Exhibit 3.13
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DYNEX CAPITAL, INC.
1. The name of the Corporation is Dynex Capital, Inc.
2. The texts of the amendments are as follows:
Articles IIIA, IIIB and IIIC shall be deleted, and in place
thereof shall be inserted the text as set forth in Appendix A,
attached hereto.
3. The amendments provide for the exchange of shares of Series A Cumulative
Convertible Preferred Stock, Series B Cumulative Convertible Preferred Stock and
Series C Cumulative Convertible Preferred Stock for shares of newly designated
Series D Cumulative Convertible Preferred Stock and shares of Common Stock. The
Corporation will implement this exchange by providing holders of the exchanged
shares with new stock certificates representing the shares of newly designated
Series D Cumulative Convertible Preferred Stock and the shares of Common Stock.
4. The amendments to the Articles of Incorporation were proposed by the
Board of Directors and submitted to the shareholders entitled to vote thereon
for approval in accordance with Section 13.1-710 of the Virginia Stock
Corporation Act at a special meeting convened on April 29, 2004 and concluded on
April 30, 2004. Pursuant to Section 13.1-639 of the Virginia Stock Corporation
Act, no action by the holders of the Corporation's Common Stock was required.
5. The designation, number of outstanding shares and number of votes
entitled to be cast by each voting group entitled to vote separately on the
amendments are as follows:
Designation of Voting Group Number of Shares Number of Votes
Entitled to Vote Separately Outstanding Entitled to be Cast
--------------------------- ---------------- -------------------
Series A Cumulative Convertible Preferred Stock 493,595 493,595
Series B Cumulative Convertible Preferred Stock 688,189 688,189
Series C Cumulative Convertible Preferred Stock 684,893 684,893
6. The total number of undisputed votes cast for the amendments for each
voting group are as follows, such votes being sufficient for approval of the
amendments by each voting group:
Designation of Voting Group Number of Undisputed Votes Cast in
Entitled to Vote Separately Favor of the Amendments
--------------------------- ----------------------------------
Series A Cumulative Convertible Preferred Stock 347,551
Series B Cumulative Convertible Preferred Stock 498,658
Series C Cumulative Convertible Preferred Stock 500,672
IN WITNESS WHEROF, the undersigned has executed these Articles of
Amendment on behalf of the Corporation.
DYNEX CAPITAL, INC.
Dated: May 18, 2004 By: /s/ Stephen J. Benedetti
------------------------------------
Stephen J. Benedetti
Executive Vice President,
Chief Financial Officer
and Secretary
A. SERIES D PREFERRED
Section 1. Number of Shares and Designation.
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(a) This series of Preferred Stock shall be designated as Series D
9.50% Cumulative Convertible Preferred Stock (the "Series D Preferred Stock")
and up to five million seven hundred thirteen thousand four hundred thirty
(5,713,430) shall be the number of shares of such Preferred Stock constituting
this series.
(b) Upon the effectiveness of this Article IIID:
(i) Each share of the Corporation's Series A Preferred Stock
shall be deemed to have been converted into 2.784 shares of Series D
Preferred Stock and 0.6373 shares of Common Stock. Each holder of
Series A Preferred Stock shall also receive a cash payment equal to
any fractional shares of Series D Preferred Stock and Common Stock
that it would otherwise be entitled to receive on a basis that values
each share of Series D Preferred Stock at $10.00 and each share of
Common Stock at $5.6484.
(ii) Each share of the Corporation's Series B Preferred Stock
shall be deemed to have been converted into 2.842 shares of Series D
Preferred Stock and 0.6506 shares of Common Stock. Each holder of
Series B Preferred Stock shall also receive a cash payment equal to
any fractional shares of Series D Preferred Stock and Common Stock
that it would otherwise be entitled to receive on a basis that values
each share of Series D Preferred Stock at $10.00 and each share of
Common Stock at $5.6484.
(iii) Each share of the Corporation's Series C Preferred Stock
shall be deemed to have been converted into 3.480 shares of Series D
Preferred Stock and 0.7967 shares of Common Stock. Each holder of
Series C Preferred Stock shall also receive a cash payment equal to
any fractional shares of Series D Preferred Stock and Common Stock
that it would otherwise be entitled to receive on a basis that values
each share of Series D Preferred Stock at $10.00 and each share of
Common Stock at $5.6484.
Section 2. Definitions.
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For purposes of the Series D Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" of a person means a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series D Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (b) of Section 5
hereof.
"Common Stock" shall mean the common stock, $.01 par value per share, of
the Corporation or such shares of the Corporation's capital stock into which
such Common Stock shall be reclassified.
"Conversion Ratio" shall mean the conversion ratio per share of Common
Stock for which each share of Series D Preferred Stock is convertible, as such
Conversion Ratio may be adjusted pursuant to Section 7. The initial Con- version
Ratio shall be one share of Common Stock for each share of Series D Preferred
Stock.
