AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1997
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 2
TO
FORM S-11
ENTERTAINMENT PROPERTIES TRUST
MARYLAND 6798 43-179877
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
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ONE KANSAS CITY PLACE
1200 MAIN STREET, SUITE 3250
KANSAS CITY, MISSOURI 64105
(816) 480-4649
PETER C. BROWN
ENTERTAINMENT PROPERTIES TRUST
ONE KANSAS CITY PLACE
1200 MAIN STREET, SUITE 3250
KANSAS CITY, MISSOURI 64105
(816) 480-4649
(Name and address of agent for service)
COPIES TO:
ALISON S. RESSLER RAYMOND F. BEAGLE, JR. YAACOV M. GROSS
SULLIVAN & CROMWELL LATHROP & GAGE L.C. WILLKIE FARR AND GALLAGHER
444 SOUTH FLOWER STREET 2345 GRAND BOULEVARD, 24TH ONE CITICORP CENTER
LOS ANGELES, CA 90071 FLOOR 153 EAST 53RD STREET
(213) 955-8000 KANSAS CITY, MO 64108 NEW YORK, NY 10022
(816) 292-2000 (212) 821-8000
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If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table itemizes the expenses incurred by the Registrant in connection with the offering of the shares being registered. All the amounts shown are estimates (other than the SEC registration fee and the NASD fee).
AMOUNT
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SEC registration fee........................................... $ 100,145
NASD fee....................................................... 30,500
New York Stock Exchange listing fee............................ 85,000
Printing and engraving fees.................................... 250,000
Legal fees and expenses (other than Blue Sky).................. 800,000
Accounting fees and expenses................................... 100,000
Blue Sky fees and expenses (including fees of counsel)......... 10,000
Other (including expenses related to the Formation
Transactions)................................................ 624,355
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Total...................................................... $2,000,000
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ITEM 32. SALES TO SPECIAL PARTIES.
See Item 33.
ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.
On August 28, 1997, the Company issued 50 shares of Common Stock to Robert L. Harris and 50 shares of Common Stock to David M. Brain at a purchase price of $20.00 per share. Such shares were issued in a transaction exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as they were issued in a transaction not involving any public offering. In addition, Robert L. Harris and David M. Brain agreed to purchase an aggregate of 120,000 Shares pursuant to the Company's Share Purchase Program. Such Shares will be issued to the two officers pursuant to the exemption provided by Section 4(2) of the Securities Act as they were issued in a transaction not involving any public offering. The opportunity to purchase such Shares was not made to any person other than Mr. Harris and Mr. Brain and the agreement by such officers to purchase such Shares was made prior to the filing of the Registration Statement on September 10, 1997. Both Mr. Harris and Mr. Brain are "accredited investors" and "executive officers" as defined in Rule 501 in Regulation D under the Securities Act.
ITEM 34. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Maryland law permits a Maryland corporation to include in its declaration of trust a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. The Registrant's declaration of trust contains such a provision which eliminates such liability to the maximum extent permitted by Maryland law.
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The Registrant's officers and trustees are and will be indemnified under the
Registrant's declaration of trust against certain liabilities. The Registrant's
declaration of trust provides that the Registrant will, to the maximum extent
permitted by Maryland law in effect from time to time, indemnify (a) any
individual who is a present or former trustee or officer of the Registrant or
(b) any individual who, while a trustee or officer of the Registrant and at the
request of the Registrant, serves or has served as a director, officer,
shareholder, partner, trustee, employee or agent of any real estate investment
trust corporation, partnership, joint venture, trust, employee benefit plan or
any other enterprise from and against any claim or liability, together with
reasonable expenses actually incurred in advance of a final disposition of a
legal proceeding, to which such person may become subject or which such person
may incur by reason as his or her status as such. The Registrant has the power,
with the approval of the Registrant's Board of Trustees, to provide such
indemnification and advancement of expenses to a person who served a predecessor
of the Registrant in any of the capacities described in (a) or (b) above and to
any employee or agent of the Registrant or its predecessors.
Maryland law permits a Maryland real estate investment trust to indemnify and advance expenses to its trustees, officers, employees and agents to the same extent as permitted by the Maryland General Corporation Law ("MGCL") for directors, officers, employees and agents of a Maryland corporation. The MGCL requires a corporation (unless its charter provides otherwise, which the Registrant's declaration of trust does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by or on his or her behalf to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was not met.
The Registrant has entered into indemnity agreements with each of its officers and trustees which provide for reimbursement of all expenses and liabilities of such officer or trustee, arising out of any lawsuit or claim against such officer or trustee due to the fact that he or she was or is serving as an officer or trustee, except for such liabilities and expenses (a) the payment of which is judicially determined to be unlawful, (b) relating to claims under Section 16(b) of the Exchange Act or (c) relating to judicially determined criminal violations.
The form of Underwriting Agreement filed as an exhibit to this Registration Statement provides for the reciprocal indemnifications by the Underwriters of the Registrant, and its trustees, officers and controlling persons, and by the Registrant of the Underwriters, and their respective directors, officers and controlling persons, against certain liabilities under the Securities Act.
ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.
The consideration to be received by the Registrant for the shares registered will be credited to the appropriate capital account.
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ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS.
See Index to Financial Statements and Index to Exhibits.
ITEM 37. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The Registrant hereby undertakes that: (1) for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and (2) for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-11 AND HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF KANSAS CITY, STATE OF MISSOURI, ON THE 5th DAY OF NOVEMBER, 1997.
ENTERTAINMENT PROPERTIES TRUST
By: /s/ DAVID M. BRAIN
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Pursuant to requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
------------------------------ -------------------------- -------------------
* Chairman of the Board of
------------------------------ Trustees (Principal November 5, 1997
PETER C. BROWN Executive Officer)
* President, Chief
------------------------------ Development Officer and November 5, 1997
ROBERT L. HARRIS Trustee
/s/ DAVID M. BRAIN Chief Financial Officer
------------------------------ (Principal Financial and November 5, 1997
DAVID M. BRAIN Accounting Officer)
*By: /s/ DAVID M. BRAIN
-------------------------
DAVID M. BRAIN
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INDEX TO EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
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1+ Form of Underwriting Agreement among Entertainment Properties Trust (the
"Company") and Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated,
Furman Selz LLC, Prudential Securities Incorporated and Salomon Brothers
Inc, as representatives of the several underwriters named therein
4.1+ Declaration of Trust of the Company
4.2+ Amended and Restated Declaration of Trust of the Company
4.3+ Bylaws of the Company
4.4 Amended Bylaws of the Company
4.5+ Form of share certificate for common shares of beneficial interest of the
Company
5 Opinion of Sullivan & Cromwell as to the legality of the shares being
registered
5.1 Opinion of Ballard Spahr Andrews & Ingersoll as to the legality of the shares
being registered
8 Opinion of Sullivan & Cromwell as to certain tax matters
10.1* Form of Agreement of Sale and Purchase between the Company and American
Multi-Cinema, Inc.
10.2* Form of Option Agreement between the Company and American Multi-Cinema, Inc.
between the Company and Clip Funding, Limited Partnership
10.3* Form of Option Agreement between the Company and Clip Funding, Limited
Partnership
10.4* Form of AMCE Right to Purchase Agreement between the Company and AMC
Entertainment Inc.
10.5* Form of Lease entered into between the Company and American Multi-Cinema,
Inc.
10.6* Form of Guaranty of Lease entered into between the Company and AMC
Entertainment, Inc.
10.7* Credit Agreement
10.8+ Form of Indemnification Agreement entered into between the Company and each
of its trustees and officers
10.9 1997 Share Incentive Plan
10.10 Deferred Compensation Plan for Non-Employee Trustees
10.11 Annual Incentive Program
10.12* Employment Agreement with Robert L. Harris
10.13* Employment Agreement with David M. Brian
21+ Subsidiaries of the Company
23.1 Consent of Sullivan & Cromwell (included in Exhibits 5 and 8)
23.2+ Consent of Ernst & Young LLP
23.3+ Consent of Coopers & Lybrand L.L.P.
23.4+ Consent of Robert J. Druten
23.5+ Consent of Scott H. Ward
23.6+ Consent of Charles S. Paul
24+ Power of Attorney pursuant to which amendments to this Registration Statement
may be filed (included on the signature page)
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* To be filed by amendment.
+ Previously filed.
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ENTERTAINMENT PROPERTIES TRUST
BYLAWS
(Amended on November 4, 1997)
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Trust shall be located at such place or places as the Trustees may designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices at such places as the Board of Trustees may from time to time determine or the business of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at the principal office of the Trust or at such other place within the United States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for the election of Trustees and the transaction of any business within the powers of the Trust shall be held during the second quarter of each year or as the Board of Trustees otherwise determines, to the extent permitted by Title 8, after the delivery of the annual report, referred to in Section 12 of this Article II, at a convenient location and on proper notice, on a date and at the time set by the Trustees, beginning with the year 1998. Failure to hold an annual meeting does not invalidate the Trust's existence or affect any otherwise valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The chairman of the board or the president or one-third of the Trustees may call special meetings of the shareholders. Special meetings of shareholders shall also be called by the secretary upon the written request of the holders of shares entitled to cast not less than a majority of all the votes entitled to be cast at such meeting. Such request shall state the purpose of such meeting and the matters proposed to be acted on at such meeting. The secretary shall inform such shareholders of the reasonably estimated cost of preparing and mailing notice of the meeting and, upon payment by such shareholders to the Trust of such costs, the secretary shall give
notice to each shareholder entitled to notice of the meeting. Unless requested by shareholders entitled to cast a majority of all the votes entitled to be cast at such meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any meeting of the shareholders held during the preceding twelve months.
