PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
TRUST AGREEMENT AS
AMENDED AND RESTATED
SEPTEMBER 29, 1997
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
TRUST AGREEMENT AS AMENDED
AND RESTATED SEPTEMBER 29, 1997
The undersigned trustees of Pennsylvania Real Estate Investment Trust
on this 29th day of September 1997, hereby amend the Trust Agreement made
December 27, 1960, and amended February 10, 1961, February 14, 1962, August 7,
1962, May 8, 1963, December 13, 1967, February 24, 1970, October 10, 1985,
November 7, 1985, February 13, 1986 and December 16, 1987 and agree that the
same as amended hereby shall be restated as follows:
1. NAME OF TRUST; REGISTERED OFFICE; DEFINITIONS
Certain trustees acting under this Trust Agreement have heretofore
formed a Trust which is designated "Pennsylvania Real Estate Investment Trust"
(hereinafter referred to as the "Trust" or "PREIT"). PREIT shall conduct all
business and the Trustees, and others authorized hereby or pursuant to the
provisions hereof, shall execute all instruments necessary or desirable and
appropriate to the performance of the purposes of PREIT.
PREIT shall exist subject to 15 Pa. C.S. Chapter 95, as
amended from time to time, and any successor statute thereto.
The address of the registered office of PREIT in the Commonwealth of
Pennsylvania is 455 Pennsylvania Avenue, Suite 135, Montgomery County, Fort
Washington, Pennsylvania 19034.
The term "Trustees," when used herein, shall mean the undersigned
trustees of PREIT and any successor or additional trustees of PREIT hereunder.
The term "Trust Property", when used herein, shall mean all property,
of all kinds, owned by PREIT.
The term "Shareholders", when used herein, shall mean holders of
Shares, as defined in Paragraph 8 of this Trust Agreement.
2. TRUSTEES
The following provisions shall apply to Trustees serving under this
Trust Agreement:
A. NUMBER
The Trustees shall have the right at any time, and from time
to time, to increase or decrease the number of Trustees then empowered to
serve to a number not in excess of fifteen (15) nor
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less than five (5). Commencing with the Annual Meeting of Shareholders in 1970
the Trustees shall be divided into three approximately equal classes each
consisting of not fewer than one (1) nor more than five (5) individuals.
B. TERM OF OFFICE
The term of office of each Trustee serving prior to the
Annual Meeting of Shareholders in 1970 shall terminate upon the election of
his successor. At such Annual Meeting one class of Trustees ("Class A
Trustees") shall be elected, each member of which is to hold office for a term
of one year, one class of Trustees ("Class B Trustees") shall be elected, each
member of which is to hold office for a term of two years, and one class of
Trustees ("Class C Trustees") shall be elected, each member of which is to
hold office for a term of three years, and in each case and in each class such
members shall serve until their respective successors shall have been duly
elected and qualified. Commencing with the Annual Meeting in 1971, and at each
Annual Meeting thereafter, one class of Trustees, which shall be the class
whose terms expire that year, shall be elected, each member of which is to
hold office for a term of three years and until his respective successor is
elected and qualified.
C. NOMINATION OF TRUSTEES
Nomination for election to the office of Trustee at any
Annual or Special Meeting of Shareholders shall be made by the Trustees, or by
petition in writing delivered to the Secretary of PREIT not fewer than
thirty-five (35) days prior to such Shareholders' meeting signed by the
holders of at least two percent (2%) of the Shares outstanding on the date of
such petition. Unless nominations shall have been made as aforesaid, they
shall not be considered at such meeting unless the number of persons nominated
as aforesaid shall be fewer than the number of persons to be elected to the
office of Trustee at such meeting in which event nominations for the Trustee
positions which would not otherwise be filled may be made at the meeting by
any person entitled to vote in the election of Trustees.
D. ADDITIONAL AND SUCCESSOR TRUSTEES: VACANCIES
The death, incapacity, resignation or removal of any or all
of the Trustees shall not terminate PREIT's existence or in any way affect its
continuity.
Vacancies shall be deemed to have occurred as a result of an
increase in the number of Trustees, or by reason of the death, resignation or
incapacity of any of the Trustees (unless the vacancy is eliminated by
reduction in the number of Trustees), and they shall be filled by persons to
be elected by the remaining Trustees. Any new Trustee so elected to fill a
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vacancy created by reason of the death, resignation or incapacity of a Trustee
shall hold office for the full remaining term of the former Trustee and until
his successor is elected and qualified. Any new Trustee so elected as a result
of an increase in the number of Trustees shall hold office until the next
Annual or Special Meeting of Shareholders and until his successor is elected
and qualified. A vacancy caused by the removal of any Trustee shall be filled
only by the Shareholders at an Annual or Special Meeting, unless by reason of
the removal of the Trustee the number of Trustees is reduced to less than five
(5), in which event the next succeeding paragraph of this Paragraph 2.D shall
apply.
Until vacancies are filled the remaining Trustees shall be
empowered to exercise all powers granted all Trustees hereunder, except that
in the event that the number of Trustees shall fall below five (5), the
Trustees shall forthwith nominate and elect at least as many Trustees as may
be required to bring the total number of trustees to five (5).
Upon the election of any Trustee or additional or successor
Trustee, the said Trustee so elected shall execute a written Acceptance of
Trust, which together with a certificate of such election executed by two
other Trustees, shall be filed with legal counsel for PREIT. Upon the delivery
of such Acceptance, the said Trustee shall have all the rights, powers and
duties of a Trustee hereunder.
E. RESIGNATION OF TRUSTEES
Any Trustee may resign at any time by delivering to any
other Trustee and to the office of PREIT written notification of his
resignation, which resignation shall be effective when received, but if the
effect of such resignation shall be to reduce the number of Trustees below
five (5), no such resignation shall be effective until a successor shall have
been elected by the remaining Trustees.
F. REMOVAL OF TRUSTEES
Any Trustee may be removed during his term by a vote of at
least two-thirds of all of the Trustees then in office for any cause by them
deemed sufficient, at any regular meeting of the Trustees, or at any meeting
specially called for that purpose.
Any individual Trustee may be removed for cause (as herein
defined) by a vote of the Shareholders at any meeting of Shareholders called
for the purpose by the affirmative vote of Shareholders entitled to cast at
least a majority of the votes of the Shares then outstanding and entitled to
vote at the annual election of Trustees. Cause for removal shall exist only if
the Trustee whose removal is proposed has been convicted of a felony
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by a court of competent jurisdiction and such conviction is no longer subject
to direct appeal or if the Trustee has been adjudged by a court of competent
jurisdiction to be liable for negligence or misconduct in the performance of
his duty to PREIT in a matter of substantial importance to PREIT, and such
adjudication is no longer subject to direct appeal.
No Trustee shall be removed at any meeting of Trustees or
Shareholders unless written notice of such meeting stating this purpose shall
be given or mailed to those entitled to vote thereon at least seven (7) days
prior to such meeting.
G. WAIVER OF BOND
No Trustee acting hereunder shall be required to furnish a
bond in any jurisdiction in which said Trustees may act.
H. MEETINGS
The Trustees shall hold an Annual Meeting immediately
following the Annual Meeting of Shareholders. No notice shall be required for
the Annual Meeting of Trustees. At that meeting, they shall elect officers,
including a President, a Secretary, and such other officers as they shall from
time to time deem necessary. Officers so elected by them shall remain in
office until the next Annual Meeting of Trustees, unless removed by the vote
of two-thirds of the Trustees then in office at any special meeting called on
seven (7) days notice for that purpose. Special Meetings of the Trustees shall
be called by the Chairman or by two or more of the other Trustees and shall be
held at such time and in such place as shall be designated in the notice of
the meeting. Such notice shall be given by or at the direction of the person
or persons authorized to call such meeting to each Trustee at least two (2)
days prior to the day named for the meeting, unless a different notice period
is provided for hereunder based upon the subject matter of such meeting.