"Current Market Price" of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation or
of any similar security of any other issuer for any day shall mean the closing
price, regular way on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices regular way on such day, in
either case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any national securities
exchange, on the National Market of the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such security is not
quoted on NASDAQ, the average of the closing bid and asked prices on such day in
the over-the-counter market as reported by NASDAQ or, if bid and asked prices
for such security on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by any NYSE or
National Association of Securities Dealers, Inc. member firm regularly making a
market in such security selected for such purpose by the Chief Executive Officer
or the Board of Directors or if any class or series of securities are not
publicly traded, the fair value of the shares of such class as determined
reasonably and in good faith by the Board of Directors of the Corporation.
"Dividend Payment Date" shall mean, with respect to each Dividend Period,
the last day of January, April, July and October, in each year, commencing on
July 31, 2004 with respect to the period commencing on April 7, 2004 and ending
June 30, 2004; provided, however, that if any Dividend Payment Date falls on any
day other than a Business Day, the dividend payment due on such Dividend Payment
Date shall be paid on the Business Day immediately following such Dividend
Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on April 7, 2004
and end on and include June 30, 2004).
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading Days
selected by the Corporation commencing not more than twenty (20) Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex date" with respect to the issuance or distribution requiring
such computation. The term "ex date," when used with respect to any issuance or
distribution, means the first day on which the share of Common Stock trades
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Issue Date" shall mean April 7, 2004 or the earlier date of issue of the
Series D Preferred Stock.
"Issue Price" shall mean the amount of $10.00.
"Junior Stock" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Series D Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"Person" shall mean any individual, firm, partnership, corporation or other
entity and shall include any successor (by merger or otherwise) of such entity.
"Press Release" shall have the meaning set forth in paragraph (a)(i) of
Section 5 hereof.
"Series A Preferred Stock" shall mean the Series A Cumulative Convertible
Preferred Stock formerly authorized by Article IIIA of these Articles of
Incorporation.
"Series B Preferred Stock" shall mean the Series B Cumulative Convertible
Preferred Stock formerly authorized by Article IIIB of these Articles of
Incorporation.
"Series C Preferred Stock" shall mean the Series C Cumulative Convertible
Preferred Stock formerly authorized by Article IIIC of these Articles of
Incorporation.
"Series D Preferred Stock" shall have the meaning set forth in Section 1
hereof.
"Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
Junior Stock are placed in a separate account of the Corporation or delivered to
a disbursing, paying or other similar agent, then "set apart for payment" with
respect to the Series D Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" as to any securities, shall mean any day on which such
securities are traded on the NYSE or, if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted or, if such securities are not
listed or admitted for trading on any national securities exchange, on NASDAQ
or, if such securities are not quoted on NASDAQ, in the securities market in
which such securities are traded.
"Transaction" shall have the meaning set forth in paragraph (e) of Section
7 hereof.
"Transfer Agent" means Wachovia Bank Shareholder Services or such other
transfer agent as may be designated by the Board of Directors or their designee
as the transfer agent for the Series D Preferred Stock.
Section 3. Dividends.
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(a) The holders of Series D Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Series D Preferred Stock equal to the greater of (i) the base
dividend of $0.2375 per quarter (the "Base Rate") or (ii) the aggregate
quarterly dividends declared on the shares of the Common Stock (or portion
thereof) into which each share of the Series D Preferred Stock is convertible.
The initial Dividend Period shall commence on the Issue Date and end on June 30,
2004. The dividends payable with respect to the portion of the initial Dividend
Period commencing on the Issue Date and ending on June 30, 2004 shall be
prorated from the Issue Date and determined by reference to the Base Rate. The
amount referred to in clause (ii) of this paragraph (a) with respect to each
Dividend Period shall be determined by multiplying each share of Common Stock,
or portion thereof calculated to the fourth decimal point, into which a share of
Series D Preferred Stock would be convertible at the close of business on the
record date for the payment of dividends on the Series D Preferred Stock (based
on the Conversion Ratio then in effect) by the quarterly cash dividend payable
or paid for such Dividend Period in respect of a share of Common Stock
outstanding as of the record date for the payment of dividends on the Common
Stock with respect to such Dividend Period or, if different, with respect to the
most recent quarterly period for which dividends with respect to the Common
Stock have been declared. Such dividends shall be cumulative from the Issue
Date, whether or not in any Dividend Period or Periods such dividends shall be
declared or there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly in arrears on the
Dividend Payment Dates, commencing on the first Dividend Payment Date after the
Issue Date. Each such dividend shall be payable in arrears to the holders of
record of the Series D Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on a record date which shall be not
more than sixty (60) days prior to the applicable Dividend Payment Date and
shall be fixed by the Board of Directors to coincide with the record date for
the regular quarterly dividends, if any, payable with respect to the Common
Stock; provided, however, that the record dates for the Dividend Period ending
December 31, may be separated so that the record date for the Common Stock
dividend is December 31 and the record date for the Series D Preferred Stock
dividend is January 1 and vice versa. Accumulated, accrued and unpaid dividends
for any past Dividend Periods may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to holders of record on such
date, which date, shall precede by not more than forty-five (45) days the
payment date thereof, as may be fixed by the Board of Directors.
