1
EXHIBIT 3.1
THIRD AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AMERICAN INDUSTRIAL PROPERTIES REIT
The undersigned, acting as the Trust Managers of a real estate
investment trust under the Texas Real Estate Investment Trust Act (the "Texas
REIT Act"), hereby adopt the following Third Amended and Restated Declaration of
Trust for such trust, which replaces in its entirety the previously enacted
Second Amended and Restated Declaration of Trust, which Third Amended and
Restated Declaration of Trust was adopted by the Shareholders of the Trust on
June 30, 1997 pursuant to the affirmative vote of the holders of at least
two-thirds of the outstanding Shares of the Trust.
ARTICLE ONE
The name of the trust (the "Trust") is "American Industrial Properties
REIT." An assumed name certificate setting forth such name has been filed in the
manner prescribed by law.
ARTICLE TWO
The Trust is formed pursuant to the Texas REIT Act and has the
following as its purpose:
To purchase, hold, lease, manage, sell, exchange, develop,
subdivide and improve real property and interests in real
property, and in general, to carry on any other business and
do any other acts in connection with the foregoing and to have
and exercise all powers conferred by the laws of the State of
Texas upon real estate investment trusts formed under the
Texas REIT Act, and to do any or all of the things hereinafter
set forth to the same extent as natural persons might or could
do. The term "real property" and the term "interests in real
property" for the purposes stated herein shall not include
severed mineral, oil or gas royalty interests.
ARTICLE THREE
The address of the Trust's principal office and place of business is
6220 North Beltline, Suite 205, Irving, Texas 75063.
ARTICLE FOUR
The street address of the Trust's registered office is 6220 North
Beltline, Suite 205, Irving, Texas 75063. The name of the Trust's registered
agent at that address is Marc A. Simpson.
ARTICLE FIVE
The names and business addresses of the Trust Managers approving and
adopting this Declaration of Trust are as follows:
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Name Mailing Address
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William H. Bricker 16475 Dallas Parkway, Suite 350
Dallas, Texas 75248
T. Patrick Duncan 8000 Robert F. McDermott Frwy., Suite 600
San Antonio, Texas 78230
Robert E. Giles 5051 Westheimer, Suite 300
Houston, Texas 77056
Edward B. Kelley 8000 Robert F. McDermott Frwy., Suite 600
San Antonio, Texas 78230
Charles W. Wolcott 6220 North Beltline, Suite 205
Irving, Texas 75063
ARTICLE SIX
The period of the Trust's duration is perpetual. The Trust may be
sooner terminated by the vote of the holders of at least a majority of the
outstanding voting Shares.
ARTICLE SEVEN
The aggregate number of shares of beneficial interest which the Trust
shall have authority to issue is five hundred million common shares, par value
$0.10 per share ("Common Shares"), and fifty million preferred shares, par value
$0.10 per share ("Preferred Shares"). All of the Common Shares shall be equal in
all respects to every other such Common Share, and shall have no preference,
conversion, exchange or preemptive rights.
Unless otherwise specified, the term "Shares" in this Declaration of
Trust shall be deemed to refer to the Common Shares and, solely to the extent
specifically required by law or as specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, to the Preferred Shares. For purposes of Articles
Ten and Nineteen (other than Article Nineteen (j)) of this Declaration of Trust,
the term Shares shall be deemed to refer to both the Common Shares and the
Preferred Shares and, for purposes of such Articles Ten and Nineteen (other than
Article Nineteen (j)), the number of outstanding Shares shall be deemed to be
equal to the value of the Trust's outstanding Shares as determined from time to
time by resolution of the Trust Managers, such determination to include an
allocation of relative value among the Common Shares and any outstanding series
of Preferred Shares.
The Trust may issue one or more series of Preferred Shares, each such
series to consist of such number of shares as shall be determined by resolution
of the Trust Managers creating such series. The Preferred Shares of each such
series shall have such designations, preferences, conversion, exchange or other
rights, participations, voting powers, options, restrictions, limitations,
special rights or relations, limitations as to dividends, qualifications or
terms, or conditions of redemption thereof, as shall be stated and expressed by
the Trust Managers in the resolution or resolutions providing for the issuance
of such series of Preferred Shares pursuant to the authority to do so which is
hereby expressly vested in the Trust Managers.
Except as otherwise specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, the number of shares of any such series so set forth
in such resolution or resolutions may be increased or decreased (but not below
the number of shares of such series then outstanding) by a resolution or
resolutions likewise adopted by the Trust Managers.
Except as otherwise specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, Preferred Shares redeemed or otherwise acquired by
the Trust shall assume the status of authorized but unissued Preferred Shares
and shall be unclassified as to series and may thereafter, subject to the
provisions of this Article Seven and to any restrictions contained in any
resolution
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or resolutions of the Trust Managers providing for the issuance of any such
series of Preferred Shares, be reissued in the same manner as other authorized
but unissued Preferred Shares.
Except as otherwise specifically provided in any resolution or
resolutions of the Trust Managers providing for the issue of any particular
series of Preferred Shares, holders of Preferred Shares shall have no preemptive
rights.
Except as otherwise specifically required by law or this Declaration of
Trust or as specifically provided in any resolution or resolutions of the Trust
Managers providing for the issuance of any particular series of Preferred
Shares, the exclusive voting power of the Trust shall be vested in the Common
Shares of the Trust. Each Common Share entitles the holder thereof to one vote
at all meetings of the shareholders of the Trust.
