-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LoGATGX0Tkmm1aj+Cy5S/znpAAp5LcNboeVY+tS7h4hmTUlZuhoJEZ++sVMGzSmf NLEwHjzudV0sJvKHGP6Jlw== 0000950137-96-002067.txt : 19961030 0000950137-96-002067.hdr.sgml : 19961030 ACCESSION NUMBER: 0000950137-96-002067 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961024 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961028 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CENTRAL INDEX KEY: 0000037008 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346513657 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06249 FILM NUMBER: 96648908 BUSINESS ADDRESS: STREET 1: 55 PUBLIC SQUARE STREET 2: STE 1900 CITY: CLEVELAND STATE: OH ZIP: 44113 BUSINESS PHONE: 2167814030 MAIL ADDRESS: STREET 1: 55 PUBLIC SQUARE SUITE 1910 CITY: CLEVELAND STATE: OH ZIP: 44113 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION REALTY DATE OF NAME CHANGE: 19691012 8-K 1 FORM 8-K 1 ================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported) October 24, 1996 ----------------- FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS ------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Ohio ------------------------------------------------------- (State of Organization) 1-6249 34-6513657 - ------------------------- ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 55 Public Square, Suite 1900, Cleveland, Ohio 44113 - -------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (216) 781-4030 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 5. OTHER EVENTS. On October 24, 1996, First Union Real Estate Equity and Mortgage Investments, an Ohio real estate investment trust ("First Union"), announced the pricing of an offering of 2,000,000 shares of its Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, $25.00 par value per share (the "Series A Preferred Shares"). Copies of the announcement and the underwriting agreement relating to the Series A Preferred Shares are filed as exhibits hereto and are hereby incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits.
EXHIBIT NO. DOCUMENT DESCRIPTION ----------- -------------------- 1(a) Underwriting Agreement dated October 23, 1996 among Sutro & Co. Incorporated, BT Securities Corporation and Tucker Anthony Incorporated and First Union Real Estate Equity and Mortgage Investments. 4(a) Certificate of Designations for the Series A Preferred Shares. 4(b) Form of certificate of Series A Preferred Shares. 99(a) Press Release dated October 24, 1996.
3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS Dated: October 24, 1996 By: /s/ John J. Dee ---------------------------- John J. Dee Senior Vice President and Chief Accounting Officer EX-1.(A) 2 UNDERWRITING AGREEMENT 1 2,000,000 SHARES FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS SERIES A CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED SHARES OF BENEFICIAL INTEREST (LIQUIDATION PREFERENCE VALUE $25 PER SHARE) UNDERWRITING AGREEMENT OCTOBER 23, 1996 SUTRO & CO. INCORPORATED BT SECURITIES CORPORATION TUCKER ANTHONY INCORPORATED As Representatives of Several Underwriters c/o Sutro & Co. Incorporated 201 California Street San Francisco, California 94111 Dear Sirs: 1. INTRODUCTION. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, an Ohio business trust (the "Trust"), proposes to issue and sell to the several Underwriters named in Schedule I hereto (the "Underwriters"), for which Sutro & Co. Incorporated, BT Securities Corporation and Tucker Anthony Incorporated are acting as representatives (the "Representatives"), 2,000,000 Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, $25 liquidation preference value per share (the "Preferred Shares"). The Trust also proposes to issue to the several Underwriters an aggregate of not more than 300,000 additional Preferred Shares (the "Additional Preferred Shares"), if requested by the Underwriters in accordance with Section 9 hereof. The Trust hereby agrees with the Underwriters as follows: 2. REPRESENTATIONS AND WARRANTIES. (a) The Trust represents, warrants and agrees with each of the Underwriters that: (i) A registration statement on Form S-3 (File No. 333-00953) under the Securities Act of 1933, as amended (the "Act"), with respect to preferred shares of beneficial interest of the Trust (as well as other securities of the Trust), including a prospectus, has been prepared by the Trust in conformity with the requirements of the Act and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder (the "Rules and Regulations"). Such registration statement has been filed with the Commission under the Act, and one amendment to such registration statement has also been so filed. After the execution of this Agreement, the Trust shall file with the Commission in accordance with Rule 424 of the Rules and Regulations, a prospectus in the form most recently filed with the 2 Commission, with such amendments and supplements in relation to the Preferred Shares. Such prospectus (as amended and supplemented) shall have been provided to and approved by the Representatives. As used in this Agreement, the term "Registration Statement" means such registration statement, as amended at the time when it was or is declared effective, including all financial schedules and exhibits thereto and to documents incorporated therein by reference; the term "Prospectus" means the prospectus contained in such registration statement as it may be amended in accordance with Rule 424 of the Rules and Regulations, but excluding the Prospectus Supplement as defined below; the term "Prospectus Supplement" means the prospectus supplement relating to the offer of the Preferred Shares, but excluding the Prospectus, filed with the Commission pursuant to Rule 424(b) under the Rules and Regulations; and the term "Preliminary Prospectus Supplement" means the preliminary prospectus supplement subject to completion relating to the offer of the Preferred Shares and filed pursuant to Rule 424 of the Rules and Regulations. References herein to any document or other information incorporated by reference in the Registration Statement shall include documents or other information incorporated by reference in the Prospectus. Reference made herein to the Prospectus shall be deemed to include all documents and information incorporated by reference therein and shall be deemed to refer to and include any documents and information filed after the date of such Prospectus and so incorporated by reference, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (ii) The Commission has not issued any order preventing or suspending the use of any Prospectus, or Preliminary Prospectus Supplement or the Registration Statement and has not instituted or threatened to institute any proceedings with respect to such an order. When any Preliminary Prospectus Supplement was filed with the Commission it (A) contained all statements required to be stated therein in accordance with, and complied in all material respects with the requirements of, the Act and the Rules and Regulations and (B) did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. When the Registration Statement was declared effective, it (A) complied in all material respects with the requirements of the Act and the Rules and Regulations and (B) did not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading. When the Prospectus and Prospectus Supplement are filed with the Commission pursuant to Rule 424(b) and at all times subsequent thereto up to and including the Closing Date (as defined in Section 3 hereof) and the Option Closing Date (as defined in Section 9 hereof), the Prospectus and the Prospectus Supplement (A) will comply in all material respects with the requirements of the Act and the Rules and Regulations and (B) did not or will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing provisions of this paragraph (ii) shall not apply to statements or omissions made in any Preliminary Prospectus Supplement, the Registration Statement or any amendment thereto, the Prospectus or any amendment thereto or the Prospectus Supplement or any amendment thereto in reliance upon, and in conformity with, information furnished in writing to the Trust by or on behalf of the Underwriters through any Representative expressly for use therein. The documents which are incorporated by reference in the Prospectus or from which information is so incorporated by reference, when they became effective or were filed with the Commission, as the case may be, complied in all material respects with the requirements of the Act and the Rules and Regulations or the Exchange Act and the rules and regulations thereunder, as applicable, and did - 2 - 3 not, when such documents became effective or were so filed, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and any documents so filed and incorporated by reference subsequent to the effective date of the Registration Statement shall, when they are filed with the Commission, conform in all material respects with the requirements of the Act and the Rules and Regulations and the Exchange Act and the rules and regulations thereunder, as applicable. (iii) The Trust (A) is a duly organized and validly existing business trust in good standing under the laws of Ohio, with full power and authority to own or lease its properties and to conduct its business as described in the Registration Statement, the Prospectus and the Prospectus Supplement; and (B) is duly qualified to do business as a foreign business trust and is in good standing in each jurisdiction (x) in which the conduct of its business requires such qualification (except for those jurisdictions in which the failure so to qualify has not had and will not have a Material Adverse Effect (as hereinafter defined)). The Trust has an affiliated Management Company, First Union Management, Inc. ("Management"), and the shares of Management are held in trust for the benefit of the holders of shares of beneficial interest, $1.00 par value per share, of the Trust. Management (A) is a duly incorporated and validly existing corporation under the laws of Delaware, with full power and authority to own or lease its properties or to conduct its business as described in the Registration Statement and the Prospectus Supplement, and (B) is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business requires such qualification (except for those jurisdictions in which the failure so to qualify has not had and will not have a Material Adverse Effect). "Material Adverse Effect" means, when used in connection with the Trust or Management, any development, change or effect that is materially adverse to the business, properties, assets, net worth, condition (financial or other), results of operations or prospects of the Trust and Management taken as a whole. (iv) The Trust has the duly authorized and validly outstanding capitalization set forth under the caption "Capitalization" in the Prospectus Supplement and will have the adjusted capitalization set forth therein on the Closing Date and the Option Closing Date (as hereinafter defined), based on the assumptions set forth therein. The Preferred Shares of the Trust conform to the descriptions thereof contained in the Prospectus and the Prospectus Supplement. Except as created hereby pursuant to Section 9 of this Agreement, or referred to or included in the Prospectus or Prospectus Supplement, there are no outstanding options, warrants, rights or other arrangements requiring the Trust or Management at any time to issue any capital stock. No holders of outstanding shares of capital stock of the Trust are entitled as such to any preemptive or other rights to subscribe for any of the Preferred Shares and neither the filing of the Registration Statement nor the offering or sale of the Preferred Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to, the registration of any securities of the Trust. On the Closing Date or the Option Closing Date (as the case may be), after payment therefor in accordance with the terms of this Agreement, good and marketable title to the Preferred Shares, fully paid, and except as set forth under the Caption "Shareholder Liability" in the Prospectus, non-assessable, will pass to the Underwriters on the Closing Date or the Option Closing Date (as the case may be) free and clear of any lien, encumbrance, security interest, claim or other restriction whatsoever. All outstanding shares of capital stock of Management have been duly authorized and validly issued, are fully paid and nonassessable and are free and clear of any lien, - 3 - 4 encumbrance, security interest, claim or other restriction whatsoever. The Trust has received, subject to notice of issuance, approval to have the Preferred Shares listed on The New York Stock Exchange and the Trust knows of no reason or set of facts which is likely to adversely affect such approval. (v) The combined financial statements and the related notes and schedules thereto included in the Registration Statement or incorporated therein by reference and the Prospectus fairly present the combined financial condition, results of operations, shareholders' equity and cash flows of the Trust and Management at the dates and for the periods specified therein. Such financial statements and the related notes and schedules thereto have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise noted therein) and such financial statements as are audited have been examined by Arthur Andersen LLP, who are independent public accountants within the meaning of the Act and the Rules and Regulations, as indicated in their reports filed therewith. The selected financial information and statistical data set forth under the caption "Selected Financial Data" in the Prospectus Supplement have been prepared on a basis consistent with the combined financial statements of the Trust and Management. (vi) The Trust and Management each has filed all necessary federal, state and local income, franchise and other material tax returns and each has paid or, if not due on the date hereof, intends to pay all taxes shown as due thereunder. The Trust and Management each has no knowledge of any tax deficiency which might be assessed against the Trust or Management which, if so assessed, may have a Material Adverse Effect. (vii) The Trust and Management each maintains insurance of the types and in amounts which each reasonably believes to be adequate for its business in such amounts and with such deductibles as is customary for companies in the same or similar business, all of which insurance is in full force and effect. (viii) Except as disclosed in the Prospectus and the Prospectus Supplement, there is no pending action, suit, proceeding or investigation or threatened action, suit, proceeding or investigation before or by any court, regulatory body or administrative agency or any other governmental agency or body, domestic or foreign, which (A) questions the validity of the capital stock of the Trust or this Agreement or of any action taken or to be taken by the Trust pursuant to or in connection with this Agreement, (B) is required to be disclosed in the Registration Statement which is not so disclosed (and such proceedings, if any, as are summarized in the Registration Statement or incorporated therein by reference are accurately summarized in all material respects), or (C) will have a Material Adverse Effect. (ix) The Trust has full legal right, power and authority to enter into this Agreement and to consummate the transactions provided for herein. This Agreement has been duly authorized, executed and delivered by the Trust and, assuming it is a binding agreement of yours, constitutes a legal, valid and binding agreement of the Trust enforceable against the Trust in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting the enforcement of creditors' rights and the application of equitable principles relating to the availability of remedies and except as rights to indemnity or contribution may be limited by federal or state securities laws and the public policy underlying such - 4 - 5 laws), and none of the Trust's execution or delivery of this Agreement, its performance hereunder, its consummation of the transactions contemplated herein, its application of the net proceeds of the offering in the manner set forth under the caption "Use of Proceeds" in the Prospectus Supplement or the conduct of its business as described in the Prospectus and the Prospectus Supplement, conflicts or will conflict with or results or will result in any breach or violation of any of the terms or provisions of, or constitutes or will constitute a default under, causes or will cause (or permits or will permit) the maturation or acceleration of any liability or obligation or the termination of any right under, or result in the creation or imposition of any lien, charge, or encumbrance upon, any property or assets of the Trust or Management pursuant to the terms of (A) the Declaration of Trust or By-Laws, each as amended, of the Trust or Articles of Incorporation or By-Laws of Management, (B) any indenture, mortgage, deed of trust, voting trust agreement, shareholders' agreement, note agreement or other agreement or instrument to which the Trust or Management is a party or by which their respective properties may be bound or to which any of their respective properties are or may be subject or (C) any statute, judgment, decree, order, rule or regulation applicable to the Trust or Management of any government, arbitrator, court, regulatory body or administrative agency or other governmental agency or body, domestic or foreign, having jurisdiction over the Trust or Management or any of their respective activities or properties. (x) All executed agreements or copies of executed agreements filed or incorporated by reference as exhibits to the Registration Statement to which the Trust or Management is a party or by which the Trust is or Management may be bound or to which any of their respective assets, properties or businesses are or may be subject have been duly and validly authorized, executed and delivered by the Trust or Management and constitute the legal, valid and binding agreements of the Trust or Management, as the case may be, enforceable against each in accordance with their respective terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to enforcement of creditors' rights generally, and general equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution may be limited by federal or state securities laws and the public policy underlying such laws). The