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Sample Business ContractsHome: Sample Business Contracts:
ARTICLES OF
AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
BAY APARTMENT COMMUNITIES, INC.
Dated: June 4, 1998
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ARTICLES OF
AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
BAY APARTMENT COMMUNITIES, INC.
ARTICLE I
PREAMBLE
Bay Apartment Communities, Inc., a corporation organized and existing
under the laws of the State of Maryland (the "Corporation"), hereby certifies
as follows:
1.1 The name of the Corporation is Bay Apartment Communities, Inc.
The date of the filing of its Articles of Incorporation with the State
Department of Assessments and Taxation of the State of Maryland (the
"Department") was March 13, 1995 (as thereafter amended from time to time prior
to the date hereof, the "Original Charter").
1.2 The total number of shares of stock which the Corporation has
authority to issue (the "Stock") prior to the date of this Amendment and
Restatement is eighty-five million (85,000,000) shares, consisting of (i)
twenty-five million (25,000,000) shares of preferred stock, par value $.01 per
share ("Preferred Stock"); (ii) forty million (40,000,000) shares of common
stock, par value $.01 per share ("Common Stock"); and (iii) twenty million
(20,000,000) shares of excess common stock, par value $.01 per share. The
aggregate par value of all of the shares of all classes of Stock prior to the
date of this Amendment and Restatement is $850,000.
1.3 The total number of shares of Stock which the Corporation has
authority to issue immediately following this Amendment and Restatement is
three hundred seventy million (370,000,000) shares, initially consisting of (i)
fifty million (50,000,000) shares of Preferred Stock; (ii) three hundred
million (300,000,000) shares of Common Stock; and (iii) twenty million
(20,000,000) shares of excess stock, par value $.01 per share ("Excess Stock").
The aggregate par value of all the shares of all classes of Stock immediately
following this Amendment and Restatement is $3,700,000.
1.4 These Articles of Amendment and Restatement of Articles of
Incorporation (the "Articles"), which amend, restate and integrate the
provisions of the Original Charter were deemed advisable and approved by a
majority of the Board of Directors of the Corporation and were approved by the
stockholders of the Corporation in accordance with the Maryland General
Corporation Law (the "MGCL").
1.5 The Corporation desires to amend and restate the Original
Charter as currently in effect, and upon acceptance for record by the
Department the provisions set forth in these
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Articles shall be all of the provisions of the charter of the Corporation.
ARTICLE II
NAME
The name of the Corporation is:
"Avalon Bay Communities, Inc."
ARTICLE III
PURPOSES
Purpose and Powers. The purposes for which the Corporation is formed
are to engage in business as a real estate investment trust (a "REIT") (as that
phrase is defined under Section 856 of the Internal Revenue Code of 1986, as
amended (the "Code")) and to engage in any other lawful act or activity for
which corporations may be organized under the Maryland General Corporation Law.
The foregoing purposes shall be in no way limited or restricted by reference
to, or inference from, the terms of any other clause of these Articles, as
amended from time to time, and each shall be regarded as independent. The
foregoing purposes are also to be construed as powers of the Corporation, and
shall be in addition to and not in limitation of the general powers of
corporations under the laws of the State of Maryland.
ARTICLE IV
PRINCIPAL OFFICE ADDRESS
The address of the principal office of the Corporation in Maryland is
c/o The Corporation Trust Incorporated, 300 East Lombard Street, Suite 1400,
Baltimore, Maryland 21202.
ARTICLE V
THE RESIDENT AGENT
The resident agent of the Corporation in Maryland is The Corporation
Trust Incorporated, whose address is 300 East Lombard Street, Suite 1400,
Baltimore, Maryland 21202.
ARTICLE VI
BOARD OF DIRECTORS
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6.1 General Powers; Action by Committee. The business and affairs
of the Corporation shall be managed under the direction of the Board of
Directors and, except as otherwise expressly provided by law, these Articles or
the bylaws, as amended from time to time (the "Bylaws"), of the Corporation,
all of the powers of the Corporation shall be vested in such Board. Any action
which the Board of Directors is empowered to take may be taken on behalf of the
Board of Directors by a duly authorized committee thereof except (i) to the
extent limited by Maryland law, these Articles or the Bylaws and (ii) for any
action which requires the affirmative vote or approval of a majority of all
Directors then in office (unless, in such case, these Articles or the Bylaws
specifically provide that a duly authorized committee can take such action on
behalf of the Board of Directors). A majority of the Board of Directors shall
constitute a quorum and, except as otherwise specifically provided in these
Articles, the affirmative vote of a majority of the Directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors.
6.2 Number. The number of Directors of the Corporation shall be
fixed from time to time by a resolution duly adopted by the Board of Directors;
provided, however, that the total number of Directors shall be not fewer than
three (3). No reduction in the number of Directors shall cause the removal of
any Director from office prior to the expiration of his or her term.
Immediately following the effectiveness of this Amendment and Restatement the
Corporation shall have twelve (12) Directors, whose names shall be as follows:
Gilbert M. Meyer
Charles H. Berman
Bruce A. Choate
Michael A. Futterman
John J. Healy, Jr.
Christopher B. Leinberger
Richard L. Michaux
Richard W. Miller
Brenda J. Mixson
Thomas H. Nielsen
Lance R. Primis
Allan D. Schuster
6.3 Term; Election. The term of office of each Director shall
expire at the next succeeding annual meeting of stockholders. The Directors
elected at each annual meeting of stockholders shall hold office until their
successors are duly elected and qualified or until their earlier resignation or
removal.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article VII or Article XIV of these Articles, the holders of any one or more
series of Stock shall have the right, voting separately as a series or together
with holders of other such series, to elect Directors at an annual or special
meeting of stockholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of these
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Articles and any articles supplementary applicable thereto.
During any period when the holders of any series of Stock have the
right to elect additional Directors as provided for or fixed pursuant to the
provisions of Article VII or Article XIV of these Articles, then upon
commencement and for the duration of the period during which such right
continues: (a) the then otherwise total authorized number of Directors of the
Corporation shall automatically be increased by such specified number of
Directors, and the holders of such Stock shall be entitled to elect the
additional Directors so provided for or fixed pursuant to said provisions and
(b) each such additional Director shall serve until such Director's successor
shall have been duly elected and qualified, or until such Director's right to
hold such office terminates pursuant to said provisions, whichever occurs
earlier, subject to such Director's earlier death, disqualification,
resignation or removal. Except as otherwise provided by the Board of Directors
in the resolution or resolutions establishing such series, whenever the holders
of any series of Stock having such right to elect additional Directors are
divested of such right pursuant to the provisions of such Stock, the terms of
office of all such additional Directors elected by the holders of such Stock,
or elected to fill any vacancies resulting from the death, resignation,
disqualification or removal of such additional Directors, shall forthwith
terminate and the total authorized number of Directors of the Corporation shall
be reduced accordingly.
6.4 Resignation or Removal of Directors. Any Director may resign
from the Board of Directors or any committee thereof at any time by written
notice to the Board of Directors, effective upon execution and delivery to the
Corporation of such notice or upon any future date specified in the notice.
Subject to the rights, if any, of the holders of any series of Stock to elect
Directors and to remove any Director whom such holders have the right to elect,
any Director (including persons elected by Directors to fill vacancies in the
Board of Directors) may be removed from office (a) only with cause and (b) only
by the affirmative vote of the holders of at least 75% of the shares then
entitled to vote at a meeting of the stockholders called for that purpose. At
least 30 days prior to any meeting of stockholders at which it is proposed that
any Director be removed from office, written notice of such proposed removal
shall be sent to the Director whose removal will be considered at the meeting.
For purposes of these Articles, "cause," with respect to the removal of any
Director, shall mean only (i) conviction of a felony, (ii) declaration of
unsound mind by order of a court, (iii) gross dereliction of duty, (iv)
commission of any act involving moral turpitude or (v) commission of an act
that constitutes intentional misconduct or a knowing violation of law if such
action in either event results both in an improper substantial personal benefit
to such Director and a material injury to the Corporation.
6.5 Vacancies. Subject to the rights, if any, of the holders of
any class or series of Stock to elect Directors and to fill vacancies on the
Board of Directors relating thereto, any vacancy on the Board of Directors
which results from the removal of a Director for cause shall be filled by the
affirmative vote of a majority of votes cast by the stockholders normally
entitled to vote in the election of Directors at a meeting of stockholders.
Any vacancy occurring on the Board of Directors for any other reason, except as
a result of an increase in the number of Directors, may be filled by a majority
vote of the remaining Directors,
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notwithstanding that such majority is less than a quorum; provided, however,
that any Director appointed to fill the vacancy for an Independent Director (as
hereinafter defined) shall also require the vote affirmative vote of a majority
of the remaining Independent Directors. Any vacancy occurring on the Board of
Directors as a result of an increase in the number of Directors may be filled
by a majority vote of the entire Board of Directors. A Director elected by the
Board of Directors or the stockholders to fill a vacancy shall hold office
until the next annual meeting of stockholders and until his or her successor is
elected and qualified. In the event of a vacancy in the Board of Directors,
the remaining Directors, except as otherwise provided by law, may exercise the
powers of the full Board of Directors until such vacancy is filled.
6.6 Independent Directors. Notwithstanding anything herein to the
contrary, at all times (except during a period not to exceed sixty (60) days
following the death, resignation, incapacity, or removal from office of a
Director prior to the expiration of the Director's term of office), a majority
of the Board of Directors shall be comprised of persons ("Independent
Directors") who are not officers or employees of the Corporation or any
affiliate thereof and who do not have a material business or professional
relationship with the Corporation or any affiliate thereof.
6.7 Powers. Subject to the express limitations herein or in the
Bylaws, the business and affairs of the Corporation shall be managed under the
direction of the Board of Directors. These Articles, as amended or
supplemented from time to time, shall be construed with a presumption in favor
of the grant of power and authority to the Directors. The determination as to
any of the following matters, made in good faith by or pursuant to the
direction of the Board of Directors consistent with these Articles and in the
absence of actual receipt of an improper benefit in money, property or services
or active and deliberate dishonesty established by a court, shall be final and
conclusive and shall be binding upon the Corporation and every holder of shares
of its Stock: the amount of the net income of the Corporation for any period
and the amount of assets at any time legally available for the payment of
dividends, redemption of its Stock or the payment of other distributions on its
Stock; the amount of paid-in surplus, net assets, other surplus, annual or
other net profit, net assets in excess of capital, undivided profits or excess
of profits over losses on sales of assets; the amount, purpose, time of
creation, increase or decrease, alteration or cancellation of any reserves or
charges and the propriety thereof (whether or not any obligation or liability
for which such reserves or charges shall have been created shall have been paid
or discharged); the fair value, or any sale, bid or asked price to be applied
in determining the fair value, of any asset owned or held by the Corporation;
any matter relating to the acquisition, holding and disposition of any assets
by the Corporation; or any other matter relating to the business and affairs of
the Corporation.