ARTICLE EIGHT
The Trust shall issue Shares for consideration consisting of any
tangible or intangible benefit to the Trust, including cash, promissory notes,
services performed, contracts for services to be performed, or other securities
of the Trust, such consideration to be determined by the Trust Managers.
ARTICLE NINE
The Trust Managers shall manage all money and/or property received for
the issuance of Shares for the benefit of the shareholders of the Trust.
ARTICLE TEN
The Trust will not commence business until it has received for the
issuance of Shares consideration of at least $1,000 value.
ARTICLE ELEVEN
The Trust shall not engage in any activities beyond the scope of the
purpose of a real estate investment trust formed pursuant to the Texas REIT Act,
as such purpose is set forth in Article Two hereof.
ARTICLE TWELVE
Cumulative voting for the election of Trust Managers is prohibited.
ARTICLE THIRTEEN
(a) The affirmative vote of the holders of not less than 80% of the
outstanding Shares of the Trust, including the affirmative vote of the holders
of not less than 50% of the outstanding Shares not owned, directly or
indirectly, by any Related Person (as hereinafter defined), shall be required
for the approval or authorization of any Business Combination (as hereinafter
defined); provided, however, that the 50% voting requirement referred to above
shall not be applicable if the Business Combination is approved by the
affirmative vote of the holders of not less than 90% of the outstanding Shares;
provided further, that neither the 80% voting requirement nor the 50% voting
requirement referred to above shall be applicable if:
(i) The Trust Managers of the Trust by a vote of not less
than 80% of the Trust Managers then holding office
(A) have expressly approved in advance the
acquisition of Shares of the Trust that caused the
Related Person to become a Related Person or (B) have
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expressly approved the Business Combination prior to
the date on which the Related Person involved in the
Business Combination shall have become a Related
Person; or
(ii) The Business Combination is solely between the Trust
and another entity, 100% of the voting stock, shares
or comparable interests of which is owned directly or
indirectly by the Trust; or
(iii) The Business Combination is proposed to be
consummated within one year of the consummation of a
Fair Tender Offer (as hereinafter defined) by the
Related Person in which Business Combination the cash
or Fair Market Value (as hereinafter defined) of the
property, securities or other consideration to be
received per Share by all remaining holders of Shares
of the Trust in the Business Combination is not less
than the price offered in the Fair Tender Offer; or
(iv) All of conditions (A) through (D) of this
subparagraph (iv) shall have been met: (A) if and to
the extent permitted by law, the Business Combination
is a merger or consolidation, consummation of which
is proposed to take place within one year of the date
of the transaction pursuant to which such person
became a Related Person and the cash or Fair Market
Value of the property, securities or other
consideration to be received per share by all
remaining holders of Shares of the Trust in the
Business Combination is not less than the Fair Price
(as hereinafter defined); (B) the consideration to be
received by such holders is either cash or, if the
Related Person shall have acquired the majority of
its holdings of the Trust's Shares for a form of
consideration other than cash, in the same form of
consideration with which the Related Person acquired
such majority; (C) after such person has become a
Related Person and prior to consummation of such
Business Combination: (1) there shall have been no
reduction in the annual rate of dividends, if any,
paid per share on the Trust's Shares (adjusted as
appropriate for recapitalizations and for Share
splits, reverse Share splits and Share dividends),
except any reduction in such rate that is made
proportionately with any decline in the Trust's net
income for the period for which such dividends are
declared and except as approved by a majority of the
Continuing Trust Managers (as hereinafter defined),
and (2) such Related Person shall not have received
the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the Trust prior to the consummation of
such Business Combination (other than in connection
with financing a Fair Tender Offer); and (D) a proxy
statement that conforms in all respects with the
provisions of the Securities Exchange Act of 1934
(the "Exchange Act") and the rules and regulations
thereunder (or any subsequent provisions replacing
the Exchange Act or the rules or regulations
thereunder) shall be mailed to holders of the Trust's
Shares at least 45 days prior to the consummation of
the Business Combination for the purpose of
soliciting shareholder approval of the Business
Combination; or
(v) The Rights (as defined in paragraph (b) of this
Article Thirteen) shall have become exercisable.
(b) If a person has become a Related Person and within one year after
the date (the "Acquisition Date") of the transaction pursuant to which the
Related Person became a Related Person (x) a Business Combination meeting all of
the requirements of subparagraph (iv) of the proviso to paragraph (a) of this
Article Thirteen regarding the applicability of the 80% voting requirement shall
not have been consummated and (y) a Fair Tender Offer shall not have been
consummated and (z) the Trust shall not have been dissolved and liquidated,
then, in such event the beneficial owner of each Share (not including Shares
beneficially owned by the Related Person) (each such beneficial owner being
hereinafter referred to as a "Holder") shall have the right (individually a
"Right" and collectively the "Rights"), which may be exercised subject to the
provisions of paragraph (d) of this Article Thirteen, commencing at the opening
of business on the one-year anniversary date of the Acquisition Date and
continuing for a period of 90 days thereafter, subject to extensions as provided
in paragraph (d) of this Article Thirteen (the
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"Exercise Period"), to sell to the Trust on the terms set forth herein one Share
upon exercise of such Right. Within five business days after the commencement of
the Exercise Period the Trust shall notify the Holders of the commencement of
the Exercise Period, specifying therein the terms and conditions for exercise of
the Rights. During the Exercise Period, each certificate representing Shares
beneficially owned by a Holder (a "Certificate") shall also represent the number
of Rights equal to the number of Shares represented thereby and the surrender
for transfer of any Certificate shall also constitute the transfer of the Rights
represented by such Shares. At 5:00 P.M., Dallas, Texas time, on the last day of
the Exercise Period, each Right not exercised shall become void, all rights in
respect thereof shall cease as of such time and the Certificates shall no longer
represent Rights.
