Trustees may
alter any or all of the above-described investment policies if they should
determine such change to be in the best interest of the Trust. Subject to the
preceding terms, the Trustees shall endeavor to invest the Trust's assets in
accordance with the investment policies set forth in this Article V, but the
failure so to invest its assets shall not affect the validity of any investment
made or action taken by the Trustees.
It shall be the policy of the Trustees to make investments in such
manner as to comply with the requirements of the Internal Revenue Code with
respect to the composition of the investments and the derivation of the income
of a real estate investment trust as defined in the REIT Provisions of the
Internal Revenue Code; provided, however, that no Trustee, officer, employee or
agent of the Trust shall be liable for any act or omission resulting in the loss
of tax benefits under the Internal Revenue Code, except for that arising from
his own willful misfeasance, bad faith, gross negligence or reckless disregard
of duty.
5.2 Prohibited Investments and Activities. The Trustees shall not:
(a) invest in any foreign currency, commodities, commodity
futures contracts, bullion or chattels, except such chattels as are
employed in the day to day business of the Trust or in connection with
its Real Property;
(b) invest in any contracts for the sale of real estate,
except in connection with the acquisition of interests in Real
Property;
(c) engage in any short sale;
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(d) issue "redeemable securities" as defined in Section
2(a)(32) of the Investment Company Act of 1940;
(e) hold equity Securities, except in connection with the
acquisition of equity interests in Real Property; or
(f) engage in trading as compared with investment activities
or engage in the business of underwriting or agency distribution of
Securities issued by others, but this prohibition shall not prevent the
Trustees from selling interests in Real Property.
5.3 Appraisals. If the Trustees shall at any time purchase Real
Property, or interests therein, the consideration paid therefor shall generally
be based upon the fair market value thereof as determined by an appraisal by a
Person who is not an Affiliate of the Trust or the Advisor and who is, in the
sole judgment of the Trustees, properly qualified to make such a determination.
ARTICLE VI
THE SHARES AND SHAREHOLDERS
6.1 Shares. The units into which the beneficial interest in the Trust
will be divided shall be designated as Shares of Beneficial Interest, each
without par value. The Shares shall be of one class, and each Share shall be
identical in all respects with every other Share. There shall be no limit upon
the number of authorized Shares which may be issued by the Trust. The
certificates evidencing the Shares shall be in such form, and signed as provided
in Section 3.2(d) on behalf of the Trust and of a transfer agent and/or
registrar (if any) in such manner as the Trustees may from time to time
prescribe or as may be prescribed in the Trustees' Regulations. The certificates
shall be negotiable and title thereto and to the Shares represented thereby
shall be transferred by assignment and delivery thereof to the same extent and
in all respects as a share certificate of a Massachusetts business corporation
(subject to Sections 3.2(d), 6.4 and 6.12). The Shares may be issued for such
consideration as the Trustees in their sole discretion shall determine or by way
of Share dividend or Share split in the sole discretion of the Trustees. Shares
reacquired by the Trust shall no longer be deemed outstanding and shall have no
voting or other rights unless and until reissued. Shares reacquired by the Trust
may be canceled and restored to the status of authorized and unissued Shares by
action of the Trustees. All Shares shall be validly issued, fully paid and
nonassessable by the Trust upon receipt of full consideration for which they
have been issued or without additional consideration if issued by way of Share
dividend or Share split. Each holder of Shares shall as a result thereof be
deemed to have agreed to and be bound by the terms of this Declaration. The
holders of Shares shall be entitled to receive, when and as declared from time
to time by the Trustees out of any funds legally available for the purpose, such
dividends as may be declared from time to time by the Trustees. In the event of
the termination of the Trust or upon the distribution of its assets, the assets
of the Trust available for payment and distribution to Shareholders shall be
distributed ratably among the holders of Shares at the time outstanding. The
Shares shall entitle the holders thereof to one vote per share, shall not
entitle the holders thereof to preference, appraisal,
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conversion, exchange, preemptive or redemption rights of any kind and shall have
equal dividend or distribution, liquidation and other rights.
6.2 Legal Ownership of Trust Estate. The legal ownership of the Trust
Estate and the right to conduct the business of the Trust are vested exclusively
in the Trustees (subject to Section 3.2(t)), and the Shareholders shall have no
interest therein other than beneficial interest in the Trust conferred by their
Shares issued hereunder and they shall have no right to compel any partition,
division, dividend or distribution of the Trust or any of the Trust Estate.
6.3 Shares Deemed Personal Property. The Shares shall be personal
property and shall confer upon the holders thereof only the interest and rights
specifically set forth or provided for in this Declaration. The death,
insolvency or incapacity of a Shareholder shall not dissolve or terminate the
Trust or affect its continuity nor give his legal representative any rights
whatsoever, whether against or in respect of other Shareholders, the Trustees or
the Trust Estate or otherwise except the sole right to demand and, subject to
the provisions of this Declaration, the Trustees' Regulations and any
requirements of law, to receive a new certificate for Shares registered in the
name of such legal representative, in exchange for the certificate held by such
Shareholder.
6.4 Share Record; Issuance and Transferability of Shares. Records shall
be kept by or on behalf of and under the direction of the Trustees, which shall
contain the names and addresses of the Shareholders, the number of Shares held
by them respectively, and the numbers of the certificates representing the
Shares, and in which there shall be recorded all transfers of Shares. The Trust,
the Trustees and the officers, employees and agents of the Trust shall be
entitled to deem the Persons in whose names certificates are registered on the
records of the Trust to be the absolute owners of the Shares represented thereby
for all purposes of this Trust; but nothing herein shall be deemed to preclude
the Trustees or officers, employees or agents of the Trust from inquiring as to
the actual ownership of Shares. Until a transfer is duly effected on the records
of the Trust, the Trustees shall not be affected by any notice of such transfer,
either actual or constructive.
Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing upon
delivery to the Trustees or a transfer agent of the certificate or certificates
therefor, properly endorsed or accompanied by duly executed instruments of
transfer and accompanied by all necessary documentary stamps together with such
evidence of the genuineness of each such endorsement, execution or authorization
and of other matters as may reasonably be required by the Trustees or such
transfer agent. Upon such delivery, the transfer shall be recorded in the
records of the Trust and a new certificate for the Shares so transferred shall
be issued to the transferee and in case of a transfer of only a part of the
Shares represented by any certificate, a new certificate for the balance shall
be issued to the transferor. Any Person becoming entitled to any Shares in
consequence of the death of a Shareholder or otherwise by operation of law shall
be recorded as the holder of such Shares and shall receive a new certificate
therefor but only upon delivery to the Trustees or a transfer agent of
instruments and other evidence required by the Trustees or the transfer agent to
demonstrate such entitlement, the existing certificate for such Shares and such
releases from applicable governmental authorities as may be required by
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the Trustees or transfer agent. In case of the loss, mutilation or destruction
of any certificate for Shares, the Trustees may issue or cause to be issued a
replacement certificate on such terms and subject to such rules and regulations
as the Trustees may from time to time prescribe. Nothing in this Declaration
shall impose upon the Trustees or a transfer agent a duty or limit their rights
to inquire into adverse claims.
6.5 Dividends or Distributions to Shareholders. The Trustees may from
time to time declare and pay to Shareholders such dividends or distributions in
cash, property or assets of the Trust or Securities issued by the Trust, out of
current or accumulated income, capital, capital gains, principal, surplus,
proceeds from the increase or financing or refinancing of Trust obligations, or
from the sale of portions of the Trust Estate or from any other source as the
Trustees in their discretion shall determine. Shareholders shall have no right
to any dividend or distribution unless and until declared by the Trustees. The
Trustees shall furnish the Shareholders with a statement in writing advising as
to the source of the funds so distributed not later than ninety (90) days after
the close of the fiscal year in which the distribution was made.
6.6 Transfer Agent, Dividend Disbursing Agent and Registrar. The
Trustees shall have power to employ one or more transfer agents, dividend
disbursing agents and registrars (including the Advisor and/or its Affiliates)
and to authorize them on behalf of the Trust to keep records, to hold and to
disburse any dividends or distributions, and to have and perform, in respect of
all original issues and transfers of Shares, dividends and distributions and
reports and communications to Shareholders, the powers and duties usually had
and performed by transfer agents, dividend disbursing agents and registrars of a
Massachusetts business corporation.
6.7 Shareholders' Meetings. There shall be an annual meeting of the
Shareholders, at such time and place as shall be determined by or in the manner
prescribed in the Trustees' Regulations, at which the Trustees shall be elected
and any other proper business may be conducted. The Annual Meeting of
Shareholders shall be held after delivery to the Shareholders of the Annual
Report and within six (6) months after the end of each fiscal year, commencing
with the fiscal year ending December 31, 1985. Special meetings of Shareholders
may be called by the chief executive officer of the Trust or by a majority of
the Trustees or of the Unaffiliated Trustees and shall be called upon the
written request of Shareholders holding in the aggregate not less than ten
percent (10%) of the total votes authorized to be cast by the outstanding Shares
of the Trust entitled to vote at such meeting in the manner provided in the
Trustees' Regulations. If there shall be no Trustees, the officers of the Trust
shall promptly call a special meeting of the Shareholders entitled to vote for
the election of successor Trustees. Notice of any special meeting shall state
the purposes of the meeting. The holders of Shares entitled to vote at the
meeting representing a majority of the total number of votes authorized to be
cast by Shares then outstanding and entitled to vote on any question present in
person or by proxy shall constitute a quorum at any such meeting for action on
such question. Any meeting may be adjourned from time to time by a majority of
the votes properly cast upon the question, whether or not a quorum is present,
and the meeting may be reconvened without further notice. At any reconvened
session of the meeting at which there shall be a quorum, any business may be
transacted at the meeting as originally noticed. Whenever any action is to be
taken by the
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Shareholders, it shall, except as otherwise required by this Declaration, be
authorized by holders of a majority of the Shares then outstanding and entitled
to vote thereon. At all elections of Trustees, voting by Shareholders shall be
conducted under the noncumulative method and the election of Trustees shall be
by the affirmative vote of the holders of Shares representing a majority of the
total votes authorized to be cast by Shares then outstanding which are present
at the meeting in person or by proxy and entitled to vote in the election of the
Trustees. Whenever Shareholders are required or permitted to take any action
(unless a vote at a meeting is specifically required as in Sections 8.1 and
8.3), such action may be taken without a meeting by written consents setting
forth the action so taken, signed by the holders of a majority (or such higher
percentage as may be specified elsewhere in this Declaration) of the outstanding
Shares that would be entitled to vote thereon at a meeting. The Shareholders
shall be entitled, to the same extent as the shareholders in a Massachusetts
business corporation, to determine by vote whether a court action, proceeding or
claim should be brought or maintained derivatively or as a class action on
behalf of the Trust or its Shareholders. Except with respect to matters on which
a Shareholder's vote shall be required for or shall determine action of the
Trustees as expressly set forth in this Declaration, no action taken by the
Shareholders at any meeting shall in any way bind the Trustees.
6.8 Proxies. Whenever the vote or consent of a Shareholder entitled to
vote is required or permitted under this Declaration, such vote or consent may
be given either directly by such Shareholder or to a proxy in the form
prescribed in the Trustees' Regulations. The Trustees may solicit such proxies
from the Shareholders or any of them entitled to vote in any matter requiring or
permitting the Shareholders' vote or consent. No proxy for any meeting of
Shareholders entitled to vote shall be effective unless such proxy shall have
been placed on file with such officer of the Trust as the Trustees shall have
designated for such purposes for verification prior to such meeting.
6.9 Reports to Shareholders.
(a) Not later than one hundred twenty (120) days after the
close of each fiscal year of the Trust, the Trustees shall mail or
deliver a report of the business and operations of the Trust during
such fiscal year to the Shareholders, which report shall constitute the
accounting of the Trustees for such fiscal year. The report (the
"Annual Report") shall be in such form and have such content as the
Trustees deem proper. The Annual Report shall include a statement
indicating the financial position of the Trust and a statement
indicating the results of its operations, each prepared in accordance
with generally accepted accounting principles. Such financial
statements shall be accompanied by the report of an independent
certified public accountant thereon. A manually signed copy of the
accountant's report shall be filed with the Trustees. The Annual Report
shall also disclose the results of year-end appraisals of the fair
market values of the Trust's Permitted Investments.
(b) At least quarterly the Trustees shall send interim reports
to the Shareholders containing financial information which may be
unaudited and otherwise having such form and content as the Trustees
deem proper.
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6.10 Fixing Record Date. The Trustees' Regulations may provide for
fixing or, in the absence of such provision, the Trustees may fix, in advance, a
date as the record date for determining the Shareholders entitled to notice of
or to vote at any meeting of Shareholders or to express consent to any proposal
without a meeting, or for the purpose of determining Shareholders entitled to
receive payment of any dividend or distribution (whether before or after
termination of the Trust) or any Annual Report or other communication from the
Trustees, or for any other purpose. The record date so fixed shall be not less
than five (5) days nor more than sixty (60) days prior to the date of the
meeting or event for the purposes of which it is fixed.
6.11 Notice to Shareholders. Any notice of meeting or other notice,
communication or report to any Shareholder shall be deemed duly delivered to
such Shareholder when such notice, communication or report is deposited, with
postage thereon prepaid, in the United States mail, addressed to such
Shareholder at his address as it appears on the records of the Trust or is
delivered in person to such Shareholder.
6.12 Shareholders' Disclosures; Trustees' Right to Refuse to Transfer
Shares; Limitation on Holdings; Redemption of Shares.
(a) The Shareholders shall upon demand disclose to the
Trustees in writing such information with respect to direct and
indirect ownership of the Shares as the Trustees deem necessary or
appropriate to comply with the REIT Provisions of the Internal Revenue
Code or to comply with the requirements of any taxing authority or
governmental agency.
(b) Whenever it is deemed by them to be reasonably necessary
to protect the status of the Trust as a REIT, the Trustees may require
a statement or affidavit from each Shareholder or proposed transferee
of Shares setting forth the number of Shares already owned by him and
any related Person specified in the form prescribed by the Trustees for
that purpose. If, in the opinion of the Trustees, which shall be
conclusive upon any proposed transferee of Shares, any proposed
transfer would jeopardize the status of the Trust as a REIT, the
Trustees shall have the right, but not the duty, to refuse to permit
such transfer.
(c) The Trustees, by notice to the holder thereof, may redeem
any or all Shares which have been transferred pursuant to a transfer
which, in the opinion of the Trustee would jeopardize the status of the
Trust as a REIT; and from and after the date of giving of such notice
of redemption ("Redemption Date") the Shares called for redemption
shall cease to be outstanding and the holder thereof shall cease to be
entitled to dividends, voting rights and other benefits with respect to
such Shares excepting only the right to payment by the Trust of the
redemption price determined and payable as set forth in the following
sentence. The redemption price of each Share called for redemption
shall be the closing price on the exchange which is the principal
United States market for the Shares on the last business day prior to
redemption if the Shares of the Trust are listed on a securities
exchange, and, if the Shares are not so listed, shall be the mean
between the average per Share closing bid prices and the average per
Share closing asked prices on such date, or, if there have been no
sales
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on a national securities exchange and no published bid quotations and
no published asked quotations with respect to Shares of the Trust on
such date, the redemption price shall be the price determined by the
Trustees in good faith.
(d) Notwithstanding any other provision of this Declaration of
Trust to the contrary, any purported acquisition of Shares of the Trust
which would result in the disqualification of the Trust as a REIT shall
be null and void.
(e) Nothing contained in this Section 6.12 or in any other
provision of this Declaration of Trust shall limit the authority of the
Trustees to take such other action as they deem necessary or advisable
to protect the Trust and the interests of the Shareholders by
preservation of the Trust's status as a REIT.
(f) If any provision of this Section 6.12 or any application
of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, 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. To the extent this Section 6.12
may be inconsistent with any other provision of this Declaration of
Trust, this Section 6.12 shall be controlling.
(g) It shall be the policy of the Trustees to consult with the
appropriate officials of the principal securities exchange, if any, on
which the Shares are listed as far as reasonably possible in advance of
the final exercise of any powers granted by subsections (b) or (c) of
this Section 6.12.
6.13 Issuance of Shares. Notwithstanding any other provision of this
Declaration, the Trust is authorized to issue an unlimited number of Shares or
other types of Securities from time to time, including Securities with
preferential rights senior to the Shares; provided that any issuance of Shares
shall be approved by the affirmative vote of holders of not less than a majority
of the then outstanding Shares entitled to vote thereon. Any Security of a class
or series so issued shall have the same characteristics and entitle the
registered holder thereof to the same rights as any identical Securities of the
same class or series issued separately by the Trust.
6.14 Ownership Limitation.
(a) No person other than ART and ▇.▇. ▇▇▇▇▇▇ de Nemours Co.
Inc. Trust Fund may beneficially own more than 4.9% of the outstanding
Shares (the "Ownership Limit") at any time. Any transfer of Shares
that, if effected, would result in any Person beneficially owning any
Shares in excess of the Ownership Limit shall be void ab initio as to
the transfer of any Shares representing beneficial ownership of Shares
in excess of the Ownership Limit.
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(b) Any transfer of Shares that, if effective, would result in
the Shares being beneficially owned (as provided in section 856(a) of
the Code) 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 (as provided in
section 856(a) of the Code) by the intended transferee; and the
intended transferee shall acquire no rights in such Shares.
(c) Any transfer of Shares that, if effective, would result in
the Trust being "closely held" within the meaning of section 856(h) of
the Code shall be void ab initio as to the transfer of such Shares
which would cause the Trust to be "closely held" within the meaning of
section 856(h) of the Code; and the intended transferee shall acquire
no rights in such Shares.
(d) Any transfer of Shares that, if effective, would result in
disqualification of the Trust as a REIT shall be void ab initio as to
the transfer of such Shares; and the intended transferee shall acquire
no rights in such Shares.
(e) Nothing contained herein shall impair the settlement of
transactions entered into on the facilities of the NYSE or any other
exchange or quotation system on which Shares are traded.
6.15 Changes in Ownership Limit. The Board of Trustees may from time to
time increase or decrease the Ownership Limit; provided, however, that:
(a) Any decrease may be made prospectively as to subsequent
holders (other than a decrease as a result of a retroactive change in
existing law, in which case such decrease shall be effective
immediately);
(b) The Ownership Limit may not be increased if, after giving
effect to such increase, five beneficial owners of Shares could
beneficially own in the aggregate, more than 50% of the Shares then
outstanding; and
(c) Prior to the modification of the Ownership Limit, the
Board of Trustees may require such opinions of counsel, affidavits,
undertakings or agreements as it may deem necessary or advisable in
order to determine or ensure the Trust's status as a REIT.
6.16 Waivers by Board. The Board of Trustees, upon receipt of a ruling
from the Internal Revenue Service or an opinion of its tax advisor or other
documents or evidence satisfactory to the Board of Trustees and upon such other
conditions as the Board of Trustees may direct, may waive the Ownership Limit
with respect to an intended transferee in connection with a proposed transfer of
Shares which, if consummated, would result in such intended transferee owning
Shares in excess of the Ownership Limit. The Board of Trustees may require
written notice from a transferee such number of days prior to the proposed
transfer as the Board may determine in its sole discretion.
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ARTICLE VII
LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS,
EMPLOYEES AND AGENTS, AND OTHER MATTERS
7.1 Exculpation of Trustees, Officers, Employees and Agents. No
Trustee, officer, employee or agent of the Trust shall be liable to the Trust or
to any other Person for any act or omission except for his own willful
misfeasance, bad faith, or failure to act in good faith in the reasonable belief
that the act or omission was in the best interests of the Trust. No future
changes or amendments made to this Article VII shall (a) create standards of
liability less favorable to any past or current Trustee, officer, employee or
agent of the Trust than those standards of liability defined herein; or (b)
adversely affect the rights of past or current officers or Trustees to
indemnification and the advancement of expenses.
