EXHIBIT 3(i)
ARTICLES OF INCORPORATION
OF
SIZELER PROPERTY INVESTORS, INC.
The undersigned, being a natural person and acting as incorporator,
does hereby form a business corporation in the State of Maryland, pursuant to
the provisions of the Maryland General Corporation Law.
ARTICLE I
INCORPORATOR
The name of the incorporator is Kayla E. Klos.
The incorporator's address, including the street and number, if any,
including the county or municipal area, and including the state or county, is:
800 Fleet Bank Building, Twelve Fountain Plaza, Buffalo, New York 14202.
The incorporator is at least eighteen years of age.
The incorporator is forming the corporation named in this Charter
under the general laws of the State of Maryland, to wit, the Maryland General
Corporation Law.
ARTICLE II
NAME AND DURATION
The name of the corporation is SIZELER PROPERTY INVESTORS, INC. (the
"Corporation"). The duration of the Corporation shall be perpetual.
ARTICLE III
PURPOSES
(a) The purposes for which the Corporation is formed are:
(1) To engage in the business of a real estate investment trust
("REIT") as that term is defined in the Internal Revenue Code of 1986, as
amended, or any successor statute (the "Code") at any time prior to the
occurrence of the Restriction Termination Date, if any, as defined in Article V,
Section 2 and to engage in any lawful act or activity for which corporations may
be organized under the general laws of the State of Maryland now or hereafter in
force including the Maryland General Corporation Law; and
(2) To engage in any one or more businesses or transactions, or to
acquire all or any portion of any entity engaged in any one or more businesses
or transactions which the Board of Directors may from time to time authorize or
approve, whether or not related to the business described elsewhere in this
Article III or to any other business at the time or theretofore engaged in by
the Corporation.
(b) The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of the Charter of the Corporation, and each
shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of corporations
under the general laws of the State of Maryland including the Maryland General
Corporation Law.
ARTICLE IV
PRINCIPAL OFFICE IN MARYLAND
AND RESIDENT AGENT
The present address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard
Street, Baltimore, Maryland 21202. The name and address of the resident agent
of the Corporation in the State of Maryland is The Corporation Trust
Incorporated, a Maryland corporation, 300 East Lombard Street, Baltimore,
Maryland 21202.
ARTICLE V
CAPITAL STOCK
SECTION 1. AUTHORIZED CAPITAL STOCK.
(a) Authorized Shares. The total number of shares of capital stock of
all classes that the Corporation has authority to issue is 70,000,000, initially
classified as 53,960,000 shares of common stock, par value $0.0001 per share
(the "Common Stock"), 40,000 shares of
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Series A Preferred Stock, par value $0.0001 per share (the "Series A Preferred
Stock") and 16,000,000 shares of excess stock, par value $0.0001 per share (the
"Excess Stock"). A majority of the entire Board of Directors, without action by
the stockholders, may amend the Charter to increase or decrease the aggregate
number of shares of stock or the number of shares of stock of any class that the
Corporation has authority to issue.
The Common Stock, the Series A Preferred Stock and the Excess Stock
shall each constitute separate classes of capital stock of the Corporation.
(b) Terminology and Aggregate Par Value. All classes of capital stock
(except Excess Stock) are referred to herein as "Equity Stock;" all classes of
capital stock (including Excess Stock) are referred to herein as "Stock." The
aggregate par value of all of the Corporation's authorized Stock is $7,000.
SECTION 2. REIT-RELATED RESTRICTIONS AND LIMITATIONS ON THE EQUITY STOCK.
Until the "Restriction Termination Date," as defined below, all Equity
Stock shall be subject to the following restrictions and limitations intended to
preserve the Corporation's status as a REIT.
(a) Definitions. As used in this Article V, the following terms shall
have the indicated meanings:
"Beneficial Ownership" or "Beneficially Own" shall mean ownership
of Equity Stock by a Person who would be treated as an owner of such
Equity Stock either directly or constructively through the application
of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code. The terms "Beneficially Own" and "Beneficially Owned" and
"Beneficial Owner" shall have the correlative meanings.
"Beneficiary" shall mean a beneficiary of the Trust as determined
pursuant to Section 5(f) of this Article V.
"Charitable Beneficiary" shall mean one or more beneficiaries of
the Trust as determined pursuant to Section 5(b)(ii) of this Article
V, provided that each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each Sections 170(b)(1)(A), 2055 and
2522 of the Code.
"Constructive Ownership" or "Constructively Own" shall mean
ownership of Equity Stock by a Person who would be treated as an owner
of such Equity Stock either directly or indirectly through the
application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The terms "Constructively
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Own," "Constructively Owned" and "Constructive Owner" shall have the
correlative meanings.
"Market Price" shall mean the last reported sales price reported
on the New York Stock Exchange, Inc. (the "NYSE"), of Equity Stock on
the trading day immediately preceding the relevant date, or if not
then traded on the NYSE, the last reported sales price of Equity Stock
on the trading day immediately preceding the relevant date as reported
on any exchange or quotation system over which Equity Stock may be
traded, or if not then traded over any exchange or quotation system,
then the market price of Equity Stock on the relevant date as
determined in good faith by the Board of Directors of the Corporation.
"Ownership Limit" shall mean 9.9% in value or in number of the
outstanding Equity Stock, whichever is more restrictive. The number
and value of the Equity Stock of the Corporation shall be determined
by the Board of Directors in good faith, which determination shall be
conclusive for all purposes.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning
of Section 509(a) of the Code, joint stock company or other entity and
also includes a group as that term is used for purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer that results in Excess Stock as defined below in
Section 5 of this Article V, the purported beneficial transferee for
whom the Purported Record Transferee would have acquired Equity Stock
if such Transfer had been valid under Section 2(b) of this Article V.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock, the Person who would
have been the record holder of Equity Stock if such Transfer had been
valid under Section 2(b) of this Article V.
"Restriction Termination Date" shall mean the effective date, if
any, for revocation or termination of the Corporation's REIT election
pursuant to Section 856(g) of the Code, as specified in a resolution
of the Board of Directors of the Corporation determining that it is no
longer in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT. If no such effective date is
specified in such resolution, the Restriction Termination Date shall
be the date such revocation or termination otherwise becomes
effective.
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"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Equity Stock (including (i) the
granting of any option or entering into any agreement for the sale,
transfer or other disposition of Equity Stock or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Equity Stock), whether voluntary
or involuntary, whether of record beneficially or constructively
(including but not limited to transfers of interests in other entities
that result in changes in Beneficial Ownership or Constructive
Ownership of Equity Stock), and whether by operation of law or
otherwise. The terms "Transfers" and "Transferred" shall have the
correlative meanings.
"Trust" shall mean the trust created pursuant to Section 5(b) of
this Article V.