I. QUORUM
A majority of the Trustees, provided that the majority
consists of at least four (4) Trustees, shall constitute a quorum. Trustees
shall be deemed present at a meeting if by means of conference telephone or
similar communications equipment all persons participating in the meeting can
hear each other. If there are fewer than five (5) Trustees, the remainder
constitutes a quorum and must act to fill vacancies to bring the total number
of Trustees to at least five (5). If a quorum is not present at any meeting, a
majority of the Trustees present at the meeting may adjourn the meeting to any
later date and the meeting may be held at such later date without any further
notice.
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J. VOTING REQUIREMENTS
Except as otherwise required by law and except as otherwise
contemplated by paragraph 3.R, the concurrence of a majority of the Trustees
present at any meeting at which a quorum is present shall be necessary to the
validity of any action taken by them. In lieu of a meeting, action may be
taken by the consent in writing of at least seventy-five (75%) of the Trustees
then serving. In any event, the concurrence or consent in writing of at least
four (4) Trustees shall be necessary to the validity of any action taken. The
minimum voting requirements specified in this paragraph shall apply, as a
minimum requirement, with respect to any and all action taken by the Trustees
under this Trust Agreement.
K. TRUSTEES' DEALINGS WITH PREIT
Any Trustee may be employed by PREIT to hold any office, to
perform any special business, financial or other service, and shall be
entitled to receive such additional reasonable compensation as the Trustees
may fix and determine. Moreover, no Trustee shall be disqualified by his
position as a Trustee from selling to, buying from or dealing with PREIT
either directly or indirectly as a director, officer, member, affiliate,
shareholder or fiduciary of any other party to such a transaction. No such
contract or transaction shall be void or voidable solely because of such a
relationship with or interest of a Trustee, or solely because such a Trustee
is present at or participates in the meeting of the Board of Trustees that
authorizes (or ratifies) the transaction, or solely because his or her votes
are counted for that purpose if the material facts as to the relationship or
interest are disclosed or are known to the Trustees and the Board of Trustees
authorizes (or ratifies) such contract or transaction by the affirmative votes
of a majority of the Trustees not having an interest therein, even though the
Trustees not having an interest in the contract or transaction are less than a
quorum. No Trustee shall have any liability for such a contract or transaction
so approved (or ratified) by a majority of the Trustees not having an interest
in such contract or transaction except for bad faith or gross negligence.
Those Trustees having an interest in such a transaction may be counted in
determining the existence of a quorum at any meeting of the Board of Trustees
which shall authorize (or ratify) any such contract or transaction.
3. ACTIVITIES OF PREIT; POWERS OF THE TRUSTEES
The business activities of PREIT, which shall be conducted by or
under the direction of the Trustees on behalf of PREIT, shall be (i) the
acquisition, ownership, operation, leasing, management, development and
disposition of real property and related personal property, either directly or
indirectly, and the
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ownership of interests in trusts, partnerships or other entities which acquire
own, operate, lease, manage, develop and dispose of real property and related
personal property, and (ii) all things that the Trustees shall deem necessary
or desirable and appropriate to the foregoing.
In furtherance of the business activities of PREIT and in addition to
any powers conferred upon the Trustees by law and by other provisions of this
Trust Agreement, the Trustees shall have the following powers, unless
otherwise restricted by any other provision of this Trust Agreement.
A. To invest in assets of any kind and nature without being limited
to so-called "legal investments", provided the amount, type or classification
will not disqualify PREIT from qualifying as a Real Estate Investment Trust
under the pertinent provisions of the Internal Revenue Code and Regulations
thereunder.
B. To make investments incorporating a variety of real property
financing techniques, including, without limitation, sale and leasebacks, net
lease financings, purchase and installment salebacks, high credit
lease-secured mortgages, convertible mortgages and mortgages of special
interests including, without limitation, leaseholds, air rights and
condominiums. PREIT's investment policy may also include new investment
techniques subsequently developed which satisfy the real estate investment
trust requirements of the Internal Revenue Code and Regulations thereunder.
C. To improve, manage, protect, subdivide, sell, mortgage, pledge,
encumber, grant easements or charges against or otherwise deal in real estate
assets and interests in real property.
D. To make such contracts as they deem expedient in the conduct of
the business of PREIT and to engage in any type of business necessary or
incidental thereto, except such business as would disqualify PREIT as a Real
Estate Investment Trust under the pertinent provisions of the Internal Revenue
Code and Regulations thereunder.
E. To borrow money to further PREIT's purposes and to pledge the
Trust Property as security therefor, provided, however, that no liability
shall be incurred except such as may be incidental to the proper management of
the property and business of PREIT and the proper execution of PREIT's
purposes.
F. To raise monies or acquire assets consistent with the purposes of
PREIT by the issuance of securities and subscriptions, options and warrants
relating thereto.
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G. To receive or sue for all monies at any time becoming due to
PREIT.
H. To compromise or refer to arbitration any claims against or rights
of PREIT.
I. To employ any persons (including Trustees) to assist the Trustees
in the conduct of the business of PREIT and to confer upon such persons such
titles, power and authority as the Trustees may deem expedient. Those persons
who are elected and serve as officers of PREIT in accordance with Paragraph
2.H of this Trust Agreement or otherwise shall have such powers and duties as
a resolution adopted by the Trustees or PREIT's By-laws may provide.
J. To execute and deliver any and all instruments in writing which
they may deem advisable to carry out the purposes of PREIT. In connection with
the execution of any documents, the Trustees may, from time to time, designate
one or more of the Trustees as such or as officers of PREIT, or such other
officer or person or officers or persons to execute documents on behalf of
PREIT, and such execution shall be valid for all purposes.
K. To manage, conduct and operate PREIT under such assumed or
fictitious name or names as they, from time to time, designate and in
connection therewith, to do all things necessary to register such fictitious
name or names on behalf of PREIT and its Shareholders.
L. In accordance with applicable law, to determine whether monies or
things shall, for the purposes of these presents, be considered as principal
or income, or what constitutes gross income or net income in any year, or part
of the year, and to determine the mode in which expenses or disbursements
shall be charged between principal or income.
M. To do all and such other things and incur such other obligations
as in their judgment will advance PREIT's purposes.
N. To execute and deliver any regulatory agreement or assumption of
regulatory agreement and any other instrument approved by the Trustees
required by the Federal Housing Commissioner in case of the purchase of any
property subject to a mortgage insured by the Federal Housing Administration.
O. To adopt, amend and repeal such By-Laws for the conduct of the
business of their meetings and of PREIT as they shall deem necessary, but all
such By-Laws shall be subordinate to and not inconsistent with the provisions
of this Agreement.
P. To determine the value of all or any part of the Trust Property and
of any services, securities, property or other
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consideration to be furnished to or acquired by PREIT, and to
revalue all or any part of the foregoing.
Q. To sell, assign, or otherwise transfer all or substantially all or
any part of the Trust Property, to merge PREIT with another business trust or
entity, and, to the extent permitted by law, to elect not to have PREIT exist
subject to 15 Pa. C.S. CHAPTER 95, or any successor thereto.
R. To establish one or more committees to consist of one or more
Trustees and to delegate such authority of the Trustees to those committees as
is permitted by law. The establishment of such committees and the delegation
of authority thereto shall be done only by resolution of a majority of all of
the Trustees then serving, and no such committee shall have the authority to
(i) amend or repeal any provision of this Agreement or the By-laws, (ii)
remove any Trustee from the Board of Trustees, or (iii) create or fill any
vacancies in the Board of Trustees.