7.2 Limitation of Liability of Shareholders, Trustees, Officers,
Employees and Agents. The Trustees, officers, employees and agents of the Trust
in incurring any debts, liabilities or obligations or in taking or omitting any
other actions for or in connection with the Trust are, and shall be deemed to
be, acting as Trustees, officers, employees or agents of the Trust and not in
their own individual capacities. No Shareholder and, except to the extent
provided in Section 7.1, no Trustee, officer, employee or agent shall be liable
for any debt, claim, demand, judgment, decree, liability or obligation of any
kind (in tort, contract or otherwise) of, against or with respect to the Trust,
arising out of any action taken or omitted for or on behalf of the Trust and the
Trust shall be solely liable therefor and resort shall be had solely to the
Trust Estate for the payment or performance thereof, and no Shareholder and,
except as aforesaid, no Trustee, officer, employee or agent shall be subject to
any personal liability whatsoever, in tort, contract or otherwise, to any other
Person or Persons in connection with the Trust Estate or the affairs of the
Trust (or any actions taken or omitted for or on behalf of the Trust), and all
such other Persons shall look solely to the Trust Estate for satisfaction of
claims of any nature arising in connection with the Trust Estate or the affairs
of the Trust (or any action taken or omitted for or on behalf of the Trust).
Each Shareholder shall be entitled to pro rata indemnity from the Trust Estate
if, contrary to the provisions hereof, such Shareholder shall be held to any
personal liability.
7.3 Express Exculpatory Clauses and Instruments. Any written instrument
creating an obligation of the Trust shall include a reference to this
Declaration and provide that neither the Shareholders nor the Trustees nor
officers, employees or agents of the Trust shall be liable thereunder and that
all Persons shall look solely to the Trust Estate for the payment of any claim
thereunder or for the performance thereof; however, the omission of such
provision from any such instrument shall not render the Shareholder or any
Trustee, officer, employee or agent of the Trust
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liable nor shall the Trustees or any officer, employee or agent of the Trust be
liable to anyone for such omission.
7.4 Indemnification and Reimbursement of Trustees, Officers, Employees
and Agents. Any Person made a party to any action, suit or proceeding or against
whom a claim or liability is asserted by reason of the fact that he, his
testator or intestate was or is a Trustee, officer, employee or agent of the
Trust shall be indemnified and held harmless by the Trust against judgments,
fines, amounts paid on account thereof (whether in settlement or otherwise) and
reasonable expenses, including attorneys' fees, actually and reasonably incurred
by him in connection with the defense of such action, suit, proceeding, claim or
alleged liability or in connection with any appeal therein, whether or not the
same proceeds to judgment or is settled or otherwise brought to a conclusion;
provided, however, that no such Person shall be so indemnified or reimbursed for
any claim, obligation or liability as to which he shall have been adjudicated
not to have acted in good faith in the reasonable belief that his actions were
in the best interests of the Trust; and provided further that such Person gives
prompt notice thereof, executes such documents and takes such action as will
permit the Trust to conduct the defense or settlement thereof and cooperates
therein, but the failure to do any of the foregoing shall not deprive such
Person of the right to indemnity hereunder except to the extent that the Trust
is actually prejudiced by such failure. In the event of a settlement approved by
the Trustees of any such claim, alleged liability, action, suit or proceeding
(which approval shall not be unreasonably withheld), indemnification and
reimbursement shall be provided except as to such matters covered by the
settlement as to which the Trust is advised by its counsel that such Person
would, if the matter were adjudicated, be found not to have acted in good faith
in the reasonable belief that his actions were in the best interests of the
Trust. Such rights of indemnification and reimbursement shall be satisfied only
out of the Trust Estate. The rights accruing to any Person under these
provisions shall not exclude any other right to which he may be lawfully
entitled, nor shall anything contained herein restrict the right of the Trust to
indemnify or reimburse such person in any proper case even though not
specifically provided for herein, nor shall anything contained herein restrict
such Person's right to contribution as may be available under applicable law.
The Trustees shall make advance payments in connection with indemnification
under this Section 7.4, provided that the indemnified Person shall have given a
written undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification, which undertaking
shall be accepted without regard to the financial ability of such Person to make
repayment.
Any action taken by or conduct on the part of a Trustee, officer,
employee or agent of the Trust in conformity with or in good faith reliance upon
the provisions of Section 7.5 shall not, for the purposes of this Trust
(including without limitation Sections 7.1, 7.2 and 7.3 and this Section 7.4)
constitute willful misfeasance, bad faith, or a failure to act in good faith in
the reasonable belief that the action was in the best interests of the Trust.
7.5 Right of Trustees, Officers, Employees and Agents to Own Shares or
Other Property and to Engage in Other Business. Any Trustee or officer, employee
or agent of the Trust may acquire, own, hold and dispose of Shares in the Trust,
for his individual account, and may exercise
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all rights of a Shareholder to the same extent and in the same manner as if he
were not a Trustee or officer, employee or agent of the Trust. Any Trustee or
officer, employee or agent of the Trust may, in his personal capacity or in a
capacity of trustee, officer, director, stockholder, partner, member, advisor or
employee of any Person or otherwise, have business interests and engage in
business activities similar to or in addition to those relating to the Trust,
which interests and activities may be similar to and competitive with those of
the Trust and may include the acquisition, syndication, holding, management,
development, operation or disposition, for his own account or for the account of
such Person or others, of interests in Mortgages, interests in Real Property, or
interests in Persons engaged in the real estate business. Each Trustee, officer,
employee and agent of the Trust shall be free of any obligation to present to
the Trust any investment opportunity which comes to him in any capacity other
than solely as Trustee, officer, employee or agent of the Trust, even if such
opportunity is of a character which, if presented to the Trust, could be taken
by the Trust; provided, however, that the provisions of this sentence shall not
extend, with respect to interests in Real Property which could be acquired by
the Trust consistent with its then existing policies, to any of such Trustees or
agents who are Affiliated Trustees or would be were they Trustees rather than
agents, or to any officer or employee of the Trust or (at a time when there is
no Advisor or other person providing an investment program for the Trust) to any
Trustee of the Trust, who in failing to present such opportunity is not acting
as a trustee, officer, director, stockholders, partner, member, advisor or
employee of any Person other than the Trust but is acting for his own personal
account. Subject to the provisions of Article IV and Section 7.6, any Trustee or
officer, employee or agent of the Trust may be interested as trustee, officer,
director, stockholder, partner, member, advisor or employee of, or otherwise
have a direct or indirect interest in, any Person who may be engaged to render
advice or services to the Trust, and may receive compensation from such Person
as well as compensation as Trustee, officer, employee or agent or otherwise
hereunder. None of these activities shall be deemed to conflict with his duties
and powers as Trustee or officer, employee or agent of the Trust.
7.6 Transactions Between Trustees, Officers, Employees or Agents and
the Trust. Except as otherwise provided by this Declaration, and in the absence
of fraud, a contract, act or other transaction, between the Trust and any other
Person, or in which the Trust is interested, shall be valid and no Trustee,
officer, employee or agent of the Trust shall have any liability as a result of
entering into any such contract, act or transaction, even though (a) one or more
of the Trustees, officers, employees or agents are directly or indirectly
interested in or connected with, or are trustees, partners, directors,
employees, officers or agents of such other Person, or (b) one or more of the
Trustees, officers, employees or agent of the Trust, individually or jointly
with others, is a party or are parties to, or directly or indirectly interested
in, or connected with, such contract, act or transaction, provided that (i) such
interest or connection is disclosed or known to the Trustees and thereafter the
Trustees authorize or ratify such contract, act or other transaction by
affirmative vote of a majority of the Trustees who are not interested or (ii)
such interest or connection is disclosed or known to the Shareholders, and
thereafter such contract, act or transaction is approved by Shareholders holding
a majority of the Shares then outstanding and entitled to vote thereon.
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Notwithstanding any other provision of this Declaration, the Trust
shall not engage in a transaction with (a) any Trustee, officer, employee or
agent of the Trust (acting in his individual capacity), (b) any director,
trustee, partner, officer, employee or agent (acting in his individual capacity)
of the Advisor or any other investment advisor of the Trust, (c) the Advisor or
any other investment advisor of the Trust or (d) an Affiliate of any of the
foregoing, except to the extent that such transaction has, after disclosure of
such affiliation, been approved or ratified in accordance with the final
paragraph of Section 2.6, after a determination by them that to the extent
applicable:
(a) such transaction is fair and reasonable to the Trust and
the Shareholders;
(b) based upon an appraisal by a qualified independent real
estate appraiser who shall have been approved by a majority of
Unaffiliated Trustees (or, if the transaction is with a Person other
than the Advisor or an Affiliate of the Advisor, a majority of the
Trustees not having any interest in such transaction and not Affiliates
of any party to the transaction), the total consideration is not in
excess of the appraised value of the interest in Real Property being
acquired, if an acquisition is involved, or less than the appraised
value of the interest in Real Property being disposed of, if a
disposition is involved; and
(c) if such transaction involves payments by the Trust for
services rendered to the Trust by a Person in a capacity other than
that of Advisor, Trustee or Trust officer, (1) the compensation is not
in excess of the compensation, if any, paid to such Person by any other
person who is not an Affiliate of such Person, for any comparable
services in the same geographic area, and (2) the compensation is not
greater than the charges for comparable services generally available in
the same geographic area from other Persons who are competent and not
affiliated with any of the parties involved;
No disposition of a Permitted Investment to an Affiliate of the Trust or the
Advisor shall be accomplished without the approval of Shareholders holding a
majority of the Shares then outstanding and entitled to vote thereon. This
Section 7.6 shall not prevent any sale of Shares issued by the Trust for the
public offering thereof in accordance with a registration statement filed with
the Securities and Exchange Commission under the Securities Act of 1933. The
Trustees are not restricted by this Section 7.6 from forming a corporation,
partnership, trust or other business association owned by any Trustee, officer,
employee or agent or by their nominees for the purpose of holding title to
property of the Trust or managing property of the Trust providing their motive
for the formation of such business association is not for their own enrichment.
7.7 Restriction of Duties and Liabilities. The Shareholders, Trustees,
officers, employees and agents shall in no event have any greater duties than
those established by this Declaration of Trust or, in cases as to which such
duties are not so established, than those of the shareholders, directors,
officers, employees and agents of a Massachusetts business corporation in effect
from time to time.
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7.8 Persons Dealing with Trustees, Officers, Employees or Agents. Any
act of the Trustees, officer, employees or agents purporting to be done in their
capacity as such, shall, as to any Persons dealing with such Trustees, officers,
employees or agents, be conclusively deemed to be within the purposes of this
Trust and within the powers of the Trustees, officers, employees or agents. No
Person dealing with the Trustees or any of them, or with the officers, employees
or agents of the Trust, shall be bound to see to the application of any funds or
property passing into their hands or control. The receipt of the Trustees or any
of them, or of authorized officers, employees or agents of the Trust, for moneys
or other consideration, shall be binding upon the Trust.
7.9 Reliance. The Trustees and the officers, employees and agents of
the Trust may consult with counsel (which may be a firm in which one or more of
the Trustees or the officers, employees or agents of the Trust is or are
members) and the advice or opinion of such counsel shall be full and complete
personal protection to all the Trustees and the officers, employees and agents
of the Trust in respect of any action taken or suffered by them in good faith
and in reliance on or in accordance with such advice or opinion. In discharging
their duties, Trustees or officers, employees or agents of the Trust, when
acting in good faith, may rely upon financial statements of the Trust
represented to them to fairly present the financial position of the Trust by the
chief executive officer of the Trust or the officer of the Trust having charge
of its books of account, or stated in a written report by an independent
certified public accountant fairly to present the financial position of the
Trust. The Trustees and the officers, employees and agents of the Trust may
rely, and shall be personally protected in acting, upon any instrument or other
document believed by them to be genuine.
7.10 Income Tax Status. Anything to the contrary herein notwithstanding
and without limitation of any rights of indemnification or non-liability of the
Trustees herein, said Trustees by this Declaration make no commitment or
representation that the Trust will qualify for the dividends paid deduction
permitted by the Internal Revenue Code and by the rules and regulations
thereunder pertaining to real estate investment trusts in any given year. The
failure of the Trust to qualify as a real estate investment trust under the
Internal Revenue Code shall not render the Trustees liable to the Shareholders
or to any other person or in any manner operate to annul the Trust.
ARTICLE VIII
DURATION, AMENDMENT AND TERMINATION OF TRUST
8.1 Duration of Trust. Unless the Trust is sooner terminated as
otherwise provided herein, the Trust shall continue in such manner that the
Trustees shall have all the powers and discretions, express and implied,
conferred upon them by law or by this Declaration until December 31, 2018;
provided, however, that any plan for the termination of the Trust which
contemplates the distribution to the Shareholders of Securities or other
property-in-kind (other than the right promptly to receive cash) shall require
the affirmative vote or written consent of the holders of Shares representing a
majority of the total number of votes authorized to be cast by Shares then
outstanding and entitled to vote thereon; and provided further that the Trust
may be terminated at any time prior
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to that set forth above by the affirmative vote at a meeting of Shareholders of
the holders of Shares representing a majority of the total number of votes
authorized to be cast by Shares then outstanding and entitled to vote thereon.
8.2 Termination of Trust.
(a) Upon the termination of the Trust:
(1) the Trust shall carry on no business
except for the purpose of winding up
its affairs;
(2) the Trustees shall proceed to wind
up the affairs of the Trust and all
the powers of the Trustees under
this Declaration shall continue
until the affairs of the Trust shall
have been wound up, including the
power to fulfill or discharge the
contracts of the Trust, collect its
assets, sell, convey, assign,
exchange, transfer or otherwise
dispose of all or any part of the
remaining Trust Estate to one or
more persons at public or private
sale for consideration which may
consist in whole or in part of cash,
Securities or other property of any
kind, discharge or pay its
liabilities, and do all other acts
appropriate to liquidate its
business; and
(3) after paying or adequately providing
for the payment of all liabilities,
and upon receipt of such releases,
indemnities and refunding
agreements, as they deem necessary
for their protection, the Trustees
may distribute the remaining Trust
Estate, in cash or, subject to
Section 8.1, in kind or partly each,
among the Shareholders according to
their respective rights.
(b) After termination of the Trust and distribution to the
Shareholders as herein provided, the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth
the fact of such termination and such distribution, a copy of which
instrument shall be filed with the Secretary of the Commonwealth of
Massachusetts, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder and the rights and interests
of all Shareholders shall thereupon cease.
8.3 Amendment Procedure. This Declaration may be amended (except as to
the limitation of personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust and the prohibition of assessments upon
Shareholders) at a meeting of Shareholders by holders of Shares representing a
majority of the total number of votes authorized to be cast by Shares then
outstanding
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and entitled to vote thereon. Approval in accordance with the final paragraph of
Section 2.6 shall also be required for any such amendment. The Trustees may,
with the approval of the committee consisting solely of at least one
Unaffiliated Trustee and two Affiliated Trustees, and without Shareholder
approval, change the investment policies of the Trust from time to time, by
amendment of Section 5.1 herein or any other provision of this Declaration. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders if they deem it necessary to conform this Declaration to the
requirements of (i) the REIT Provisions of the Internal Revenue Code, (ii) other
applicable Federal laws or regulations or (iii) any state securities or "blue
sky" laws or requirements of administrative agencies thereunder in connection
with the initial public offering of Shares, but the Trustees shall not be liable
for failing so to do. Actions by the Trustees pursuant to the second paragraph
of Section 1.1 or pursuant to Section 9.6(a) that result in amending this
Declaration shall be effected without vote or consent of Shareholders.
Any amendment pursuant to any Section of this Declaration of Trust
shall not become effective until a certification in recordable form signed by a
majority of the Trustees setting forth an amendment and reciting that it was
duly adopted as aforesaid or a copy of this Declaration, as amended, in
recordable form, and executed by a majority of the Trustees, is filed with the
Secretary of the Commonwealth of Massachusetts.
8.4 Transfer to Successor; Merger. The Trustees, with the approval of a
majority of the Trustees (including a majority of the Unaffiliated Trustees) and
the affirmative vote or written consent of the holders of Shares representing a
of the total number of votes authorized to be cast by Shares then outstanding
and entitled to vote thereon, shall have the power to cause to be organized or
to assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association, or other organization
to take over the Trust Estate or any part or parts thereof or to carry on any
business in which the Trust shall directly or indirectly have any interest, and
to sell, convey and transfer the Trust Estate or any part or parts thereof to
any such corporation, trust, partnership, association, or organization in
exchange for the Shares or Securities thereof or otherwise, and to lend money
to, subscribe for the Shares or Securities of, and enter into any contracts with
any such corporation, trust, partnership, association, or organization, or any
corporation, trust partnership, association, or organization in which the Trust
holds or is about to acquire Shares or any other interest. The Trustees may also
cause a merger or consolidation between the Trust or any successor thereto and
any such corporation, trust, partnership, association or organization if and to
the extent permitted by law, provided that under the law then in effect, the
federal income tax benefits available to qualified real estate investment trusts
and their shareholders, or substantially similar benefits, are also available to
such corporation, trust, partnership, association, or organization and its
stockholders or members, and provided that the resulting investment would be
substantially equal in quality and substantially the same in type as an
investment in the Shares.
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ARTICLE IX
MISCELLANEOUS
9.1 Applicable Law. This Declaration is executed and acknowledged by
the Trustees in the Commonwealth of Massachusetts and with reference to the
statutes and laws thereof and the rights of all parties and the construction and
effect of every provision hereof shall be subject to and construed according to
statutes and laws of such Commonwealth.
9.2 Index and Headings for Reference Only. The index and headings
preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction or effect of this Declaration.
9.3 Successors in Interest. This Declaration and the Trustees'
Regulations shall be binding upon and inure to the benefit of the undersigned
Trustees and their successors, assigns, heirs, distributees and legal
representatives, and every Shareholder and his successors, assigns, heirs,
distributees and legal representatives.
9.4 Inspection of Records. Trust records shall be available for
inspection by Shareholders at the same time and in the same manner and to the
extent that comparable records of a Massachusetts business corporation would be
available for inspection by shareholders under the laws of the Commonwealth of
Massachusetts. Except as specifically provided for in this Declaration,
Shareholders shall have no greater right than shareholders of a Massachusetts
business corporation to require financial or other information from the Trust,
Trustees or officers of the Trust. Any Federal or state securities
administration or other similar authority shall have the right, at reasonable
times during business hours and for proper purposes, to inspect the books and
records of the Trust.
9.5 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which when so executed shall be deemed to be an
original and such counterparts together shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
9.6 Provisions of the Trust in Conflict with Law or Regulations;
Severability.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any one
or more of such provisions (the "Conflicting Provisions") are in
conflict with the REIT Provisions of the Internal Revenue Code, or with
other applicable Federal laws and regulations, the Conflicting
Provisions shall be deemed never to have constituted a part of the
Declaration; provided, however, that such determination by the Trustees
shall not affect or impair any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted
(including but not limited to the election of Trustees) prior to such
determination. A certification in recordable form signed by a of the
Trustees setting forth any such determination and reciting that it was
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duly adopted by the Trustees, or a copy of this Declaration, with the
Conflicting Provisions removed pursuant to such a determination, in
recordable form, signed by a of the Trustees, shall be conclusive
evidence of such determination when filed with the Secretary of the
Commonwealth of Massachusetts. The Trustees shall not be liable for
failure to make any determination under this Section 9.6(a). Nothing in
this Section 9.6(a) shall in any way limit or affect the right of the
Trustees to amend this Declaration as provided in Section 8.3.
(b) If any provision of this Declaration shall be held invalid
or unenforceable, such invalidity of unenforceability shall attach only
to such provision and shall not in any manner affect or render invalid
or unenforceable any other provision of this Declaration, and this
Declaration shall be carried out as if any such invalid or
unenforceable provision were not contained herein.
9.7 Certifications. The following certifications shall be final and
conclusive as to any Persons dealing with the Trust:
(a) a certification of a vacancy among the Trustees by reason
of resignation, removal, increase in the number of Trustees,
incapacity, death or otherwise, when made in writing by a of the
remaining Trustees;
(b) a certification as to the individuals holding office as
Trustees or officers at any particular time, when made in writing by
the secretary of the Trust or by any Trustee;
(c) a certification that a copy of this Declaration or of the
Trustees' Regulations is a true and correct copy thereof as then in
force, when made in writing by the secretary of the Trust or by any
Trustee;
(d) the certifications referred to in Sections 2.7, 8.3 and
9.6(a); and
(e) a certification as to any actions by Trustees, other than
the above, when made in writing by the secretary of the Trust or by any
Trustee.
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IN WITNESS WHEREOF, the undersigned have signed these presents all on
the day and year first above written.