Section 4. NOTICE. Not less than ten nor more than 90 days before each meeting of shareholders, the secretary shall give to each shareholder entitled to vote at such meeting and to each shareholder not entitled to vote who is entitled to notice of the meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail or by presenting it to such shareholder personally or by leaving it at his residence or usual place of business. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the shareholder at his post office address as it appears on the records of the Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be transacted at an annual meeting of shareholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders, the Chairman of the Board, if there be one, shall conduct the meeting or, in the case of vacancy in office or absence of the Chairman of the Board, one of the following officers present shall conduct the meeting in the order stated: the Vice Chairman of the Board, if there be one, the President, the Vice Presidents in their order of rank and seniority, or a Chairman chosen by the shareholders entitled to cast a majority of the votes which all shareholders present in person or by proxy are entitled to cast, shall act as Chairman, and the Secretary, or, in his absence, an assistant secretary, or in the absence of both the Secretary and assistant secretaries, a person appointed by the Chairman shall act as Secretary.
Section 7. QUORUM. At any meeting of shareholders, the presence in person or by proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any requirement under any statute or the Declaration of Trust for the vote necessary for the adoption of any measure. If, however, such quorum shall not be present at any meeting of the shareholders, the shareholders entitled to vote at such meeting, present in person or by proxy, shall have the power to adjourn the meeting from time to
time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of shareholders duly called and at which a quorum is present shall be sufficient to elect a Trustee. Each share may be voted for as many individuals as there are Trustees to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of shareholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required herein or by statute or by the Declaration of Trust. Unless otherwise provided in the Declaration of Trust, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders.
Section 9. PROXIES. A shareholder may cast the votes entitled to be cast by the shares owned of record by him either in person or by proxy executed in writing by the shareholder or by his duly authorized agent. Such proxy shall be filed with the secretary of the Trust before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the Trust registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such shares pursuant to a bylaw or a resolution of the governing board of such corporation or other entity or agreement of the partners of the partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such shares. Any trustee or other fiduciary may vote shares registered in his name as such fiduciary, either in person or by proxy.
Shares of the Trust directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.
The Trustees may adopt by resolution a procedure by which a shareholder may certify in writing to the Trust that any shares registered in the name of the shareholder are held for the account of a specified person other than the shareholder. The resolution shall set forth the class of shareholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the share transfer books, the time after the record date or closing of the share transfer books within which the certification must be received by the Trust; and any other provisions with respect to the procedure which the Trustees consider necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the shareholder of record of the specified shares in place of the shareholder who makes the certification.
Section 11. INSPECTORS. At any meeting of shareholders, the chairman of the meeting may appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and report the number of shares represented at the meeting based upon their determination of the validity and effect of proxies, count all votes, report the results and perform such other acts as are proper to conduct the election and voting with impartiality and fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be PRIMA FACIE evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS.
The Trustees shall submit to the shareholders at or before the annual meeting of shareholders a report of the business and operations of the Trust during such fiscal year, containing a balance sheet and a statement of income and surplus of the Trust, accompanied by the certification of an independent certified public accountant, and such further information as the Trustees elect or as they may determine is required pursuant to any law or regulation to which the Trust is subject. Within the earlier of 20 days after the annual meeting of shareholders or 120 days after the end of the fiscal year of the Trust, the Trustees shall place the annual report on file at the principal office of the Trust and with any governmental agencies as may be required by law and as the Trustees may deem appropriate.
Section 13. NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.
(a) ANNUAL MEETINGS OF SHAREHOLDERS. (1) Nominations of persons for election to the Board of Trustees and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (i) pursuant to the Trust's notice of meeting, (ii) by or at the direction of the Trustees or (iii) by any shareholder of the Trust who was a shareholder of record both at the time of giving of notice provided for in this Section 13(a) and at the time of the annual meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 13(a).
(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of paragraph (a) (1) of this Section 13, the shareholder must have given timely notice thereof in writing to the secretary of the Trust and such other business must otherwise be a proper matter for action by shareholders. To be timely, a shareholder's notice shall be delivered to the secretary at the principal executive offices of the Trust not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date or if the Trust has not previously held an annual meeting, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the Trust. In no event shall the public announcement of a postponement or adjournment of an annual meeting to a later date or time commence a new time period for the giving of a shareholder's notice as described above. Such shareholder's notice shall set forth (i) as to each person whom the shareholder proposes to nominate for election or reelection as a Trustee all information relating to such person that is required to be disclosed in solicitations of proxies for election of Trustees in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Trustee if elected); (ii) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (x) the name and address of such shareholder, as they appear on the Trust's books, and of such beneficial owner and (y) the number of each class of shares of the Trust which are owned beneficially and of record by such shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)
(2) of this Section 13 to the contrary, in the event that the number of Trustees
to be elected to the Board of Trustees is increased and there is no public
announcement by the Trust naming all of the nominees for Trustee or specifying
the size of the increased Board of Trustees at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a shareholder's notice
required by this Section 13(a) shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the secretary at the principal executive offices of the Trust
not later than the close of business on the tenth day following the day on which
such public announcement is first made by the Trust.
(b) SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Trust's notice of meeting. Nominations of persons
for election to the Board of Trustees may be made at a special meeting of
shareholders at which Trustees are to be elected (i) pursuant to the Trust's
notice of meeting (ii) by or at the direction of the Board of Trustees or (iii)
provided that the Board of Trustees has determined that Trustees shall be
elected at such special meeting, by any shareholder of the Trust who was a
shareholder of record both at the time of giving of notice provided for in this
Section 13(b) and at the time of the special meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 13(b). In the event the Trust calls a special meeting of shareholders
for the purpose of electing one or more Trustees to the Board of Trustees, any
such shareholder may nominate a person or persons (as the case may be) for
election to such position as specified in the Trust's notice of meeting, if the
shareholder's notice containing the information required by paragraph (a) (2) of
this Section 13 shall be delivered to the secretary at the principal executive
offices of the Trust not earlier than the close of business on the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the tenth day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Trustees to be elected at such
meeting. In no event shall the public announcement of a postponement or
adjournment of a special
meeting to a later date or time commence a new time period for the giving of a shareholder's notice as described above.
(c) GENERAL. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 13 shall be eligible to serve as Trustees and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 13. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 13 and, if any proposed nomination or business is not in compliance with this Section 13, to declare that such nomination or proposal shall be disregarded.
(2) For purposes of this Section 13, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the Trust with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 13, a shareholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 13. Nothing in this Section 13 shall be deemed to affect any rights of shareholders to request inclusion of proposals in, nor the rights of the Trust to omit a proposal from, the Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS. Any action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by shareholders entitled to cast a sufficient number of votes to approve the matter, as required by statute, the Declaration of Trust of the Trust or these Bylaws, and such consent is filed with the minutes of proceedings of the shareholders.
Section 15. VOTING BY BALLOT. Voting on any question or in any election may be VIVA VOCE unless the presiding officer shall order or any shareholder shall demand that voting be by ballot.
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER. The business and affairs of the Trust shall be managed under the direction of its Board of Trustees. A Trustee shall be an individual at least 21 years of age who is not under legal disability. In case of failure to elect Trustees at an annual meeting of the shareholders, the Trustees holding over shall continue to direct the management of the business and affairs of the Trust until their successors are elected and qualify.
Section 2. NUMBER. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Trustees may establish, increase or decrease the number of Trustees.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Trustees shall be held immediately after and at the same place as the annual meeting of shareholders, no notice other than this Bylaw being necessary. The Trustees may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Trustees without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Trustees may be called by or at the request of the chairman of the board or the president or by a majority of the Trustees then in office. The person or persons authorized to call special meetings of the Trustees may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Trustees called by them.
Section 5. NOTICE. Notice of any special meeting shall be given by
written notice delivered personally, telegraphed, communicated by telephone
call, facsimile-transmitted or mailed to each Trustee at his business or
residence address. Personally delivered or telegraphed notices shall be given at
least two days prior to the meeting. Notice by mail shall be given at least
five days prior to the meeting. Telephone or facsimile-transmission notice
shall be given at least 24 hours prior to the meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail properly
addressed, with postage thereon prepaid. If given by telegram, such notice
shall be deemed to be given when the telegram is delivered to the telegraph
company. Telephone notice shall be deemed given when the Trustee is personally
given such notice in a telephone call to which he is a party.
Facsimile-transmission notice shall be deemed given upon completion of the
transmission of the message to the number given to the Trust by the Trustee and
receipt of a completed answer-back indicating receipt. Neither the business to
be transacted at, nor the purpose of, any annual, regular or special meeting of
the Trustees need be stated in the notice, unless specifically required by
statute or these Bylaws.
Section 6. QUORUM. A majority of the entire Board of Trustees shall constitute a quorum for transaction of business at any meeting of the Trustees, provided that, if less than a majority of such Trustees are present at said meeting, a majority of the Trustees present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the Declaration of Trust or these Bylaws, the vote of a majority of a particular group of Trustees is required for action, a quorum must also include a majority of such group.
The Trustees present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough Trustees to leave less than a quorum.
Section 7. VOTING. The action of the majority of the Trustees present at a meeting at which a quorum is present shall be the action of the Trustees, unless the concurrence of a greater proportion is required for such action by applicable statute.
Section 8. TELEPHONE MEETINGS. Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 9. INFORMAL ACTION BY TRUSTEES. Any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting, if a consent in writing to such action is signed by each Trustee and such written consent is filed with the minutes of proceedings of the Trustees.
Section 10. VACANCIES. If for any reason any or all the Trustees cease to be Trustees, such event shall not terminate the Trust or affect these Bylaws or the powers of the remaining Trustees hereunder (even if fewer than three Trustees remain). Any vacancy (including a vacancy created by an increase in the number of Trustees or the removal of a Trustee) may be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the Trustees. Any individual so elected as Trustee shall hold office until the next annual meeting of shareholders and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation or removal.
Section 11. COMPENSATION; FINANCIAL ASSISTANCE.
(a) COMPENSATION. Trustees shall not receive any stated salary for their services as Trustees but, by resolution of the Trustees, may receive compensation per year and/or per meeting
and/or per visit to real property owned or to be acquired by the Trust and for any service or activity they performed or engaged in as Trustees. Trustees may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Trustees or of any committee thereof; and for their expenses, if any, in connection with each property visit and any other service or activity performed or engaged in as Trustees; but nothing herein contained shall be construed to preclude any Trustees from serving the Trust in any other capacity and receiving compensation therefor.