ARTICLE VII
STOCK
7.1 Authorized Stock. The total number of shares of Stock which
the Corporation has authority to issue is three hundred seventy million
(370,000,000) shares, initially
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consisting of (i) fifty million (50,000,000) shares of Preferred Stock, par
value $.01 per share; (ii) three hundred million (300,000,000) shares of Common
Stock, par value $.01 per share; and (iii) twenty million (20,000,000) shares
of Excess Stock, par value $.01 per share. The aggregate par value of all the
shares of all classes of Stock is $3,700,000. If shares of one class of Stock
are classified or reclassified into shares of another class of Stock pursuant
to this Article VII, the number of authorized shares of the former class shall
be automatically decreased and the number of shares of the latter class shall
be automatically increased, in each case by the number of shares so classified
or reclassified, so that the aggregate number of shares of Stock of all classes
that the Corporation has authority to issue shall not be more than the total
number of shares of Stock set forth in the first sentence of this paragraph.
7.2 Preferred Stock. Subject to any limitations prescribed by
law, the Board of Directors is expressly authorized to classify any unissued
shares of Preferred Stock and reclassify any previously classified but unissued
shares of Preferred Stock of any series from time to time, in one or more
classes or series of such Stock and, by filing articles supplementary with the
Department, to establish or change from time to time the number of shares to be
included in each such class or series, and to fix the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends and
other distributions, qualifications and terms and conditions of redemption of
each class or series. Any action by the Board of Directors under this Section
7.2 of Article VII shall require the affirmative vote of a majority of the
Directors then in office; provided, however, that by the affirmative vote of a
majority of the Directors then in office, the Board of Directors may appoint a
committee to act on behalf of the Board of Directors under this Section 7.2,
and in such event the affirmative vote of a majority of the members of such
committee then in office shall be required for any action under this Section
7.2.
At the time of acceptance for record of these Articles, the Board of
Directors had duly divided and classified 18,238,800 shares of Preferred Stock
into seven series of Preferred Stock. The rights, preferences and privileges
of these series are set forth herein in Article XIV.
7.3 Common Stock. Subject to all of the rights, powers and
preferences of the Preferred Stock and except as provided by law or in this
Article VII or Article XIV (or in any articles supplementary regarding any
class or series of Preferred Stock):
7.3.1 Voting Rights. The holders of shares of Common Stock
shall be entitled to vote for the election of Directors and on all
other matters requiring stockholder action, and each holder of shares
of Common Stock shall be entitled to one vote for each share of Common
Stock held by such stockholder.
7.3.2 Dividend Rights. Holders of Common Stock shall be
entitled to receive such dividends and other distributions in cash,
Stock or property of the Corporation as may be authorized and declared
by the Board of Directors upon the Common Stock and, if any Excess
Stock resulting from the conversion of Common Stock is then
outstanding, such Excess Stock out of any assets or funds of the
Corporation legally available therefor, but only when and as
authorized by the Board of Directors or any
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authorized committee thereof from time to time, and shall share
ratably with the holders of such Excess Stock resulting from the
conversion of Common Stock in any such dividend or distribution.
Before payment of any dividends or other distributions, there
may be set aside out of any assets of the Corporation available for
dividends or other distributions such sum or sums as the Board of
Directors may from to time, in its absolute discretion, think proper
as a reserve fund for contingencies, for equalizing dividends or other
distributions, for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors shall
determine to be in the best interest of the Corporation, and the Board
of Directors may modify or abolish any such reserve in the manner in
which it was created.
7.3.3 Rights Upon Liquidation. Upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
subject to the rights of holders of any shares of Preferred Stock and
Excess Stock resulting from the conversion of Preferred Stock, the net
assets of the Corporation available for distribution to the holders of
Common Stock, and, if any Excess Stock resulting from the conversion
of Common Stock is then outstanding, such Excess Stock, shall be
distributed pro rata to such holders in proportion to the number of
shares of Common Stock and such Excess Stock held by each.
7.4 Excess Stock. For the purposes of this Section 7.4, terms not
otherwise defined shall have the meanings set forth in Article IX.
7.4.1 Conversion into Excess Stock.
(a) If, notwithstanding the other provisions
contained in these Articles, prior to the Restriction
Termination Date, there is a purported Transfer or
Non-Transfer Event such that any Person (other than a
Look-Through Entity) would Beneficially Own shares of Equity
Stock in excess of the Ownership Limit, or such that any
Person that is a Look-Through Entity would Beneficially Own
shares of Equity Stock in excess of the Look-Through Limit,
then, (i) except as otherwise provided in Section 9.4 of
Article IX, the purported transferee shall be deemed to be a
Prohibited Owner and shall acquire no right or interest (or,
in the case of a Non-Transfer Event, the Person holding record
title to the shares of Equity Stock Beneficially Owned by such
Beneficial Owner shall cease to own any right or interest) in
such number of shares of Equity Stock which would cause such
Beneficial Owner to Beneficially Own shares of Equity Stock in
excess of the Ownership Limit or the Look-Through Limit, as
the case may be, (ii) such number of shares of Equity Stock in
excess of the Ownership Limit or the Look-Through Limit, as
the case may be (rounded up to the nearest whole share), shall
be automatically converted into an equal number of shares of
Excess Stock and transferred to a Trust in accordance with
Section 7.4.4 of this Article VII and (iii) the Prohibited
Owner shall submit the
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certificates representing such number of shares of Equity
Stock to the Corporation, accompanied by all requisite and
duly executed assignments of transfer thereof, for
registration in the name of the Trustee of the Trust. If the
shares of Equity Stock that are converted into Excess Stock
are not shares of Common Stock, then the Excess Stock into
which they are converted shall be deemed to be a separate
series of Excess Stock with a designation and title
corresponding to the designation and title of the shares that
have been converted into the Excess Stock. Such conversion
into Excess Stock and transfer to a Trust shall be effective
as of the close of trading on the Trading Day prior to the
date of the purported Transfer or Non-Transfer Event, as the
case may be, even though the certificates representing the
shares of Equity Stock so converted may be submitted to the
Corporation at a later date.
(b) If, notwithstanding the other provisions
contained in these Articles, prior to the Restriction
Termination Date there is a purported Transfer or Non-Transfer
Event that, if effective, would (i) result in the Corporation
being "closely held" within the meaning of Section 856(h) of
the Code, (ii) cause the Corporation to Constructively Own 10%
or more of the ownership interest in a tenant of the
Corporation's or a Subsidiary's real property within the
meaning of Section 856(d)(2)(B) of the Code or (iii) result in
the shares of Equity Stock being beneficially owned by fewer
than 100 persons within the meaning of Section 856(a)(5) of
the Code, then (x) the purported transferee shall be deemed to
be a Prohibited Owner and shall acquire no right or interest
(or, in the case of a Non-Transfer Event, the Person holding
record title of the shares of Equity Stock with respect to
which such Non-Transfer Event occurred shall cease to own any
right or interest) in such number of shares of Equity Stock,
the ownership of which by such purported transferee or record
holder would (A) result in the Corporation being "closely
held" within the meaning of Section 856(h) of the Code, (B)
cause the Corporation to Constructively Own 10% or more of the
ownership interests in a tenant of the Corporation's or a
Subsidiary's real property within the meaning of Section
856(d)(2)(B) of the Code or (c) result in the shares of Equity
Stock being beneficially owned by fewer than 100 persons
within the meaning of Section 856(a)(5) of the Code, (y) such
number of shares of Equity Stock (rounded up to the nearest
whole share) shall be automatically converted into an equal
number of shares of Excess Stock and transferred to a Trust in
accordance with Section 7.4.4 of this Article VII and (z) the
Prohibited Owner shall submit such number of shares of Equity
Stock to the Corporation, accompanied by all requisite and
duly executed assignments of transfer thereof, for
registration in the name of the Trustee of the Trust. If the
shares of Equity Stock that are converted into Excess Stock
are not shares of Common Stock, then the Excess Stock into
which they are converted shall be deemed to be a separate
series of Excess Stock with a designation and title
corresponding to the designation and title of the shares that
have been converted into the Excess Stock. Such conversion
into Excess Stock and transfer to a Trust shall be effective
as of the close of trading on the Trading
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Day prior to the date of the purported Transfer or
Non-Transfer Event, as the case may be, even though the
certificates representing the shares of Equity Stock so
converted may be submitted to the Corporation at a later date.
(c) Upon the occurrence of such a conversion of
shares of Equity Stock into an equal number of shares of
Excess Stock, such shares of Equity Stock shall be
automatically retired and canceled, without any action
required by the Board of Directors of the Corporation, and
shall thereupon be restored to the status of authorized but
unissued shares of the particular class or series of Equity
Stock from which such Excess Stock was converted and may be
reissued by the Corporation as that particular class or series
of Equity Stock.
7.4.2 Remedies for Breach. If the Corporation, or its
designees, shall at any time determine in good faith that a Transfer
has taken place in violation of Section 9.2 of Article IX or that a
Person intends to acquire or has attempted to acquire Beneficial
Ownership or Constructive Ownership of any shares of Equity Stock in
violation of Section 9.2 of Article IX, the Corporation shall take
such action as it deems advisable to refuse to give effect to or to
prevent such Transfer or acquisition, including, but not limited to,
refusing to give effect to such Transfer on the stock transfer books
of the Corporation or instituting proceedings to enjoin such Transfer
or acquisition, but the failure to take any such action shall not
affect the automatic conversion of shares of Equity Stock into Excess
Stock and their transfer to a Trust in accordance with Section 7.4.4.
7.4.3 Notice of Restricted Transfer. Any Person who
acquires or attempts to acquire shares of Equity Stock in violation of
Section 9.2 of Article IX, or any Person who owns shares of Equity
Stock that were converted into shares of Excess Stock and transferred
to a Trust pursuant to Sections 7.4.1 and 7.4.4 of this Article VII,
shall immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of
such Transfer or Non-Transfer Event, as the case may be, on the
Corporation's status as a REIT.
7.4.4 Ownership in Trust. Upon any purported Transfer or
Non-Transfer Event that results in Excess Stock pursuant to Section
7.4.1 of this Article VII, (i) the Corporation shall create, or cause
to be created, a Trust, and shall designate a Trustee and name a
Beneficiary thereof and (ii) such Excess Stock shall be automatically
transferred to such Trust to be held for the exclusive benefit of the
Beneficiary. Any conversion of shares of Equity Stock into shares of
Excess Stock and transfer to a Trust shall be effective as of the
close of trading on the Trading Day prior to the date of the purported
Transfer or Non-Transfer Event that results in the conversion. Shares
of Excess Stock so held in trust shall remain issued and outstanding
shares of Stock of the Corporation.