(c) The purchase price for a Share upon exercise of an accompanying
Right shall be equal to the then-applicable Fair Price paid by the Related
Person (plus, as an allowance for interest, an amount equal to the prime rate of
interest as published in the Wall Street Journal and as in effect from time to
time from the Acquisition Date until the date of the payment for such Share but
less the amount of any cash and the Fair Market Value of any property or
securities distributed with respect to such Shares as dividends or otherwise
during such time period), pursuant to the exercise of the Right relating
thereto. In the event the Related Person shall have acquired any of its holdings
of the Trust's Shares for a form of consideration other than cash, the value of
such other consideration shall be the Fair Market Value thereof.
(d) Notwithstanding the foregoing in paragraph (b) of this Article
Thirteen, the Exercise Period will be deferred in the event (a "Deferral Event")
that the Trust is otherwise prohibited under applicable law from repurchasing
Shares pursuant to the Rights. In the event the Exercise Period is deferred, or
if at any time the Trust reasonably anticipates that a Deferral Event will
exist, the Trust will, as soon as practicable, notify the Holders. If at the end
of any fiscal quarter the Deferral Event ceases to exist, notice shall be given
to the Holders of the commencement of the deferred Exercise Period, which
Exercise Period shall commence no sooner than 15 days nor more than 45 days from
the date of such notice and which shall continue in effect for a period of time
equal in duration to the previously unexpired portion of the Exercise Period.
Notwithstanding any other provision of this Declaration of Trust to the
contrary, during the Exercise Period (including during the existence of any
Deferral Event), neither the Trust nor any subsidiary may declare or pay any
dividend or make any distribution on its shares or to its shareholders (other
than dividends or distributions payable in its Shares or, in the case of any
subsidiary, dividends payable to the Trust) or purchase, redeem or otherwise
acquire or retire for value, or permit any subsidiary to purchase or otherwise
acquire for value, any Shares of the Trust if, upon giving effect to such
dividend, distribution, purchase, redemption, or other acquisition or
retirement, the aggregate amount expended for all such purposes (the amount
expended for such purposes, if other than in cash, to be determined by a
majority of the Continuing Trust Managers, whose determination shall be
conclusive) would prejudice the ability of the Trust to satisfy its maximum
obligation to purchase Shares upon exercise of the Rights.
(e) Rights may be exercised upon surrender to the Trust's principal
transfer agent (the "Transfer Agent") at its principal office of the Certificate
or Certificates evidencing the Shares to be tendered for purchase by the Trust,
together with the form on the reverse thereof completed and duly signed in
accordance with the instructions thereon. In the event that a Holder shall
tender a Certificate which represents greater than the number of Shares which
the Holder elects to require the Trust to purchase upon exercise of the Rights,
the Holder shall designate on the reverse side of such Certificate the number of
Shares to be sold from such Certificate. The Transfer Agent shall thereupon
issue a new Certificate or Certificates for the balance of the number of Shares
not sold to the Trust, which new Certificate or Certificates shall also
represent Rights for an equivalent number of Shares.
(f) For the purposes of this Article:
(i) The term "Business Combination" shall mean (A) any
merger or consolidation, if and to the extent
permitted by law, of the Trust or a subsidiary, with
or into a Related Person, (B) any sale, lease,
exchange, mortgage, pledge, transfer or other
disposition, of all or any Substantial Part (as
hereinafter defined) of the assets of the Trust and
its subsidiaries (taken as a whole) (including,
without limitation, any voting securities of a
subsidiary) to or with a Related Person, (C) the
issuance or transfer by the Trust or a subsidiary
(other than by way of a pro rata distribution to all
shareholders) of any securities of the Trust or a
subsidiary of the Trust to a Related Person, (D) any
reclassification of securities
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(including any reverse Share split) or
recapitalization by the Trust, the effect of which
would be to increase the voting power (whether or not
currently exercisable) of the Related Person, (E) the
adoption of any plan or proposal for the liquidation
or dissolution of the Trust proposed by or on behalf
of a Related Person which involves any transfer of
assets, or any other transaction, in which the
Related Person has any direct or indirect interest
(except proportionately as a shareholder), (F) any
series or combination of transactions having,
directly or indirectly, the same or substantially the
same effect as any of the foregoing, and (G) any
agreement, contract or other arrangement providing,
directly or indirectly, for any of the foregoing.
(ii) The term "Continuing Trust Manager' shall mean (x)
any Trust Manager of the Trust who is not affiliated
with a Related Person and who was a Trust Manager
immediately prior to the time that the Related Person
became a Related Person, and (y) any other Trust
Manager who is not affiliated with the Related Person
and is recommended either by a majority of the
persons described in clause (x) of this subparagraph
(ii) or by persons described in this clause (y) who
are then Trust Managers of the Trust to succeed a
person described in either the said clause (x) or
clause (y) as a Trust Manager of the Trust.