S. In addition to the authority in Paragraph 8, to create and issue
(whether or not in connection with the issuance of Shares or other
securities), and to authorize the creation and issuance by subsidiaries and
affiliates of PREIT of, option rights or securities having conversion or
option rights entitling the holders thereof to purchase or acquire Shares,
option rights, securities having conversion or option rights, or obligations,
of any class or series, or assets of PREIT, or to purchase or acquire from
PREIT equity securities, option rights, securities having conversion or option
rights, or obligations, of any class or series, owned by PREIT and issued by
any other person or entity. The securities, contracts, warrants or other
instruments evidencing Shares, option rights, securities having option or
conversion rights, or obligations of PREIT, may contain such terms as are
fixed by the Trustees, including, without limiting the generality of such
authority, restrictions, provisions providing for adjustment of terms upon the
happening of certain events, pricing and payment terms, and conditions,
including, but not limited to, conditions that preclude any person or persons
owning or offering to acquire a specified number or percentage of Shares or
any class or series thereof or option rights, securities having conversion or
option rights, or obligations of PREIT or any class or series of the foregoing
or any transferee or transferees of the person or persons from exercising,
converting, transferring or receiving the Shares or other equity securities,
option rights, securities having conversion or option rights, obligations or
assets. The provisions of this Paragraph 3.S shall not be construed to effect
a change in the fiduciary relationship between a Trustee and PREIT or to
change the standard of care of a Trustee as provided for in Paragraph 5 of
this Agreement, 15 Pa. C.S. Section 9506, as amended from time to time, and
Subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law of
1988, as amended from time to time.
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T. To adopt and implement executive compensation, pension, profit
sharing, share option, share bonus, share purchase, share appreciation rights,
savings, thrift, retirement, incentive or benefit plans, trusts or provisions
applicable to any or all Trustees, officers, employees or agents of PREIT or
trustees, directors, officers, employees or agents of any of PREIT's
subsidiaries or affiliates or other entities in which PREIT maintains an
investment and, without limiting the foregoing authority, to create and issue
rights and options to Trustees, officers, employees and agents of PREIT and
trustees, directors, officers, employees or agents of any of PREIT's
subsidiaries or affiliates or other entities in which PREIT maintains an
investment as an incentive for service or continued service with PREIT or any
of its subsidiaries or affiliates or other entities in which PREIT maintains
an investment or for such other purposes and upon such terms as the Trustees,
who may benefit by their action, deem advantageous to PREIT.
U. To determine and alter, from time to time, the fiscal year of
PREIT.
V. To grant rights to holders of equity interests in entities
controlled by PREIT to vote on matters to be voted upon by the Shareholders of
PREIT, either as a separate class or with the Shareholders and on any such
basis as the Board shall determine.
4. PROTECTION OF PERSONS DEALING WITH TRUSTEES
A resolution of the Trustees, certified by any Trustee or by any
officer of PREIT, authorizing a particular act shall be conclusive evidence to
anyone, including strangers to PREIT, that such act is within the powers of
the Trustees. Any instrument executed by any Trustee or by the Chief Executive
Officer, President, Chief Operating Officer or any Vice President of PREIT
shall be conclusive evidence to anyone, including strangers to PREIT, that
said persons are in fact authorized to execute said instrument on behalf of
PREIT and a resolution accompanying such instrument shall not be necessary for
this purpose. A certification of incumbency of Trustees and officers of PREIT,
executed by any other Trustee or by any other officer of PREIT shall be
conclusive evidence to anyone, including strangers to PREIT, that the Trustees
and the officers of PREIT named therein are at the time stated therein then
serving under this Trust Agreement. No purchaser from PREIT shall be bound to
see to the application of the money or other consideration paid by the
purchaser to PREIT.
5. LIMITATION OF TRUSTEES' AND OFFICERS' LIABILITY
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A. The Trustees, when acting in such capacity, shall not be
personally liable to any person or entity for any act, omission or obligation
of PREIT.
B. The Trustees shall stand in a fiduciary relationship to PREIT. The
provisions of 15 Pa. C.S. Subchapter B and, specifically, Section 1715, shall
be applicable to the Trustees with respect to the fiduciary relationship and
the discharge of duties arising therefrom. No Trustee shall be personally
liable for monetary damages for any action taken, or any failure to take any
action, except that a Trustee shall remain personally liable for monetary
damages to the same extent that a director of a Pennsylvania business
corporation remains liable under the provisions of 15 Pa. C.S. Section 1713.
In furtherance of the purposes of the preceding sentence, such sentence shall
be deemed to have the effect of a bylaw adopted by the Shareholders (as that
term is used in 15 Pa. C.S. Section 1713).
C. An officer of PREIT shall perform his duties as an
officer of PREIT in good faith, in a manner he reasonably believes to be in
the best interests of PREIT and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his duties shall not be liable by
reason of having been an officer of PREIT.
D. It is the intention of this Trust Agreement to limit the
liability of the Trustees to the fullest extent permitted by applicable law,
as amended or supplemented. No amendment of this Agreement or repeal of any of
its provisions shall adversely affect any right or protection of any Trustee
or officer of PREIT provided for hereunder for or with respect to any acts,
omissions or obligations of PREIT or any Trustee or officer of PREIT occurring
or incurred prior to such amendment or repeal.
6. RECORDS
The Trustees shall keep a record of all meetings of the Trustees and
committees of the Trustees and of the Shareholders and the officers of PREIT
shall keep books of account showing the receipts and disbursements of PREIT.
The Trustees shall arrange for the preparation, as soon as practicable, after
the close of PREIT's fiscal year, which shall be determined by the Trustees,
of a complete report of the business of PREIT during the preceding fiscal
year. A copy of this report shall be sent to each Shareholder. In addition,
the Trustees, or their appointed institutional agents, shall maintain proper
transfer books and a register of the names and interests of the Shareholders
hereunder and any other security holders of PREIT.
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7. LEGAL TITLE
Legal title to all Trust Property shall be held by PREIT (to the
extent permitted by law) or by Trustees as such, or by any of them or by such
other nominee or nominees as the Trustees may from time to time designate to
hold legal title for PREIT. The Trustees shall have absolute control over the
management and disposition of the Trust Property, subject only to such
limitations as are set forth herein. The Trustees shall have complete control
of the conduct of PREIT.
Any enumeration of specific duties and powers shall not be deemed a
limitation upon the general powers herein conferred.
8. BENEFICIAL INTERESTS
The beneficial interests in PREIT shall be divided into an unlimited
number of shares, each having a par value of $1.00 per share (herein referred
to as "Shares" and the holders thereof are sometimes referred to herein as
"Shareholders"). The Trustees may sell or exchange such Shares for such sums
or other consideration and on such terms as they may deem expedient, provided
that in no event shall Shares be sold for a consideration less than par, and
the Shares shall be issued only upon the payment of an amount at least equal
to such par value; provided that, in the case of Shares sold for non-cash
consideration, the value received shall be deemed to be an amount at least
equal to the par value thereof if the sale was authorized by the Trustees and,
in the case of Shares issued upon conversion or upon exercise of rights to
acquire Shares, such Shares shall be deemed to have been issued for an amount
at least equal to the par value thereof if, at the time such convertible
security was issued or at the time such exercise right was granted, such
issuance or grant was authorized by the Trustees. The said Shares when so
issued shall be fully paid and non-assessable. PREIT shall issue or cause to
be issued to subscribers for or purchasers of such Shares, certificates in
such form as the Trustees deem proper evidencing the beneficial interest of
such Share owners. The certificates shall be personal property and, except as
otherwise provided herein, shall entitle the owners thereof to participate in
all dividends and other distributions of income or principal in the proportion
which the number of Shares of each owner bears to the total number of Shares
issued and outstanding. Shareholders' rights shall be limited to those
specifically set forth in the certificate, in this Trust Agreement or in any
resolution or resolutions adopted by the Trustees with respect thereto.