7.4.5 Dividend Rights. Each share of Excess Stock shall be
entitled to the
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same dividends and distributions (as to both timing and amount) as may
be authorized by the Board of Directors with respect to shares of the
same class and series as the shares of Equity Stock that were
converted into such Excess Stock. The Trustee, as record holder of
the shares of Excess Stock, shall be entitled to receive all dividends
and distributions and shall hold all such dividends or distributions
in trust for the benefit of the Beneficiary. The Prohibited Owner
with respect to such shares of Excess Stock shall repay to the Trust
the amount of any dividends or distributions received by it that are
(i) attributable to any shares of Equity Stock that have been
converted into shares of Excess Stock and (ii) dividends or
distributions which were distributed by the Corporation to
stockholders of record on a record date which was on or after the date
that such shares were converted into shares of Excess Stock. The
Corporation shall take all measures that it determines reasonably
necessary to recover the amount of any such dividend or distribution
paid to a Prohibited Owner, including, if necessary, withholding any
portion of future dividends or distributions payable on shares of
Equity Stock Beneficially Owned by the Person who, but for the
provisions of Articles VII and IX, would Constructively Own or
Beneficially Own the shares of Equity Stock that were converted into
shares of Excess Stock; and, as soon as reasonably practicable
following the Corporation's receipt or withholding thereof, shall pay
over to the Trust for the benefit of the Beneficiary the dividends so
received or withheld, as the case may be.
7.4.6 Rights upon Liquidation. In the event of any
voluntary or involuntary liquidation of, or winding up of, or any
distribution of the assets of, the Corporation, each holder of shares
of Excess Stock shall be entitled to receive, ratably with each other
holder of shares of Equity Stock of the same class and series as the
shares which were converted into such Excess Stock and other holders
of such Excess Stock, that portion of the assets of the Corporation
that is available for distribution to the holders of shares of such
class and series of Equity Stock and such Excess Stock. The Trust
shall distribute to the Prohibited Owner the amounts received upon
such liquidation, dissolution, or winding up, or distribution;
provided, however, that the Prohibited Owner shall not be entitled to
receive amounts in excess of, in the case of a purported Transfer in
which the Prohibited Owner gave value for shares of Equity Stock and
which Transfer resulted in the conversion of the shares into shares of
Excess Stock, the product of (x) the price per share, if any, such
Prohibited Owner paid for the shares of Equity Stock and (y) the
number of shares of Equity Stock which were so converted into Excess
Stock, and, in the case of a Non-Transfer Event or purported Transfer
in which the Prohibited Owner did not give value for such shares
(e.g., if the shares were received through a gift or devise) and which
Non-Transfer Event or purported Transfer, as the case may be, resulted
in the conversion of the shares into shares of Excess Stock, the
product of (x) the price per share equal to the Market Price on the
date of such Non-Transfer Event or purported Transfer and (y) the
number of shares of Equity Stock which were so converted into Excess
Stock. Any remaining amount in such Trust shall be distributed to the
Beneficiary.
7.4.7 Voting Rights. Each share of Excess Stock shall
entitle the holder to no
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voting rights other than those voting rights which must accompany a
class of Stock under Maryland law. The Trustee, as record holder of
the Excess Stock, shall be entitled to vote all shares of Excess Stock
in the event voting rights are mandated by Maryland law. Any vote by
a Prohibited Owner as a purported holder of shares of Equity Stock
prior to the discovery by the Corporation that such shares of Equity
Stock have been converted into shares of Excess Stock shall, subject
to applicable law, (i) be rescinded and shall be void ab initio with
respect to such shares of Excess Stock and (ii) be recast in
accordance with the desires of the Trustee acting for the benefit of
the Beneficiary; provided, however, that if the Corporation has
already taken irreversible corporate action, then the Trustee shall
not have the authority to rescind and recast such vote.
7.4.8 Designation of Permitted Transferee.
(a) As soon as practicable after the Trustee acquires
Excess Stock, but in an orderly fashion so as not to materially adversely
affect the trading price of Common Stock, the Trustee shall designate one or
more Persons as Permitted Transferees and sell to such Permitted Transferees
any shares of Excess Stock held by the Trustee; provided, however, that (i) any
Permitted Transferee so designated purchases for valuable consideration
(whether in a public or private sale) the shares of Excess Stock and (ii) any
Permitted Transferee so designated may acquire such shares of Excess Stock
without violating any of the restrictions set forth in Section 9.2 of Article
IX and without such acquisition resulting in the conversion of the shares of
Equity Stock so acquired into shares of Excess Stock and the transfer of such
shares to a Trust pursuant to Sections 7.4.1 and 7.4.4 of this Article VII.
The Trustee shall have the exclusive and absolute right to designate Permitted
Transferees of any and all shares of Excess Stock. Prior to any transfer by
the Trustee of shares of Excess Stock to a Permitted Transferee, the Trustee
shall give not less than five Trading Days' prior written notice to the
Corporation of such intended transfer and the Corporation must have waived in
writing its purchase rights, if any, under Section 7.4.10 of this Article VII.
(b) Subject to Section 7.4.8, upon the designation by the
Trustee of a Permitted Transferee in accordance with the provisions of this
Section 7.4.8, the Trustee shall cause to be transferred to the Permitted
Transferee shares of Excess Stock acquired by the Trustee pursuant to Section
7.4.4 of this Article VII. Upon such transfer of shares of Excess Stock to the
Permitted Transferee, such shares of Excess Stock shall be automatically
converted into an equal number of shares of Equity Stock of the same class and
series which was converted into such Excess Stock. Upon the occurrence of such
a conversion of shares of Excess Stock into an equal number of shares of Equity
Stock, such shares of Excess Stock shall be automatically retired and canceled,
without any action required by the Board of Directors of the Corporation, and
shall thereupon be restored to the status of authorized but unissued shares of
Excess Stock and may be reissued by the Corporation as Excess Stock. The
Trustee shall (i) cause to be recorded on the stock transfer books of the
Corporation that the Permitted Transferee is the holder of record of such
number of shares of Equity Stock, and (ii) distribute to the Beneficiary any
and all amounts held with respect to such shares of Excess Stock after making
payment to the Prohibited Owner pursuant to Section 7.4.9 of this Article VII.
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(c) If the Transfer of shares of Excess Stock to a
purported Permitted Transferee would or does violate any of the transfer
restrictions set forth in Section 9.2 of Article IX, such Transfer shall be
void ab initio as to that number of shares of Excess Stock that cause the
violation of any such restriction when such shares are converted into shares of
Equity Stock (as described in clause (b) above) and the purported Permitted
Transferee shall be deemed to be a Prohibited Owner and shall acquire no rights
in such shares of Excess Stock or Equity Stock. Such shares of Equity Stock
shall be automatically re-converted into Excess Stock and transferred to the
Trust from which they were originally Transferred. Such conversion and
transfer to the Trust shall be effective as of the close of trading on the
Trading Day prior to the date of the Transfer to the purported Permitted
Transferee and the provisions of this Article VII shall apply to such shares,
including, without limitation, the provisions of Sections 7.4.8 through 7.4.10
with respect to any future Transfer of such shares by the Trust.
7.4.9 Compensation to Record Holder of Shares of Equity
Stock That Are Converted into Shares of Excess Stock. Any Prohibited
Owner shall be entitled (following acquisition of the shares of Excess
Stock and subsequent designation of and sale of Excess Stock to a
Permitted Transferee in accordance with Section 7.4.8 of this Article
VII or following the purchase of such shares in accordance with
Section 7.4.10 of this Article VII) to receive from the Trustee
following the sale or other disposition of such shares of Excess Stock
the lesser of (i) (a) in the case of a purported Transfer in which the
Prohibited Owner gave value for shares of Equity Stock and which
Transfer resulted in the conversion of such shares into shares of
Excess Stock, the product of (x) the price per share, if any, such
Prohibited Owner paid for the shares of Equity Stock and (y) the
number of shares of Equity Stock which were so converted into Excess
Stock and (b) in the case of a Non-Transfer Event or purported
Transfer in which the Prohibited Owner did not give value for such
shares (e.g., if the shares were received through a gift or devise)
and which Non-Transfer Event or purported Transfer, as the case may
be, resulted in the conversion of such shares into shares of Excess
Stock, the product of (x) the price per share equal to the Market
Price on the date of such Non-Transfer Event or purported Transfer and
(y) the number of shares of Equity Stock which were so converted into
Excess Stock or (ii) the proceeds received by the Trustee from the
sale or other disposition of such shares of Excess Stock in accordance
with Section 7.4.8 or Section 7.4.10 of this Article VII. Any amounts
received by the Trustee in respect of such shares of Excess Stock and
in excess of such amounts to be paid to the Prohibited Owner pursuant
to this Section 7.4.9 shall be distributed to the Beneficiary in
accordance with the provisions of Section 7.4.8 of this Article VII.
Each Beneficiary and Prohibited Owner shall be deemed to have waived
any and all claims that it may have against the Trustee and the Trust
arising out of the disposition of shares of Excess Stock, except for
claims arising out of the gross negligence or willful misconduct of,
or any failure to make payments in accordance with this Section 7.4 of
this Article VII, by such Trustee.
7.4.10 Purchase Right in Excess Stock. Except for shares
of Excess Stock which may result from the conversion of shares of
Series A Preferred Stock and Series
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B Preferred Stock which are outstanding as of the acceptance for
record of these Articles, which shares shall not be subject to this
Section 7.4.10, shares of Excess Stock shall be deemed to have been
offered for sale to the Corporation or its designee, at a price per
share equal to the lesser of (i) the price per share in the
transaction that created such shares of Excess Stock (or, in the case
of a Non-Transfer Event or Transfer in which the Prohibited Owner did
not give value for the shares (e.g., if the shares were received
through a gift or devise), the Market Price on the date of such
Non-Transfer Event or Transfer in which the Prohibited Owner did not
give value for the shares) or (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days
following the later of (a) the date of the Non-Transfer Event or
purported Transfer which results in such shares of Excess Stock or (b)
the date the Board of Directors first determines that a Transfer or
Non-Transfer Event resulting in shares of Excess Stock has occurred,
if the Corporation does not receive a notice of such Transfer or
Non-Transfer Event pursuant to Section 7.4.3 of this Article VII.
7.5 Classification of Stock. The Board of Directors may classify
or reclassify any unissued shares of Stock from time to time by setting or
changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption for each class or
series, including, but not limited to, the reclassification of unissued shares
of Common Stock to shares of Preferred Stock or unissued shares of Preferred
Stock to shares of Common Stock or the issuance of any rights plan or similar
plan.
7.6 Issuance of Stock. The Board of Directors may authorize the
issuance from time to time of shares of Stock of any class or series, whether
now or hereafter authorized, or securities or rights convertible into shares of
Stock, for such consideration as the Board of Directors may deem advisable (or
without consideration in the case of a share split or dividend), subject to
such restrictions or limitations, if any, as may be set forth in these Articles
or the Bylaws of the Corporation.
