Exhibit 3.2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDITRUST OPERATING COMPANY
Meditrust Operating Company, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The Corporation filed its original Certificate of Incorporation with
the Secretary of State of the State of Delaware on August 23, 1979 (the
"Original Certificate of Incorporation") under the name "Santa Anita Operating
Company". The name of the Corporation was changed to Meditrust Operating Company
on November 5, 1997, by way of amendment to the Original Certificate of
Incorporation. A Restated Certificate of Incorporation (the "Second
Certificate") was filed with the Secretary of State of the State of Delaware on
March 2, 1998 restating and integrating the Corporation's certificate of
incorporation as theretofore amended and supplemented.
2. This Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the Corporation's Certificate of
Incorporation as heretofore amended and supplemented. The Certificate was duly
adopted by the Board of Directors of the Corporation in accordance with the
provisions of Sections 242 and 245 of the Delaware General Corporation Law, as
amended from time to time (the "DGCL"), and was duly adopted by the stockholders
of the Corporation in accordance with the applicable provisions of Sections 242
and 245 of the DGCL.
3. The text of the Second Certificate, as amended to date, shall at the
effective time of this Certificate read as follows:
FIRST. NAME. The name of the Corporation is Meditrust Operating
Company.
SECOND. REGISTERED OFFICE. The address of its registered office in
the State of Delaware is 1013 Centre Road, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is Corporation
Service Company.
THIRD. PURPOSES. The nature of the business or purposes to be
conducted or promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware and to do all things and
exercise all powers, rights and privileges which a business corporation may now
or hereafter be organized or authorized to do or to exercise under the laws of
the State of Delaware.
FOURTH. CAPITALIZATION.
SECTION 1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 561,000,000, of which 500,000,000
shares of the par value of $.10 each are to be a class designated Common Stock,
6,000,000 shares of the par value of $.10 each are to be of a class designated
Preferred Stock, 30,000,000 shares of the par value of $.10 each are to be of a
class designated Series Common Stock and 25,000,000 of the par value $.10 each
are to be of a class designated Excess Stock.
SECTION 2. The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors of the Corporation, or any
duly authorized committee thereof, is hereby authorized to fix or authorize the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or
prices, and the liquidation preferences of any wholly unissued series of
Preferred Stock and the number of shares constituting any such series and the
designation thereof, or all or any of them and such other rights specified by
the Board of Directors of the Corporation and not prohibited by law.
SECTION 3. The shares of Series Common Stock may be issued from time to
time in one or more series. The Board of Directors of the Corporation is hereby
authorized to fix or alter the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Series Common Stock and the number of shares
constituting any such series and the designation thereof, or all or any of them.
SECTION 4. (a) Each holder of Common Stock, as such, shall be entitled
to one vote for each share of Common Stock held of record by such holder on all
matters on which stockholders generally are entitled to vote.
(b) Except as otherwise required by law, holders of a series of
Preferred Stock or Series Common Stock, as such, shall be entitled only to such
voting rights, if any, as shall expressly be granted thereto by this Certificate
of Incorporation (including any Certificate of Designation relating to such
series).
(c) Subject to applicable law and the rights, if any, of the holders of
any outstanding series of Preferred Stock or Series Common Stock or any class or
series of stock having a preference over or the right to participate with the
Common Stock with respect to the payment of dividends, dividends may be declared
and paid on the Common Stock at such times and in such amounts as the Board of
Directors of the Corporation in its discretion shall determine.
(d) Upon the dissolution, liquidation or winding up of the Corporation,
subject to the rights, if any, of the holders of any outstanding series of
Preferred Stock or Series Common Stock or any class or series of stock having a
preference over or the right to participate with the Common Stock with respect
to the distribution of assets of the Corporation upon such dissolution,
liquidation or winding up of the Corporation, the holders of the Common Stock,
as such, shall be entitled to receive the assets of the Corporation available
for distribution to its stockholders ratably in proportion to the number of
shares held by them.
SECTION 5. The terms and conditions applicable to shares of Excess
Stock are set forth in Article Thirteenth hereof.
FIFTH. [DELETED].
SIXTH. BY-LAWS. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation is expressly
authorized, without stockholder approval, to make, alter or repeal the by-laws
of the Corporation.
SEVENTH. RIGHT TO AMEND CERTIFICATE. The Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
EIGHTH. [DELETED].
NINTH:
PART 1. VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS
1.1. HIGHER VOTE FOR CERTAIN BUSINESS COMBINATIONS. In addition to any
affirmative vote required by law or any other Article of this Certificate of
Incorporation, and except as otherwise expressly provided in Part 2 of this
Article Ninth:
(a) any merger or consolidation of the Corporation or any Subsidiary
with (i) any Interested Stockholder or (ii) any other corporation (whether or
not itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or Associate of an Interested Stockholder;
or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value of $5,000,000 or more; or
(c) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market Value
of $5,000,000 or more, other than the issuance of securities by the Corporation
or any Subsidiary upon the conversion of convertible securities of the
Corporation or any Subsidiary into stock of the Corporation or any Subsidiary;
or
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(d) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(e) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least (a) 80%
of the combined voting power of the then outstanding shares of stock of all
classes and series of the Corporation entitled to vote in the election of
directors (the "Voting Stock"), and (b) a majority of the combined voting power
of the then outstanding shares of Voting Stock held by persons who are
Disinterested Stockholders, provided, however, that the majority vote
requirement of this clause (b) shall not be applicable if the Business
Combination is approved by the affirmative vote of the holders of not less than
90% of combined voting power of the then outstanding shares of Voting Stock. The
foregoing affirmative vote requirements are hereinafter referred to as the
"Special Vote Requirement." The Special Vote Requirement shall be applicable
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
1.2. DEFINITION OF "BUSINESS COMBINATION." The term "Business
Combination" as used in this Article Ninth shall mean any transaction which is
referred to in any one or more of clauses (a) through (e) of Section 1.1.
PART 2. WHEN SPECIAL VOTE REQUIREMENT IS NOT APPLICABLE
The provisions of Part 1 of this Article Ninth shall not be applicable
to any particular Business Combination, and such Business Combination shall
require only such affirmative vote as is required by law and any other Article
of this Certificate of Incorporation, if all of the conditions specified in
either of the following Sections 2.1 and 2.2 are met:
2.1. APPROVAL BY CONTINUING DIRECTORS. The Business Combination shall
have been approved by a majority of the Continuing Directors.
2.2. PRICE AND PROCEDURAL REQUIREMENTS. All of the following
conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received per share by holders of Common Stock in such Business
Combination shall be at least equal to the higher of (i) the highest price paid
for any share of Common Stock by any person who is an Interested Stockholder
within the two-year period immediately prior to the time of the first public
announcement of the proposed Business Combination (the "Announcement Date") or
in the transaction in which such person became an Interested Stockholder,
whichever price is the higher; or (ii) the Fair Market Value per share of the
Corporation's Common Stock on the Announcement Date or on the date on which the
Interested Stockholder became an Interested Stockholder (the "Determination
Date"), whichever is higher. The price paid for any share of Common Stock shall
be the amount of cash plus the Fair Market Value of any other consideration to
be received therefor, determined at the time of payment thereof.
(b) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received in such Business Combination by holders of securities
of the Corporation other than Common Stock shall be at least equal to the higher
of (i) if applicable, the highest preferential amount to which the holders of
such securities are entitled in the event of any voluntary liquidation,
dissolution or winding up of the Corporation, (ii) the highest price paid for
any of such securities by any person who is an Interested Stockholder within the
two-year period immediately prior to the Announcement Date or in the transaction
in which such person became an Interested Stockholder, whichever price is
higher, (iii) the Fair Market Value of such securities on the Announcement Date
or the Determination Date, whichever is higher, or (iv) if such securities are
convertible into or exchangeable for shares of Common Stock, the amount per
share of such Common Stock determined pursuant to the foregoing paragraph (a)
reduced by any amount payable by the holders of such
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securities in accordance with the terms of such securities, per share, upon such
conversion or exchange, multiplied by the total number of shares of Common Stock
into which or for which such securities are convertible or exchangeable.
(c) The consideration to be received by holders of a particular class
of outstanding Voting Stock (including Common Stock) shall be in cash or in the
same forms the Interested Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or the form of
consideration used to acquire the largest number of shares of such class of
Voting Stock previously acquired by it.