The Trustees shall have the power from time to time (a) to classify
or reclassify, in one or more series or classes, any unissued Shares, (b) to
determine and alter all rights, preferences, privileges, qualifications,
limitations and
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restrictions thereof (including, without limitation, voting, distribution,
liquidation, conversion and/or redemption rights, and limitations and/or
exclusions thereof) granted to or imposed upon any wholly unissued series or
class of Shares and the number of Shares constituting any such series or
class, and (c) to increase or decrease (but not below the number of Shares of
such series or class then outstanding) the number of Shares of any series or
class subsequent to the issue of Shares of that series or class.
Any Trustee hereunder may acquire, hold and dispose of Shares to the
same extent and in the same manner as if such person were not a Trustee and
without affecting in any way such person's status or powers as such.
A. CHANGE IN PAR VALUE OF SHARES
The Trustees may from time to time change the par value of
the Shares outstanding or unissued, or any class or series thereof, if in
their opinion the same shall be necessary or desirable and appropriate to
further PREIT's purposes.
B. PRE-EMPTIVE RIGHTS WAIVED
No Shareholder shall have any pre-emptive right because of
his shareholdings to have first offered to him any part of any Shares or
debentures, bonds or securities convertible into or exchangeable, with or
without further consideration, for Shares of PREIT hereinafter issued,
including those now authorized and those authorized by amendments hereto.
C. TRANSFER OF SHARES
Shares may be transferred by the holders thereof in person,
or by duly authorized attorney. The transferee shall surrender such
certificate to PREIT or, if applicable, to the transfer agent designated by
the Trustees for such Shares, duly endorsed for transfer, or with an
appropriate power affixed (accompanied by the requisite documentary transfer
stamps if any are required) which shall execute a new certificate representing
the Share or Shares so transferred. The acceptance by the transferee of a
certificate so assigned, or any certificate issued in place thereof, shall
constitute the transfer, and each transferee by acceptance of the certificate
shall be deemed to have agreed to be bound by the provisions of this Trust
Agreement, as the same may be amended or supplemented, and any other document
or instrument authorized hereunder pertaining to such Shares or such
transferee. No such transfer shall be binding upon PREIT until it has been
recorded on the transfer books maintained by PREIT or its transfer agent.
Moreover, PREIT may deem the person in whose name the Share certificate is at
the time registered upon the books maintained by the transfer agent
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designated by PREIT to be the absolute owner of the shares for all purposes
whatsoever, and shall not be affected by any notice to the contrary. All
transfers of Shares shall be subject to Paragraph 9 of this Trust Agreement.
D. DEATH OF A SHAREHOLDER
The death of a Shareholder during the continuance of PREIT
shall not terminate PREIT's existence or entitle the legal representative of
such Shareholder to any action in the courts or otherwise against the Trust
Property, PREIT or the Trustees by virtue of the fact of death alone. The
executors, administrators, heirs, legatees or assigns of a deceased
Shareholder shall succeed to the rights and be subject to the liabilities of
the deceased Shareholder as a holder of Shares.
E. LOST OR DESTROYED CERTIFICATES
In the event of the loss or destruction of a certificate,
PREIT may, in its discretion, issue a new certificate representing the
interest evidenced by the lost or destroyed certificate upon satisfactory
proof of its loss or destruction and the furnishing of sufficient indemnity,
in the form of a bond, if required, for the benefit of all interested parties.
9. RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES; EXCHANGE
FOR EXCESS SHARES
A. Definitions. For the purposes of this Paragraph 9, the
following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 544 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), as modified
by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have correlative meanings.
Accordingly, for purposes hereof, Beneficial Ownership expressed as a
percentage shall be calculated for any Person by dividing two numbers, (a) the
number that is the numerator being the sum of (i) the number of outstanding
Shares beneficially owned by such Person plus (ii) the maximum number of
Shares issuable upon the exercise or conversion of outstanding warrants,
options or other securities exercisable for or convertible into Shares
beneficially owned by such Person and (b) the number that is the denominator
being the sum of (i) all outstanding Shares plus (ii) the maximum number of
Shares issuable upon the exercise or conversion of outstanding warrants,
options or other securities exercisable for or convertible into Shares
beneficially owned by such Person; provided that the Trustees shall retain
full
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authority to adopt such other formula for determining Beneficial Ownership as
they may deem appropriate.
"Constructive Ownership" shall mean ownership of Shares either
directly or constructively through the application of Section 318(a) of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have
correlative meanings. Accordingly, for purposes hereof, Constructive Ownership
expressed as a percentage shall be calculated for any Person by dividing two
numbers, (a) the number that is the numerator being the sum of (i) the number
of outstanding Shares beneficially owned by such Person plus (ii) the maximum
number of Shares issuable upon the exercise or conversion of outstanding
warrants, options or other securities exercisable for or convertible into
Shares owned by such Person and (b) the number that is the denominator being
the sum of (i) all outstanding Shares plus (ii) the maximum number of Shares
issuable upon the exercise or conversion of outstanding warrants, options or
other securities exercisable for or convertible into Shares owned by such
Person; provided that the Trustees shall retain full authority to adopt such
other formula for determining Constructive Ownership as it may deem
appropriate.
"Event" shall have the meaning assigned to it in Paragraph
9.C(iii).
"Excess Shares" shall mean Shares that are issued pursuant to
Paragraph 9.C(i) or (iii) and held in Trust in accordance with, and governed
by, Paragraph 9.N.
"Market Price" shall mean the last reported sales price reported on
the American Stock Exchange of Shares on the trading day immediately preceding
the relevant date, or if the Shares are not then traded on the American Stock
Exchange, the last reported sales price of Shares on the trading day
immediately preceding the relevant date as reported on any exchange or
quotation system over which the Shares may be traded, or if the Shares are not
then traded over any exchange or quotation system, then the fair market value
of the Shares on the relevant date as determined in good faith by the
Trustees.
"Ownership Limit" shall mean 9.9% in value of the
outstanding Shares.
"Ownership Limitation Termination Date" shall mean the first day
after the date on which the Trustees determine that it is no longer in the
best interests of PREIT to attempt to, or continue to, qualify as a REIT.
"Person" shall mean an individual, corporation, partnership,
limited liability company, estate, trust (including a trust
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qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a
trust permanently set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association, private foundation
within the meaning of Section 509(a) of the Code, joint stock company or other
entity or any government or agency or political subdivision thereof and also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, but does not include an
underwriter which participates in a public offering of Shares for a period of
25 days following the purchase by such underwriter of those Shares.
"Purported Beneficial Holder" shall mean, with respect to any event
other than a purported Transfer which results in Excess Shares, the Person for
whom the Purported Record Holder of the Shares that were, pursuant to
Paragraph 9.C, automatically exchanged for Excess Shares upon the occurrence
of such event held such Shares.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in Excess Shares, the purported beneficial
transferee for whom the Purported Record Transferee would have acquired
Shares, if such Transfer had been valid under Paragraph 9.B.
"Purported Record Holder" shall mean, with respect to any event other
than a purported Transfer which results in Excess Shares, the record holder of
the Shares that were, pursuant to Paragraph 9.C, automatically exchanged for
Excess Shares upon the occurrence of such event.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Shares, the record holder of the
Shares if such Transfer had been valid under Paragraph 9.C.
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
"Section 544 Subsidiary" of any individual or entity shall mean any
entity, over 50% of the ownership interest in which is owned, directly or
indirectly (applying the principles of Section 544 of the Code) by the
individual or entity in question.