(b) The amount of dividends payable per share of Series D Preferred
Stock for the portion at the initial Dividend Period commencing on the Issue
Date and ending and including June 30, 2004, or any other period shorter than a
full Dividend Period, shall be computed ratably on the basis of twelve (12)
thirty (30)-day months and a three hundred sixty (360)-day year. Holders of
Series D Preferred Stock shall not be entitled to any dividends, whether payable
in cash, property or stock, in excess of cumulative dividends, as herein
provided, on the Series D Preferred Stock. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on
the Series D Preferred Stock that may be in arrears.
(c) So long as any of the shares of Series D Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for payment by
the Corporation and no other distribution of cash or other property shall be
declared or made directly or indirectly by the Corporation unless dividends
equal to the full amount of accumulated, accrued and unpaid dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof has been or contemporaneously is set apart for such payment
on the Series D Preferred Stock for all Dividend Periods terminating on or prior
to the Dividend Payment Date.
(d) So long as any of the shares of Series D Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of or options, warrants or rights to subscribe for or purchase shares of Junior
Stock) shall be declared or paid or set apart for payment by the Corporation and
no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any shares of Junior
Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise
acquired (other than by a redemption, purchase or other acquisition of Common
Stock made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) directly or indirectly by the Corporation (except by conversion into
or exchange for Junior Stock), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of shares
of Junior Stock in respect thereof, directly or indirectly, by the Corporation
unless in each case (i) the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all outstanding shares of Series D
Preferred Stock shall have been paid or such dividends have been declared and
set apart for payment for all past Dividend Periods with respect to the Series D
Preferred Stock and (ii) sufficient funds shall have been paid or set apart for
the payment of the full dividend for the current Dividend Period with respect to
the Series D Preferred Stock.
Section 4. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Series D Preferred Stock shall be entitled to receive an amount in cash per
share of Series D Preferred Stock ("Liquidation Preference") equal to the Issue
Price, plus an amount in cash equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Series D Preferred Stock have been
paid the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not earned or declared) accumulated, accrued and unpaid thereon to
the date of final distribution to such holders, no payment will be made to any
holder of Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Series D Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series D Preferred Stock
ratably in the same proportion as the respective amounts that would be payable
on such Series D Preferred Stock if all amounts payable thereon were paid in
full. For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of Series D Preferred
Stock, as provided in this Section 4, any other series or class or classes of
Junior Stock shall, subject to the respective terms thereof, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series D Preferred Stock shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation.
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(a) Shares of Series D Preferred Stock will be redeemable by the
Corporation, in whole or in part, at the option of the Corporation as set forth
herein, subject to the provisions described below:
(i) Provided that for twenty (20) Trading Days within any period
of thirty (30) consecutive Trading Days, including the last Trading
Day of such period, the closing price of the Common Stock on the NYSE
equals or exceeds $10.00, shares of Series D Preferred Stock may be
redeemed, in whole or in part, at the option of the Corporation by
issuing and delivering to each holder for each share of Series D
Preferred Stock to be redeemed one share of authorized but previously
unissued Common Stock, subject to adjustment of the Conversion Ratio
as provided in Section 7 plus accumulated, accrued and unpaid
dividends (as provided below), which are to be paid in cash through
the end of the prior Dividend Period; however, no dividend will be
payable for the Dividend Period in which such a redemption occurs if
such redemption occurs before the record date for the dividend on the
Common Stock, in which event, the dividend will be payable through
the redemption date, provided, however, if no dividend on the Common
Stock has been declared for such period, a dividend shall be paid
on the redeemed Series D Preferred Stock in cash and on a pro rata
basis for the period in which such redemption occurs). In order to
exercise its redemption option pursuant to this paragraph (a)(i), the
Corporation must issue a press release announcing the redemption (the
"Press Release") prior to the opening of business on the second Trad-
ing Day after the condition upon which this redemption is based has
been satisfied. The Press Release shall announce the redemption and
set forth the number of shares of Series D Preferred Stock that
the Corporation intends to redeem; or
(ii) Shares of Series D Preferred Stock may be redeemed, in
whole or in part, at the option of the Corporation out of funds
legally available therefore for cash at the Issue Price per share,
plus any accumulated, accrued and unpaid dividends (as provided in
Section 5(b) below), plus the pro-rated dividend accrued from the
beginning of the current Dividend Period to the date of redemption
determined by reference solely to the Base Rate.
(b) Shares of Series D Preferred Stock shall be redeemed by the
Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 5 (the "Call Date"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of redemption and
shall be not less than thirty (30) days nor more than 60 days after (i) the date
on which the Corporation issues the Press Release, if such redemption is
pursuant to paragraph (a)(i) of this Section 5, or (ii) the date notice of
redemption is sent by the Corporation, if such redemption is pursuant to
paragraph (a)(ii) of this Section 5. In the event of a redemption pursuant to
Section 5(a)(i) or 5(a)(ii), if the Call Date falls after a dividend payment
record date and prior to the corresponding Dividend Payment Date, then (i) in
the event of a redemption pursuant to Section 5(a)(i) each holder of Series D
Preferred Stock at the close of business on such dividend payment record date
shall be entitled to the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares prior to
such Dividend Payment Date and (ii) in the event of a redemption pursuant to
Section 5(a)(ii), each holder of Series D Preferred Stock at the close of
business on such dividend payment record date shall be entitled to the portion
of the dividend accrued from the beginning of the Dividend Period in which the
redemption occurs and ending on the Call Date notwithstanding the redemption of
such shares prior to such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for accumulated or accrued
dividends on shares of Series D Preferred Stock called for redemption or on the
shares of Common Stock issued upon such redemption.