7.7 Dividends or Distributions. The Directors may from time to
time authorize and declare and pay to stockholders such dividends or
distributions in cash, property or other assets of the Corporation or in
securities of the Corporation or from any other source as the Directors in
their discretion shall determine.
7.8 Ambiguity. In the case of an ambiguity in the application of
any of the provisions of this Article VII, the Board of Directors shall have
the power to determine the application of the provisions of this Article VII
with respect to any situation based on the facts known to it.
7.9 Legend. Except as otherwise determined by the Board of
Directors, each certificate for shares of Equity Stock shall bear substantially
the following legend:
"The shares of Avalon Bay Communities, Inc. (the
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"Corporation") represented by this certificate are subject to
restrictions set forth in the Corporation's charter, as the
same may be amended from time to time, which prohibit in
general (a) any Person (other than a Look-Through Entity) from
Beneficially Owning shares of Equity Stock in excess of the
Ownership Limit, (b) any Look-Through Entity from Beneficially
Owning shares of Equity Stock in excess of the Look-Through
Ownership Limit and (c) any Person from acquiring or
maintaining any ownership interest in the stock of the
Corporation that is inconsistent with (i) the requirements of
the Internal Revenue Code of 1986, as amended, pertaining to
real estate investment trusts or (ii) the charter of the
Corporation, and the holder of this certificate by his, her or
its acceptance hereof consents to be bound by such
restrictions. Capitalized terms used in this paragraph and
not defined herein are defined in the Corporation's charter,
as the same may be amended from time to time.
The Corporation will furnish without charge, to each
stockholder who so requests, a copy of the relevant provisions
of the charter and the bylaws, each as amended, of the
Corporation, a copy of the provisions setting forth the
designations, preferences, privileges and rights of each class
of stock or series thereof that the Corporation is authorized
to issue and the qualifications, limitations and restrictions
of such preferences and/or rights. Any such request may be
addressed to the Secretary of the Corporation or to the
transfer agent named on the face hereof."
7.10 Severability. Each provision of this Article VII shall be
severable and an adverse determination as to any such provision shall in no way
affect the validity of any other provision.
7.11 Articles and Bylaws. All persons who shall acquire Stock in
the Corporation shall acquire the same subject to the provisions of these
Articles and the Bylaws.
ARTICLE VIII
LIMITATION ON PREEMPTIVE RIGHTS
No holder of any Stock or any other securities of the Corporation,
whether now or hereafter authorized, shall have any preferential or preemptive
rights to subscribe for or purchase any Stock or any other securities of the
Corporation other than such rights, if any, as the Board of Directors, in its
sole discretion, may fix by articles supplementary, by contract or otherwise;
and any Stock or other securities which the Board of Directors may determine to
offer for subscription may, within the Board of Directors' sole discretion, be
offered to the holders of any class, series or type of Stock or other
securities at the time outstanding to the
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exclusion of holders of any or all other classes, series or types of Stock or
other securities at the time outstanding.
ARTICLE IX
LIMITATIONS ON TRANSFER AND OWNERSHIP OF EQUITY STOCK
9.1 Definitions. For purposes of this Article IX, the following
terms shall have the meanings set forth below:
"Beneficial Ownership," when used with respect to ownership of
shares of Equity Stock by any Person, shall mean all shares of Equity Stock
which are (i) directly owned by such Person, (ii) indirectly owned by such
Person (if such Person is an "individual" as defined in Section 542(a)(2) of
the Code) taking into account the constructive ownership rules of Section 544
of the Code, as modified by Section 856(h)(1)(B) of the Code, or (iii)
beneficially owned by such Person pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended; provided, however, that in determining the
number of shares Beneficially Owned by a Person or group, no share shall be
counted more than once although applicable to two or more of clauses (i), (ii)
and (iii) of this definition or (in the case of a group) although Beneficially
Owned by more than one Person in such group. (If a Person Beneficially Owns
shares of Equity Stock that are not actually outstanding (e.g., shares issuable
upon the exercise of an option or convertible security) ("Option Shares"),
then, whenever these Articles require a determination of the percentage of
outstanding shares of a class of Equity Stock Beneficially Owned by that
Person, the Option Shares Beneficially Owned by that Person shall also be
deemed to be outstanding.)
"Beneficiary" shall mean, with respect to any Trust, one or
more organizations described in each of Section 170(b)(1)(A) (other than
clauses (vii) and (viii) thereof) and Section 170(c)(2) of the Code that are
named by the Corporation as the beneficiary or beneficiaries of such Trust, in
accordance with the provisions of Section 7.4.4 of Article VII.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Constructive Ownership" shall mean ownership of shares of
Equity Stock by a Person who is or would be treated as a direct or indirect
owner of such shares of Equity Stock through the application of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively Owned" shall
have correlative meanings.
"Equity Stock" shall mean a particular class (other than
Excess Stock) or series of stock of the Corporation. The use of the term
"Equity Stock" or any term defined by reference to the term "Equity Stock"
shall refer to the particular class or series of stock which is appropriate
under the context.
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"Look-Through Entity" shall mean a Person that is either (i) a
trust described in Section 401(a) of the Code and exempt from tax under Section
501(a) of the Code as modified by Section 856(h)(3) of the Code or (ii)
registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, with respect to a
class or series of Equity Stock, 15% of the number of outstanding shares of
such Equity Stock.
"Market Price" of Equity Stock on any date shall mean the
average of the Closing Price for shares of such Equity Stock for the five
consecutive Trading Days ending on such date. The "Closing Price" on any date
shall mean (A) where there exists a public market for the Corporation's Equity
Stock, the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Equity Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Equity Stock
are listed or admitted to trading or, if the shares of Equity Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq Stock Market,
Inc. or, if such system is no longer in use, the principal other automated
quotation system that may then be in use or (B) if no public market for the
Equity Stock exists, the Closing Price will be determined by a single,
independent appraiser selected by a committee composed of Independent Directors
which appraiser shall appraise the Market Price for such Equity Stock within
such guidelines as shall be determined by the committee of Independent
Directors.
"Non-Transfer Event" shall mean an event other than a
purported Transfer that would cause (a) any Person (other than a Look-Through
Entity) to Beneficially Own shares of Equity Stock in excess of the Ownership
Limit or (b) any Look-Through Entity to Beneficially Own shares of Equity Stock
in excess of the Look-Through Ownership Limit. Non-Transfer Events include but
are not limited to (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of shares (or of
Beneficial Ownership of shares) of Equity Stock or (ii) the sale, transfer,
assignment or other disposition of interests in any Person or of any securities
or rights convertible into or exchangeable for shares of Equity Stock or for
interests in any Person that results in changes in Beneficial Ownership of
shares of Equity Stock.
"Ownership Limit" shall mean, with respect to a class or
series of Equity Stock, 9.8% of the number of outstanding shares of such Equity
Stock.
"Permitted Transferee" shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Section 7.4.8 of
Article VII.
"Person" shall mean (a) an individual or any corporation,
partnership, estate,
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trust, association, private foundation, joint stock company or any other entity
and (b) a "group" as that term is used for purposes of Section 13(d)(3) of the
Exchange Act; but shall not include an underwriter that participates in a
public offering of Equity Stock for a period of 90 days following purchase by
such underwriter of such Equity Stock.
"Prohibited Owner" shall mean, with respect to any purported
Transfer or Non-Transfer Event, any Person who is prevented from becoming or
remaining the owner of record title to shares of Equity Stock by the provisions
of Section 7.4.1 of Article VII.
"Restriction Termination Date" shall mean the first day on
which the Board of Directors, in accordance with Article VI hereof, determines
that it is no longer in the best interests of the Corporation to attempt to, or
continue to, qualify under the Code as a REIT.
"Trading Day" shall mean a day on which the principal national
securities exchange on which any of the shares of Equity Stock are listed or
admitted to trading is open for the transaction of business or, if none of the
shares of Equity Stock are listed or admitted to trading on any national
securities exchange, any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law or executive order to close.
"Transfer" (as a noun) shall mean any sale, transfer, gift,
assignment, devise or other disposition of shares (or of Beneficial Ownership
of shares) of Equity Stock, whether voluntary or involuntary, whether of
record, constructively or beneficially and whether by operation of law or
otherwise. "Transfer" (as a verb) shall have the correlative meaning.
"Trust" shall mean any separate trust created and administered
in accordance with the terms of Section 7.4 of Article VII, for the exclusive
benefit of any Beneficiary.
"Trustee" shall mean any Person or entity, unaffiliated with
both the Corporation and any Prohibited Owner (and, if different than the
Prohibited Owner, the Person who would have had Beneficial Ownership of the
Shares that would have been owned of record by the Prohibited Owner),
designated by the Corporation to act as trustee of any Trust, or any successor
trustee thereof.
9.2 Restriction on Ownership and Transfer.
(a) (I) Except as provided in Section 9.4 of this Article
IX, until the Restriction Termination Date, (i) no Person (other than a
Look-Through Entity) shall Beneficially Own shares of Equity Stock in excess of
the Ownership Limit and (ii) no Look-Through Entity shall Beneficially Own
shares of Equity Stock in excess of the Look-Through Ownership Limit.
(II) Except as provided in Section 9.4 of this Article IX,
until the Restriction Termination Date, any purported Transfer (whether or not
the result of a transaction entered into through the facilities of the New York
Stock Exchange or any other national securities
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exchange or the Nasdaq Stock Market, Inc. or any other automated quotation
system) that, if effective, would result in any Person (other than a
Look-Through Entity) Beneficially Owning shares of Equity Stock in excess of
the Ownership Limit shall be void ab initio as to the Transfer of that number
of shares of Equity Stock which would be otherwise Beneficially Owned by such
Person in excess of the Ownership Limit, and the intended transferee shall
acquire no rights in such shares of Equity Stock.
(III) Except as provided in Section 9.4 of this Article IX,
until the Restriction Termination Date, any purported Transfer (whether or not
the result of a transaction entered into through the facilities of the New York
Stock Exchange or any other national securities exchange or the Nasdaq Stock
Market, Inc. or any other automated quotation system) that, if effective, would
result in any Look-Through Entity Beneficially Owning shares of Equity Stock in
excess of the Look-Through Ownership Limit shall be void ab initio as to the
Transfer of that number of shares of Equity Stock which would be otherwise
Beneficially Owned by such Look-Through Ownership Entity in excess of the
Look-Through Ownership Limit, and the intended transferee Look-Through Entity
shall acquire no rights in such shares of Equity Stock.
(b) Until the Restriction Termination Date, any purported
Transfer (whether or not the result of a transaction entered into through the
facilities of the New York Stock Exchange or any other national securities
exchange or the Nasdaq Stock Market, Inc. or any other automated quotation
system) of shares of Equity Stock that, if effective, would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code shall be void ab initio as to the Transfer of that number of shares of
Equity Stock that would cause the Corporation to be "closely held" within the
meaning of Section 856(h) of the Code, and the intended transferee shall
acquire no rights in such shares of Equity Stock.