"Special Beneficiary" shall mean the beneficiary of the Special Trust
as determined pursuant to Paragraph 9.N(v).
"Special Trust" shall mean the trust created pursuant to
Paragraph 9.N(i).
"Transfer" shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition of Shares or capital
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stock of any Person (including but not limited to (i) the granting of any
option or entering into any agreement for the sale, transfer or other
disposition of Shares, (ii) the sale, transfer, exercise, assignment or other
disposition of any securities or rights convertible into or exchangeable for
Shares or (iii) the establishment of a put or the granting to a third party of
a call right with respect to Shares), whether voluntary or involuntary,
whether of record or beneficially and whether by operation of law or
otherwise.
B. Restrictions on Ownership and Transfer.
--------------------------------------
(i) Except as provided in Paragraph 9.K, prior to the
Ownership Limitation Termination Date, no Person shall Beneficially Own or
Constructively Own any Shares to the extent such ownership would exceed the
Ownership Limit.
(ii) Except as provided in Paragraph 9.K, prior to the
Ownership Limitation Termination Date, any Transfer that, if effective, would
result in any Person Beneficially Owning or Constructively Owning Shares in
excess of the Ownership Limit shall be void ab initio as to the Transfer of
such Shares which would be otherwise Beneficially Owned or Constructively
Owned by such Person in excess of such Ownership Limit; and the intended
transferee shall acquire no rights in or to such Shares.
(iii) Prior to the Ownership Limitation Termination Date,
any Transfer that, if effective, would result in Shares being beneficially
owned by less than 100 Persons (determined without reference to any rules of
attribution) shall be void ab initio as to the Transfer of such Shares which
would be otherwise beneficially owned by the transferee; and the intended
transferee shall acquire no rights in such Shares.
(iv) Prior to the Ownership Limitation Termination Date,
any Transfer that, if effective, would result in PREIT being "closely held"
within the meaning of Section 856(h) of the Code shall be void ab initio as to
the Transfer of the Shares which would cause PREIT to be "closely held" within
the meaning of Section 856(h) of the Code; and the intended transferee shall
acquire no rights in such Shares.
(v) The Trustees shall have the authority to select the
Ownership Limitation Termination Date.
C. Exchange For Excess Shares.
--------------------------
(i) If, notwithstanding the other provisions contained in
this Paragraph 9, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that any Person would Beneficially
Own or Constructively Own Shares in excess of the Ownership Limit, then,
except as
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otherwise provided in Paragraph 9.K, such number of Shares in excess of such
Ownership Limit (rounded up to the nearest whole Share), shall be
automatically exchanged for an equal number of Excess Shares. Such exchange
shall be effective as of the close of business on the business day prior to
the date of the Transfer.
(ii) If, notwithstanding the other provisions contained in
this Paragraph 9, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer which, if effective, would cause PREIT to
become "closely held" within the meaning of Section 856(h) of the Code, then
the Shares being Transferred which would cause PREIT to be "closely held"
within the meaning of Section 856(h) of the Code (rounded up to the nearest
whole Share) shall be automatically exchanged for an equal number of Excess
Shares. Such exchange shall be effective as of the close of business on the
business day prior to the date of the Transfer.
(iii) If, notwithstanding the other provisions contained in
this Paragraph 9, at any time prior to the Ownership Limitation Termination
Date, an event other than a purported Transfer (an "Event") occurs which would
cause any Person to Beneficially Own or Constructively Own Shares in excess of
the Ownership Limit, then, except as otherwise provided in Paragraph 9.K,
Shares Beneficially Owned or Constructively Owned by such Person (rounded up
to the nearest whole Share) shall be automatically exchanged for an equal
number of Excess Shares to the extent necessary to eliminate such excess
ownership. Such exchange shall be effective as of the close of business on the
business day prior to the date of the Event. In determining which Shares are
exchanged, Shares directly held or Beneficially Owned by any Person who caused
the Event to occur shall be exchanged before any Shares not so held are
exchanged. Where several such Persons exist, the exchange shall be pro rata
based upon the number of Shares Beneficially Owned and Constructively Owned by
such Persons.
D. Remedies For Breach. If the Trustees or their designee(s) shall at
any time determine that a Transfer has taken place in violation of Paragraph
9.B or that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution) of any
Shares that would result in Shares being beneficially owned by less than 100
persons as contemplated by Paragraph 9.B(iii), or in Beneficial Ownership or
Constructive Ownership of any Shares in violation of Paragraph 9.B, the
Trustees or their designee(s) shall take such action as they deem advisable to
refuse to give effect to or to prevent such Transfer (or any Transfer related
to such intent), including, but not limited to, refusing to give effect to
such Transfer on the books of PREIT or instituting proceedings to enjoin such
Transfer; provided, however, that any
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Transfers or attempted Transfers in violation of Paragraphs 9.B (ii), (iii) or
(iv) shall automatically result in the exchange described in Paragraph 9.C,
irrespective of any action (or non-action) by the Trustees or its designees.
E. Notice of Ownership or Attempted Ownership in Violation of
Paragraph 9.B. Any Person who acquires or attempts to acquire Beneficial
Ownership or Constructive Ownership of Shares in violation of Paragraph 9.B
shall immediately give written notice to PREIT of such acquisition or
attempted acquisition and shall provide to PREIT such other information as
PREIT may request in order to determine the effect, if any, of such
acquisition or attempted acquisition on PREIT's status as a REIT.
F. Owners Required to Provide Information. Prior to the
Ownership Limitation Termination Date:
(i) every Beneficial Owner or Constructive Owner of 1% or
more in value of the outstanding Shares shall, within 30 days after January 1
of each year, give written notice to PREIT stating the name and address of
such Beneficial Owner or Constructive Owner, the number of Shares Beneficially
Owned or Constructively Owned, and a description of how such Shares are held.
Each such Beneficial Owner or Constructive Owner shall provide to PREIT such
additional information as PREIT may request in order to determine the effect,
if any, of such Beneficial Ownership or Constructive Ownership on PREIT's
status as a REIT.
(ii) Each Person who is a Beneficial Owner or Constructive
Owner of Shares and each Person (including the shareholder of record) who is
holding Shares for a Beneficial Owner or Constructive Owner shall provide to
PREIT such information as PREIT may request in order to determine PREIT's
status as a REIT or to comply with regulations promulgated under the REIT
provisions of the Code.
G. Remedies Not Limited. Nothing contained in this Paragraph 9 shall
limit the authority of the Trustees to take such other action as it deems
necessary or advisable to protect PREIT and the interests of Shareholders by
preserving PREIT's REIT status.
H. Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this Paragraph 9 including any definition contained in
Paragraph 9.A and any ambiguity with respect to which Shares are to be
exchanged for Excess Shares in a given situation, the Trustees shall have the
authority to determine the application of the provisions of this Paragraph 9
with respect to any situation based on the facts known to it.
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I. Increase in Ownership Limit. Subject to the limitations provided in
Paragraph 9.J the Trustees may from time to time increase the Ownership Limit.
J. Limitations on Modifications.
----------------------------
(i) The Ownership Limit may not be increased if, after
giving effect to such increase, five (5) Beneficial Owners of Shares would
Beneficially Own, in the aggregate, more than 49.9% of the outstanding Shares.
(ii) Prior to an increase in the Ownership Limit pursuant to
Paragraph 9.I, the Trustees may require such opinions of counsel or PREIT's
tax accountants, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure PREIT's status as a
REIT.