(d) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination: (i)
there shall have been (1) no reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the Continuing Directors, and (2) an
increase in such annual rate of dividends necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of reducing the
number of outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the Continuing Directors;
and (ii) such Interested Stockholder shall have not become the beneficial owner
of any additional shares of Voting Stock except as part of the transaction which
results in such Interested Stockholder becoming an Interested Stockholder.
(e) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934 and the rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to all stockholders of
the Corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions).
PART 3. CERTAIN DEFINITIONS
For the purposes of this Article Ninth:
3.1. A "person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
3.2. "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(a) is the beneficial owner, directly or indirectly, of more than 10%
of the combined voting power of the then outstanding Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the combined voting power of
the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period immediately prior
to the date in question beneficially owned by any Interested Stockholder, if
such assignment or succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering within the meaning of
the Securities Act of 1933.
3.3. A person shall be a "beneficial owner" of any Voting Stock:
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
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(b) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote or to direct the
vote pursuant to any agreement, arrangement or understanding; or
(c) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
3.4. For the purposes of determining whether a person is an Interested
Stockholder pursuant to Section 3.2, the number of shares of Voting Stock deemed
to be outstanding shall include shares deemed owned through application of
Section 3.3 but shall not include any other shares of Voting Stock which may be
issuable to other persons pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
3.5. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on January 1, 1984.
3.6. "Subsidiary" means any corporation of which more than a majority
of any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for purposes of the definition of
Interested Stockholder set forth in Section 3.2, the term "Subsidiary" shall
mean only a corporation of which a majority of each class of equity security is
owned by the Corporation, by a Subsidiary, or by the Corporation and one or more
Subsidiaries.
3.7. "Continuing Director" means any member of the Board of Directors
of the Corporation who is unaffiliated with, and not a nominee of, the
Interested Stockholder and was a member of the Board of Directors of the
Corporation prior to the time that the Interested Stockholder became an
Interested Stockholder and any successor of a Continuing Director who is
unaffiliated with, and not a nominee of, the Interested Stockholder and who is
recommended to succeed a Continuing Director by a majority of Continuing
Directors then on the Board of Directors of the Corporation.
3.8. "Disinterested Stockholder" means a holder of Voting Stock who is
not an Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder and whose shares are not deemed owned by an Interested Stockholder
through application of Section 3.3.
3.9. "Fair Market Value" means: (a) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock 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 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such quotations are
available, the Fair Market Value on the date in question of a share of such
stock as determined by a majority of the Continuing Directors in good faith; and
(b) in the case of stock of any class of securities not traded on any securities
exchange or in the over-the-counter market or in the case of property other than
cash or stock, the Fair Market Value of such securities or property on the date
in question as determined by a majority of the Continuing Directors in good
faith. If the stock is paired for purposes of trading with that of any other
corporation, the Fair Market Value of the paired stock shall be determined
pursuant to the pairing or other agreement which provides for the determination
of the relative values of the stock of the Corporation and the stock of such
other corporation, after determining the Fair Market Value of the paired stock
as set forth above.
3.10. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration to be received" as used in Sections 2.2(a),
(b) and (c) shall include the shares of Common Stock and/or the shares of any
other class of outstanding Voting Stock retained by the holders of such shares.
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PART 4. DIRECTORS' DUTY TO DETERMINE CERTAIN FACTS
The majority of the Continuing Directors of the Corporation shall have
the power and duty to determine for the purpose of this Article Ninth, on the
basis of information known to them after reasonable inquiry, all facts necessary
to determine the applicability of the various provisions of this Article Ninth,
including (A) whether a person is an Interested Stockholder, (B) the number of
shares of Voting Stock beneficially owned by any person, (C) whether a person is
an Affiliate or Associate of another, (D) whether the requirements of Section
2.2 have been met with respect to any Business Combination, and (E) whether the
assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $5,000,000 or more; and the good faith determination of a
majority of the Continuing Directors shall be conclusive and binding for all
purposes of this Article Ninth.
PART 5. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED STOCKHOLDERS
Nothing contained in this Article Ninth shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
PART 6. AMENDMENT, REPEAL, INCONSISTENT PROVISIONS
Notwithstanding any other provisions of law or of this Certificate of
Incorporation or the by-laws of the Corporation which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of securities which may be required by law or
by this Certificate of Incorporation, any proposal to amend or repeal, or adopt
any provisions inconsistent with, this Article Ninth of this Certificate of
Incorporation shall require for approval the affirmative vote of at least (a)
80% of the combined voting power of the then outstanding Shares of Voting Stock
and (b) a majority of the combined voting power of the then outstanding shares
of Voting Stock held by persons who are Disinterested Stockholders, provided
that the majority vote requirement of this clause (b) shall not be applicable if
the proposal is approved by the affirmative vote of not less than 90% of the
combined voting power of the then outstanding shares of Voting Stock.
TENTH:
(a) The number of directors shall be as provided in the by-laws. The
Board of Directors of the Corporation shall be divided into three classes,
designated Class I, Class II and Class III, such classes to be as nearly equal
in number as possible and to have the number provided in the by-laws. At the
annual meeting of stockholders in 1986, Directors of Class I shall be elected to
hold office for a term expiring at the next succeeding annual meeting, Directors
of Class II shall be elected to hold office for a term expiring at the second
succeeding annual meeting, and Directors of Class III shall be elected to hold
office for a term expiring at the third succeeding annual meeting. Thereafter at
each annual meeting of stockholders, directors shall be chosen for a term of
three years to succeed those whose terms then expire and shall hold office until
the third following annual meeting of stockholders and until the election of
their respective successors. Any vacancy on the Board of Directors of the
Corporation, whether arising through death, resignation or removal of a director
or through an increase in the number of directors of any class, shall be filled
by a majority vote of all the remaining directors. The term of office of any
director elected to fill such a vacancy shall expire at the expiration of the
term of office of directors of the class in which the vacancy occurred.
Notwithstanding any other provision of this Article, and except as otherwise
required by law, whenever the holders of any one or more series of Preferred
Stock or other securities of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
term of office, the filling of vacancies and other features of such
directorships shall be governed by the terms of this Certificate of
Incorporation applicable thereto, and unless the terms of this Certificate of
Incorporation expressly provide otherwise, such directorships shall be in
addition to the number of directors provided in the by-laws and such directors
shall not be classified pursuant to this Article.
(b) Any action required or permitted to be taken by holders of stock of
the Corporation must be taken at a meeting of such holders and may not be taken
by consent in writing. The by-laws of the Corporation may be amended by the
stockholders only by the affirmative vote of at least 80% of the voting power of
the Corporation. Notwithstanding any other provision of law or of this
Certificate of Incorporation or the by-laws of the Corporation which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative
vote of the holders of any particular class or series of securities which may be
required by law or by this Certificate of Incorporation, any proposal
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to amend or repeal, or adopt any provisions inconsistent with, this Article
Tenth shall require for approval the affirmative vote of at least 80% of the
voting power of the Corporation.
ELEVENTH:
The Board of Directors of the Corporation shall base the response of
this Corporation to any proposed Business Combination on the evaluation by the
Board of Directors of the Corporation of what is in the best interest of this
Corporation. In evaluating what is in the best interest of this Corporation, the
Board of Directors of the Corporation shall consider:
(a) THE BEST INTEREST OF THE STOCKHOLDERS. For this purpose, the Board
of Directors of the Corporation shall consider among other factors, not only the
consideration offered in the proposed Business Combination in relation to the
then current market price of this Corporation's stock, but also in relation to
the then current value of this Corporation in a freely negotiated transaction
and in relation to the then current estimate by the Board of Directors of the
future value of this Corporation as an independent entity; and
(b) Such other factors as the Board of Directors of the Corporation
determines to be relevant, including, among other factors, the social, legal and
economic effects on the communities in which this Corporation and its
subsidiaries operate and are located.
TWELFTH:
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as director.
Any repeal or modification of this Article shall not result in any
liability for a director with respect to any action or omission occurring prior
to such repeal or modification.
THIRTEENTH:
Section 13.1. RESTRICTIONS ON OWNERSHIP AND TRANSFER OF EQUITY STOCK.