(c) Until the Restriction Termination Date, any purported
Transfer (whether or not the result of a transaction entered into through the
facilities of the New York Stock Exchange or any other national securities
exchange or the Nasdaq Stock Market, Inc. or any other automated quotation
system) of shares of Equity Stock that, if effective, would cause the
Corporation to Constructively Own 10% or more of the ownership interests in a
tenant of the real property of the Corporation or any direct or indirect
subsidiary (whether a corporation, partnership, limited liability company or
other entity) of the Corporation (a "Subsidiary"), within the meaning of
Section 856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of
that number of shares of Equity Stock that would cause the Corporation to
Constructively Own 10% or more of the ownership interests in a tenant of the
real property of the Corporation or a Subsidiary within the meaning of Section
856(d)(2)(B) of the Code, and the intended transferee shall acquire no rights
in such shares of Equity Stock.
(d) Until the Restriction Termination Date, any purported
Transfer (whether or not the result of a transaction entered into through the
facilities of the New York Stock Exchange or any other national securities
exchange or the Nasdaq Stock Market, Inc. or any other automated quotation
system) that, if effective, would result in shares of Equity Stock being
beneficially owned by fewer than 100 persons within the meaning of Section
856(a)(5) of
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the Code shall be void ab initio and the intended transferee shall acquire no
rights in such shares of Equity Stock.
9.3 Owners Required to Provide Information. Until the Restriction
Termination Date:
(a) Every Beneficial Owner of more than 5%, or such lower
percentages as are then required pursuant to regulations under the Code, of the
outstanding shares of any class or series of Equity Stock of the Corporation as
of any dividend record date on the Corporation's Equity Stock shall, within 30
days after January 1 of each year, provide to the Corporation a written
statement or affidavit stating the name and address of such Beneficial Owner,
the number of shares of Equity Stock Beneficially Owned by such Beneficial
Owner as of each such dividend record date, and a description of how such
shares are held. Each such Beneficial Owner shall provide to the Corporation
such additional information as the Corporation may request in order to
determine the effect, if any, of such Beneficial Ownership on the Corporation's
status as a REIT and to ensure compliance with the Ownership Limit.
(b) Each Person who is a Beneficial Owner of shares of
Equity Stock and each Person (including the stockholder of record) who is
holding shares of Equity Stock for a Beneficial Owner shall provide to the
Corporation a written statement or affidavit stating such information as the
Corporation may request in order to determine the Corporation's status as a
REIT and to ensure compliance with the Ownership Limit.
9.4. Exception. The Board of Directors, upon receipt of a ruling
from the Internal Revenue Service or an opinion of counsel or other evidence or
undertakings acceptable to it, may, in its sole discretion, waive the
application of the Ownership Limit or the Look-Through Ownership Limit to a
Person subject, as the case may be, to any such limit, provided that (A) the
Board of Directors obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain that such Person's Beneficial
Ownership or Constructive Ownership of shares of Equity Stock will now and in
the future (i) not result in the Corporation being "closely held" within the
meaning of Section 856(h) of the Code, (ii) not cause the Corporation to
Constructively Own 10% or more of the ownership interests of a tenant of the
Corporation or a Subsidiary within the meaning of Section 856(d)(2)(B) of the
Code and to violate the 95% gross income test of Section 856(c)(2) of the Code,
and (iii) not result in the shares of Equity Stock of the Corporation being
beneficially owned by fewer than 100 persons within the meaning of Section
856(a)(5) of the Code, and (B) such Person agrees in writing that any violation
or attempted violation of (x) such other limitation as the Board of Directors
may establish at the time of such waiver with respect to such Person or (y)
such other restrictions and conditions as the Board of Directors may in its
sole discretion impose at the time of such waiver with respect to such Person,
will result, as of the time of such violation even if discovered after such
violation, in the conversion of such shares in excess of the original limit
applicable to such Person into shares of Excess Stock pursuant to Section 7.4.1
of Article VII.
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9.5 New York Stock Exchange Transactions. Notwithstanding any
provision contained herein to the contrary, nothing in these Articles shall
preclude the settlement of any transaction entered into through the facilities
of the New York Stock Exchange or any other national securities exchange or the
Nasdaq Stock Market, Inc. or any other automated quotation system. In no event
shall the existence or application of the preceding sentence have the effect of
deterring or preventing the conversion of Equity Stock into Excess Stock as
contemplated herein.
9.6 Ambiguity. In the case of an ambiguity in the application of
any of the provisions of this Article IX, including any definition contained in
Section 9.1 of this Article IX, the Board of Directors shall have the power to
determine the application of the provisions of this Article IX with respect to
any situation based on the facts known to it.
9.7 Remedies Not Limited. Except as set forth in Section 9.5 of
this Article IX, nothing contained in this Article IX or Article VII shall
limit the authority of the Corporation to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
stockholders by preservation of the Corporation's status as a REIT and to
ensure compliance with the Ownership Limit or the Look-Through Ownership Limit.
ARTICLE X
RIGHTS AND POWERS OF CORPORATION,
BOARD OF DIRECTORS AND OFFICERS
In carrying on its business, or for the purpose of attaining or
furthering any of its objects, the Corporation shall have all of the rights,
powers and privileges granted to corporations by the laws of the State of
Maryland, as well as the power to do any and all acts and things that a natural
person or partnership could do as now or hereafter authorized by law, either
alone or in partnership or conjunction with others. In furtherance and not in
limitation of the powers conferred by statute, the powers of the Corporation
and of the Directors and stockholders shall include the following:
10.1 Conflicts of Interest. Any Director or officer individually,
or any firm of which any Director or officer may be a member, or any
corporation or association of which any Director or officer may be a director
or officer or in which any Director or officer may be interested as the holder
of any amount of its Stock or otherwise, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
Corporation, and, in the absence of fraud, no contract or other transaction
shall be thereby affected or invalidated; provided, however, that (a) such fact
shall have been disclosed or shall have been known to the Board of Directors or
the committee thereof that approved such contract or transaction and such
contract or transaction shall have been approved or ratified by the affirmative
vote of a majority of the disinterested Directors, or (b) such fact shall have
been disclosed or shall have been known to the stockholders entitled to vote,
and such contract or transaction shall have been approved or ratified by a
majority of the votes cast by the stockholders entitled to vote, other than the
votes of shares owned of record or beneficially by the interested Director or
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corporation, firm or other entity, or (c) the contract or transaction is fair
and reasonable to the Corporation. Any Director of the Corporation who is also
a director or officer of or interested in such other corporation or
association, or who, or the firm of which he is a member, is so interested, may
be counted in determining the existence of a quorum at any meeting of the Board
of Directors of the Corporation which shall authorize any such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or association or were not so interested or
were not a member of a firm so interested.
10.2 Amendment of Articles. The Corporation reserves the right,
from time to time, to make any amendment of its Articles, now or hereafter
authorized by law, including any amendment which alters the contract rights, as
expressly set forth in its Articles, of any outstanding Stock.
No amendment or repeal of these Articles shall be made unless the same
is first approved by the Board of Directors pursuant to a resolution adopted by
the Board of Directors in accordance with the MGCL, and, except as otherwise
provided by law, thereafter approved by the stockholders.
Whenever any vote of the holders of voting stock is required to amend
or repeal any provision of these Articles, then in addition to any other vote
of the holders of voting stock that is required by these Articles, the
affirmative vote of the holders of a majority of the outstanding shares of
Stock of the Corporation entitled to vote on such amendment or repeal, voting
together as a single class, and the affirmative vote of the holders of a
majority of the outstanding shares of each class entitled to vote thereon as a
class, shall be required to amend or repeal any provision of these Articles;
provided, however, that the affirmative vote of the holders of not less than
two-thirds of the outstanding shares entitled to vote on such amendment or
repeal, voting together as a single class, and the affirmative vote of the
holders of not less than two-thirds of the outstanding shares of each class
entitled to vote thereon as a class, shall be required to amend or repeal any
of the provisions of Sections 6.4, 6.5 or 6.6 of Article VI, Article X or
Article XII of these Articles.
ARTICLE XI
INDEMNIFICATION
The Corporation (which for the purpose of this Article XI shall
include predecessor entities of the Corporation as set forth in Section 2-418
of the MGCL) shall have the power to the maximum extent permitted by Maryland
law in effect from time to time, to obligate itself to indemnify, and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding
to, (a) any individual who is a present or former Director or officer of the
Corporation or (b) any individual who, while a Director of the Corporation and
at the request of the Corporation, serves or has served as a director, officer,
partner or trustee of another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or any other
enterprise from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his status as a
present or former
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Director or officer of the Corporation. The Corporation shall have the power,
with the approval of the Board of Directors, to provide such indemnification
and advancement of expenses to a person who served a predecessor of the
Corporation in any of the capacities described in (a) or (b) above and to any
employee or agent of the Corporation or a predecessor of the Corporation.
ARTICLE XII
LIMITATION OF LIABILITY
To the fullest extent permitted under the MGCL as in effect on the
date of filing these Articles or as the MGCL is thereafter amended from time to
time, no Director or officer shall be liable to the Corporation or its
stockholders for money damages. Neither the amendment or the repeal of this
Article, nor the adoption of any other provision in the Corporation's Articles
inconsistent with this Article, shall eliminate or reduce the protection
afforded by this Article to a Director or officer of the Corporation with
respect to any matter which occurred, or any cause of action, suit or claim
which but for this Article would have accrued or arisen, prior to such
amendment, repeal or adoption.
ARTICLE XIII
MISCELLANEOUS
13.1 Provisions in Conflict with Law or Regulations.
(a) The provisions of these Articles are severable, and
if the Directors shall determine that any one or more of such provisions are in
conflict with the REIT provisions of the Code, or other applicable federal or
state laws, the conflicting provisions shall be deemed never to have
constituted a part of these Articles, even without any amendment of these
Articles pursuant to Section 10.2 hereof; provided, however, that such
determination by the Directors shall not affect or impair any of the remaining
provisions of these Articles or render invalid or improper any action taken or
omitted prior to such determination. No Director shall be liable for making or
failing to make such a determination.
(b) If any provision of these Articles or any application
of such provision shall be held invalid or unenforceable by any federal or
state court having jurisdiction, such holding shall not in any manner affect or
render invalid or unenforceable such provision in any other jurisdiction, and
the validity of the remaining provisions of these Articles shall not be
affected. Other applications of such provision shall be affected only to the
extent necessary to comply with the determination of such court.