"Trustee" shall mean the Person unaffiliated with the Corporation
and a Prohibited Owner, that is appointed by the Corporation to serve
as trustee of the Trust.
(b) Ownership Limitation and Transfer Restrictions with Respect to
Equity Stock.
(i) Except as provided in Section 2(f) of this Article V, prior
to the Restriction Termination Date, no Person shall Beneficially Own
or Constructively Own shares of Equity Stock in excess of the
Ownership Limit.
(ii) Except as provided in Section 2(f) of this Article V, prior
to the Restriction Termination Date, any Transfer that, if effective,
would result in any Person Beneficially Owning or Constructively
Owning Equity Stock in excess of the Ownership Limit shall be void ab
initio as to the Transfer of such Equity Stock that would be otherwise
Beneficially Owned or Constructively Owned (as the case may be) by
such Person in excess of the Ownership Limit; and the Purported Record
Transferee (and the Purported Beneficial Transferee, if different)
shall acquire no rights in such excess shares of Equity Stock.
(iii) Except as provided in Section 2(f) of this Article V, prior
to the Restriction Termination Date, any Transfer that, if effective,
would result in the outstanding Equity Stock being Beneficially Owned
by less than 100 Persons (determined under the principles of Section
856(a)(5) of the Code) shall be void ab initio as to the Transfer of
such Equity Stock which would be otherwise Beneficially Owned by the
transferee; and the Purported Record Transferee (and the Purported
Beneficial Transferee, if different) shall acquire no rights in such
shares of Equity Stock.
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(iv) Prior to the Restriction Termination Date, any Transfer
that, if effective, would result in the Corporation being "closely
held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT,
shall be void ab initio as to the Transfer of the shares of Equity
Stock that would cause the Corporation to be "closely held" within the
meaning of Section 856(h) of the Code or otherwise to fail to qualify
as a REIT, as the case may be; and the Purported Record Transferee
(and the Purported Beneficial Transferee, if different) shall acquire
no rights in such shares of Equity Stock.
(v) If the Board of Directors or its designee shall at any time
determine in good faith that a Transfer of Equity Stock has taken
place in violation of this Section 2(b) or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership (determined
without reference to any rules of attribution) or Constructive
Ownership of any Equity Stock of the Corporation in violation of this
Section 2(b), the Board of Directors or its designee shall take such
action as it deems advisable to refuse to give effect to or to prevent
such Transfer, including but not limited to, refusing to give effect
to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer; provided, however, that any
Transfers or attempted Transfers in violation of Section 2(b)(ii),
Section 2(b)(iii) or Section 2(b)(iv) of this Article V shall
automatically result in the conversion and exchange described in
Section 2(c), irrespective of any action (or non-action) by the Board
of Directors, except as provided in Section 2(f) of this Article V.
(c) Automatic Conversion of Equity Stock into Excess Stock.
Subject to Section 5(a) of this Article V below,
(i) If, notwithstanding the other provisions contained in this
Article V, at any time prior to the Restriction Termination Date there
is a purported Transfer or other change in the capital structure of
the Corporation such that any Person would Beneficially Own or
Constructively Own Equity Stock in excess of the Ownership Limit,
then, except as otherwise provided in Section 2(f) of this Article V,
such shares of Equity Stock in excess of the Ownership Limit (rounded
up to the nearest whole share) shall automatically (and without action
by the Corporation or by any purported Transferor, Purported Record
Transferee or Purported Beneficial Transferee of such Equity Stock, in
the case of a Transfer) be converted into and exchanged for an equal
number of shares of Excess Stock. Such conversion and exchange shall
be effective as of the close of business on the business day prior to
the date of the purported Transfer or change in capital structure.
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(ii) If, notwithstanding the other provisions contained in this
Article V, at any time prior to the Restriction Termination Date there
is a purported Transfer or other change in the capital structure of
the Corporation that, if effective, would cause the Corporation to
become "closely held" within the meaning of Section 856(h) of the Code
or otherwise to fail to qualify as a REIT, then the shares of Equity
Stock being Transferred, or resulting from any other change in the
capital structure of the Corporation, that would cause the Corporation
to be "closely held" within the meaning of Section 856(h) of the Code
or otherwise to fail to qualify as a REIT, as the case may be,
(rounded up to the nearest whole share) shall automatically (and
without any action by the Corporation or by any purported Transferor,
Purported Record Transferee or Purported Beneficial Transferee of such
Equity Stock, in the case of a Transfer) be converted into and
exchanged for an equal number of shares of Excess Stock. Such
conversion and exchange shall be effective as of the close of business
on the business day prior to the date of the purported Transfer or
change in capital structure.
(d) The Corporation's Right to Redeem Stock. The Corporation shall
have the right to redeem any Stock that is Transferred, or is attempted to be
Transferred, in violation of Section 2(b) of this Article V, or which has become
shares of Excess Stock as provided in Section 2(c) of this Article V, at a price
per share equal to the lesser of (i) the price per share in the transaction that
created such violation or attempted violation (or, in the case of a devise or
gift, the Market Price at the time of such devise or gift) and (ii) the Market
Price of the class of Equity Stock to which such shares of Excess Stock relate
on the date the Corporation, or its designee, gives notice of such redemption.
The Corporation shall have the right to redeem any Stock described in this
Section for a period of 90 days after the later of (i) the date of the Transfer
or attempted Transfer or (ii) the date the Board of Directors determines in good
faith that a Transfer has occurred, if the Corporation does not receive a notice
of such Transfer pursuant to Section 2(e) of this Article V.
(e) Notice Requirements and General Authority of the Board of
Directors to Implement REIT-Related Restrictions and Limitations.
(i) Any Person who acquires or attempts to acquire shares of
Equity Stock in violation of Section 2(b) of this Article V, and any
Person who is a Purported Record Transferee or a Purported Beneficial
Transferee such that Equity Stock proposed to be acquired is converted
into Excess Stock under Section 2(c) of this Article V, shall
immediately give written notice or in the event of a proposed or
attempted Transfer, give at least 15 days' prior 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 attempted Transfer on the
Corporation's status as a REIT.
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(ii) Prior to the Restriction Termination Date, every Beneficial
Owner or Constructive Owner of more than 5.0% (or such other
percentage, between 0.5% and 5.0%, as provided in the income tax
regulations promulgated under the Code) of the number or value of
outstanding Equity Stock of the Corporation shall, within 30 days
after January 1 of each year, give written notice to the Corporation
stating the name and address of such Beneficial Owner or Constructive
Owner, the number of shares of Equity Stock Beneficially Owned or
Constructively Owned, and a description of how such shares are held.