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EXHIBIT B
Form of New Advisory Agreement
[begins on next page]
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EXHIBIT B
ADVISORY AGREEMENT
BETWEEN
EQK REALTY INVESTORS I
AND
BASIC CAPITAL MANAGEMENT, INC.
THIS AGREEMENT dated as of _____, 1998, between EQK Realty Investors I,
a Massachusetts business trust (the "Trust") and Basic Capital Management, Inc.,
a Nevada corporation (the "Advisor")
W I T N E S S E T H:
WHEREAS:
1. The Trust's sole real estate asset is Oak Tree Village, a retail
shopping center located in Lubbock, Texas.
2. The Trust is a real estate investment trust.
3. The Advisor and its employees have extensive experience in the
administration of real estate assets and the origination, structuring and
evaluation of real estate and mortgage investments.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties agree as follows:
1. DUTIES OF THE ADVISOR. Subject to the supervision of the Trust's
Board of Trustees, the Advisor will be responsible for the day-to-day operations
of the Trust and, subject to Section 17 hereof, shall provide such services and
activities relating to the assets, operations and business plan of the Trust as
may be appropriate, including:
(a) preparing and submitting an annual budget and business
plan for approval by the Board of Trustees (the "Business Plan");
(b) using its best efforts to present to the Trust a
continuing and suitable investment program consistent with the investment
policies and objectives of the Trust as set forth in the Business Plan;
77
(c) using its best efforts to present to the Trust investment
opportunities consistent with the Business Plan and such investment program as
the Trustees may adopt from time to time;
(d) furnishing or obtaining and supervising the performance of
the ministerial functions in connection with the administration of the
day-to-day operations of the Trust, including the investment of reserve funds
and surplus cash in short-term money market investments;
(e) serving as the Trust's investment and financial advisor
and providing research, economic, and statistical data in connection with the
Trust's investments and investment and financial policies;
(f) on behalf of the trust, investigating, selecting and
conducting relations with borrowers, lenders, mortgagors, brokers, investors,
builders, developers and others; provided however, that the Advisor shall not
retain on the Trust's behalf any consultants or third party professionals, other
than legal counsel, without prior Board approval;
(g) consulting with the Trustees and furnishing the Trustees
with advice and recommendations with respect to the making, acquiring (by
purchase, investment, exchange, or otherwise) , holding, and disposition
(through sale, exchange, or otherwise) of investments consistent with the
Business Plan of the Trust;
(h) obtaining for the Trustees such services as may be
required in acquiring and disposing of investments, disbursing and collecting
the funds of the Trust, paying the debts and fulfilling the obligations of the
Trust, and handling, prosecuting, and settling any claims of the Trust,
including foreclosing and otherwise enforcing mortgage and other liens securing
investments;
(i) obtaining for and at the expense of the Trust such
services as may be required for property management, loan disbursements, and
other activities relating to the investments of the Trust, provided, however,
the compensation for such services shall be agreed to by the Trust and the
service provider;
(j) advising the Trust in connection with public or private
sales of shares or other securities of the Trust, or loans to the Trust, but in
no event in such a way that the Advisor could be deemed to be acting as a broker
dealer or underwriter;
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(k) quarterly and at any other time requested by the Trustees,
making reports to the Trustees regarding the Trust's performance to date in
relation to the Trust's approved Business Plan and its various components, as
well as the Advisor's performance of the foregoing services;
(1) making or providing appraisal reports, where appropriate,
on investments or contemplated investments of the Trust;
(m) assisting in preparation of reports and other documents
necessary to satisfy the reporting and other requirements of any governmental
bodies or agencies and to maintain effective communications with the holders of
shares of beneficial interest of the Trust (individually, a "shareholder" and
collectively, "shareholders"); and
(n) doing all things necessary to ensure its ability to render
the services contemplated herein, including providing office space and office
furnishings and personnel necessary for the performance of the foregoing
services as Advisor, all at its own expense, except as otherwise expressly
provided for herein.
2. NO PARTNERSHIP OR JOINT VENTURE. The Trust and the Advisor are not
partners or joint venturers with each other, and nothing herein shall be
construed so as to make them such partners or joint venturers or impose any
liability as such on either of them.
3. RECORDS. At all times, the Advisor shall keep proper books of
account and records of the Trust's affairs which shall be accessible for
inspection by the Trust at any time during ordinary business hours.
4. ADDITIONAL OBLIGATIONS OF THE ADVISOR. The Advisor shall refrain
from any action (including, without limitation, furnishing or rendering services
to tenants of property or managing or operating real property) that would (a)
adversely affect the status of the Trust as a real estate investment trust, as
defined and limited in Sections 856-860 of the Internal Revenue Code, (b)
violate any law, rule, regulation, or statement of policy of any governmental
body or agency having jurisdiction over the Trust or over its securities, (c)
cause the Trust to be required to register as an investment company under the
Investment Company Act of 1940, or (d) otherwise not be permitted by the Trust's
Amended and Restated Declaration of Trust.
5. BANK ACCOUNTS. The Advisor may establish and maintain one or more
bank accounts in its own name, and may collect and deposit into any such account
or accounts, and disburse from
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any such account or accounts, any money on behalf of the Trust, under such terms
and conditions as the Trustees may approve, provided that no funds in any such
account shall be commingled with funds of the Advisor; and the Advisor shall
from time to time render appropriate accounting of such collections and payments
to the Trustees and to the auditors of the Trust.
6. BOND. The Advisor shall maintain a fidelity bond with a responsible
surety company in such amount as may be required by the Trustees from time to
time, covering all directors, officers, employees, and agents of the Advisor
handling funds of the Trust and any investment documents or records pertaining
to investments of the Trust. Such bond shall inure to the benefit of the Trust
in respect to losses of any such property from acts of such directors, officers,
employees, and agents through theft, embezzlement, fraud, negligence, error, or
omission or otherwise, the premium for said bond to be at the expense of the
Trust.
7. INFORMATION FURNISHED ADVISOR. The Trustees shall have the right to
change the Business Plan at any time, effective upon receipt by the Advisor of
notice of such change. The Trust shall furnish the Advisor with a certified copy
of all financial statements, a signed copy of each report prepared by
independent certified public accountants, and such other information with regard
to the Trust's affairs as the Advisor may from time to time reasonably request.
8. CONSULTATION AND ADVICE. In addition to the services described
above, the Advisor shall consult with the Trustees, and shall, at the request of
the Trustees or the officers of the Trust, furnish advice and recommendations
with respect to any aspect of the business and affairs of the Trust, including
any factors that in the Advisor's best judgment should influence the policies of
the Trust.
9. ANNUAL BUSINESS PLAN AND BUDGET. No later than January 15th of each
year, the Advisor shall submit to the Trustees a written Business Plan for the
current Fiscal Year of the Trust. Such Business Plan shall include a
twelve-month forecast of operations and cash flow with explicit assumptions and
a general plan for asset sales or acquisitions, lending, foreclosure and
borrowing activity, other investments or ventures and proposed securities
offerings or repurchases or any proposed restructuring of the Trust. To the
extent possible, the Business Plan shall set forth the Advisor's recommendations
and the basis therefor with respect to all material investments of the Trust.
Upon approval by the Board of Trustees, the Advisor shall be authorized to
conduct the
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business of the Trust in accordance with the explicit provisions of the Business
Plan, specifically including the borrowing, leasing, maintenance, capital
improvements, renovations and sale of investments set forth in the Business
Plan. Any transaction or investment not explicitly provided for in the approved
Business Plan shall require the prior approval of the Board of Trustees unless
made pursuant to authority expressly delegated to the Advisor. Within sixty (60)
days of the end of each calendar quarter, the Advisor shall provide the Board of
Trustees with a report comparing the Trust's actual performance for such quarter
against the Business Plan.
10. DEFINITIONS. As used herein, the following terms shall have the
meanings set forth below:
(a) "Affiliate" shall mean, as to any Person, any other Person
who owns beneficially, directly, or indirectly, it or more of the outstanding
capital stock, shares or equity interests of such Person or of any other Person
which controls, is controlled by, or is under common control with such Person or
is an officer, retired officer, director, employee, partner, or trustee
(excluding a noninterested trustee not otherwise affiliated with the entity) of
such Person or of any other Person which controls, is controlled by, or is under
common control with, such Person.
(b) "Appraised Value" shall mean the value of a Real Property
according to an appraisal made by an independent qualified appraiser who is a
member in good standing of the American Institute of Real Estate Appraisers and
is duly licensed to perform such services in accordance with the applicable
state law, or, when pertaining to Mortgage Loans, the value of the underlying
property as determined by the Advisor.
(c) "Book Value" of an asset or assets shall mean the value of
such asset or assets on the books of the Trust, before provision for
amortization, depreciation, depletion or valuation reserves and before deducting
any indebtedness or other liability in respect thereof, except that no asset
shall be valued at more than its fair market value as determined by the
Trustees.
(d) "Book Value of Invested Assets" shall mean the Book Value
of the Trust's total assets (without deduction of any liabilities), but
excluding (i) goodwill and other intangible assets, (ii) cash, and (iii) cash
equivalent investments with terms which mature in one year or less.
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(e) "Business Plan" shall mean the Trust's investment policies
and objectives and the capital and operating budget based thereon, approved by
the Board as thereafter modified or amended.
(f) "Fiscal Year" shall mean any period for which an income
tax return is submitted to the Internal Revenue Service and which is treated by
the Internal Revenue Service as a reporting period.
(g) "Gross Asset Value" shall mean the total assets of the
Trust after deduction of allowance for amortization, depreciation or depletion
and valuation reserves.
(h) "Mortgage Loans" shall mean notes, debentures, bonds, and
other evidences of indebtedness or obligations, whether negotiable or
non-negotiable, and which are secured or collateralized by mortgages, including
first, wraparound, construction and development, and junior mortgages.
(i) "Net Asset Value" shall mean the Book Value of all the
assets of the Trust minus all the liabilities of the Trust.
(j) "Net Income" for any period shall mean the Net Income of
the Trust for such period computed in accordance with generally accepted
accounting principles after deduction of the Gross Asset Fee, but before
deduction of the Net Income Fee, as set forth in Sections 11 (a) and 11(b),
respectively, herein, and inclusive of gain or loss of the sale of assets.
(k) "Net Operating Income" shall mean rental income less
property operations expenses.
(1) "Operating Expenses" shall mean the aggregate annual
expenses regarded as operating expenses in accordance with generally accepted
accounting principles, as determined by the independent auditors selected by the
Trustees and including the Gross Asset Fee payable to the Advisor and the fees
and expenses paid to the Trustees who are not employees or Affiliates of the
Advisor. The operating expenses shall exclude, however, the following:
(i) the cost of money borrowed by the Trust;
(ii) income taxes, taxes and assessments on real property and
all other taxes applicable to the Trust;
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(iii) expenses and taxes incurred in connection with the
issuance, distribution, transfer, registration, and stock exchange
listing of the Trust's securities (including legal, auditing,
accounting, underwriting, brokerage, printing, engraving and other
fees);
(iv) fees and expenses paid to independent mortgage servicers,
contractors, consultants, managers, and other agents retained by or on
behalf of the Trust;
(v) expenses directly connected with the purchase,
origination, ownership, and disposition of Real Properties or Mortgage
Loans (including the costs of foreclosure, insurance, legal,
protective, brokerage, maintenance, repair, and property improvement
services) other than expenses with respect thereto of employees of the
Advisor, except legal, internal auditing, foreclosure and transfer
agent services performed by employees of the Advisor;
(vi) expenses of maintaining and managing real estate equity
interests and processing and servicing mortgage and other loans;
(vii) expenses connected with payments of dividends, interest
or distributions by the Trust to shareholders;
(viii) expenses connected with communications to shareholders
and bookkeeping and clerical expenses for maintaining shareholder
relations including the cost of printing and mailing share
certificates, proxy solicitation materials and reports;
(ix) transfer agent's registrar's and indenture trustee's fees
and charges; and
(x) the cost of any accounting, statistical, bookkeeping or
computer equipment necessary for the maintenance of books and records
of the Trust. Additionally, the following expenses of the Advisor shall
be excluded:
(i) employment expenses of the Advisor's personnel (including
Trustees, officers, and employees of the Trust who are directors,
officers, or employees of the Advisor or its Affiliates) , other than
the expenses of those employee services listed at (v) above;
(ii) rent, telephone, utilities, and office furnishings and
other office expenses of the Advisor (except those relating to a
separate office, if any, maintained by the Trust); and
(iii) the Advisor's overhead directly related to performance
of its functions under this Agreement.
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(m) "Person" shall mean and include individuals, corporations,
limited partnerships, general partnerships, joint stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.
(n) "Real Property" shall mean and include land, rights in
land, leasehold interests (including but not limited to interests of a lessor or
lessee therein) , and any buildings, structures, improvements, fixtures, and
equipment located on or used in connection with land, leasehold interests, and
rights in land or interests therein.
All calculations made pursuant to this Agreement shall be
based on statements (which may be unaudited, except as provided herein) prepared
on an accrual, basis consistent with generally accepted accounting principles,
regardless of whether the Trust may also prepare statements on a different
basis. All other terms shall have the same meaning as set forth in the Trust's
Amended and Restated Declaration of Trust.
11. ADVISORY COMPENSATION.
(a) Gross Asset Fee. On or before the twenty-eighth day of
each month during the term hereof, the Trust shall pay to the Advisor, as
compensation for the basic management and advisory services rendered to the
Trust hereunder, a fee at the rate of 0.0625% per month of the average of the
Gross Asset Value of the Trust at the beginning and at the end of the next
preceding calendar month. Without negating the provisions of Sections 18, 19, 22
and 23 hereof, the annual rate of the Gross Asset Fee shall be 0.75% per annum.
(b) Net Income Fee. As an incentive for successful investment
and management of the Trust's assets, the Advisor will be entitled to receive a
fee equal to 7.5% per annum of the Trust's Net Income for each Fiscal Year or
portion thereof for which the Advisor provides services. To the extent the Trust
has Net Income in a quarter, the 7.5% Net Income Fee is to be paid quarterly on
or after the third business day following the filing of the report on Form 10-Q
with the Securities and Exchange Commission, except for the payment for the
fourth quarter, ended December 31, which is to be paid on or after the third
business day following the filing of the report on Form 10-K with the Securities
and Exchange Commission. The 7.5% Net Income Fee is to be cumulative within any
Fiscal Year, such that if the Trust has a loss in any quarter during the Fiscal
Year, each
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subsequent quarter's payment during such Fiscal Year shall be adjusted to
maintain the 7.5% per annum rate, with final settlement being made with the
fourth quarter payment and in accordance with audited results for the Fiscal
Year. The 7.5% Net Income Fee is not cumulative from year to year.
(c) Acquisition Fee. For supervising the acquisition, purchase
or long term lease of Real Property for the Trust, the Advisor is to receive an
Acquisition Fee equal to the lesser of (i) up to 1% of the cost of acquisition,
inclusive of commissions, if any, paid to nonaffiliated brokers; or (ii) the
compensation customarily charged in arm's-length transactions by others
rendering similar property acquisition services as an ongoing public activity in
the same geographical location and for comparable property. The aggregate of
each purchase price of each property (including the Acquisition Fees and all
real estate brokerage fees) may not exceed such property's Appraised Value at
acquisition.
(d) Incentive Fee. To encourage periodic sales of appreciated
Real Property at optimum value and to reward the Advisor for improved
performance of the Trust's Real Property, the Trust shall pay the Advisor, on or
before the 45th day after the close of each Fiscal Year, an Incentive Fee equal
to 10% of the amount, if any, by which the aggregate sales consideration for all
Real Property sold by the Trust during such Fiscal Year exceeds the sum of: (i)
10% of the Trust's Net Income for the Fiscal Year in excess of a 10% return on
shareholders' equity, if any, and (ii) 10% of the excess of the Trust's net
capital gains over net capital losses, if any; provided, however, no Incentive
Fee shall be paid unless (a) such Real Property sold in such Fiscal Year, in the
aggregate, has produced an 8% simple annual return on the Trust's net investment
including capital improvements, calculated over the Trust's holding period,
before depreciation and inclusive of operating income and sales consideration
and (b) the aggregate Net Operating Income from all Real Property owned by the
Trust for all of the prior Fiscal Year and the current Fiscal Year shall be at
least 5% higher in the current Fiscal Year than in the prior Fiscal Year.
(e) Mortgage Placement Fee. For the acquisition or purchase
from an unaffiliated party or the origination of any existing mortgage or loan
by the Trust, the Advisor or an Affiliate is to receive a Mortgage Placement Fee
equal to the lesser of (a) 1% of the amount of the mortgage or loan purchased or
originated by the Trust or (b) a brokerage or commitment fee which is reasonable
and fair under the circumstances.
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(f) Loan Arrangement Fee. For obtaining loans to the Trust or
refinancing on Trust properties, the Advisor or an Affiliate is to receive a
Loan Arrangement Fee equal to the lesser of (a) 1% of the amount of the loan or
the amount refinanced or (b) a brokerage or refinancing fee which is reasonable
and fair under the circumstances; provided, however that no such fee shall be
paid on loans from the Advisor or an Affiliate without the approval of the Board
of Trustees. No fee shall be paid on loan extensions.
12. LIMITATION ON THIRD PARTY MORTGAGE PLACEMENT FEES. The Advisor or
any of its Affiliates shall pay to the Trust, one-half of any compensation
received by the Advisor or any such Affiliate from third parties with respect to
the origination, placement or brokerage of any loan made by the Trust, provided,
however, the compensation retained by the Advisor or Affiliate shall not exceed
the lesser of (a) 2% of the amount of the loan committed by the Trust or (b) a
loan brokerage and commitment fee which is reasonable and fair under the
circumstances.
13. STATEMENTS. The Advisor shall furnish to the Trust not later than
the tenth day of each calendar month, beginning with the second calendar month
of the term of this Agreement, a statement showing the computation of the fees,
if any, payable in respect to the next preceding calendar month (or, in the case
of incentive compensation, for the preceding Fiscal Year, as appropriate) under
the Agreement. The final settlement of incentive compensation for each Fiscal
Year shall be subject to adjustment in accordance with, and upon completion of
the annual audit of the Trust's financial statements; any payment by the Trust
or repayment by the Advisor that shall be indicated to be necessary in
accordance therewith shall be made promptly after the completion of such audit
and shall be reflected in the audited statements to be published by the Trust.
14. COMPENSATION FOR ADDITIONAL SERVICES. If and to the extent that the
Trust shall request the Advisor or any director, officer, partner, or employee
of the Advisor to render services for the Trust other than those required to be
rendered by the Advisor hereunder, such additional services, if performed, will
be compensated separately on terms to be agreed upon between such party and the
Trust from time to time. In particular, but without limitation, if the Trust
shall request that the Advisor perform property management, leasing, loan
disbursement or similar functions, the Trust and the Advisor shall enter into a
separate agreement specifying the obligations of the parties and providing for
reasonable additional compensation to the Advisor for performing such services.
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15. EXPENSES OF THE ADVISOR. Without regard to the amount of
compensation or reimbursement received hereunder by the Advisor, the Advisor
shall bear the following expenses:
(a) employment expenses of the personnel employed by the
Advisor (including Trustees, officers, and employees of the Trust who are
directors, officers, or employees of the Advisor or of any company that
controls, is controlled by, or is under common control with the Advisor),
including, but not limited to, fees, salaries, wages, payroll taxes, travel
expenses, and the cost of employee benefit plans and temporary help expenses
except for those personnel expenses described in Sections 16(e) and (p);
(b) advertising and promotional expenses incurred in seeking
investments for the Trust;
(c) rent, telephone, utilities, office furniture and
furnishings, and other office expenses of the Advisor and the Trust, except as
any of such expenses relates to an office maintained by the Trust separate from
the office of the Advisor; and
(d) miscellaneous administrative expenses relating to
performance by the Advisor of its functions hereunder.