(b) FINANCIAL ASSISTANCE TO TRUSTEES. The Trust may lend money to, guarantee an obligation of or otherwise assist a Trustee or a trustee of its direct or indirect subsidiary. The loan, guarantee or other assistance may be with or without interest, unsecured, or secured in any manner that the Board of Trustees approves, including a pledge of Shares.
Section 12. REMOVAL OF TRUSTEES. The shareholders may, at any time, remove any Trustee in the manner provided in the Declaration of Trust.
Section 13. LOSS OF DEPOSITS. No Trustee shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or shares have been deposited.
Section 14. SURETY BONDS. Unless required by law, no Trustee shall be obligated to give any bond or surety or other security for the performance of any of his duties.
Section 15. RELIANCE. Each Trustee, officer, employee and agent of the Trust shall, in the performance of his duties with respect to the Trust, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel or upon reports made to the Trust by any of its officers or employees or by the adviser, accountants, appraisers or other experts or consultants selected by the Trustees or officers of the Trust, regardless of whether such counsel or expert may also be a Trustee.
Section 16. INTERESTED TRUSTEE TRANSACTIONS. Section 2-419 of the Maryland General Corporation Law (the "MGCL") shall be available for and apply to any contract or other transaction between the Trust and any of its Trustees or between the Trust and any other trust, corporation, firm or other entity in which any of its Trustees is a trustee or director or has a material financial interest.
Section 17. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS. The Trustees shall have no responsibility to devote their full time to the affairs of the Trust. Any Trustee or officer, employee or agent of the Trust (other than a full-time officer, employee or agent of the Trust), in his personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar or in addition to those of or relating to the Trust.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Trustees may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee and other committees, composed of one or more Trustees, to serve at the pleasure of the Trustees.
Section 2. POWERS. The Trustees may delegate to committees appointed under Section 1 of this Article any of the powers of the Trustees, except as prohibited by law.
Section 3. MEETINGS. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another Trustee to act in the place of such absent member. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Trustees.
One-third, but not less than one, of the members of any committee shall be present in person at any meeting of such committee in order to constitute a quorum for the transaction of business at such meeting, and the act of a majority present shall be the act of such committee. The Board of Trustees may designate a chairman of any committee, and such chairman or any member of any committee may fix the time and place of its meetings unless the Board shall otherwise provide. In the absence or disqualification of any member of any such committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another Trustee to act at the meeting in the place of such absent or disqualified members.
Each committee shall keep minutes of its proceedings and shall report the same to the Board of Trustees at the next succeeding meeting, and any action by the committee shall be subject to revision and alteration by the Board of Trustees, provided that no rights of third persons shall be affected by any such revision or alteration.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted to be taken at any meeting of a committee of the Trustees may be taken without a meeting, if a consent in writing to such action is signed by each member of the committee and such written consent is filed with the minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of Trustees shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent, disqualified or removed member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust shall include a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, a chief executive officer, a chief operating officer, a chief financial officer, one or more vice presidents, one or more assistant secretaries and one or more assistant treasurers. In addition, the Trustees may from time to time appoint such other officers with such powers and duties as they shall deem necessary or desirable. The officers of the Trust shall be elected annually by the Trustees at the first meeting of the Trustees held after each annual meeting of shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until his successor is elected and qualifies or until his death, resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. In their discretion, the Trustees may leave unfilled any office except that of president and secretary. Election of an officer or agent shall not of itself create contract rights between the Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Trust may be removed by the Trustees if in their judgment the best interests of the Trust would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Trust may
resign at any time by giving written notice of his resignation to the Trustees, the chairman of the board, the president or the secretary. Any resignation shall take effect at any time subsequent to the time specified therein or, if the time when it shall become effective is not specified therein, immediately upon its receipt. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Trust.
Section 3. VACANCIES. A vacancy in any office may be filled by the Trustees for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate a chief executive officer from among the elected officers. The chief executive officer shall have responsibility for implementation of the policies of the Trust, as determined by the Trustees, and for the administration of the business affairs of the Trust. In the absence of both the chairman and vice chairman of the board, the chief executive officer shall preside over the meetings of the Trustees and of the shareholders at which he shall be present.
Section 5. CHIEF OPERATING OFFICER. The Trustees may designate a chief operating officer from among the elected officers. Said officer will have the responsibilities and duties as set forth by the Trustees or the chief executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Trustees may designate a chief financial officer from among the elected officers. Said officer will have the responsibilities and duties as set forth by the Trustees or the chief executive officer.
Section 7. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The chairman of the board shall preside over the meetings of the Trustees and of the shareholders at which he shall be present and shall in general oversee all of the business and affairs of the Trust. In the absence of the chairman of the board, the vice chairman of the board shall preside at such meetings at which he shall be present. The chairman and the vice chairman of the board may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Trustees or by these Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed. The chairman of the board and the vice chairman of the board shall perform such other duties as may be assigned to him or them by the Trustees.
Section 8. PRESIDENT. In the absence of the chairman, the vice chairman of the board and the chief executive officer, the president shall preside over the meetings of the Trustees and of
the shareholders at which he shall be present. In the absence of a designation of a chief executive officer by the Trustees, the president shall be the chief executive officer and shall be ex officio a member of all committees that may, from time to time, be constituted by the Trustees. The president may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Trustees or by these Bylaws to some other officer or agent of the Trust or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Trustees from time to time.
Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to him by the president or by the Trustees. The Trustees may designate one or more vice presidents as executive vice president or as vice president for particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Trustees and committees of the Trustees in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the trust records and of the seal of the Trust; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the secretary by such shareholder; (e) have general charge of the share
transfer books of the Trust; and (f) in general perform such other duties as
from time to time may be assigned to him by the chief executive officer, the
president or by the Trustees.
Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of the Trust and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Trust and shall deposit all moneys and other valuable effects in the name and to the credit of the Trust in such depositories as may be designated by the Trustees.
The treasurer shall disburse the funds of the Trust as may be ordered by the Trustees, taking proper vouchers for such disbursements, and shall render to the president and Trustees, at the regular meetings of the Trustees or whenever they may require
it, an account of all his transactions as treasurer and of the financial condition of the Trust.
If required by the Trustees, the treasurer shall give the Trust a bond in such sum and with such surety or sureties as shall be satisfactory to the Trustees for the faithful performance of the duties of his office and for the restoration to the Trust, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, moneys and other property of whatever kind in his possession or under his control belonging to the Trust.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the president or the Trustees. The assistant treasurers shall, if required by the Trustees, give bonds for the faithful performance of their duties in such sums and with such surety or sureties as shall be satisfactory to the Trustees.
Section 13. SALARIES. The salaries and other compensation of the officers shall be fixed from time to time by the Trustees and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a Trustee.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Trust and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document executed by one or more of the Trustees or by an authorized person shall be valid and binding upon the Trustees and upon the Trust when authorized or ratified by action of the Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Trust shall be signed by such officer or agent of the Trust in such manner as shall from time to time be determined by the Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed shall be deposited from time to time to the credit of the Trust in such banks, trust companies or other depositories as the Trustees may designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Each shareholder shall be entitled to a certificate or certificates which shall represent and certify the number of shares of each class of beneficial interests held by him in the Trust. Each certificate shall be signed by the chairman, the president or a vice president and countersigned by the secretary or an assistant secretary or the treasurer or an assistant treasurer and may be sealed with the seal, if any, of the Trust. The signatures may be either manual or facsimile. Certificates shall be consecutively numbered; and if the Trust shall, from time to time, issue several classes of shares, each class may have its own number series. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. Each certificate representing shares which are restricted as to their transferability or voting powers, which are preferred or limited as to their dividends or as to their allocable portion of the assets upon liquidation or which are redeemable at the option of the Trust, shall have a statement of such restriction, limitation, preference or redemption provision, or a summary thereof, plainly stated on the certificate. In lieu of such statement or summary, the Trust may set forth upon the face or back of the certificate a statement that the Trust will furnish to any shareholder, upon request and without charge, a full statement of such information.
Section 2. TRANSFERS. Certificates shall be treated as negotiable and title thereto and to the shares they represent shall be transferred by delivery thereof to the same extent as those of a Maryland stock corporation. Upon surrender to the Trust or the transfer agent of the Trust of a share certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Trust shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
The Trust shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of beneficial interest of the Trust will be subject in all respects to the Declaration of Trust and all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Trustees may direct a new certificate to be issued in place of any certificate previously issued by the Trust alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing the issuance of a new certificate, an officer designated by the Trustees may, in his discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or the owner's legal representative to advertise the same in such manner as he shall require and/or to give bond, with sufficient surety, to the Trust to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Trustees may set, in advance, a record date for the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or determining shareholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of shareholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of shareholders not less than ten days, before the date on which the meeting or particular action requiring such determination of shareholders of record is to be held or taken.
In lieu of fixing a record date, the Trustees may provide that the share transfer books shall be closed for a stated period but not longer than 20 days. If the share transfer books are closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days before the date of such meeting.
If no record date is fixed and the share transfer books are not closed for the determination of shareholders, (a) the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day on which the notice of meeting is mailed or the 30th day before the meeting, whichever is the closer date to the meeting; and (b) the record date for the determination of shareholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the Trustees, declaring the dividend or allotment of rights, is adopted.
When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except when (i) the determination has been made through the closing of the transfer books and the stated period of closing has expired
or (ii) the meeting is adjourned to a date more than 120 days after the record date fixed for the original meeting, in either of which case a new record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Trust shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate share ledger containing the name and address of each shareholder and the number of shares of each class held by such shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Trustees may issue fractional shares or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the Declaration of Trust or these Bylaws, the Trustees may issue units consisting of different securities of the Trust. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Trust, except that the Trustees may provide that for a specified period securities of the Trust issued in such unit may be transferred on the books of the Trust only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Trustees shall have the power, from time to time, to fix the fiscal year of the Trust by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the shares of beneficial interest of the Trust may be authorized and declared by the Trustees, subject to the provisions of law and the Declaration of Trust. Dividends and other distributions may be paid in cash, property or shares of the Trust, subject to the provisions of law and the Declaration of Trust.
Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any funds of the Trust available for dividends or other distributions such sum or sums as the Trustees may from time to time, in their absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for repairing or maintaining any property of the Trust, for investment or for such other purpose as the Trustees shall determine to be in
the best interest of the Trust, and the Trustees may modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Declaration of Trust, the Board of Trustees may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Trust as it shall deem appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of a seal by the Trust. The seal shall have inscribed thereon the name of the Trust and the year of its formation. The Trustees may authorize one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute the document on behalf of the Trust.
ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Maryland law in effect from time to time, the Trust shall indemnify (a) any Trustee or officer or any former Trustee or officer (including among the foregoing, for all purposes of this Article XII and without limitation, any individual who, while a Trustee or officer and at the express request of the Trust, serves or has served another real estate investment trust, corporation, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee of such real estate investment trust, corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) who has been successful, on the merits or otherwise, in the defense of a proceeding to which he was made a party by reason of service in such capacity, against reasonable expenses incurred by him in connection with the proceeding and (b) any Trustee or officer or any former Trustee or officer against any
claim or liability to which he may become subject by reason of such status unless it is established that (i) his act or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, (ii) he actually received an improper personal benefit in money, property or services or (iii) in the case of a criminal proceeding, he had reasonable cause to believe that his act or omission was unlawful. In addition, the Trust shall, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse, in advance of final disposition of a proceeding, reasonable expenses incurred by a Trustee or officer or former Trustee or officer made a party to a proceeding by reason of such status, provided that, the Trust shall have received (i) a written affirmation by the Trustee or officer of his good faith belief that he has met the applicable standard of conduct necessary for indemnification by the Trust as authorized by these Bylaws and (ii) a written undertaking by or on his behalf to repay the amount paid or reimbursed by the Trust if it shall ultimately be determined that the applicable standard of conduct was not met. The Trust may, with the approval of its Trustees, provide such indemnification or payment or reimbursement of expenses to any Trustee or officer or any former Trustee or officer who served a predecessor of the Trust and to any employee or agent of the Trust or a predecessor of the Trust. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Declaration of Trust or these Bylaws inconsistent with this Article, shall apply to or affect in any respect the applicability of this Article with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.
Any indemnification or payment or reimbursement of the expenses permitted by these Bylaws shall be furnished in accordance with the procedures provided for indemnification or payment or reimbursement of expenses, as the case may be, under Section 2-418 of the MGCL for directors of Maryland corporations. The Trust may provide to Trustees or officers such other and further indemnification or payment or reimbursement of expenses, as the case may be, to the fullest extent permitted by the MGCL, as in effect from time to time, for directors of Maryland corporations.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Declaration of Trust or Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Trustees shall have the exclusive power to alter, amend or repeal any provision of these Bylaws and to make new Bylaws.
ARTICLE XV
MISCELLANEOUS
All references to the Declaration of Trust shall include any amendments thereto.
[SULLIVAN & CROMWELL LETTERHEAD]
November 5, 1997
Entertainment Properties Trust,
One Kansas City Place,
1200 Main Street, Suite 3250,
Kansas City, Missouri 64105.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the "Act") of 15,852,000 common shares (the "Securities") of beneficial interest, par value $.01 per share, of Entertainment Properties Trust, a Maryland real estate investment trust(the "Company"), we, as your counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion, when the registration statement relating to the Securities (the "Registration Statement") has become effective under the Act, the terms of the sale of the Securities have been duly
established in conformity with the Company's declaration of trust, and the
Securities have been duly issued and sold as contemplated by the Registration
Statement, the Securities will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of Maryland, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. With respect to all
matters of Maryland law, we have relied upon the opinion, dated November 5,
1997, of Ballard Spahr Andrews & Ingersoll, and our opinion is subject to the
same assumptions, qualifications and limitations with respect to such matters as
are contained in such opinion of Ballard Spahr Andrews & Ingersoll.
Also, we have relied as to certain matters on information obtained
from public officials, officers of the Company and other sources believed by us
to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
Shares" in the Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
Sullivan & Cromwell
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
FILE NUMBER
862875
November 5, 1997
Entertainment Properties Trust
One Kansas City Place
1200 Main Street
Suite 3250
Kansas City, Missouri 64105
Ladies and Gentlemen:
We have served as Maryland counsel to Entertainment Properties Trust, a Maryland real estate investment trust (the "Company"), in connection with certain matters of Maryland law arising out of the registration of up to 15,852,000 common shares (the "Shares") of beneficial interest, $.01 par value per share, of the Company ("Common Shares"), including up to 2,052,000 Shares which may be issued pursuant to the exercise of an over-allotment option, covered by the above-referenced Registration Statement, and all amendments thereto (the "Registration Statement"), under the Securities Act of 1933, as amended (the "1933 Act"). Unless otherwise defined herein, capitalized terms used shall have the meanings assigned to them in the Registration Statement.
In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the "Documents"):
1. The Registration Statement and the related form of prospectus included therein in the form in which it was transmitted to the Securities and Exchange Commission (the "Commission") under the 1933 Act;
2. An unexecuted copy of the Amended and Restated Declaration of Trust of the Company, provided to us by Sullivan & Cromwell, counsel to the Company;
3. The Bylaws of the Company, certified as of a recent date by its Secretary;
4. Resolutions adopted by the Board of Trustees of the Company relating to the sale, issuance and registration of the Common Shares, certified as of a recent date by the Secretary of the Company;
5. The form of certificate evidencing a Common Share, certified as of a recent date by the Secretary of the Company;
6. A certificate of the SDAT as to the good standing of the
Company, dated November 5, 1997;
7. A certificate executed by David M. Brain, Secretary of the Company, dated November 5, 1997; and
8. Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth in this letter, subject to the assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed, and so far as is known to us there are no facts inconsistent with, the following:
1. Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party's obligations set forth therein are legal, valid and binding.
2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. Each individual executing any of the Documents, whether on behalf of such individual or any other person, is legally competent to do so.
4. All Documents submitted to us as originals are authentic. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all such Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All statements and information contained in the Documents are true and complete. There are no oral or written modifications or amendments to the Documents, and there has been no waiver of any of the provisions of the Documents, by action or conduct of the parties or otherwise.
5. The Amended and Restated Declaration of Trust will be filed with and accepted for record by the SDAT.
The phrase "known to us" is limited to the actual knowledge, without independent inquiry, of the lawyers at our firm who have performed legal services in connection with the issuance of this opinion.
Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
1. The Company is a real estate investment trust duly formed and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.
2. The Common Shares have been duly authorized and when issued, sold and delivered against payment therefor in the manner described in the Registration Statement and in accordance with the resolutions of the Board of Trustees of the Company authorizing their issuance, will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the substantive laws of the State of Maryland and we do not express any opinion herein concerning any
other law. We express no opinion as to compliance with the securities (or "blue sky") laws or the real estate syndication laws of the State of Maryland.
We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Commission as an exhibit to the Registration Statement, and, accordingly, may not be relied upon by, quoted in any manner to, or delivered to any other person or entity without, in each instance, our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act.
Very truly yours,
Ballard Spahr Andrews &
Ingersoll
[SULLIVAN & CROMWELL LETTERHEAD]
November 5, 1997
Entertainment Properties Trust,
One Kansas City Place,
1200 Main Street,
Suite 3250,
Kansas City, Missouri 64105.
Dear Sirs:
We have acted as your counsel in connection with the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of
15,852,000 common shares of beneficial interest, $.01 par value per share, of
Entertainment Properties Trust (the "Trust").
In rendering this opinion, we have reviewed such documents as we have
considered necessary or appropriate. In addition, in rendering this opinion, we
have relied upon the statements and representations contained in the
certificate, dated November 5, 1997 (the "Certificate"), provided to us by David
M. Brain on behalf of the Trust.
In rendering this opinion we have also assumed, with your approval,
that (I) the statements and representations made in the Certificate are and will
continue to be true and correct and (II) the Certificate has
Entertainment Properties Trust -2-
been executed by an appropriate and authorized officer of the Trust.
Based on the foregoing and in reliance thereon and subject thereto and
on an analysis of the Internal Revenue Code of 1986 (the "Code"), Treasury
Regulations thereunder, judicial authority and current administrative rulings
and such other laws and facts as we have deemed relevant and necessary, we
hereby confirm (i) our opinion that, commencing with its taxable year ending
December 31, 1997, the Trust has been organized in conformity with the
requirements for qualification as a real estate investment trust ("REIT") under
the Code, and its proposed method of operation will enable it to satisfy the
requirements for qualification and taxation as a REIT and (ii) our opinion set
forth under the caption "Federal Income Tax Considerations" in the Prospectus of
the Trust included in the Registration Statement (No. 333-35281) on Form S-11
under the Securities Act of 1933 (the "Prospectus") filed by the Trust with the
Securities and Exchange Commission of the United States.
The Trust's qualification as a REIT will depend upon the continuing
satisfaction by the Trust of the requirements of the Code relating to
qualification for REIT status; which requirements include those that are
dependent upon actual operating results, distribution levels, diversity of stock
ownership, asset composition, source of income and recordkeeping. We do not
undertake to monitor whether the Trust actually has satisfied or will satisfy
the various qualification tests, and we express no opinion
Entertainment Properties Trust -3-
concerning whether the Trust actually has satisfied or will satisfy these
various qualifications tests.
We hereby consent to the filing with the Securities and Exchange
Commission of this opinion as an exhibit to the Registration Statement of which
the Prospectus is a part and the reference to us in the Prospectus under the
caption "Federal Income Tax Considerations". In giving such consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
Sullivan & Cromwell
ENTERTAINMENT PROPERTIES TRUST
1997 SHARE INCENTIVE PLAN
1. PURPOSE. The purpose of the Entertainment Properties Trust 1997 Share Incentive Plan (the "Plan") is to enhance the ability of Entertainment Properties Trust (the "Company") and its subsidiaries to attract and retain employees and trustees of outstanding ability and to provide employees and trustees with an interest in the Company parallel to that of the Company's shareholders.
2. DEFINITIONS.
(a) "Award" shall mean an award determined in accordance with the terms of the Plan.
(b) "Board" shall mean the Board of Trustees of the Company.