(iii) The term "Fair Market Value" shall mean: (A) in the
case of securities, the highest closing sale price
during the 30-day period immediately preceding the
date in question of such security on the Composite
Tape for New York Stock Exchange-Listed Stocks, or,
if such security is not quoted on the Composite Tape
on the New York Stock Exchange, or, if such security
is not listed on such Exchange, on the principal
United States securities exchange registered under
the Exchange Act on which such security is listed,
or, if such security is not listed on any such
exchange, the highest closing bid quotation with
respect to such security during the 30-day period
preceding the date in question on the National
Association of Securities Dealers, Inc. Automated
Quotation System or any system then in use, or if no
such quotations are available, the fair market value
on the date in question of such security as
reasonably determined by an independent appraiser
selected by a majority of the Continuing Trust
Managers (or, if there are no Continuing Trust
Managers, by the investment banking firm most
recently retained by the Trust) in good faith; and
(B) in the case of property other than cash or stock,
the fair market value of such property on the date in
question as reasonably determined by an independent
appraiser selected by a majority of the Continuing
Trust Managers (or, if there are no Continuing Trust
Managers, by the investment banking firm most
recently retained by the Trust) in good faith. In
each case hereunder in which an independent appraiser
is to be selected to determine Fair Market Value, (1)
in the event (x) there are no Continuing Trust
Managers, and (y) the investment banking firm most
recently retained by the Trust is unable or elects
not to serve as such appraiser, or (2) in the event
there are Continuing Trust Managers that do not
select an independent appraiser within 10 days of a
request for such appointment made by a Related
Person, such independent appraiser may be selected by
such Related Person.
(iv) The term "Fair Price" shall mean the highest
per-Share price (which, to the extent not paid in
cash, shall equal the Fair Market Value of any other
consideration paid), with appropriate adjustments for
recapitalizations and for Share splits, reverse Share
splits and Share dividends, paid by the Related
Person in acquiring any of its holdings of the
Trust's Shares.
(v) The term "Fair Tender Offer" shall mean a bona fide
tender offer for all of the Trust's Shares
outstanding (and owned by persons other than a
Related Person if the tender offer is made by the
Related Person), whether or not such offer is
conditional upon any minimum number of Shares being
tendered, in which the aggregate amount of cash or
the Fair Market Value of any securities or other
property to be received by all holders who tender
their Shares for each Share so tendered shall be at
least equal to the then applicable
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Fair Price paid by a Related Person or paid by the
person making the tender offer if such person is not
a Related Person. In the event that at the time such
tender offer is commenced the terms and conduct
thereof are not directly regulated by Section 14(d)
or 13(e) of the Exchange Act and the general rules
and regulations promulgated thereunder, then the
terms of such tender offer regarding the time such
offer is held open and regarding withdrawal rights
shall conform in all respects with such terms
applicable to tender offers regulated by either of
such Sections of the Exchange Act. A Fair Tender
Offer shall not be deemed to be "consummated" until
Shares are purchased and payment in full has been
made for all duly tendered Shares.
(vi) The term "Related Person" shall mean and include any
individual, corporation, partnership or other
"person" (as defined in Section 13(d)(3) of the
Exchange Act), and the "Affiliates" and "Associates"
(as defined in Rule 12b-2 of the Exchange Act) of any
such individual, corporation, partnership or other
person) which individually or together is the
"Beneficial Owner" (as defined in Rule 13d-3 of the
Exchange Act) in the aggregate of more than 50% of
the outstanding Shares of the Trust, other than the
Trust or any employee benefit plan(s) sponsored by
the Trust, except that an individual, corporation,
partnership or other person which individually or
together Beneficially Owns or upon conversion of debt
securities (owned or with regard to which such
individual, corporation, partnership or other person
is committed to purchase as of the date of adoption
of this Declaration of Trust) would own in excess of
20% of the outstanding Shares at the time this
provision is adopted by vote of the Trust's
shareholders shall only be considered a Related
Person at such time as he, she, it or they acquire in
the aggregate Beneficial Ownership of more than 80%
of the outstanding Shares.
(vii) The term "Substantial Part" shall mean more than 35%
of the book value of the total assets of the Trust
and its subsidiaries (taken as a whole) as of the end
of the fiscal year ending prior to the time the
determination is being made.
(viii) Any person (as such term is defined in subsection
(vi) of this paragraph (f)) that has the right to
acquire any Shares of the Trust pursuant to any
agreement, or upon the exercise of conversion rights,
warrants or options, or otherwise, shall be deemed a
Beneficial Owner of such Shares for purposes of
determining whether such person, individually or
together with its Affiliates and Associates, is a
Related Person.
(ix) For purposes of subparagraph (iii) of paragraph (a)
of this Article Thirteen, the term "other
consideration to be received" shall include, without
limitation, Shares of the Trust retained by its
existing public shareholders in the event of a
Business Combination in which the Trust is the
surviving entity.
(g) The affirmative vote of the holders of not less than 80% of the
outstanding Shares of the Trust, including the affirmative vote of the holders
of not less than 50% of the outstanding Shares not owned, directly or
indirectly, by any Related Person (such 50% voting requirement shall not be
applicable if such amendment, alteration, change, repeal or rescission is
approved by the affirmative vote of not less than 90% of the outstanding Shares)
shall be required to amend, alter, change, repeal or rescind, or adopt any
provisions inconsistent with, this Article Thirteen.
(h) The provisions of this Article Thirteen shall be subject to all
valid and applicable laws, including, without limitation, the Texas REIT Act,
and, in the event this Article Thirteen or any of the provisions hereof are
found to be inconsistent with or contrary to any such valid laws, such laws
shall be deemed to control and this Article Thirteen shall be regarded as
modified accordingly, and, as so modified, to continue in full force and effect.
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ARTICLE FOURTEEN
The Trust Managers may from time to time declare, and the Trust may
pay, dividends on its outstanding Shares in cash, in property or in its Shares,
except that no dividend shall be declared or paid when the Trust is unable to
pay its debts as they become due in the usual course of its business, or when
the payment of such dividend would result in the Trust being unable to pay its
debts as they become due in the usual course of business.