16. EXPENSES OF THE TRUST. The Trust shall pay all of its expenses not
assumed by the Advisor, including without limitation, the following expenses:
(a) the cost of money borrowed by the Trust;
(b) income taxes, taxes and assessments on real property, and
all other taxes applicable to the Trust;
(c) legal, auditing, accounting, underwriting, brokerage,
listing, registration and other fees, printing, and engraving and other
expenses, and taxes incurred in connection with the issuance, distribution,
transfer, registration, and stock exchange listing of the Trust's securities;
(d) fees, salaries, and expenses paid to officers and
employees of the Trust who are not directors, officers or employees of the
Advisor, or of any company that controls, is controlled by, or is under common
control with the Advisor;
(e) expenses directly connected with the origination or
purchase of Mortgage Loans and with the acquisition, disposition, and ownership
of real estate equity interests or other property (including the costs of
foreclosure, insurance, legal, protective, brokerage, maintenance,
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repair, and property improvement services) and including all compensation,
traveling expenses, and other direct costs associated with the Advisor's
employees or other personnel engaged in (i) real estate transaction legal
services, (ii) internal auditing, (iii) foreclosure and other mortgage finance
services, (iv) sale or solicitation for sale of mortgages, (v) engineering and
appraisal services, and (vi) transfer agent services;
(f) expenses of maintaining and managing real estate equity
interests;
(g) insurance, as required by the Trustees (including
trustees' liability insurance);
(h) the expenses of organizing, revising, amending,
converting, modifying, or terminating the Trust; expenses connected with
payments of dividends or interest or distributions in cash or any other form
made or caused to be made by the Trustees to holders of securities of the Trust;
(j) all expenses connected with communications to holders of
securities of the Trust and the other bookkeeping and clerical work necessary in
maintaining relations with holders of securities, including the cost of printing
and mailing certificates for securities and proxy solicitation materials and
reports to holders of the Trust's securities;
(k) the cost of any accounting, statistical, bookkeeping or
computer equipment or computer time necessary for maintaining the books and
records of the Trust and for preparing and filing Federal, State and Local tax
returns;
(1) transfer agent's, registrars, and indenture trustee's fees
and charges;
(m) legal, accounting, investment banking, and auditing fees
and expenses charged by independent parties performing these services not
otherwise included in clauses (c) and (e) of this Section 16;
(n) expenses incurred by the Advisor, arising from the sales
of Trust properties, including those expenses related to carrying out
foreclosure proceedings;
(o) commercially reasonable fees paid to the Advisor for
efforts to liquidate mortgages before maturity, such as the solicitation of
offers and negotiation of terms of sale;
(p) costs and expenses connected with computer services,
including but not limited to employee or other personnel compensation, hardware
and software costs, and related development and installation costs associated
therewith;
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(q) costs and expenses associated with risk management (i.e.
insurance relating to the Trust's assets);
(r) loan refinancing compensation; and
(s) expenses associated with special services requested by the
Trustees pursuant to Section 14 hereof.
17. OTHER ACTIVITIES OF ADVISOR. The Advisor, its officers, directors,
or employees or any of its Affiliates may engage in other business activities
related to real estate investments or act as advisor to any other person or
entity (including another real estate investment trust), including those with
investment policies similar to the Trust, and the Advisor and its officers,
directors, or employees and any of its Affiliates shall be free from any
obligation to present to the Trust any particular investment opportunity that
comes to the Advisor or such persons, regardless of whether such opportunity is
in accordance with the Trust's Business Plan. However, to minimize any possible
conflict, the Advisor shall consider the respective investment objectives of,
and the appropriateness of a particular investment to each such entity in
determining to which entity a particular investment opportunity should be
presented. If appropriate to more than one entity, the Advisor shall present the
investment opportunity to the entity that has had sufficient uninvested funds
for the longest period of time.
18. [RESERVED]
19. TERM; TERMINATION OF AGREEMENT. This Agreement shall continue in
force until the next annual meeting of the shareholders of the Trust and,
thereafter, it shall automatically be renewed from year to year, subject to any
required approval of the shareholders of the Trust and, if any Trustee is an
Affiliate of the Advisor, the approval of the Trustee who is not so affiliated.
Notice of renewal shall be given in writing by the Trustees to the Advisor not
less than 60 days before the expiration of this Agreement or of any extension
thereof. This Agreement may be terminated for any reason without penalty upon 60
days' written notice by the Trust to the Advisor or 120 days' written notice by
the Advisor to the Trust, in the former case by the vote of the Trustee who is
not an Affiliate of the Advisor or by the vote of holders of a majority of the
outstanding shares of the Trust. Notwithstanding the foregoing, however, in the
event of any material change in the
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ownership, control, or management of the Advisor, the Trust may terminate this
Agreement without penalty and without advance notice to the Advisor.
20. AMENDMENTS. This Agreement shall not be changed, modified,
terminated or discharged in whole or in part except by an instrument in writing
signed by both parties hereto, or their respective successors or assigns, or
otherwise as provided herein.
21. ASSIGNMENT. This Agreement shall not be assigned by the Advisor
without the prior consent of the Trust. The Trust may terminate this Agreement
in the event of its assignment by the Advisor without the prior consent of the
Trust. Such an assignment or any other assignment of this Agreement shall bind
the assignee hereunder in the same manner as the Advisor is bound hereunder.
This Agreement shall not be assignable by the Trust without the consent of the
Advisor, except in the case of assignment by the Trust to a corporation,
association, trust, or other organization that is a successor to the Trust. Such
successor shall be bound hereunder and by the terms of said assignment in the
same manner as the Trust is bound hereunder.
22. DEFAULT, BANKRUPTCY, ETC. At the option solely of the Trustees,
this Agreement shall be and become terminated immediately upon written notice of
termination from the Trustees to the Advisor if any of the following events
shall occur:
(a) If the Advisor shall violate any provision of this
Agreement, and after notice of such violation shall not cure such default within
30 days; or
(b) If the Advisor shall be adjudged bankrupt or insolvent by
a court of competent jurisdiction, or an order shall be made by a court of
competent jurisdiction for the appointment of a receiver, liquidator, or trustee
of the Advisor or of all or substantially all of its property by reason of the
foregoing, or approving any petition filed against the Advisor for its
reorganization, and such adjudication or order shall remain in force or unstayed
for a period of 30 days; or
(c) If the Advisor shall institute proceedings for voluntary
bankruptcy or shall file a petition seeking reorganization under the Federal
bankruptcy laws, or for relief under any law for the relief of debtors, or shall
consent to the appointment of a receiver of itself or of all or substantially
all its property, or shall make a general assignment for the benefit of its
creditors, or shall admit in writing its inability to pay its debts generally,
as they become due.
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The Advisor agrees that if any of the events
specified in subsections (b) and (c) of this Section 22 shall occur, it will
give written notice thereof to the Trustees within seven days after the
occurrence of such event.
23. ACTION UPON TERMINATION. From and after the effective date of
termination of this Agreement, pursuant to Sections 19, 21 or 22 hereof, the
Advisor shall not be entitled to compensation for further services hereunder but
shall be paid all compensation accruing to the date of termination. The Advisor
shall forthwith upon such termination:
(a) pay over to the Trust all monies collected and held for
the account of the Trust pursuant to this Agreement;
(b) deliver to the Trustees a full accounting, including a
statement showing all payments collected by it and a statement of any monies
held by it, covering the period following the date of the last accounting
furnished to the Trustees; and
(c) deliver to the Trustees all property and documents of the
Trust then in the custody of the Advisor.
24. MISCELLANEOUS. The Advisor shall be deemed to be in a fiduciary
relationship to the shareholders of the Trust. The Advisor assumes no
responsibility under this Agreement other than to render the services called for
hereunder in good faith, and shall not be responsible for any action of the
Trustees in following or declining to follow any advice or recommendations of
the Advisor. Neither the Advisor nor any of its shareholders, directors,
officers, or employees shall be liable to the Trust, the Trustees, the holders
of securities of the Trust or to any successor or assign of the Trust for any
losses arising from the operation of the Trust if the Advisor had determined, in
good faith, that the course of conduct which caused the loss or liability was in
the best interests of the Trust and the liability or loss was not the result of
negligence or misconduct by the Advisor. However, in no event will the
directors, officers or employees of the Advisor be personally liable for any act
or failure to act unless it was the result of such person's willful misfeasance,
bad faith, gross negligence or reckless disregard of duty.
25. NOTICES. Any notice, report, or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report, or other
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communication is accepted by the party to whom it is given, and shall be given
by being delivered at the following addresses of the parties hereto:
The Trustees and/or the Trust:
EQK Realty Investors I
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: _______________
The Advisor:
Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President and Chief Financial
Officer
Either party may at any time give notice in writing to the other party
of a change of its address for the purpose of this Section 25.
26. HEADINGS. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction, or effect of this Agreement.
27. GOVERNING LAW. This Agreement has been prepared, negotiated and
executed in the State of Texas. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of Texas
applicable to agreements made and to be performed entirely in the State of
Texas.
28. EXECUTION. This instrument is executed and made on behalf of the
Trust by an officer of the Trust, not individually but solely as an officer, and
the obligations under this Agreement are not binding upon, nor shall resort be
had to the private property of, any of the Trustees, stockholders, officers,
employees, or agents of the Trust personally, but bind only the Trust property.
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IN WITNESS WHEREOF, EQK REALTY INVESTORS I and BASIC CAPITAL
MANAGEMENT, INC., by their duly authorized officers, have signed these presents
all as of the day and year first above written.
EQK REALTY INVESTORS I
By:
----------------------------------
BASIC CAPITAL MANAGEMENT, INC.
By:
----------------------------------
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EXHIBIT C
Copy of Amended and Restated Articles of Amendment
[begins on next page]
94
EXHIBIT C
AMENDED AND RESTATED ARTICLES OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
AMERICAN REALTY TRUST, INC.
setting forth the
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING
OR OPTIONAL OR OTHER SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS THEREOF
of
SERIES F CUMULATIVE CONVERTIBLE PREFERRED STOCK
of
AMERICAN REALTY TRUST, INC.
(Pursuant to Section 14-2-1006 of the
Georgia Business Corporation Code)
--------------------------
American Realty Trust, Inc., a corporation organized and existing under
the Georgia Business Corporation Code (hereinafter called the "Corporation"),
hereby certifies:
THAT, pursuant to the authority conferred upon the board of Directors
(the "Board of Directors") by the articles of incorporation, as amended
("Articles of Incorporation") of the Corporation, and pursuant to Section
14-2-1003 of the Georgia Business Corporation Code, the Board of Directors have
recommended by unanimous written consent dated August __, 1998, and the holders
of all of the issued and outstanding shares of Series F Cumulative Convertible
Preferred Stock have unanimously and duly adopted certain amended and restated
recitals and resolutions providing for the certificate of designations,
preferences and relative participating, optional or other special rights and
qualifications, limitations or other restrictions thereof, of a series of
special stock of the Corporation, specifically the Series F Cumulative
Convertible Preferred Stock, which amended and restated recitals and resolutions
are as follows:
WHEREAS, Article Five of the Articles of Incorporation authorizes the
Corporation to issue not more than 100,000,000 shares of common voting stock,
$0.01 par value per share (the "Common Stock"), and 20,000,000 shares of a
special class of stock, $2.00 par value per share (the "Special Stock"), which
Special Stock may be issued from time to time in one or more series and shall be
designated as the Board of Directors may determine to have such voting powers,
preferences,
95
limitations and relative rights with respect to the shares of each series of the
class of Special Stock of the Corporation as expressly provided in a resolution
or resolutions providing for the issuance of such series adopted by the Board of
Directors which is vested with the authority in respect thereof;
WHEREAS, 16,681 shares of such Special Stock have been previously
designated as the Series C 10% Cumulative Preferred Stock prior to the date
hereof, all of which have been issued and are outstanding;
WHEREAS, 91,000 shares of such Special Stock have been previously
designated as the Series D Cumulative Preferred Stock prior to the date hereof,
none of which has been issued or is outstanding;
WHEREAS, 80,000 shares of such Special Stock have been previously
designated as the Series E Cumulative Convertible Preferred Stock prior to the
date hereof, none of which has been issued or is outstanding;
WHEREAS, 7,500,000 shares of such Special Stock have been previously
designated as the Series F Cumulative Convertible Preferred Stock prior to the
date hereof, 2,800,000 shares of which have been issued and are currently
outstanding;
WHEREAS, 12,000 shares of such Special Stock have been previously
designated as the Series G Cumulative Convertible Preferred Stock prior to the
date hereof, 1,000 shares of which have been issued and are outstanding;
WHEREAS, 231,750 shares of such Special Stock have been previously
designated as the Series H Cumulative Convertible Preferred Stock prior to the
date hereof, none of which has been issued or is outstanding; and
WHEREAS, the Board of Directors now desires to amend and restate the
Articles of Amendment of the Articles of Incorporation of the Corporation
setting forth the certificate of designations, preferences and relative
participating or optional or other special rights, and qualifications,
limitations or restrictions of the Corporation's Series F Cumulative Convertible
Preferred Stock to (i) increase the number of authorized shares of such series
to 15,000,000, and (ii) modify the voting rights with respect to such series in
order to satisfy the listing criteria of the New York Stock Exchange, all as set
forth herein.
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority granted
to the Board of Directors by Article Five of the Articles of Incorporation, and
with the unanimous consent and approval of the holders of all of the issued and
outstanding shares of Series F Preferred Stock, the Board of Directors hereby
amends and restates the Articles of Amendment to the Articles of Incorporation
setting forth the certificate of designations, preferences and relative
participating or optional or other special rights, and qualifications,
limitations or restrictions of the Corporation's Series F Cumulative Convertible
Preferred Stock as follows:
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Section 1. Designation and Amount. The shares of such series shall be
designated as "Series F Cumulative Convertible Preferred Stock" (the "Series F
Preferred Stock") and each share of the Series F Preferred Stock shall have a
par value of $2.00 per share and a preference on liquidation as specified in
Section 6 below. The number of shares constituting the Series F Preferred Stock
shall be 15,000,000. Such number of shares may be increased or decreased by the
Board of Directors by filing articles of amendment as provided in the Georgia
Business Corporation Code; provided, that no decrease shall reduce the number of
shares of Series F Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants; provided further, that no
increase in the authorized amount of shares constituting Series F Preferred
Stock shall be made without the prior written consent of the holders of a
majority of shares of Series F Preferred Stock then outstanding voting
separately as a class.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series F Preferred Stock shall be
entitled to receive, when, as, and if declared by the Board of
Directors and to the extent permitted under the Georgia
Business Corporation Code, out of funds legally available for
the purpose and in preference to and with priority over
dividends upon all Junior Securities, quarterly cumulative
dividends payable in arrears in cash on the fifteenth day
following the end of each calendar quarter (each such date
being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on October 15, 1998, in an amount per share
(rounded to the next highest cent) equal to 10% per annum of
the Adjusted Liquidation Value, as determined immediately
prior to the beginning of such calendar quarter assuming each
year consists of 360 days and each quarter consists of 90
days. The term "Adjusted Liquidation Value" shall mean
Liquidation Value (as defined in Section 6) plus all accrued
and unpaid dividends through the applicable date. The
foregoing is intended to provide a 10% cumulative return,
compounded on a quarterly basis, on the Liquidation Value from
August 16, 1998.
(B) Dividends shall commence accruing cumulatively on outstanding
shares of the Series F Preferred Stock from August 16, 1998 to
and including the date on which the Redemption Price (as
defined in Section 9(A), below) of such shares is paid,
whether or not such dividends have been declared and whether
or not there are profits, surplus or other funds of the
Corporation legally available for the payment of such
dividends. Dividends for the first Quarterly Dividend Payment
Date shall accrue and shall be payable for a period of 45
days. Dividends payable on each Quarterly Dividend Payment
Date shall be dividends accrued and unpaid through the last
Business Day (as defined in Section 3(A) below) of the
immediately preceding calendar month. The Board of Directors
may fix a record date for the determination of holders of
shares of Series F Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon other than a
quarterly dividend paid on the Quarterly Dividend Payment Date
immediately after such dividend accrued; which
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record date shall be not more than 50 days prior to the date
fixed for the payment thereof.
(C) So long as any shares of the Series F Preferred Stock are
outstanding, the Corporation will not make, directly or
indirectly, any distribution (as such term is defined in the
Georgia Business Corporation Code) in respect of Junior
Securities unless on the date specified for measuring
distributions in Section 14-2-640(e) of the Georgia Business
Corporation Code (a) all accrued dividends on the Series F
Preferred Stock for all past quarterly dividend periods have
been paid in full and the full amount of accrued dividends for
the then current quarterly dividend period has been paid or
declared and a sum sufficient for the payment thereof set
apart and (b) after giving effect to such distribution (i) the
Corporation would not be rendered unable to pay its debts as
they become due in the usual course of business and (ii) the
Corporation's total assets would not be less than the sum of
its total liabilities plus the amount that would be needed, if
the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon
dissolution of the holders of the Series F Preferred Stock as
provided in these Articles of Amendment. Dividends shall not
be paid (in full or in part) or declared and set apart for
payment (in full or in part) on any series of Special Stock
(including the Series F Preferred Stock) for any dividend
period unless all dividends, in the case dividends are being
paid in full on the Series F Preferred Stock, or a ratable
portion of all dividends (i.e., so that the amount paid on
each share of each series of Special Stock as a percentage of
total accrued and unpaid dividends for all periods with
respect to each such share is equal), in the case dividends
are not being paid in full on the Series F Preferred Stock,
have been or are, contemporaneously, paid and declared and set
apart for payment on all outstanding series of Special Stock
(including the Series F Preferred Stock) entitled thereto for
each dividend period terminating on the same or earlier date.
If at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series F
Preferred Stock, such payment will be distributed ratably
among the then holders of Series F Preferred Stock so that an
equal amount is paid with respect to each outstanding share.
Section 3. Conversion Rights.
(A) The Series F Preferred Stock may be converted at any time and
from time to time in whole or in part after the earliest to
occur of (i) August 15, 2003, (ii) the first Business Day, if
any, occurring after a Quarterly Dividend Payment Date on
which dividends equal to or in excess of 5% of the Liquidation
Value (i.e., $0.50 per share) are accrued and unpaid, or (iii)
the Corporation becomes obligated to mail a statement pursuant
to subsection (G)(iv) below, at the option of the holders
thereof, in accordance with subsection (D) below at the
Conversion Price (as defined below in subsection (D)) into
fully paid and nonassessable Common Stock of the Corporation
by dividing (i) the Adjusted Liquidation Value for such share
of Series
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F Preferred Stock as of the date of conversion by (ii) the
Conversion Price; provided, however, that as to any shares of
Series F Preferred Stock which shall have been called for
redemption, the right of conversion shall terminate at the
close of business on the second full Business Day (unless
otherwise provided, "Business Day" herein shall mean any day
other than a Saturday, a Sunday or a day on which banking
institutions in Dallas, Texas are authorized or obligated by
law or executive order to remain closed) prior to the date
fixed for redemption. Notwithstanding anything to the contrary
herein provided, the Corporation may elect to redeem the
shares of Series F Preferred Stock sought to be converted
hereunder instead of issuing shares of Common Stock in
replacement thereof in accordance with the provisions of
Section 3(D), below.
(B) For purposes of this Section 3, the term "Conversion Price"
shall be and mean the amount obtained (rounded upward to the
next highest cent) by multiplying (i) 0.9 by (ii) the simple
average of the daily closing price of the Common Stock for the
twenty Business Days ending on the last Business Day of the
calender week immediately preceding the date of conversion on
the New York Stock Exchange or, if the shares of Common Stock
are not then being traded on the New York Stock Exchange, then
on the principal stock exchange (including without limitation
NASDAQ NMS or NASDAQ Small Cap) on which such Common Stock is
then listed or admitted to trading as determined by the
Corporation (the "Principal Stock Exchange") or, if the Common
Stock is not then listed or admitted to trading on a Principal
Stock Exchange, the average of the last reported closing bid
and asked prices on such days in the over-the-counter market
or, if no such prices are available, the fair market value per
share of the Common Stock, as determined by the Board of
Directors of the Corporation in its sole discretion. The
Conversion Price shall not be subject to any adjustment as a
result of the issuance of any additional shares of Common
Stock by the Corporation for any purpose, except for stock
splits (whether accomplished by stock dividend or otherwise).
For purposes of calculating the Conversion Price, the term
"Business Day" shall mean a day on which the exchange looked
to for purposes of determining the Conversion Price is open
for business or, if no such exchange, the term "Business Day"
shall have the meaning given such term in Section 3(A), above.