ARTICLE XIV
DESIGNATED SERIES OF PREFERRED STOCK
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14.1 Series A Preferred Stock. The Board of Directors has duly
divided and classified 2,308,800 shares of the Preferred Stock of the
Corporation into a series designated Series A Preferred Stock and has provided
for the issuance of such series. Subject in all cases to the provisions of
Section 7.4 of Article VII and Article IX of the Articles with respect to
Excess Stock, the following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Series A Preferred
Stock of the Corporation:
14.1.1 Designation and Amount. The designation of the
Preferred Stock described in Section 14.1 hereof shall
be "Series A Preferred Stock (par value $.01 per share)"
(hereinafter "Series A Preferred Stock"). The number of
authorized shares of Series A Preferred Stock is 2,308,800.
The Series A Preferred Stock shall rank (a) senior to the
Corporation's Series E Preferred Stock (as defined in Section
14.5 hereof) and Common Stock, (b) on a pari passu basis with
the Corporation's Series B Preferred Stock (as defined in
Section 14.2 hereof), and (c) junior to the Corporation's
Series C Preferred Stock (as defined in Section 14.3 hereof),
Series D Preferred Stock (as defined in Section 14.4 hereof),
Series F Preferred Stock (as defined in Section 14.6 hereof)
and Series G Preferred Stock (as defined in Section 14.7
hereof), with respect to the payment of dividends.
14.1.2 Dividend Rights.
(a) The holders of record of outstanding shares of Series
A Preferred Stock shall be entitled to receive, when and as authorized by the
Board of Directors, out of funds legally available therefor, cash dividends
which are (i) cumulative, (ii) preferential to the dividends paid on the
Corporation's Series E Preferred Stock and Common Stock, on a pari passu basis
to the dividends paid on the Corporation's Series B Preferred Stock, and junior
to the dividends paid on the Corporation's Series C Preferred Stock, Series D
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock, and
(iii) payable at an annual rate equal to the Series A Dividend Amount, and no
more, on the fifteenth day of each February, May, August and November following
the date of original issuance of the Series A Preferred Stock (the "Series A
Original Issue Date"). Each calendar quarter immediately preceding the
fifteenth day of February, May, August and November (or if the Series A
Original Issue Date is not on the first day of a calendar quarter, the period
beginning on the date of issuance and ending on the last day of the calendar
quarter of issuance) is referred to hereinafter as a "Series A Dividend
Period." The initial per share Series A Dividend Amount per annum shall be
equal to $1.6068. The amount of dividends payable for each full Series A
Dividend Period for the Series A Preferred Stock shall be computed by dividing
the Series A Dividend Amount by four. The amount of dividends on the Series A
Preferred Stock payable for the initial Series A Dividend Period, or any other
period shorter or longer than a full Series A Dividend Period, shall be
computed ratably on the basis of the actual number of days in such Series A
Dividend Period. In the event of any change in the quarterly cash dividend per
share applicable to the Common Stock, the quarterly cash dividend per share on
the Series A Preferred Stock shall be adjusted for the same dividend period by
an amount computed by multiplying the amount of the change in the Common Stock
dividend times the Series A Conversion Ratio (as defined in Section 14.1.4(a)).
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(b) In the event the Corporation shall declare a
distribution payable in (i) securities of other persons, (ii) evidences of
indebtedness issued by the Corporation or other persons, (iii) assets
(excluding cash dividends) or (iv) options or rights to purchase capital stock
or evidences of indebtedness in the Corporation or other persons, then, in each
such case for the purpose of this Section 14.1.2(b), the holders of the Series
A Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series A Preferred Stock
are or would be convertible (assuming such shares of Series A Preferred Stock
were then convertible).
(c) The Corporation shall not (i) declare or pay or set
apart for payment any dividends or distributions on any Stock ranking as to
dividends junior to the Series A Preferred Stock (other than dividends paid in
shares of such junior Stock) or (ii) make any purchase or redemption of, or any
sinking fund payment for the purchase or redemption of, any Stock ranking as to
dividends junior to the Series A Preferred Stock (other than a purchase or
redemption made by issue or delivery of such junior Stock) unless all dividends
payable on all outstanding shares of Series A Preferred Stock for all past
Series A Dividend Periods shall have been paid in full or declared and a
sufficient sum set apart for payment thereof, provided, however, that any
moneys theretofore deposited in any sinking fund with respect to any Preferred
Stock of the Corporation in compliance with the provisions of such sinking fund
may thereafter be applied to the purchase or redemption of such Preferred Stock
in accordance with the terms of such sinking fund.
(d) All dividends declared on shares of Series A
Preferred Stock and any other class of Preferred Stock or series thereof
ranking on a parity as to dividends with the Series A Preferred Stock shall be
declared pro rata, so that the amounts of dividends declared per share on the
Series A Preferred Stock for the Series A Dividend Period of the Series A
Preferred Stock ending either on the same day or within the dividend period of
such other Stock shall, in all cases, bear to each other the same ratio that
accrued dividends per share on the shares of Series A Preferred Stock and such
other Stock bear to each other.
14.1.3 Liquidation Rights.
(a) Subject to the prior rights of the Corporation's
Series C Preferred Stock, Series D Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and any class or series of Stock the terms of which
specifically provide that such Stock ranks senior to the Series A Preferred
Stock, in the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, the holders of Series A Preferred
Stock shall be entitled to receive, on a pari passu basis with the holders of
the Corporation's Series B Preferred Stock and prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of Common Stock by reason of their ownership of such Stock, an amount
equal to all accrued but unpaid dividends for each share of Series A Preferred
Stock then held by them. If
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upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders of the full amounts to which they are entitled under
the preceding sentence, then, subject to any prior rights of any classes or
series of Stock, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably to the holders of the
Series A Preferred Stock and the holders of any other shares of Stock on a
parity for liquidation purposes with the Series A Preferred Stock in proportion
to the aggregate amounts owed to each such holder.
(b) Subject to any prior rights of any other class or
series of Stock, after the payment or setting apart of payment to the holders
of Series A Preferred Stock of the full preferential amounts to which they
shall be entitled pursuant to Section 14.1.3(a) above, the holders of the
Series A Preferred Stock shall be treated pari passu with the holders of the
record of Common Stock, with each holder of record of Series A Preferred Stock
being entitled to receive in addition to the amounts payable pursuant to
Section 14.1.3(a) above, that amount which such holder would be entitled to
receive if such holder had converted all its Series A Preferred Stock into
Common Stock immediately prior to the liquidating distribution in question.
14.1.4 Conversion.
(a) Right to Convert. Beginning on the third anniversary
of the Series A Original Issue Date, the holders of shares of Series A
Preferred Stock shall have the right, at their option, to convert each such
share, at any time and from time to time, into one (the "Series A Conversion
Ratio," which shall be subject to adjustment as hereinafter provided) fully
paid and nonassessable share of Common Stock; provided, however, that no holder
of Series A Preferred Stock shall be entitled to convert shares of such Series
A Preferred Stock into Common Stock pursuant to the foregoing provision, if, as
a result of such conversion, such person would become the Beneficial Owner of
more than 4.9% of the Corporation's outstanding Common Stock (the "4.9%
Limitation"). As used in Section 14.1 and 14.2 hereof, Beneficial Owner shall
have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of
1934 (or any successor provision thereto). Notwithstanding the foregoing, such
conversion right may be exercised at any time after the Series A Original Issue
Date and irrespective of the 4.9% Limitation (and no such limit shall apply) if
any of the following circumstances occurs:
(i) For any two consecutive fiscal quarters, the
aggregate amount outstanding as of the end of the quarter under (1)
all mortgage indebtedness of the Corporation and its consolidated
entities and (2) unsecured indebtedness of the Corporation and its
consolidated entities exceeds sixty-five percent (65%) of the amount
arrived at by (A) taking the Corporation's consolidated gross revenues
less property-related expenses, including real estate taxes,
insurance, maintenance and utilities, but excluding depreciation,
amortization, interest and corporate general and administrative
expenses, for the quarter in question and the immediately preceding
quarter, (B) multiplying the amount in clause (A) by two (2), and (C)
dividing the resulting product in clause (B) by nine percent (9%) (all
as such items of indebtedness, revenues and expenses are reported in
consolidated financial statements contained in the Corporation's Forms
10-K and Forms 10-Q as filed with the Securities and Exchange
Commission); or
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(ii) Gilbert M. Meyer has ceased to be an executive
officer of the Corporation, unless the holders of a majority of the
shares of the Series A Preferred Stock then outstanding have voted on
and approved a replacement for Mr. Meyer and the replacement remains
an executive officer of the Corporation; or
(iii) If (A) the Corporation shall be party to, or shall
have entered into an agreement for, any transaction (including,
without limitation, a merger, consolidation, statutory share exchange
or sale of all or substantially all of its assets (each of the
foregoing a "Series A Transaction")), in each case as a result of
which shares of Common Stock shall have been or will be converted into
the right to receive stock, securities or other property (including
cash or any combination thereof) or which has resulted or will result
in the holders of Common Stock immediately prior to the Series A
Transaction owning less than 50% of the Common Stock after the Series
A Transaction, or (B) a "change of control" as defined in the next
sentence occurs with respect to the Corporation. A change of control
shall mean the acquisition (including by virtue of a merger, share
exchange or other business combination) by one stockholder or a group
of stockholders acting in concert of the power to elect a majority of
the Corporation's Board of Directors. The Corporation shall notify
the holders of Series A Preferred Stock promptly if any of the events
listed in this Section 14.1.4(a)(iii) shall occur. Calculations set
forth in Section 14.1.4(a)(i) shall be made without regard to
unconsolidated indebtedness incurred as a joint venture partner, and
the effect of any unconsolidated joint venture, including any income
from such unconsolidated joint venture, shall be excluded for purposes
of the calculation set forth in Section 14.1.4(a)(i).
(b) Mandatory Conversion. On the tenth anniversary of
the Series A Original Issue Date (the "Series A Mandatory Conversion Date"),
each issued and outstanding share of Series A Preferred Stock which has not
been converted to Common Stock shall mandatorily convert to that number of
fully paid and nonassessable shares of Common Stock equal to the Series A
Conversion Ratio, as adjusted, regardless of the 4.9% Limitation. From and
after the Series A Mandatory Conversion Date, certificates representing shares
of Series A Preferred Stock shall be deemed to represent the shares of Common
Stock into which they have been converted. Following the Series A Mandatory
Conversion Date, the holder of certificates for Series A Preferred Stock may
surrender those certificates at the office of any transfer agent for the Common
Stock, or if there is no such transfer agent, at the principal offices of the
Corporation, or at such other office as may be designated by the Corporation,
accompanied by instructions from the holder as to the name(s) and address(es)
in which such holder wishes the certificate(s) for the shares of Common Stock
issuable upon such conversion to be issued. Promptly following surrender of
certificates for Series A Preferred Stock after the Series A Mandatory
Conversion Date, the Corporation shall issue and deliver at such office a
certificate or certificates for the number of whole shares of Common Stock
issuable upon mandatory conversion of the Series A Preferred Stock to the
person(s) entitled to receive the same. For purposes of Sections 14.1.4(d) and
14.1.4(e) below, the Series A Mandatory Conversion Date shall constitute the
Series A Conversion Date.