ARTICLE FIFTEEN
Upon resolution adopted by the Trust Managers, the Trust shall be
entitled to purchase or redeem, directly or indirectly, its own Shares, subject
to any limitations of the Texas REIT Act.
ARTICLE SIXTEEN
(a) In this Article:
(i) "Indemnitee" means (A) any present or former Trust
Manager or officer of the Trust, (B) any person who
while serving in any of the capacities referred to in
clause (A) hereof served at the Trust's request as a
trust manager, director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar
functionary of another real estate investment trust
or foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise and (C) any person
nominated or designated by (or pursuant to authority
granted by) the Trust Managers or any committee
thereof to serve in any of the capacities referred to
in clauses (A) or (B) hereof.
(ii) "Official Capacity" means (A) when used with respect
to a Trust Manager, the office of Trust Manager of
the Trust and (B) when used with respect to a person
other than a Trust Manager, the elective or
appointive office of the Trust held by such person or
the employment or agency relationship undertaken by
such person on behalf of the Trust, but in each case
does not include service for any other real estate
investment trust or foreign or domestic corporation
or any partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other
enterprise.
(iii) "Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or
proceeding, and any inquiry or investigation that
could lead to such an action, suit or proceeding.
(b) The Trust shall indemnify every Indemnitee against all judgments,
penalties (including excise and similar taxes), fines, amounts paid in
settlement and reasonable expenses actually incurred by the Indemnitee in
connection with any Proceeding in which he or she was, is or is threatened to be
named defendant or respondent, or in which he or she was or is a witness without
being named a defendant or respondent, by reason, in whole or in part, of his or
her serving or having served, or having been nominated or designated to serve,
in any of the capacities referred to in paragraph (a)(i) of this Article
Sixteen, to the fullest extent that indemnification is permitted by Texas law.
An Indemnitee shall be deemed to have been found liable in respect of any claim,
issue or matter only after the Indemnitee shall have been so adjudged by a court
of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable
expenses shall include, without limitation, all court costs and all fees and
disbursements of attorneys for the Indemnitee.
(c) Without limitation of paragraph (b) of this Article Sixteen and in
addition to the indemnification provided for in paragraph (b) of this Article
Sixteen, the Trust shall indemnify every Indemnitee against reasonable expenses
incurred by such person in connection with any proceeding in which he or she is
a witness or a named
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defendant or respondent because he or she served in any of the capacities
referred to in paragraph (a)(i) of this Article Sixteen.
(d) Reasonable expenses (including court costs and attorneys' fees)
incurred by an Indemnitee who was or is a witness or was, is or is threatened to
be made a named defendant or respondent in a Proceeding shall be paid or
reimbursed by the Trust at reasonable intervals in advance of the final
disposition of such Proceeding after receipt by the Trust of a written
undertaking by or on behalf of such Indemnitee to repay the amount paid or
reimbursed by the Trust if it shall ultimately be determined that he or she is
not entitled to be indemnified by the Trust as authorized in this Article
Sixteen. Such written undertaking shall be an unlimited obligation of the
Indemnitee but need not be secured and it may be accepted without reference to
financial ability to make repayment. Notwithstanding any other provision of this
Article Sixteen, the Trust may pay or reimburse expenses incurred by an
Indemnitee in connection with his or her appearance as a witness or other
participation in a Proceeding at a time when he or she is not named a defendant
or respondent in the Proceeding.
(e) The indemnification provided by this Article Sixteen shall (i) not
be deemed exclusive of, or to preclude, any other rights to which those seeking
indemnification may at any time be entitled under the Trust's Bylaws, any law,
agreement or vote of shareholders or disinterested Trust Managers, or otherwise,
or under any policy or policies of insurance purchased and maintained by the
Trust on behalf of any Indemnitee, both as to action in his or her Official
Capacity and as to action in any other capacity, (ii) continue as to a person
who has ceased to be in the capacity by reason of which he or she was an
Indemnitee with respect to matters arising during the period he or she was in
such capacity, and (iii) inure to the benefit of the heirs, executors and
administrators of such a person.
(f) The provisions of this Article Sixteen (i) are for the benefit of,
and may be enforced by, each Indemnitee of the Trust, the same as if set forth
in their entirety in a written instrument duly executed and delivered by the
Trust and such Indemnitee and (ii) constitute a continuing offer to all present
and future Indemnitees. The Trust, by its adoption of this Declaration of Trust,
(x) acknowledges and agrees that each Indemnitee of the Trust has relied upon
and will continue to rely upon the provisions of this Article Sixteen in
becoming, and serving in any of the capacities referred to in paragraph (a)(i)
of this Article Sixteen, (y) waives reliance upon, and all notice of acceptance
of, such provisions by such Indemnitees and (z) acknowledges and agrees that no
present or future Indemnitee shall be prejudiced in his or her right to enforce
the provisions of this Article Sixteen in accordance with their terms by any act
or failure to act on the part of the Trust.
(g) No amendment, modification or repeal of this Article Sixteen or any
provision of this Article Sixteen shall in any manner terminate, reduce or
impair the right of any past, present or future Indemnitees to be indemnified by
the Trust, nor the obligation of the Trust to indemnify any such Indemnitees,
under and in accordance with the provisions of this Article Sixteen as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may be
asserted.