(C) Upon any conversion, fractional shares of Common Stock shall
not be issued but any fractions shall be adjusted by the
delivery of one additional share of Common Stock in lieu of
any cash. Any accrued but unpaid dividends shall be
convertible into shares of Common Stock as provided for in
this Section. The Corporation shall pay all issue taxes, if
any, incurred in respect to the issuance of Common Stock on
conversion, provided, however, that the Corporation shall not
be required to pay any transfer or other taxes incurred by
reason of the issuance of such Common Stock in names other
than those in which the Series F Preferred Stock surrendered
for conversion may stand.
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(D) Any conversion of Series F Preferred Stock into Common Stock
shall be made by the surrender to the Corporation, at the
office of the Corporation set forth in Section 12 hereof or at
the office of the transfer agent for such shares, of the
certificate or certificates representing the Series F
Preferred Stock to be converted, duly endorsed or assigned
(unless such endorsement or assignment be waived by the
Corporation), together with a written request for conversion.
The Corporation shall either (i) issue as of the date of
receipt by the Corporation of such surrender shares of Common
Stock calculated as provided above and evidenced by a stock
certificate delivered to the holder as soon as practicable
after the date of such surrender or (ii) within two Business
Days after the date of such surrender advise the holder of the
Series F Preferred Stock that the Corporation is exercising
its option to redeem the Series F Preferred Stock pursuant to
Section 3(A), above, in which case the Corporation shall have
thirty (30) days from the date of such surrender to pay to the
holder cash in an amount equal to the Conversion Price for
each share of Series F Preferred Stock so redeemed. The date
of surrender of any Series F Preferred Stock shall be the date
of receipt by the Corporation or its agent of such surrendered
shares of Series F Preferred Stock.
(E) A number of authorized shares of Common Stock sufficient to
provide for the conversion of the Series F Preferred Stock
outstanding upon the basis hereinbefore provided shall at all
times be reserved for such conversion. If the Corporation
shall propose to issue any securities or to make any change in
its capital structure which would change the number of shares
of Common Stock into which each share of Series F Preferred
Stock shall be convertible as herein provided, the Corporation
shall at the same time also make proper provision so that
thereafter there shall be a sufficient number of shares of
Common Stock authorized and reserved for conversion of the
outstanding Series F Preferred Stock on the new basis.
(F) The term "Common Stock" shall mean stock of the class
designated as Common Stock of the Corporation on the date the
Series F Preferred Stock is created or stock of any class or
classes resulting from any reclassification or
reclassifications thereof, the right of which to share in
distributions of both earnings and assets is without
limitation in the Articles of Incorporation of the Corporation
as to any fixed amount or percentage and which are not subject
to redemption; provided, that if at any time there shall be
more than one such resulting class, the shares of each such
class then issuable on conversion of the Series F Preferred
Stock shall be substantially in the proportion which the total
number of shares of stock of each such class resulting from
all such reclassifications bears to the total number of shares
of stock of all such classes resulting from all such
reclassifications.
(G) In case the Corporation shall propose at any time before all
shares of the Series F Preferred Stock have been redeemed by
or converted into Common Stock of the Corporation:
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(i) to pay any dividend on the Common Stock
outstanding payable in Common Stock or to make any other
distribution, other than cash dividends to the holders of the
Common Stock outstanding; or
(ii) to offer for subscription to the holders of the
Common Stock outstanding any additional shares of any class or
any other rights or option; or
(iii) to effect any re-classification or
recapitalization of the Common Stock outstanding involving a
change in the Common Stock, other than a subdivision or
combination of the Common Stock outstanding; or
(iv) to merge or consolidate with or into any other
corporation (unless the Corporation is the surviving entity
and holders of Common Stock continue to hold such Common Stock
without modification and without receipt of any additional
consideration), or to sell, lease, or convey all or
substantially all its property or business, or to liquidate,
dissolve or wind up;
then, in each such case, the Corporation shall mail to the holders of
record of each of the shares of Series F Preferred Stock at their last
known addresses as shown by the Corporation's records a statement,
signed by an officer of the Corporation, with respect to the proposed
action, such statement to be so mailed at least thirty (30) days prior
to the date of the taking of such action or the record date for holders
of the Common Stock for the purposes thereof, whichever is earlier. If
such statement relates to any proposed action referred to in clauses
(iii) or (iv) of this subsection (G), it shall set forth such facts
with respect thereto as shall reasonably be necessary to inform the
holders of the Series F Preferred Stock as to the effect of such action
upon the conversion rights of such holders.
Section 4. Voting Rights and Powers. The holders of shares of Series F
Preferred Stock shall have only the following voting rights:
(A) Except as may otherwise be specifically required by law under
Section 14-2-1004 of the Georgia Business Corporation Code or
otherwise provided herein, the holders of the shares of Series
F Preferred Stock shall not have the right to vote such stock,
directly or indirectly, at any meeting of the shareholders of
the Corporation, and such shares of stock shall not be counted
in determining the total number of outstanding shares to
constitute a quorum at any meeting of shareholders;
(B) In the event that, under the circumstances, the holders of the
Series F Preferred Stock are required by law to vote upon any
matter, the approval of such series shall be deemed to have
been obtained only upon the affirmative vote of the holders of
a majority of the shares of the Series F Preferred Stock then
outstanding;
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(C) Except as set forth herein, or as otherwise provided by the
Articles of Incorporation or by law, holders of the Series F
Preferred Stock shall have no voting rights and their consent
shall not be required for the taking of any corporate action;
(D) Notwithstanding anything herein to the contrary, if and
whenever at any time or times all or any portion of the
dividends on Series F Preferred Stock for any six quarterly
dividends, whether or not consecutive, shall be in arrears and
unpaid, then and in any such event, the number of Directors
constituting the Board of Directors shall be increased by two,
and the holders of Series F Preferred Stock, voting separately
as a class, shall be entitled at the next annual meeting of
shareholders, or at a special meeting of holders of Series F
Preferred Stock called as hereinafter provided, to elect two
Directors to fill such newly created Directorships. Each
holder shall be entitled to one vote in such election for each
share of Series F Preferred Stock held. At such time as all
arrearages in dividends on the Series F Preferred Stock shall
have been paid in full and dividends thereon for the current
quarterly period shall have been paid or declared and a sum
sufficient for the payment thereof set aside, then (i) the
voting rights of holders of Series F Preferred Stock described
in this subsection (D) shall cease (subject always to
revesting of such voting rights in the event of each and every
similar future arrearages in quarterly dividends), (ii) the
term of the Directors then in office as a result of the voting
rights described in this subsection (D) shall terminate and
(iii) the number of Directors shall be reduced by the number
of Directors then in office elected pursuant to this
subsection (D). A vacancy in the class of Directors elected
pursuant to this subsection (D) shall be filled by a Director
chosen by the remaining Directors of the class, unless such
vacancy is filled pursuant to the final sentence of subsection
(G);
(E) At any time when the voting right described in subsection (D)
shall have vested and shall remain in the holders of Series F
Preferred Stock, such voting right may be exercised initially
either at a special meeting of holders of Series F Preferred
Stock or at any annual or special shareholders' meeting called
for the purpose of electing Directors, but thereafter it shall
be exercised only at annual shareholders' meetings. If such
voting right shall not already have been initially exercised,
the Secretary of the Corporation may, and upon the written
request of the holders of record of at least 10% of the shares
of Series F Preferred Stock then outstanding shall, call a
special meeting of the holders of Series F Preferred Stock for
the purpose of electing two Directors pursuant to subsection
(D), and notice thereof shall be given to the holders of
Series F Preferred Stock in the same manner as that required
to be given to holders of the Corporation's Common Stock for
the annual meeting of shareholders. Such meeting shall be held
at the earliest practicable date upon the notice required for
special meetings of shareholders of the Corporation, or, if
none, at a time and place designated by the Secretary of the
Corporation.
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(F) At any meeting held for the purpose of electing Directors at
which the holders of Series F Preferred Stock shall have the
right to elect Directors as provided in subsection (D) above,
the presence in person or by proxy of the holders of at least
thirty-five percent (35%) of the then outstanding shares of
Series F Preferred Stock shall be required and be sufficient
to constitute a quorum of Series F Preferred Stock for the
election of Directors by Series F Preferred Stock, and the
vote of the holders of a majority of such shares so present in
person or by proxy at any such meeting at which there shall be
such a quorum shall be required and be sufficient to elect the
members of the Board of Directors which the holders of Series
F Preferred Stock are entitled to elect as hereinabove
provided. At any such meeting or adjournment thereof, (i) the
absence of a quorum of the holders of Series F Preferred Stock
shall not prevent the election of Directors other than the
Directors to be elected by the holders of Series F Preferred
Stock and (ii) in the case of holders of Series F Preferred
Stock entitled to vote for the election of Directors, a
majority of the holders present in person or by proxy of such
class, if constituting less than a quorum as hereinabove
provided, shall have the power to adjourn the meeting for the
election of the Directors that the holders of such class are
entitled to elect, from time to time until a quorum shall be
present, and notice of such adjourned meeting need not be
given unless otherwise required by law, provided that nothing
herein shall affect the conduct of the meeting with respect to
shareholders of any other class.
(G) Any Director who shall have been elected or appointed pursuant
to Section 4(D) shall hold office for a term expiring (subject
to the earlier termination of the default in quarterly
dividends) at the next annual meeting of shareholders, and
during such term may be removed at any time, either with or
without cause, only by the affirmative vote of the holders of
record of a majority of the shares of Series F Preferred Stock
then outstanding at a special meeting of such shareholders
called for such purpose. Any vacancy created by such removal
may also be filled at such meeting.
(H) So long as any shares of Series F Preferred Stock remain
outstanding, the Corporation shall not, without the vote or
written consent by the holders of record of two-thirds of the
outstanding shares of Series F Preferred Stock, amend its
articles of incorporation or bylaws if such amendment would
materially alter or change the existing terms of the Series F
Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series F Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever or
surrendered for conversion hereunder shall no longer be deemed to be outstanding
and all rights with respect to such shares of stock, including the right, if
any, to receive notices and to vote, shall forthwith cease except, in the case
of stock surrendered for conversion hereunder, rights of the holders thereof to
receive Common Stock in exchange therefor. All shares of Series F Preferred
Stock obtained by the Corporation shall be retired and canceled promptly after
the acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Special Stock and may be reissued as part of
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a new series of Special Stock subject to the conditions and restrictions on
issuance set forth herein, in the Articles of Incorporation, or in any other
Certificates of Designations creating a series of Special Stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. The Liquidation
Value of the Series F Preferred Stock shall be $10.00 per share. Upon any
liquidation, dissolution or winding up of the Corporation, and after paying and
providing for the payment of all creditors of the Corporation, the holders of
shares of the Series F Preferred Stock then outstanding shall be entitled,
before any distribution or payment is made upon any Junior Securities (defined
to be and mean the Common Stock and any other equity security of any kind which
the Corporation at any time has issued, issues or is authorized to issue if the
Series F Preferred Stock has priority over such securities as to dividends or
upon liquidation, dissolution or winding up), to receive a liquidation
preference in an amount in cash equal to the Adjusted Liquidation Value as of
the date of such payment, whether such liquidation is voluntary or involuntary,
and the holders of the Series F Preferred Stock shall not be entitled to any
other or further distributions of the assets. If, upon any liquidation,
dissolution or winding up of the affairs of the Corporation, the net assets
available for distribution shall be insufficient to permit payment to the
holders of all outstanding shares of all series of Special Stock of the amount
to which they respectively shall be entitled, then the assets of the Corporation
to be distributed to such holders will be distributed ratably among them based
upon the amounts payable on the shares of each such series of Special Stock in
the event of voluntary or involuntary liquidation, dissolution or winding up, as
the case may be, in proportion to the full preferential amounts, together with
any and all arrearages to which they are respectively entitled. Upon any such
liquidation, dissolution or winding up of the Corporation, after the holders of
Special Stock have been paid in full the amounts to which they are entitled, the
remaining assets of the Corporation may be distributed to holders of Junior
Securities, including Common Stock, of the Corporation. The Corporation will
mail written notice of such liquidation, dissolution or winding up, not less
than twenty (20) nor more than fifty (50) days prior to the payment date stated
therein to each record holder of Series F Preferred Stock. Neither the
consolidation nor merger of the Corporation into or with any other corporation
or corporations, nor the sale or transfer by the Corporation of less than all or
substantially all of its assets, nor a reduction in the capital stock of the
Corporation, nor the purchase or redemption by the Corporation of any shares of
its Special Stock or Common Stock or any other class of its stock will be deemed
to be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
Section 7. Ranking. Except as provided in the following sentence, the
Series F Preferred Stock shall rank on a parity as to dividends and upon
liquidation, dissolution or winding up with all other shares of Special Stock
issued by the Corporation. The Corporation shall not issue any shares of Special
Stock of any series which are superior to the Series F Preferred Stock as to
dividends or rights upon liquidation, dissolution or winding up of the
Corporation as long as any shares of the Series F Preferred Stock are issued and
outstanding, without the prior written consent of the holders of at least 66 2/3
of such shares of Series F Preferred Stock then outstanding voting separately as
a class.
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Section 8. Redemption at the Option of the Holder. The shares of Series
F Preferred Stock shall not be redeemable at the option of a holder of Series F
Preferred Stock.
Section 9. Redemption at the Option of the Corporation.
(A) In addition to the redemption right of the Corporation set
forth in Section 3(A), above, the Corporation shall have the
right to redeem all or a portion of the Series F Preferred
Stock issued and outstanding at any time and from time to
time, at its option, for cash. The redemption price of the
Series F Preferred Stock pursuant to this Section 9 shall be
an amount per share (the "Redemption Price") equal to (i) 105%
of the Adjusted Liquidation Value as of the Redemption Date
(as defined in subsection (B) below) during the period from
August 15, 1997 through August 15, 1998; (ii) 104% of Adjusted
Liquidation Value as of the Redemption Date during the period
from August 16, 1998 through August 15, 1999; and (iii) 103%
of the Adjusted Liquidation Value as of the Redemption Date at
any time on or after August 16, 1999.
(B) The Corporation may redeem all or a portion of any holder's
shares of Series F Preferred Stock by giving such holder not
less than twenty (20) days nor more than thirty (30) days
notice thereof prior to the date on which the Corporation
desires such shares to be redeemed, which date shall be a
Business Day (the "Redemption Date"). Such notice shall be
written and shall be hand delivered or mailed, postage
prepaid, to the holder (the "Redemption Notice"). The
Redemption Notice, once given, shall be irrevocable. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States Mail, postage prepaid,
addressed to the holder of shares of Series F Preferred Stock
at his address as it appears on the stock transfer records of
the Corporation. The Redemption Notice shall state (i) the
total number of shares of Series F Preferred Stock held by
such holder; (ii) the total number of shares of the holder's
Series F Preferred Stock that the Corporation intends to
redeem; (iii) the Redemption Date and the Redemption Price;
and (iv) the place at which the holder(s) may obtain payment
of the applicable Redemption Price upon surrender of the share
certificate(s).
(C) If fewer than all shares of the Series F Preferred Stock at
any time outstanding shall be called for redemption, such
shares shall be redeemed pro rata, by lot drawn or other
manner deemed fair in the sole discretion of the Board of
Directors to redeem one or more such shares without redeeming
all such shares of Series F Preferred Stock. If a Redemption
Notice shall have been so mailed, at least two Business Days
prior to the Redemption Date the Corporation shall provide for
payment of a sum sufficient to redeem the applicable number of
shares of Series F Preferred Stock subject to redemption
either by (i) setting aside the sum required to be paid as the
Redemption Price by the Corporation, separate and apart from
its other funds, in trust for the account of the holder(s) of
the shares of Series F Preferred Stock to be
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redeemed or (ii) depositing such sum in a bank or trust
company (either located in the state where the principal
executive office of the Corporation is maintained, such bank
or trust company having a combined surplus of at least
$20,000,000 according to its latest statement of condition, or
such other bank or trust company as may be permitted by the
Articles of Incorporation, or by law) as a trust fund, with
irrevocable instructions and authority to the bank or trust
company to give or complete the notice of redemption and to
pay, on or after the Redemption Date, the applicable
Redemption Price on surrender of certificates evidencing the
share(s) of Series F Preferred Stock so called for redemption
and, in either event, from and after the Redemption Date (a)
the share(s) of Series F Preferred Stock shall be deemed to be
redeemed, (b) such setting aside or deposit shall be deemed to
constitute full payment for such shares(s), (c) such share(s)
so redeemed shall no longer be deemed to be outstanding, (d)
the holder(s) thereof shall cease to be a shareholder of the
Corporation with respect to such share(s), and (e) such
holder(s) shall have no rights with respect thereto except the
right to receive the Redemption Price for the applicable
shares. Any interest on the funds so deposited shall be paid
to the Corporation. Any and all such redemption deposits shall
be irrevocable except to the following extent: any funds so
deposited which shall not be required for the redemption of
any shares of Series F Preferred Stock because of any prior
sale or purchase by the Corporation other than through the
redemption process, subsequent to the date of deposit but
prior to the Redemption Date, shall be repaid to the
Corporation forthwith and any balance of the funds so
deposited and unclaimed by the holder(s) of any shares of
Series F Preferred Stock entitled thereto at the expiration of
one calendar year from the Redemption Date shall be repaid to
the Corporation upon its request or demand therefor, and after
any such repayment of the holder(s) of the share(s) so called
for redemption shall look only to the Corporation for payment
of the Redemption Price thereof. All shares of Series F
Preferred Stock redeemed shall be canceled and retired and no
shares shall be issued in place thereof, but such shares shall
be restored to the status of authorized but unissued shares of
Special Stock.
(D) Holders whose shares of Series F Preferred Stock have been
redeemed hereunder shall surrender the certificate or
certificates representing such shares, duly endorsed or
assigned (unless such endorsement or assignment be waived by
the Corporation), to the Corporation by mail, courier or
personal delivery at the Corporation's principal executive
office or other location so designated in the Redemption
Notice, and upon the Redemption Date the Redemption Price
shall be payable to the order of the person whose name appears
on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In
the event fewer than all of the shares represented by such
certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares.
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Section 10. Sinking Fund. The Corporation shall not be required to
maintain any so-called "sinking fund" for the retirement on any basis of the
Series F Preferred Stock.
Section 11. Fractional Shares. The Series F Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of shares of Series F Preferred Stock.
Section 12. Notice. Any notice or request made to the Corporation in
connection with the Series F Preferred Stock shall be given, and shall
conclusively be deemed to have been given and received three Business Days
following deposit thereof in writing, in the U.S. mails, certified mail, return
receipt requested, duly stamped and addressed to the Corporation, to the
attention of its General Counsel, at its principal executive offices (which
shall be deemed to be the address most recently provided to the Securities and
Exchange Commission ("SEC") as its principal executive offices for so long as
the Corporation is required to file reports with the SEC).
IN WITNESS WHEREOF, these Amended and Restated Articles of Amendment
are executed on behalf of the Corporation by its President and attested by its
Secretary as of the ____ day of July, 1998.
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
President
Attest:
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary
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EXHIBIT D-1
List of EQK Exceptions
As of August 7, 1998
[Exceptions to Representations and Warranties of EQK contained in
Article III]
As to SECTION 3.07(c): The following tenant allowances in excess of $25,000
have been committed to and/or paid since March 31,
1998: Cafe Matangos ($85,000 commitment, of which
$28,333 has been paid); The Gap ($375,000 commitment,
lease net yet executed); Radio Shack ($35,000
commitment, which has not been paid); Joy ▇▇▇▇▇▇ ▇▇▇▇▇
($100,000 commitment, lease not yet executed); Strictly
Nails ($30,000 commitment, lease not yet executed);
Lady Footlocker ($35,000 commitment, lease not yet
executed); and ▇▇▇ Bee Toys ($40,000 commitment, lease
not het executed).
As to SECTION 3.07(m): The following capital expenditures in excess of $25,000
have been made or committed to subsequent to March 31,
1998: parking lot overlay ($70,408 paid); and roof
repairs ($148,109 commited, of which $147,505 has been
paid.
108
EXHIBIT D-2
List of ART Exceptions
None.