Each such Beneficial Owner or Constructive Owner shall provide to the
Corporation such additional information that the Corporation may
reasonably request in order to determine the effect, if any, of such
Beneficial Ownership or Constructive Ownership on the Corporation's
status as a REIT; and
(iii) Prior to the Restriction Termination Date, each Person who
is a Beneficial Owner or Constructive Owner of Equity Stock and each
Person (including the stockholder of record) who is holding Equity
Stock for a Beneficial Owner or Constructive Owner shall provide to
the Corporation such information that the Corporation may reasonably
request, in good faith, in order to determine the Corporation's
status as a REIT, to comply with the requirements of any taxing
authority or governmental agency or to determine any such compliance.
(iv) Each certificate for Equity Stock to be issued by the
Corporation hereafter shall bear substantially the following legend:
"The securities represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the
Corporation's maintenance of its status as a "real estate investment
trust" under the Internal Revenue Code of 1986, as amended. Except as
otherwise provided pursuant to the Charter of the Corporation, no
Person may Beneficially Own or Constructively Own Equity Stock in
excess of 9.9% (in value or in number of shares of Equity Stock,
whichever is more restrictive) of the outstanding Equity Stock of the
Corporation, with further restrictions and exceptions set forth in the
Charter of the Corporation. There shall be no Transfer that would
cause a violation of the Ownership Limit, that would result in Equity
Stock of the Corporation being Beneficially Owned by fewer than 100
persons or that would result in the Corporation's being "closely held"
under section 856(h) of the Code. Any Person who attempts or proposes
to own, Beneficially Own or Constructively Own Equity Stock in excess
of the above limitation must notify the Corporation in writing at
least 15 days prior to such proposed or attempted Transfer to such
Person. If attempt is made to violate these restrictions on
Transfers, (i) any purported Transfer will be void and will not be
recognized by the Corporation, (ii) the Corporation will have the
right to redeem the Stock proposed to be Transferred, and (iii) the
Stock represented hereby generally will be automatically converted
into and exchanged for Excess
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Stock, which will be held in trust by the Trustee in part for the
benefit of a Charitable Beneficiary. All capitalized terms in this
legend have the meanings defined in the Charter of the Corporation, a
copy of which, including the restrictions on ownership and transfer,
will be sent without charge to each stockholder who directs a request
to the Chairman of the Board of the Corporation."
(v) Subject to Section 2(f)(iii) of this Article V, nothing
contained in this Article V shall limit the authority of the Board of
Directors 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.
(f) Exemptions.
(i) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence
satisfactory to the Board of Directors and upon at least 15 days'
written notice from a Transferee prior to a proposed Transfer that, if
consummated, would result in the intended Transferee Beneficially
Owning Equity Stock in excess of the Ownership Limit, and upon such
other conditions as the Board of Directors may direct, may in its sole
and absolute discretion exempt a Person from the Ownership Limit.
(ii) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence
satisfactory to the Board of Directors, may in its sole and absolute
discretion exempt a Person from the limitation on a Person
Constructively Owning Equity Stock in excess of the Ownership Limit,
if (x) such Person does not and represents that it will not directly
own or Constructively Own more than a 9.9% interest (as set forth in
Section 856(d)(2)(B) of the Code) in a tenant of the Corporation; (y)
the Corporation obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain this fact; and
(z) such Person agrees that any violation or attempted violation of
such representations, undertakings and agreement will result in such
Equity Stock in excess of the Ownership Limit being converted into and
exchanged for Excess Stock in accordance with Section 2(c) of this
Article V.
(iii) Nothing in this Article V shall preclude the settlement of
a transaction entered into through the facilities of any interdealer
quotation system or national securities exchange upon which Equity
Stock is traded. Notwithstanding the previous sentence, certain
transactions may be settled by providing Excess Stock as set forth in
this Article V.
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(iv) Subject to sub-paragraph (b) (iv) of this Article V,
Section 2, an underwriter which participates in a public offering or a
private placement of Equity Stock (or securities convertible into or
exchangeable for Equity Stock) may Beneficially Own or Constructively
Own shares of Equity Stock (or securities convertible into or
exchangeable for Equity Stock) in excess of the Ownership Limit but
only to the extent necessary to facilitate such public offering or
private placement or to support such offering or placement in the
aftermarket.
(v) The Board of Directors may from time to time increase or
decrease the Ownership Limit; provided however,
(A) Any decrease may be made only prospectively as to subsequent
holders (other than a decrease as a result of a retroactive change in
existing law, in which case such decrease shall be effective
immediately);
(B) The Ownership Limit may be increased if, after giving effect
to such increase, five Persons could Beneficially Own or
Constructively Own in the aggregate, of more than 50.0% in value of
the shares of Equity Stock then outstanding; and
(C) Prior to the modification of Ownership Limit, the Board of
Directors of the Corporation may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or
advisable in order to determine or ensure the Corporation's status as
a REIT.
(g) Savings Provision. If any of the restrictions on transfer of
stock contained in this Article are determined to be void, invalid or
unenforceable by any court of competent jurisdiction, then the Purported Record
Transferee may be deemed, at the option of the Corporation, to have acted as an
agent of the Corporation in acquiring such stock and to hold such stock on
behalf of the Corporation.
SECTION 3. CLASSIFICATION AND RECLASSIFICATION OF STOCK.
(a) Power of Board to Classify or Reclassify Stock. The Board of
Directors shall have the power, in its sole discretion and without limitation,
to classify or reclassify any unissued Stock, whether now or hereafter
authorized, by setting, altering or eliminating in any one or more respects,
from time to time, before the issuance of such Stock, any feature of such Stock,
including, but not limited to, the designation, preferences, conversion or other
rights, voting powers, qualifications and terms and conditions of redemption of,
and limitations as to dividends and any other restrictions on, such Stock. The
power of the Board of Directors to classify and reclassify any of the shares of
capital stock shall include, without limitation, subject to the provisions of
the Charter, authority to classify or reclassify any unissued shares of such
stock into a class or classes of preferred stock, preference stock, special
stock or other stock, and
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to divide and classify shares of any class into one or more series of such
class, by determining, fixing or altering one or more of the following:
(i) The distinctive designation of such class or series and the
number of shares which constitute such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or
series, the number of shares of any class or series may be decreased
by the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such
class or series may be increased by the Board of Directors in
connection with any such classification or reclassification, and any
shares of any class or series which have been redeemed, purchased,
otherwise acquired or converted into shares of Common Stock or any
other class or series shall become part of the authorized capital
stock and be subject to classification and reclassification as
provided in this subparagraph.
(ii) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on
shares of such class or series, whether any such dividends shall rank
senior or junior to or on a parity with the dividends payable on any
other class or series of stock, and the status of any such dividends
as cumulative, cumulative to a limited extent or non-cumulative and as
participating or non-participating.