(c) "Change in Control" shall mean the occurrence of any one of the following events:
(i) individuals who, on the Effective Date, constitute the Board (the "Incumbent Trustees") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a trustee subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Trustees then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for trustee, without written objection to such nomination) shall be an Incumbent Trustee; PROVIDED, HOWEVER, that no
individual initially elected or nominated as a trustee of the Company as a result of an actual or threatened election contest with respect to trustees or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Trustee;
(ii) any "person" (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange
Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the
Company's then outstanding securities eligible to vote for the
election of the Board (the "Company Voting Securities"); PROVIDED,
HOWEVER, that the event described in this paragraph (ii) shall not be
deemed to be a Change in Control by virtue of any of the following
acquisitions: (A) by the Company or any Subsidiary, (B) by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any Subsidiary, (C) by any underwriter temporarily
holding securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii)), or (E) a transaction (other than one described in (iii) below)
in which Company Voting Securities are acquired from the Company,
if a majority of the Incumbent Trustees approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this paragraph (ii);
(iii) the shareholders of the Company approve a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation or any person which beneficially owned, immediately prior to such Business Combination, directly or indirectly, 25% or more of the Company Voting Securities (a "Company 25% Shareholder")) would become the beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and no Company 25% Shareholder would increase its percentage of such total voting power and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Trustees at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; PROVIDED, THAT if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean a committee of at least two members of the Board appointed by the Board to administer the Plan and to perform the functions set forth herein and who are "non-employee directors" within the meaning of Rule 16b-3 as promulgated under Section 16 of the Exchange Act and who are also "outside directors" within the meaning of Section 162(m) of the Code.
(f) "Common Share" shall mean the common shares of the beneficial interest, $0.01 par value per share, of the Company.
(g) "Covered Employee" shall have the meaning set forth in
Section 162(m)(3) of the Code.
(h) "Fair Market Value" per share as of a particular date shall mean the last reported sale price (on the day immediately preceding such date) of the Common Shares on the New York Stock Exchange (or any other exchange
or national market system upon which price quotations for the Company's Common Shares are regularly available); PROVIDED, HOWEVER, that prior to the Initial Public Offering, Fair Market Value shall mean the price per share in the Initial Public Offering.
(i) "Immediate Family Member" shall mean, except as otherwise determined by the Committee, a Participant's children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse, siblings, in-laws and persons related by reason of legal adoption.
(j) "Initial Public Offering" shall mean the Company's initial public offering of Common Shares pursuant to its registration statement filed with the Securities and Exchange Commission.
(k) "Incentive Stock Option" shall mean a stock option which is intended to meet the requirements of Section 422 of the Code.
(l) "Non-Employee Trustee" shall mean a member of the Board who is not an employee of the Company or any Subsidiary; PROVIDED, HOWEVER, that such term shall not include the Company's Chairman of the Board.
(m) "Ownership Limit" shall have the same meaning as provided in the Company's declaration of trust.
(n) "Nonqualified Stock Option" shall mean a stock option which is not intended to be an Incentive Stock Option.
(o) "Option" shall mean either an Incentive Stock Option or a Nonqualified Stock Option.
(p) "Participant" shall mean an employee or trustee of the Company or its Subsidiaries who is selected to participate in the Plan in accordance with Section 5.
(q) "Subsidiary" shall mean any subsidiary of the Company that is a corporation and which at the time qualifies as a "subsidiary corporation" within the meaning of Section 424(f) of the Code.
3. SHARES SUBJECT TO THE PLAN. Subject to adjustment in accordance with Section 19, the total of the number of Common Shares which shall be available for the grant of Awards under the Plan shall not exceed 1,500,000 shares; PROVIDED, THAT, for purposes of this limitation, any Common Shares subject to an Option which is canceled or expire without exercise shall again become available for Awards under the Plan. Upon forfeiture of Awards in accordance with the provisions of the Plan, and the terms and conditions of the Award, such shares shall no longer be counted in any determination of the number of shares available under the Plan and shall be available for subsequent Awards. Subject to adjustment in accordance with Section 19, no employee shall be granted, during the term of this Plan, Options to purchase more than 750,000 Common Shares. Notwithstanding the foregoing, no participant shall be granted an Award (or be permitted to exercise an Award) if upon grant (or exercise) the Ownership Limit for that individual would be exceeded. Common Shares available for issue or distribution under the Plan shall be authorized and unissued shares or shares reacquired by the Company in any manner.
4. ADMINISTRATION. (a) The Plan shall be administered by the Board, unless and until the Board shall
appoint a Committee to administer the Plan. All references to the Committee hereinafter shall mean the Board if no such Committee has been appointed.
(b) The Committee shall (i) approve the selection of
Participants, (ii) determine the type of Awards to be made to Participants,
(iii) determine the number of Common Shares subject to Awards, (iv) determine
the terms and conditions of any Award granted hereunder (including, but not
limited to, any restriction and forfeiture conditions on such Award) and (v)
have the authority to interpret the Plan, to establish, amend, and rescind any
rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements entered into hereunder, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry it into effect.
(c) Any action of the Committee shall be final, conclusive and binding on all persons, including the Company and its Subsidiaries and shareholders, Participants and persons claiming rights from or through a Participant.
(d) The Committee may delegate to officers or employees of the Company or any Subsidiary, and to service providers, the authority, subject to such terms as the Committee shall determine, to perform administrative functions with respect to the Plan and Award agreements.
(e) Members of the Committee and any officer or employee of the Company or any Subsidiary acting at the
direction of, or on behalf of, the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified by the Company with respect to any such action or determination.
5. ELIGIBILITY. Individuals eligible to receive Awards under the Plan shall be the officers and other key employees of the Company and its Subsidiaries selected by the Committee. In addition, all Non-Employee Trustees shall be eligible to receive Options as provided in Section 12 hereof.
6. AWARDS. Awards under the Plan may consist of Options, restricted Common Shares, restricted Common Share units, performance shares, performance share units, purchases, share awards or other awards based on the value of the Common Shares. Awards shall be subject to the terms and conditions of the Plan and shall be evidenced by an agreement containing such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.
7. OPTIONS. Options may be granted under the Plan in such form as the Committee may from time to time approve pursuant to terms set forth in an Option agreement. The Committee may alter or waive, at any time, any term or condition of an Option that is not mandatory under the Plan.
(a) TYPES OF OPTIONS. Each Option agreement shall state whether or not the Option will be treated as an Incentive Stock Option or Nonqualified Stock Option.
(b) OPTION PRICE. The purchase price per share of the Common Shares purchasable under an Option shall
be determined by the Committee; PROVIDED, HOWEVER, the Option price for Incentive Stock Options will be not less than 100% of the Fair Market Value of the Common Shares on the date of the grant of the Option and in the case of Incentive Stock Options granted to an employee owning stock possessing more than 10% of the total combined voting power of all classes of shares of the Company and its Subsidiaries (a "10% Shareholder") the price per share specified in the agreement relating to such Option shall not be less than 110% of the Fair Market Value per share of the Common Shares on the date of grant.
(c) OPTION PERIOD. The term of each Option shall be fixed by the Committee, but no Option shall be exercisable after the expiration of 10 years from the date the Option is granted, PROVIDED, HOWEVER, that in the case of Incentive Stock Options granted to 10% Shareholders, the term of such Option shall not exceed 5 years from the date of grant.
(d) EXERCISABILITY. Each Option shall vest and become exercisable at a rate determined by the Committee at or subsequent to grant; PROVIDED, HOWEVER, that no Option granted under this Section 7 shall become exercisable earlier than the time that the Plan is approved by the shareholders of the Company in accordance with Section 24; PROVIDED, FURTHER, that upon the occurrence of a Change in Control before such shareholder approval, all Incentive Stock Options granted hereunder shall automatically become Nonqualified Stock Options and all Options shall vest and become immediately exercisable in accordance with Section 13.
(e) METHOD OF EXERCISE. Options may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of Common Shares to be purchased. Such notice shall be accompanied by
the payment in full of the Option purchase price. Such payment shall be made:
(a) in cash, or (b) to the extent authorized by the Committee, by surrender of
Common Shares owned by the holder of the Option (including Common Shares
otherwise receivable upon exercise of the Option), or (c) through simultaneous
sale through a broker of shares acquired on exercise, as permitted under
Regulation T of the Federal Reserve Board, or (d) through additional methods
prescribed by the Committee, or (e) by a combination of any such methods.
8. RESTRICTED COMMON SHARES. The Committee may from time to time award restricted Common Shares under the Plan to eligible employees. Shares of restricted Common Shares may not be sold, assigned, transferred or otherwise disposed of, or pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose, for such period (the "Restricted Period") as the Committee shall determine. The Committee may define the Restricted Period in terms of the passage of time or in any other manner it deems appropriate. The Committee may alter or waive at any time any term or condition of restricted Common Shares that is not mandatory under the Plan.
Unless otherwise determined by the Committee, upon termination of a Participant's employment for any reason prior to the end of the Restricted Period, the restricted
Common Shares shall be forfeited and the Participant shall have no right with respect to the Award.
Except as restricted under the terms of the Plan and any Award agreement, any employee awarded restricted Common Shares shall have all the rights of a shareholder including, without limitation, the right to vote restricted Common Shares.
If a share certificate is issued in respect of restricted Common Shares, the certificate shall be registered in the name of the employee but shall be held by the Company for the account of the employee until the end of the Restricted Period.
The Committee may also award restricted Common Shares in the form of restricted Common Share units having a value equal to an identical number of Common Shares. Payment of restricted Common Share units shall be made in Common Shares or in cash or in a combination thereof (based upon the Fair Market Value of Common Shares on the day the Restricted Period expires), all as determined by the Committee in its sole discretion.
9. PERFORMANCE SHARES. Performance shares may be granted in the form of actual Common Shares or Common Share units having a value equal to an identical number of Common Shares. In the event that a share certificate is issued in respect of performance shares, such certificate shall be registered in the name of the employee but shall be held by the Company until the time the performance shares are earned. The performance conditions and the length of the performance period shall be determined by the Committee but in no event may a performance period be less than twelve
months. The Committee shall determine in its sole discretion whether performance shares granted in the form of Common Share units shall be paid in cash, Common Shares, or a combination of cash and Common Shares.