109
EXHIBIT E
Copy of Amended and Restated Cost Sharing Agreement
[begins on next page]
110
EXHIBIT E
[EQK LETTERHEAD]
July 14, 1998
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
RE: COST SHARING AGREEMENT RELATIVE TO PROPOSED ACQUISITION
Dear ▇▇▇▇▇▇:
On March 6, 1997, American Realty Trust ("ART") and EQK Realty Investors I
("EQK") entered into a Cost Sharing Agreement ("Original Cost Sharing
Agreement") in connection with the possibility of ART's acquiring up to 50% of
the outstanding shares of EQK. On July 9, 1997, ART and EQK executed a letter
agreement (the "July 1997 Agreement") that amended, restated and superseded the
Original Cost Sharing Agreement. ART and EQK have recently decided to proceed
towards such an acquisition through a modified structure (the "June 1998
Structure") which supersedes the structures contemplated by the Original Cost
Sharing Agreement and the July 1997 Agreement (the "Old Structures"). This
letter amends, restates and supersedes the July 1997 Agreement.
Significant legal, financial and other costs have been and will be incurred in
connection with the proposed transactions (the "transactions"). As used
herein, "transaction costs" shall mean all out-of-pocket fees and expenses
incurred on or after February 20, 1997 by either EQK or ART in connection with
the transactions, whether or not such transactions are ultimately completed,
and whether or not such fees and expenses were incurred in connection with
pursuing the Old Structures or the June 1998 Structure. Transaction costs
include, without limitation:
(i) legal fees and expenses (including, without limitation, any fees or
expenses incurred as a result of threatened or actual litigation or other
legal proceedings), fees associated with the issuance of a fairness opinion
relating to the Old Structures, an appraisal of Harrisburg East Mall and
any update thereof, printing expenses, accounting fees, costs of a
solicitor used during the proxy solicitation process and all other
out-of-pocket expenses directly related to the proposed transactions.
(ii) all costs paid or obligated to be paid through the date, if any, on
which either party notifies the other that it is terminating negotiations.
111
Inasmuch as ART and EQK have preliminarily agreed that the pursuit of such a
transaction would be in their mutual interest, and want to provide the
incentives and protections desired by both companies to proceed, the parties
hereby agree to the following sharing of transaction costs, to the extent they
may be incurred:
(1) If the proposed transaction is not completed, by reason of an
inadequate shareholder response to the merger proxy or otherwise, EQK's
liability shall be limited to the lesser of 50% of actual transaction costs
or $100,000, and ART shall be responsible for all additional transaction
costs.
(2) If the proposed transaction is ultimately initiated and successfully
achieves the desired merger in accordance with the definitive agreement,
EQK's liability shall be limited to the lesser of 50% of actual transaction
costs or $150,000, and ART shall be responsible for all additional
transaction costs.
In addition to the foregoing sharing agreement, EQK and ART agree to reconcile
the transaction costs incurred by each party on a regular and timely basis. ART
agrees to provide prompt reimbursement to EQK (not more than 15 days after
submission of a payment request) should EQK's share of expenses exceed the
applicable maximum threshold amounts.
If the terms of this sharing arrangement are acceptable, please indicate your
approval by signing in the space indicated below.
Very truly yours,
EQK REALTY INVESTORS I
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Vice President and Controller
ACCEPTED AND AGREED this 20th
day of July, 1998.
AMERICAN REALTY TRUST, INC.
By: /s/ A. ▇▇▇ ▇▇▇▇▇, ▇▇.
--------------------------
Name: A. ▇▇▇ ▇▇▇▇▇, ▇▇.
------------------------
Title: VP
-----------------------
Date: 7/20/98
------------------------
112
EXHIBIT F
Form of Standstill Agreement
[begins on next page]
113
EXHIBIT F
STANDSTILL AGREEMENT
BY AND BETWEEN
AMERICAN REALTY TRUST, INC.
AND
[NAME OF EQK SHAREHOLDER]
DATED AS OF , 1998
----------- --
114
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT (this "AGREEMENT"), dated as of ___________
___, 1998, is by and between American Realty Trust, Inc., a Georgia Corporation
("ART"), and [Name of EQK Shareholder] (the "EQK SHAREHOLDER"), a
___________________________.
RECITALS:
WHEREAS, EQK Shareholder owns ____________ shares of beneficial
interest (the "EQK SHARES"), or _____% of the shares outstanding, in EQK Realty
Investors I, a Massachusetts business trust ("EQK") (collectively the "EQK
SHARES"); and
WHEREAS, EQK Shareholder has received a copy of the Prospectus /Proxy
Statement dated ___________, 1998 with respect to, among other things, the
merger of ART Newco, LLC, a Massachusetts limited liability company ("ART
NEWCO"), with and into EQK (the "MERGER") pursuant to an Amended and Restated
Agreement and Plan of Merger, dated as of August __, 1998 (the "MERGER
AGREEMENT") among ART, ART Newco and EQK; and
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Merger Agreement that ART and EQK Shareholder shall have
entered into a Standstill Agreement in form and substance satisfactory to ART
with respect to the EQK Shares, and accordingly ART and EQK Shareholder desire
to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. Restrictions on Disposition.
(a) In consideration of the payment to EQK Shareholder of
$0.10 per each EQK Share (the "STANDSTILL PAYMENT"), EQK Shareholder
hereby covenants and agrees, for a period of 42 months after
[_______________ ___, 1998][THE DATE OF THE CONSUMMATION OF THE MERGER]
(the "STANDSTILL PERIOD"), not to (i) offer to sell, contract to sell
or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to (collectively, a "DISPOSITION") any EQK Shares, any options
or warrants to purchase any EQK Shares or any securities convertible
into or exchangeable for EQK Shares, now owned or hereafter acquired
directly or indirectly by EQK Shareholder or with respect to which EQK
Shareholder has or hereafter acquires the power of disposition, or (ii)
acquire any additional EQK Shares.
(b) The foregoing restrictions are expressly agreed to
preclude the holder of the EQK Shares from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead
to or result in a Disposition of EQK Shares during the Standstill
Period, even if such shares would be disposed of by a party other than
EQK Shareholder. Such
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115
prohibited hedging or other transactions include, without limitation,
any short sale (whether or not against the box) or any purchase, sale
of grant of any right (including without limitation any put or call
option) with respect to any EQK Shares or with respect to any security
(other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the EQK
Shares. Notwithstanding the foregoing, this Standstill Agreement does
not prohibit the sale of EQK Shares by EQK Shareholder to ART.
SECTION 2. Stop Transfer Instructions. EQK Shareholder hereby agrees
and consents to the entry of stop transfer instructions with EQK's transfer
agent against the transfer of the EQK Shares except in compliance with this
Standstill Agreement.
SECTION 3. Termination. This Standstill Agreement shall terminate and
be of no further force or effect if (i) the Merger is not consummated on or
before May 31, 1998, or (ii) ART files a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or is otherwise adjudicated bankrupt or insolvent by a court of
competent jurisdiction.
SECTION 4. Dividends and Distributions; Nature of Standstill Payment.
During the Standstill Period, all dividends and distributions in respect of EQK
Shares shall accrue for the benefit of, and be paid to, EQK Shareholder, and all
voting rights with respect to such EQK Shares shall remain with EQK Shareholder.
The Standstill Payment is separate from and independent of the consideration to
be paid with respect to the EQK Shares pursuant to the Merger Agreement.
SECTION 5. Successors and Assigns. No party shall have the right to
assign all or any part of its interest in this Agreement without the prior
written consent of the other parties, and any attempted transfer without such
consent shall be null and void.
SECTION 6. No Third-Party Benefit. Nothing in this Agreement shall be
deemed to create any right or obligation in any Person not a party hereto, and
this Agreement shall not be construed in any respect to be a contract or
agreement in whole or in part for the benefit of or binding upon any Person not
a party hereto.
SECTION 7. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral and written agreements, memoranda,
understandings and undertakings between the parties hereto with respect to the
subject matter hereof. This Agreement may not be modified, amended, altered or
supplemented except by a written instrument executed and delivered by each of
the parties hereto.
SECTION 8. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered as follows:
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If to ART:
c/o Basic Capital Management, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to EQK Shareholder:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Attention:
------------------
or to such other address as the person to whom notice is to be given
may have previously furnished to the other in writing in the manner set
forth above.
SECTION 10. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas,
without regard to its conflict of law rules.
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SECTION 11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by parties hereto on the date first above written.
AMERICAN REALTY TRUST, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[NAME OF EQK SHAREHOLDER]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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EXHIBIT G
Form of Purchase and Sale Agreement
[begins on next page]
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EXHIBIT G
Oak Tree Village
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made this _____
day of __________, 1998 (the "Effective Date"), between AMERICAN REALTY TRUST,
INC., a Georgia corporation, having an address at c/o Basic Capital Management,
Inc., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Seller"), and EQK
REALTY INVESTORS I, a Massachusetts trust, having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
W I T N E S S E T H:
ARTICLE 1
AGREEMENT FOR ACQUISITION AND SALE; THE ASSETS
On the terms and provisions hereof and for the consideration herein set
forth, Seller agrees to transfer and convey to Purchaser, and Purchaser agrees
to accept, the following assets and properties (collectively referred to herein
as the "Assets"):
SECTION 1.1. Real Property. That certain parcel of land situated in
Lubbock County, in the City of Lubbock, State of Texas, as more particularly
described in Exhibit "A" attached hereto (the "Land"), together with all strips
and gores, rights of way, privileges and appurtenances pertaining thereto,
including any right, title and interest of Seller in and to any street adjoining
any portion of the Land (collectively, the "Real Property").
SECTION 1.2. Improvements. All those improvements and related
amenities, including all parking areas and all buildings, structures, and other
improvements, known as the "Oak Tree Village" (collectively, the "Improvements")
in and on the Real Property, and having an address of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
SECTION 1.3. Tangible Personal Property. All those fixtures,
appliances, machinery, equipment, furniture, carpet, drapes and other tangible
personal property (excluding cash-on-hand), if any, owned by the Seller and
located on or about the Land and the Improvements and used solely in connection
with the ownership, operation or management of the Improvements (the "Tangible
Personal Property").
SECTION 1.4. Tenant Leases. All of the existing leases or occupancy and
concession agreements (herein, the "Tenant Leases") for space in the
Improvements, together with all rents,
120
issues, profits and tenant security deposits held by the Seller on the Closing
Date (as hereinafter defined).
SECTION 1.5. Service Contracts. All (a) service contracts, management
contracts, supply contracts, security contracts, landscaping contracts, cable or
satellite television contracts, maintenance agreements, open purchase orders and
other contracts for the provision of labor, services, materials or supplies,
whether oral or written, to or for the benefit of the Land, Improvements or
Tangible Personal Property, together with all amendments thereto, (b) contracts
that affect the Land, Improvements or Tangible Personal Property or are
otherwise related to the construction, ownership, operation, occupancy or
maintenance of the Land, Improvements or Tangible Personal Property, and (c) all
current design contracts, construction contracts, subcontracts and purchase
orders, and other contracts of any nature relating to the Land, Improvements or
Tangible Personal Property (herein, the "Service Contracts").
SECTION 1.6. Intangible Property. All (a) licenses, permits,
certificates of occupancy, approvals, dedications, subdivision maps and
entitlements now or hereafter issued, approved or granted in connection with the
Land and Improvements together with any renewals or modifications thereof; (b)
names, trade names and logos used by the Seller exclusively in the operation and
identification of the Improvements, including the name "Oak Tree Village" and
any variations thereof; (c) warranties and guaranties relative to the
Improvements or Tangible Personal Property and (d) all other intangible rights,
titles, privileges, interests, including, without limitation, transferable
utility contracts, transferable telephone exchange numbers, plans and
specifications, engineering plans and studies, floor plans and landscape plans
pertaining to the Land or Improvements (herein, the "Intangible Property").
SECTION 1.7. Surveys. All of Seller's right, title and interest in and
to any and all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, engineering plans and studies, floor plans,
landscape plans and any other plans or studies of any kind (the "Plans and
Studies"), if any, in Seller's possession that relate to the Real Property.
SECTION 1.8. Easements and Awards. All right, title and interest of
Seller, if any, in and to any easements, rights-of-way, privileges, licenses or
other interests in, on, or to, any land, highway, street, road, or avenue, open
or proposed, in, on or across, in front of, abutting or adjoining, the Real
Property; and all right, title and interest of Seller, if any, in and to any
awards made, or to be made in lieu thereof, and in and to any unpaid awards for
damage thereto by reason of a change of grade of any such highway, street, road
or avenue (collectively, the "Easements and Awards").
ARTICLE 2
CONSIDERATION
SECTION 2.1. Consideration. The consideration (the "Consideration") to
be paid by the Purchaser to the Seller on the Closing Date (defined below) for
the Assets, shall be TWO MILLION
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SEVEN HUNDRED EIGHTY THOUSAND FORTY-SIX AND NO/100 DOLLARS ($2,780,046.00), to
be payable as follows:
(a) Non-Recourse Note. The Purchaser shall deliver to Seller a
promissory note in the aggregate principal amount of $1,250,000 (the
"Non-Recourse Note") in favor of the Seller. The Non-Recourse note shall be a
non-recourse obligation of the Purchaser and shall bear interest only at a rate
of 12% per annum over a term of five years with the final payment of principal
being due and payable to Seller on December 15, 2003. The Non-Recourse Note
shall be in substantially the form attached hereto as Exhibit E. The
Non-Recourse Note shall be secured by a second lien mortgage on the Assets in
favor of the Seller.
(b) Assumption of Note. Purchaser shall assume the obligations
of Seller under that certain promissory note in the aggregate principal amount
of $1,530,046 (as of March 31, 1998) in favor of Midland Loan Services (the
"Midland Note"). Such assumption shall be made on a non-recourse basis pursuant
to the terms of an assumption agreement in substantially the form attached
hereto as Exhibit F. The principal amount of the Midland Note will not exceed
$1,530,046.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Seller's Representations and Warranties. Seller warrants
and represents to Purchaser that as of the Effective Date and on the Closing
Date:
(a) Existence. Seller is a corporation duly formed, validly
existing and in good standing in the State of Georgia, and is qualified to do
business and is in good standing in the State of Texas.
(b) Authority. Seller is qualified and has the full right,
power, and authority, without the joinder of any other person or entity, to
enter into, execute and deliver this Agreement, and to perform all duties and
obligations imposed on Seller under this Agreement, and neither the execution
nor the delivery of this Agreement, nor the consummation of the transfer
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement conflict with or will result in the breach of any
of the terms, conditions, or provisions of any agreement or instrument to which
Seller is a party or by which Seller is bound.
(c) Title. Seller has good and indefeasible title to the Real
Property, free and clear of all liens, deeds of trust, mortgages, pledges,
restrictions, claims and encumbrances whatsoever except for all matters
disclosed on the Title Commitment delivered to Purchaser by Seller in connection
herewith (the "Title Commitment").
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(d) Ownership of Property. Seller is the owner of the Tangible
Personal Property and the Intangible Property and has good title to sell and
convey the same to Purchaser, free and clear of all liens, claims and
encumbrances whatsoever.
(e) Access. To the best of Seller's knowledge, the Real
Property has access to and from public highways, streets, roads, and to utility
service connections and there is no pending or threatened governmental
proceeding that would impair or result in the termination of such access.
(f) Assessed Value of Assets. To the best of Seller's
knowledge, the Assets, during the most recent tax fiscal year and the year prior
thereto, have been valued and assessed for ad valorem tax purposes and taxed in
accordance with all applicable statutes, laws, regulations, codes and
ordinances.
(g) Third Party Rights. The Assets are not subject to any
outstanding agreements of sale or any other rights of third parties to acquire
any interest therein except as described in this Agreement. None of the Tangible
Personal Property is held by Seller under a lease or installment sale contract.
(h) Operating Permits. To Seller's actual knowledge, (i)
Seller possesses all licenses, certificates, and permits, if any, that are
required to own, operate, use and maintain the Assets (collectively, the
"Operating Permits").
(i) Litigation and Proceedings. Seller is not a party to any
litigation, arbitration or administrative proceeding with any person or entity
concerning any aspect of the Assets or having or claiming any interest in the
Assets or which affects or questions Seller's title to the Assets or Seller's
ability to perform its obligations under this Agreement. Seller knows of no
presently pending or threatened litigation, arbitration or administrative
proceeding concerning any aspect of the Assets or which affects or questions
Seller's title to the Assets or Seller's ability to perform its obligations
under this Agreement. There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings in bankruptcy
pending or contemplated by Seller, and to the knowledge of Seller, no such
actions have been threatened against it.
(j) Condemnation. There is no pending or, to Seller's actual
knowledge, without inquiry, threatened condemnation or similar proceedings
affecting the Real Property or any part thereof and, to Seller's knowledge, no
such proceeding or assessment is being contemplated by any governmental
authority.
(k) Conflicts with Laws. Neither the execution of this
Agreement nor the consummation by Seller of the transactions contemplated hereby
will (a) conflict with, or result in a breach of, the terms, conditions or
provisions of, or constitute a default, or result in a termination of, any
agreement or instrument to which Seller is a party, (b) to the best of Seller's
knowledge, violate any restriction to which Seller is subject, (c) to the best
of Seller's knowledge, constitute a violation of any applicable code,
resolution, law, statute, regulation, ordinance, judgment, rule,
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decree or order of which Seller is aware, or (d) to the best of Seller's
knowledge, result in the creation of any lien, charge or encumbrance upon the
Assets or any part thereof.
(m) "Foreign Person". Seller is not a "foreign person" as
defined in ss. 1445 of the Internal Revenue Code of 1986, as amended, and the
Income Tax Regulations thereunder.
(n) Landfill, Hazardous Materials. To the best knowledge of
Seller (without any independent investigation), and except as otherwise
disclosed in any environmental reports delivered by the Purchaser, the Real
Property has not previously been used as a landfill or as a dump for garbage or
refuse, or as a site where hazardous waste, solid waste, Hazardous Materials (as
hereinafter defined) have been disposed of or released, and there are no such
Hazardous Materials present in, on, or under the Real Property. As used herein,
the term "Hazardous Materials" shall mean any substance which is or contains (i)
any "hazardous substance" as now or hereafter defined in Section 101(14) of the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amend (42 U.S.C. Section 9601 et seq.) ("CERCLA") or any regulations
promulgated under CERCLA; (ii) any "hazardous waste" as now or hereafter defined
in the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.)
("RCRA") or regulations promulgated under RCRA; (iii) any substance regulated by
the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.); (iv)
gasoline, diesel fuel, or other petroleum hydrocarbons; (v) asbestos and
asbestos containing materials, in any form, whether friable or non-friable; (vi)
polychlorinated biphenyls; (vii) radon gas; and (viii) any additional substances
or materials which are now or hereafter classified or considered to be hazardous
or toxic under any other environmental laws or the common law, or any other
applicable laws relating to the Real Property. Hazardous Materials shall
include, without limitation, any substance, the presence of which on the Real
Property, (A) requires reporting, investigation or remediation under
environmental laws; (B) causes or threatens to cause a nuisance on the Real
Property or adjacent property or poses or threatens to pose a hazard to the
health or safety of persons on the Real Property or adjacent property; or (C)
which, if it emanated or migrated from the Real Property, could constitute a
trespass. Seller has provided Purchaser with copies of all environmental
reports, if any, in its possession and will, upon Purchaser's request, permit
Purchaser to perform a Phase I environmental inspection of the Real Property
prior to the Closing Date.
(o) No Employees. There are no property level employees with
respect to the Real Property or the Improvements.
(p) Rent Roll. Attached hereto as Schedule II is a rent roll
with respect to the Real Property which identifies each Tenant Lease as of March
23, 1998.
(q) Tenant Leases. Each of the Tenant Leases identified on
Schedule II is in full force and effect and, to Seller's actual knowledge, there
exists no default thereunder.
(r) Brokerage Commissions. To Seller's actual knowledge, there
are no unpaid brokerage commissions with respect to the Tenant Leases.
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(s) Tenant Improvements. To Seller's actual knowledge, there
are no uncompleted tenant improvements or other unperformed or unpaid
obligations which are of the nature of tenant inducements with respect to the
Improvements.
(t) Midland Loan Documentation. A true and correct copy of the
documentation for the loan evidenced by the Midland Note (the "Midland Loan
Documentation") is attached hereto as Exhibit G. To Seller's actual knowledge,
there exists no default under the Midland Loan Documentation.
SECTION 3.2. Purchaser's Representations and Warranties. Purchaser
warrants and represents to Seller that as of the Effective Date and on the
Closing Date:
(a) Existence. Purchaser is a trust duly formed, validly
existing and in good standing in the State of Massachusetts.