(iii) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and,
if so, the terms of such voting rights.
(iv) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or
exchange rate in such events or at such times as the Board of
Directors shall determine.
(v) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall
be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; and whether or not there shall be any sinking fund
or purchase account in respect thereof, and if so, the terms thereof.
(vi) The rights of the holders of shares of such class or series
upon the liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the Corporation, which rights
may vary depending upon whether such liquidations dissolution or
winding up is voluntary or involuntary and, if
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voluntary, may vary at different dates, and whether such rights shall
rank senior or junior to or on a parity with such rights of any other
class or series of stock.
(vii) Whether or not there shall be any limitations applicable,
while shares of such class or series are outstanding, upon the payment
of dividends or making of distributions on, or the acquisition of, or
the use of moneys for purchase or redemption of, any stock of the
Corporation, or upon any other action of the Corporation, including
action under this subparagraph, and, if so, the terms and conditions
thereof.
(viii) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the Charter of the
Corporation.
(b) Ranking of Stock. For the purposes hereof and of any articles
supplementary to the Charter providing for the classification or
reclassification of any shares of capital stock or of any other charter document
of the Corporation (unless otherwise provided in any such articles or document),
any class or series of stock of the Corporation shall be deemed to rank:
(i) Prior to another class or series either as to dividends or
upon liquidation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in
preference or priority to holders of such other class or series.
(ii) On a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of such
class or series of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or priority over
the holders of such other class or series.
(iii) Junior to another class or series either as to dividends or
upon liquidation, if the rights of the holders of such class or series
shall be subject or subordinate to the rights of the holders of such
other class or series in respect of the receipt of dividends or the
amounts distributable upon liquidation, dissolution or winding up, as
the case may be.
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SECTION 4. COMMON STOCK.
Subject to the provisions of Sections 2 and 5 of this Article V, the
Common Stock shall have the following designation, preferences, conversion or
other rights, voting powers, qualifications and terms and conditions of
redemption, limitations as to dividends and any other restrictions, and such
others as may be afforded by law:
(a) Voting Rights. Subject to action, if any, by the Board of
Directors, pursuant to Section 3 of this Article V, each share of Common Stock
shall have one vote, and, except as otherwise provided in respect of the Series
A Preferred Stock or any class of stock hereafter classified or reclassified,
the exclusive voting power for all purposes shall be vested in the holders of
the Common Stock. Shares of Common Stock shall not have cumulative voting
rights.
(b) Dividend Rights. After provision(s) with respect to preferential
dividends on any then outstanding classes of preferred stock, if any, fixed by
the Board of Directors pursuant to Section 3 of this Article V or provided for
in Article VI shall have been satisfied, and after satisfaction of any other
requirements, if any, including with respect to redemption rights and
preferences, of any such classes of preferred stock, then and thereafter the
holders of Common Stock shall be entitled to receive, pro rata in relation to
the number of shares of Common Stock held by them, such dividends or other
distributions as may be declared from time to time by the Board of Directors out
of funds legally available therefor.
(c) Liquidation Rights. In the event of the voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, after distribution in
full of the preferential amounts, if any, fixed pursuant to Section 3 of this
Article V or provided for in Article VI, to be distributed to the holders of any
then outstanding preferred stock, and subject to the right, if any, of the
holders of any outstanding preferred stock to participate further in any
liquidating distributions, all of the assets of the Corporation, if any,
remaining, of whatever kind available for distribution to stockholders after the
foregoing distributions have been made shall be distributed to the holders of
the Common Stock, ratably in proportion to the number of shares of Common Stock
held by them. For purposes of making liquidating distributions pursuant to this
Section 4(c) of this Article V, Excess Stock shall be included as part of the
preferred stock and the Common Stock to the extent provided in Section 5(e) of
this Article V below.
(d) Conversion Rights. Each share of Common Stock is convertible into
Excess Stock as provided in Section 2(c) of this Article V.
SECTION 5. EXCESS STOCK.
(a) Condition to Issuance. The provisions of this Article V to the
contrary notwithstanding, the automatic conversion and exchange of certain
Equity Stock into Excess Stock in the circumstances provided for in Section 2(c)
of this Article V shall be deemed not to
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have occurred, nunc pro tunc, if the Corporation shall have determined, in the
sole and absolute discretion of the Board of Directors, that the issuance by the
Corporation of Excess Stock would cause the Corporation to fail to satisfy the
organizational and operational requirements that must be met for the Corporation
to qualify for treatment as a REIT.
(b) Ownership of Excess Stock in Trust.
(i) Upon any purported Transfer that results in Excess Stock
pursuant to Section 2(c) of this Article V, such Excess Stock shall be
held, in book entry form, in the name of the Trustee in Trust for the
exclusive benefit of (i) one or more Charitable Beneficiaries and (ii)
such Beneficiary or Beneficiaries to whom an interest in such Excess
Stock may later be transferred pursuant to Section 5(f) of this
Article V. Excess Stock so held in Trust shall be issued and
outstanding Stock of the Corporation. The Purported Record Transferee
shall have no rights in such Excess Stock except the right to
designate a transferee of such Excess Stock upon the terms specified
in Section 5(f) of this Article V. The Purported Beneficial
Transferee shall have no rights in such Excess Stock except as
provided in Section 5(f) of this Article V.
(ii) By written notice to the Trustee, the Corporation shall
designate one or more nonprofit organizations to be the Charitable
Beneficiary of the interest in the Trust such that (i) the shares of
Excess Stock held in the Trust would not violate the restrictions set
forth in Section 2(b) of this Article V in the hands of such
Charitable Beneficiary and (ii) each such organization must be
described in Section 501(c)(3) of the Code and contributions to each
such organization must be eligible for deduction under each of
Sections 170(b)(1)(A), 2055 and 2522 of the Code.
(c) No Voting Rights. Except as required by law, Excess Stock shall
not be entitled to vote on any matters. Any vote cast by the Purported Record
Transferee in respect of shares of Excess Stock prior to the discovery that
shares of Equity Stock had been converted into Excess Stock, shall be void ab
initio.
(d) Dividend Rights. Subject to the provisions of this Section 5(d)
of this Article V, Excess Stock shall be entitled to receive dividends equal to
the dividends declared on any class of Equity Stock from which the Excess Stock
had been converted, and a declaration of dividends on such class of Equity Stock
shall also constitute a declaration of dividends on the Equity Stock. The
Trustee shall have all rights to dividends or other distributions with respect
to shares of Excess Stock held in the Trust, which rights shall be exercised for
the exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Corporation that the shares of
Equity Stock had been converted into Excess Stock and transferred to the Trustee
shall be paid with respect to such shares of Excess Stock to the Trustee upon
demand and any dividend or other distribution authorized but unpaid shall be
paid when
14
due to the Trustee. Any dividends or distributions so paid over to the Trustee
shall be held in trust for the Charitable Beneficiary. Notwithstanding the
provisions of this Article V, until the Corporation has received notification
that shares of Equity Stock have been converted to Excess Stock and transferred
into a Trust, the Corporation shall be entitled to rely on its share transfer
and other stockholder records for purposes of preparing lists of stockholders
entitled to vote at meetings, determining the validity and authority of proxies
and otherwise conducting votes of stockholders.