(h) If the indemnification provided in this Article Sixteen is either
(i) insufficient to cover all costs and expenses incurred by any Indemnitee as a
result of such Indemnitee being made or threatened to be made a defendant or
respondent in a Proceeding by reason of his or her holding or having held a
position named in paragraph (a)(i) of this Article Sixteen or (ii) not permitted
by Texas law, the Trust shall indemnify, to the fullest extent that
indemnification is permitted by Texas law, every Indemnitee with respect to all
costs and expenses incurred by such Indemnitee as a result of such Indemnitee
being made or threatened to be made a defendant or respondent in a Proceeding by
reason of his or her holding or having held a position named in paragraph (a)(i)
of this Article Sixteen.
(i) The indemnification provided by this Article Sixteen shall be
subject to all valid and applicable laws, including, without limitation, the
Texas REIT Act, and, in the event this Article Sixteen or any of the provisions
hereof or the indemnification contemplated hereby are found to be inconsistent
with or contrary to any such valid laws, such laws shall be deemed to control
and this Article Sixteen shall be regarded as modified accordingly, and, as so
modified, to continue in full force and effect.
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ARTICLE SEVENTEEN
No Trust Manager or officer of the Trust shall be liable to the Trust
for any act, omission, loss, damage, or expense arising from the performance of
his or her duties under the Trust save only for his or her own willful
misfeasance or malfeasance or negligence. In discharging their duties to the
Trust, Trust Managers and officers of the Trust shall be entitled to rely upon
experts and other matters as provided in the Texas REIT Act and the Trust's
Bylaws.
ARTICLE EIGHTEEN
The number of Trust Managers may be increased from time to time by the
affirmative vote of the majority of the Trust Managers or decreased by the
unanimous vote of the Trust Managers. Each Trust Manager shall serve until his
or her successor is elected and qualified or until his or her death, retirement,
resignation or removal.
A Trust Manager may be removed by the vote of the holders of two-thirds
of the outstanding Shares at a special meeting of the shareholders called for
such purpose pursuant to the Trust's Bylaws.
ARTICLE NINETEEN
(a) No Person may own Shares of any class with an aggregate value in
excess of 9.8% of the aggregate value of all outstanding Shares of such class of
Shares or more than 9.8% of the number of outstanding Shares of any class of
Shares (the limitation on the ownership of outstanding Shares is referred to in
this Article Nineteen as the "Ownership Limit" and the 9.8% threshold is
referred to in this Article Nineteen as the "Percentage Limit"), and no
Securities (as hereinafter defined) shall be accepted, purchased, or in any
manner acquired by any Person if such issuance or transfer would result in that
Person's ownership of Shares exceeding the Percentage Limit. For purposes of
determining if the Ownership Limit is exceeded by a Person, Convertible
Securities (as hereinafter defined) owned by such Person shall be treated as if
the Convertible Securities owned by such Person had been converted into Shares
if the effect of such treatment would be to increase the ownership percentage of
such Person in the Trust. The Ownership Limit shall not apply (i) to
acquisitions of Securities by any Person that has made a tender offer for all
outstanding Shares of the Trust (including Convertible Securities) in conformity
with applicable federal securities laws, (ii) to the acquisition of Securities
of the Trust by an underwriter in a public offering of Securities of the Trust,
or in any transaction involving the issuance of Securities by the Trust, in
which a majority of the Trust Managers determines that the underwriter or other
Person or party initially acquiring such Securities will timely distribute such
Securities to or among others so that, following such distribution, none of such
Securities will be Excess Securities (as hereinafter defined), (iii) to the
acquisition of Securities pursuant to the exercise of employee share options, or
(iv) to the acquisition of Securities pursuant to an exception made pursuant to
paragraph (h) hereof.
(b) Nothing in this Article Nineteen shall preclude the settlement of
any transaction in Securities entered into through the facilities of the New
York Stock Exchange. If any Securities are accepted, purchased, or in any manner
acquired by any Person resulting in a violation of paragraph (a) or (e) hereof,
such issuance or transfer shall be valid only with respect to such amount of
Securities issued or transferred as does not result in a violation of paragraph
(a) or (e) hereof, and such acceptance, purchase or acquisition shall be void ab
initio with respect to the amount of Securities that results in a violation of
paragraph (a) or (e) hereof (the "Excess Securities"), and the intended
transferee of such Excess Securities shall acquire no rights in such Excess
Securities except as set forth in subsection (d) below.
(c) Each shareholder shall, within ten days of demand by the Trust,
disclose to the Trust in writing such information with respect to his, her or
its ownership of shares as the Trust Managers in their discretion deem necessary
or appropriate in order that the Trust may fully comply with all provisions of
the Internal Revenue Code of 1986, as amended, and any successor statute (the
"Code") relating to REITs and all regulations, rulings and cases promulgated or
decided thereunder (the "REIT Provisions") and to comply with the requirements
of any taxing
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authority or governmental agency. All Persons who own Shares of any class with
an aggregate value in excess of 9.8% of the aggregate value of such class of
Shares or 9.8% of the number of outstanding Shares of any class must disclose in
writing such ownership information to the Trust no later than January 31 of each
year. Failure to provide such information, upon reasonable request, shall result
in the Securities so owned being treated as Excess Securities pursuant to
paragraph (b) hereof for so long as such failure continues.
(d) The Excess Securities, and the owners thereof, shall have the
following characteristics, rights and powers:
(i) Upon any purported purchase, sale, exchange,
acquisition, disposition or other transfer or upon
any change in the capital structure of the Trust
(including any redemption of Securities) that results
in Excess Securities pursuant to paragraphs (a) or
(e) of this Article Nineteen, such Excess Securities
shall be deemed to have been transferred to the
Trust, as trustee of a trust for the exclusive
benefit of such beneficiary or beneficiaries to whom
an interest in such Excess Securities may later be
transferred pursuant to subparagraph (v) of this
subsection (d) (the "Beneficial Trust"). Any such
Excess Securities so held in the Beneficial Trust
shall be issued and outstanding shares of the Trust.