If the dividend payment record date for the Series D Preferred Stock
and Common Stock do not coincide, and the preceding sentence does not
operate to ensure that a holder of shares of Series D Preferred Stock whose
shares are redeemed for Common Stock does not receive dividends on both the
shares of Series D Preferred Stock and the Common Stock for which such shares
are redeemed for the same Dividend Period, then notwithstanding anything herein
to the contrary, it is the intent, and the Transfer Agent is authorized to
ensure that no redemption after the earlier of such record dates will be
accepted until after the latter of such record dates.
(c) If full cumulative dividends on all outstanding shares of Series D
Preferred Stock of the Corporation have not been paid or declared and set apart
for payment, no shares of Series D Preferred Stock may be redeemed unless all
outstanding shares of Series D Preferred Stock are simultaneously redeemed, and
neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Series D Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares of
Series D Preferred Stock.
(d) If the Corporation shall redeem shares of Series D Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to each holder of record of the shares to be redeemed and, if such
redemption is pursuant to paragraph (a)(i) of this Section 5, such notice shall
be given not more than ten (10) Business Days after the date on which the
Corporation issues the Press Release; if the Corporation shall redeem shares of
Series D Preferred Stock pursuant to paragraph (a)(ii) of this Section 5, notice
of such redemption shall be given not less than thirty (30) nor more than sixty
(60) days prior to the Call Date. Such notice shall be provided by first class
mail, postage prepaid, at such holder's address as the same appears on the stock
records of the Corporation, or by publication in The Wall Street Journal or The
New York Times, or if neither such newspaper is then being published, any other
daily newspaper of national circulation not less than thirty (30) nor more than
sixty (60) days prior to the Call Date. If the Corporation elects to provide
such notice by publication, it shall also promptly mail notice of such
redemption to the holders of the shares of Series D Preferred Stock to be
redeemed. Neither the failure to mail any notice required by this paragraph (d),
nor any defect therein or in the mailing thereof, to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which was mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such mailed or published notice shall state, as appropriate: (1) the Call Date;
(2) the number of shares of Series D Preferred Stock to be redeemed and, if
fewer than all such shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (3) whether redemption will be for
shares of Common Stock pursuant to paragraph (a)(i) of this Section 5 or for
cash pursuant to paragraph (a)(ii) of this Section 5, and, if redemption will be
for Common Stock, the number of shares of Common Stock to be issued with respect
to each share of Series D Preferred Stock to be redeemed; (4) the place or
places at which certificates for such shares are to be surrendered for
certificates representing shares of Common Stock and (5) the then-current
Conversion Ratio. Notice having been published or mailed as aforesaid, from and
after the Call Date (unless the Corporation shall fail to issue and make
available the number of shares of Common Stock and/or amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the shares of Series D Preferred Stock so called for redemption shall cease
to accumulate or accrue on the shares of Series D Preferred Stock called for
redemption (except that, in the case of a Call Date after a dividend record date
and prior to the related Dividend Payment Date, holders of Series D Preferred
Stock on the dividend record date will be entitled on such Dividend Payment Date
to receive the dividend payable on such shares), (ii) said shares shall no
longer be deemed to be outstanding, and (iii) all rights of the holders thereof
as holders of Series D Preferred Stock of the Corporation shall cease (except
the rights to receive the shares of Common Stock and/or cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any dividends payable thereon). The
Corporation's obligation to provide shares of Common Stock and/or cash in
accordance with the preceding sentence shall be deemed fulfilled if on or before
the Call Date, the Corporation shall deposit with a bank or trust company (which
may be an affiliate of the Corporation) that has, or is an affiliate of, a bank
or trust company that has a capital and surplus of at least $50,000,000, such
number or shares of Common Stock and such amount of cash as is necessary for
such redemption, in trust, with irrevocable instructions that such shares of
Common Stock and/or cash be applied to the redemption of the shares of Series D
Preferred Stock so called for redemption. In the case of any redemption pursuant
to paragraph (a)(i) of this Section 5, at the close of business on the Call
Date, each holder of shares of Series D Preferred Stock to be redeemed (unless
the Corporation defaults in the delivery of the shares of Common Stock or cash
payable on such Call Date) shall be deemed to be the record holder of the number
of shares of Common Stock into which such shares of Series D Preferred Stock are
to be converted at redemption, regardless of whether such holder has surrendered
the certificates representing the shares of Series D Preferred Stock to be so
redeemed. No interest shall accrue for the benefit of the holders of shares of
Series D Preferred Stock to be redeemed on any cash so set aside by the
Corporation. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Corporation after which reversion the holders of shares of Series D Preferred
Stock so called for redemption shall look only to the general funds of the
Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such certificates shall be exchanged for certificates
representing shares of Common Stock and/or any cash (without interest thereon)
for which such shares have been redeemed in accordance with such notice. If
fewer than all the outstanding shares of Series D Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
outstanding shares of Series D Preferred Stock not previously called for
redemption by lot or, with respect to the number of shares of Series D Preferred
Stock held of record by each holder of such shares, pro rata (as nearly as may
be) or by any other method as may be determined by the Board of Directors in its
discretion to be equitable. If fewer than all the shares of Series D Preferred
Stock represented by any certificate are redeemed, then a new certificate
representing the unredeemed shares shall be issued without cost to the holders
thereof.