Awards of performance shares to a Covered Employee shall be subject to performance goals. Performance goals may be expressed in terms of one or more of the following: revenue, revenue growth, earnings before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA growth, funds from operations, funds from operations per share and per share growth, cash available for distribution, cash available for distribution per share and per share growth, net earnings, earnings per share and per share growth, return on equity, return on assets, share price performance on an absolute basis and relative to an index, of earnings per share or improvements in the Company's attainment of expense levels, and implementing or completion of critical projects. The Committee shall establish the relevant performance conditions within 90 days after the commencement the performance period (or such later date as may be required or permitted by Section 162(m) of the Code). The Committee may, in its discretion, reduce or eliminate the amount of payment with respect to an Award of performance shares to a Covered Employee, notwithstanding the achievement of a specified performance condition. The maximum number of performance shares subject to any Award to a Covered Employee is 250,000 for each 12 months during the performance period (or, to the extent the Award is paid in cash, the maximum dollar amount of any such Award is the equivalent cash value of such number of Common Shares at the closing price on the last trading day of the performance
period). An Award of performance shares to a Participant who is a Covered Employee shall (unless the Committee determines otherwise) provide that in the event of the employee's termination of employment prior to the end of the performance period for any reason, such Award will be payable only (A) if the applicable performance conditions are achieved and (B) to the extent, if any, as the Committee shall determine.
10. SHARE PURCHASES. The Committee may authorize eligible individuals to purchase Common Shares in the Company at a price equal to the Fair Market Value of the Common Shares at the time of grant. Any such offer may be subject to the conditions and terms the Committee may impose. The Company may make loans available to eligible employees in connection with the purchase of Common Shares, as the Committee, in its discretion, may determine. The terms and conditions of any such loans shall be determined by the Committee, in its sole discretion.
11. SHARE AWARDS. Subject to such performance and employment
conditions as the Committee may determine, awards of Common Shares or awards
based on the value of the Common Shares may be granted either alone or in
addition to other Awards granted under the Plan. Any Awards under this
Section 11 and any Common Shares covered by any such Award may be forfeited to
the extent so provided in the Award agreement, as determined by the Committee.
Payment of Common Share awards made under this Section which are based on the
value of Common Shares may be made in Common Shares or in cash or in a
combination thereof (based upon the Fair Market Value of Common Shares on the
date of payment), all as determined by the Committee in its sole discretion.
12. NON-EMPLOYEE TRUSTEE STOCK OPTIONS.
(a) INITIAL GRANT. Nonqualified Stock Options to purchase 10,000 Common Shares shall be granted automatically to each Non-Employee Trustee who is a Non-Employee Trustee as of the date of the Initial Public Offering. With respect to each person who becomes a Non-Employee Trustee after such date, Nonqualified Stock Options to purchase 10,000 Common Shares shall be granted automatically to each such Non-Employee Trustee on the day he or she first becomes a Non-Employee Trustee.
(b) SUBSEQUENT OPTIONS. In addition to the Nonqualified Stock Options granted to Non-Employee Trustees under Section 10(a), Nonqualified Stock Options to purchase 3,333 Common Shares shall be granted automatically to each Non-Employee Trustee on the day after the annual meeting of shareholders for 1998 and each annual meeting thereafter; PROVIDED, HOWEVER, he or she continues to serve as a Non-Employee Trustee on such date.
(c) OPTION PRICE. The purchase price for each Option granted under this Section 10 to a Non-Employee Trustee shall be the Fair Market Value of the Common Shares on the date of grant of the Option.
(d) EXERCISABILITY. Each Initial Option granted under Section
10(a) shall become exercisable and vest at a rate of 33-1/3% on each of the
first, second and third anniversaries of the date of grant of such Option;
PROVIDED, HOWEVER, that no Option shall become exercisable earlier than the time
that the Plan is approved by the shareholders of the Company in accordance with
Section 24; PROVIDED, FURTHER, that upon the occurrence of a Change in
Control before such shareholder approval, all Options shall vest and become immediately exercisable in accordance with Section 13. Subsequent Options granted under Section 12(b) shall become exercisable and vest 1 year from the date of the grant thereof.
(e) METHOD OF EXERCISE. Each Option granted under this Section 12 may be exercised in the same manner as provided in Section 7(e).
(f) OPTION PERIOD. Each Option granted under this Section 12 shall terminate 10 years from the date of grant unless sooner terminated by reason of termination of service as a trustee of the Company and its Subsidiaries.
(g) TERMINATION OF TRUSTEE STATUS.
(i) In the event of termination of service as a trustee of the Company and its Subsidiaries for any reason other than death or permanent disability (as determined by the Committee), an Option granted under this Section 12 (to the extent exercisable as of the date of termination) shall be exercisable for 90 days following such termination (but in no event beyond the term of the Option), and shall thereafter terminate.
(ii) In the event of the death of a Non-Employee Trustee while a trustee of the Company or any Subsidiaries, the Option (to the extent exercisable as of the date of death), shall be exercisable by any prior transferee or by the Non-Employee Trustee's designated beneficiary, or if none, the person(s) to whom such Non-Employee Trustee's rights under the Option are transferred
by will or the laws of descent and distribution for 1 year following the date of death (but in no event beyond the term of the Option), and shall thereafter terminate.
(iii) In the event of the termination of service as a trustee of the Company and its Subsidiaries due to permanent disability (as determined by the Committee), the Option (to the extent exercisable as of the date of termination), shall be exercisable for 1 year following such termination of service (but in no event beyond the term of the Option), and shall thereafter terminate.
(h) Except as expressly provided in this Section 12, any Option granted to a Non-Employee Trustee hereunder shall be subject to the terms and conditions of the Plan.
13. CHANGE IN CONTROL. Upon the occurrence of a Change in Control, all Options shall automatically become vested and exercisable in full and all restrictions or performance conditions, if any, on any Common Share awards, restricted Common Shares, restricted Common Share units or performance shares granted hereunder shall automatically lapse. The Committee may, in its discretion, include such further provisions and limitations in any agreement documenting such Awards as it may deem equitable and in the best interests of the Company.
14. FORFEITURE. Notwithstanding anything in the Plan to the contrary, the Committee may provide in any Award agreement that in the event of a serious breach of conduct
by an employee, former employee, trustee, or former trustee (including, without
limitation, any conduct prejudicial to or in conflict with the Company or its
Subsidiaries), or any activity of any employee or former employee in competition
with any of the businesses of the Company or any Subsidiary, the Committee may
(a) cancel any outstanding Award granted to such employee, former employee,
trustee, or former trustee, in whole or in part, whether or not vested, and/or
(b) if such conduct or activity occurs within 1 year following the exercise or
payment of an Award, require such employee, former employee, trustee, or former
trustee to repay to the Company any gain realized or payment received upon the
exercise or payment of such Award (with such gain or payment valued as of the
date of exercise or payment). Such cancellation or repayment obligation shall
be effective as of the date specified by the Committee. Any repayment
obligation may be satisfied in Common Shares or cash or a combination thereof
(based upon the Fair Market Value of Common Shares on the day prior to the date
of payment), and the Committee may provide for an offset to any future payments
owed by the Company or any Subsidiary to the employee, former employee, trustee,
or former trustee if necessary to satisfy the repayment obligation. The
determination of whether an employee, former employee, trustee, or former
trustee has engaged in a serious breach of conduct or any activity in
competition with any of the businesses of the Company or any Subsidiary shall be
determined by the Committee in good faith and in its sole discretion. This
Section 14 shall have no application following a Change in Control.
15. WITHHOLDING. The Company shall have the right to deduct from any
payment to be made pursuant to the Plan the amount of any taxes required by law
to be withheld therefrom, or to require a Participant to pay to the Company in
cash such amount required to be withheld prior to the issuance or delivery of
any Common Shares or the payment of cash under the Plan. Such taxes may be paid
by (a) delivering previously owned Common Shares or (b) having the Company
retain Common Shares which would otherwise be delivered upon exercise or payment
of Awards or (c) any combination of a cash payment or the methods set forth in
(a) and (b) above. For purposes of (a) and (b) above, Common Shares shall be
valued at Fair Market Value determined as of the day immediately prior to
exercise or payment. If and to the extent authorized by the Committee, the
Company may, upon election by a Participant, withhold from any distribution of
Common Shares hereunder, Common Shares with a Fair Market Value in excess of the
Participant's required withholding obligation.
16. NONTRANSFERABILITY, BENEFICIARIES. Unless otherwise determined by the Committee with respect to the transferability of Nonqualified Stock Options by a Participant to his Immediate Family Members (or to trusts or partnerships or limited liability companies established for such family members), no Award shall be assignable or transferable by the Participant, otherwise than by will or the laws of descent and distribution or pursuant to a beneficiary designation, and Options shall be exercisable, during the Participant's lifetime, only by the Participant (or by the Participant's legal representatives in the event of the Participant's incapacity). Each Participant may
designate a beneficiary to exercise any Option held by the Participant at the time of the Participant's death or to be assigned any other Award outstanding at the time of the Participant's death. If no beneficiary has been named by a deceased Participant, any Award held by the Participant at the time of death shall be transferred as provided in his will or by the laws of descent and distribution. Except in the case of the holder's incapacity, an Option may only be exercised by the holder thereof.
17. NO RIGHT TO EMPLOYMENT. Nothing contained in the Plan or in any Award under the Plan shall confer upon any employee any right with respect to the continuation of employment with the Company or any of its Subsidiaries, or interfere in any way with the right of the Company to terminate his or her employment at any time. Nothing contained in the Plan shall confer upon any employee or other person any claim or right to any Award under the Plan.