descriptions in the Registration Statement or incorporated therein by reference of contracts and other documents are accurate and fairly present the information required to be shown with respect thereto by the Act and the Rules and Regulations, and there are no contracts or other documents which are required by the Act or the Rules and Regulations to be described in the Registration Statement or filed as exhibits to the Registration Statement which are not described or filed as required or incorporated therein by reference, and the exhibits which have been filed are complete and correct copies of the documents of which they purport to be copies. (xi) Subsequent to the most recent date as of which information is given in the Prospectus Supplement up to and including the Closing Date, and except as included or contemplated therein, neither the Trust nor Management has, other than in the ordinary course of its business, (i) incurred any material liabilities or obligations, direct or contingent, (ii) purchased any material amount of its outstanding capital stock, (iii) paid or declared any dividends or other distributions on its capital stock other than the Trust's regular quarterly dividend or (iv) entered into any material transactions. Subsequent to the most recent date as of which information is given in the Prospectus Supplement and except as contemplated therein, there has been no material change in capital stock or debt or any material adverse change in the business, properties, assets, net worth, condition (financial or other), or results of operations or - 5 - 6 prospects of the Trust and Management taken as a whole. Neither the Trust nor Management is in breach or violation of, or in default under, any term or provision of (A) the Trust's Declaration of Trust or By-Laws, each as amended, (B) Management's Articles of Incorporation or By-Laws, (C) any material indenture, evidence of indebtedness, mortgage, deed of trust, voting trust agreement, shareholders' agreement, note agreement or other agreement or instrument to which either the Trust or Management is a party or by which either the Trust or Management is or may be bound or to which any of the respective properties of either the Trust or Management are or may be subject, or (D) any statute, judgment, decree, order, rule or regulation applicable to the Trust or Management or of any arbitrator, court, regulatory body, administrative agency or any other governmental agency or body, domestic or foreign, having jurisdiction over the Trust or Management or any of their respective activities or properties, the effect of which breach or violation of, or default under, as applicable, singly or in the aggregate, will have a Material Adverse Effect. (xii) No labor disturbance by the employees of the Trust or Management exists or, to the best of Trust's and Management's knowledge, is imminent which will have a Material Adverse Effect. (xiii) Since its inception, the Trust has not incurred any material liability arising under or as a result of the application of the provisions of the Act, which would adversely affect the consummation of the transactions contemplated hereby. (xiv) No consent, approval, authorization or order of or filing with any court, regulatory body, administrative agency or any other governmental agency or body, domestic or foreign, is required for the performance of this Agreement or the consummation of the transactions contemplated hereby, except such as have been obtained under the Act, the Rules and Regulations, the Exchange Act or the rules and regulations thereunder or may be required under state securities or Blue Sky laws in connection with the Underwriters' purchase and distribution of the Preferred Shares. (xv) There are no contracts, agreements or understandings between the Trust and any person granting such person the right to require the Trust to file a registration statement under the Act with respect to any securities of the Trust owned or to be owned by such person or to require the Trust to include such securities under the Registration Statement (other than those disclosed in the Prospectus Supplement or Prospectus) that have not been waived with respect to the Registration Statement. (xvi) Neither the Trust nor any of its officers, directors or affiliates (within the meaning of the Rules and Regulations) has taken, directly or indirectly, any action designed to stabilize or manipulate the price of any security of the Trust, or which has constituted or which would reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Trust, to facilitate, in each case, the sale or resale of the Preferred Shares. (xvii) The Trust and Management each has good and marketable title to, or valid and enforceable leasehold interests in, all properties and assets owned or leased by it, free and clear of all liens, encumbrances, security interests, claims, restrictions, equities, claims and defects, except (A) such as are described in the Registration Statement, Prospectus and Prospectus Supplement or such as do not materially adversely affect the value of any of such properties or assets taken as a whole and do not materially interfere with the use made and proposed to be made of - 6 - 7 any of such properties or assets, and (B) liens for taxes not yet due and payable as to which appropriate reserves have been established and reflected in the financial statements included or incorporated by reference in the Registration Statement. The Trust owns or leases all such properties as are necessary to its operations as now conducted, and as proposed to be conducted as set forth in the Registration Statement, Prospectus and Prospectus Supplement; and the properties and business of the Trust and Management conform in all material respects to the descriptions thereof contained in the Registration Statement, the Prospectus and the Prospectus Supplement. All the material leases and subleases of the Trust and Management, and under which the Trust or Management holds properties or assets as lessee or sublessee, constitute valid leasehold interests of the Trust or Management free and clear of any lien, encumbrance, security interest, restriction, equity, claim or defect, are in full force and effect, and neither the Trust nor Management is in default in respect of any of the material terms or provisions of any such material leases or subleases, and neither the Trust nor Management has notice of any claim which has been asserted by anyone adverse to the Trust's or Management's rights as lessee or sublessee under either the material lease or sublease, or affecting or questioning the Trust's or Management's right to the continued possession of the leased or subleased premises under any such material lease or sublease, which may have a Material Adverse Effect. (xviii) Neither the Trust nor Management has violated any applicable environmental, safety, health or similar law applicable to the business of the Trust, nor any federal or state law relating to discrimination in the hiring, promotion, or pay of employees, nor any applicable federal or state wages and hours law, nor any provisions of ERISA or the rules and regulations promulgated thereunder, the consequences of which violation will have a Material Adverse Effect. (xix) The Trust and Management each holds all franchises, licenses, permits, approvals, certificates and other authorizations from federal, state and other governmental or regulatory authorities necessary to the ownership, leasing and operation of their respective properties or required for the present conduct of the business, and such franchises, licenses, permits, approvals, certificates and governmental authorizations are in full force and effect and the Trust and Management each is in compliance therewith in all material respects except where the failure so to hold, obtain, maintain or comply with would not have a Material Adverse Effect. (xx) Management is not currently prohibited, directly or indirectly from repaying to the Trust any loans or advances to Management from the Trust, except as described in or contemplated by the Prospectus Supplement or Prospectus. (xxi) The Trust meets the requirements for use of Form S-3 under the Rules and Regulations. (xxii) The Trust is qualified as a "real estate investment trust" under the Internal Revenue Code of 1986, as amended, and will be so qualified immediately after consummation of the transactions contemplated by the Registration Statement. 3. PURCHASE, SALE AND DELIVERY OF THE PREFERRED SHARES. On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Trust agrees to sell to each Underwriter and each Underwriter, severally and not jointly, agrees to purchase from the Trust at a purchase price of $23.875 per share, the number of Preferred Shares set forth opposite the name of such Underwriter in Column (1) of Schedule I hereto. - 7 - 8 Delivery of certificates, and payment of the purchase price, for the Preferred Shares shall be made at the offices of Squire, Sanders & Dempsey L.L.P., or such other location as shall be agreed upon by the Trust and the Representatives. Such delivery and payment shall be made at 10:00 a.m., New York City time, on October 29, 1996 or at such other time and date not more than ten business days thereafter as shall be agreed upon by the Representatives and the Trust. The time and date of such delivery and payment are herein called the "Closing Date." Delivery of the certificates for the Preferred Shares shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price for the Preferred Shares by wire transfer of same day funds. The certificates for the Preferred Shares to be so delivered will be in definitive, fully registered form, will bear no restrictive legends, other than those relating to restrictions described in the Prospectus and Prospectus Supplement, and will be in such denominations and registered in such names as the Representatives shall request, not less than one full business day prior to the Closing Date. The certificates for the Preferred Shares will be made available to the Representatives at such office or such other place as the Representatives may designate for inspection, checking and packaging not later than 11:00 a.m., New York time on the business day prior to the Closing Date. 4. PUBLIC OFFERING OF THE PREFERRED SHARES. It is understood that the Underwriters propose to make a public offering of the Preferred Shares at the price and upon the other terms set forth in the Prospectus Supplement. 5. COVENANTS OF THE TRUST. (a) The Trust covenants and agrees with each of the Underwriters that: (i) If required, the Trust will file the Prospectus and Prospectus Supplement and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Rules and Regulations. During any time when a prospectus relating to the Preferred Shares is required to be delivered under the Act, the Trust (A) will comply with all requirements imposed upon it by the Act and the Rules and Regulations to the extent necessary to permit the continuance of sales of or dealings in the Preferred Shares in accordance with the provisions hereof and of the Prospectus and Prospectus Supplement, as then amended or supplemented, and (B) will not file with the Commission the Prospectus or the Prospectus Supplement, any amendment or supplement to the Prospectus or Prospectus Supplement or any amendment to the Registration Statement of which the Representatives shall not previously have been advised and furnished with a copy a reasonable period of time prior to the proposed filing and as to which filing the Representative shall not have given its consent, which may be given by counsel to the Underwriters. (ii) As soon as the Trust is advised or obtains knowledge thereof, on or subsequent to the date hereof, the Trust will advise the Representatives (A) of any request made by the Commission for amending the Registration Statement, for supplementing any Preliminary Prospectus Supplement, the Prospectus or Prospectus Supplement or for additional information, or (B) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or any order preventing or suspending the use of any Preliminary Prospectus Supplement, the Prospectus or Prospectus Supplement or any amendment or supplement thereto or the institution or threat of any investigation or proceeding for that purpose, and will use its best efforts to prevent the issuance of any such order and, if issued, to obtain the lifting thereof as soon as reasonably possible. - 8 - 9 (iii) The Trust will (A) use its best efforts to arrange for the qualification (whether through exemptions, notice, filings, registrations or otherwise) of the Preferred Shares for offer and sale under the state securities or Blue Sky laws of such jurisdictions as the Underwriters may designate with such notice as to reasonably enable the Trust to make such arrangements, (B) continue such qualifications in effect for as long as may be necessary to complete the distribution of the Preferred Shares, and (C) make such applications, file such documents and furnish such information as may be required for the purposes set forth in clauses (A) and (B); provided, however, that the Trust shall not be required to qualify as a foreign business trust or file a general or unlimited consent to service of process in any such jurisdiction. (iv) The Trust consents to the use of the Prospectus and Prospectus Supplement (and any amendment or supplement thereto) by the Underwriters and all dealers to whom the Preferred Shares may be sold, in connection with the offering or sale of the Preferred Shares and for such period of time thereafter as the Prospectus and Prospectus Supplement are required by law to be delivered in connection therewith. If, at any time when a Prospectus and Prospectus Supplement relating to the Preferred Shares are required to be delivered under the Act, any event occurs as a result of which the Prospectus or Prospectus Supplement, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, or if it becomes necessary at any time to amend or supplement the Prospectus or Prospectus Supplement to comply with the Act or the Rules and Regulations, the Trust promptly will so notify the Representatives and, subject to Section 5(a)(i) hereof, will prepare and file with the Commission an amendment to the Registration Statement or an amendment or supplement to the Prospectus or Prospectus Supplement which will correct such statement or omission or effect such compliance, each such amendment or supplement to be reasonably satisfactory to counsel to the Underwriters. (v) As soon as practicable, but in any event not later than 45 days after the end of the 12-month period beginning on the day after the end of the fiscal quarter of the Trust during which the effective date of the Registration Statement occurs (90 days in the event that the end of such fiscal quarter is the end of the Trust's fiscal year), the Trust will make generally available to its security holders, in the manner specified in Rule 158(b) of the Rules and Regulations, and to the Representatives, an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which statement need not be audited unless required by the Act or the Rules and Regulations, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (vi) The Trust will maintain a transfer agent and, if necessary under the jurisdiction of formation of the Trust, a registrar (which may be the same entity as the transfer agent) for its Preferred Shares. (vii) Except as provided in the foregoing sentence, the Trust will furnish, without charge, to the Representatives or on the order of the Representatives at such place as the Representatives may designate, copies of the Preliminary Prospectus Supplement, the Registration Statement and any pre-effective or post-effective amendments thereto (two copies of which will be signed (or conformed) and will include all financial statements and exhibits), the Prospectus and Prospectus Supplement, and all amendments and supplements thereto, in each case as soon as - 9 - 10 available and in such quantities as the Representatives may reasonably request. Notwithstanding the foregoing, the Trust will not be required to send any of the foregoing documents to any purchasers of the Preferred Shares (other than the Underwriters or their affiliates) and the Underwriters will be solely responsible for any prospectus delivery requirements contained in the Act and the Rules and Regulations. (viii) The Trust will not, directly or indirectly, without the prior written consent of any of the Representatives, issue, offer, sell, grant any option to purchase or otherwise dispose (or announce any issuance, offer, sale, grant of any option to purchase or other disposition) of any Preferred Shares or any securities convertible into, or exchangeable or exercisable for, Preferred Shares for a period of 180 days after the date hereof, except pursuant to this Agreement, except for issuances pursuant to the exercise of stock options outstanding on or granted subsequent to the date hereof, pursuant to a stock option or other employee benefit plan in existence on the date hereof and except as contemplated by the Prospectus or the Prospectus Supplement. (ix) The Preferred Shares have been duly authorized for listing, subject to official notice of issuance, on The New York Stock Exchange. (x) Neither the Trust nor any of its officers, directors or affiliates (within the meaning of the Rules and Regulations) will take, directly or indirectly, any action designed to, or which would in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Trust. (xi) The Trust will apply the net proceeds of the offering received by it in the manner set forth under the caption "Use of Proceeds" in the Prospectus Supplement. (xii) For a period of three years from the date hereof, the Trust will timely file all such reports, forms or other documents as may be required from time to time, under the Act, the Rules and Regulations, the Exchange Act, and the rules and regulations thereunder, and all such reports, forms and documents filed will comply as to form and substance in all material respects with the applicable requirements under the Act, the Rules and Regulations, the Exchange Act and the rules and regulations thereunder. 