K. Exceptions. The Trustees, with a ruling from the Internal Revenue
Service or an opinion of counsel or PREIT's tax accountants to the effect that
such exemption will not result in PREIT being "closely held" within the
meaning of Section 856(h) of the Code, may exempt a Person from the Ownership
Limit if the Trustees obtain such representations and undertakings from such
Person as the Trustees may deem appropriate and such Person agrees that any
violation or attempted violation of any of such representations or
undertakings will result in, to the extent necessary or otherwise deemed
appropriate by the Trustees, the exchange of Shares held by such Person for
Excess Shares in accordance with Paragraph 9.C.
L. American Stock Exchange Transactions. Nothing in this Paragraph 9
shall preclude the settlement of any transaction entered into through the
facilities of the American Stock Exchange, any successor exchange or quotation
system thereto, or any other exchange or quotation system over which the
Shares may be traded from time to time.
M. Legend. (a) Each certificate for Common Shares hereafter issued
shall bear the following legend:
"The Shares represented by this certificate are
subject to restrictions on ownership and transfer for the
purpose of PREIT's maintenance of its status as a real
estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person may Beneficially
own or Constructively Own Shares in excess of 9.9% in value
(or such greater percentage as may be determined by the
Board of Trustees) of the outstanding Shares of PREIT. Any
Person who attempts to Beneficially Own or Constructively
Own Shares in excess of the above limitation must
immediately notify PREIT. In addition, if any Person
attempts to acquire
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beneficial ownership of any Shares and the result of such
acquisition would be Shares being beneficially owned by
fewer than 100 persons, such purported transfer shall be
void ab initio and the intended transferee shall acquire no
rights to such Shares. All capitalized terms used in this
legend have the meanings set forth in the Trust Agreement, a
copy of which, including the restrictions on ownership and
transfer, will be sent without charge to each Shareholder
who so requests. If the restrictions on ownership and
transfer are violated, the Shares represented hereby will be
automatically exchanged for Excess Shares which will be held
in trust by PREIT."
N. Excess Shares.
-------------
(i) Ownership in Trust. Upon any purported Transfer or Event
that results in an exchange of Shares for Excess Shares pursuant to Paragraph
9.C, such Excess Shares shall be deemed to have been transferred to PREIT, as
trustee of a Special Trust for the exclusive benefit of the Special
Beneficiary or Special Beneficiaries to whom an interest in such Excess Shares
may later be transferred pursuant to Paragraph 9.N(v). Excess Shares so held
in trust shall be issued and outstanding Shares of PREIT. The Purported Record
Transferee or Purported Record Holder shall have no rights in such Excess
Shares except as and to the extent provided in this Paragraph 9.N.
(ii) Dividend Rights. Excess Shares shall not be entitled to
any dividends or distributions. Any dividend or distribution paid prior to the
discovery by PREIT that the Shares with respect to which the dividend or
distribution was made had been exchanged for Excess Shares shall be repaid to
PREIT upon demand. Any dividend on distribution declared by PREIT and not yet
paid with respect to Shares that have been exchanged for Excess Shares shall
be void ab initio with respect to such Shares.
(iii) Rights Upon Liquidation. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of, or any distribution
of the assets of, PREIT, each holder of Excess Shares shall be entitled to
receive, ratably with each other holder of Shares and Excess Shares, that
portion of the assets of PREIT available for distribution to the holders of
Shares or Excess Shares which bears the same relation to the total amount of
such assets of PREIT as the number of Excess Shares held by such holder bears
to the total number of Shares and Excess Shares then outstanding. PREIT, as
holder of the Excess Shares in trust, or if PREIT shall have been dissolved,
any trustee appointed by PREIT prior to its dissolution, shall distribute
ratably to the Special Beneficiaries of the Special Trust, when determined,
any such assets received in respect of
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the Excess Shares in any liquidation, dissolution or winding up of, or any
distribution of the assets of PREIT.
(iv) Voting Rights. The holders of Excess Shares shall not
be entitled to vote with respect to such Shares on any matters (except as
required by law).
(v) Restrictions On Transfer: Designation of Special
Beneficiary.
(a) Excess Shares shall not be transferrable. The
Purported Record Transferee or Purported Record Holder may freely designate a
Special Beneficiary of an interest in the Special Trust (representing the number
of Excess Shares held by the Special Trust attributable to a purported Transfer
or Event that resulted in the Excess Shares) if (i) the Excess Shares held in
the Special Trust would not be Excess Shares in the hands of such Special
Beneficiary and (ii) the Purported Beneficial Transferee or Purported Beneficial
Holder does not receive a price, as determined on a Share-by-Share basis, for
designating such Special Beneficiary that reflects a price for such Excess
Shares that, (I) in the case of a Purported Beneficial Transferee, exceeds (x)
the price such Purported Beneficial Transferee paid for the Shares in the
purported Transfer that resulted in the exchanges of Shares for Excess Shares,
or (y) if the Purported Beneficial Transferee did not give value for such Shares
(having received such Shares pursuant to a gift, devise or other transaction),
the Market Price of such Shares on the date of the purported Transfer that
resulted in the exchange of Shares for Excess Shares or (II) in the case of a
Purported Beneficial Holder, exceeds the Market Price of the Shares that were
automatically exchanged for such Excess Shares on the date of such exchange.
Upon such a transfer of an interest in the Special Trust, the corresponding
shares of Excess Shares in the Special Trust shall be automatically exchanged
for an equal number of Shares and such Shares shall be transferred of record
to the transferee of the interest in the Special Trust if such Shares would
not be Excess Shares in the hands of such transferee. Prior to any transfer of
any interest in the Special Trust, the Purported Record Transferee or
Purported Record Holder, as the case may be, must give advance notice to PREIT
of the intended transfer and PREIT must have waived in writing its purchase
rights under Paragraph 9.N(vi).
(b) Notwithstanding the foregoing, if a Purported
Beneficial Transferee or Purported Beneficial Holder receives a price for
designating a Special Beneficiary of an interest in the Special Trust that
exceeds the amounts allowable under Paragraph 9.N(v)(a), such Purported
Beneficial Transferee or Purported Beneficial Holder shall pay, or cause such
Special Beneficiary to pay, such excess to PREIT.
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(vi) Purchase Right in Excess Shares. Excess Shares shall be
deemed to have been offered for sale to PREIT, or its designee, at a price per
share equal to, (I) in the case of Excess Shares resulting from a purported
Transfer, the lesser of (i) the price per share in the transaction that
created such Excess Shares (or, in the case of a gift, devise or other
transaction, the Market Price at the time of such gift, devise or other
transaction) or (ii) the Market Price on the date PREIT, or its designee,
accepts such offer or (II) in the case of Excess Shares created by an Event,
the lesser of (i) the Market Price of the Shares originally exchanged for the
Excess Shares on the date of such exchange or (ii) the Market Price of such
Shares on the date PREIT, or its designee, accepts such offer. PREIT shall
have the right to accept such offer for a period of ninety (90) days after the
later of (i) the date of the purported Transfer or Event which resulted in an
exchange of Shares for such Excess Shares and (ii) the date the Trustees
determine that a purported Transfer or other event resulting in an exchange of
Shares for such Excess Shares has occurred, if PREIT does not receive a notice
of any such Transfer pursuant to Paragraph 9.E.
O. Severability; Agent for Trust. If any provision of this Paragraph
9 or any application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the 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. In any event, to the extent such court holds the
Purported Record Transferee to be the record and beneficial owner of Shares
which, had the provisions of Paragraph 9 been enforced, would have been
exchanged for Excess Shares, such Purported Record Transferee shall be deemed,
at the option of PREIT, to have acted as agent on behalf of PREIT in acquiring
such transferred Shares and to hold such Shares on behalf of PREIT.
10. DISTRIBUTIONS
PREIT shall distribute to the Shareholders from the income or capital
of PREIT such sums as they shall determine. The amounts to be distributed and
the time of the distribution shall rest in the discretion of the Trustees.