(e) In the case of any redemption pursuant to paragraph (a)(i) of this
Section 5, no fractional shares of Common Stock or scrip representing fractions
of shares of Common Stock shall be issued upon redemption of the shares of
Series D Preferred Stock. Instead of any fractional interest in a share of
Common Stock that would otherwise be deliverable upon redemption of shares of
Series D Preferred Stock, the Corporation shall pay to the holder of such share
an amount in cash (computed to the nearest cent) based upon the Current Market
Price of the Common Stock on the Trading Day immediately preceding the Call
Date. If more than one share shall be surrendered for redemption at one time by
the same holder, the number of full shares of Common Stock issuable upon
redemption thereof shall be computed on the basis of the aggregate number of
shares of Series D Preferred Stock so surrendered.
(f) In the case of any redemption pursuant to paragraph (a)(i) of this
Section 5, the Corporation covenants that any shares of Common Stock issued upon
redemption of shares of Series D Preferred Stock shall be validly issued, fully
paid and non-assessable. The Corporation shall use its best efforts to list,
subject to official notice of issuance, the shares of Common Stock required to
be delivered upon any such redemption of shares of Series D Preferred Stock,
prior to such redemption, on a national securities exchange, if any, on which
the outstanding shares of Common Stock are listed at the time of such delivery.
The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon the redemption of Series D Preferred
Stock are freely transferable and not subject to any resale restrictions under
the Act or any applicable state securities or blue sky laws (other than any
shares of Common Stock issued upon redemption of any Series D Preferred Stock
which are held by an "affiliate" (as defined in Rule 144 under the Act)
of the Corporation).
Section 6. Stock To Be Retired.
- --------- -------------------
All shares of Series D Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series. The Corporation may also retire any unissued shares of Series D
Preferred Stock, and such shares shall then be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series.
Section 7. Conversion into Common Stock.
- ---------- -----------------------------
Holders of shares of Series D Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section 7, a
holder of shares of Series D Preferred Stock shall have the right, at such
holder's option at any time to convert such shares, in whole or in part, into
one share, subject to adjustment as provided in this Section 7, of fully paid
and non-assessable, authorized but previously unissued Common Stock per each
share of Series D Preferred Stock by surrendering such shares to be converted,
such surrender made in the manner provided in paragraph (b) of this Section 7;
provided, however, that the right to convert shares of Series D Preferred Stock
called for redemption pursuant to Section 5 shall terminate at the close of
business on the Call Date fixed for such redemption, unless the Corporation
shall default in making payment of shares of Common Stock and/or cash payable
upon such redemption under Section 5 hereof.
(b) In order to exercise the conversion right, the holder of each share of
Series D Preferred Stock to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof elects to convert such share of Series D
Preferred Stock. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Series D Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
Holders of shares of Series D Preferred Stock at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Common Stock issued upon such
conversion.
As promptly as practicable after the surrender of certificates for shares
of Series D Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or send on such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares of Series D Preferred Stock in
accordance with provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall be settled
as provided in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Series
D Preferred Stock shall have been surrendered and such notice received by the
Corporation as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on such date and such conversion
shall be at the Conversion Ratio in effect at such time on such date unless the
stock transfer books of the Corporation shall be closed on that date, in which
event such person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Ratio in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation. If the dividend payment
record date for the Series D Preferred Stock and Common Stock do not coincide,
and the preceding sentence does not operate to ensure that a holder of shares of
Series D Preferred Stock whose shares are converted into Common Stock does not
receive dividends on both the shares of Series D Preferred Stock and the Common
Stock into which such shares are converted for the same Dividend Period, then
notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
(c) No fractional share of Common Stock or scrip representing fractions of
a share of Common Stock shall be issued upon conversion of the shares of Series
D Preferred Stock. Instead of any fractional interest in a share of Common Stock
that would otherwise be deliverable upon the conversion of shares of Series D
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of the Common Stock on the Trading
Day immediately preceding the date of conversion. If more than one share shall
be surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series D Preferred Stock so
surrendered.