(c) Procedure for Conversion. In order to exercise its
right to convert shares
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of Series A Preferred Stock into Common Stock, the holder of shares of Series A
Preferred Stock shall surrender the certificate(s) therefor, duly endorsed if
the Corporation shall so require, or accompanied by appropriate instruments of
transfer satisfactory to the Corporation, at the office of any transfer agent
for the Series A Preferred Stock, or if there is no such transfer agent, at the
principal offices of the Corporation, or at such other office as may be
designated by the Corporation, together with written notice that such holder
elects to convert such shares. Such notice shall also state the name(s) and
address(es) in which such holder wishes the certificate(s) for the shares of
Common Stock issuable upon conversion to be issued. As soon as practicable
after a conversion, the Corporation shall issue and deliver at said office a
certificate or certificates for the number of whole shares of Common Stock
issuable upon conversion of the shares of Series A Preferred Stock duly
surrendered for conversion, to the person(s) entitled to receive the same.
Shares of Series A Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the date on which the
certificates therefor and notice of intention to convert the same are duly
received by the Corporation in accordance with the foregoing provisions, and
the person(s) entitled to receive the Common Stock issuable upon such
conversion shall be deemed for all purposes as record holder(s) of such Common
Stock as of the close of business on such date (hereinafter, the "Series A
Conversion Date").
(d) Fractional Shares. No fractional shares shall be
issued upon conversion of the Series A Preferred Stock into Common Stock, and
the number of shares of Common Stock to be issued shall be rounded to the
nearest whole share. As to any final fraction of a share which the holder of
one or more shares of Series A Preferred Stock would be entitled to receive
upon exercise of his conversion right the Corporation shall pay a cash
adjustment in an amount equal to the same fraction of the last sale price (or
bid price if there were no sales) per share of Common Stock on the New York
Stock Exchange on the business day which next precedes the Series A Conversion
Date or, if such Common Stock is not then listed on the New York Stock
Exchange, of the market price per share (as determined in a manner prescribed
by the Board of Directors of the Corporation) at the close of business on the
business day which next precedes the Series A Conversion Date.
(e) Payment of Adjusted Accrued Dividends Upon
Conversion. On the next dividend payment date (or such later date as is
permitted in this Section 14.1.4(e)) following any Series A Conversion Date
hereunder, the Corporation shall pay in cash Series A Adjusted Accrued
Dividends (as defined below) on shares of Series A Preferred Stock so
converted. The holder shall be entitled to receive accrued and unpaid
dividends accrued to and including the Series A Conversion Date on the shares
of Series A Preferred Stock converted (assuming that such dividends accrue
ratably each day that such shares are outstanding), less an amount equal to the
pre-conversion portion of the dividends paid on the shares of Common Stock
issued upon such conversion (the "Series A Conversion Stock"). (The record
date for the Series A Conversion Stock which occurs after the Series A
Conversion Date is hereinafter referred to as the "Series A Subsequent Record
Date.") The pre-conversion portion of such Series A Conversion Stock dividend
means that portion of such dividend as is attributable to the period that (i)
begins on the day after the last Series A Conversion Stock dividend record date
occurring before such Series A Subsequent Record Date and (ii) ends on such
Series A Conversion Date, assuming that such dividends accrue ratably during
the period. The term "Series A Adjusted
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Accrued Dividends" means the amount arrived at through the application of the
foregoing formula. Series A Adjusted Accrued Dividends shall not be less than
zero. The formula for Series A Adjusted Accrued Dividends shall be applied to
effectuate the Corporation's intent that the holder converting shares of Series
A Preferred Stock to Series A Conversion Stock shall be entitled to receive
dividends on such shares of Series A Preferred Stock up to and including the
Series A Conversion Date and shall be entitled to the dividends on the shares
of Series A Conversion Stock issued upon such conversion which are deemed to
accrue beginning on the first day after the Series A Conversion Date, but shall
not be entitled to dividends attributable to the same period for both the
shares of Series A Preferred Stock converted and the shares of Series A
Conversion Stock issued upon such conversion. The Corporation shall be
entitled to withhold (to the extent consistent with the intent to avoid double
dividends for overlapping portions of Series A Preferred and Series A
Conversion Stock dividend periods) the payment of Series A Adjusted Accrued
Dividends until the applicable Series A Subsequent Record Date, even though
such date occurs after the applicable dividend payment date with respect to the
Series A Preferred Stock, in which event the Corporation shall mail to each
holder who converted Series A Preferred Stock a check for the Series A Adjusted
Accrued Dividends thereon within five (5) business days after such Series A
Subsequent Record Date. Series A Adjusted Accrued Dividends shall be
accompanied by an explanation of how such Series A Adjusted Accrued Dividends
have been calculated. Series A Adjusted Accrued Dividends shall not bear
interest.
(f) Adjustments.
(i) In the event the Corporation shall at any time (i)
pay a dividend or make a distribution to holders of Common Stock in
shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a larger number of shares, or (iii) combine its
outstanding shares of Common Stock into a smaller number of shares,
the Series A Conversion Ratio shall be adjusted on the effective date
of the dividend, distribution, subdivision or combination by
multiplying the Series A Conversion Ratio by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding
immediately prior to such dividend, distribution, subdivision or
combination and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such dividend,
distribution, subdivision or combination.
(ii) Whenever the Series A Conversion Ratio shall be
adjusted as herein provided, the Corporation shall cause to be mailed
by first class mail, postage prepaid, as soon as practicable to each
holder of record of shares of Series A Preferred Stock a notice
stating that the Series A Conversion Ratio has been adjusted and
setting forth the adjusted Series A Conversion Ratio, together with an
explanation of the calculation of the same.
(iii) If the Corporation shall be party to any Series A
Transaction in each case
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as a result of which shares of Common Stock shall be converted into
the right to receive stock, securities or other property (including
cash or any combination thereof), the holder of each share of Series A
Preferred Stock shall have the right in connection with such Series A
Transaction to convert such share, pursuant to the optional conversion
provisions hereof, into the number and kind of shares of stock or
other securities and the amount and kind of property receivable upon
such Series A Transaction by a holder of the number of shares of
Common Stock issuable upon conversion of such share of Series A
Preferred Stock immediately prior to such Series A Transaction. The
Corporation shall not be party to any Series A Transaction unless the
terms of such Series A Transaction are consistent with the provisions
of this Section 14.1.4(f)(iii), and it shall not consent to or agree
to the occurrence of any Series A Transaction until the Corporation
has entered into an agreement with the successor or purchasing entity,
as the case may be, for the benefit of the holders of the Series A
Preferred Stock, thereby enabling the holders of the Series A
Preferred Stock to receive the benefits of this Section 14.1.4(f)(iii)
and the other provisions of the Articles. Without limiting the
generality of the foregoing, provision shall be made for adjustments
in the Series A Conversion Ratio which shall be as nearly equivalent
as may be practicable to the adjustments provided for in Section
14.1.4(f)(iii). The provisions of this Section 14.1.4(f)(iii) shall
similarly apply to successive Series A Transactions.
(iv) In the event that the Corporation shall propose to
effect any Series A Transaction which would result in an adjustment
under Section 14.1.4(f)(iii), the Corporation shall cause to be mailed
to the holders of record of Series A Preferred Stock at least 20 days
prior to the record date for such Series A Transaction a notice
stating the date on which such Series A Transaction is expected to
become effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
Series A Transaction. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such Series A
Transaction.
(g) Other.
(i) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the maximum
number of shares of Common Stock issuable upon the conversion of all
shares of Series A Preferred Stock then outstanding, and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, in addition to
such other remedies as shall be available to the holder of such Series
A Preferred Stock, the Corporation shall take such corporate action as
may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
(ii) The Corporation shall pay any taxes that may be
payable in respect of the issuance of shares of Common Stock upon
conversion of shares of Series A Preferred
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Stock, but the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer of shares of Series A
Preferred Stock or any transfer involved in the issuance of shares of
Common Stock in a name other than that in which the shares of Series A
Preferred Stock so converted are registered, and the Corporation shall
not be required to transfer any such shares of Series A Preferred
Stock or to issue or deliver any such shares of Common Stock unless
and until the person(s) requesting such transfer or issuance shall
have paid to the Corporation the amount of any such taxes, or shall
have established to the satisfaction of the Corporation that such
taxes have been paid.
(iii) The Corporation will not, by amendment of the
Articles or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good
faith assist in carrying out of all the provisions of the Articles and
in the taking of all such action as may be necessary or appropriate to
protect the conversion rights of the holders of the Series A Preferred
Stock against impairment.
(iv) Holders of Series A Preferred Stock shall be entitled
to receive copies of all communications by the Corporation to its
holders of Common Stock, concurrently with the distribution to such
shareholders.
14.1.5 Voting Rights. Except as indicated in this
Section 14.1.5, or except as otherwise from time to time
required by applicable law, the holders of shares of Series A
Preferred Stock shall not be entitled to vote on any matter on
which the holders of shares of Common Stock are entitled to
vote, except that the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting as a separate
class, shall be required to vote on and approve any material
adverse change in the rights, preferences or privileges of the
Series A Preferred Stock. For purposes of the foregoing, the
creation of a new class of Stock having rights, preferences or
privileges senior to, in parity with or junior to the rights,
preferences or privileges of the Series A Preferred Stock
shall not be treated as a material adverse change in the
rights, preferences or privileges of the Series A Preferred
Stock, and the holders of Series A Preferred Stock shall not
have any right to vote on the creation of such new class of
Stock. Except as provided above and as required by law, the
holders of Series A Preferred Stock are not entitled to vote
on any merger or consolidation involving the Corporation, on
any share exchange or on a sale of all or substantially all of
the assets of the Corporation.
14.1.6 Reacquired Shares. Shares of Series A Preferred
Stock converted, redeemed or otherwise purchased or acquired
by the Corporation shall be restored to the status of authorized but
unissued shares of Preferred Stock without designation as to series.
14.2 Series B Preferred Stock. The Board of Directors has duly
divided and classified 425,000 shares of the Preferred Stock of the Corporation
into a series designated Series B Preferred Stock and has provided for the
issuance of such series. Subject in all cases to the
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provisions of Section 7.4 of Article VII and Article IX of the Articles with
respect to Excess Stock, the following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of the Series
B Preferred Stock of the Corporation:
14.2.1 Designation and Amount. The designation of the
Preferred Stock described in Section 14.2 hereof shall be
"Series B Preferred Stock (par value $.01 per share)" (hereinafter,
the "Series B Preferred Stock"). The number of shares of the Series B
Preferred Stock is 425,000. The Series B Preferred Stock shall rank
(a) senior to the Corporation's Series E Preferred Stock and Common
Stock, (b) on a pari passu basis with the Corporation's Series A
Preferred Stock, and (c) junior to the Corporation's Series C
Preferred Stock, Series D Preferred Stock, Series F Preferred Stock
and Series G Preferred Stock, with respect to the payment of
dividends. The Series B Preferred Stock shall have identical
preferences, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption, conversion and
other rights as the Series A Preferred Stock.