(e) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Corporation, each holder of share(s) of Excess Stock shall be entitled to
receive that portion of the assets of the Corporation that would have been
distributed to the Equity Stock in respect of which the Excess Stock was issued.
The Trustee, as holder of the Excess Stock in Trust, shall distribute ratably to
the Beneficiaries of the Trust, when determined, any such assets received in
respect of the Excess Stock in any liquidation, dissolution or winding up of, or
any distribution of the assets of, the Corporation, provided that any amounts
per share in excess of (i) the price per share paid by the Purported Record
Transferee for the Equity Stock that resulted in Excess Stock or (ii) if the
Purported Record Transferee did not give value for such Excess Stock (through
gift, devise or other transaction), the price per share equal to the Market
Price on the date of the purported Transfer that resulted in the Excess Stock,
shall be paid to the Charitable Beneficiary.
(f) Restrictions on Transfer; Designation of Beneficiary.
(i) Excess Stock shall not be transferable. The Purported Record
Transferee may freely designate a Beneficiary of an interest in the
Trust (representing the number of shares of Excess Stock held by the
Trust attributable to a purported Transfer that resulted in Excess
Stock), if the Excess Stock held in the Trust would not be Excess
Stock in the hands of such Beneficiary and the Purported Record
Transferee does not receive a price for designating such Beneficiary
that reflects a price per share of Excess Stock that exceeds (x) the
price per share that such Purported Record Transferee paid for the
Equity Stock in the purported Transfer that resulted in the Excess
Stock; or (y) if the Purported Record Transferee did not give value
for such Excess Stock (through a gift, devise or other transaction),
the price per share equal to the Market Price on the date of the
purported Transfer that resulted in the Excess Stock. Upon such
transfer of an interest in the Trust, the corresponding shares of
Excess Stock in the Trust shall automatically be exchanged for an
equal number of shares of Equity Stock of the same class as such stock
had been previously immediately prior to it becoming Excess Stock, and
such shares of Equity Stock shall be transferred of record to the
transferee of the interest in the Trust if such Equity Stock would not
be Excess Stock in the hands of such Beneficiary. Prior to any
transfer of any interest in the Trust, the Purported Record Transferee
must give advance notice to the
15
Corporation of the intended transfer and the Corporation must have
waived in writing its redemption rights under Section 2(d) of this
Article V.
(ii) Notwithstanding the foregoing, if a Purported Record
Transferee receives a price for designating a Beneficiary of an
interest in the Trust that exceeds the amounts allowable under Section
5(f)(i) of this Article V, such Purported Record Transferee shall pay,
or cause such Beneficiary to pay, such excess to the Charitable
Beneficiary. If, prior to the discovery by the Corporation that
shares of Equity Stock have been converted into Excess Stock and
transferred to the Trustee, such shares are sold by a Purported Record
Transferee, then (i) such shares shall be deemed to have been sold on
behalf of the Trust and (ii) to the extent that the Purported Record
Transferee received an amount for such shares that exceeds the amount
allowable under Section 5(f)(i) of this Section V, such excess shall
be paid to the Trustee upon demand.
(iii) Each Purported Record Transferee and Charitable Beneficiary
waive any and all claims that they may have against the Trustee and
the Trust arising out of the disposition of any shares of Excess Stock
transferred to the Trust, except for claims arising out of the gross
negligence or willful misconduct of, or any failure to make payments
in accordance with this Section 5(f)(iii) of this Article V by, the
Trustee or the Corporation.
SECTION 6. GENERAL PROVISIONS.
(a) Interpretation and Ambiguities. The Board of Directors shall have
the power to interpret and to construe the provisions of this Article V,
including any definition contained in Section 1, and the Board of Directors
shall have the power to determine the application of the provisions of this
Article V with respect to any situation based on the facts known to it, and any
such interpretation, construction and determination shall be final and binding
on all interested parties, including the stockholders.
(b) Severability. If any provision of this Article V or any
application of any such provision is determined to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the validity and
enforceability of the remaining provisions shall not be affected and other
applications of such provision shall be affected only to the extent necessary to
comply with the determination of such court.
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ARTICLE VI
SERIES A PREFERRED STOCK
SECTION 1. DESIGNATION AND AMOUNT.
There is hereby designated 40,000 shares of Equity Stock, par value
$0.0001 per share, as Series A Preferred Stock.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any class or series of Preferred Stock ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors (as used in this Article VI the "Board") out
of funds legally available for that purpose, quarterly dividends payable in cash
on a day (specified by the Board) in each quarterly period of each year
commencing on or after the initial date of issuance of the shares of Series A
Preferred Stock with respect to which dividends have been declared, but in no
event later than the 20th day of December, March, June and September or, if any
such day is not a business day, on the next succeeding business day (each such
date being referred to in this Article VI as a "Quarterly Dividend Payment
Date") commencing after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $0.01 or (b) subject to the provision for adjustment
hereinafter set forth, one thousand (1,000) times the aggregate per share amount
of all cash dividends, and one thousand (1,000) times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of the Common Stock, or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time the effective date of this
Charter (the "Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of
17
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $0.01 per share on the Series A Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board may fix a record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than thirty (30) days prior to the date fixed for the
payment thereof.
SECTION 3. VOTING RIGHTS.
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to one
thousand (1,000) votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
18
Except as otherwise provided herein or by law, the holders of the shares of
Series A Preferred Stock shall not be entitled to vote as a separate class on
any matters submitted to a vote of the stockholders.
(C) Except as set forth herein, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 of this Article
VI are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to, the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock and all such junior
stock on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration of any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board) to all holders of such
shares upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
19
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation should, under paragraph (A) of this Section 4
of Article VI, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. REACQUIRED SHARES.
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall become authorized but unissued
shares of Series A Preferred Stock and may be reclassified and reissued by
resolution of the Board, subject to the conditions and restrictions on issuance
set forth herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$.01 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Notwithstanding any provision of this
Charter to the contrary, following the payment of the full amount of the Series
A Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Preferred Stock unless, prior thereto, the holders
of shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) one thousand (1,000) (as appropriately adjusted
as set forth in paragraph (C) of this Section to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii) immediately above being referred to as the "Adjusted
Number"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Preferred Stock and Common Stock, respectively, holders of Series A
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
20
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
SECTION 7. CONSOLIDATION, MERGER, ETC.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock, securities, cash or any other
property, then in any such case the shares of Series A Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to one thousand
(1,000) times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock, or (ii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
SECTION 8. REDEMPTION.