6. EXPENSES. Regardless of whether the transactions contemplated in this Agreement are consummated, and regardless of whether for any reason this Agreement is terminated, the Trust will pay, and hereby agrees to indemnify each Underwriter against, all fees and expenses incident to the performance of the obligations of the Trust under this Agreement, including, but not limited to, (i) fees and expenses of accountants and counsel for the Trust, (ii) all costs and expenses incurred in connection with the preparation, duplication, printing, filing, delivery and shipping of copies of the Registration Statement and any pre-effective or post-effective amendments thereto, any Preliminary Prospectus Supplement, the Prospectus and the Prospectus Supplement and any amendments or supplements thereto, this Agreement, the Agreement Among Underwriters, any Selected Dealer Agreement, Underwriters' Questionnaire, Underwriters' Power of Attorney, and all other documents in connection with the transactions contemplated herein, including the cost of all copies thereof, subject to the last sentence of Section 5(a)(vii), (iii) fees and expenses relating to qualification of the Preferred Shares under state securities or Blue Sky laws, including the cost of preparing and mailing the preliminary and final Blue Sky memoranda and filing fees and disbursements and reasonable fees of counsel and other related expenses, if any, in connection therewith, (iv) filing fees of the Commission relating to the Preferred Shares, - 10 - 11 (v) any fees and expenses in connection with the listing of the Preferred Shares on The New York Stock Exchange, and (vi) costs and expenses incident to the preparation, issuance and delivery to the Underwriters of any certificates evidencing the Preferred Shares, including transfer agent's and registrar's fees and any applicable transfer taxes incurred in connection with the delivery to the Underwriters of the Preferred Shares to be sold by the Trust pursuant to this Agreement. 7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation of each Underwriter to purchase and pay for the Preferred Shares set forth opposite the name of such Underwriter in Schedule I is subject to the continuing accuracy of the representations and warranties of the Trust herein as of the date hereof and as of the Closing Date as if they had been made on and as of the Closing Date; the accuracy on and as of the Closing Date of the statements of officers of the Trust made pursuant to the provisions hereof; the performance by the Trust on and as of the Closing Date of its covenants and agreements hereunder; and the following additional conditions: (a) The Registration Statement shall have been declared effective not later than 11:00 A.M., New York time, on the date hereof; if required, in the case of any changes in or amendments or supplements to the Prospectus in addition to those contemplated above, the Trust shall have filed such Prospectus as amended or supplemented with the Commission in the manner and within the time period required by Rule 424(b) under the Act; no stop order suspending the effectiveness of the Registration Statement or any amendment thereto shall have been issued, and no proceedings for that purpose shall have been instituted or threatened or, to the knowledge of the Trust or the Representatives, shall be contemplated by the Commission; and the Trust shall have complied with any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise). (b) The Representatives shall not have advised the Trust that the Registration Statement, or any amendment thereto, contains an untrue statement of fact which, in the Representatives' opinion, is material, or omits to state a fact which, in such Underwriter's opinion, is material and is required to be stated therein or is necessary to make the statements therein not misleading, or that the Prospectus, or any supplement thereto, contains an untrue statement of fact which, in the Representatives' opinion, is material, or omits to state a fact which, in the Representatives' opinion, is material and is required to be stated therein or is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) On or prior to the Closing Date, the Representatives shall have received from counsel to the Underwriters, such opinion or opinions with respect to the issuance and sale of the Preferred Shares, the Registration Statement and the Prospectus and such other related matters as the Representatives reasonably may request and such counsel shall have received such documents and other information as they reasonably request to enable them to pass upon such matters. (d) On or prior to the Closing Date, the Representatives shall have received a certificate executed and delivered by the Chairman and the principal financial officer of the Trust and any vice president, dated the Closing Date, to the effect set forth below: (i) The representations and warranties of the Trust contained in Section 2 hereof are true and correct as of the date of such certificate, and the Trust has complied with all the agreements and satisfied all conditions contained herein to be performed or satisfied at or prior to the Closing Date; - 11 - 12 (ii) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to the knowledge of such officers, are contemplated under the Act. (e) On the Closing Date the Underwriters shall have received the opinion, dated the Closing Date, of Mayer, Brown & Platt, counsel to the Trust ("Trust Counsel"), to the effect set forth below (for all matters of Ohio law, Mayer, Brown & Platt will rely for those matters on the opinion of Paul F. Levin, Senior Vice President-General Counsel and Secretary of the Trust). (i) The Trust has authorized capital stock as set forth in the Prospectus and Prospectus Supplement; the common shares of the Trust conform in all material respects to the description thereof contained in the Prospectus and Prospectus Supplement; the Preferred Shares, when issued by the Trust and paid for in accordance with the terms hereof, will be validly issued, fully paid and, except as set forth in the Prospectus under the heading "Description of Shares of Beneficial Interest - Shareholder Liability," nonassessable and will conform in all material respects to the description thereof contained in the Prospectus and Prospectus Supplement and will not be subject to any preemptive, subscription or other similar rights; and the Preferred Shares have been duly authorized for listing, subject to official notice of issuance, on The New York Stock Exchange; (ii) The Registration Statement is effective under the Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); and, to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement or any amendment thereto has been issued, and no proceedings for that purpose have been instituted or are pending or are threatened or contemplated under the Act; the Registration Statement and each amendment thereto and the Prospectus and, if any, each amendment and supplement thereto (except for the financial statements, schedules and other financial data included therein, as to which such counsel need not express any opinion), complied as to form in all material respects with the requirements of the Act and the Rules and Regulations; (iii) No consent, approval, authorization or order of any court, regulatory body or administrative agency or other governmental agency or body, domestic or foreign, has been or is required for the Trust's performance of this Agreement or the consummation of the transactions contemplated hereby, except such as have been obtained under the Act and the Rules and Regulations, the Exchange Act and the rules and regulations thereunder or may be required under state securities or Blue Sky laws in connection with the purchase and distribution by the Underwriters of the Preferred Shares; and (iv) The Trust's existing legal organization and its method of operation, as described in the Prospectus and the Prospectus Supplement and as represented by the Trust, will enable the Trust to satisfy the requirements for qualification as a real estate investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). In rendering any such opinion, such counsel may rely, as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Trust and public officials. - 12 - 13 References to the Registration Statement and the Prospectus in this paragraph (c) and (e) shall include any amendment or supplement thereto at the date of such opinion. The opinion described in paragraph 7(e)(iv) may be based upon assumptions relating to the organization and operation of Management and of any partnerships in which the Trust will hold an interest, and may be conditioned upon representations made by the Trust as to factual matters relating to the Trust's and Management's organization and manner of operation. Such opinion may also be based upon the assumption that for all of its taxable years (or a portion thereof) prior to the date of the Prospectus Supplement, the Trust satisfied all the requirements necessary for qualification as a REIT under the Code, and the assumption that all organizational documents for the Trust and Management are complied with. (f) On the Closing Date the Underwriters shall have received the opinion, dated as of the Closing Date, of Paul F. Levin, Senior Vice President-General Counsel and Secretary of the Trust, to the effect set forth below: (i) The Trust (A) is a duly organized and validly existing business trust in good standing under the laws of Ohio with full power and authority to own or lease its properties and to conduct its business as described in the Registration Statement and the Prospectus, and (B) is duly qualified to do business as a foreign business trust and is in good standing in each jurisdiction in which the conduct of its business requires such qualification (except for those jurisdictions in which the failure so to qualify has not and will not have a Material Adverse Effect); (ii) Management (A) is a duly incorporated and validly existing corporation under the laws of Delaware, with full power and authority to own or lease its property and to conduct its business as described in the Registration Statement and the Prospectus, and (B) is duly qualified to do business as a foreign corporation and is in good standing in Delaware and in each jurisdiction in which the conduct of its business requires such qualification (except for those jurisdictions in which the failure so to qualify has not and will not have a Material Adverse Effect); (iii) The Trust has duly authorized the issuance and sale of the Preferred Shares to be sold by it hereunder, and when issued, the Preferred Shares shall be fully paid and, except as set forth under the caption "Shareholder Liability" in the Prospectus, non-assessable; (iv) The descriptions contained and summarized in the Registration Statement and the Prospectus of contracts and other documents, are accurate and fairly represent in all material respects the information required to be shown by the Act and the Rules and Regulations; to the best knowledge of such counsel, there are no contracts or documents which are required by the Act to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which are not described or filed as required by the Act and the Rules and Regulations; to the best knowledge of such counsel, there is not pending or threatened against the Trust any action, suit, proceeding or investigation before or by any court, regulatory body, or administrative agency or any other governmental agency or body, domestic or foreign, of a character required to be disclosed in the Registration Statement or the Prospectus which is not so disclosed therein; (v) The Trust has full legal right, power, and authority to enter into this Agreement and to consummate the transactions provided for herein; this - 13 - 14 Agreement has been duly authorized, executed and delivered by the Trust; and this Agreement, assuming due authorization, execution and delivery by each other party hereto, is a valid and binding agreement of the Trust, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or affecting creditors' rights generally or by general principles of equity relating to the availability of remedies and except as rights to indemnity and contribution may be limited by federal or state securities laws or the public policy underlying such laws. None of the Trust's execution or delivery of this Agreement, its performance hereof, its consummation of the transactions contemplated herein or its application of the net proceeds of the offering in the manner set forth under the caption "Use of Proceeds" in the Prospectus Supplement, conflicts or will conflict with or results or will result in any breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any material lien, charge or encumbrance upon, any material property or assets of the Trust or Management (A) with respect to the Trust pursuant to the terms of the Declaration of Trust or By-Laws, each as amended, of the Trust and with respect to Management pursuant to the terms of the Articles of Incorporation or By-Laws of Management; (B) the terms of any material indenture, mortgage, deed or trust, voting trust agreement, shareholder's agreement, note agreement or other agreement or instrument known to such counsel after reasonable investigation to which the Trust or Management is a party or by which it or Management is or may be bound or to which any of their respective properties may be subject; (C) any statute, rule or regulation of any regulatory body or administrative agency or other governmental agency or body, domestic or foreign, having jurisdiction over the Trust or any of its activities or properties; (D) or any judgment, decree or order, known to such counsel, of any government, arbitrator, court, regulatory body or administrative agency or other governmental agency or body, domestic or foreign, having such jurisdiction; (vi) To the best of such counsel's knowledge, the conduct of the businesses of the Trust and Management is not in violation of any federal, state or local statute, administrative regulation or other law, which violation is likely to have a Material Adverse Effect; and the Trust and Management each has obtained all material licenses, permits, franchises, certificates and other authorizations from state, federal and other regulatory authorities as are necessary or required for the ownership, leasing and operation of properties and the conduct of their respective businesses as presently conducted and as contemplated in the Prospectus and the Prospectus Supplement; and (vii) The issued shares of capital stock of Management have been duly authorized and validly issued, are fully paid and nonassessable and are owned by a trust created pursuant to an amended and restated declaration of trust dated as of October 1, 1996 free and clear of any perfected security interest or, to the best knowledge of such counsel, any other liens, encumbrances, claims or security interests. In rendering any such opinion, such counsel may rely, as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Trust and public officials. References to the Registration Statement and the Prospectus in this paragraph (f) shall include any amendment or supplement thereto at the date of such opinion. - 14 - 15 In addition, such counsel shall state that in the course of the preparation of the Registration Statement and the Prospectus, such counsel has participated in conferences with officers and representatives of the Trust and with the Trust's independent public accountants, at which conferences such counsel made inquiries of such officers, representatives and accountants and discussed the contents of the Registration Statement and the Prospectus and (without taking any further action to verify independently the statements made in the Registration Statement and the Prospectus and, except as stated in the foregoing opinion, without assuming responsibility for the accuracy, completeness or fairness of such statements) nothing has come to such counsel's attention that causes such counsel to believe that either the Registration Statement as of the date it was declared effective and as of the Closing Date or the Prospectus as of the date thereof and as of the Closing Date contained or contains any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading (it being understood that such counsel need not express any opinion with respect to the financial statements, schedules and other financial data included in the Registration Statement or the Prospectus). (g) On or prior to the Closing Date, counsel to the Underwriters shall have been furnished such documents, certificates and opinions as they may reasonably require in order to evidence the accuracy, completeness or satisfaction of any of the representations or warranties of the Trust, or conditions herein contained. (h) At the time that this Agreement is executed by the Trust, the Underwriters shall have received from Arthur Andersen LLP a letter as of the date this Agreement in form and substance which is customary for a transaction of this nature and which is reasonably satisfactory to the Representatives (the "Original Letter"), and on the Closing Date the Underwriters shall have received from such accounting firm a letter dated the Closing Date stating that, as of a specified date not earlier than five (5) days prior to the Closing Date, nothing has come to the attention of such firm to suggest that the statements made in the Original Letter are not true and correct. (i) On the Closing Date, the Underwriters shall have received a certificate, dated the Closing Date, of the principal executive officer and the principal financial or accounting officer of the Trust to the effect that each of such persons has carefully examined the Registration Statement and the Prospectus and any amendments or supplements thereto and this Agreement, and that: (i) The representations and warranties of the Trust in this Agreement are true and correct, as if made on and as of the Closing Date, and the Trust has complied with all agreements and covenants and satisfied all conditions contained in this Agreement on its part to be performed or satisfied at or prior to the Closing Date; (ii) No stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been instituted or are pending or, to the best knowledge of each of such persons are contemplated or threatened under the Act and any and all filings required by Rule 424 have been timely made; (iii) The Registration Statement and Prospectus and, if any, each amendment and each supplement thereto, contain all statements and information required to be included therein, and neither the Registration Statement nor any amendment thereto includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements - 15 - 16 therein not misleading and neither the Prospectus (or any amendment thereto) or the Prospectus Supplement (or any amendment thereto) includes or included any untrue statement of a material fact or omits or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (iv) Subsequent to the most recent respective dates as of which information is given in the Registration Statement and the Prospectus Supplement up to and including the Closing Date, the Trust has not, other than in the ordinary course of its business or as included in or contemplated by the Prospectus Supplement or the Prospectus, (i) incurred any material liabilities or obligations, direct or contingent; (ii) paid or declared any dividends or other distributions on its capital stock other than its regular quarterly dividend; (iii) entered into any material transactions not in the ordinary course of business. Subsequent to the most recent respective dates as of which information is given in the Registration Statement and the Prospectus Supplement up to and including the Closing Date, other than in the ordinary course of business or as included in or contemplated by the Prospectus Supplement or the Prospectus, there has not been any material change in the capital stock or long-term debt or any increase in the short-term borrowings (other than any increase in short-term borrowings in the ordinary course of business) of the Trust or any material adverse change to the business properties, assets, net worth, condition (financial or other), results of operations or prospects of the Trust; the Trust has not sustained any material loss or damage to its property or assets, whether or not insured; there is no litigation which is pending or threatened against the Trust which is required under the Act or the Rules and Regulations to be set forth in an amended or supplemented Prospectus which has not been set forth, and there has not occurred any event required to be set forth in an amended or supplemented Prospectus which has not been set forth, and there has been no document required to be filed under the Exchange Act and the rules and regulations thereunder that upon such filing would be deemed incorporated by reference into the Prospectus that has not been filed. References to the Registration Statement, the Prospectus and Prospectus Supplement in this paragraph (i) are to such documents as amended and supplemented at the date of the certificate. (j) Subsequent to the most recent respective dates as of which information is given in the Registration Statement, the Prospectus and the Prospectus Supplement up to and including the Closing Date, there has not been (i) any change or decrease specified in the letter or letters referred to in paragraph (h) of this Section 7 or (ii) any change, or any development involving a prospective change, in the business or properties of the Trust which change or decrease in the case of clause (i) or change or development in the case of clause (ii) makes it impractical or inadvisable in the Representatives' judgment to proceed with the public offering or the delivery of the Preferred Shares as contemplated by the Prospectus Supplement. (k) No order suspending the sale of the Preferred Shares in any jurisdiction designated by the Representatives pursuant to Section 5(a)(iii)(A) hereof has been issued on or prior to the Closing Date and no proceedings for that purpose have been instituted or, to the Representatives' knowledge or that of the Trust, have been or are contemplated. (l) The Trust shall have furnished the Underwriters with such further opinions, letters, certificates or documents as either the Representative or counsel for the Underwriters may reasonably request. All opinions, certificates, letters and documents to be furnished by the Trust will comply with the provisions hereof only if they are reasonably - 16 - 17 satisfactory in all material respects to the Underwriters and to counsel for the Underwriters. The Trust shall furnish the Underwriters with conformed copies of such opinions, certificates, letters and documents in such quantities as the Representatives may reasonably request. The certificates delivered under this Section 7 shall constitute representations, warranties and agreements of the Trust, as the case may be, as to all matters set forth therein as fully and effectively as if such matters had been set forth in Section 2 of this Agreement. (m) The Preferred Shares shall have been duly authorized for listing, subject to official notice of issuance, on The New York Stock Exchange. 8. INDEMNIFICATION. (a) The Trust agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several (and actions in respect thereof), to which such Underwriter or such controlling person may become subject, under the Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or the Prospectus or any Preliminary Prospectus Supplement or the Prospectus Supplement, or any amendment or supplement thereto, or any Blue Sky application or other document executed by the Trust specifically for the purpose of qualifying, or based upon written information furnished by the Trust filed in any state or other jurisdiction in order to qualify, any or all of the Preferred Shares under the securities or Blue Sky laws thereof (any such application, document or information being hereinafter called a "Blue Sky Application"), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading and will reimburse, as incurred, such Underwriter or such controlling persons for any legal or other expenses reasonably incurred by such Underwriter or such controlling persons in connection with investigating, defending or appearing as a third party witness in connection with any such loss, claim, damage, liability or action; provided, however, that the Trust will not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with information furnished in writing to the Trust by such Underwriter expressly for use therein, and provided, further, that such indemnity with respect to any Preliminary Prospectus Supplement shall not inure to the benefit of any Underwriter (or to the benefit of any person controlling such Underwriter) from whom the person asserting any such loss, claim, damage, liability or action purchased Preferred Shares which are the subject thereof to the extent that any such loss, claim, damage, liability or action (i) results from the fact that such Underwriter failed to send or give a copy of the Prospectus and Prospectus Supplement (as amended or supplemented) to such person at or prior to the confirmation of the sale of such Preferred Shares to such person in any case where such delivery is required by the Act or the Rules and Regulations or (ii) arises out of or is based upon an untrue statement or omission of a material fact contained in such Preliminary Prospectus Supplement that was corrected in the Prospectus or Prospectus Supplement (as amended and supplemented), unless such failure resulted from non-compliance by the Trust with Section 5(a)(vii) hereof. The indemnity agreement in this paragraph (a) shall be in addition to any liability which the Trust may otherwise have. (b) Each of the Underwriters agrees severally, but not jointly, to indemnify and hold harmless the Trust, each of its trustees, each of its officers who has signed the - 17 - 18 Registration Statement, each person, if any, who controls the Trust within the meaning of Section 15 of the Act or Section 20 or the Exchange Act against any and all losses, claims, damages or liabilities (and actions in respect thereof) to which the Trust or any such director, officer, or controlling person may become subject, under the Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or the Prospectus or any Preliminary Prospectus Supplement, or any amendment or supplement thereto or in any Blue Sky Application, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished in writing by that Underwriter through any Representative to the Trust expressly for use therein; and will reimburse, as incurred, all legal or other expenses reasonably incurred by the Trust or any trustee, officer, controlling person in connection with investigating or defending any such loss, claim, damage, liability or action. The Trust acknowledges that the statements with respect to the public offering of the Preferred Shares set forth in paragraphs two and three under the heading "Underwriting" and the stabilization legend in the Prospectus Supplement have been furnished by the Underwriters to the Trust expressly for use therein and constitute the only information furnished in writing by or on behalf of the Underwriters for inclusion in the Prospectus. The indemnity agreement contained in this subsection (b) shall be in addition to any liability which the Underwriters may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against one or more indemnifying parties under this Section 8, notify such indemnifying party or parties of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) of this Section 8 or to the extent that the indemnifying party was not adversely affected by such omission. In case any such action is brought against an indemnified party and it notifies an indemnifying party or parties of the commencement thereof, the indemnifying party or parties against which a claim is to be made will be entitled to participate therein and, to the extent that it or they may wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party has reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and otherwise to participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses (other than the reasonable costs of investigation) subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party has employed such counsel in connection with the assumption of such different or additional legal defenses in accordance with the proviso to the immediately preceding sentence, (ii) the indemnifying party has not employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, or (iii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party. - 18 - 19 (d) If the indemnification provided for in this Section 8 is unavailable or insufficient to hold harmless an indemnified party under paragraph (a) or (b) above in respect of any losses, claims, damages, expenses or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) (i) in such proportion as is appropriate to reflect the relative benefits received by each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand, from the offering of the Preferred Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. In any case where the Trust is a contributing party and an Underwriter is the indemnified party, the relative benefits received by the Trust on the one hand, and the Underwriter, on the other, shall be deemed to be in the same proportion as the total net proceeds from the offering of the Preferred Shares (before deducting expenses) bear to the total underwriting discounts received by the Underwriter hereunder, in each case as set forth in the table on the cover page of the Prospectus Supplement. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Trust or by the Underwriter, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this paragraph (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this paragraph (d), no Underwriter shall be required to contribute any amount in excess of the underwriting discount applicable to the Preferred Shares purchased by such Underwriter hereunder. The Underwriters' obligations to contribute pursuant to this paragraph (d) are several in proportion to their respective underwriting obligations, and not joint. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), (i) each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter and (ii) each trustee of the Trust, each officer of the Trust who has signed the Registration Statement, and each person, if any, who controls the Trust within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Trust, subject in each case to this paragraph (d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect to which a claim for contribution may be made against another party or parties under this paragraph (d), notify such party or parties from whom contribution may be sought, but the omission so to notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any other obligation (x) it or they may have hereunder or otherwise than this paragraph (d) or (y) to the extent that such party or parties were not adversely affected by such omission. The contribution agreement set forth above shall be in addition to any liabilities which any indemnifying party may otherwise have. 9. RIGHT TO INCREASE OFFERING. At any time during a period of 30 days from the date of the Prospectus Supplement, the Underwriters, by no less than two business days' prior written notice may designate a closing (which may be concurrent with, and part of, the closing on the Closing Date with respect to the Preferred Shares or may be a second closing held on a date subsequent to the Closing Date, in either case such date shall be referred to herein as the "Option Closing Date") at which the Underwriters may purchase Additional Preferred Shares in accordance - 19 - 20 with the provisions of this Section 9 at the purchase price per share to be paid for the Preferred Shares. In no event shall the Option Closing Date be later than 10 business days or less than three business days after written notice of election to purchase Preferred Shares is given. The Trust agrees to sell to the several Underwriters on the Option Closing Date the number of Additional Preferred Shares specified in such written notice and the Underwriters agree severally and not jointly, to purchase such Additional Preferred Shares on the Option Closing Date. Such Additional Preferred Shares shall be purchased for the account of each Underwriter in the same proportion as the number of Preferred Shares set forth opposite the name of such Underwriter in Column (1) of Schedule I and bears to the total number of Preferred Shares (subject to adjustment by the Representative to eliminate fractions) and may be purchased by the Underwriters only for the purpose of covering over-allotments made in connection with the sale of the Preferred Shares. No Additional Preferred Shares shall be sold or delivered unless the Preferred Shares previously have been, or simultaneously are, sold and delivered. The right to purchase Additional Preferred Shares or any portion thereof may be surrendered and terminated at any time upon written notice by the Representative to the Trust but not subsequent to the time written notice was given to purchase Additional Preferred Shares. Except to the extent modified by this Section 9, all provisions of this Agreement relating to the transactions contemplated to occur on the Closing Date for the sale of the Preferred Shares, including but not limited to the representations and warranties of the Trust, shall apply, MUTATIS MUTANDIS, to the Option Closing Date for the sale of the Preferred Shares. 10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective representations, warranties, agreements, covenants, indemnities and statements of, and on behalf of, the Trust and its officers and the Underwriters, respectively, set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriters, and will survive delivery of and payment for the Preferred Shares for a period of three years after such delivery and payment. Any successors to the Underwriters shall be entitled to the indemnity, contribution and reimbursement agreements contained in this Agreement. 11. EFFECTIVE DATE AND TERMINATION. (a) This Agreement shall become effective when executed by the Trust and the Representatives. (b) This Agreement (except for the provisions of Sections 6 and 8 hereof) may be terminated by the Representatives by written notice to the Trust in the event that the Trust has failed to comply in any respect with any of the provisions of this Agreement required on the part of the Trust to be performed at or prior to the Closing Date, or if any of the representations or warranties of the Trust is not accurate in any respect or if the covenants, agreements or conditions of, or applicable to the Trust herein contained have not been complied with in any respect or satisfied within the time specified on the Closing Date, respectively, or if after the execution of this Agreement but prior to the Closing Date: (i) the Trust or Management shall have sustained a loss by strike, fire, flood, accident or other calamity of such a character as to interfere materially with the conduct of the business and operations of the Trust or Management taken as a whole regardless of whether or not such loss was insured; - 20 - 21 (ii) trading in the common shares of the Trust shall have been suspended by the Commission or The New York Stock Exchange or trading in securities generally on the New York Stock Exchange or a material limitation on such trading shall have been imposed or minimum or maximum prices shall have been established on any such exchange; (iii) a banking moratorium shall have been declared by New York or United States authorities; (iv) there shall have been any material adverse change in the financial markets in the United States or an outbreak or escalation of hostilities between the United States and any foreign power or an outbreak or escalation of any other insurrection or armed conflict involving the United States; or (v) there shall have been a material adverse change in (A) general economic, political or financial conditions or (B) the present or prospective business or condition (financial or other) of the Trust or Management that, in each case, in the Representatives' judgment makes it impracticable or inadvisable to make or consummate the public offering, sale or delivery of the Trust's Preferred Shares on the terms and in the manner contemplated in the Prospectus, Prospectus Supplement and the Registration Statement. (c) Termination of this Agreement under this Section 11 or Section 12 after the Preferred Shares have been purchased by the Underwriters hereunder shall be applicable only to the Additional Preferred Shares. Termination of this Agreement shall be without liability of any party to any other party other than as provided in Sections 6 and 8 hereof. 12. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters shall fail or refuse (otherwise than for a reason sufficient to justify the termination of this Agreement under the provisions of Section 7 or 11 hereof) to purchase and pay for (a) in the case of the Closing Date, the number of Preferred Shares agreed to be purchased by such Underwriter in accordance with the terms hereof or (b) in the case of the Option Closing Date, the number of Preferred Shares agreed to be purchased by such Underwriter in accordance with the terms hereof, and the number of such Preferred Shares shall not exceed 10% of the Preferred Shares required to be purchased on the Closing Date, as the case may be, then, the non-defaulting Underwriters shall severally purchase and pay for (in addition to the number of such Preferred Shares which it has severally agreed to purchase hereunder) that proportion of the number of Preferred Shares which the defaulting Underwriter shall have so failed or refused to purchase on such Closing Date or Option Closing Date, as the case may be, which the number of Preferred Shares agreed to be purchased by such non-defaulting Underwriters bears to the aggregate number of Preferred Shares so agreed to be purchased by such non-defaulting Underwriter on such Closing Date or Option Closing Date, as the case may be. In such case, the non-defaulting Underwriter shall have the right to postpone the Closing Date, as the case may be, to a date not exceeding seven full business days after the date originally fixed as such Closing Date, as the case may be, pursuant to the terms hereof in order that any necessary changes in the Prospectus and Prospectus Supplement or any other documents or arrangements may be made. - 21 - 22 13. NOTICES. All communications hereunder shall be in writing and if mailed or delivered or telegraphed and confirmed by letter or telecopied and confirmed by letter: If to: Sutro & Co. Incorporated 201 California Street San Francisco, California 94111 Attention: Syndicate Department If to: Tucker Anthony Incorporated 1 Beacon Street Boston, Massachusetts 02108 Attention: Marc Menchel, General Counsel If to: BT Securities Corporation 130 Liberty Street New York, New York 10006 Attention: High Yield Administration If to the Trust: 55 Public Square Suite 1900 Cleveland, Ohio 44113-1937 Attention: Paul F. Levin, Esq. 14. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon the Trust and each Underwriter and the Trust's and each Underwriter's respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person, except that the representations, warranties, indemnities and contribution agreements of the Trust contained in this Agreement shall also be for the benefit of any person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and except that the Underwriters' indemnity and contribution agreements shall also be for the benefit of the trustees of the Trust, the officers of the Trust who have signed the Registration Statement, and any person or persons, if any, who control the Trust within the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of Preferred Shares from the Underwriters will be deemed a successor because of such purchase. 15. LIABILITY OF BENEFICIARIES OF TRUST. Notwithstanding anything contained herein to the contrary, this Agreement is made and executed on behalf of First Union Real Equity and Mortgage Investments ("First Union"), a business trust organized under the laws of the State of Ohio, by its officer(s) on behalf of the trustees thereof, and none of the trustees or any additional or successor trustee hereafter appointed, or any beneficiary, officer, employee or agent of First Union shall have any liability in his personal or individual capacity, but instead, all parties shall look solely to the property and assets of First Union for satisfaction of claims of any nature arising under or in connection with this Agreement. 16. APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without giving effect to the choices of law or conflict of law principles thereof. Each party hereto consents to the jurisdiction of each court in which any action is commenced seeking indemnity or contribution pursuant to Section 8 - 22 - 23 above and agrees to accept, either directly or through an agent, service of process of each such court. 17. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. - 23 - 24 If the foregoing correctly sets forth our understanding, please indicate the Representatives' acceptance thereof in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Underwriters and the Trust. Very truly yours, FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By: /s/ James C. Mastandrea ------------------------------ James C. Mastandrea, Chairman President and Chief Executive Officer Accepted as of the date first above written: SUTRO & CO. INCORPORATED By: /s/ Scott Wendelin --------------------------------- Title: Managing Director ------------------------------ TUCKER ANTHONY INCORPORATED By: /s/ Kevin J. Dresner --------------------------------- Title: Executive Vice President ------------------------------ BT SECURITIES CORPORATION By: /s/ Authorized Officer --------------------------------- Title: Authorized Officer ------------------------------ For themselves and as Representatives of the other Underwriters named in Schedule I hereto. - 24 - 25 SCHEDULE I UNDERWRITERS Underwriting Agreement dated October 23, 1996
(1) (2) Number of Preferred Number of Additional Shares to be Preferred Shares to Purchased be Purchased --------- ------------ Name and Address - ---------------- SUTRO & Co. Incorporated . . . . . . . . . . . . . . . . . . 568,000 Tucker Anthony Incorporated . . . . . . . . . . . 566,000 BT Securities Corporation . . . . . . . . . . . . 566,000 Robert W. Baird & Co. Incorporated . . . . . . . 20,000 J.C. Bradford & Co. . . . . . . . . . . . . . . . 20,000 Crowell, Weedon & Co. . . . . . . . . . . . . . . 20,000 EVEREN Securities, Inc. . . . . . . . . . . . . . 20,000 Friedman, Billings, Ramsey & Co., Inc. . . . . . . . . . . . . . . . . . . 20,000 First of Michigan Corporation . . . . . . . . . . 20,000 Morgan Keegan & Company, Inc. . . . . . . . . . . 20,000 Parker/Hunter Incorporated . . . . . . . . . . . 20,000 Piper Jaffray Inc. . . . . . . . . . . . . . . . 20,000 Principal Financial Services, Inc. . . . . . . . 20,000 Rauscher Pierce Refsnes, Inc. . . . . . . . . . . 20,000 Roney & Co., LLC . . . . . . . . . . . . . . . . 20,000 Starr Securities, Inc. . . . . . . . . . . . . . 20,000 The Ohio Company . . . . . . . . . . . . . . . . 20,000 Vector Securities International, Inc. . . . . . . 20,000 Total . . . . . . . . . . . . . . . . . . . . . . 2,000,000 =========
EX-4.(A) 3 CERTIFICATE OF DESIGNATIONS 1 EXHIBIT 4A Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest CERTIFICATE OF DESIGNATIONS FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS ================================================== Designating a Series of Preferred Shares of Beneficial Interest as Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest and Fixing Distribution and Other Preferences and Rights of Such Series ================================================== Dated as of October 23, 1996 2 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS The undersigned, James C. Mastandrea, Chairman, President and Chief Executive Officer of First Union Real Estate Equity and Mortgage Investments, an Ohio real estate investment trust (the "Trust"), hereby certifies on behalf of the Trust that: The Board of Trustees adopted the following resolution creating the Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, par value $25.00 per share, of the Trust: RESOLVED, that pursuant to the authority vested in the Board of Trustees in accordance with Section 11.22 of the Declaration of Trust, as amended, a series of preferred shares of the Trust be and hereby is created, and that the designation and amount thereof and the preferences and relative, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Number of Shares and Designation. This class of preferred shares of beneficial interest shall be designated as Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, par value $25.00 per share (the "Series A Preferred Shares"), and the number of shares which shall constitute such series shall not be more than 2,000,000 shares (or not more than 2,300,000 shares if the over-allotment option granted by the Trust in the Underwriting Agreement dated October 23, 1996, between the Trust and the underwriters named therein is exercised), which number may be decreased (but not below the number thereof then outstanding) from time to time by the Board of Trustees. Section 2. Definitions. For purposes of the Series A Preferred Shares, the following terms shall have the meanings indicated: "Board of Trustees" shall mean the Board of Trustees of the Trust or any committee authorized by such Board of Trustees to perform any of its responsibilities with respect to the Series A Preferred Shares. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in Cleveland, Ohio are not required to be open. "Call Date" shall mean the date specified in the notice to holders required under Section 5(c) as the Call Date. 3 "Common Shares" shall mean the common shares of beneficial interest of the Trust, par value $1.00 per share. "Constituent Person" shall have the meaning set forth in Section 6 (e). "Conversion Price" shall mean the conversion price per Common Share for which the Series A Preferred Shares are convertible, as such Conversion Price may be adjusted pursuant to Section 6. The initial conversion price shall be $7.5625 (equivalent to a conversion rate of 3.31 Common Shares for each Series A Preferred Share). "Current Market Price" of publicly traded common shares or any other class of shares of beneficial interest or other security of the Trust or any other issuer for any day shall mean the last reported sales price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange ("NYSE") or, if such security is not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such security is listed or admitted for trading or, if not listed or admitted for trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such security is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Chairman of the Board or the Board of Trustees. "Dividend Payment Date" shall mean the last calendar day of January, April, July and October in each year, commencing on January 31, 1997; provided, however, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date. "Dividend Periods" shall mean quarterly dividend periods commencing on February 1, May 1, August 1 and November 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period, which shall commence on the Issue Date and end on and include January 31, 1997, and other than the Dividend Period during which any Series A Preferred Shares -2- 4 shall be redeemed pursuant to Section 5, which shall end on and include the Call Date with respect to the Series A Preferred Shares being redeemed). "Expiration Time" shall have the meaning set forth in Section 6(d) (iv). "Fair Market Value" shall mean the average of the daily Current Market Prices of a Common Share during the five (5) consecutive Trading Days selected by the Trust commencing not more than 20 Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex date" with respect to the issuance or distribution requiring such computation. The term "ex date," when used with respect to any issuance or distribution, means the first day on which the Common Shares trade regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "Fully Junior Shares" shall mean the Common Shares and any other class or series of shares of beneficial interest of the Trust now or hereafter issued and outstanding over which the Series A Preferred Shares have preference or priority in both (i) the payment of dividends and (ii) the distribution of assets on any liquidation, dissolution or winding up of the Trust. "Income from Operations" shall mean the Trust's consolidated revenues minus expenses. "Issue Date" shall mean October 29, 1996. "Junior Shares" shall mean the Common Shares and any other class or series of shares of beneficial interest of the Trust now or hereafter issued and outstanding over which the Series A Preferred Shares have preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Trust. "Non-Electing Share" shall have the meaning set forth in Section 6 (e). "Parity Shares" shall have the meaning set forth in Section 8(b). "Person" shall mean any individual, firm, partnership, corporation, limited liability company or other entity, and shall include any successor (by merger or otherwise) of such entity. -3- 5 "Purchased Shares" shall have the meaning set forth in Section 6(d) (iv). "Securities" and "Security" shall have the meanings set forth in Section 6(d)(iii). "Series A Preferred Shares" shall have the meaning set forth in Section 1. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Trust in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Trustees, the allocation of funds to be so paid on any series or class of shares of beneficial interest of the Trust; provided, however, that if any funds for any class or series of Junior Shares or any class or series of shares of beneficial interest ranking on a parity with the Series A Preferred Shares as to the payment of dividends are placed in a separate account of the Trust or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Series A Preferred Shares shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading on any national securities exchange, on the National Market System of NASDAQ, or if such securities are not quoted on such National Market System, in the applicable securities market in which the securities are traded. "Transaction" shall have the meaning set forth in Section 6(e). "Transfer Agent" means The Hunington National Bank, Cleveland, Ohio, or such other agent or agents of the Trust as may be designated by the Board of Trustees or their designee as the transfer agent, registrar and dividend disbursing agent for the Series A Preferred Shares. "Voting Preferred Shares" shall have the meaning set forth in Section 9. -4- 6 Section 3. Dividends. (a) The holders of Series A Preferred Shares shall be entitled to receive, when, as and if declared by the Board of Trustees, out of funds legally available for the payment of dividends, cumulative preferential dividends payable in cash in an amount per share equal to the greater of (i) $0.525 per share per Dividend Period (equivalent to 8.4% of the liquidation preference per annum) or (ii) the cash dividends (determined on each Dividend Payment Date) on the Common Shares, or portion thereof, into which a Series A Preferred Share is convertible. Such dividends shall equal the number of Common Shares, or portion thereof, into which a Series A Preferred Share is convertible, multiplied by the most current quarterly cash dividend on a Common Share on or before the applicable Dividend Payment Date. Such dividends shall begin to accrue and shall be fully cumulative from the Issue Date, whether or not in any Dividend Period or Periods there shall be funds of the Trust legally available for the payment of such dividends, and shall be payable quarterly, when, as and if declared by the Board of Trustees, in arrears on Dividend Payment Dates, commencing on January 31, 1997. Each such dividend shall be payable in arrears to the holders of record of Series A Preferred Shares as they appear in the records of the Trust at the close of business on such record dates, not less than 10 nor more than 50 days preceding such Dividend Payment Dates thereof, as shall be fixed by the Board of Trustees. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time and for such interim periods, without reference to any regular Dividend Payment Date, to holders of record on such date, not less than 10 nor more than 50 days preceding the payment date thereof, as may be fixed by the Board of Trustees. Any dividend payment made on Series A Preferred Shares shall first be credited against the earliest accrued but unpaid dividend due with respect to Series A Preferred Shares which remains payable. (b) The initial Dividend Period will include a partial dividend for the period from the Issue Date until October 31, 1996. The amount of dividends payable for such period, or any other period shorter than a full Dividend Period, on the Series A Preferred Shares shall be computed on the basis of a 360-day year of twelve 30-day months. Holders of Series A Preferred Shares shall not be entitled to any dividends, whether payable in cash, property or shares, in excess of cumulative dividends, as herein provided, on the Series A Preferred Shares. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series A Preferred Shares which may be in arrears. -5- 7 (c) So long as any Series A Preferred Shares are outstanding, no dividends, except as described in the immediately following sentence, shall be declared or paid or set apart for payment on any class or series of Parity Shares for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series A Preferred Shares for all Dividend Periods terminating on or prior to the dividend payment date on such class or series of Parity Shares. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon Series A Preferred Shares and all dividends declared upon any other class or series of Parity Shares shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series A Preferred Shares and accumulated and unpaid on such Parity Shares. (d) So long as any Series A Preferred Shares are outstanding, no dividends (other than dividends or distributions paid solely in shares of, or options, warrants or rights to subscribe for or purchase shares of, Fully Junior Shares) shall be declared or paid or set apart for payment or other distribution shall be declared or made or set apart for payment upon Junior Shares, nor shall any Junior Shares be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Shares made for purposes of an employee incentive or benefit plan of the Trust or First Union Management, Inc. (the "Management Company") or any subsidiary of the Trust or the Management Company) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any Junior Shares) by the Trust, directly or indirectly (except by conversion into or exchange for Fully Junior Shares), unless in each case (i) the full cumulative dividends on all outstanding Series A Preferred Shares and any other Parity Shares of the Trust shall have been or contemporaneously are declared and paid or declared and set apart for payment for all past Dividend Periods with respect to the Series A Preferred Shares and all past dividend periods with respect to such Parity Shares and (ii) sufficient funds shall have been or contemporaneously are declared and paid or declared and set apart for the payment of the dividend for the current Dividend Period with respect to the Series A Preferred Shares and the current dividend period with respect to such Parity Shares. (e) No distributions on Series A Preferred Shares shall be declared by the Board of Trustees or paid or set apart for payment by the Trust at such time as the terms and provisions of any agreement of the Trust, including any agreement relating to its indebtedness, prohibits such declaration, -6- 8 payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. Section 4. Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Trust, whether voluntary or involuntary, before any payment or distribution of the assets of the Trust (whether capital or surplus) shall be made to or set apart for the holders of Junior Shares, the holders of the Series A Preferred Shares shall be entitled to receive Twenty-Five Dollars ($25.00) per Series A Preferred Share plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders, without interest; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Trust, the assets of the Trust, or proceeds thereof, distributable among the holders of the Series A Preferred Shares shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series A Preferred Shares and any such other Parity Shares ratably in accordance with the respective amounts that would be payable on such Series A Preferred Shares and any such other Parity Shares if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Trust with one or more corporations, real estate investment trusts or other entities, (ii) a sale, lease or conveyance of all or substantially all of the Trust's property or business or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Trust. (b) Subject to the rights of the holders of shares of any series or class or classes of shares of beneficial interest ranking on a parity with or prior to the Series A Preferred Shares upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the Trust, after payment shall have been made in full to the holders of the Series A Preferred Shares, as provided in this Section 4, any other series or class or classes of Junior Shares shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Preferred Shares shall not be entitled to share therein. -7- 9 Section 5. Redemption at the Option of the Trust. (a) The Series A Preferred Shares shall not be redeemable by the Trust prior to the fifth anniversary of the Issue Date. On and after the fifth anniversary of the Issue Date, the Trust, at its option, may redeem the Series A Preferred Shares in whole or in part, as set forth herein, subject to the provisions described below. (b) The Series A Preferred Shares may be redeemed, in whole or in part, at the option of the Trust, at any time, only if for 20 Trading Days, within any period of 30 consecutive Trading Days, including the last Trading Day of such period, the Current Market Price of the Common Shares on each of such 20 Trading Days equals or exceeds the Conversion Price in effect on such Trading Day. In order to exercise its redemption option, the Trust must issue a press release announcing the redemption (the "Press Release") prior to the opening of business on the second Trading Day after the condition in the preceding sentence has, from time to time, been met. The Trust may not issue a Press Release prior to October 29, 2001. The Press Release shall announce the redemption and set forth the number of Series A Preferred Shares which the Trust intends to redeem. The Call Date (as defined below) shall be selected by the Trust, shall be specified in the notice of redemption and shall be not less than 30 days or more than 60 days after the date on which the Trust issues the Press Release. (c) Upon redemption of Series A Preferred Shares by the Trust on the date specified in the notice to holders required under subparagraph (e) of this Section 5 (the "Call Date"), each Series A Preferred Share so redeemed shall be converted into a number of Common Shares equal to the liquidation preference (excluding any accrued and unpaid dividends) of the Series A Preferred Shares being redeemed divided by the Conversion Price as of the opening of business on the Call Date. Upon any redemption of Series A Preferred Shares, the Trust shall pay any accrued and unpaid dividends in arrears for any Dividend Period ending on or prior to the Call Date, without interest. If the Call Date falls after a dividend payment record date and prior to the corresponding Dividend Payment Date, then each holder of Series A Preferred Shares at the close of business on such dividend payment record date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date. Except as provided above, the Trust shall make no payment or allowance for unpaid dividends, whether or not in arrears, on -8- 10 Series A Preferred Shares called for redemption or on the Common Shares issued upon such redemption. (d) If full cumulative dividends on the Series A Preferred Shares and any other class or series of Parity Shares of the Trust have not been paid or declared and set apart for payment, the Series A Preferred Shares may not be redeemed in part and the Trust may not purchase or acquire Series A Preferred Shares or Parity Shares, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of Series A Preferred Shares or Parity Shares, as the case may be. (e) If the Trust shall redeem Series A Preferred Shares pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given not more than four Business Days after the date on which the Trust issues the Press Release to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the transfer books of the Trust. Neither the failure to mail any notice required by this paragraph (e), nor any defect therein or in the mailing thereof, to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Call Date; (2) the number of Series A Preferred Shares to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the number of Common Shares to be issued with respect to each Series A Preferred Share; (4) the place or places at which certificates for such shares are to be surrendered for certificates representing Common Shares; (5) the then-current Conversion Price; and (6) that dividends on the shares to be redeemed shall cease to accrue on such Call Date except as otherwise provided herein. Notice having been mailed as aforesaid, from and after the Call Date (unless the Trust shall fail to make available the number of Common Shares or amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the Series A Preferred Shares so called for redemption shall cease to accrue, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Series A Preferred Shares of the Trust shall cease (except the rights to receive the Common Shares and cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Trust's -9- 11 obligation to provide Common Shares and cash in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Trust shall deposit with a bank or trust company (which may be an affiliate of the Trust) that has an office in the Borough of Manhattan, City of New York, or in Cleveland, Ohio and that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, Common Shares and any cash necessary for such redemption, in trust, with irrevocable instructions that such Common Shares and cash be applied to the redemption of the Series A Preferred Shares so called for redemption. At the close of business on the Call Date, each holder of Series A Preferred Shares to be redeemed (unless the Company defaults in the delivery of the Common Shares or cash payable on such Call Date) shall be deemed to be the record holder of the number of Common Shares into which such Series A Preferred Shares are to be redeemed, regardless of whether such holder has surrendered the certificates representing the Series A Preferred Shares. No interest shall accrue for the benefit of the holders of Series A Preferred Shares to be redeemed on any cash so set aside by the Trust. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Call Date shall revert to the general funds of the Trust, after which reversion the holders of such shares so called for redemption shall look only to the general funds of the Trust for the payment of such cash. As promptly as practicable after the surrender in accordance with said notice of the certificates for any such shares so redeemed (properly endorsed or assigned for transfer, if the Trust shall so require and if the notice shall so state), such shares shall be exchanged for certificates of Common Shares and any cash (without interest thereon) for which such shares have been redeemed. If fewer than all the outstanding Series A Preferred Shares are to be redeemed, shares to be redeemed shall be selected by the Trust from outstanding Series A Preferred Shares not previously called for redemption on a pro rata basis (as nearly as may be) or by any other manner determined by the Trust in its sole discretion to be equitable. If fewer than all the Series A Preferred Shares represented by any certificate are redeemed, then new certificates representing the unredeemed shares shall be issued without cost to the holder thereof. (f) No fractional shares or scrip representing fractions of Common Shares shall be issued upon redemption of the Series A Preferred Shares. Instead of any fractional interest in a Common Share that would otherwise be deliverable upon the redemption of a Series A Preferred Share, the Trust shall pay to the holder of such share an amount in cash (computed to the nearest cent with $.005 being rounded upward) based upon the Current Market Price of Common -10- 12 Shares on the Trading Day immediately preceding the Call Date. If more than one certificate representing Series A Preferred Shares shall be surrendered for redemption at one time by the same holder, the number of full Common Shares issuable upon redemption thereof shall be computed on the basis of the aggregate number of Series A Preferred Shares so surrendered. (g) The Trust covenants that any Common Shares issued upon redemption of the Series A Preferred Shares shall be validly issued, fully paid and (subject to any customary qualification based upon the nature of a real estate investment trust) non-assessable. The Trust shall endeavor to list the Common Shares required to be delivered upon redemption of the Series A Preferred Shares, prior to such redemption, upon each national securities exchange, if any, upon which the outstanding Common Shares are listed at the time of such delivery. The Trust shall endeavor to take any action necessary to ensure that any Common Shares issued upon the redemption of Series A Preferred Shares are freely transferable and not subject to any resale restrictions under the Securities Act of 1933, as amended (the "Act"), or any applicable state securities or blue sky laws (other than any Common Shares issued upon redemption of any Series A Preferred Shares which are held by an "affiliate" (as defined in Rule 144 under the Act) of the Trust). Section 6. Conversion. Holders of Series A Preferred Shares shall have the right to convert all or a portion of such shares into Common Shares, as follows: (a) Subject to and upon compliance with the provisions of this Section 6, a holder of Series A Preferred Shares shall have the right, at his or her option, at any time to convert such shares into the number of Common Shares obtained by dividing the aggregate liquidation preference (excluding any accrued and unpaid dividends) of such shares by the Conversion Price (as in effect at the time and on the date provided for in the last paragraph of paragraph (b) of this Section 6) by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (b) of this Section 6; provided, however, that the right to convert shares called for redemption pursuant to Section 5 shall terminate at the close of business on the Call Date fixed for such redemption, unless the Trust shall default in making payment of the Common Shares and any cash payable upon such redemption under Section 5. (b) In order to exercise the conversion right, the holder of each Series A Preferred Share to be converted shall -11- 13 surrender the certificate representing such share, duly endorsed or assigned to the Trust or in blank, at the office of the Transfer Agent, accompanied by written notice to the Trust that the holder thereof elects to convert such Series A Preferred Shares. Unless the shares issuable on conversion are to be issued in the same name as the name in which such Series A Preferred Share is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Trust, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Trust demonstrating that such taxes have been paid). Holders of Series A Preferred Shares at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date and prior to such Dividend Payment Date. However, Series A Preferred Shares surrendered for conversion during the period between the close of business on any dividend payment record date and the opening of business on the corresponding Dividend Payment Date (except shares converted after the issuance of notice of redemption with respect to a Call Date during such period, such Series A Preferred Shares being entitled to such dividend on the Dividend Payment Date) must be accompanied by payment of an amount equal to the dividend payable on such shares on such Dividend Payment Date. A holder of Series A Preferred Shares on a dividend payment record date who (or whose transferee) tenders any such shares for conversion into Common Shares on the corresponding Dividend Payment Date will receive the dividend payable by the Trust on such Series A Preferred Shares on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of Series A Preferred Shares for conversion. Except as provided above, the Trust shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the Common Shares issued upon such conversion. As promptly as practicable after the surrender of certificates for Series A Preferred Shares as aforesaid, the Trust shall issue and shall deliver at such office to such holder, or on his or her written order, a certificate or certificates for the number of full Common Shares issuable upon the conversion of such shares in accordance with provisions of this Section 6, and any fractional interest in respect of a Common Share arising upon such conversion shall be settled as provided in paragraph (c) of this Section 6. -12- 14 Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for Series A Preferred Shares shall have been surrendered and such notice shall have been received by the Trust as aforesaid (and if applicable, payment of an amount equal to the dividend payable on such shares shall have been received by the Trust as described above), and the Person or Persons in whose name or names any certificate or certificates for Common Shares shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the share transfer books of the Trust shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such share transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Trust. (c) No fractional shares or scrip representing fractions of Common Shares shall be issued upon conversion of the Series A Preferred Shares. Instead of any fractional interest in a Common Share that would otherwise be deliverable upon the conversion of a Series A Preferred Share, the Trust shall pay to the holder of such share an amount in cash (computed to the nearest cent with $.005 being rounded upward) based upon the Current Market Price of Common Shares on the Trading Day immediately preceding the date of conversion. If more than one certificate representing Series A Preferred Shares shall be surrendered for conversion at one time by the same holder, the number of full Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of Series A Preferred Shares so surrendered. (d) The Conversion Price shall be adjusted from time to time as follows: (i) If the Trust shall after the Issue Date (A) pay a dividend or make a distribution on its capital shares in Common Shares, (B) subdivide its outstanding Common Shares into a greater number of shares, (C) combine its outstanding Common Shares into a smaller number of shares or (D) issue any shares of beneficial interest by reclassification of its Common Shares, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or distribution or at the opening of business on the Business Day next following the day on which such -13- 15 subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any Series A Preferred Share thereafter surrendered for conversion shall be entitled to receive the number of Common Shares that such holder would have owned or have been entitled to receive after the happening of any of the events described above as if such Series A Preferred Shares had been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (i) shall become effective immediately after the opening of business on the Business Day next following the record date (except as provided in paragraph (h) below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the Business Day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Trust shall issue after the Issue Date rights, options or warrants to all holders of Common Shares entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Shares at a price per share less than 94% (100% if a stand-by underwriter is used and charges the Trust a commission) of the Fair Market Value per Common Share on the record date for the determination of shareholders entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the Business Day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the Business Day next following the date fixed for such determination by (B) a fraction, the numerator of which shall be the sum of (x) the number of Common Shares outstanding on the close of business on the date fixed for such determination and (y) the number of shares that the aggregate proceeds to the Trust from the exercise of such rights, options or warrants for Common Shares would purchase at 94% of such Fair Market Value (or 100% in the case of a stand-by underwriting), and the denominator of which shall be the sum of (x) the number of Common Shares outstanding on the close of business on the date fixed for such determination and (y) the number of additional Common Shares offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (h) below). In -14- 16 determining whether any rights, options