(d) The Conversion Ratio shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its capital stock in shares of Common Stock,
(B) subdivide its outstanding Common Stock into a greater number of shares,
(C) combine its outstanding Common Stock into a smaller number of shares or
(D) issue any shares of capital stock by reclassification of its Common
Stock, the Conversion Ratio in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening of business on
the day following the day on which such subdivision, combination or re-
classification becomes effective, as the case may be, shall be adjusted so
that the holder of any share of Series D Preferred Stock thereafter sur-
rendered for conversion shall be entitled to receive the number of shares
of Common Stock (or fraction of a share of Common Stock) that such holder
would have owned or have been entitled to receive after the happening
of any of the events described above had such share of Series D Prefer-
red Stock been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a sub-
division, combination or reclassification. An adjustment made pursuant to
this paragraph (d)(i) of this Section 7 shall become effective immediately
after the opening of business on the day next following the record date
(except as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the day next following the effective date in the case of a
subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights, options
or warrants to all holders of Common Stock entitling them (for a period
expiring within 45 days after the record date described below in this para-
graph (d)(ii) of this Section 7) to subscribe for or purchase Common Stock
at a price per share less than the Fair Market Value per share of the
Common Stock on the record date for the determination of stockholders en-
titled to receive such rights, options or warrants, then the Conversion
Ratio in effect at the opening of business on the day next following such
record date shall be adjusted to equal the ratio determined by multi-
plying the Conversion Ratio in effect immediately prior to the opening of
business on the day following the date fixed for such determination by a
fraction, the numerator of which shall be the sum of (X) the number of
shares of Common Stock outstanding on the close of business on the date
fixed for such determination and (Y) the number of shares that the aggre-
gate proceeds to the Corporation from the exercise of such rights, options
or warrants for Common Stock would purchase at such Fair Market Value, and
the denominator of which shall be the sum of (XX) the number of shares of
Common Stock outstanding on the close of business on the date fixed
for such determination and (YY) the number of additional shares of Common
Stock offered for subscription or purchase pursuant to such rights, options
or warrants. Such adjustment shall become effective immediately after the
opening of business on the day next following such record date (except as
provided in paragraph (h) below). In determining whether any rights, op-
tions or warrants entitle the holders of Common Stock to subscribe for or
purchase Common Stock at less than such Fair Market Value, there shall be
taken into account any consideration received by the Corporation upon
issuance and upon exercise of such rights, options or warrants, the value
of such consideration, if other than cash, to be determined in good faith
by the Board of Directors.
(iii) No adjustment in the Conversion Ratio shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1%, in such ratio, provided, however, that any adjustments that by reason
of this paragraph (d)(iii) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made:
and provided, further, that any adjustment shall be required and made in
accordance with the provisions of this Section 7 (other than this paragraph
(d)(iii)) not later than such time as may be required in order to preserve
the tax-free nature of a distribution to the holders of shares of Common
Stock. Notwithstanding any other provisions of this Section 7, the Corpor-
ation shall not be required to make any adjustment of the Conversion Ratio
for the issuance of any shares of Common Stock pursuant to any plan pro-
viding for the reinvestment of dividends or interest payable on securities
of the Corporation and the investment of additional optional amounts in
shares of Common Stock under such plan. All calculations under this Section
7 shall be made to the nearest one-tenth of a share (with .05 of a share
being rounded upward). Anything in this paragraph (d) of this Section 7 to
the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Ratio,
in addition to those required by this paragraph (d), as it in its discre-
tion shall determine to be advisable in order that any stock dividends,
subdivision of shares, reclassification or combination of shares, distribu-
tion of rights or warrants to purchase stock or securities, or a distribu-
tion of other assets (other than cash dividends) hereafter made by the Cor-
poration to its stockholders shall not be taxable, or if that is not pos-
sible, to diminish any income taxes that are otherwise payable because of
such event.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, issuer or
self tender offer for all or a substantial portion of the shares of Common Stock
outstanding, sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock, but excluding any transaction as to which
paragraph (d)(i) of this Section 7 applies (each of the foregoing being referred
to herein as a "Transaction"), in each case 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), each share of Series
D Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall thereupon
be convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon such
consummation by a holder of that number of shares of Common Stock into which one
share of Series D Preferred Stock was convertible immediately prior to such
Transaction. The Corporation shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the provisions of this paragraph
(e), and it shall not consent or agree to the occurrence of any Transaction
until the 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 D Preferred Stock that will contain provisions enabling the holders of
the Series D Preferred Stock that remain outstanding after such Transaction to
convert into the consideration received by holders of Common Stock at the
Conversion Ratio in effect immediately prior to such Transaction. The provisions
of this paragraph (e) shall similarly apply to successive Transactions.
(f) If,
(i) the Corporation shall declare a dividend (or any other distribu-
tion) on the Common Stock (other than cash dividends and cash distribu-
tions); or
(ii) the Corporation shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any shares
of any class or series of capital stock or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock or any con-
solidation or merger to which the Corporation is a party and for which ap-
proval of any stockholders of the Corporation is required, or a statutory
share exchange, or an issuer or self tender offer by the Corporation for
all or a substantial portion of its outstanding shares of Common Stock (or
an amendment thereto changing the maximum number of shares sought or the
amount or type of consideration being offered therefor or the sale or
transfer of all or substantially all of the assets of the Corporation as an
entirety; or
(iv) there shall occur the voluntary or involuntary liquidation, dissol-
ution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Series D Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, but at least fifteen (15) days prior to the applicable
date hereinafter specified, a notice stating (A) the record date for the payment
of such dividend, distribution or rights or warrants, or, if a record date is
not established, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date
on which such tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto). Failure
to give or receive such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Ratio is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Ratio after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Ratio setting forth the
adjusted Conversion Ratio and the effective date such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Ratio
to each holder of shares of Series D Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7 provides that an
adjustment shall become effective on the day next following the record date for
an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series D Preferred Stock converted after
such record date and before the occurrence of such event the additional Common
Stock issuable upon such conversion by reason of the adjustment required by such
event over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment and (B) paying to such holder any amount of
cash in lieu of any fraction pursuant to paragraph (c) of this Section 7.