14.2.2 Dividend Rights.
(a) The holders of record of outstanding shares of Series
B Preferred Stock shall be entitled to receive, when, as and if authorized by
the Board of Directors, out of funds legally available therefor, cash dividends
which are (1) cumulative (2) preferential to the dividends paid on the
Corporation's Series E Preferred Stock and Common Stock, on a pari passu basis
with the dividends paid on the Corporation's Series A Preferred Stock, and
junior to the dividends paid on the Corporation's Series C Preferred Stock,
Series D Preferred Stock, Series F Preferred Stock and Series G Preferred
Stock, and (3) payable at an annual rate equal to the Series B Dividend Amount
(as defined below) and no more, on the fifteenth day of each February, May,
August and November following the date of original issuance of the Series B
Preferred Stock (the "Series B Original Issue Date"). Each calendar quarter
immediately preceding the fifteenth day of February, May, August and November
(or if the Series B Original Issue Date is not on the first day of a calendar
quarter, the period beginning on the date of issuance and ending on the last
day of the calendar quarter of issuance) is referred to hereinafter as a
"Series B Dividend Period." The initial per share Series B Dividend Amount per
annum shall be equal to $1.648. The amount of dividends payable for each full
Series B Dividend Period for each share of the Series B Preferred Stock shall
be computed by dividing the per share Series B Dividend Amount by four. The
amount of dividends on the Series B Preferred Stock payable for the initial
Series B Dividend Period, or any other period shorter or longer than a full
Series B Dividend Period, shall be computed ratably on the basis of the actual
number of days in such Series B Dividend Period. In the event of any change in
the quarterly cash dividend per share declared on the Common Stock, the
quarterly cash dividend per share on the Series B Preferred Stock shall be
adjusted for the same Series B Dividend Period by an amount computed by
multiplying the amount of the change in the Common Stock dividend times the
Series B Conversion Ratio (as defined in Section 14.2.4(a)).
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(b) In the event the Corporation shall declare a
distribution payable in (i) securities of other persons, (ii) evidences of
indebtedness issued by the Corporation or other persons, (iii) assets
(excluding cash dividends) or (iv) options or rights to purchase capital stock
or evidences of indebtedness in the Corporation or other persons, then, in each
such case for the purpose of this Section 14.2.2(b), the holders of the Series
B Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series B Preferred Stock
are or would be convertible (assuming such shares of Series B Preferred Stock
were then convertible).
(c) The Corporation shall not (i) declare or pay or set
apart for payment any dividends or distributions on any Stock ranking as to
dividends junior to the Series B Preferred Stock (other than dividends paid in
shares of such junior Stock) or (ii) make any purchase or redemption of, or any
sinking fund payment for the purchase or redemption of, any Stock ranking as to
dividends junior to the Series B Preferred Stock (other than a purchase or
redemption made by issue or delivery of such junior Stock) unless all dividends
payable on all outstanding shares of Series B Preferred Stock for all past
Series B Dividend Periods shall have been paid in full or declared and a
sufficient sum set apart for payment thereof, provided, however, that any
moneys theretofore deposited in any sinking fund with respect to any Preferred
Stock of the Corporation in compliance with the provisions of such sinking fund
may thereafter be applied to the purchase or redemption of such Preferred Stock
in accordance with the terms of such sinking fund.
(d) All dividends declared on shares of Series B
Preferred Stock and any other class of Preferred Stock or series thereof
ranking on a parity as to dividends with the Series B Preferred Stock and the
Series A Preferred Stock shall be declared pro rata, so that the amounts of
dividends declared per share on the Series B Preferred Stock and Series A
Preferred Stock for the Series B Dividend Period of the Series B Preferred
Stock and Series A Preferred Stock ending either on the same day or within the
dividend period of such other Stock, shall, in all cases, bear to each other
the same ratio that accrued dividends per share on the shares of Series B
Preferred Stock, Series A Preferred Stock and such other Stock bear to each
other.
14.2.3 Liquidation Rights.
(a) Subject to any prior rights of any class or series of
Stock, in the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, the holders of Series B Preferred
Stock shall be entitled to receive, on a pari passu basis with the holders of
the Corporation's Series A Preferred Stock and prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of Common Stock by reason of their ownership of such Stock, an amount
equal to all accrued but unpaid dividends for each share of Series B Preferred
Stock then held by them. If upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series B Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
amounts to which they are entitled, then, subject to any prior rights of any
classes or series of Stock, the
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entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably to the holders of the Series A Preferred Stock and
Series B Preferred Stock, and any other shares of Stock on a parity for
liquidation purposes in proportion to the aggregate amounts owed to each such
holder.
(b) Subject to any prior rights of any other class or
series of Stock, after the payment or setting apart of payment to the holders
of Series B Preferred Stock of the full preferential amounts to which they
shall be entitled pursuant to Section 14.2.3(a) above, the holders of record of
the Series B Preferred Stock shall be treated pari passu with the holders of
record of Series A Preferred Stock and Common Stock, with each holder of record
of Series B Preferred Stock being entitled to receive, in addition to the
amounts payable pursuant to Section 14.2.3(a) above, that amount which such
holder would be entitled to receive if such holder had converted all its Series
B Preferred Stock into Common Stock immediately prior to the liquidating
distribution in question.
14.2.4 Conversion.
(a) Right to Convert. Beginning on October 2, 1998, the
holders of shares of Series B Preferred Stock shall have the right, at their
option, to convert each such share, at any time and from time to time, into one
(the "Series B Conversion Ratio," which shall be subject to adjustment as
hereinafter provided) fully paid and nonassessable share of Common Stock;
provided, however, that no holder of Series B Preferred Stock shall be entitled
to convert shares of such Series B Preferred Stock into Common Stock pursuant
to the foregoing provision, if, immediately after such conversion, such person
would be the Beneficial Owner of the Corporation's outstanding Common Stock in
an amount exceeding the 4.9% Limitation. Notwithstanding the foregoing, such
conversion right may be exercised at any time after the Series B Original Issue
Date and irrespective of the 4.9% Limitation (and no such limit shall apply) if
any of the following circumstances occurs:
(i) For any two consecutive fiscal quarters, the
aggregate amount outstanding as of the end of the quarter under (1)
all mortgage indebtedness of the Corporation and its consolidated
entities and (2) unsecured indebtedness of the Corporation and its
consolidated entities exceeds sixty-five percent (65%) of the amount
arrived at by (A) taking the Corporation's consolidated gross revenues
less property-related expenses, including real estate taxes,
insurance, maintenance and utilities, but excluding depreciation,
amortization, interest and corporate general and administrative
expenses, for the quarter in question and the immediately preceding
quarter, (B) multiplying the amount in clause (A) by two (2), and (C)
dividing the resulting product in clause B by nine percent (9%) (all
as such items of indebtedness, revenues and expenses are reported in
consolidated financial statements contained in the Corporation's Forms
10-K and Forms 10-Q as filed with the Securities and Exchange
Commission); or
(ii) Gilbert M. Meyer has ceased to be an executive
officer of the Corporation, unless the holders of a majority of the
shares of the Series B Preferred Stock then outstanding have voted on
and approved a replacement for Mr. Meyer and the
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replacement remains an executive officer of the Corporation; or
(iii) If (A) the Corporation shall be party to, or shall
have entered into an agreement for, any transaction (including,
without limitation, a merger, consolidation, statutory share exchange
or sale of all or substantially all of its assets (each of the
foregoing a "Series B Transaction")), in each case as a result of
which shares of Common Stock shall have been or will be converted into
the right to receive stock, securities or other property (including
cash or any combination thereof) or which has resulted or will result
in the holders of Common Stock immediately prior to the Series B
Transaction owning less than 50% of the Common Stock after the Series
B Transaction, or (B) a "change of control" as defined in the next
sentence occurs with respect to the Corporation. A change of control
shall mean the acquisition (including by virtue of a merger, share
exchange or other business combination) by one stockholder or a group
of stockholders acting in concert of the power to elect a majority of
the Corporation's Board of Directors. The Corporation shall notify
the holders of Series B Preferred Stock promptly if any of the events
listed in this Section 14.2.4(a)(iii) shall occur.
Calculations set forth in Section 14.2.4(a)(i) shall be made without
regard to unconsolidated indebtedness incurred as a joint venture partner, and
the effect of any unconsolidated joint venture, including any income from such
unconsolidated joint venture, shall be excluded for purposes of the calculation
set forth in Section 14.2.4(a)(i).
(b) Mandatory Conversion. On October 2, 2005 (the
"Series B Mandatory Conversion Date"), each issued and outstanding share of
Series B Preferred Stock which has not been converted to Common Stock shall
mandatorily convert to that number of fully paid and nonassessable shares of
Common Stock equal to the Series B Conversion Ratio, as adjusted, regardless of
the 4.9% Limitation. From and after the Series B Mandatory Conversion Date,
certificates representing shares of Series B Preferred Stock shall be deemed to
represent the shares of Common Stock into which they have been converted.
Following the Series B Mandatory Conversion Date, the holder of certificates
for Series B Preferred Stock may surrender those certificates at the office of
any transfer agent for the Common Stock, or if there is no such transfer agent,
at the principal offices of the Corporation, or at such other office as may be
designated by the Corporation, accompanied by instructions from the holder as
to the name(s) and address(es) in which such holder wishes the certificate(s)
for the shares of Common Stock issuable upon such conversion to be issued.
Promptly following surrender of certificates for Series B Preferred Stock after
the Series B Mandatory Conversion Date, the Corporation shall issue and deliver
at such office a certificate or certificates for the number of whole shares of
Common Stock issuable upon mandatory conversion of the Series B Preferred Stock
to the person(s) entitled to receive the same. For purposes of Sections
14.2.4(d) and 14.2.4(e) below, the Series B Mandatory Conversion Date shall
constitute the Series B Conversion Date.
(c) Procedure for Conversion. In order to exercise its
right to convert shares of Series B Preferred Stock into Common Stock, the
holder of shares of Series B Preferred Stock shall surrender the certificate(s)
therefor, duly endorsed if the Corporation shall so require, or accompanied by
appropriate instruments of transfer satisfactory to the Corporation, at the
office
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of any transfer agent for the Series B Preferred Stock or if there is no such
transfer agent, at the principal offices of the Corporation, or at such other
office as may be designated by the Corporation, together with written notice
that such holder elects to convert such shares. Such notice shall also state
the name(s) and address(es) in which such holder wishes the certificate(s) for
the shares of Common Stock issuable upon conversion to be issued. As soon as
practicable after a conversion, the Corporation shall issue and deliver at said
office a certificate or certificates for the number of whole shares of Common
Stock issuable upon conversion of the shares of Ser |