The outstanding shares of Series A Preferred Stock, at the option of
the Board, may be redeemed as a whole, but not in part, at any time, or from
time to time, at a cash price per share equal to one hundred five percent (105%)
of (i) the product of the Adjustment Number times the Average Market Value (as
such term is hereinafter defined) of the Common Stock, plus (ii) all dividends
which on the redemption date have accrued on the shares to be redeemed and have
not been paid, or declared and a sum sufficient for the payment thereof set
apart, without interest. The "Average Market Value" is the average of the
closing sale prices of the Common Stock during the thirty (30) day period
immediately preceding the date before the redemption date on the Composite Tape
for New York Stock Exchange Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on which such
stock is listed, or, if such stock is not listed on any such exchange, the
average of the closing sale prices with respect to a share of Common Stock
during such thirty (30) day period, as quoted on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in use,
or if no such
21
quotations are available, the fair market value of the Common Stock as
determined by the Board of Directors in good faith.
SECTION 9. RANKING.
The Series A Preferred Stock shall rank junior to all other series of
the Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
SECTION 10. AMENDMENT.
Except as otherwise provided by law, the Charter of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of a majority
or more of the outstanding shares of Series A Preferred Stock, voting separately
as a class.
SECTION 11. FRACTIONAL SHARES.
At the Corporation's sole discretion, Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
ARTICLE VII
THE BOARD OF DIRECTORS
SECTION 1. AUTHORIZED NUMBER AND INITIAL DIRECTORS.
The business and affairs of the Corporation shall be managed by a
Board of Directors. The authorized number of directors of the Corporation
initially shall be eight, which number may be increased or decreased pursuant to
the Bylaws of the Corporation, but shall never be less than the minimum number
permitted by the General Laws of the State of Maryland now or hereafter in
force. The persons who shall serve as directors effectively immediately and
until their successors are duly elected and qualify are as follows:
J. Terrell Brown
Harold B. Judell
Richard L. Pearlstone
Francis L. Fraenkel
Sidney W. Lassen
22
Thomas A. Masilla, Jr.
James W. McFarland
Theodore H. Strauss
At least three of the directors of the Corporation shall be Independent
Directors (as defined in Section 10 of this Article VII). No decrease in the
number of directors shall shorten the term of any incumbent director.
SECTION 2. DIRECTORS ELECTED BY PREFERRED STOCKHOLDERS.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the Board of Directors shall consist of
said directors so elected in addition to the number of directors fixed as
provided in Section 1 of this Article VII or in the Bylaws. Notwithstanding the
foregoing, and except as otherwise may be required by law, whenever the holders
of any one or more series of preferred stock of the Corporation shall have the
right, voting separately as a class, to elect one or more directors of the
Corporation, the terms of the director of directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
SECTION 3. GENERAL TERM OF OFFICE; CLASSES OF DIRECTORS.
The directors of the Corporation (except for the directors elected by
the holders of any one or more series of preferred stock of the Corporation as
provided in Section 2 of this Article VII) shall be divided into three classes,
Class I, Class II and Class III, as follows:
(1) The term of office of Class I shall be until the 2002 annual
meeting of stockholders and until their successors shall be elected
and have qualified and thereafter shall be for three years and until
their successors shall be elected and have qualified;
(2) the term of office of Class II shall be until the 2003 annual
meeting of stockholders and until their successors shall be elected
and have qualified and thereafter shall be for three years and until
their successors shall be elected and have qualified; and
(3) the term of office of Class III shall be until the 2004
annual meeting of stockholders and until their successors shall be
elected and have qualified and thereafter shall be for three years and
until their successors shall be elected and have qualified.
The number of directors in each class shall be as nearly equal in
number as possible. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain or attain, if
possible, the equality of the number of directors
23
in each class. If such equality is not possible, the increase or decrease shall
be apportioned among the classes in such a way that the difference in the number
of directors in any two classes shall not exceed one. The names of the
individuals who will serve as initial directors until their successors are
elected and qualified are as follows:
Class I: Francis L. Fraenkel
Sidney W. Lassen
Class II: Thomas A. Masilla, Jr.
James A. McFarland
Theodore H. Strauss
Class III: J. Terrell Brown
Harold B. Judell
Richard L. Pearlstone
SECTION 4. REMOVAL OF DIRECTORS.
Subject to the rights of holders of any class separately entitled to
elect one or more directors, a director may be removed from office but only for
cause and only by the affirmative vote of the holders of at least 75% of the
combined voting power of all shares of capital stock entitled to be cast in the
election of directors voting together as a single class, at a meeting of
stockholders called expressly for that purpose.
SECTION 5. FILLING VACANCIES.
Subject to the rights of the holder of any class of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by the affirmative vote of a majority of
the remaining directors then in office (whether or not constituting a quorum)
or, unless the Corporation has elected to be subject to the provisions of
Section 3-804(c) of the Maryland General Corporation Law, the required vote of
the stockholders of the Corporation. A director so chosen by the stockholders
shall hold office for the balance of the term then remaining. Unless the
Corporation has elected to be subject to the provisions of Section 3-804(c) of
the Maryland General Corporation Law, a director so chosen by the remaining
directors shall hold office until the next annual meeting of stockholders, at
which time the stockholders shall elect a director to hold office for the
balance of the term then remaining. No decrease in the number of directors
constituting the Board of Directors shall affect the tenure of office of any
director.
24
SECTION 6. BOARD AUTHORIZATION OF SHARE ISSUANCES.
The Board of Directors of the Corporation may authorize the issuance
from time to time of Stock of any class, whether now or hereafter authorized, or
securities convertible into Stock of any class, whether now or hereafter
authorized, for such consideration as the Board of Directors may deem advisable,
subject to such restrictions or limitations, if any, as may be set forth in the
Charter or the Bylaws of the Corporation.
SECTION 7. PREEMPTIVE RIGHTS.
No holder of any Stock or any other securities of the Corporation,
whether now or hereafter authorized, shall have any preemptive right to
subscribe for or purchase any Stock or any other securities of the Corporation
other than such, if any, as the Board of Directors, in its sole discretion, may
determine and at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any Stock or other securities
which the Board of Directors may determine to offer for subscription may, as the
Board of Directors in its sole discretion shall determine, be offered to the
holders of any class, series or type of Stock or other securities at the time
outstanding to the exclusion of the holders of any or all other classes, series
or types of stock or other securities at the time outstanding.