(i) There shall be no adjustment of the Conversion Ratio in case of the
issuance of any capital stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 7.
(j) If the Corporation shall take any action affecting the Common Stock
other than action described in this Section 7, that in the opinion of the Board
of Directors would materially adversely affect the conversion rights of the
holders of Series D Preferred Stock, the Conversion Ratio for the Series D
Preferred Stock may be adjusted, to the extent permitted by law, in such manner,
if any, and at such time as the Board of Directors, in its sole discretion may
determine to be equitable under the circumstances.
(k) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock solely for the purpose of effecting conversion of the Series D
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series D Preferred Stock not theretofore
converted into Common Stock. For purposes of this paragraph (k), the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series D Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Series D Preferred Stock shall be validly issued,
fully paid and non-assessable.
The Corporation shall use its best efforts to list the shares of Common
Stock required to be delivered upon conversion of the shares of Series D
Preferred Stock, prior to such delivery, on a national securities exchange, if
any, on which the outstanding shares of Common Stock are listed at the time of
such delivery.
The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon conversion of shares of Series D Preferred
Stock are freely transferable and not subject to any resale restrictions under
the Act, or any applicable state securities or blue sky laws (other than any
shares of Common Stock which are held by an "affiliate" (as defined in Rule 144
under the Act).
(l) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion or redemption of
shares of Series D Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock or
other securities or property in a name other than that of the holder of the
shares of Series D Preferred Stock to be converted or redeemed, and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Corporation the amount of any such tax or
established, to the reasonable satisfaction of the Corporation, that such tax
has been paid.
Section 8. Conversion into Senior Notes.
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(a) If at any time the Corporation:
(i) falls in arrears in the payment of dividends on the Series D
Preferred Stock in an aggregate amount equal to the full accrued
dividends for two quarterly Dividend Periods; or
(ii) fails to maintain consolidated shareholders' equity determined in
accordance with generally accepted accounting principles of at
least 200% of the aggregate Issue Price of the then outstanding
Series D Preferred Stock, then the Series D Preferred Stock will
automatically convert into 9.50% Senior Notes (the "Conversion
Notes"), which will be in substantially the following form:
[Date] ,
- ------------------ -------
DYNEX CAPITAL, INC.
9.50% Senior Note
DYNEX CAPITAL, INC., a corporation duly organized and validly existing
under the laws of the Commonwealth of Virginia (the "Company"), for value
received hereby promises to pay to the order of ___________________ (the "Note
Holder") the principal sum of ____________ Dollars ($_________) with interest
thereon at the rate of 9.50% per annum, payable as follows:
a. Interest in quarterly installments payable only on the last
day of the months of _______ , _______ , _______ ,and _______
commencing from the date of issuance of this Note (the "Issue Date");
and
b. Principal in arrears, together with associated interest,
commencing the third year after the Issue Date over eight quarterly
periods payable on the last day of the months of _______ , _______ ,
_______ ,and _______; provided, however, that such quarterly payments
will not begin until after the Company tenders its last payment on the
Company's 9.50% Senior Notes due 2007.
The principal and interest payable on this Note will be paid to the person
in whose name this Note is registered at the close of business on the record
date, which shall be _______ , _______ , _______ ,and _______ (whether or not a
business day). Interest shall be paid by check mailed to the Noteholder at the
registered address of such person unless other arrangements are made by the
Noteholder with the Company.
Interest on this Note shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Company will have the right to prepay or redeem this Note in part or in
its entirety, including all accrued interest due hereon, at its option, anytime
prior to maturity without penalty.
The Company covenants that, until it satisfies its obligations pursuant to
the terms of this Note, it will not (i) repurchase outstanding capital stock of
the Company or (ii) make distributions to shareholders of the Company other than
such distributions necessary to maintain the Company's status as a real estate
investment trust pursuant to the Internal Revenue Code of 1986, as amended.
Any of the following shall constitute an "Event of Default" hereunder: (i)
the failure to pay any sum due hereunder within ten (10) days after a notice of
default is delivered to Company by Noteholder following the date such sum is
due, (ii) Company's admission in writing that it is unable to pay its debts as
they become due, (iii) any assignment by the Company for the benefit of its
creditors, or (iv) Company's filing or having filed against it a petition in
bankruptcy. Upon the occurrence of an Event of Default, interest shall begin to
accrue at a rate of __% per annum from the date of said occurrence until this
Note is paid in full. Upon the occurrence of an Event of Default, the
outstanding principal balance hereof and all interest accrued thereon shall
become due and payable immediately at the election of Noteholder, without
notice. Failure to exercise this option upon any such Event of Default shall not
constitute or be construed as a waiver of the right to exercise such option
subsequently.
This Note has been executed and delivered in the Commonwealth of Virginia,
and shall be construed and governed by the laws of the Commonwealth of Virginia.