However, the Trustees shall attempt to make such distribution so that PREIT
will continue to qualify as a real estate investment trust under pertinent
provisions of the Internal Revenue Code and Regulations thereunder. All other
income may be distributed or accumulated in the Trustees' sole discretion. The
Shareholders shall share in all distributions from PREIT on the record date
established by the Trustees for the purpose of determining the percentage
ownership of the holders; or, if required for tax purposes, they shall share
such distributions in such manner as may be necessary
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so that PREIT continues to so qualify as a real estate investment
trust.
11. SHAREHOLDERS
A. ANNUAL MEETINGS
The Annual Meeting of the Shareholders entitled to vote in
the election of Trustees shall be held at the principal office of PREIT or at
such other place as the Trustees shall by notice designate, no later than the
second Wednesday of the sixth month following the end of each fiscal year, or,
if that day falls on a holiday, the next business day following, or on such
other day as may be fixed by the Trustees. If the Annual Meeting has not been
held during a calendar year, any Shareholder may call such meeting at any time
thereafter, by following the procedure set forth in Paragraph 11.B hereof.
At said Annual Meeting, the Shareholders entitled to vote
thereat shall elect individuals to the office of Trustee as provided in
Paragraph 2.B of this Trust Agreement and shall at such meeting exercise and
discharge any other powers or duties vested in them by the Trust Agreement.
B. SPECIAL MEETINGS
Special Meetings of Shareholders may be called at any time
by the Chairman, or by the Trustees, or by the Shareholders entitled to cast
at least forty percent (40%) of the votes at the particular meeting. Upon
written request of any person or persons who have duly called a Special
Meeting, the Secretary shall affix the date of the meeting to be held not more
than sixty (60) days after receipt of the request and give due notice to the
Shareholders entitled to vote thereat. If the Secretary shall neglect or
refuse to fix such date or give such notice, the person or persons calling the
meeting may do so.
C. NOTICE OF MEETINGS
Written notice shall, unless otherwise provided, be given to
the Shareholders entitled to vote at the meeting, not less than ten (10) nor
more than forty-five (45) days prior to the date of said meeting, either
personally or by sending a copy thereof through the mail, or by telegram,
charges prepaid, to the address of the Shareholder appearing on the books of
PREIT. In said notice, the Trustees may specify the date selected by them as a
record date for the determination of Shareholders entitled to notice of or to
vote at any such meeting; only such Shareholders as were Shareholders of
record on the date so fixed and are entitled to vote at such meeting shall be
entitled to notice of such meeting.
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In addition, the Trustees shall in the case of Special
Meetings notify all Shareholders of the purpose or purposes of the meeting and
the nature of the business to be considered thereat, and such Special Meeting
shall be limited to the business specified in the notice. Any notice addressed
to a Shareholder at the address given on the books of PREIT and mailed to such
address shall be deemed properly addressed.
When a meeting of Shareholders is adjourned it shall not be
necessary to give any notice of the adjourned meeting or of the business to be
transacted at an adjourned meeting, other than by announcement at the meeting
at which the adjournment is taken, unless the Trustees fix a new record date
for the adjourned meeting.
D. RECORD DATE
The Trustees may fix in advance a date as the record date
for the determination of Shareholders entitled to notice of, or to vote at,
any meeting of Shareholders or Shareholders entitled to receive payment of any
dividend or distribution, or in order to make a determination of Shareholders
for any other purpose, such date in any case to be not more than sixty (60)
days and, in case of a meeting of Shareholders, not less than ten (10) days,
prior to the date for which such determination of Shareholders is necessary or
proper. In the absence of such record date fixed by the Trustees, all
Shareholders entitled to vote thereat shall be entitled to notice, except
transferees of shares transferred on the books within thirty (30) days next
preceding the date of the said meeting. The Trustees shall not be required to
set a new record date with respect to an adjourned meeting of Shareholders.
E. QUORUM
The owners of a majority of the Shares entitled to vote
thereat or their proxies shall constitute a quorum for the purpose of any
meeting. At any meeting where a quorum is present, a majority of the Shares
present and voting shall be required to adopt any resolution which is within
the province of the Shareholders unless a greater or different vote shall be
required by this Agreement or by the Board in its authorizing resolution. In
the event that a quorum is not present at the time designated for any
Shareholders Meeting, annual or special, the same shall be adjourned without
any further notice until a quorum shall be present.
F. VOTING RIGHTS AND ACTS OF SHAREHOLDERS
Unless otherwise provided in this Agreement, the certificate
for the relevant Shares or the resolutions of the Trustees with respect to
certain Shares, at all Shareholders
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Meetings, annual or special, each Shareholder shall be entitled to one vote
for each Share standing in his name on the books of PREIT.
Unless a greater or different vote shall be required by this
Agreement or by the Board in its authorizing resolution as to a particular
matter or under any agreement authorized by the Board pursuant to Paragraph
3.V, an act authorized by the vote of the holders of a majority of Shares
present in person or by proxy and casting a vote on the matter at a duly
organized meeting shall be the act of the Shareholders. For purposes of the
foregoing, abstentions and non-votes on a particular matter shall not be
deemed to be votes cast on the matter.
G. PROXIES
At all meetings of Shareholders, a Shareholder entitled to
vote on a particular matter may vote in person or may authorize another person
or persons to act for him by proxy. Every proxy shall be executed in writing
by the Shareholder, or by his duly authorized attorney in fact. Such proxies
shall be filed with the Secretary of PREIT before or at the time of the
meeting. A proxy, unless coupled with an interest, shall be revocable at will,
notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of the proxy shall not be effective until notice
thereof has been given to the Secretary of PREIT.
H. VOTING FOR TRUSTEES
Cumulative voting shall not be permitted. The candidates
receiving the highest number of votes shall be elected.
I. ADJOURNMENT
Any annual, regular or special meeting of Shareholders,
including one at which Trustees are to be elected, may be adjourned for such
period as the Shareholders present and entitled to vote shall direct.
12. LIMITED LIABILITY OF SHAREHOLDERS
A. The Trustees shall have no power to bind the Shareholders to
personal liability. All persons dealing with PREIT, or with any agent of PREIT
and/or the Trustees, shall look only to the Trust Property for the payment of
any sums due as a result of such dealing and personal liability shall not
attach to any Shareholder for any act, omission or liability of a Trustee or
PREIT.
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B. An obligation of PREIT based upon a writing may be limited to a
specific fund or other identified pool or group of assets of PREIT.
It is the intention of this Trust Agreement to limit the liability of
Shareholders for the obligations of PREIT to the fullest extent permitted by
applicable law, as amended or supplemented.
13. EXPRESS EXCULPATORY LANGUAGE IN INSTRUMENTS
Neither the Shareholders nor the Trustees, officers, employees or
agents of PREIT shall be liable under any written agreement or instrument
creating an obligation of PREIT, and all persons shall look solely to the
Trust Property for the payment of any claim under or for the performance of
that agreement or instrument. The omission of the exculpatory language from
any agreement or instrument shall not affect the validity or enforceability of
such agreement or instrument and shall not render any Shareholder, Trustee,
officer, employee or agent of PREIT liable thereunder to any third party; nor
shall the Trustees or any officer, employee or agent of PREIT be liable to
anyone for such omission.