(a) DEFINITIONS. For purposes of this Article Thirteenth and Article
Fourteenth the following terms shall have the meanings set forth below:
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the shares of Equity
Stock directly or indirectly owned by such Person, (ii) the number of shares of
Equity Stock treated as owned directly or indirectly by such Person through the
application of the constructive ownership rules of Section 544 of the Internal
Revenue Code of 1986, as amended (the "Code"), as modified by Section
856(h)(1)(B) of the Code as if the Corporation were a real estate investment
trust (a "REIT") as defined in the Code, and (iii) the number of shares of
Equity Stock which such Person is deemed to beneficially own pursuant to Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that for the purposes of calculating the foregoing, no
share shall be counted more than once. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have correlative meanings.
"Beneficiary" shall mean, with respect to any Trust, one or more
organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) and (viii) thereof) and Section 170(c)(2) of the Code that are named by
the Corporation as the beneficiary or beneficiaries of such Trust, in accordance
with the provisions of Section 13.2(d).
"Common Stock" shall mean the common stock, par value $.10 per share of
the Corporation.
"Constructive Ownership" shall mean ownership of shares of Equity Stock
by a Person who is or would be treated as a direct or indirect owner of such
shares of Equity Stock through the application of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have correlative
meanings.
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"Equity Stock" shall mean the Common Stock, par value $.10 per share,
and the Preferred Stock, par value $.10 per share of the Corporation.
"Look-Through Entity" shall mean a Person that is either (i) a trust
described in Section 401(a) of the Code and exempt from tax under Section 501(a)
of the Code as modified by Section 856(h)(3) of the Code as if the Corporation
were a REIT or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, with respect to a class or
series of Equity Stock, 9.8% of the number of outstanding shares of such Equity
Stock.
"Market Price" on any date shall mean the average of the Closing Price
for the five consecutive Trading Days ending on such date. The "Closing Price"
on any date shall mean the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Equity Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Equity Stock are listed or admitted to trading or, if the shares of Equity Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price, or if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq Stock
Market, Inc. or, if such system is no longer in use, the principal other
automated quotation system that may then be in use or, if the shares of Equity
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker selected by the
Board of Directors of the Corporation making a market in the shares of Equity
Stock. In the case of Equity Stock that is paired, "Market Price" shall mean the
"Market Price" for paired shares multiplied by a fraction (expressed as a
percentage) determined by dividing the value for such Equity Stock most recently
determined under Section 14.2(c) by the value of a paired share most recently
determined under Section 14.2(c) (the "Valuation Percentage").
"Non-Transfer Event" shall mean an event (other than a purported
Transfer) that would (a) cause any Person (other than a Look-Through Entity) to
Beneficially Own or Constructively Own shares of Equity Stock in excess of the
Ownership Limit, (b) cause any Look-Through Entity to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the Look-Through
Ownership Limit, (c) result in the capital stock of the Corporation being
beneficially owned (within the meaning of Section 856(a)(5) of the Code as if
the Corporation were a REIT) by fewer than 100 persons within the meaning of
Section 856(a)(5) of the Code as if the Corporation were a REIT, (d) result in
the Corporation being "closely held" within the meaning of Section 856(h) of the
Code as if the Corporation were a REIT, or (e) cause the Corporation to
Constructively Own 10% or more of the ownership interest in a tenant of the
Corporation's or a Subsidiary's real property within the meaning of Section
856(d)(2)(B) of the Code as if the Corporation were a REIT. Non-Transfer Events
include but are not limited to (i) the granting of any option or entering into
any agreement for the sale, transfer or other disposition of shares of Equity
Stock or (ii) the sale, transfer, assignment or other disposition of interests
in any Person or of any securities or rights convertible into or exchangeable
for shares of Equity Stock that results in changes in Beneficial Ownership or
Constructive Ownership of shares of Equity Stock.
"Ownership Limit" shall mean, with respect to any class or series of
Equity Stock, 9.25% of the number of outstanding shares of such class or series
of Equity Stock. For purposes of computing the percentage of shares of any class
or series of Equity Stock of the Corporation that is Beneficially Owned by any
Person, any shares of Equity Stock of the Corporation which are deemed to be
Beneficially Owned by such Person pursuant to Rule 13d-3 of the Exchange Act but
which are not outstanding shall be deemed to be outstanding.
"Permitted Transferee" shall mean any Person designated as a Permitted
Transferee in accordance with the provisions of Section 13.2(h).
"Person" shall mean (a) an individual or any corporation, partnership,
estate, trust, association, private foundation, joint stock company, limited
liability company or any other entity and (b) a "group" as that term is defined
for purposes of Rule 13d-5 of the Exchange Act.
8
"Prohibited Owner" shall mean, with respect to any purported Transfer
or Non-Transfer Event, any Person who is prevented from being or becoming the
owner of record title to shares of Equity Stock by the provisions of Section
13.2(a).
"Realty" shall mean Meditrust Corporation, a Delaware corporation.
"Realty Common Stock" shall mean the common stock, par value $.10 per
share of Realty.
"Realty Equity Stock" shall mean Realty Common Stock and preferred
stock of any designation, par value $.10 per share of Realty.
"Restriction Termination Date" shall mean the first day on which the
Board of Directors of Realty determines that it is no longer in the best
interests of Realty to attempt to, or continue to, qualify under the Code as a
REIT.
"Trading Day" shall mean a day on which the principal national
securities exchange on which shares of Equity Stock are listed or admitted to
trading is open for the transaction of business or, if shares of Equity Stock
are not listed or admitted to trading on any national securities exchange, any
day other than a Saturday, a Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or executive order to
close.
"Transfer" (as a noun) shall mean any sale, transfer, gift, assignment,
devise or other disposition of shares of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether by
operation of law or otherwise. "Transfer" (as a verb) shall have the correlative
meaning.
"Trust" shall mean any separate trust created and administered in
accordance with the terms of Section 13.2, for the exclusive benefit of any
Beneficiary.
"Trustee" shall mean any Person or entity unaffiliated with both the
Corporation and any Prohibited Owner designated by the Corporation to act as
trustee of any Trust, or any successor trustee thereof. The Trustee shall be
designated by the Corporation and Realty in accordance with Article Fourteenth.
(b) RESTRICTION ON OWNERSHIP AND TRANSFER.
(i) Except as provided in Section 13.1(d), until the
Restriction Termination Date, (i) no Person (other than a Look-Through Entity)
shall Beneficially Own or Constructively Own outstanding shares of Equity Stock
in excess of the Ownership Limit and no Look-Through Entity shall Beneficially
Own or Constructively Own outstanding shares of Equity Stock in excess of the
Look-Through Ownership Limit, (ii) any Transfer (whether or not the result of a
transaction entered into through the facilities of the New York Stock Exchange)
that, if effective, would result in any Person (other than a Look-Through
Entity) Beneficially Owning or Constructively Owning shares of Equity Stock in
excess of the Ownership Limit shall be void ab initio as to the Transfer of that
number of shares of Equity Stock which would be otherwise Beneficially Owned or
Constructively Owned by such Person in excess of the Ownership Limit and the
intended transferee shall acquire no rights in such shares of Equity Stock, and
(iii) any Transfer (whether or not the result of a transaction entered into
through the facilities of the New York Stock Exchange) that, if effective, would
result in any Look-Through Entity Beneficially Owning or Constructively Owning
shares of Equity Stock in excess of the Look-Through Ownership Limit shall be
void ab initio as to the Transfer of that number of shares of Equity Stock which
would be otherwise Beneficially Owned or Constructively Owned by such
Look-Through Entity in excess of the Look- Through Ownership Limit and the
intended transferee shall acquire no rights in such shares of Equity Stock.
(ii) Until the Restriction Termination Date, any Transfer
(whether or not the result of a transaction entered into through the facilities
of the New York Stock Exchange) that, if effective, would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code if the Corporation were a REIT shall be void ab initio as to the Transfer
of that number of shares of Equity Stock that would cause the Corporation to be
"closely held" within the meaning of Section 856(h) of the Code as if the
Corporation were a REIT, and the intended transferee shall acquire no rights in
such shares of Equity Stock.
9
(iii) Until the Restriction Termination Date, any Transfer
(whether or not the result of a transaction entered into through the facilities
of the New York Stock Exchange) of shares of Equity Stock that, if effective,
would cause the Corporation to Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the Corporation or any direct or
indirect subsidiary (whether a corporation, partnership, limited liability
company or other entity) of the Corporation (a "Subsidiary"), within the meaning
of Section 856(d)(2)(B) of the Code as if the Corporation were a REIT, shall be
void ab initio as to the Transfer of that number of shares of Equity Stock that
would cause the Corporation to Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the Corporation or a Subsidiary
within the meaning of Section 856(d)(2)(B) of the Code as if the Corporation
were a REIT, and the intended transferee shall acquire no rights in such shares
of Equity Stock.