(b) Authority. Purchaser is qualified and has the full right,
power, and authority, without the joinder of any other person or entity, to
enter into, execute and deliver this Agreement, and to perform all duties and
obligations imposed on Purchaser under this Agreement, and neither the execution
nor the delivery of this Agreement, nor the consummation of the transfer
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement conflict with or will result in the breach of any
of the terms, conditions, or provisions of any agreement or instrument to which
Purchaser is a party or by which Seller is bound.
SECTION 3.3. Survival. All representations and warranties by Seller and
Purchaser stated in Section 3.1 and 3.2 of this Agreement shall survive the
Closing for a period of six (6) months and shall not merge in any conveyance
documents delivered at Closing.
SECTION 3.4. Subsequent Disclosure. In the event that changes occur as
to any information, documents or exhibits referred to in this Agreement
delivered by either party to this Agreement of which such party has knowledge,
such party will promptly disclose same to the other party when first available
to such party.
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ARTICLE 4
CLOSING
SECTION 4.1. Closing. The Closing of the transactions contemplated
hereby (the "Closing") shall, subject to the satisfaction or waiver of the
Seller Obligations set forth in Section 6.3 or the Purchaser Obligations set
forth in Section 6.4, take place within ten (10) Business Days after the later
of (i) the 1998 annual meeting of the Purchaser's shareholders, or (ii) the
consummation by the Purchaser of the sale of the Harrisburg East Mall (the
"Mall"), at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at such other date, time and place as the Seller and
Purchaser may mutually agree. The date on which the Closing actually occurs is
referred to herein as the "Closing Date". As used herein, the term "Business
Day" shall mean any day other than a Saturday, a Sunday or any day on which
banks in the State of Texas are permitted or required by law to be closed.
SECTION 4.2. Closing Costs. All closing costs, including all title
examinations fees and all premiums for the Title Policy (including the cost to
modify the survey exception to read "shortages in area" only), the cost of
issuing tax certificates, all charges for UCC searches and abstract of judgment
searches, all recording fees, all transfer taxes (whether state or local), any
escrow fees and other customary charges of the issuer of the Title Policy (the
"Title Company"), all placement fees, all reasonable attorneys' fees of both
Seller and Purchaser, and all costs and expenses in connection with the
preparation of the Plans and Studies (collectively, the "Closing Costs") shall
be paid by Seller.
SECTION 4.3. Seller Obligations. At the Closing, Seller shall deliver
the following to Purchaser, at Seller's sole cost and expense (except as
specifically agreed to by the parties herein):
(a) Deed. A duly executed and acknowledged Special Warranty
Deed in recordable form, conveying to Purchaser good and indefeasible fee simple
title to the Real Property, Improvements thereon, and the Easements and Awards
to Purchaser, free and clear of all liens, claims, encumbrances, easements,
reservations and restrictions, subject only to the encumbrances noted and not
otherwise objected to by Purchaser in the Title Commitment (the "Permitted
Encumbrances"), in form and substance as attached hereto as Exhibit "B".
(b) ▇▇▇▇ of Sale. The duly executed Blanket ▇▇▇▇ of Sale and
Assignment ("▇▇▇▇ of Sale") assigning all of Seller's right, title and interest
in and to the Tangible Personal Property subject to the Permitted Encumbrances,
and Seller's rights in and to, among other things, the Operating Permits, in the
form of Exhibit "C" attached hereto.
(c) Operating Permits. The originals of the Operating Permits.
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(d) Title Policy. An Owner's Policy of Title Insurance ("Title
Policy") covering the Real Property and Improvements, in accordance with the
Title Commitment subject only to the Permitted Encumbrances.
(e) Plans and Studies. The Plans and Studies.
(f) UCC Searches. A report of searches made of the county and
state Uniform Commercial Code records of the Secretary of State of the state and
of the County in which the Real Property is located and in which the Seller has
its principal of business, dated within fifteen (15) days prior to Closing,
showing no filings against, or with respect to, the Real Property, or any
portion thereof.
(g) Keys. Keys to the Improvements, if any.
(h) Certificate of Authority. A duly executed certificate of
resolutions and authority in form reasonably satisfactory to Purchaser,
authorizing the execution and delivery of all documents required hereunder to be
executed by Seller and the consummation of the transactions contemplated
hereunder, and such other evidence of the authority of Seller to consummate the
Closing as the Purchaser or the Title Company may reasonably require.
(i) Governmental Certificates. Evidence of the existence and
good standing of the Seller in the State of Georgia certified by the Secretary
of State of the State of Georgia, a certificate of authority of the Seller in
the State of Texas certified by the Secretary of State of Texas, and a
certification of account status issued by the Comptroller of Public Accounts of
the State of Texas.
(j) Non-Foreign Person Affidavit. A non-foreign affidavit,
properly executed and in recordable form as attached hereto as Exhibit "D".
(k) Possession. Seller shall deliver possession of the Assets
to the Purchaser subject only to the Permitted Encumbrances.
(l) Closing Costs. The Closing Costs to be paid pursuant to
Section 6.2 above.
(m) Midland Estoppel Letter. Seller shall deliver to Purchaser
an estoppel letter (the "Midland Estoppel Letter") from Midland Loan Services
which identifies the Midland Loan Documentation and confirms (i) that the
Midland Loan Documentation has not been amended, (ii) that there are no defaults
under the Midland Loan Documentation, (iii) the amount of principal outstanding
under the Midland Note, (iv) the date through which interest has been paid on
the Midland Note, (v) that there are no other amounts outstanding under the
Midland Note, and (vi) Midland's consent to the Assumption Agreement and the
Non-Recourse Note.
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(n) Other Documents. Such additional documents, instruments,
assumptions, consents, waivers and releases as may be reasonably necessary to
effectuate the transactions contemplated herein or to evidence the capacity and
authority of Purchaser to consummate the transactions contemplated herein.
SECTION 4.4. Purchaser's Obligations. At the Closing, Purchaser shall
deliver the following to Seller at Purchaser's sole cost and expense:
(a) Assumption Agreement. The Assumption Agreement duly
executed by the Purchaser.
(b) Non-Recourse Note. The Non-Recourse Note duly executed by
the Purchaser.
(c) Certificate of Authority. A duly executed Certificate of
Corporate Resolutions, authorizing the execution and delivery of all documents
required hereunder to be executed by Purchaser and the consummation of the
transactions contemplated hereunder, and such other evidence of Authority of
Purchaser to consummate the Closing as Seller or the Title Company may
reasonably require.
(d) ▇▇▇▇ of Sale. A duly executed counterpart of the ▇▇▇▇ of
Sale.
(e) Governmental Certificates. Evidence of the existence and
good standing of Purchaser in the State of Massachusetts certified by the
Secretary of State of the State of Massachusetts.
(f) Management Agreement. A property management agreement with
respect to the Improvements in substantially the form attached hereto as Exhibit
"H" (the "Management Agreement") duly executed by the Purchaser.
(g) Other Documents. Such additional documents, instruments,
assumptions, consents, waivers and releases as may be reasonably necessary to
effectuate the transactions contemplated herein or to evidence the capacity and
authority of Purchaser to consummate the transactions contemplated herein.
ARTICLE 5
CASUALTY OR CONDEMNATION
SECTION 5.1. If, prior to the Closing Date, all or any portion of the
Real Property is taken by, or made subject to, condemnation, eminent domain or
other governmental acquisition proceedings, then Purchaser, at its sole option,
may elect either:
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(a) to terminate this Agreement by written notice to Seller
given at or prior to the Closing and, upon Seller's receipt thereof, neither
party hereto shall have any further rights against or obligations to the other
under this Agreement; or
(b) to agree to close and deduct from the total amount of
consideration to be paid pursuant to Section 2.1 an amount equal to any sum paid
to Seller for such governmental acquisition in which event Seller shall assign,
transfer and set over to Purchaser all of Seller's right, title and interest in
and to any awards which may in the future be made on account of such
governmental acquisition.
SECTION 5.2. If, prior to the Closing Date, all or any portion of the
Improvements should be damaged or destroyed by fire or other casualty such that
the cost to repair same exceeds $10,000.00, then Purchaser, at its sole option,
may elect either:
(a) to terminate this Agreement by written notice to Seller
given at or prior to the Closing and, upon Seller's receipt thereof, neither
party hereto shall have any further rights against or obligations to the other
under this Agreement; or
(b) to agree to close this Contract without reduction in the
total consideration to be paid pursuant to Section 2.1 and require Seller to
assign to Purchaser at Closing all insurance proceeds payable for such damage
and pay to Purchaser the amount of any deductible under the insurance policies
insuring the Improvements.
If the cost to repair the damage does not exceed $10,000.00,
Purchaser's option shall be limited to (b) above. Seller shall maintain in
effect until the time of closing its existing policies of fire and extended
coverage insurance.
ARTICLE 6
REMEDIES
SECTION 6.1. Remedies.
(a) Breach by Purchaser. In the event that Purchaser shall
default in any of its obligations hereunder to be performed prior to Closing,
for any reason other than Seller's default or a termination of this Agreement by
Purchaser or Seller pursuant to a right to do so under the provisions hereof,
Seller shall have the right to (i) terminate this Agreement and (ii) receive
liquidated damages in the amount of $100. Upon such termination and payment to
Seller of such liquidated damages, this Agreement shall become null and void and
the parties hereto shall have no further obligations hereunder. Except as
provided in the second preceding sentence, Purchaser shall not be liable to
Seller for any other damages, including any punitive, speculative or
consequential damages, or to the remedy of specific performance.
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(b) Breach by Seller. In the event that Seller shall default
in any of its obligations hereunder to be performed prior to Closing, for any
reason other than Purchaser's default or a termination of this Agreement by
Purchaser or Seller pursuant to a right to do so under the provisions hereof,
Purchaser shall, with respect to any default first discovered by Purchaser
prior to Closing, either (i) terminate this Agreement and in such event this
Agreement shall be null and void and the parties shall have no further
obligation or liability hereunder, or (ii) seek specific performance of this
Agreement, including, without limitation, to enforce Seller's (or its
affiliates') obligations under Sections 8.1 and 8.2 of this Agreement. In no
event shall Seller be liable to Purchaser for any punitive, speculative or
consequential damages by reason of a default discovered by Purchaser prior to
Closing or otherwise; provided that nothing in this Section 6.1(b) shall be
construed to limit Purchaser's right to indemnification from Seller under
Section 10.2.
ARTICLE 7
PRORATIONS AND ADJUSTMENTS
SECTION 7.1. At the Closing, the following items of revenue and expense
shall be adjusted and apportioned in cash as of 12:01 A.M. on the Closing Date
(the "Adjustment Date"):
(a) Real estate and other ad valorem taxes, personal property,
use taxes and sewer charges, on the basis of the fiscal year for which such
taxes or charges are assessed. If, however, after the Closing Date, by reason of
any change in assessment or change in rate or any other reason, the ad valorem
or other taxes or charges for the fiscal year covered by such apportionment
should be determined to vary from those apportioned on the Closing Date, the
amount of any refund received by, or payment due from, the Purchaser shall be
apportioned between the Seller and the Purchaser as of the Adjustment Date. If
the actual ad valorem taxes are not available on the Closing Date for the tax
year in which the Adjustment Date occurs, the proration of such taxes or other
charges shall be estimated at the Closing based upon reasonable information
available to the parties, including information disclosed by the local tax
office or other public information, and an adjustment shall be made when actual
figures are published or otherwise become available.
(b) Fees paid or payable by Seller for transferable Licenses
and Permits shall be prorated at the Closing with Seller being responsible for
all such fees through and including the date preceding the Closing Date.
(c) Accrued and unpaid interest on the Midland Note payable
through the month in which Closing occurs shall be prorated at the Closing with
Seller being responsible for all such interest through and including the date
preceding the Closing Date.
(d) All other income (actually received on a cash basis) and
public utility charges and amounts under contracts expressly being assumed by
the Purchaser hereunder shall be prorated at the Closing effective as of the
Closing Date. In this regard, all such expenses for the Closing Date shall be
borne by Purchaser.
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(d) Notwithstanding anything herein to the contrary, to the
extent that the net prorations pursuant to the Section 7.1 (the "Net
Prorations") are payable in favor of the Seller, the aggregate principal amount
of the Non-Recourse Note shall be increased by the amount of such Net
Prorations. Likewise, to the extent that the Net Prorations are payable in favor
of the Purchaser, the aggregate principal amount of the Non-Recourse Note shall
be decreased by the amount of such Net Prorations.
SECTION 7.2. All items to be adjusted, in accordance with the foregoing
Section 7.1, for which figures are not available at Closing, will be adjusted
and payment therefor will be made by Seller to Purchaser or by Purchaser to
Seller, as appropriate, as soon as figures are available after Closing.
Purchaser or Seller, as appropriate, will deliver simultaneously with such
payment, any and all data, information or other backup it may have with respect
to such payment and/or such proration so as to fully indicate to the other party
the calculation of the amount of payment contained therewith.
SECTION 7.3. The provisions of this Article 7 shall survive the
Closing.
ARTICLE 8
OPERATIONS PENDING CLOSING; DEVELOPMENT PERIOD
SECTION 8.1. From the Effective Date through the Closing Date Seller
agrees to operate the Real Property as follows:
(a) Seller will keep the Real Property in as good a condition
as exists on the Effective Date.
(b) Seller will not enter into any employment, maintenance,
service, supply or other agreement relating to the Real Property without the
express written consent of Purchaser, unless such agreement may be terminated on
thirty (30) days written notice.
(c) Seller shall not enter into any leases or occupancy
agreements with respect to the Real Property without the express written consent
of Purchaser.
(d) Purchaser or representatives of Purchaser shall have
access to the Assets during normal business hours if Purchaser notifies Seller
in advance of the time Purchaser desires access to the Assets. The Seller shall
make all books and records relating to the ownership of the Assets available to
the Purchaser and its accountants, at Purchaser's request, during normal
business hours and without interfering with the operations of the Assets, and
shall permit the Purchaser's accountants and attorneys to examine and audit the
same, at the Purchaser's sole cost and expense.
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(e) Seller shall not enter into or record any easement,
covenant, license, permit, agreement or other instrument against the Real
Property, or any portion thereof.
(f) Prior to the Closing, Seller shall take such actions as
may be required to enable it to convey the Operating Permits to Purchaser on the
Closing Date. Seller shall pay all fees and expenses in regard to such
assignments or transfers, including any customary transfer charges necessary to
obtain the consent of any party which may be required in connection with such
assignments or transfers. Seller shall cooperate and promptly execute all
applications and instruments required by governmental entities in connection
with the transfer to Purchaser of any of the Operating Permits. Purchaser agrees
to submit all applications, documentation and information reasonably required to
assist Seller in obtaining such consents and transfers.
(g) Immediately upon receipt, Seller shall send Purchaser a
copy of any notice with respect to the Assets which Seller may receive from any
governmental authority or agency having jurisdiction over the Assets.
(h) Seller will advise Purchaser in writing promptly of any
litigation, arbitration or administrative hearing concerning or affecting the
Assets of which Seller has knowledge or notice.
(i) Seller will immediately notify Purchaser of any
condemnation or threatened condemnation of the Real Property or any portion
thereof.
(j) Seller will not, without the prior written consent of
Purchaser, create, place or permit to be created or placed, or through any act
or failure to act, acquiesce in the placing of, or allow to remain, any deed of
trust, mortgage, voluntary or involuntary lien, whether statutory,
constitutional or contractual, security interest, encumbrance or charge, or
conditional sale or other title retention document, other than the Permitted
Encumbrances, and should any of the foregoing become attached hereafter in any
manner to any part of the Assets without the prior written consent of Purchaser,
Seller will cause the same to be promptly discharged and released.
(k) Seller covenants and agrees to timely pay all accrued,
outstanding, due or unpaid expenses or charges attributable to or incurred or
accrued with respect to the Assets existing as of Closing.
SECTION 8.2. Management. An affiliate of Seller approved by Purchaser
(the "Manager") will provide property management services for the Real Property
pursuant to the terms of the Management Agreement. As compensation for its
services, the Manager shall be entitled to receive property management fees as
specified in the Management Agreement. The Manager will provide services
commensurate with those then being provided by property managers of other
comparable retail shopping centers in the market in which the Real Property is
located. In addition, the Manager will be subject to removal as set forth in the
Management Agreement if the Manager's performance fails to satisfy standards set
forth in the Management Agreement.
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ARTICLE 9
CONDITIONS TO OBLIGATIONS
SECTION 9.1. Purchaser's obligation to consummate the acquisition of
the Assets pursuant to the terms of this Agreement are subject to and
conditioned upon the following:
(a) Each of the representations and warranties made by Seller
herein shall be true and complete in all respects on the Closing Date as if made
on and as of such date.
(b) Seller shall have performed and complied with all
covenants and agreements which it is required to perform or comply with on or
before the Closing Date pursuant to the provisions of this Agreement.
(c) No suit, action, or other proceeding shall be pending or
threatened before any court or governmental agency by which any third party is
seeking to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby.
(d) Purchaser shall have obtained the approval of the
Purchaser's Board of Directors of all of the terms and conditions of this
Agreement ("Board Approval").
(e) Midland and Purchaser shall have duly executed the
Assumption Agreement.
(f) Seller shall have delivered to Purchaser the Midland
Estoppel Letter duly executed by Midland.
(g) Purchaser shall have been satisfied with the results of
any Phase I environmental inspection performed in respect of the Real Property.
SECTION 9.2. Seller's obligation to consummate the acquisition of the
Assets pursuant to the terms of this Agreement are subject to and conditioned
upon the following:
(a) Each of the representations and warranties made by
Purchaser herein shall be true and complete in all respects on the Closing Date
as if made on and as of such date.
(b) Purchaser shall have performed and complied with all
covenants and agreements which it is required to perform or comply with on or
before the Closing Date pursuant to the provisions of this Agreement.
(c) No suit, action, or other proceeding shall be pending or
threatened before any court or governmental agency by which any third party is
seeking to restrain or prohibit or to
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obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
(d) Purchaser shall have duly executed the Management
Agreement.
(e) Midland and Purchaser shall have duly executed the
Assumption Agreement.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Notices. All notices, demands and requests which may be
given or which are required to be given by either party to the other, and any
exercise of a right of termination provided by this Agreement, shall be in
writing and shall be deemed effective when either: (i) personally delivered to
the intended recipient; (ii) sent, by certified or registered mail, return
receipt requested, addressed to the intended recipient at the address specified
below; (iii) delivered in person to the address set forth below for the party to
whom the notice was given; or (iv) deposited into the custody of a nationally
recognized overnight delivery service such as Federal Express Corporation,
▇▇▇▇▇, or Purolator, addressed to such party at the address specified below. For
purposes of this Section 12.1, the addresses of the parties for all notices are
as follows (unless changed by similar notice in writing given by the particular
person whose address is to be changed):
If to Seller: American Realty Trust, Inc.
c/o Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
3701 Bank One Center
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
If to Purchaser: EQK Realty Investors I
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇.
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with a copy to: Wolf, Block ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇
Twelfth Floor, Packard Building
Philadelphia, PA 19102
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 10.2. Indemnification by Seller. Seller agrees to indemnify and
hold harmless the Purchaser and its officers, directors, trustees, employees and
controlling persons from and against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Purchaser may sustain from (i) the breach of
any of the covenants or obligations of the Seller hereunder, or (ii) any claims
by the Seller or third parties (and liabilities of Purchaser in favor of Seller
or third parties) related to this transaction, the Property, or Seller's or
Purchaser's activities in connection with the Property, whether (A) accruing
prior to or subsequent to Closing hereunder, (B) due to the negligence, gross
negligence, or intentional misconduct of Purchaser, (C) sounding in tort,
contract or otherwise, (D) arising from any contract executed or assumed by
Purchaser, including the Assumption Agreement, (E) arising from the NonRecourse
Note (or the documents securing the same) or the Midland Note (or the documents
securing the same), (F) arising from any other documents executed by the
Purchaser at Closing hereunder, (G) arising from any violation of applicable law
or any other reason whatsoever which, in the aggregate, exceed the then current
fair market value of the Assets. This Section 10.2 shall survive Closing without
limitation.
SECTION 10.3. Entire Agreement. This Agreement embodies the entire
agreement between the parties relative to the subject matter hereof, and there
are no oral or written agreements between the parties, nor any representations
made by either party relative to the subject matter hereof, which are not
expressly set forth herein.