18. GOVERNMENTAL COMPLIANCE. Each Award under the Plan shall be subject to the requirement that if at any time the Committee shall determine that the listing, registration or qualification of any shares issuable or deliverable thereunder upon any securities exchange or under any Federal or state law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition thereof, or in connection therewith, no such grant or award may be exercised or shares issued or delivered unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
19. ADJUSTMENTS. In the event of any change in the outstanding Common Shares by reason of any share
dividend or split, recapitalization, merger, consolidation, spinoff, combination or exchange of shares or other corporate change, or any distribution to holders of Common Shares other than regular cash dividends, the number or kind of shares available for Options and Awards under the Plan may be adjusted by the Committee as it shall in its sole discretion deem equitable and the number and kind of shares subject to any outstanding Awards granted under the Plan and the purchase price thereof may be adjusted by the Committee as it shall in its sole discretion deem equitable to preserve the value of such Awards.
20. AWARD AGREEMENT. Each Award under the Plan shall be evidenced by an agreement setting forth the terms and conditions, as determined by the Committee, which shall apply to such Award, in addition to the terms and conditions specified in the Plan.
21. AMENDMENT. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that (a) no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable law, regulation or stock exchange rule and (b) except as provided in
Section 19, no amendment shall be made that would adversely affect the rights of
a Participant under an Award theretofore granted, without such Participant's
written consent.
22. GENERAL PROVISIONS.
(a) The Committee may require each Participant purchasing or acquiring shares pursuant to an Award under the Plan to represent to and agree with the Company in
writing that such Participant is acquiring the shares for investment and without a view to distribution thereof.
(b) All certificates for Common Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Shares is then listed, and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If the Committee determines that the issuance of Common Shares hereunder is not in compliance with, or subject to an exemption from, any applicable Federal or state securities laws, such shares shall not be issued until such time as the Committee determines that the issuance is permissible.
(c) It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 22(c), such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.
(d) Except as otherwise provided by the Committee in the applicable grant or Award agreement, a
Participant shall have no rights as a shareholder with respect to any shares of
Common Shares subject to an Award until a certificate or certificates evidencing
Common Shares shall have been issued to the Participant and, subject to
Section 19, no adjustment shall be made for dividends or distributions or other
rights in respect of any share for which the record date is prior to the date on
which Participant shall become the holder of record thereof.
(e) The law of the State of Missouri shall apply to all Awards and interpretations under the Plan regardless of the effect of such state's conflict of laws principles.
(f) Where the context requires, words in any gender shall include any other gender.
23. TERM OF PLAN. Subject to earlier termination pursuant to
Section 21, the Plan shall have a term of 10 years from its Effective Date.
24. EFFECTIVE DATE; APPROVAL OF SHAREHOLDERS. The Plan is effective as of ________ __, 1997. The Plan is conditioned upon the approval of the shareholders of the Company prior to the Initial Public Offering, and failure to receive their approval shall render the Plan and all outstanding Awards issued thereunder void and of no effect; PROVIDED, HOWEVER, that this limitation shall have no effect upon the occurrence of a Change in Control before such shareholder approval, and all Awards shall be exercisable in accordance with their terms.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE TRUSTEES OF
ENTERTAINMENT PROPERTIES TRUST
1. DEFINITIONS.
(a) "Board" means the Board of Trustees of Entertainment Properties Trust.
(b) "Committee" means the Board, unless and until the Board establishes the Compensation Committee of the Board.
(c) "Common Share" means the common shares of beneficial interest, $0.01 par value per share, of the Company.
(d) "Company" means Entertainment Properties Trust.
(e) "Effective Date" means __________, 1997.
(f) "Participant" means a trustee who elects to participate in this Plan as provided in Section 3.
(g) "Plan" means the Deferred Compensation Plan for Non-Employee Trustees of Entertainment Properties Trust as set forth herein and as amended from time to time.
(h) "Share Account" means an account maintained under the Plan to which deferred compensation is credited pursuant to Section 4. Separate Share Accounts shall be maintained for each Participant.
(i) "Share Unit" means the equivalent of one Common Share.
(j) "Trustee" means any member of the Board who is not an employee of the Company or any of its subsidiaries; PROVIDED, HOWEVER, that such term shall not include the Company's Chairman of the Board.
(k) "Trustee Compensation" means compensation to which the Trustee is entitled as a retainer (whether payable in cash or Common Shares) or a fee for meetings as a member of the Board.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The Committee shall also have the authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide any and all questions as may arise in connection with the interpretation or application of the Plan.
(b) The decision or action of the Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon Participants and all other persons having or claiming any interest in the Plan.
3. PARTICIPATION.
(a) A Trustee may elect to participate in the Plan by filing a written election with the Company, on such form as may be prescribed by the Committee, to defer up to 100% (in increments of 10%) of his or her Trustee Compensation.
(b) A deferral election shall become effective on the first day of the calendar year following the date the election is made. A deferral election for a Participant shall remain effective for each subsequent calendar year unless the Participant files another election in which the Participant elects to cease deferring Trustee Compensation or to change the percentage of Trustee Compensation which is deferred. The new deferral election shall become effective on the first day of the calendar year following the date the election is made.
(c) Notwithstanding anything contained herein to the contrary, in the case of each individual who is a Trustee as of ________ __, 1997 a deferral election will be effective for Trustee Compensation for 1997 if it is made by __________ __, 1997; PROVIDED, HOWEVER, such election shall not be effective for any Trustee Compensation earned before the election is made. An individual who becomes a Trustee after the Effective Date may make a deferral election within
30 days after becoming a Trustee; such election, however, shall be effective only with respect to Trustee Compensation earned after the date such election is made.
4. DEFERRAL ACCOUNT.
(a) The portion of Trustee Compensation that would otherwise be paid in cash except that it is deferred pursuant to a deferral election, shall be credited to the Participant's Share Account maintained for the Participant, in Share Units, the number of which shall be determined by dividing (A) the portion of such Trustee Compensation deferred under the Plan by (B) an amount equal to the closing price of the Common Shares, as reported on the New York Stock Exchange (or any other exchange or national market system upon which price quotations for the Company's Common Shares are regularly available) on the date such Trustee Compensation would have been paid.
The portion of Trustee Compensation that would otherwise be paid in Common Shares except that it is deferred pursuant to a deferral election, shall be credited to the Participant's Share Account maintained for the Participant in Share Units. The number of Share Units shall be equal to the number of Common Shares which the Participant elected to defer.
(b) If dividends are paid with respect to the Company's Common Shares, the Participant's Share Account shall be credited with additional Share Units on the record date for each dividend in an amount equal to the result of dividing (i) the product of the per share dividend and the number of Share Units credited to the Participant's Share Account by (ii) the closing price of one Common Share on such record date as reported on the New York Stock Exchange (or any other exchange or national market system upon which price quotations for the Company's Common Shares are regularly available).
(c) The Company shall submit to each Participant, within 120 days after the close of each calendar year, a statement, setting forth the balance to the credit of such Participant in his Share Account.
5. PAYMENT OF DEFERRED COMPENSATION.
(a) Payment of a Participant's Share Account shall be made or commenced within 90 days after the Participant's retirement, death, or other termination of service as a Trustee. Payment shall be made in a lump sum or in substantially equal installments over a period not to exceed ten years, in accordance with the Participant's election made at the time of his deferral election.
(b) In the event of a Participant's death prior to payment of the balance credited to his Share Account, the amount remaining in such account shall be paid to his Beneficiary in accordance with the Participant's payment election.
(c) A Participant may request that payment be made of all or a portion of his Share Account due to financial hardship occurring prior to his retirement, death, or other termination as a Trustee by submitting a written request to the Committee. Payment of the amount determined by the Committee necessary to relieve such financial hardship shall be made in a lump sum.
(d) Notwithstanding anything contained herein to the contrary, in the event of the Participant's retirement, death, or other termination as a Trustee after a Change in Control (as defined in paragraph (f) of this Section), his Share Account shall be paid in a lump sum within 60 days of such retirement, death, or other termination.
(e) Payments from the Plan with respect to a Participant's Share Account shall be made in Common Shares equal to the number of Share Units in the Participant's Share Account as of the date on which payment is made; PROVIDED, HOWEVER, that cash payments shall be made in lieu of fractional shares.
(f) A "Change in Control" means the first to occur of any one of the following events: (i) individuals who, on the Effective Date, constitute the Board (the "Incumbent Trustees") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a trustee subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Trustees then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for trustee, without written objection to such nomination) shall be an Incumbent Trustee; PROVIDED, HOWEVER, that no individual initially elected or nominated as a trustee of the Company as a result of an actual or threatened election contest with respect to trustees or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Trustee; (ii) any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); PROVIDED, HOWEVER, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii)), or (E) a transaction (other than one described in (iii) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Trustees approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this paragraph (ii); (iii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (A) more than 50% of
the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation or any person which beneficially owned, immediately prior to such Business Combination, directly or indirectly, 25% or more of the Company Voting Securities (a "Company 25% Shareholder")) would become the beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and no Company 25% Shareholder would increase its percentage of such total voting power and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Trustees at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or (iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; PROVIDED, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by
such person, a Change in Control of the Company shall then occur.
6. BENEFICIARY DESIGNATION.
Each Participant shall have the right, at any time, to designate any person or persons as his beneficiary or beneficiaries to whom payment under this Plan shall be paid in the event of his death prior to complete distribution to Participant of his Share Account. Any beneficiary designation may be made or changed by a Participant by a written instrument in such form prescribed by the Committee which is filed with the Company prior to the Participant's death. If a Participant fails to designate a beneficiary, or if all designated beneficiaries predecease the Participant, then any amounts otherwise payable to the Participant's beneficiary shall be paid to the Participant's estate.
7. AMENDMENT AND TERMINATION OF PLAN.
(a) The Board may at any time amend the Plan in whole or in part.
(b) The Board may, in its sole discretion, terminate the Plan at any time, and upon any such termination, the Company shall immediately pay to each Participant in a lump sum the then remaining balance in the Participant's Share Account.
8. MISCELLANEOUS.
(a) The Company's obligation to make payments under the Plan shall be contractual only and all payments hereunder shall be made by the Company from its general assets at the time and in the manner provided for in the Plan.
(b) Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, anticipate, or otherwise encumber, the amounts, if any, payable hereunder, to the Participant or such other person. No part of the amounts payable under the Plan shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency.
(c) This Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of Missouri.