(iv) Until the Restriction Termination Date, any Transfer
(whether or not the result of a transaction entered into through the facilities
of the New York Stock Exchange) that, if effective, would result in the shares
of capital stock of the Corporation being beneficially owned (within the meaning
of Section 856(a)(5) of the Code as if the Corporation were a REIT) by fewer
than 100 persons within the meaning of Section 856(a)(5) of the Code as if the
Corporation were a REIT shall be void ab initio and the intended transferee
shall acquire no rights in such shares of Equity Stock.
(c) OWNERS REQUIRED TO PROVIDE INFORMATION. Until the Restriction
Termination Date:
(i) Every Beneficial Owner or Constructive Owner of more than
5%, or such lower percentages as required pursuant to regulations under the Code
as if the Corporation were a REIT, of the outstanding shares of any class or
series of Equity Stock of the Corporation shall, within 30 days after January 1
of each year, provide to the Corporation a written statement or affidavit
stating the name and address of such Beneficial Owner 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
as the Corporation may request to ensure compliance with the restrictions in
this Section 13.1.
(ii) Each Person who is a Beneficial Owner or Constructive
Owner of shares of Equity Stock and each Person (including the stockholder of
record) who is holding shares of Equity Stock for a Beneficial Owner or
Constructive Owner shall provide to the Corporation a written statement or
affidavit stating such information as the Corporation may request in order to
determine the Corporation's status as a REIT (as if the Corporation were a REIT)
and to ensure compliance with the Ownership Limit or the Look-Through Ownership
Limit, as the case may be.
(d) EXCEPTION. The Board of Directors of the Corporation, upon receipt
of a ruling from the Internal Revenue Service or an opinion of counsel in each
case to the effect that the restrictions contained in subsections (b)(ii)
through (iv) of this Section 13.1 would not be violated, may exempt a Person
from the Ownership Limit or Look-Through Ownership Limit, provided that (A) the
Board of Directors of the Corporation obtains such representations and
undertakings from such Person as are reasonably necessary to ascertain that no
Person's Beneficial Ownership or Constructive Ownership of shares of Equity
Stock will (i) result in the capital stock of the Corporation being beneficially
owned (within the meaning of Section 856(a)(5) of the Code as if the Corporation
were a REIT) by fewer than 100 persons within the meaning of Section 856(a)(5)
of the Code as if the Corporation were a REIT, (ii) result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code as if the
Corporation were a REIT or (iii) cause the Corporation to Constructively Own 10%
or more of the ownership interests in the real property of a tenant of the
Corporation or a Subsidiary within the meaning of Section 856(d)(2)(B) of the
Code as if the Corporation were a REIT and (B) such Person agrees in writing
that any violation or attempted violation of the Ownership Limit or Look-Through
Ownership Limit will result in the conversion of such shares into shares of
Excess Stock pursuant to Section 13.2(a).
(e) NEW YORK STOCK EXCHANGE TRANSACTIONS. Notwithstanding any provision
contained herein to the contrary, nothing in this Certificate of Incorporation
shall preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
10
Section 13.2. EXCESS STOCK.
(a) CONVERSION INTO EXCESS STOCK.
(i) If, notwithstanding the other provisions contained in this
Article Thirteenth, prior to the Restriction Termination Date, there is a
purported Transfer or Non-Transfer Event such that any Person (other than a
Look-Through Entity) would either Beneficially Own or Constructively Own shares
of Equity Stock in excess of the Ownership Limit or such that any Person that is
a Look-Through Entity would either Beneficially Own or Constructively Own shares
of Equity Stock in excess of the Look-Through Ownership Limit, then, (i) except
as otherwise provided in Section 13.1(d), the purported transferee shall be
deemed to be a Prohibited Owner and shall acquire no right or interest (or, in
the case of a Non-Transfer Event, the Person holding record title to the shares
of Equity Stock Beneficially Owned or Constructively Owned by such Beneficial
Owner or Constructive Owner, shall cease to own any right or interest) in such
number of shares of Equity Stock which would cause such Beneficial Owner or
Constructive Owner to Beneficially Own or Constructively Own shares of Equity
Stock in excess of the Ownership Limit or the Look-Through Ownership Limit, as
the case may be, (ii) such number of shares of Equity Stock in excess of the
Ownership Limit or the Look- Through Ownership Limit, as the case may be,
(rounded up to the nearest whole share) shall be automatically converted into an
equal number of shares of Excess Stock and transferred to a Trust in accordance
with Section 13.2(d) and (iii) the Prohibited Owner shall submit such number of
shares of Equity Stock to the Corporation for registration in the name of the
Trustee of the Trust. Such conversion into Excess Stock and transfer to a Trust
shall be effective as of the close of trading on the Trading Day prior to the
date of the Transfer or Non- Transfer Event, as the case may be.
(ii) If, notwithstanding the other provisions contained in
this Article Thirteenth, prior to the Restriction Termination Date, there is a
purported Transfer or Non-Transfer Event that, if effective, would (i) result in
the capital stock of the Corporation being beneficially owned (within the
meaning of Section 856(a)(5) of the Code as if the Corporation were a REIT) by
fewer than 100 persons within the meaning of Section 856(a)(5) of the Code as if
the Corporation were a REIT, (ii) result in the Corporation being "closely held"
within the meaning of Section 856(h) of the Code as if the Corporation were a
REIT or (iii) cause the Corporation to Constructively Own 10% or more of the
ownership interest in a tenant of the Corporation's or a Subsidiary's real
property within the meaning of Section 856(d)(2)(B) of the Code as if the
Corporation were a REIT, then (x) the purported transferee shall be deemed to be
a Prohibited Owner and shall acquire no right or interest (or, in the case of a
Non-Transfer Event, the Person holding record title of the shares of Equity
Stock with respect to which such Non-Transfer Event occurred, shall be deemed to
be a Prohibited Owner and shall cease to own any right or interest) in such
number of shares of Equity Stock, the ownership of which by such purported
transferee or record holder would (A) result in the shares of capital stock of
the Corporation being beneficially owned (within the meaning of Section
856(a)(5) of the Code as if the Corporation were a REIT) by fewer than 100
persons within the meaning of Section 856(a)(5) of the Code as if the
Corporation were a REIT, (B) result in the Corporation being "closely held"
within the meaning of Section 856(h) of the Code as if the Corporation were a
REIT or (C) cause the Corporation to Constructively Own 10% or more of the
ownership interests in a tenant of the Corporation's or a Subsidiary's real
property within the meaning of Section 856(d)(2)(B) of the Code as if the
Corporation were a REIT, (y) such number of shares of Equity Stock (rounded up
to the nearest whole share) shall be automatically converted into an equal
number of shares of Excess Stock and transferred to a Trust in accordance with
Section 13.2(d) and (z) the Prohibited Owner shall submit such number of shares
of Equity Stock to the Corporation for registration in the name of the Trustee
of the Trust. Such conversion into Excess Stock and transfer to a Trust shall be
effective as of the close of trading on the Trading Day prior to the date of the
Transfer or Non-Transfer Event, as the case may be.
(iii) Upon the occurrence of such a conversion of shares of
any class or series of Equity Stock into an equal number of shares of Excess
Stock, such shares of Equity Stock shall be automatically retired and canceled,
without any action required by the Board of Directors of the Corporation, and
shall thereupon be restored to the status of authorized but unissued shares of
the particular class or series of Equity Stock from which such Excess Stock was
converted and may be reissued by the Corporation as that particular class or
series of Equity Stock.
(iv) Upon the conversion into Excess Shares (pursuant to the
Certificate of Incorporation of Realty) of any shares of any class or series of
Realty stock that are paired with a class or series of shares of Equity Stock,
pursuant to Article Fourteenth, such shares of Equity Stock shall likewise be
converted into an equal number of shares of Excess Stock and be paired with such
converted shares of Realty, pursuant to Article Fourteenth.
11
(b) REMEDIES FOR BREACH. If the Corporation, or its designees, shall at
any time determine in good faith that a Transfer has taken place in violation of
Section 13.1(b) or that a Person intends to acquire or has attempted to acquire
Beneficial Ownership or Constructive Ownership of any shares of Equity Stock in
violation of Section 13.1(b), the Corporation shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing to give effect to such
Transfer on the stock transfer books of the Corporation or instituting
proceedings to enjoin such Transfer or acquisition.