The purported transferee shall have no rights in such
Excess Securities except as provided in subparagraph
(v) of this subsection (d).
(ii) The holder of Excess Securities shall not be entitled
to receive any dividends, interest payments or other
distributions. Any dividend or distribution paid
prior to the discovery by the Trust that the
Securities have become Excess Securities shall be
repaid to the Trust upon demand.
(iii) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any
distribution of the assets of, the Trust, each holder
of Excess Securities shall be entitled to receive,
ratably with each other holder of Securities and
Excess Securities, that portion of the assets of the
Trust available for distribution to its shareholders.
The Trust as holder of all Excess Securities in the
Beneficial Trust or if the Trust shall have been
dissolved, any trustee of such Beneficial Trust
appointed by the Trust prior to its dissolution,
shall distribute ratably to the beneficiaries of such
Beneficial Trust any such assets received in respect
of the Excess Securities in any liquidation,
dissolution or winding up of, or any distribution of
the assets of, the Trust.
(iv) The holders of shares of Excess Securities shall not
be entitled to vote on any matters (except as
required by law).
(v) Except as otherwise provided in this Article
Nineteen, Excess Securities shall not be
transferable. The purported transferee may freely
designate a beneficiary of an interest in the
Beneficial Trust (representing the number of shares
of Excess Securities that have not been acquired by
the Trust pursuant to subparagraph (vi) of this
subsection (d) that are held by the Beneficial Trust
attributable to a purported transfer that resulted in
the Excess Securities), if (A) the shares of Excess
Securities held in the Beneficial Trust would not be
Excess Securities in the hands of such beneficiary
and (B) the purported transferee does not receive a
price from such beneficiary that reflects a price per
share for such Excess Securities that exceeds (x) the
price per share such purported transferee paid for
the Securities in the purported transfer that
resulted in the Excess Securities, or (y) if the
purported transferee did not give value for such
Excess Securities (through a gift, devise or other
transaction), a price per share equal to the Market
Price (as hereinafter defined) on the date of the
purported transfer that resulted in the Excess
Securities. Upon such transfer of an interest in the
Beneficial Trust, the corresponding shares of Excess
Securities in the Beneficial Trust shall be
automatically exchanged for an equal number of shares
of the applicable Securities and such Securities
shall be transferred of record to the transferee of
the interest in the Beneficial Trust if such
Securities would not be
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Excess Securities in the hands of such transferee.
Prior to any transfer of any interest in the
Beneficial Trust, the purported transferee must give
advance notice to the Trust of the intended transfer
and the Trust must have waived in writing its
purchase rights under subparagraph (vi) of this
subsection (d). Notwithstanding the foregoing, if a
purported transferee receives a price for designating
a beneficiary of an interest in the Beneficial Trust
that exceeds the amounts allowable under the
foregoing provisions of this subparagraph (v), such
purported transferee shall pay, or cause such
beneficiary to pay, such excess to the Trust
immediately upon demand.
(vi) Excess Securities shall be deemed to have been
offered for sale to the Trust, or its designee, at a
price per share equal to the lesser of (A) the price
per share in the transaction that created such Excess
Securities (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and
(B) the Market Price on the date the Trust, or its
designee, accepts such offer. The Trust shall have
the right to accept such offer for a period of 90
days after the later of (x) the date of the transfer
which resulted in such Excess Securities and (y) the
date the Trust Managers determine in good faith that
a transfer resulting in Excess Securities has
occurred.
(e) Any sale, transfer, gift, assignment, devise or other disposition
of Shares (a "transfer") that, if effective, would result in (i) the Shares of
the Trust being owned by less than 100 persons (determined without reference to
any rules of attribution) shall be void ab initio as to the Shares which would
otherwise be beneficially owned by the transferee, (ii) 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 the Shares that would cause the Trust to be "closely held"
within the meaning of Section 856(h) of the Code, (iii) the Trust owning,
directly or indirectly, 10% or more of the ownership interest in any tenant or
subtenant of the Trust's real property within the meaning of Section
856(d)(2)(B) of the Code and the Treasury Regulations thereunder, shall be void
ab initio, or (iv) the disqualification of the Trust as a REIT shall be void ab
initio as to the transfer of the Shares that would cause the Trust to be
disqualified as a REIT, and, in the case of each of clauses (i), (ii), (iii) and
(iv) of this paragraph (e), the intended transferee shall acquire no rights in
such Shares except as set forth in subsection (d) above.
(f) For purposes of this Article Nineteen:
(i) The term "Convertible Securities" means any
securities of the Trust that are convertible into
Shares.
(ii) The term "individual" shall mean any natural person
as well as those organizations treated as natural
persons under Section 542(a) of the Code.
(iii) The term "Market Price" means the average of the last
reported sales price of Common Shares reported on the
New York Stock Exchange on the five trading days
immediately preceding the relevant __te, or if the
Common Shares are not then traded on the New York
Stock Exchange, the last reported sales price of the
Common Shares on the five trading days immediately
preceding the relevant date as reported on any
exchange or quotation system over which the Common
Shares may be traded, or if the Common Shares are not
then traded over any exchange or quotation system,
then the market price of the Common Shares on the
relevant date as determined in good faith by the
Trust Managers.