or warrants entitle the holders of Common Shares to subscribe for or purchase Common Shares at less than 94% of such Fair Market Value (or 100% in the case of a stand-by underwriting), there shall be taken into account any consideration received by the Trust upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined by the Chairman of the Board or the Board of Trustees. (iii) If the Trust shall distribute to all holders of its Common Shares any shares of beneficial interest of the Trust (other than Common Shares) or evidence of its indebtedness or assets (excluding cumulative cash dividends or distributions paid with respect to the Common Shares after December 31, 1995 which are not in excess of the following: the sum of (A) the Trust's cumulative undistributed Income from Operations and capital gains and cumulative depreciation and amortization at December 31, 1995, plus (B) the cumulative amount of net income before distributions accrued or paid on the Series A Preferred Shares, plus depreciation and amortization, after December 31, 1995, minus (C) the cumulative amount of distributions accrued or paid on the Series A Preferred Shares or any other class or series of preferred shares of beneficial interest of the Trust after the Issue Date) or rights, options or warrants to subscribe for or purchase any of its securities (excluding those rights, options and warrants issued to all holders of Common Shares entitling them for a period expiring within 45 days after the record date referred to in subparagraph (ii) above to subscribe for or purchase Common Shares, which rights and warrants are referred to in and treated under subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) collectively called the "Securities" and individually a "Security"), then in each such case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (x) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of shareholders entitled to receive such distribution by (y) a fraction, the numerator of which shall be the Fair Market Value per Common Share on the record date mentioned below less the then fair market value (as determined by the Chairman of the Board or the Board of Trustees, whose determination shall be conclusive), of the portion of the shares of beneficial interest or assets or evidences of indebtedness so distributed or of such rights, options or -15- 17 warrants applicable to one Common Share, and the denominator of which shall be the Fair Market Value per Common Share on the record date mentioned below. Such adjustment shall become effective immediately at the opening of business on the Business Day next following (except as provided in paragraph (h) below) the record date for the determination of shareholders entitled to receive such distribution. For the purposes of this subparagraph (iii), the distribution of a Security, which is distributed not only to the holders of the Common Shares on the date fixed for the determination of shareholders entitled to such distribution of such Security, but also is distributed with each Common Share delivered to a Person converting a Series A Preferred Share after such determination date, shall not require an adjustment of the Conversion Price pursuant to this subparagraph (iii); provided that on the date, if any, on which a Person converting a Series A Preferred Share would no longer be entitled to receive such Security with a Common Share (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred and the Conversion Price shall be adjusted as provided in this subparagraph (iii) (and such day shall be deemed to be "the date fixed for the determination of the shareholders entitled to receive such distribution" and "the record date" within the meaning of the two preceding sentences). (iv) In case a tender or exchange offer made by the Trust or any subsidiary of the Trust for all or any portion of the Common Shares shall expire and such tender or exchange offer shall involve the payment by the Trust or such subsidiary of consideration per Common Share having a fair market value (as determined in good faith by the Board of Trustees, whose determination shall be conclusive and described in a resolution of the Board of Trustees), at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer, that exceeds the Current Market Price per Common Share on the Trading Day next succeeding the Expiration Time, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subparagraph, by a fraction of which the numerator shall be the number of Common Shares outstanding (including any tendered or exchanged shares) at the Expiration Time, multiplied by the Current Market Price per Common Share on the Trading Day next succeeding the Expiration Time, and the denominator shall be the sum of (A) the fair market value -16- 18 (determined as aforesaid) of the aggregate consideration payable to shareholders based upon the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any maximum, being referred to as the "Purchased Shares") and (B) the product of the number of Common Shares outstanding (less any Purchased Shares) at the Expiration Time and the Current Market Price per Common Share on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. (v) No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this subparagraph (v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 6 (other than this subparagraph (v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Common Shares. Notwithstanding any other provisions of this Section 6, the Trust shall not be required to make any adjustment of the Conversion Price for the issuance of any Common Shares pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Trust and the investment of additional optional amounts in Common Shares under such plan. All calculations under this Section 6 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (d) to the contrary notwithstanding, the Trust shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (d), as it in its discretion shall determine to be advisable in order that any share dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase shares or securities, or distribution of other assets (other than cash dividends) hereafter made by the Trust to its shareholders shall not be taxable. (e) If the Trust shall be a party to any transaction (including without limitation a merger, consolidation, -17- 19 statutory share exchange, self tender offer for all or substantially all Common Shares, sale of all or substantially all of the Trust's assets or recapitalization of the Common Shares and excluding any transaction as to which subparagraph (d)(i) of this Section 6 applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which all or substantially all Common Shares are converted into the right to receive shares, securities or other property (including cash or any combination thereof), each Series A Preferred Share which is not redeemed or converted into the right to receive shares, securities or other property prior to such Transaction shall thereafter be convertible into the kind and amount of shares, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of Common Shares into which one Series A Preferred Share was convertible immediately prior to such Transaction, assuming such holder of Common Shares (i) is not a Person with which the Trust consolidated or into which the Trust merged or which merged into the Trust or to which such sale or transfer was made, as the case may be ("Constituent Person"), or an affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of shares, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of shares, securities and other property (including cash) receivable upon such Transaction is not the same for each Common Share held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("Non-Electing Share"), then for the purpose of this paragraph (e) the kind and amount of shares, securities and other property (including cash) receivable upon such Transaction by each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). The Trust shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (e), and it shall not consent or agree to the occurrence of any Transaction until the Trust has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series A Preferred Shares that will contain provisions enabling the holders of the Series A Preferred Shares that remain outstanding after such Transaction to convert into the consideration received by holders of Common Shares at the Conversion Price in effect immediately prior to such Transaction. The provisions of this paragraph (e) shall similarly apply to successive Transactions. (f) If: -18- 20 (i) the Trust shall declare a dividend (or any other distribution) on the Common Shares (other than cash dividends or distributions paid with respect to the Common Shares after December 31, 1995 not in excess of the sum of the Trust's cumulative undistributed Income from Operations and capital gains and cumulative depreciation and amortization at December 31, 1995, plus the cumulative amount of net income before distributions accrued or paid on the Series A Preferred Shares, plus depreciation and amortization, after December 31, 1995, minus the cumulative amount of distributions accrued or paid on the Series A Preferred Shares or any other class or series of preferred shares of beneficial interest of the Trust after the Issue Date); or (ii) the Trust shall authorize the granting to the holders of Common Shares of rights, options or warrants to subscribe for or purchase any shares of any class or any other rights, options or warrants; or (iii) there shall be any reclassification of the Common Shares (other than an event to which subparagraph (d)(i) of this Section 6 applies) or any consolidation or merger to which the Trust is a party and for which approval of any shareholders of the Trust is required, or a statutory share exchange, or a self tender offer by the Trust for all or substantially all of its outstanding Common Shares or the sale or transfer of all or substantially all of the assets of the Trust as an entirety; or (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Trust; then the Trust shall cause to be filed with the Transfer Agent and shall cause to be mailed to the holders of Series A Preferred Shares at their addresses as shown on the records of the Trust, as promptly as possible, but at least 10 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of Common Shares of record to be entitled to such dividend, distribution or rights, options or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Shares of record shall be entitled to exchange their Common Shares for securities or other property, if any, deliverable upon such -19- 21 reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 6. (g) Whenever the Conversion Price is adjusted as herein provided, the Trust shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Trust shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date of such adjustment and shall mail such notice of such adjustment of the Conversion Price to the holder of each Series A Preferred Share at such holder's last address as shown on the records of the Trust. (h) In any case in which paragraph (d) of this Section 6 provides that an adjustment shall become effective on the day next following the record date for an event, the Trust may defer until the occurrence of such event (A) issuing to the holder of any Series A Preferred Share converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event over and above the Common Shares issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of this Section 6. (i) There shall be no adjustment of the Conversion Price in case of the issuance of any shares of beneficial interest of the Trust in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 6. If any action or transaction would require adjustment of the Conversion Price pursuant to more than one paragraph of this Section 6, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value. (j) If the Trust shall take any action affecting the Common Shares, other than actions described in this Section 6, that in the opinion of the Board of Trustees would materially and adversely affect the conversion rights of the holders of the Series A Preferred Shares, the Conversion Price for the Series A Preferred Shares may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as -20- 22 the Board of Trustees, in its sole discretion, may determine to be equitable in the circumstances. (k) The Trust covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Shares, for the purpose of effecting conversion of the Series A Preferred Shares, the full number of Common Shares deliverable upon the conversion of all outstanding Series A Preferred Shares not theretofore converted. For purposes of this paragraph (k), the number of Common Shares that shall be deliverable upon the conversion of all outstanding Series A Preferred Shares shall be computed as if at the time of computation all such outstanding shares were held by a single holder. The Trust covenants that any Common Shares issued upon conversion of the Series A Preferred Shares shall be validly issued, fully paid and (subject to customary qualification based upon the nature of a real estate investment trust) non-assessable. Before taking any action that would cause an adjustment reducing the Conversion Price below the then-par value of the Common Shares deliverable upon conversion of the Series A Preferred Shares, the Trust will take any action that, in the opinion of its counsel, may be necessary in order that the Trust may validly and legally issue fully paid and (subject to any customary qualification based upon the nature of a real estate investment trust) non-assessable Common Shares at such adjusted Conversion Price. The Trust shall endeavor to list the Common Shares required to be delivered upon conversion of the Series A Preferred Shares, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding Common Shares are listed at the time of such delivery. Prior to the delivery of any securities that the Trust shall be obligated to deliver upon conversion of the Series A Preferred Shares, the Trust shall endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. (l) The Trust will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Common Shares or other securities or property on conversion of the Series A Preferred Shares pursuant hereto; provided, however, that the Trust shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Common -21- 23 Shares or other securities or property in a name other than that of the holder of the Series A Preferred Shares to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Trust the amount of any such tax or established, to the reasonable satisfaction of the Trust, that such tax has been paid. Section 7. Shares To Be Retired. All Series A Preferred Shares which shall have been issued and reacquired in any manner by the Trust shall be restored to the status of authorized but unissued shares of beneficial interest of the Trust, without designation as to class or series. Section 8. Ranking. Any class or series of shares of beneficial interest of the Trust shall be deemed to rank: (a) prior to the Series A Preferred Shares, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series A Preferred Shares; (b) on a parity with the Series A Preferred Shares, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof shall be different from those of the Series A Preferred Shares, if the holders of such class or series and the Series A Preferred Shares shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Shares"); (c) junior to the Series A Preferred Shares, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series shall be Junior Shares; and (d) junior to the Series A Preferred Shares, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series shall be Fully Junior Shares. Section 9. Voting. If and whenever six quarterly dividends (whether or not consecutive) payable on the Series A Preferred Shares or any series or class of Parity Shares shall be in arrears -22- 24 (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of trustees then constituting the Board of Trustees shall be increased by two and the holders of Series A Preferred Shares, together with the holders of shares of every other series of Parity Shares (any such other series, the "Voting Preferred Shares"), voting as a single class regardless of series, shall be entitled to elect two additional trustees to serve on the Board of Trustees at any annual meeting of shareholders or special meeting held in place thereof, or at a special meeting of the holders of the Series A Preferred Shares and the Voting Preferred Shares called as hereinafter provided. Whenever all arrears in dividends on the Series A Preferred Shares and the Voting Preferred Shares then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the Series A Preferred Shares and the Voting Preferred Shares to elect such additional two trustees shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends), and the terms of office of all persons elected as trustees by the holders of the Series A Preferred Shares and the Voting Preferred Shares shall forthwith terminate and the number of the Board of Trustees shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Series A Preferred Shares and the Voting Preferred Shares, the Secretary of the Trust may, and upon the written request of any holder of Series A Preferred Shares (addressed to the Secretary at the principal office of the Trust) shall, call a special meeting of the holders of the Series A Preferred Shares and of the Voting Preferred Shares for the election of the two trustees to be elected by them as herein provided, such call to be made by notice similar to that provided in the By-Laws of the Trust for a special meeting of the shareholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Series A Preferred Shares may call such meeting, upon the notice above provided, and for that purpose shall have access to the records of the Trust. The trustees elected at any such special meeting shall hold office until the next annual meeting of the shareholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the trustees elected by the holders of the Series A Preferred Shares and the Voting Preferred Shares, a successor shall be elected by the Board of Trustees, upon the nomination of the then-remaining trustee elected by the holders of the Series A Preferred Shares and the Voting Preferred Shares or the successor of such remaining