14. INDEMNITY; INSURANCE
A. RIGHT TO INDEMNIFICATION OF TRUSTEES AND OFFICERS
Every Trustee and officer of PREIT shall be entitled as of
right to be indemnified by PREIT against reasonable expense and any liability
paid or incurred by such person in connection with an actual (whether pending
or completed) or threatened claim, action, suit or proceeding, civil,
criminal, administrative, investigative or other, whether brought by or in the
right of PREIT or otherwise, in which he or she may be involved, as a party or
otherwise, by reason of such person's being or having been a Trustee or
officer of PREIT or by reason of the fact that such person is or was serving
in any capacity at the request of PREIT as a trustee, director, officer,
employee, agent, partner, fiduciary or other representative of another real
estate investment trust, corporation, partnership, joint venture, trust,
employee benefit plan or other entity (such claim, action, suit or proceeding
hereinafter being referred to as "action"); provided, however, that no such
right of indemnification shall exist with respect to an action brought by a
Trustee or Officer against PREIT (other than a suit for indemnification as
provided in Paragraph B of this Paragraph 14). Such indemnification shall
include the right to have expenses incurred by such person in connection with
an action paid in advance by PREIT prior to final disposition of such action,
subject to such conditions as may be prescribed by law provided that the
payment of such expenses incurred by such person in advance of the final
disposition of
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the action shall be made only upon delivery to PREIT of an undertaking by or
on behalf of such person, to repay all amounts so advanced without interest if
it shall ultimately be determined that such person is not entitled to be
indemnified under this Paragraph 14.A or otherwise. Persons who are not
Trustees or officers of PREIT may be indemnified in respect of service to
PREIT or to another such entity at the request of PREIT to the extent the
Board of Trustees at any time denominates such person as entitled to some or
all of the benefits of this Paragraph as the Trustees shall determine as to
each such Person. As used herein, "expense" shall include fees and expenses of
counsel selected by such person; and "liability" shall include amounts of
expenses, liability, loss, judgments, excise taxes, fines and penalties and
amounts paid in settlement. No indemnification pursuant to this Paragraph 14.A
shall be made, however, in any case where the act or failure to act giving
rise to the claim for indemnification is determined by the final judgment of a
court of competent jurisdiction to have constituted willful misconduct or
recklessness.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph 14.A is not paid in full by PREIT
within 60 days after a written claim has been received by PREIT, the claimant
may at any time thereafter bring suit against PREIT to recover the unpaid
amount of the claim, and, if successful in whole or in part, the claimant
shall also be entitled to be paid the expense of prosecuting such claim. It
shall be a defense to any such action that the conduct of the claimant was
such that under law PREIT would be prohibited from indemnifying the claimant
for the amount claimed, but the burden of proving such defense shall be on
PREIT. Neither the failure of PREIT (including its Board of Trustees,
independent legal counsel and its Shareholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because the conduct of the claimant was not
such that indemnification would be prohibited by law, nor an actual
determination by PREIT (including, its Board of Trustees, independent legal
counsel or its Shareholders) that the conduct of the claimant was such that
indemnification would be prohibited by law, shall be a defense to the action
or create a presumption that the conduct of the claimant was such that
indemnification would be prohibited by law.
C. INSURANCE AND FUNDING FOR PAYMENT OF EXPENSES
PREIT may purchase and maintain insurance, at its expense, to protect
itself and any person eligible to be indemnified hereunder against any
liability or expense asserted or incurred by such person in connection with
any action, whether or not PREIT would have the power to indemnify such person
against such
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liability or expense by law or under the provisions of this Paragraph 14.
PREIT may create a trust fund, grant a security interest, cause a letter of
credit to be issued or use other means (whether or not similar to the
foregoing), to insure the payment of such sums as may become necessary to
effect indemnification as provided in this Paragraph 14.
D. NON-EXCLUSIVITY OF RIGHTS
The provisions of Paragraph 5 relating to the limitation of
Trustees' liability and the right to indemnification and to the advancement of
expenses provided in this Paragraph 14 shall not be exclusive of any other
rights that any person may have or hereafter acquire under any statute,
provision of this Trust Agreement, By-Laws, other agreement, vote of
Shareholders or Trustees or otherwise.
E. EXTENT OF RIGHTS
The provisions of Paragraph 5 relating to the limitations of
Trustees' liability, and the provisions of this Paragraph 14 relating to or
providing for indemnification and to the advancement of expenses (1) shall be
deemed to create contractual rights in favor of each of the Trustees, Officers
and other persons entitled to indemnification hereunder and may be modified as
to any Trustee, officer or other person only with said Trustee's, Officer's or
other such person's written consent; (2) shall continue as to persons who have
ceased to have the status pursuant to which they were entitled or were
denominated as entitled to indemnification hereunder and shall enure to the
benefit of the heirs and legal representatives of persons entitled to
indemnification hereunder; and (3) shall be applicable to actions, suits or
proceedings commenced after the adoption hereof, whether arising from acts or
omissions occurring before or after the adoption hereof. The right of
indemnification provided for herein may not be amended, modified or repealed
so as to limit in any way the indemnification provided for herein with respect
to any acts or omissions occurring prior to the adoption of such amendment or
repeal.
15. CONTROLLING LAW
This Trust Agreement has been executed in the Commonwealth of
Pennsylvania and shall be construed in accordance with the laws of that
Commonwealth.
16. TERM
The term of PREIT's existence shall be perpetual unless sooner
terminated by a vote of the Trustees as follows:
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PREIT may be dissolved, its affairs wound-up and its
existence terminated by the vote of two-thirds of the total number of Trustees
then in office, but in no event less than four (4). Upon PREIT's dissolution,
the Trustees may wind up PREIT's business, liquidate its assets, make adequate
provision for payment of liabilities and funding of contingencies and
distribute the net proceeds among the Shareholders in the same proportions
that the Shareholders own Shares in PREIT at the time for distribution,
subject to preferences and rights among different classes or series of Shares,
if any; or convey the property of PREIT to, or in any way merge, consolidate
or combine with, one or more persons, entities, trusts or corporations, for
consideration consisting in whole or part of cash, shares of stock or
beneficial interest, or other property of any kind, and distribute the net
proceeds among the Shareholders ratably. The Trustees in office at the time of
such dissolution shall continue in office until the process of dissolving,
winding-up, terminating the business and the distribution to the Shareholders
is completed. PREIT shall not dissolve and the term of PREIT's existence shall
not terminate for the reason that it fails to qualify, or after qualification
as such to continue to qualify, as a real estate investment trust under the
applicable tax laws.
17. AMENDMENT
This Agreement may be amended by the Trustees in any particular,
including, without limitation, such amendments as may be necessary or
desirable from time to time to implement the authority granted in the second
paragraph of Paragraph 8 hereof, provided, however, that no amendment shall be
effected to increase the liability of the Shareholders without the consent of
the holders of two-thirds of the outstanding Shares at a meeting called for
that purpose, and in no event may any amendment be adopted requiring
additional contributions from or assessments against the Shareholders. No
amendment may be considered at any meeting of the Trustees unless notice of
the proposed amendment is included in the call for the meeting. No such
amendment may be considered unless the total number of Trustees is five (5) or
more, in which event, the consent of two-thirds of the Trustees, but not fewer
than four (4), shall be necessary to adopt any such amendment. The amendment
shall become effective when certified by the chairman of the meeting which
voted it, countersigned by the secretary. As soon as may be, after such
adoption and certification, a copy of the amendment shall be recorded in every
public office where this Agreement has been recorded, but no failure to record
such amendment shall affect its validity.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
TRUSTEES:
/s/ Sylvan M. Cohen /s/ William R. Dimeling
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Sylvan M. Cohen William R. Dimeling
/s/ Jonathan B. Weller /s/ Lee H. Javitch
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Jonathan B. Weller Lee H. Javitch
/s/ Leonard I. Korman /s/ Jeffrey P. Orleans
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Leonard I. Korman Jeffrey P. Orleans
/s/ Robert G. Roger /s/ Robert Freedman
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Robert G. Rogers Robert Freedman
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