(c) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts
to acquire shares of Equity Stock in violation of Section 13.1(b), or any Person
who owns shares of Equity Stock that were converted into shares of Excess Stock
and transferred to a Trust pursuant to subsections (a) and (d) of this Section
13.2, shall immediately give written notice to the Corporation of such event and
shall provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or Non-
Transfer Event, as the case may be, on the Corporation's status as a REIT
(determined as if the Corporation were a REIT).
(d) OWNERSHIP IN TRUST. Upon any Transfer or Non-Transfer Event that
results in Excess Stock pursuant to Section 13.2(a), such Excess Stock shall be
automatically transferred to a Trust to be held for the exclusive benefit of the
Beneficiary. The Corporation and Realty shall name a Beneficiary for each Trust.
Any conversion of shares of Equity Stock into shares of Excess Stock and
transfer to a Trust shall be effective as of the close of trading on the Trading
Day prior to the date of the Transfer or Non-Transfer Event that results in the
conversion. Shares of Excess Stock so held in trust shall remain issued and
outstanding shares of stock of the Corporation.
(e) DIVIDEND RIGHTS. Each share of Excess Stock shall be entitled to
the same dividends and distributions (as to both timing and amount) as may be
declared by the Board of Directors of the Corporation as shares of the class or
series of Equity Stock from which such Excess Stock was converted. The Trustee,
as record holder of the shares of Excess Stock, shall be entitled to receive all
dividends and distributions and shall hold all such dividends or distributions
in trust for the benefit of the Beneficiary. The Prohibited Owner with respect
to such shares of Excess Stock shall repay to the Trust the amount of any
dividends or distributions received by it (i) that are attributable to any
shares of Equity Stock that have been converted into shares of Excess Stock and
(ii) the record date of which was on or after the date that such shares were
converted into shares of Excess Stock. The Corporation shall take all measures
that it determines reasonably necessary to recover the amount of any such
dividend or distribution paid to a Prohibited Owner, including, if necessary,
withholding any portion of future dividends or distributions payable on shares
of Equity Stock Beneficially Owned or Constructively Owned by the Person who,
but for the provisions of this Article Thirteenth, would Constructively Own or
Beneficially Own the shares of Equity Stock that were converted into shares of
Excess Stock; and, as soon as reasonably practicable following the Corporation's
receipt or withholding thereof, shall pay over to the Trust for the benefit of
the Beneficiary the dividends so received or withheld, as the case may be.
(f) RIGHTS UPON LIQUIDATION. In the event of any voluntary or
involuntary liquidation of, or winding up of, or any distribution of the assets
of, the Corporation, each holder of shares of Excess Stock shall be entitled to
receive, ratably with each other holder of shares of Equity Stock of the same
class or series from which the Equity Stock was converted, that portion of the
assets of the Corporation that is available for distribution to the holders of
such class or series of Equity Stock. The Trust shall distribute to the
Prohibited Owner the amounts received upon such liquidation, dissolution, or
winding up, or distribution; provided, however, that the Prohibited Owner shall
not be entitled to receive amounts in excess of, in the case of a purported
Transfer in which the Prohibited Owner gave value for shares of Equity Stock and
which Transfer resulted in the conversion of the shares into shares of Excess
Stock, the price per share, if any, such Prohibited Owner paid for the shares of
Equity Stock (which, in the case of Equity Stock that is paired, shall equal the
price per paired share multiplied by the most recent Valuation Percentage) and,
in the case of a Non-Transfer Event or Transfer in which the Prohibited Owner
did not give value for such shares (e.g., if the shares were received through a
gift or devise) and which Non-Transfer Event or Transfer, as the case may be,
resulted in the conversion of the shares into shares of Excess Stock, the price
per share equal to the Market Price on the date of such Non-Transfer Event or
Transfer. Any remaining amount in such Trust shall be distributed to the
Beneficiary.
(g) VOTING RIGHTS. Each share of Excess Stock shall entitle the holder
to the number of votes the holder would have, if such share of Excess Stock was
a share of Equity Stock of the same class or series from which such Excess Stock
was converted, on all matters submitted to a vote at any meeting of
stockholders. The holders of shares of Excess Stock converted from the same
class or series of Equity Stock shall vote together with the holders of such
Equity Stock as a single class on all such matters. The Trustee, as record
holder of the Excess Stock, shall be entitled
12
to vote all shares of Excess Stock. Any vote by a Prohibited Owner as a
purported holder of shares of Equity Stock prior to the discovery by the
Corporation that the shares of Equity Stock have been converted into shares of
Excess Stock shall, subject to applicable law, be rescinded and shall be void ab
initio with respect to such shares of Excess Stock, and the Prohibited Owner
shall be deemed to have given, as of the close of trading on the Trading Day
prior to the date of the purported Transfer or Non-Transfer Event that results
in the conversion of the shares of Equity Stock into shares of Excess Stock and
the transfer of such shares to a Trust pursuant to subsections (a) and (d) of
this Section 13.2, an irrevocable proxy to the Trustee to vote the shares of
Excess Stock in the manner in which the Trustee, in its sole and absolute
discretion, desires.
(h) DESIGNATION OF PERMITTED TRANSFEREE.
(i) The Trustee shall have the exclusive and absolute right to
designate one or more Permitted Transferees of any and all shares of Excess
Stock if the Corporation fails to exercise its option with respect to such
shares pursuant to Section 13.2(j) hereof within the time period set forth
therein. As soon as practicable, but in an orderly fashion so as not to
materially adversely affect the Market Price of the shares of Excess Stock, the
Trustee shall designate any one or more Persons as Permitted Transferees;
provided, however, that (i) the Permitted Transferee so designated purchases for
valuable consideration (whether in a public or private sale) the shares of
Excess Stock (which, in the case of paired Excess Stock, shall be determined
based on the Valuation Percentage) and (ii) the Permitted Transferee so
designated may acquire such shares of Excess Stock without violating any of the
restrictions set forth in Section 13.1(b) and without such acquisition resulting
in the conversion of the shares of Equity Stock so acquired into shares of
Excess Stock and the transfer of such shares to a Trust pursuant to subsections
(a) and (d) of this Section 13.2.
(ii) Upon the designation by the Trustee of a Permitted
Transferee in accordance with the provisions of this Section 13.2(h), the
Trustee shall cause to be transferred to the Permitted Transferee that number of
shares of Excess Stock acquired by the Permitted Transferee. Upon such transfer
of the shares of Excess Stock to the Permitted Transferee, such shares of Excess
Stock shall be automatically converted into an equal number of shares of Equity
Stock of the same class and series from which such Excess Stock was converted.
Upon the occurrence of such a conversion of shares of Excess Stock into an equal
number of shares of Equity Stock, such shares of Excess Stock shall be
automatically retired and canceled, without any action required by the Board of
Directors of the Corporation, and shall thereupon be restored to the status of
authorized but unissued shares of Excess Stock and may be reissued by the
Corporation as Excess Stock.
(iii) The Trustee shall (i) cause to be recorded on the stock
transfer books of the Corporation that the Permitted Transferee is the holder of
record of such number of shares of Equity Stock, and (ii) distribute to the
Beneficiary any and all amounts held with respect to the shares of Excess Stock
after making payment to the Prohibited Owner pursuant to Section 13.2(i).
(iv) If the Transfer of shares of Excess Stock to a purported
Permitted Transferee shall violate any of the transfer restrictions set forth in
Section 13.1(b), such Transfer shall be void ab initio as to that number of
shares of Excess Stock that cause the violation of any such restriction when
such shares are converted into shares of Equity Stock (as described in
subsection (h)(ii) above) and the purported Permitted Transferee shall be deemed
to be a Prohibited Owner and shall acquire no rights in such shares of Excess
Stock or Equity Stock. Such shares of Equity Stock shall be automatically
reconverted into Excess Stock and transferred to the Trust from which they were
originally Transferred. Such conversion and transfer to the Trust shall be
effective as of the close of trading on the Trading Day prior to the date of the
Transfer to the purported Permitted Transferee and the provisions of this
Article Thirteenth shall apply to such shares, including, without limitation,
the provisions of subsections (h) through (j) of this Section 13.2 with respect
to any future Transfer of such shares by the Trust.
