Exhibit 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
KAHLER REALTY CORPORATION
To form a Minnesota business corporation under and pursuant to
the Minnesota Business Corporation Act, the following articles of
incorporation are adopted:
ARTICLE 1. NAME
The name of the corporation is Kahler Realty Corporation.
ARTICLE 2. REGISTERED OFFICE
The address of the registered office of the corporation is 20
Second Avenue Southwest, Rochester, Minnesota 55904.
ARTICLE 3. PURPOSE
The corporation may engage in any lawful act or activity for
which corporations may be formed under the Minnesota Business Corporation
Act.
ARTICLE 4. AUTHORIZED SHARES
4.1 Authorized Capital Stock. The total number of shares of Capital
Stock ("Capital Stock") that the corporation is authorized to issue shall
be 80,000,000 shares, consisting of 70,000,000 shares of common stock, par
value $0.10 per share ("Common Stock") and 10,000,000 shares of preferred
stock, par value $0.10 per share ("Preferred Stock").
4.2 Common Stock. All shares of Common Stock shall be voting shares
and shall be entitled to one vote per share. Subject to any preferential
rights of holders of Preferred Stock, holders of Common Stock shall be
entitled to receive their ratable shares of such dividends or other
distributions as may be declared by the Board of Directors from time to
time and of any distribution of the assets of the corporation upon its
liquidation, dissolution or winding up, whether voluntary or involuntary.
4.3 Preferred Stock. The Board of Directors of the corporation is
hereby authorized to provide, by resolution or resolutions adopted by such
Board, for the issuance of Preferred Stock from time to time in one or
more classes and/or series, to establish the designation and number of
shares of each such class or series and to fix the relative rights and
preferences of the shares of each such class or series, all to the full
extent permitted by the Minnesota Business Corporation Act, as now enacted
or hereinafter amended.
ARTICLE 5. RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX
BENEFIT; REDEMPTION OF EXCESS STOCK
5.1 Definitions. For the purposes of this Article 5, the following
terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Capital Stock by a
Person who is or would be treated as an owner of such Capital Stock either
directly or through the application of Section 544 of the Code, as
modified by Section 856(h) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Closing Price" with respect to any Capital Stock shall mean, for any
day, the last reported sale price of such Stock regular way or, in case no
sale takes place on such day, the average of the closing bid and asked
prices regular way on such day, in either case as reported on the New York
Stock Exchange Composite Tape, or, if such Stock is not listed or admitted
to trading on such Exchange, on the principal national securities exchange
on which such Stock is listed or admitted to trading, or, if such Stock is
not listed or admitted to trading on any national securities exchange, on
the Nasdaq National Market, or, if such Stock is not admitted for
quotation on the Nasdaq National Market, the average of the high bid and
low asked prices on such day as recorded by the National Association of
Securities Dealers, Inc. through Nasdaq, or, if the National Association
of Securities Dealers, Inc. through Nasdaq shall not have reported any bid
and asked prices for such Stock on such day, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange
member firm selected from time to time by the corporation for such
purpose, or, if no such bid and asked prices can be obtained from any such
firm, the fair market value of one share of such Stock on such day as
determined in good faith by the Board of Directors of the corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Constructive Ownership" shall mean ownership of Capital Stock by a
Person who is or would be treated as an owner of such Capital 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 the correlative meanings.
"Merger Date" shall mean the effective date of any merger between the
corporation and Kahler Corporation, a Delaware corporation.
"Ownership" shall mean ownership, Beneficial Ownership or Constructive
Ownership of Capital Stock by a Person. The terms Owner, Owns and Owned
shall have correlative meanings.
"Ownership Limit" shall mean not more than 9.8% (in value or in number
of shares, whichever is more restrictive) of the outstanding Capital
Stock.
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity.
"REIT" shall mean a Real Estate Investment Trust under Section 856 of
the Code.
"REIT Provisions" shall mean (i) all provisions of the Code relating to
REITs and all regulations, rulings and cases promulgated or decided
thereunder and (ii) the requirements of any taxing authority or
governmental agency relating to REITs.
"Transfer" shall mean any sale, transfer, gift, assignment,
hypothecation, pledge, devise or other disposition of Capital Stock,
including, without limitation, the (i) granting of any warrant, option or
similar right exercisable for such Capital Stock, (ii) entering into of
any agreement for the sale, transfer, gift, assignment, hypothecation,
pledge, devise or other disposition of Capital Stock or any instrument or
security described in clauses (i) or (iii) hereof or (iii) the sale,
transfer, gift, assignment, hypothecation, pledge, devise or other
disposition of any securities convertible into or exchangeable for Capital
Stock (or any warrants, options, or similar rights to acquire any such
exchangeable or convertible securities), whether voluntary or involuntary,
whether of record, by operation of law or otherwise, and including, but
not limited to, transfers of interests in other Persons that result in
changes in the Ownership of Capital Stock. The terms "Transferor" and
"Transferee" shall have correlative meanings.