SECTION 8. AMENDMENTS TO THE BYLAWS.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, repeal, alter, amend and rescind the Bylaws of the Corporation.
Notwithstanding any other provision of the Charter or the Bylaws of the
Corporation (and notwithstanding the fact that some lesser percentage may be
specified by law), the Bylaws shall not be made, repealed, altered, amended or
rescinded by the stockholders of the Corporation except by (1) the affirmative
vote of not less than 75% of the aggregate votes entitled to be cast (considered
for this purpose as one class) at a meeting of the stockholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or recission is included in the notice of such meeting) or (2) as set
forth above, by the Board of Directors.
SECTION 9. CERTAIN OTHER DETERMINATIONS BY THE BOARD OF 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
the Charter 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 Stock: the manner in which distributions are to be made to
stockholders; 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 Stock or the payment of other distributions on Stock; the amount
of paid-in surplus, net assets, annual or other
25
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 nor 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; and
any matters relating to the acquisition, holding and disposition of any assets
of the Corporation.
SECTION 10. RESERVED POWERS OF THE BOARD OF DIRECTORS.
The enumeration and definition of particular powers of the Board of
Directors included in this Article VII shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other provision of the charter of the Corporation, or construed or deemed by
inference or otherwise in any manner to exclude or limit the powers conferred
upon the Board of Directors under the general laws of the State of Maryland as
now or hereafter in force.
SECTION 11. CERTAIN DEFINITIONS.
For purposes of Articles VII and VIII:
(a) The term "Advisor" shall mean an entity responsible for directing
or performing the day-to-day business affairs of the Corporation including a
person or entity to which an Advisor subcontracts substantially all of such
functions.
(b) The term "Independent Directors" shall mean the Directors of the
Corporation who are not affiliated, directly or indirectly, with an Advisor of
the Corporation whether by ownership of, ownership interest in, employment by,
any material business or professional relationship with, or serves as an officer
or director of such Advisor of an affiliated business entity of such Advisor. A
Director shall not be considered independent if he is serving as a Director for
more than three real estate investment trusts organized by the same Sponsor.
Independent Directors shall also mean those who perform no other services for
the Corporation, except as Directors. An indirect relationship shall include
circumstances in which a member of the immediate family of a Director has one of
the foregoing relationships with an Advisor of the Corporation or entity for
which he serves as Director.
(c) The term "Unimproved Real Property" shall mean property of the
Corporation which has the following three characteristics: (1) an equity
interest in property which was not acquired for the purpose of producing rental
or other operating income, (2) has no development or construction in process on
such property, and (3) no development or construction on such property is
planned in good faith to commence on such land within one year.
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ARTICLE VIII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
STOCKHOLDERS AND DIRECTORS
SECTION 1. PROHIBITED TRANSACTIONS.
The Corporation shall not:
(a) Invest more than 10% of its assets in Unimproved Real Property or
mortgage loans on Unimproved Real Property;
(b) Invest in commodities or commodity future contracts, other than
interest rate futures used solely for hedging purposes;
(c) Issue equity securities redeemable at the option of the holder
thereof;
(d) Issue options or warrants to purchase Common Stock of the
Corporation at an exercise price of less than the fair market value of the
Common Stock or which are for more than 10% of the shares of Common Stock on the
date such option or warrant is granted, provided, however, that the Corporation
may issue options to Directors of the Corporation with an exercise price less
than the fair market value of Common Stock on the date the option is granted
pursuant to a plan under which (1) a Director waives the right to all or part of
the annual Director's fee in return for the granting of such option and (2) the
sum of (A) the exercise price per share of Common Stock pursuant to the plan and
(B) the per share amount of Director's fee waived in connection with the
granting of the option is equal to the fair market value of a share of Common
Stock on the date the option is granted;
(e) Invest in real estate contracts for sale, unless such real estate
contracts are in recordable form and appropriately recorded in the chain of
title;
(f) Invest in mortgage loans unless an appraisal is obtained for the
underlying property; or
(g) Allow the aggregate borrowing of the Corporation to exceed 300% of
the Net Assets of the Corporation, unless the Independent Directors determine
that a higher level of borrowing is appropriate.
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SECTION 2. RELATED PARTY TRANSACTIONS.
Without limiting any other procedure available by law or otherwise to
the Corporation, the Board of Directors may authorize any agreement or other
transaction with any person, corporation, association, company, trust,
partnership (limited or general) or other organization, although one or more of
the directors or officers of the Corporation may be a party to any such
agreement or any officer, director, stockholder or member of such other party
(an "Interested Officer/Director"), and no such agreement or transaction shall
be invalidated or rendered void or voidable solely by reason of the existence of
any such relationship if: ii) the existence is disclosed or known to the Board
of Directors, and the contract or transaction is authorized, approved or
ratified by the affirmative vote of a majority of the disinterested directors,
even if they constitute less than a quorum of the Board of Directors; or (ii)
the existence is disclosed to the stockholders entitled to vote, and the
contract or transaction is authorized, approved or ratified by a majority of the
votes cast by the stockholders entitled to vote, other than the votes of the
stock held of record by the Interested Officers/Directors; or (iii) the contract
or transaction is fair and reasonable to the Corporation. Any Interested
Officer/Director of the Corporation or the stock owned by them or by a
corporation, association, company, trust, partnership (limited or general) or
other organization in which an Interested Officer/Director may have an interest,
may be counted in determining the presence of a quorum at a meeting of the Board
of Directors or a committee of the Board of Directors or at a meeting of the
stockholders, as the case may be, at which the contract or transaction is
authorized, approved or ratified.
SECTION 3. REIT QUALIFICATION.
After the Corporation has initially elected to qualify as a REIT under
the Code, the Board of Directors shall use its reasonable best efforts to cause
the Corporation and its stockholders to qualify for U.S. federal income tax
treatment in accordance with the provision of the Code applicable to a REIT. In
furtherance of the foregoing, the Board of Directors shall use its reasonable
best efforts to take such actions as are necessary, and may take such actions as
in its sole judgment and discretion are desirable, to preserve the status of the
Corporation as a REIT, provided, however, that if the Board of Directors
determines in its discretion, that it is no longer in the best interests of the
Corporation to continue to have the Corporation qualify as a REIT, the Board of
Directors may revoke or otherwise terminate the Corporation's REIT election
pursuant to Section 856(g) of the Code. Nothing contained in the Charter shall
limit the authority of the Board of Directors to take such action as it in its
sole discretion deems necessary or advisable to protect the Corporation and the
interests of the stockholders by maintaining the Corporation's eligibility to
be, and preserving the Corporation's status as, a qualified REIT under the Code.
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SECTION 4. OTHER CONSIDERATIONS.