(i) COMPENSATION TO RECORD HOLDER OF SHARES OF EQUITY STOCK THAT
ARE CONVERTED INTO SHARES OF EXCESS STOCK. Any Prohibited Owner shall be
entitled (following discovery of the shares of Excess Stock and subsequent
designation of the Permitted Transferee in accordance with Section 13.2(h) or
following the acceptance of the offer to purchase such shares in accordance with
Section 13.2(j) to receive from the Trustee following the sale or other
disposition of such shares of Excess Stock the lesser of (i)(a) in the case of a
purported Transfer in which the Prohibited Owner gave value for shares of Equity
Stock and which Transfer resulted in the conversion of such shares into shares
of Excess Stock, the price per share, if any, such Prohibited Owner paid for the
shares of Equity Stock (which, in the case of paired Excess Stock, shall be
determined based on the Valuation Percentage) and (b) in the case
13
of a Non- Transfer Event or Transfer in which the Prohibited Owner did not give
value for such shares (e.g., if the shares were received through a gift or
devise) and which Non-Transfer Event or Transfer, as the case may be, resulted
in the conversion of such shares into shares of Excess Stock, the price per
share equal to the Market Price on the date of such Non-Transfer Event or
Transfer or (ii) the price per share (which, in the case of paired Excess Stock,
shall be determined based on the Valuation Percentage) received by the Trustee
from the sale or other disposition of such shares of Excess Stock in accordance
with this Section 13.2(i) or Section 13.2(j). Any amounts received by the
Trustee in respect of such shares of Excess Stock and in excess of such amounts
to be paid the Prohibited Owner pursuant to this Section 13.2(i) shall be
distributed to the Beneficiary in accordance with the provisions of Section
13.2(h). Each Beneficiary and Prohibited Owner shall waive any and all claims
that it may have against the Trustee and the Trust arising out of the
disposition of shares of Excess Stock, except for claims arising out of the
gross negligence or willful misconduct of, or any failure to make payments in
accordance with this Section 13.2 by, such Trustee or the Corporation.
(j) PURCHASE RIGHT IN EXCESS STOCK. Shares of Excess Stock shall be
deemed to have been offered for sale to the Corporation or its designee, at a
price per share equal to the lesser of (i) the price per share (which, in the
case of paired Excess Stock, shall be determined based on the Valuation
Percentage) in the transaction that created such shares of Excess Stock (or, in
the case of devise, gift or Non-Transfer Event, the Market Price at the time of
such devise, gift or Non-Transfer Event) or (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days following the later of
(a) the date of the Non- Transfer Event or purported Transfer which results in
such shares of Excess Stock or (b) the date on which the Corporation determines
in good faith that a Transfer or Non-Transfer Event resulting in shares of
Excess Stock previously has occurred, if the Corporation does not receive a
notice of such Transfer or Non-Transfer Event pursuant to Section 13.2(c).
Section 13.3. REMEDIES NOT LIMITED. Nothing contained in this Article
Thirteenth shall limit the authority of the Corporation to take such other
action as it deems necessary or advisable to protect the Corporation and the
interests of its stockholders by preservation of the Realty's status as a REIT
and to ensure compliance with the requirements of Article Fourteenth and Section
13.1.
Section 13.4. AMBIGUITY. In the case of an ambiguity in the application
of any of the provisions of this Article Thirteenth, including any definition
contained in Section 13.1(a), the Board of Directors of the Corporation shall
have the power to determine the application of the provisions of this Article
Thirteenth with respect to any situation based on the facts known to it.
Section 13.5. LEGEND. Each certificate for shares of Equity Stock
shall bear the following legend:
"The shares of Meditrust Corporation and Meditrust Operating Company
represented by this combined certificate are subject to restrictions in the
respective Certificates of Incorporation of each company which prohibit (a) any
Person (other than a Look-Through Entity) (as such terms are defined in the
respective Certificates of Incorporation of each company) from Beneficially
Owning or Constructively Owning (as these terms are defined in the respective
Certificates of Incorporation of each company) in excess of 9.25% of the number
of outstanding shares of any class or series of Equity Stock (as that term is
defined in the respective Certificates of Incorporation of each company), (b)
any Look-Through Entity from Beneficially Owning or Constructively Owning in
excess of 9.8% of the number of outstanding shares of any class or series of
Equity Stock, (c) any Person from acquiring or maintaining any ownership
interest in the stock of either company that is inconsistent with (i) the
requirements of the Internal Revenue Code of 1986, as amended, pertaining to
real estate investment trusts or (ii) Article Thirteenth of the respective
Certificates of Incorporation of each company and (d) any transfer of shares of
any class or series of Equity Stock of either company that are paired pursuant
to Article Fourteenth of the respective Certificates of Incorporation of each
company, except in combination with an equal number of shares of the other
company in accordance with the respective Certificates of Incorporation of each
company, copies of which are on file with the transfer agent named on the face
hereof, and the holder of this certificate by his acceptance hereof consents to
be bound by such restrictions.
Meditrust Corporation and Meditrust Operating Company will furnish
without charge to each stockholder who so requests a copy of the relevant
provisions of the respective Certificates of Incorporation of each company, and
a copy of the provisions setting forth the designations, preferences, privileges
and rights of each class of stock or series thereof that each company is
authorized to issue and the qualifications, limitations and restrictions of such
preferences and/or
14
rights. Any such request may be addressed to the Secretary of either company or
to the transfer agent named on the face hereof."
Section 13.6. SEVERABILITY. Each provision of this Article Thirteenth
shall be severable and an adverse determination as to any such provision shall
be in no way affect the validity of any other provision.
FOURTEENTH:
Section 14.1 TRANSFER OF SHARES. Until the restrictions and limitations
set forth in this Article Fourteenth shall have been terminated in the manner
hereinafter provided:
(a) Except as provided herein, no shares of Equity Stock shall be
transferable, and they shall not be transferred on the books of the Corporation,
unless (i) a simultaneous transfer is made by the same transferor to the same
transferee, or (ii) such transferor has previously arranged with Realty for the
transfer to the transferee, of the same number of shares of Realty Equity Stock,
except that the Corporation may transfer Equity Stock acquired by it from Realty
to a person to whom Realty simultaneously issues the same number of Equity
Stock.
(b) Each certificate evidencing ownership of shares of Realty Equity
Stock shall be deemed to evidence, in addition, the same number of shares of
Equity Stock.
(c) Notwithstanding the foregoing, any shares of Equity Stock issued
after the date of the filing of this Certificate, which are issued on an
unpaired basis by the Corporation pursuant to the terms of Section 14.7 of this
Certificate, may be transferred without compliance with Section 14.1(a) and may
be evidenced solely by a certificate which is not deemed to evidence a like
number of shares of Realty Equity Stock as required by Section 14.1(b).
Section 14.2 ISSUANCE OF SHARES. Until such time as the pairing of the
outstanding shares of Common Stock and the outstanding shares of Realty Common
Stock in accordance with this Article Fourteenth (the "Pairing" and each paired
share a "Paired Share") shall have been terminated in the manner herein
provided:
(a) Except as provided herein, the Corporation shall not issue or agree
to issue any shares of Equity Stock to any person except Realty unless effective
provision has been made for the simultaneous issuance or transfer to the same
person of the same number of shares of Realty Equity Stock and for the pairing
of such shares of the Corporation and Realty and unless the Corporation and
Realty have agreed on the manner and basis of allocating the consideration to be
received upon such issuance between the Corporation and Realty or, if allocation
of such consideration between them is not practicable, on the payment by one
company to the other of cash or other consideration in lieu thereof. Any such
allocation or payment shall be based on the respective fair market values of
Equity Stock and Realty Equity Stock.
(b) As desired from time to time, but not less often than once each
calendar year, the Corporation and Realty shall jointly arrange for the
determination of the fair market value as of a date specified by the Corporation
and Realty (the "valuation date") of the Common Stock outstanding on the
valuation date. The amount so determined (the "fair market value of the Common
Stock") shall thereafter be used in all calculations pursuant to this Section
14.2 until a new determination is made. The fair market value of each share of
Realty Common Stock shall be determined by subtracting the fair market value of
one share of Common Stock from the average of the closing sale prices of a
Paired Share over the principal exchange on which the Paired Shares are listed,
or if not listed, then the average of the last bid prices in the
over-the-counter market during the ten business days prior to any date of
determination of the fair market value of Realty Common Stock.