5.2 Restriction on Ownership and Transfer.
(a) Except as provided in Section 5.7, from and after the Merger
Date, no Person shall directly or indirectly Own Capital Stock in excess
of the Ownership Limit.
(b) Except as provided in Section 5.7, from and after the Merger
Date, any Transfer (whether or not such Transfer is the result of a
transaction entered into or through the Nasdaq National Market or any
exchange upon which the Capital Stock may be traded) that, if effective,
would result in any Person directly or indirectly Owning Capital Stock in
excess of the Ownership Limit shall be void and of no force or effect as
to the Transfer of that number of shares of Capital Stock that would be
otherwise Owned by such Person in excess of the Ownership Limit, and the
purported transfer of such shares will not be reflected on the
corporation's stock record books.
(c) From and after the Merger Date, any Transfer (whether or not such
Transfer is the result of a transaction entered into or through the Nasdaq
National Market or any exchange upon which the Capital Stock may be
traded) that, if effective, would result in the Capital Stock being
beneficially owned (within the meaning of Section 856(a)(5) of the Code
and determined as provided in Treasury Regulation 1.856-1(d)(2)
promulgated thereunder) by less than 100 persons (as such term is used in
Section 856(a)(5) of the Code) shall be void and of no force or effect as
to the Transfer of that number of shares of Capital Stock that would
otherwise cause such 100 person minimum beneficial ownership requirement
to be violated.
(d) From and after the Merger Date, any Transfer (whether or not such
Transfer is the result of a transaction entered into or through the Nasdaq
National Market or any exchange upon which the Capital Stock may be
traded) or other event that, if effective, would result in the corporation
being "closely held" within the meaning of Section 856(h) of the Code or
which would otherwise result in the corporation failing to qualify as a
REIT (including, but not limited to, a Transfer or other event that would
result in the corporation directly or indirectly Constructively Owning an
interest in a tenant that exceeds the limits described in Section
856(d)(2)(B) of the Code), shall be void and of no force or effect as to
the Transfer of that number of shares of Capital Stock or other event that
would otherwise cause the corporation to be "closely held" within the
meaning of Section 856(h) of the Code or which would otherwise result in
the corporation failing to qualify as a REIT, and any purported Transfer
of shares that would cause the same will not be reflected on the
corporation's stock record books.
5.3 Remedies. If the Board of Directors, or its designee, should at
any time determine in good faith that a Transfer or other event has taken
place in violation of Section 5.2 or that a Person intends to acquire, has
attempted to acquire or may acquire the Ownership of any shares of the
corporation in violation of Section 5.2, the Board of Directors, or its
designee, may take such action as it deems necessary or advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such Transfer or
other event on the stock record books of the corporation or instituting
any appropriate proceedings to enjoin such Transfer or other event.
Nothing contained in this Article 5 (but subject to Section 5.11) shall
limit the authority of the Board of Directors to take such other action as
it deems necessary or advisable to protect the corporation and the
interests of its stockholders by preservation of the corporation's status
as a REIT.
5.4 Notice of Restricted Transfer. Any Person who acquires, attempts
to acquire or intends to acquire the Ownership of Capital Stock in
violation of Section 5.2 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 event on the corporation's status as a REIT.
5.5 Owners Required To Provide Information. From and after the
Merger Date, each Person who is an Owner of outstanding shares of Capital
Stock shall, upon demand by the corporation, disclose to the corporation
in writing such information with respect to its Ownership of Capital Stock
as the Board of Directors, or its designee, in its discretion deems
necessary or appropriate to ensure the corporation's compliance with the
REIT Provisions. Whenever the Board of Directors deems it reasonably
necessary to protect the tax status of the corporation as a REIT under the
REIT Provisions, the Board of Directors may require a statement or
affidavit from each stockholder or proposed Transferee of shares of
Capital Stock setting forth the number of shares of Capital Stock already
Owned by such Person and any related, associated or affiliated Person
specified by the Board of Directors. If, in the opinion of the Board of
Directors, any proposed Transfer may jeopardize the qualification of the
corporation as a REIT, the Board of Directors shall have the right, but
not the duty, to refuse to permit such Transfer. All contracts,
agreements or other instruments that provide for the Transfer of shares of
Capital Stock shall be subject to this Section 5.5.