The Board of Directors shall, in connection with the exercise of its
business judgment involving a Business Combination (as defined in Section 3-601
of the Maryland General Corporation Law) or any actual or proposed transaction
which would or may involve a change in control of the Corporation (whether by
purchases of shares of stock or any other securities of the Corporation in the
open market, or otherwise, tender offer, merger, consolidation, dissolution,
liquidation, sale of all or substantially all of the assets of the Corporation,
proxy solicitation or otherwise), in determining what is in the best interests
of the Corporation and its stockholders and in making any recommendation to its
stockholders, give due consideration to all relevant factors, including but not
limited to (a) the economic effect, both immediate and long-term, upon the
Corporation's stockholders, including stockholders, if any, who do not
participate in the transaction; (b) the social and economic effect on the
employees, customers of, and others dealing with, the Corporation and its
subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located; (c) whether the proposal is acceptable
based on the historical and current operating results or financial condition of
the Corporation; (d) whether a more favorable price could be obtained for the
Corporation's stock or other securities in the future; (e) the reputation and
business practices of the offeror and its management and affiliates as they
would affect the employees of the Corporation and its subsidiaries; (f) the
future value of the stock or any other securities of the Corporation; (g) any
antitrust or other legal and regulatory issues that are raised by the proposal;
and (h) the business and financial condition and earnings prospects of the
acquiring person or entity, including but not limited to debt service and other
existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person or entity. If the Board of Directors determines that any
proposed Business Combination (as defined in Section 3-601 of the Maryland
General Corporation Law) or actual or proposed transaction which would or may
involve a change in control of the Corporation should be rejected, it may take
any lawful action to defeat such transaction, including but not limited to any
or all of the following: advising stockholders not to accept the proposal;
instituting litigation against the party making the proposal; filing complaints
with governmental and regulatory authorities; acquiring the stock or any of the
securities of the Corporation; selling or otherwise issuing authorized but
unissued stock, other securities or granting options or rights with respect
thereto; acquiring a company or assets which would create an antitrust or other
regulatory problem for the party making the proposal; and obtaining a more
favorable offer from another individual or entity.
SECTION 5. STOCKHOLDER PROPOSALS.
For any stockholder proposal to be presented in connection with an
annual meeting of stockholders of the Corporation, including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely written notice
thereof in writing to the Chairman of the Board of the Corporation in the manner
and containing the information required by the Bylaws. Stockholder proposals to
be
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presented in connection with a special meeting of stockholders will be
presented by the Corporation only to the extent required by Section 2-502 of the
Maryland General Corporation Law.
SECTION 6. VOTING REQUIREMENTS.
Notwithstanding any provision of law requiring the authorization of
any action by a greater proportion than a majority of the total number of shares
of all classes of capital stock or the total number of shares of any class of
capital stock, such action shall be valid and effective if authorized by the
affirmative vote of the holders of a majority of the total number of shares of
all classes and entitled to vote thereon, except as otherwise provided in the
Charter of the Corporation. All mergers, consolidations, share exchanges,
recapitalization or dissolutions to which the Corporation is a party and all
sales of all or substantially all the assets of the Corporation shall not be
valid and effective unless advised by at least 75% of the Board of Directors.
ARTICLE IX
BUSINESS COMBINATIONS
The Corporation has elected to incorporate in the State of Maryland
with the intention to rely on the provisions of Subtitle 6, Special Voting
Requirements, (Sections 3-601 through Sections 3-603 at the date of
incorporation) of the Maryland General Corporation Law ("Subtitle 6") as it may
be amended or renumbered from time to time; provided, however, that in the event
the provisions of Subtitle 6 are effectively repealed or otherwise deleted from
the Maryland General Corporation Law or any other Maryland statute governing the
Corporation, the Corporation hereby incorporates by reference in this Article IX
of this Charter the provisions of Subtitle 6 as in effect on the date of the
Company's incorporation in Maryland with the same effect as if such provisions
had been set forth in full text in this Article IX.
ARTICLE X
INDEMNIFICATION
AND LIMITATION OF LIABILITY
SECTION 1. INDEMNIFICATION.
The Corporation shall provide any indemnification permitted by the
laws of Maryland and shall indemnify directors, officers, agents and employees
as follows: (a) the Corporation shall indemnify its directors and officers,
whether serving the Corporation or at its request any other entity, to the full
extent required or permitted by the General Laws of the State
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of Maryland now or hereafter in force, including the advance of expenses under
the procedures and to the full extent permitted by law and (b) the Corporation
shall indemnify other employees and agents, whether serving the Corporation or
at its request any other entity, to such extent as shall be authorized by the
Board of Directors or the Corporation's Bylaws and be permitted by law. The
foregoing rights of indemnification shall not be exclusive of any other rights
to which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time to
time such bylaws, resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law. No amendment of
the Charter of the Corporation or repeal of any of its provisions shall limit or
eliminate the right to indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal or shall limit or
eliminate the rights granted under indemnification agreements entered into by
the corporation and its directors, officers, agents and employees.
SECTION 2. LIMITATION OF LIABILITY.
To the fullest extent permitted by Maryland statutory or decisional
law, as amended or interpreted, no director or officer of the Corporation shall
be liable to the Corporation or its stockholders for money damages. No
amendment of the Charter of the Corporation or repeal any of its provisions
shall apply to or affect in any respect the applicability of the preceding
sentence with respect to any act or omission which occurred prior to such
amendment or repeal.
ARTICLE XI
AMENDMENTS
(a) Right to Amend Charter. The Corporation reserves the right to
amend, alter, change or repeal any provision contained in the Charter, including
any amendments changing the terms or contract rights, as expressly set forth in
the Charter, of any of its outstanding stock by classification, reclassification
or otherwise.
(b) Certain Amendments Requiring Special Director Approval. Any
amendment to, repeal of or adoption of any provision inconsistent with Article
V, Section 2 (REIT related restrictions), Article VI, Article VII, Article IX,
Article X or this Article XI will be effective only if it is also advised by at
least 75% of the Board of Directors.
(c) Certain Amendments Requiring Special Stockholder Vote. Any
provision of the Charter of the Corporation to the contrary notwithstanding:
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(i) Article VII, Section 3 (classification of directors),
Section 4 (removal of directors) and Section 8 (amendments of Bylaws);
Article IX (business combinations); Article X (indemnification and
limitation of liability); and this Article XI shall not be amended,
altered, rescinded or repealed; and
(ii) no provision imposing cumulative voting in the election of
directors may be added to the Charter of the Corporation;
unless in each such case, in addition to any vote required by the terms of then
outstanding Preferred Stock, such action is approved by the affirmative vote of
the holders of not less than 75% of all of the votes entitled to be cast on the
matter.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: ________________, 2001
/s/ Kayla E. Klos
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Kayla E. Klos, Incorporator
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