The provisions of this Note shall be binding upon the successors and
assigns of the Company and shall inure to the benefit of the Noteholder.
(b) The Conversion Notes shall be subordinate only to the Corporation's
9.50% Senior Notes due April 2007 (the "2007 Senior Notes"). The principal
payments under the Conversion Notes will not begin until after the Corporation
tenders its last payment on the 2007 Senior Notes.
(c) If the Series D Preferred Stock converts into Conversion Notes,
then the aggregate amount of accrued and unpaid dividends payable to holders of
the Series D Preferred Stock, including pro-rata dividends, will be added to the
principal balance of the Conversion Notes.
(d) The Conversion Notes shall be issued pursuant to an indenture
substantially similar to the indenture that governs the Corporation's 9.50%
Senior Notes due 2007 and that complies with the requirements of the Trust
Indenture Act of 1939.
Section 9. Ranking.
- ---------- -------
The Series D Preferred Stock will rank senior to the Common Stock with
respect to the payment of dividends and amounts payable upon liquidation,
dissolution or winding up of the Corporation. The Corporation is not permitted
to issue any stock ranking senior to the Series D Preferred Stock as to the
payment of dividends or amounts upon liquidation, without the approval of the
holders of two-thirds (2/3) of the Series D Preferred Stock.
Section 10. Voting.
- ----------- -------
(a) The holders of the Series D Preferred Stock voting as a single
class, will have the right to elect two representatives to the Board of
Directors of the Corporation so long as there remains outstanding greater than
or equal to 50% of the number of shares of Series D Preferred Stock issued in
accordance with Section 1(b). If the amount of Series D Preferred Stock at any
time outstanding is less than 50% of the number of shares of Series D Preferred
Stock issued in accordance with Section 1(b), then the holders of the Series D
Preferred Stock will have the right to elect one representative to the Board of
Directors of the Corporation. In this event, unless one of the two directors
delivers notice of his resignation to the Corporation within ten days after
receiving notice of the change in the right of the holders of the Series D
Preferred Stock to elect representatives to the Board of Directors, the term of
the board representative of the holders of the Series D Preferred Stock who
received the fewest number of votes in the most recent election of directors
shall terminate effective as of the date on which the amount of Series D
Preferred Stock outstanding ceased to be greater than or equal to 50% of the
number of shares of the Series D Preferred Stock issued in accordance with
Section 1(b). If no Series D Preferred Stock remains outstanding, the holders of
the Series D Preferred Stock shall no longer have the right to elect any
representatives to the Board of Directors of the Corporation, and the term of
the board representatives of the holders of the Series D Preferred Stock shall
terminate effective as of the date on which the Series D Preferred Stock ceased
to be outstanding. However, if the reason that the Series D Preferred Stock
ceased to be outstanding is the conversion of the Series D Preferred Stock
pursuant to Section 8, then any representatives to the Board of Directors of the
Corporation elected by the holders of the Series D Preferred Stock will continue
in office until the next succeeding meeting of the shareholders of the
Corporation.
(b) So long as any shares of Series D Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Articles of Incorporation, as amended, and subject to Section 11 below, the
affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the Series D Preferred Stock, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of this amendment to the Articles of Incorporation, the
Articles of Incorporation or the Bylaws of the Corporation that
materially adversely affects the voting powers, rights or preferences
of the holders of the Series D Preferred Stock; provided, however,
that the amendment of the provisions of the Articles of Incorporation
so as to authorize or create, or to increase the authorized amount of,
any Junior Stock or any shares of any class ranking on a parity with
the Series D Preferred Stock shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the
holders of Series D Preferred Stock; or
(ii) The authorization or creation of, or the increase in the
authorized amount of, any shares of any class or any security
convertible into shares of any class ranking prior or senior to the
Series D Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation or in the
payment of dividends; provided, however, that no such vote of the
holders of Series D Preferred Stock shall be required if, at or prior
to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible
security is to be made, as the case may be, provision is made for the
redemption of all shares of Series D Preferred Stock at the time
outstanding.
For purposes of the foregoing provisions of this Section 10, each share
of Series D Preferred Stock shall have one (1) vote per share, except that when
any other series of preferred stock shall have the right to vote with the Series
D Preferred Stock as a single class on any matters then the Series D Preferred
Stock and such other series shall have with respect to such matters one (1) vote
per $10.00 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the Series D Preferred Stock shall not
have any relative participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
Section 11. Restriction on Payments.
- ----------- ------------------------
The Corporation will not make any payments for (a) repurchases, tender
offers, and other retirements of Common Stock of the Corporation or (b)
dividends on Common Stock in excess of the amount of payment required to
maintain the status of the Corporation as a real estate investment trust unless,
after taking into account such payment, consolidated shareholders equity of the
Corporation, as determined in accordance with generally accepted accounting
principles, exceeds 300% of the aggregate Issue Price of the then outstanding
Series D Preferred Stock unless approved by the holders of at least 75% of the
Series D Preferred Stock.
Section 12. Record Holders.
- ----------- ---------------
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Series D Preferred Stock as the true and lawful owner thereof
for all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.