trustee, to serve until the next annual meeting of the shareholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. -23- 25 So long as any Series A Preferred Shares are outstanding, in addition to any other vote or consent of shareholders required by law, by the Trust's Amended Declaration of Trust, as amended and supplemented (the "Declaration of Trust"), or by the Trust's By-Laws, as amended and supplemented (the "By-Laws"), the affirmative vote of at least 66 2/3% of the votes entitled to be cast by the holders of the Series A Preferred Shares and the Voting Preferred Shares, at the time outstanding, acting as a single class regardless of series, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (a) Any amendment, alteration or repeal of any of the provisions of the Declaration of Trust, By-Laws or this Certificate of Designations that materially and adversely affects the voting powers, rights or preferences of the holders of the Series A Preferred Shares or the Voting Preferred Shares; provided, however, that the amendment of the provisions of the Declaration of Trust so as to authorize or create or to increase the authorized amount of, any Fully Junior Shares, Junior Shares that are not senior in any respect to the Series A Preferred Shares, or any shares of any class ranking on a parity with the Series A Preferred Shares or the Voting Preferred Shares shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Series A Preferred Shares, and provided, further, that if any such amendment, alteration or repeal would materially and adversely affect any voting powers, rights or preferences of the Series A Preferred Shares or another series of Voting Preferred Shares that are not enjoyed by some or all of the other series otherwise entitled to vote in accordance herewith, the affirmative vote of at least 66 2/3% of the votes entitled to be cast by the holders of all series similarly affected, similarly given, shall be required in lieu of the affirmative vote of at least 66 2/3% of the votes entitled to be cast by the holders of the Series A Preferred Shares and the Voting Preferred Shares otherwise entitled to vote in accordance herewith; or (b) A share exchange that affects the Series A Preferred Shares, a consolidation with or merger of the Trust into another entity, or a consolidation with or merger of another entity into the Trust, unless in each such case each Series A Preferred Share (i) shall remain outstanding without a material and adverse change to its terms and rights or (ii) shall be converted into or exchanged for convertible preferred shares of the surviving entity having preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms or conditions of redemption thereof identical to that of a Series A Preferred -24- 26 Share (except for changes that do not materially and adversely affect the holders of the Series A Preferred Shares); or (c) The authorization, reclassification or creation of, or the increase in the authorized amount of, any shares of any class or any security convertible into shares of any class ranking prior to the Series A Preferred Shares in the distribution of assets on any liquidation, dissolution or winding up of the Trust or in the payment of dividends; provided, however, that no such vote of the holders of Series A Preferred Shares shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all Series A Preferred Shares at the time outstanding. For purposes of the foregoing provisions of this Section 9, each Series A Preferred Share shall have one (1) vote per share, except that when any other series of Preferred Shares shall have the right to vote with the Series A Preferred Shares as a single class on any matter, then the Series A Preferred Shares and such other series shall have with respect to such matters one (1) vote per $25.00 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Series A Preferred Shares shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any Trust action. Section 10. Limitation on Ownership. (a) Limitation. Notwithstanding any other provision of the terms of the Series A Preferred Shares, except as provided in the next sentence and in Section 10(b), no Person, or Persons acting as a group, shall at any time directly or indirectly acquire ownership of more than 25% of the outstanding Series A Preferred Shares (the "Limit"). Any Series A Preferred Shares owned by a Person or Persons acting as a group in excess of such 25% shall be deemed "Excess Preferred Shares," except that any such shares in excess of 25% will not be considered Excess Preferred Shares if the 25% limitation is exceeded solely as a result of the Trust's redemption of Series A Preferred Shares, provided that thereafter any additional Series A Preferred Shares acquired by such Person or Persons acting as a group shall be considered Excess Preferred Shares. The Limit set for in this Section 10(a) shall be in addition to any other limitation set forth in the (1) By-Laws, (2) Declaration of Trust, (3) Amended and Restated Declaration of Trust dated as of October 1, 1996 made by Adolph Posnick, as amended and supplemented -25- 27 (the "Management Company Declaration of Trust"), and (4) applicable law. (b) If any Series A Preferred Shares are issued or transferred to any Person in violation of Section 10(a), such issuance or transfer shall be valid only with respect to such amount of Series A Preferred Shares as does not result in violation of Section 10(a), and such issuance or transfer shall be null and void with respect to such Excess Preferred Shares. If the last clause of the foregoing sentence is determined to be invalid by virtue of any legal decision, statute, rule or regulation, such Person shall be conclusively deemed to have acted as an agent on behalf of the Trust in acquiring the Excess Preferred Shares and to hold such Excess Preferred Shares on behalf of the Trust. As the equivalent of treasury securities for such purposes, the Excess Preferred Shares shall not be entitled to any voting rights; shall not be considered outstanding for quorums or voting purposes; shall not be entitled to receive dividends, interest or any other distribution with respect to such Shares; and shall not be entitled to any conversion rights. Any Person who receives dividends, interest or any other distribution in respect to Excess Preferred Shares shall hold the same as agent for the Trust and (following a permitted transfer) for the transferee thereof. Notwithstanding the foregoing, any holder of Excess Preferred Shares may transfer the same (together with any distributions thereon) to any Person who, following such transfer, would not own Series A Preferred Shares (within the meaning of Section 10(a)) in excess of the Limit. Upon such permitted transfer, the Trust shall pay or distribute to the transferee any distributions on the Excess Preferred Shares not previously paid or distributed. (c) Ownership of the Series A Preferred Shares is conditional upon the owner or prospective owner having provided to the Trust definitive written information respecting his ownership of the Series A Preferred Shares. Failure to provide such information upon reasonable request shall result in the Series A Preferred Shares so owned being treated as Excess Preferred Shares pursuant to Section 10(b) for so long as such failure continues. (d) For purposes of this Section 10, "Ownership" means beneficial ownership. Beneficial ownership, for this purpose, may be determined on the basis of the beneficial ownership rules applicable under the Securities Exchange Act of 1934, as amended, or such other basis as management of the Trust reasonably determines to be appropriate to effectuate the purposes hereof. -26- 28 (e) 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 real estate investment trust under the Internal Revenue Code of 1986, as amended, modified or rescinded from time to time, or any similar provision of succeeding law. (f) If any provision of this Section 10 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. (g) Exemptions. The limitation on ownership set forth in Section 10(a) shall not apply to the acquisition of Series A Preferred Shares by an underwriter in a public offering of Series A Preferred Shares (including the initial public offering of such Shares) and shall not apply to the acquisition of Series A Preferred Shares by a managing underwriter in the initial public offering of Series A Preferred Shares. The Trustees, in their sole and absolute discretion, may exempt from the ownership limitation set forth in Section 10(a) certain designated Series A Preferred Shares owned by a Person who has provided the Trustees with evidence and assurances acceptable to the Trustees that the qualification of the Trust as a real estate investment trust would not be jeopardized thereby. Section 11. Record Holders. The Trust and the Transfer Agent may deem and treat the record holder of any Series A Preferred Shares as the true and lawful owner thereof for all purposes, and neither the Trust nor the Transfer Agent shall be affected by any notice to the contrary. Section 12. Sinking Fund. The Series A Preferred Shares shall not be entitled to the benefits of any retirement or sinking fund. Section 13. Management Company Declaration of Trust. Notwithstanding any other provisions of this Certificate of Designations, the holders of the Series A Preferred Shares shall not be entitled to the benefit of the Management Company Declaration of Trust. Section 14. Exclusivity. Notwithstanding any provision of the Declaration of Trust to the contrary, the holders of the Series A Preferred Shares shall have no voting rights, and shall not be -27- 29 entitled to receive any dividends or distributions on account of their shares, except, in each case, to the extent expressly set forth herein or as otherwise required by applicable law. -28- 30 IN WITNESS WHEREOF, this Certificate of Designations has been duly executed by the undersigned this 23rd day of October, 1996. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By: /s/ James C. Mastandrea ----------------------------- James C. Mastandrea Chairman, President and Chief Executive Officer -29- EX-4.(B) 4 FORM OF CERTIFICATE OF SERIES A PREFERRED SHARES 1 TEMPORARY CERTIFICATE - EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN READY FOR DELIVERY
NUMBER PREFERRED PA SHARES [LOGO] - --------------------------- ------------------------ ----------------------------------- SERIES A CUMULATIVE CONVERTIBLE SERIES A CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED SHARES OF REDEEMABLE PREFERRED SHARES OF BENEFICIAL INTEREST BENEFICIAL INTEREST PAR VALUE $25.00 PAR VALUE $25.00
Organized under the Laws of the State of Ohio FIRST UNION Real Estate Equity and Mortgage Investments THIS CERTIFICATE IS TRANSFERABLE IN THE CITY OF NEW YORK OR IN CLEVELAND, OHIO CUSIP 337400 30 3 see Reverse for Certain Definitions and Restrictions THIS IS TO CERTIFY THAT [Name] IS THE REGISTERED HOLDER OF [Amount] FULLY PAID AND NON-ASSESSABLE PREFERRED SHARES OF BENEFICIAL INTEREST, $25.00 PAR VALUE, IN First Union Real Estate Equity and Mortgage Investments a trust established in business trust form under the laws of the State of Ohio under a Declaration of Trust dated as of August 1, 1961, as amended from time to time, a copy of which is on file with the Transfer Agents of the Trust. The Preferred Shares evidenced by this certificate are subject to all the terms and provisions of the Certificate of Designations referred to on the reverse hereof which the holder or transferee hereof by accepting this certificate agrees to be bound. The Trust is not a bank or trust company and does not and will not solicit, receive or accept deposits as a business. The shares represented hereby are transferable on the records of the Trust only by the registered holder hereof or by his agent duly authorized in writing on delivery to a Transfer Agent of the Trust of this certificate properly endorsed or accompanied by duly executed instrument of transfer together with such evidence of the genuineness thereof and such other matters as may reasonably be required. The transferability of the shares represented hereby is subject to the aforementioned Certificates of Designations and such regulations as may from time to time be 2 adopted by the Trustees of the Trust and set forth in the By-Laws to which reference is hereby made to prevent transfers of shares which would result in disqualification of the Trust for taxation as a real estate investment trust under the Internal Revenue Code as amended. This certificate is not valid unless countersigned by a Transfer Agent and registered by a Registrar of the Trust. In Witness Whereof, the Trustees of this Trust have caused this certificate to be signed by facsimile signatures. [SEAL] Dated: Countersigned and Registered: THE HUNTINGTON NATIONAL BANK (Columbus, Ohio) TRANSFER AGENT AND REGISTRAR BY SENIOR VICE PRESIDENT CHAIRMAN, PRESIDENT AND AUTHORIZED SIGNATURE AND SECRETARY CHIEF EXECUTIVE OFFICER 3 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS THE CERTIFICATE OF DESIGNATIONS DATED AS OF OCTOBER 23, 1996 SETS FORTH A FULL STATEMENT OF ALL OF THE DESIGNATIONS, PREFERENCES, RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION, AND OTHER RELATIVE RIGHTS OF THESE SERIES A PREFERRED SHARES. THE DECLARATION OF TRUST DATED AS OF AUGUST 1, 1961, AS AMENDED FROM TIME TO TIME, SETS FORTH A FULL STATEMENT OF THE AUTHORITY OF THE TRUSTEES OF THE TRUST TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE EXTENT THEY HAVE BEEN SET AND THE AUTHORITY OF THE TRUSTEES OF THE TRUST TO SET THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES OF PREFERRED SHARES. A COPY OF SUCH STATEMENTS MAY BE OBTAINED FROM THE SECRETARY OF THE TRUST. THE SERIES A PREFERRED SHARES WILL NOT BE ENTITLED TO THE BENEFIT OF THE DECLARATION OF TRUST DATED AS OF OCTOBER 1, 1996, PURSUANT TO WHICH ALL OF THE SHARES OF FIRST UNION MANAGEMENT, INC. ARE HELD FOR THE BENEFIT OF THE HOLDERS OF THE TRUST'S SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE. THE CERTIFICATE OF DESIGNATIONS DATED AS OF OCTOBER 23, 1996 PROVIDES, AMONG OTHER THINGS, THAT NO PERSON MAY ACQUIRE THE SERIES A PREFERRED SHARES IF, THEREAFTER, HE WOULD BENEFICIALLY OWN MORE THAN 25% OF THE SERIES A PREFERRED SHARES, EXCEPT AS A RESULT OF A TRUST'S REDEMPTION OF ANY OF THE SERIES A PREFERRED SHARES. THE BY-LAWS OF THE TRUST PROVIDE, AMONG OTHER THINGS, THAT NO PERSON MAY ACQUIRE TRUST SECURITIES INCLUDING THESE SECURITIES) IF, THEREAFTER, HE WOULD BENEFICIALLY OWN MORE THAN 9.8% OF THE TRUST'S SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE. IN APPLYING THIS RESTRICTION, CONVERTIBLE SECURITIES OF THE TRUST BENEFICIALLY OWNED BY SUCH PERSON (INCLUDING CONVERTIBLE SECURITIES SUCH AS THESE SERIES A PREFERRED SHARES) ARE TO BE TREATED AS IF ALREADY CONVERTED INTO SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE. A COPY OF THE BY-LAWS AND INFORMATION ABOUT THE LIMIT ON OWNERSHIP MAY BE OBTAINED FROM THE SECRETARY OF THE TRUST. THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL ACCORDING TO APPLICABLE LAWS OR REGULATIONS: TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT __________ CUSTODIAN_______ TEN ENT - AS TENANTS BY THE ENTIRETIES (CUST) (MINOR) JT TEN - AS JOINT TENANTS WITH RIGHT UNDER UNIFORM GIFTS TO MINORS OF SURVIVORSHIP AND NOT AS ACT_____________ TENANTS IN COMMON (STATE)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST. FOR VALUE RECEIVED, __________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR NOTICE: THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND WITH OTHER IDENTIFYING THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY NUMBER OF ASSIGNEE PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
________________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) ________________________________________________________________________________ ________________________________________________________________________________ ____________________________________________________ Series A Preferred Shares of Beneficial Interest represented by the within-named Trust, with full power of substitution in the premises. Dated _____________________ (Sign here)_______________________________ EX-99.(A) 5 PRESS RELEASE DATED OCTOBER 24, 1996 1 [FIRST UNION REAL ESTATE INVESTMENTS LETTERHEAD] FOR IMMEDIATE RELEASE October 24, 1996 FIRST UNION REAL ESTATE INVESTMENTS ANNOUNCES $50 MILLION PREFERRED SHARE OFFERING Cleveland, Ohio, October 24, 1996 - First Union Real Estate Investments (NYSE:FUR), a leading property repositioning REIT, today announced the public offering of 2,000,000 shares of its 8.4% Series A Cumulative Convertible Redeemable Preferred Shares at a price of $25.00 per share. The offering was underwritten by Sutro & Co. Incorporated, as lead manager, with BT Securities Corporation and Tucker Anthony Incorporated as co-managers. First Union (the Trust) also granted the underwriters the option to purchase 300,000 additional shares of the offering to cover over-allotments. The Series A Preferred Shares are convertible, at the option of the shareholder, into common shares at the conversion price of $7.5625 per common share, which represents a 10% premium. After October 29, 2001, the Shares will be redeemable, in whole or in part, at a rate of 3.31 common shares for each Series A Preferred Share, when the common share price exceeds the conversion price. Commenting on the offering, James C. Mastandrea, chairman and chief executive officer of First Union Real Estate Investments, said, "This is the first time that First Union has been to the equity market since 1977. The successful completion of this offering, reflected by the favorable pricing and strong demand, is evidence that the market supports our strategic plan to reposition assets to maximize total return to shareholders. The proceeds of the offering will be used to substantially clear the outstanding balance on our $96 million line of credit which will enhance financial flexibility and allow us to pursue additional acquisitions." This press release does not constitute an offer to sell or the solicitation of an offer to buy securities. Such offers may be made only by means of a prospectus, copies of which may be obtained from the Trust, or the underwriters. First Union Real Estate Investments (NYSE:FUR) is an equity real estate investment trust (REIT) specializing in repositioning real estate to extract intrinsic value. ### -----END PRIVACY-ENHANCED MESSAGE-----