(iv) The term "ownership" (including "own" or "owns") of
Shares means beneficial ownership. Beneficial
ownership, for this purpose shall be defined to
include actual ownership by a Person as well as
constructive ownership by such Person after
application of principles in accordance with or by
reference to Sections 856 or 544 of the Code.
(v) The term "Person" includes an individual,
corporation, partnership, association, joint stock
company, limited liability company, trust,
unincorporated association or other
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entity and also includes a "group" as that term is
defined in Section 13(d)(3) of the Exchange Act.
(vi) The term "REIT" means a "real estate investment
trust" as defined in Section 856 of the Code and
applicable Treasury Regulations.
(vii) The term "Securities" means Shares and Convertible
Securities.
(g) If any of the restrictions on transfer set forth in this
Article Nineteen are determined to be void, invalid or
unenforceable by virtue of any legal decision, statute, rule
or regulation, then the intended transferee of any Excess
Securities may be deemed, at the option of the Trust, to have
acted as an agent on behalf of the Trust in acquiring the
Excess Securities and to hold the Excess Securities on behalf
of the Trust.
(h) The Percentage Limit set forth in paragraph (a) hereof shall not
apply to Securities which the Trust Managers in their sole discretion may exempt
from the Percentage Limit while owned by a Person who has provided the Trust
with evidence and assurances acceptable to the Trust Managers that the
qualification of the Trust as a REIT would not be jeopardized thereby. The Trust
Managers, in their sole discretion, may at any time revoke any exception
pursuant to this paragraph (h) in the case of any Person, and upon such
revocation, the provisions of paragraph (a) hereof shall immediately become
applicable to such Person and all Securities which such Person may own. A
decision to exempt or refuse to exempt from the Percentage Limit the ownership
of certain designated Securities, or to revoke an exemption previously granted,
shall be made by the Trust Managers in their sole discretion, based on any
reason whatsoever, including, but not limited to, the preservation of the
Trust's qualification as a REIT.
(i) Subject to the provisions of the first sentence of paragraph (b)
hereof, nothing herein contained shall limit the ability of the Trust to impose
or to seek judicial or other imposition of additional restrictions if deemed
necessary or advisable to protect the Trust and the interests of its security
holders by preservation of the Trust's status as a qualified REIT under the
Code.
(j) All Persons who own 5% or more of the Trust's outstanding Shares
during any taxable year of the Trust shall file with the Trust an affidavit
setting forth the number of Shares during such taxable year (i) owned directly
(held of record by such Person or by a nominee or nominees of such Person) and
(ii) constructively owned (within the meaning of Section 544 of the Code or for
purposes of Rule 13(d) of the Exchange Act) by the Person filing the affidavit.
The affidavit to be filed with the Trust shall set forth all the information
required to be reported (i) in returns of shareholders under Section 1.857-9 of
the Treasury Regulations or similar provisions of any successor Treasury
Regulations and (ii) in reports to be filed under Section 13(d) of the Exchange
Act. The affidavit or an amendment to a previously filed affidavit shall be
filed with the Trust annually within 60 days after the close of the Trust's
taxable year. A Person shall have satisfied the requirements of this paragraph
(j) if the person furnishes to the Trust the information in such person's
possession after such person has made a good faith effort to determine the
Shares it owns and to acquire the information required by income tax regulation
1.857-9 or similar provisions of any successor regulation.
ARTICLE TWENTY
The Board of Trust Managers shall use its best efforts to cause the
Trust and its shareholders to qualify for U.S. federal income tax treatment in
accordance with the provisions of the Code applicable to REITs. In furtherance
of the foregoing, the Board of Trust Managers shall use its best efforts to take
such actions as are necessary, and may take such actions as it deems desirable
(in its sole discretion) to preserve the status of the Trust as a REIT.
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ARTICLE TWENTY-ONE
Special meetings of the shareholders for any purpose or purposes,
unless otherwise prescribed by law or by the Declaration of Trust, may be called
by the Trust Managers, any officer of the Trust or the holders of at least five
percent (5%) of all of the shares entitled to vote at such meeting.
ARTICLE TWENTY-TWO
This Declaration of Trust may be amended from time to time by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
Shares, except that (i) Article Eleven hereof (relating to the prohibition
against engaging in non-real estate investment trust businesses); (ii) Article
Thirteen hereof (relating to the approval of Business Combinations); (iii)
Article Eighteen hereof (relating to the number and removal of Trust Managers);
(iv) Article Nineteen hereof (relating to Share ownership requirements); and (v)
this Article Twenty-Two may not be amended or repealed, and provisions
inconsistent therewith and herewith may not be adopted, except by the
affirmative vote of the holders of at least 80% of the outstanding voting
Shares.
ARTICLE TWENTY-THREE
If any provision of this Declaration of Trust or any application of any
such provision is determined to be invalid by any federal or state court having
jurisdiction over the issue, the validity of the remaining provisions shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court. In lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Declaration of Trust, a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible, and the parties hereto request the
court or any arbitrator to whom disputes relating to this Declaration of Trust
are submitted to reform the otherwise illegal, invalid or unenforceable
provision in accordance with this Article Twenty-Three.
IN WITNESS WHEREOF, the undersigned Trust Managers do hereby execute
this Third Amended and Restated Declaration of Trust as of the 30th day of June,
1997.
/s/ William S. Bricker
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WILLIAM H. BRICKER
/s/ T. Patrick Duncan
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T. PATRICK DUNCAN
/s/ Robert E. Giles
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ROBERT E. GILES
/s/ Edward B. Kelley
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EDWARD B. KELLEY
/s/ Charles W. Wolcott
----------------------------------
CHARLES W. WOLCOTT
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