5.6 Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this Article 5, including, but not limited to, any
definition contained in Section 5.1, the Board of Directors shall have the
power to determine the appropriate application of the provisions of this
Article 5 with respect to any situation based on the facts known to it
(subject, however, to the provisions of Section 5.11).
5.7 Exceptions. (a) Subject to Sections 5.2(c), 5.2(d) and 5.7(c),
the Board of Directors may, in its sole and absolute discretion, exempt a
Person (including an underwriter in a public offering of shares of Capital
Stock of the corporation or any Person in any transaction involving the
issuance of Capital Stock by the corporation) from the Ownership Limit if
the Board of Directors obtains such representations, agreements and
undertakings from such Person as the Board of Directors, in its sole and
absolute discretion, determines are necessary to ensure that the
qualification of the corporation as a REIT will not be jeopardized
thereby.
(b) Prior to granting any exception pursuant to Section 5.7(a), the
Board of Directors may, in its sole discretion, require a ruling from the
Internal Revenue Service or an opinion of counsel, in either case in form
and substance satisfactory to the Board of Directors, if it deems the same
necessary or advisable in order to determine or ensure the corporation's
status as a REIT; provided, however, that obtaining a favorable ruling or
opinion shall not be required for the Board of Directors to grant an
exception hereunder.
(c) The Board of Directors may, in its sole and absolute discretion,
at any time revoke any exception granted pursuant to Section 5.7(a), and
upon such revocation, the provisions of this Article 5 shall immediately
become applicable to the Person to whom the exemption was granted and all
Capital Stock of the corporation Owned or proposed to be Owned by such
Person. A decision to exempt or refuse to exempt from the Ownership Limit
the Ownership of shares of Capital Stock or to revoke an exemption
previously granted may be based on any reason whatsoever, including, but
not limited to, the preservation of the corporation's qualification as a
REIT.
5.8 Legend. Each certificate for Capital Stock of the corporation
shall bear the following legend:
"The shares of Capital Stock represented by this certificate are
subject to restrictions on ownership and transfer for the purpose of the
issuer's qualification for and maintenance of its status as a Real Estate
Investment Trust under the Internal Revenue Code of 1986, as amended. No
Person may Own Capital Stock of the issuer in excess of 9.8% (in value or
in number of shares, whichever is more restrictive) of the outstanding
Capital Stock of the issuer, with certain further restrictions and
exceptions set forth in the issuer's Articles of Incorporation. Any
Person who attempts to Own Capital Stock in excess of the above
limitations must immediately notify the issuer. TRANSFERS IN VIOLATION OF
THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AND OF NO FORCE OR EFFECT.
In addition, upon the occurrence of certain events, if the restrictions
on Ownership are violated, the Capital Stock represented hereby may be
purchased by the issuer or its designee. The issuer will furnish to the
holder hereof upon request and without charge a complete written statement
of the terms and conditions of such repurchase right. Requests for such
a statement should be directed to the issuer's registered office in
Minnesota. All capitalized terms in this legend have the meanings given
them in the issuer's Articles of Incorporation. "
5.9 Separability. If any provision of this Article 5 or any
application of any such provision is determined to be invalid by any
federal or state court having jurisdiction, the validity of the remaining
provisions of this Article 5 shall not be affected and other applications
of such provisions shall be affected only to the extent necessary to
comply with the determination of such court.
5.10 Corporation's Purchase Right. Any shares of Capital Stock
("Excess Stock") held of record by any shareholder in excess of the
Ownership Limitation 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 paid by the shareholder in the transaction that
created such Excess Stock (or, if the shareholder did not give value for
the Excess Stock, the Closing Price of the class of Capital Stock
constituting such Excess Stock on the date of the Transfer or other event
that gave rise to the Excess Stock), (ii) the Closing Price of the class
of Capital Stock constituting such Excess Stock on the date the
corporation, or its designee, gives notice of acceptance of such offer,
(iii) the Closing Price of the class of Capital Stock constituting such
Excess Stock on the date the corporation, or its designee, purchases such
Excess Stock and (iv) the maximum price allowed under the applicable
provisions of Minnesota law. Any decision by the corporation to purchase
shares of Excess Stock or to designate a person to purchase such stock,
shall be made by the Board of Directors of the corporation in its sole and
absolute discretion.
5.11 Settlement. Nothing in this Article 5 shall preclude the
settlement of any transaction entered into through the Nasdaq National
Market or any exchange upon which the Capital Stock of the corporation may
be traded.