ENTERTAINMENT PROPERTIES TRUST
ANNUAL INCENTIVE PROGRAM
1. GENERAL. The purposes of Entertainment Properties Trust Annual Incentive Program (the "Program") are to attract and retain highly-qualified executives by providing appropriate performance-based incentive awards. Entertainment Properties Trust (the "Company") intends that certain performance-based compensation under the Program will qualify for a deduction under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") with respect to certain Covered Employees. The Program will be effective __________ __, 1997, subject to approval by the Company's shareholders as of such date.
2. DEFINITIONS.
(a) "Award" shall mean an annual incentive award granted pursuant to the Program, the payment of which shall be contingent upon the attainment of Performance Goals with respect to a Program Year, unless otherwise determined by the Committee.
(b) "Board" shall mean the Board of Trustees of the Company.
(c) "Committee" shall mean the Board, unless and until the Board shall establish the Compensation Committee of the Board.
(d) "Common Share" shall mean the common shares of beneficial interest, $0.01 par value per share, of the Company.
(e) "Covered Employee" shall have the meaning set forth in
Section 162(m)(3) of the Code.
(f) "Fair Market Value" per share as of a particular date shall mean the last reported sale price (on the day immediately preceding such date of the Common Shares on the New York Stock Exchange (or any other exchange or national market system upon which price quotations for the Company's Common Shares are regularly available).
(g) "Participant" shall mean, for any Program Year, a key employee of the Company or a Subsidiary who has been designated by the Committee to participate in the Program for such year. If a key employee becomes a Participant other than at the beginning of a Program Year, the Committee may establish a target
Award for such Participant and such Participant shall be eligible to earn a prorated Award for such year.
(h) "Performance Goals" shall mean the criteria and objectives which must be met during the Program Year as a condition of the Participant's receipt of payment with respect to an Award, as described in Section 3 hereof.
(i) "Program Year" shall mean the period beginning on August 22, 1997 and ending on December 31, 1997 and each calendar year thereafter.
(j) "Subsidiary" shall mean any subsidiary of the Company which has been approved for participation in the Program by the Committee so that its executives may be selected for participation in the Program.
3. PERFORMANCE GOALS. (a) Performance Goals for each Program Year shall be established by the Committee not later than the latest permissible date under Section 162(m) of the Code. Performance Goals may be expressed in terms of one or more of the following: revenue, revenue growth, EBITDA, EBITDA growth, Funds from Operations, Funds from Operations per share and per share growth, Cash Available For Distributions, Cash Available For Distribution per share and per share growth, net earnings, earnings per share, earnings per share growth, return on equity, return on assets, share price performance on an absolute basis and relative to an index, attainment of expense levels, and implementation or completion of critical projects. In the case of Participants who are not Covered Employees, Performance Goals may be based on such other financial or individual goals as the Committee may establish.
(b) In the case of Covered Employees, the Committee shall establish Performance Goals which state, in terms of an objective formula or standard, the method for computing the amount of compensation payable if the goal is attained and which otherwise satisfy the requirements of Section 162(m) of the Code, so that the Awards paid if the Performance Goals are attained will be fully deductible by the Company.
(c) With respect to corporate and individual Performance Goals, the Committee shall specify a minimum level of performance below which no Award will be paid for attainment of corporate or individual objectives. The Committee shall also specify the levels of corporate performance at which the target and maximum Award will be earned for attainment of corporate and individual objectives. The Performance Goals established by the Committee may (but need not) be different for each Program Year and different Performance Goals may apply to different Participants.
For purposes of certain of the Performance Goals established under Section 3(a) above:
(i) "Cash Available for Distribution" for any Program year shall mean Funds from Operations plus amortization and minus capital expenditures and principal payments on indebtedness.
(ii) "EBITDA" for any Program Year shall mean earnings before interest, taxes, depreciation and amortization.
(iii) "Funds from Operations" for any Program Year shall mean net earnings (loss) (computed in accordance with GAAP), excluding significant non-recurring items, gains (or losses) from debt restructuring and sales of property, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.
(iv) "GAAP" shall mean generally accepted accounting principles, as in effect from time to time.
(v) Measurement of Funds from Operations shall be determined in accordance with the Company's audited financial statements and generally accepted accounting principles as reported by the Company's independent accountants.
(vi) Notwithstanding any other provision of the Program, in determining whether Performance Goals have been achieved for any Participant who is not a Covered Employee, the Committee may exclude items it deems to be extraordinary, nonrecurring items, regardless of whether such items are excludable or otherwise dealt with under GAAP.
4. AWARDS.
(a) IN GENERAL. For the Program Year commencing in 1998 and each subsequent Program Year, the Committee shall, no later than the time specified in Section 3(a) hereof, determine the Participants and specify the Performance Goals applicable to such Participants for such Program Year and the extent to which target Awards will be increased or decreased for attainment of Performance Goals that are above or below target. Unless otherwise provided by the Committee in its discretion in connection with termination of employment, payment of an Award for a particular Program Year shall be made only if and to the extent the Performance Goals with respect to such Program Year are attained and only if the Participant is employed by the Company or one of its subsidiaries on the last day of such Program Year.
(b) DISCRETIONARY ADJUSTMENTS. The Committee may, taking into account such factors as it deems relevant, increase or decrease the amount payable to any Participant as a result of the level of performance attained relative to corporate Performance Goals for the Program Year, but shall not increase the amount payable to any Covered Employee.
(c) LIMITATION ON AWARDS. Notwithstanding anything to the contrary contained in this Program, the maximum Award which may be earned by any Participant under the Program in respect of any Program Year shall not exceed 60% of the Participant's base salary payable with respect to the calendar year in which such Program Year commences; PROVIDED, HOWEVER, that such amount shall not exceed $300,000.
(d) TIME OF PAYMENT. Unless otherwise determined by the Committee, all payments in respect of Awards granted under this Section 4 shall be made no later than 90 days after the end of the Program Year. In the case of Covered Employees, unless otherwise determined by the Committee in connection with termination of employment, such payments shall be made only after achievement of the Performance Goals has been certified by the Committee. In all other cases, such payments shall be made only if approved by the Committee in accordance with the provisions of the Program.
(e) FORM OF PAYMENT. Payment of each Participant's Award for any Program Year shall be made in cash, less the appropriate withholding taxes as set forth in Section 6(c). Notwithstanding the foregoing, the Participant may elect to receive his Award in Common Shares, having a Fair Market Value equal to that of the Award, less the appropriate withholding taxes as set forth in Section 6(c).
5. ADMINISTRATION. The Program shall be administered by the Committee. The Committee shall have the authority, in its sole discretion, to administer the Program and to exercise all the powers and authorities either specifically granted to it under the Program or necessary or advisable in the administration of the Program, including, without limitation, (i) to grant Awards, (ii) to determine the persons to whom and the time or times at which Awards shall be granted, (iii) to determine the terms, conditions, restrictions and Performance Goals relating to any Award, (iv) to make adjustments in the Performance Goals in response to changes in applicable laws, regulations, or accounting principles, (v) to make discretionary adjustments in the amounts payable upon attainment of Performance Goals, (vi) to construe and interpret the Program, (vii) to prescribe, amend and rescind rules and regulations relating to the Program, and (viii) to make all other determinations deemed necessary or advisable for the administration of the Program; PROVIDED, HOWEVER, that the Committee may in no event exercise its discretion with respect to matters pertaining
to Covered Employees in a manner that would cause Awards awarded under the Program not to qualify as performance-based compensation for purposes of Section 162(m) of the Code and the regulations thereunder.
The Committee, if appointed by the Board, shall consist of two or
more persons each of whom is an "outside director" within the meaning of
Section 162(m) of the Code. The Committee may delegate to one or more of its
members or one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Program. All
decisions, determinations and interpretations of the Committee, including,
without limitation, decisions as to an employee's selection as a Participant,
whether individual or corporate Performance Goals have been attained and the
amount of Award to which the Participant is entitled, shall be final and
binding on all persons, including the Company, the Participant (or any person
claiming any rights under the Program from or through any Participants) and
any shareholder. No member of the Board or the Committee shall be liable for
any action taken or determination made in good faith with respect to the
Program or any Award granted hereunder.
6. MISCELLANEOUS.
(a) GOVERNMENTAL COMPLIANCE. The Program and the granting of Awards, and other obligations of the Company under the Program shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required.
(b) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Program or in any Award granted shall confer upon any Participant the right to continue in the employ of the Company or any of its subsidiaries or to be entitled to any remuneration or benefits not set forth in the Program or to interfere with or limit in any way the right of the Company to terminate such Participant's employment.
(c) WITHHOLDING TAXES. The Company or subsidiary employing any Participant shall deduct from all payments and distributions under the Program any taxes required to be withheld by federal, state or local or other governmental authority.
(d) AMENDMENT AND TERMINATION OF THE PROGRAM. The Board may at any time and from time to time alter, amend, suspend, or terminate the Program in whole or in part; PROVIDED, HOWEVER, that no amendment which requires shareholder approval in order for the Program to continue to comply with Section 162(m) of the Code as it relates to Covered Employees shall be effective unless the same shall be
approved by the requisite vote of the shareholders of the Company.
Notwithstanding the foregoing, no amendment shall adversely affect the right of
any Participant, without such Participant's consent, to receive an Award
theretofore granted under the Program or, once a Participant has been notified
of his selection as a Participant and of the amount of his target Award for a
Program Year, to have his right to receive an Award be determined in accordance
with the provisions of the Program as in effect immediately prior to such
amendment.
(e) PARTICIPANT RIGHTS. No Participant shall have any claim to be granted any Award under the Program, and there is no obligation for uniformity of treatment among Participants.
(f) DESIGNATION OF BENEFICIARY. A Participant may designate a beneficiary or beneficiaries who shall receive payment of any Award earned under the Program in the event of the Participant's death prior to payment. The Participant may, at any time, change or revoke such designation. A beneficiary designation, or revocation of a prior beneficiary designation, will be effective only if it is made in writing signed by the Participant and received by the Secretary of the Company.
(g) GOVERNING LAW. The Program and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Missouri without giving effect to the choices of law principles thereof.
7. TERM. No Award may be granted under the Program with respect to any Program Year after the Program Year commencing in 2002.