Section 14.3. STOCK CERTIFICATES; TRANSFER AGENTS AND REGISTRARS. Until
such time as the Pairing shall have been terminated in the manner herein
provided, except in the case of shares of Equity Stock issued to Realty or
Equity Stock issued pursuant to Section 14.7, each certificate which is issued
evidencing shares of Equity Stock shall be printed "back- to-back" with a
certificate evidencing the same number of Realty Equity Stock, shall bear a
conspicuous legend (on the face thereof) referring to the restrictions on the
transfer of the shares evidenced thereby contained in this Certificate and the
by-laws of the Corporation, and shall be in a form which satisfies the
requirements of the laws of Delaware and which has been approved by the Board of
Directors of the Corporation.
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Section 14.4. STOCK DIVIDENDS, RECLASSIFICATIONS, ETC. Until such time
as the Pairing shall have been terminated in the manner herein provided, the
Corporation shall not declare or pay any stock dividend consisting in whole or
in part of Equity Stock, issue any rights or warrants to purchase any shares of
Equity Stock, or subdivide, combine or otherwise reclassify the shares of Equity
Stock, unless Realty simultaneously takes the same or equivalent action with
respect to the Realty Equity Stock, to the end that the outstanding Equity Stock
and the outstanding shares of Realty Equity Stock will at all times be
effectively paired on a one-for-one basis as contemplated herein.
Section 14.5. SHARES IN EXCESS OF THE OWNERSHIP LIMIT OR IN VIOLATION
OF THE TRANSFER RESTRICTIONS; DESIGNATION OF TRUSTEE AND BENEFICIARIES. Until
such time as the Board of Directors of the Corporation determines that it is no
longer in the best interests of the Corporation to cooperate with Realty to
qualify under the Code as a REIT:
(a) Upon the conversion of a share of any class or series of Equity
Stock of the Corporation into a share of Excess Stock of the Corporation in
accordance with the provisions of Article Thirteenth, if such share of Equity
Stock was paired prior to its conversion into Excess Stock, the corresponding
paired share of that same class or series of Equity Stock of Realty shall be
simultaneously converted into a share of Excess Stock of Realty; such shares of
Excess Stock of Realty and the Corporation shall be paired and shall be
simultaneously transferred to a Trust.
(b) Upon the conversion of a share of Excess Stock of the Corporation
into a share of Equity Stock of the Corporation of the same class or series from
which such Excess Stock was converted in accordance with the provisions of
Article Thirteenth, if such share of Excess Stock was paired prior to its
conversion from Equity Stock into Excess Stock, the corresponding paired share
of Excess Stock of Realty shall be simultaneously converted into a share of
Equity Stock of Realty of the same class or series from which such Excess Stock
was converted and such shares of Equity Stock shall be paired.
(c) With respect to an offer made by a Trust pursuant to Article
Thirteenth to the Corporation to purchase shares of Excess Stock from a Trust
pursuant to Article Thirteenth, in the case of shares of Excess Stock that are
paired, the Corporation shall accept such offer with respect to its shares of
Excess Stock without the agreement of Realty to accept such offer with respect
to the corresponding paired shares of its Excess Stock.
(d) The Trustee of each Trust shall be designated by mutual agreement
of the Board of Directors of the Corporation and the Board of Directors of
Realty.
(e) The Beneficiary with respect to each Trust shall be designated by
mutual agreement of the Board of Directors of the Corporation and the Board of
Directors of Realty.
(f) At such time that the Board of Directors of Realty no longer deems
it in the best interests of Realty to attempt to, or continue to, qualify under
the Code as a REIT, the Ownership Limit and the Transfer Restrictions shall
cease to have effect, as provided in Article Thirteenth.
Section 14.7. UNPAIRED SHARES.
(a) Shares of capital stock of any class or series other than Common
Stock, irrespective of whether such shares are convertible into Paired Shares,
may be issued by the Corporation to any person without effective provision for
the simultaneous issuance or transfer to the same person of the same number of
shares of that same class or series of capital stock of Realty and without
effective provision for the pairing of such shares of capital stock of the
Corporation and Realty, as the Board of Directors of the Corporation shall in
its sole discretion determine (any such shares of capital stock of any class or
series issued by the Corporation pursuant to this Section 14.7 are referred to
herein as "Unpaired Shares").
(b) Unpaired Shares may be transferred on the books of the Corporation
without a simultaneous transfer to the same transferee of any shares of any
other class or series of capital stock of Realty.
Section 14.8. MERGER, SALE OF ASSETS, ETC. Until such time as the
Pairing shall have been terminated in the manner provided herein, the
Corporation will not be a party to any merger, consolidation, sale of assets,
liquidation or other form or reorganization pursuant to which shares of Common
Stock are converted, redeemed, exchanged or otherwise changed unless Realty is
also a party to such transaction.
16
Section 14.9. WAIVER AND TERMINATION. The Board of Directors of the
Corporation is hereby authorized to waive, or repeal or make inapplicable the
restrictions and limitations set forth in this Article Fourteenth in its
entirety or in any provision of this Article Fourteenth.
Section 14.10. SEVERABILITY. Each provision of this Article Fourteenth
shall be severable and an adverse determination as to any provision shall in no
way affect the validity of any other provision.
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CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
JUNIOR PARTICIPATING PREFERRED STOCK
I. DESIGNATION AND AMOUNT
The shares of such series shall be designated as "Junior Participating
Preferred Stock" (the "Junior Preferred Stock") and the number of shares
constituting the Junior Preferred Stock shall be 200,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors of the
Corporation; provided, that no decrease shall reduce the number of shares of
Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
II. DIVIDENDS AND DISTRIBUTIONS
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, par value $.10
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Junior Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 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 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 Junior Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Junior 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
Junior Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of 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 $1.00 per share on the Junior
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 Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, 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 Junior 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 Junior 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 of Directors of the Corporation may fix a record date for
the determination of holders of shares of Junior Preferred Stock entitled to
receive payment of a dividend or
18
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
III. VOTING RIGHTS
The holders of shares of Junior Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Corporation's Certificate of
Incorporation or as otherwise provided by law, holders of Junior Preferred Stock
shall have no voting rights.
IV. CERTAIN RESTRICTIONS
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section II are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, 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 Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except dividends paid ratably on the Junior Preferred Stock and
all such parity 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 junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior 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 Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock ranking on a parity
with the Junior Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors of the
Corporation) to all holders of such shares upon such terms as the Board of
Directors of the Corporation, 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.
(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 could, under paragraph (A) of this Section IV
purchase or otherwise acquire such shares at such time and in such manner.
V. REACQUIRED SHARES
Any shares of Junior Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation,
19
in any other Certificate of Designations creating a series of Preferred Stock or
any similar stock or as otherwise required by law.
VI. LIQUIDATION, DISSOLUTION OR WINDING UP
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Junior Preferred Stock unless, prior thereto, the holders of shares of Junior
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Junior
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Junior Preferred Stock, except distributions made ratably on the Junior
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Junior Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) 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.
VII. 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 or securities, cash and/or any other
property, then in any such case each share of Junior Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
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 declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
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.
VIII. REDEMPTION
The shares of Junior Preferred Stock shall not be redeemable.
IX. RANK
The Junior Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
X. AMENDMENT
The Certificate of Incorporation of the Corporation shall not be
amended in any manner which would alter or change the powers, preferences or
special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Junior Preferred Stock, voting together as a single
series.
20
CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND
RIGHTS OF SERIES A NON-VOTING CONVERTIBLE COMMON STOCK
1. DESIGNATION AND AMOUNT. There shall be a series of undesignated
Series Common Stock of the Corporation designated as "Series A Non-Voting
Convertible Common Stock" and the number of shares constituting such series
shall be ten million (10,000,000). The number of shares designated as shares of
Series A Non-Voting Convertible Common Stock may be increased or decreased by
the Board of Directors of the Corporation without a vote of stockholders. Except
as otherwise expressly provided herein, all shares of Series A Non-Voting
Convertible Common Stock shall be identical to shares of Common Stock (as
defined in Article FOURTH of the Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation")) and shall entitle
the holders thereof to the same rights and privileges.
2. VOTING. The holders of Series A Non-Voting Convertible Common Stock
shall not have any right to vote, except as required under applicable law and,
except as required by law, the holders of Common Stock and Series A Non-Voting
Convertible Common Stock shall vote together as a single class on all matters as
to which holders of Series A Non-Voting Convertible Common Stock are entitled to
vote as set forth herein. Except as required by law or as set forth herein, the
holders of Series A Non-Voting Convertible Common Stock (to the extent permitted
by this Section 2), Common Stock (to the extent permitted by the Certificate of
Incorporation), Preferred Stock (to the extent permitted by the Certificate of
Incorporation) and Series Common Stock (to the extent permitted by the
Certificate of Incorporation) shall vote together as a single class on all
matters submitted to the stockholders for a vote.