SECTION 10.4. Amendment. This Agreement may be amended only by a
written instrument executed by the party or parties to be bound thereby.
SECTION 10.5. Headings. The captions and headings used in this
Agreement are for convenience only and do not in any way limit, amplify, or
otherwise modify the provisions of this Agreement.
SECTION 10.6. Time of Essence. Time is of the essence of this
Agreement; however, if the final date of any period which is set out in any
provision of this Agreement falls on a Saturday, Sunday or legal holiday under
the laws of the United States or the State of Texas, then, in such event, the
time of such period shall be extended to the next day which is not a Saturday,
Sunday or legal holiday.
SECTION 10.7. Applicable Law; Venue. This Agreement is made and entered
into in the City of Dallas, State of Texas, and its interpretation, validity and
performance shall be governed by the laws of the State of Texas. The parties
hereto mutually consent to the jurisdiction of any local, state or federal court
situated in Dallas, Texas, and waive any objection which they may have
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135
pertaining to improper venue or forum non conviens to the conduct of any
proceeding in any such court. The parties hereto agree that venue for any action
in connection herewith, shall be in Dallas, Texas.
SECTION 10.8. Successors and Assigns; Assignment. This Agreement shall
bind and inure to the benefit of Seller and Purchaser and their respective
heirs, executors, administrators, personal and legal representatives, successors
and assigns.
SECTION 10.9. Invalid Provision. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; and, the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
such illegal, invalid, or unenforceable provision or by its severance from this
Agreement.
SECTION 10.10. Attorneys' Fees. In the event it becomes necessary for
either party hereto to file suit to enforce this Agreement or any provision
contained herein, the party prevailing in such suit shall be entitled to
recover, in addition to all other remedies or damages, as provided herein,
reasonable attorneys' fees incurred in such suit.
SECTION 10.11. Multiple Counterparts. This Agreement may be executed in
a number of identical counterparts which, taken together, shall constitute
collectively one (1) agreement; but in making proof of this Agreement, it shall
not be necessary to produce or account for more than one such counterpart.
SECTION 10.12. Schedules and Exhibits. The following schedules and
exhibits are attached to this Agreement and are incorporated into this Agreement
and made a part hereof:
(a) Schedule I - Rent Rolls;
(b) Exhibit A - the Real Property;
(c) Exhibit B - the Special Warranty Deed;
(d) Exhibit C - the Blanket ▇▇▇▇ of Sale and Assignment;
(e) Exhibit D - the Non-Foreign Person Affidavit; and
(f) Exhibit E - form of Non-Recourse Note
(g) Exhibit F - form of Management Agreement
(h) Exhibit G - Copy of Midland Loan Documentation
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136
IN WITNESS WHEREOF the parties hereto have executed this Agreement
effective as of the date set forth above.
SELLER:
------
AMERICAN REALTY TRUST, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PURCHASER:
---------
EQK REALTY INVESTORS I
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]
137
SCHEDULE I
Rent Roll
---------
[begins on next page]
SCHEDULE I - RENT ROLL
138
EXHIBIT "A"
----------
DESCRIPTION OF REAL PROPERTY
----------------------------
▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇▇, 11, 12, 13, 14, and a portion of Lot 5
(described by metes and bonds), ▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Addition to the City of
Lubbock, Lubbock County, Texas. A copy of the metes and bounds description for
the portion of Lot 5 is included in the Addendum hereto.
EXHIBIT A - DESCRIPTION OF REAL PROPERTY - Page 1
139
EXHIBIT "B"
----------
FORM OF SPECIAL WARRANTY DEED
-----------------------------
STATE OF TEXAS )
)
COUNTY OF __________ )
__________________________________, a __________________ ("Grantor"),
for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other
valuable consideration, the receipt and sufficiency of which consideration are
hereby acknowledged, has Granted, Sold, and Conveyed, and by these presents does
Grant, Sell, and Convey, unto______________________, a ___________________
("Grantee"), having an address of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, that certain real property described in Exhibit A attached
hereto and made a part hereof (the "Property"), together with (i) any and all
appurtenances, privileges and hereditaments belonging or appertaining to the
Property; (ii) any and all improvements or fixtures located on the Property;
(iii) any and all appurtenant easements or rights-of-way benefiting the Property
and any and all of the rights to Grantor to use the easements and rights-of-way;
(iv) any and all rights of ingress and egress; (v) any and all mineral rights
and interests of Grantor in, on or under the Property (present or reversionary);
and (vi) all right, title and interest of Grantor (if any) in, to and under
adjoining streets, rights of way and easements (all of the above being
hereinafter referred to collectively as the "Real Estate"), SUBJECT TO the
matters identified on Exhibit B attached hereto and incorporated herein by this
reference (the "Permitted Exceptions").
TO HAVE AND TO HOLD the Real Estate, together with all and singular the
rights and appurtenances belonging in any way to the Real Estate, unto the said
Grantee, its successors and assigns forever, and Grantor binds itself and its
successors and assigns to warrant and forever defend all and singular the Real
Estate to Grantee, its successors and assigns against every person lawfully
claiming or to claim all or any part of the Real Estate, by, through, or under
Grantor, but not otherwise.
EXHIBIT B - FORM OF SPECIAL WARRANTY DEED - PAGE 1
140
IN WITNESS WHEREOF, Grantor has executed this Deed effective as of the
_____ day of _________________________, 1998.
GRANTOR: _____________________________________,
a_____________________
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STATE OF TEXAS )
)
COUNTY OF ________ )
This instrument was acknowledged before me this _____ day of
____________, 1998, by ________________, the _________________ of
________________________________, a ______________________, on behalf of said
________________________.
(SEAL)
-------------------------------------------
Notary Public in and for the State of TEXAS
-------------------------------------------
Print name of notary
-------------------------------------------
My Commission Expires:
EXHIBIT B - FORM OF SPECIAL WARRANTY DEED - PAGE 2
141
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
----------------------------
▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇▇, 11, 12, 13, 14, and a portion of Lot 5
(described by metes and bonds), ▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Addition to the City of
Lubbock, Lubbock County, Texas. A copy of the metes and bounds description for
the portion of Lot 5 is included in the Addendum hereto.
EXHIBIT B - FORM OF SPECIAL WARRANTY DEED - PAGE 3
142
EXHIBIT B
PERMITTED ENCUMBRANCES
----------------------
[to be attached]
EXHIBIT B - FORM OF SPECIAL WARRANTY DEED - PAGE 4
143
EXHIBIT "C"
FORM OF BLANKET ▇▇▇▇ OF SALE AND ASSIGNMENT
-------------------------------------------
The undersigned, ___________________________, a ______________________
("Assignor"), for and in consideration of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration in hand paid by
___________________________________________, a __________________ ("Assignee"),
pursuant to and in accordance with the terms and provisions of that certain
Purchase and Sale Agreement (the "Agreement") dated effective as of
________________________, 1998, between Assignor and Assignee, the receipt and
sufficiency of which are hereby acknowledged by Assignor, ASSIGNS, TRANSFERS,
SETS OVER AND DELIVERS to Assignee, its successors and assigns, all of the
following (collectively, the "Property"):
(i) All of Assignor's right, title and interest in and to any
personal property located on any portion of the Real Property
(as defined in the Agreement), including, without limitation,
the personal property more particularly described on Exhibit
"A" attached hereto (collectively, the "Personal Property");
(ii) All site plans, surveys, soil and substrata studies,
architectural drawings, plans and specifications, engineering
plans and studies, landscape plans and any other plans or
studies of any kind, if any, in Assignor's possession that
relate to the Real Property and the Improvements located
thereon;
(iii) All licenses, permits, trademarks, trade names and logos
(including, without limitation, the name "Oak Tree Village")
owned by Assignor or to which Assignor claims any right or
interest or to which Assignor has rights pursuant to any
license, as used by Assignor in connection with the Real
Property; and
(iv) To the extent assignable without the consent of third parties,
all intangible property, if any, owned by Seller and
pertaining to the Real Property, the Improvements, or the
Personal Property, including without limitation, transferable
utility contracts.
TO HAVE AND TO HOLD the Property, together with all and singular any
other rights and appurtenances thereto in anywise belonging unto Assignee, its
successors and assigns forever.
The assignment hereunder is made and accepted expressly subject to the
Permitted Exceptions contained in the Special Warranty Deed of even date
herewith, executed by Assignor, conveying the Real Property and all Improvements
thereon to Assignee, but only to the extent such Permitted Exceptions affect the
Property.
EXHIBIT C - FORM OF ▇▇▇▇ OF SALE AND ASSIGNMENT- Page 1
144
Except as aforesaid, this Agreement shall bind and inure to the benefit
of the parties and their respective successors, legal representatives and
assigns.
Neither this Agreement nor any term, provision, or condition hereof may
be changed, amended or modified, and no obligation, duty or liability or any
party hereby may be released, discharged or waived, except in a writing signed
by all parties hereto.
[Signature Pages Follow]
EXHIBIT C - FORM OF ▇▇▇▇ OF SALE AND ASSIGNMENT- Page 2
145
IN WITNESS WHEREOF, Assignor has caused this Blanket ▇▇▇▇ of Sale and
Assignment to be executed the _________ day of _______________, 1998.
ASSIGNOR:
---------
__________________________________________,
a _____________________________
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ASSIGNEE:
---------
-------------------------------------------
By:
----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Exhibit "A" - Personal Property
EXHIBIT C - FORM OF ▇▇▇▇ OF SALE AND ASSIGNMENT- Page 3
146
EXHIBIT A
DESCRIPTION OF PERSONAL PROPERTY
--------------------------------
[to be provided]
EXHIBIT C - FORM OF ▇▇▇▇ OF SALE AND ASSIGNMENT- Page 4
147
EXHIBIT "D"
NONFOREIGN PERSON AFFIDAVIT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. To inform EQK Realty Investors I, a
Massachusetts trust ("Purchaser") that withholding of a tax is not required upon
the disposition of that certain real property located in Lubbock, Lubbock
County, in the State of Texas, as described on EXHIBIT "A" attached hereto, from
American Realty Trust, Inc., a Georgia corporation ("Seller"), the undersigned,
being first duly sworn, hereby certifies the following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership or
foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The Seller's U.S. employer identification number is _______________.
3. The Seller's office address is:
American Realty Trust, Inc.
c/o Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
The undersigned understands that this certification may be disclosed to
the Internal Revenue Service by Purchaser and that any false statement contained
herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and, to the best of my knowledge and belief, it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of the Seller.
DATED: _______________, 1998
AMERICAN REALTY TRUST, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
EXHIBIT D - NONFOREIGN PERSON AFFIDAVIT - Page 1
148
EXHIBIT D - NONFOREIGN PERSON AFFIDAVIT - Page 2
149
EXHIBIT "A"
LEGAL DESCRIPTION
▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇▇, 11, 12, 13, 14, and a portion of Lot 5
(described by metes and bonds), ▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Addition to the City of
Lubbock, Lubbock County, Texas. A copy of the metes and bounds description for
the portion of Lot 5 is included in the Addendum hereto.
EXHIBIT D - NONFOREIGN PERSON AFFIDAVIT - Page 3
150
EXHIBIT "E"
FORM OF
NON-RECOURSE PROMISSORY NOTE
$1,250,000.00 ________, 1998
FOR VALUE RECEIVED, the undersigned, EQK REALTY INVESTORS I, a
Massachusetts trust, ("Maker"), promises to pay to the order of AMERICAN REALTY
TRUST, INC., a Georgia corporation, or its assigns ("Payee"), at its address at
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, the principal sum of ONE
MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($1,250,000.00), together
with interest on said principal equal to twelve percent (12%) per annum.
This Note shall be due and payable as follows:
Interest only shall be due and payable monthly as it accrues, on
the first day of each and every calendar month, beginning ______,
1998 and continuing regularly thereafter until the expiration of
sixty (60) months from the date hereof, when the entire principal
balance and all accrued and unpaid interest shall be due and
payable in full.
Interest charges will be calculated on amounts advanced hereunder on
the actual number of days said amounts are outstanding on the basis of a 360 day
year. It is the intention of Maker and Payee to conform strictly to all
applicable usury laws. It is therefore agreed that (i) in the event that the
maturity hereof is accelerated by reason of an election by Payee, all unearned
interest shall be canceled automatically or, if theretofore paid, shall either
be refunded to Maker or credited on the unpaid principal amount of this Note,
whichever remedy is chosen by Payee, (ii) the aggregate of all interest and
other charges constituting interest under applicable law and contracted for,
chargeable or receivable under this Note or otherwise in connection with the
transaction for which this Note is given shall never exceed the maximum amount
of interest, nor produce a rate in excess of the maximum rate of interest that
Payee may charge Maker under applicable law and in regard to which Maker may not
successfully assert the claim or defense of usury, and (iii) if any excess
interest is provided for, it shall be deemed a mistake and the same shall either
be refunded to Maker or credited on the unpaid principal amount hereof and this
Note shall be automatically deemed reformed so as to permit only the collection
of the maximum legal non-usurious rate and amount of interest. All sums paid or
agreed to be paid to the holder of this Note for the use, forbearance or
detention of the
EXHIBIT E - FORM OF NON-RECOURSE PROMISSORY NOTE - Page 1
151
indebtedness evidenced hereby to the full extent allowed by applicable law,
shall be amortized, prorated, allocated and spread through the full term of this
Note.
In the event of default in the payment of any installment of principal
or interest when due hereunder, or upon the occurrence of any event of default
under any document or instrument executed in connection with or as security for
this Note, or upon failure in performance of any covenant, agreement, or
obligation to be performed under any documents executed in connection with or as
security for this Note, in each event after notice has been delivered to the
Maker and Maker has failed to cure such default within ten (10) business days
from the date such notice was so delivered to Maker, Payee may declare the
entirety of this Note, principal and interest, immediately due and payable
without any further notice, and failure to exercise said option shall not
constitute a waiver on the part of Payee of the right to exercise the same at
any other time.
Maker consents to the release or discharge of any party liable hereon
and to the release or impairment of any collateral for this Note by Payee.
All past due principal and interest on this Note shall bear interest
from maturity of such principal or interest (in whatever manner same may be
brought about) until paid at the highest non-usurious rate allowed by applicable
law. In the event default is made in the payment of this Note in whatever manner
its maturity may be brought about, and it is placed in the hands of an attorney
for collection, or is collected through probate, bankruptcy or other
proceedings, Maker promises to pay all costs and reasonable attorneys' fees
incurred by Payee as a result thereof.
Maker and every surety, endorser and guarantor of this Note waive
grace, notice, demand, presentment for payment, notice of non-payment, protest,
notice of protest, notice of intention to accelerate, notice of acceleration of
the indebtedness due hereunder and all other notice, filing of suit and
diligence in collecting this Note, and the enforcing of any of the security
rights of Payee, and consent and agree that the time of payment hereof may be
extended without notice at any time and from time to time, and for periods of
time whether or not for a term or terms in excess of the original term hereof,
without notice or consideration to, or consent from, any of them.
This Note may be prepaid at any time, in whole or in part, without any
penalty.
All regular installments and any prepayment sums as received by Payee
or other holder hereof shall be applied to any indebtedness of Maker to Payee in
such order as Payee shall elect in its sole discretion.
This Note is secured by that certain Deed of Trust instrument of even
date herewith executed by Maker to Payee covering, among other things, that
certain tract of land located in Lubbock County, Texas as more particularly
described on Exhibit A attached thereto and made a part thereof for all
purposes.
EXHIBIT E - FORM OF NON-RECOURSE PROMISSORY NOTE - Page 2
152
The terms and provisions hereof shall be binding upon and inure to the
benefit of Maker and Payee and their respective successors and assigns.
Subject to the remaining terms and provisions hereof, without impairing
the rights, powers, privileges, liens and security interests hereunder or under
any other agreements executed in connection with or as security for the payment
of this Note, Payee, by its acceptance hereof, hereby agrees that payment of
this Note and performance of Maker's obligations under the deed of trust
described above or any other instrument securing this Note shall be enforced
solely from the above-described property and/or any and all other property
(whether real, personal, tangible or intangible) covered by the deed of trust
described above or any other instrument securing this Note. Subject to the
remaining terms and provisions hereof, the provisions set forth in this
paragraph are not intended as any release or discharge of the indebtedness
evidenced hereby but are intended only as a covenant not to ▇▇▇ for a
deficiency, it being expressly understood that nothing contained herein shall
obligate Maker, or Maker's administrators, successors or assigns, further than
to bind their right, title and interest in and to any and all property securing
this Note, and in the event of a default hereunder or under any deed of trust,
or under any other security instrument executed and delivered in connection
herewith or therewith, the legal holder hereof shall not be entitled to a
personal or deficiency judgment, and none shall be sought or entered.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT THE APPLICABILITY OF ANY
OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE
SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING.
The terms and provisions hereof shall be binding upon and inure to the
benefit of Maker and Payee and their respective successors and assigns.
EXECUTED by the undersigned under seal with the intent that this
instrument be an instrument under seal as of the day, month and year first above
written.
MAKER:
EQK REALTY INVESTORS I
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
EXHIBIT E - FORM OF NON-RECOURSE PROMISSORY NOTE - Page 3
153
EXHIBIT F
FORM OF ASSUMPTION AGREEMENT
(Midland Loan)
THIS ASSUMPTION AGREEMENT ("Agreement") is made as of ___________
1998 ("Effective Date") by and among American Realty Trust, Inc., a Georgia
corporation ("Seller") and EQK Realty Investors I, a Massachusetts trust
("Purchaser"), pursuant to the Purchase and Sale Agreement dated as of
____________, 1998, among Seller and Purchaser (as may be amended, the "Purchase
Agreement").
A. Pursuant to the Purchase Agreement, concurrently herewith, Seller
has conveyed to Purchaser all of its right, title and interest in and to the
real property and improvements located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (the "Property").
B. Seller is the current obligor under that certain Promissory Note
(the "Note") in the original principal amount of $_________ dated ____________,
and payable to Midland Loan Services (the "Holder") which note is secured by a
certain Deed of Trust on the Property dated ___________, and recorded on
_____________, at [Reception No. ___________] in the records of the Clerk and
Recorder of the City and County of Lubbock, State of Texas (the "Deed of
Trust").
▇. ▇▇▇▇▇▇ has agreed to approve the transfer of the Property and
release Seller from all liability under the above Note upon provision to Holder
of this Agreement and the certification as contained herein from Purchaser, as
transferees of the Property, that Purchaser is an entity affiliated with Seller.
NOW, THEREFORE, in consideration of the Property and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged:
1. Purchaser hereby assumes and agrees to pay, perform, fulfill
and discharge when due, all obligations and liabilities of Seller under the Note
and the Deed of Trust, subject to any limitation on personal liability set forth
in the Note and/or Deed of Trust.
2. Purchaser hereby certifies that it is an entity affiliated with
Seller and all parties hereto agree that, for purposes of this Section 2, the
Holder is an intended third party beneficiary to this Assumption Agreement.
3. Purchaser will defend, indemnify and hold Seller harmless from
and against any and all claims, losses, costs and expenses, including reasonable
attorneys' fees, arising out of or relating to the Deed of Trust or the Note
after the date hereof.
EXHIBIT F - FORM OF ASSUMPTION AGREEMENT - PAGE 1
154
4. Notwithstanding anything herein to the contrary, Purchaser's
liability under this Assumption Agreement shall be limited to its interest in
the Property.
5. This Agreement shall be governed and construed in accordance
with the laws of the State of Texas.
6. This Agreement may be executed in counterparts, which together
shall constitute but one and the same document. Such counterparts may be
transmitted by telecopy, the telecopy to have full force and effect as if it
were an original.
EXHIBIT F - FORM OF ASSUMPTION AGREEMENT - PAGE 2
155
IN WITNESS WHEREOF, the parties have executed this agreement as of
the date first above written.
SELLER:
AMERICAN REALTY TRUST, a Georgia corporation
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PURCHASER:
EQK REALTY INVESTORS I, a Massachusetts trust
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
CONSENTED AND AGREED TO
EFFECTIVE AS OF THE _____
DAY OF _________, 1998:
MIDLAND LOAN SERVICES
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
EXHIBIT F - FORM OF ASSUMPTION AGREEMENT - PAGE 3
156
EXHIBIT G
Copy of Midland Loan Documentation
[Previously Provided]