ARTICLE 6. NO CUMULATIVE VOTING
Unless otherwise provided in the resolutions of the Board of
Directors establishing a class or series of Preferred Stock, there shall
be no cumulative voting by shareholders of the corporation.
ARTICLE 7. NO PREEMPTIVE RIGHTS
Unless otherwise provided in the resolutions of the Board of
Directors establishing a class or series of Preferred Stock the
shareholders of the corporation shall not have any preemptive rights to
subscribe for or acquire securities or rights to purchase securities of
any class, kind, or series of the corporation.
ARTICLE 8. BOARD OF DIRECTORS
The affairs of the corporation shall be conducted by a Board of
Directors. The directors shall be divided into three classes: Class I;
Class II and Class III; each such class, as nearly as possible, to have
the same number of directors. The term of office of the initial Class I
directors shall expire at the annual shareholders meeting in 1995, the
term of office of the initial Class II directors shall expire at the
annual shareholders meeting in 1996, and the term of office of the initial
Class III directors shall expire at the annual shareholders meeting in
1997. At each annual election of directors by the shareholders, the
directors chosen to succeed those whose terms have then expired shall be
identified as being of the same class as the directors they succeed and
shall be elected by the shareholders for a term expiring at the third
succeeding annual election of directors. In all cases, directors shall
hold office until their respective successors are elected by the
shareholders and have qualified.
ARTICLE 9. WRITTEN ACTION BY DIRECTORS
An action required or permitted to be taken at a meeting of the
board of directors of the corporation may be taken by a written action
signed, or counterparts of a written action signed in the aggregate, by
all of the directors unless the action need not be approved by the
shareholders of the corporation, in which case the action may be taken by
a written action signed in the aggregate, by the number of directors that
would be required to take the same action at a meeting of the board of
directors of the corporation at which all of the directors were present.
ARTICLE 10. DIRECTOR LIABILITY
A director of this corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders;
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) under sections 302A.559 or
80A.23 of the Minnesota Statutes; or (iv) for any transaction from which
the director derived an improper personal benefit.
If the Minnesota Business Corporation Act is hereafter amended to
authorize any further limitation of the liability of a director, then the
liability of a director of the corporation shall be eliminated or limited
to the fullest extent permitted by the Minnesota Business Corporation Act,
as amended.
Any repeal or modification of the foregoing provisions of this
Article 10 by the shareholders of the corporation shall not adversely
affect any right or protection of a director of the corporation existing
at the time of such repeal or modification.
ARTICLE 11. LIMITATION ON INDEBTEDNESS
From and after the fifteenth day following receipt by the
corporation of the proceeds of the first Public Offering after the
effective date of these Amended and Restated Articles of Incorporation,
the corporation shall not incur or at any time suffer to exist aggregate
Consolidated Indebtedness outstanding at any time in excess of 40% of the
aggregate Consolidated Hotel Investment of the corporation after giving
effect to the use of proceeds from any Consolidated Indebtedness.
"Consolidated Indebtedness" shall mean (a) obligations for borrowed money,
(b) obligations representing the deferred purchase price of property
(other than accounts payable incurred in the ordinary course of business),
and (c) obligations which are evidenced by notes, acceptances or other
instruments. "Consolidated Hotel Investment" shall mean the total amount
invested in hotel properties at cost and before accumulated depreciation.
Consolidated Indebtedness and Consolidated Hotel Investment shall be
determined on a consolidated basis in accordance with generally accepted
accounting principles in effect at any date of determination. "Public
Offering" shall mean the sale by the corporation of shares of Common Stock
in an offering registered on Form S-11 under the Securities Act of 1933,
as amended.
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
KAHLER REALTY CORPORATION
The undersigned, Harold W. Milner, President and Chief Executive
Officer of Kahler Realty Corporation, a Minnesota Corporation (the
"Corporation"), hereby certifies that the following resolution was duly
adopted by the shareholders and the board of directors of the Corporation
pursuant to Chapter 302A of the Minnesota Business Corporation Act at duly
convened board of directors and shareholder meetings on April 27, 1995,
and that such resolution has not been subsequently modified or rescinded:
RESOLVED, that the Articles of Incorporation of the Corporation
are hereby amended to delete Article 11 of such Articles of Incorporation
in its entirety.
IN WITNESS WHEREOF, the undersigned President and Chief Executive
Officer of the Corporation, being duly authorized on behalf of the
Corporation, has executed this document as of June 27, 1995.
_____/s/ Harold W. Milner_____
Harold W. Milner
President and Chief Executive Officer