3. DIVIDENDS. Subject to applicable law, the holders of Series A
Non-Voting Convertible Common Stock shall be entitled to receive such dividends
out of funds legally available therefor at such times and in such amounts as the
Board of Directors of the Corporation may determine in its sole discretion shall
be paid with respect to the Common Stock, with each share of Common Stock and
each share of Series A Non-Voting Convertible Common Stock sharing
share-for-share in such dividends (with each share of Series A Non-Voting
Convertible Common Stock being equal to the number of shares of Common Stock
into which it would then be convertible on the record date for such dividend)
except that if dividends are declared which are payable in shares of Common
Stock or Series A Non-Voting Convertible Common Stock, dividends shall be
declared which are payable at the equivalent rate in both classes of stock and
the dividends payable in shares of Common Stock shall be payable to the holders
of that class of stock and the dividends payable in shares of Series A
Non-Voting Convertible Common Stock shall be payable to the holders of that
class of stock.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(a "Liquidation Event"), after the payment or provision for payment of all debts
and liabilities of the Corporation and all preferential amounts to which the
holders of Preferred Stock or Series Common Stock, if any, are entitled with
respect to the distribution of assets in liquidation, the holders of Series A
NonVoting Convertible Common Stock shall be entitled to share ratably with the
holders of Common Stock (with each share of Series A Non-Voting Convertible
Common Stock being equal to the number of shares of Common Stock into which it
would then be convertible on the effective date of such Liquidation Event) in
the remaining assets of the Corporation available for distribution.
5. CONVERSION OF SERIES A NON-VOTING CONVERTIBLE COMMON STOCK.
(a) AUTOMATIC CONVERSION. Each share of Series A Non-Voting Convertible
Common Stock shall be automatically converted, without the payment of any
additional consideration, into fully paid and non-assessable shares of Common
Stock at the rate of one share of Common Stock for each share of Series A
Non-Voting Convertible Common Stock so converted (the "Series A Non-Voting
Conversion Rate") as of the date (the "Conversion Date") that is the earlier to
occur of (i) the next Business Day (as defined below) following the date on
which the shareholders of the Corporation and of Meditrust Corporation
("Meditrust Corporation") shall have approved the merger transaction (the
"Merger") among La Quinta Inns, Inc. ("La Quinta"), Meditrust Corporation and
the Corporation, and (ii) the date of any termination of the Agreement and Plan
of Merger dated as of January 3, 1998 and among La Quinta, Meditrust Corporation
and the Corporation relating to the Merger in accordance with the terms thereof.
As used herein, the term "Business Day" means any day other than Saturday,
Sunday, or any other day on which banking institutions in the States of Delaware
or New York are not open for business.
21
(b) PROCEDURE FOR CONVERSION. As of the Conversion Date, all
outstanding shares of Series A Non-Voting Convertible Common Stock shall be
converted automatically without any further action by the holders of Series A
NonVoting Convertible Common Stock and whether or not the certificates
representing such shares of Series A Non-Voting Convertible Common Stock are
surrendered to the Corporation or its transfer agent. On the Conversion Date,
all rights with respect to the Series A Non-Voting Convertible Common Stock so
converted shall terminate, except any of the rights of the holders thereof, in
accordance with the procedures herein, to receive certificates for the number of
shares of Common Stock into which such Series A Non-Voting Convertible Common
Stock has been converted. The Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable on the Conversion
Date unless certificates evidencing such shares of the Series A Non-Voting
Convertible Common Stock being converted, duly assigned or endorsed for transfer
to the Corporation (or accompanied by duly executed stock powers relating
thereto), are surrendered at the principal executive office of the Corporation
(or the offices of the transfer agent for the Series A Non-Voting Convertible
Common Stock or such office or offices of an agent for conversion as may from
time to time be designated by notice to the holders of the Series A Non-Voting
Convertible Common Stock by the Corporation), together with written notice by
the holder of such Series A Non-Voting Convertible Common Stock stating the name
or names (with addresses) and denominations in which the certificate or
certificates for Common Stock shall be issued and shall include instructions for
delivery thereof. Upon such surrender of a certificate representing Series A
Non-Voting Convertible Common Stock following its automatic conversion, the
Corporation shall issue and send by hand delivery, by courier or by first class
mail (postage prepaid) to the holder thereof or to such holder's designee, at
the address designated by such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled upon
conversion. In the event that there shall have been surrendered a certificate or
certificates representing Series A Non-Voting Convertible Common Stock, only
part of which are to be converted, the Corporation shall issue and send to such
holder or such holder's designee, in the manner set forth in the preceding
sentence, a new certificate or certificates representing the number of shares of
Series A Non-Voting Convertible Common Stock which shall not have been
converted. If the certificate or certificates for Common Stock are to be issued
in a name other than the name of the registered holder of the Series A
Non-Voting Convertible Common Stock surrendered for conversion, the Corporation
shall not be obligated to issue or deliver any certificate unless and until the
holder of the Series A NonVoting Convertible Common Stock surrendered has paid
to the Corporation the amount of any tax that may be payable in respect of any
transfer involved in such issuance or has established to the satisfaction of the
Corporation that such tax has been paid.
(c) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series A Non-Voting Convertible Common Stock such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Non-Voting Convertible Common
Stock.
6. ADJUSTMENTS.
(a) CHANGES IN COMMON STOCK. In the event the Corporation shall (i) pay
a dividend in or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock any shares of the Corporation, the Series A
Non-Voting Conversion Rate in effect immediately prior thereto shall be adjusted
so that the holder of a share of Series A Non-Voting Convertible Common Stock
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which it would have owned or have been entitled to
receive after the happening of any of the events described above had such share
of Series A Non-Voting Convertible Common Stock been converted on or immediately
prior to the record date for such dividend or the effective date of such
subdivision, combination or reclassification, as the case may be.
(b) CHANGES IN SERIES A NON-VOTING CONVERTIBLE COMMON STOCK. In the
event that the Corporation shall (i) pay a dividend in or make a distribution in
shares of its Series A Non-Voting Convertible Common Stock, (ii) subdivide its
outstanding shares of Series A Non-Voting Convertible Common Stock, (iii)
combine its outstanding shares of Series A Non-Voting Convertible Common Stock
into a smaller number of shares, or (iv) issue by reclassification of its shares
of Series A Non-Voting Convertible Common Stock any shares of the Corporation,
the Series A Non-Voting Conversion Rate in effect immediately prior thereto
shall be adjusted so that the holder of a share of Series A Non-Voting
Convertible Common Stock thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock which it would have owned or
have been entitled to receive after the happening 22
22
of any of the events described above had such share of Series A Non-Voting
Convertible Common Stock been converted on or immediately prior to the record
date for such dividend or the effective date of such subdivision, combination or
reclassification, as the case may be.
(c) GENERAL. An adjustment made pursuant to this Section 6 shall become
effective immediately after the record date (in the case of a dividend or
distribution in shares of capital stock) and shall become effective immediately
after the effective date (in the case of a subdivision, combination or
reclassification). No adjustment in accordance with this Section 6 shall be
required unless such adjustment would require an increase or decrease in any
conversion rate of at least 0.1%; provided, however, that any adjustments which
by reason of this clause are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
7. NOTICES. In the event that the Corporation provides any notice,
report or statement to the holders of Common Stock or Series A Non-Voting
Convertible Common Stock (in their capacity as such), the Corporation shall at
the same time provide a copy of any such notice, report or statement to each
record holder of outstanding Series A Non-Voting Convertible Common Stock.
8. STATUS OF ACQUIRED SHARES. Shares of Series A Non-Voting Convertible
Common Stock acquired by the Corporation (upon conversion or otherwise) will be
restored to the status of authorized but unissued shares of undesignated Series
Common Stock.
[End of Text]
23
I, William C. Baker, President of the Corporation, for the purpose of
amending and restating the Corporation's Certificate of Incorporation pursuant
to the General Corporation Law of the State of Delaware, do execute this
certificate, hereby declaring and certifying that this is my act and deed on
behalf of the Corporation this 21st day of June, 1999.
By: /s/ William C. Baker
Name: William C. Baker
Title: President