ANNALY MORTGAGE MANAGEMENT, INC.
ARTICLES SUPPLEMENTARY
7.875% SERIES A CUMULATIVE REDEEMABLE
PREFERRED STOCK
Annaly Mortgage Management, Inc., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Under a power contained in Article VI of the Articles of
Amendment and Restatement of the Corporation, as amended (the "Charter"), the
Board of Directors by duly adopted resolutions classified and designated
4,887,500 shares of authorized but unissued Common Stock (as defined in the
Charter) as shares of 7.875% Series A Cumulative Redeemable Preferred Stock,
with the following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption, which, upon any
restatement of the Charter, shall become part of Article VI of the Charter, with
any necessary or appropriate renumbering or relettering of the sections or
subsections hereof.
SERIES A PREFERRED STOCK
(1) DESIGNATION AND NUMBER. A series of preferred stock, designated the
"7.875% Series A Cumulative Redeemable Preferred Stock" (the "Series A Preferred
Stock"), is hereby established. The number of shares of the Series A Preferred
Stock shall be 4,887,500.
(2) RANK. The Series A Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of the
Corporation, rank (a) senior to all classes or series of Common Stock of the
Corporation, and to all equity securities the terms of which specifically
provide that such equity securities rank junior to such Series A Preferred
Stock; and (b) junior to all equity securities issued by the Corporation the
terms of which specifically provide that such equity securities rank senior to
the Series A Preferred Stock. The term "equity securities" shall not include
convertible debt securities.
(3) DIVIDENDS.
(a) Holders of the then outstanding shares of Series A Preferred Stock
shall be entitled to receive, when and as authorized by the Board of Directors,
out of funds legally available for the payment of dividends, cumulative
preferential cash dividends at the rate of 7.875% of the $25.00 liquidation
preference per annum (equivalent to a fixed annual amount of $1.96875 per
share). Such dividends shall be cumulative from the first date on which any
Series A Preferred Stock is issued and shall be payable quarterly in arrears on
or before March 31, June 30, September 30, and December 31 of each year or, if
not a business day, the next succeeding business day (each, a "Dividend Payment
Date"). Any dividend payable on the Series A Preferred Stock
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for any partial dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months (it being understood that the dividend
payable on June 30, 2004 will be for less than the full quarterly dividend
period). Dividends will be payable to holders of record as they appear in the
stock records of the Corporation at the close of business on the applicable
record date, which shall be the first day of the calendar month on which the
applicable Dividend Payment Date falls or on such other date designated by the
Board of Directors of the Corporation for the payment of dividends that is not
more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a
"Dividend Record Date").
(b) No dividends on shares of Series A Preferred Stock shall be
declared by the Corporation or paid or set apart for payment by the Corporation
at such time as the terms and provisions of any agreement of the Corporation,
including any agreement relating to its indebtedness, prohibit such declaration,
payment or setting apart for payment or provide that such declaration, payment
or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited
by law.
(c) Notwithstanding the foregoing, dividends on the Series A Preferred
Stock shall accrue whether or not the terms and provisions set forth in Section
3(b) hereof at any time prohibit the current payment of dividends, whether or
not the Corporation has earnings, whether or not there are funds legally
available for the payment of such dividends and whether or not such dividends
are declared. Accrued but unpaid dividends on the Series A Preferred Stock will
accumulate as of the Dividend Payment Date on which they first become payable.
(d) Except as provided in Section 3(e) below, unless full cumulative
dividends on the Series A Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in shares of Common Stock or in shares
of any series of preferred stock ranking junior to the Series A Preferred Stock
as to dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any preferred stock of the Corporation ranking junior to or on a
parity with the Series A Preferred Stock as to dividends or upon liquidation,
nor shall any shares of Common Stock, or any shares of preferred stock of the
Corporation ranking junior to or on a parity with the Series A Preferred Stock
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such shares) by the Corporation (except by
conversion into or exchange for other capital stock of the Corporation ranking
junior to the Series A Preferred Stock as to dividends and upon liquidation and
except for transfers made pursuant to the provisions of Article XI of the
Charter).
(e) When dividends are not paid in full (or a sum sufficient for such
full payment is not so set apart) on the Series A Preferred Stock and the shares
of any other series of preferred stock ranking on a parity as to dividends with
the Series A Preferred Stock, all dividends declared upon the Series A Preferred
Stock and any other series of preferred stock ranking on a parity as to
dividends with the Series A Preferred Stock shall be declared pro rata so that
the amount of dividends declared per
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share of Series A Preferred Stock and such other series of preferred stock shall
in all cases bear to each other the same ratio that accrued dividends per share
on the Series A Preferred Stock and such other series of preferred stock (which
shall not include any accrual in respect of unpaid dividends for prior dividend
periods if such preferred stock does not have a cumulative dividend) bear to
each other. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on Series A Preferred Stock which
may be in arrears.
(f) Any dividend payment made on shares of the Series A Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to such shares which remains payable. Holders of the Series A
Preferred Stock shall not be entitled to any dividend, whether payable in cash,
property or stock in excess of full cumulative dividends on the Series A
Preferred Stock as described above.
(4) LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the holders of shares of Series A
Preferred Stock then outstanding are entitled to be paid out of the assets of
the Corporation, legally available for distribution to its stockholders, a
liquidation preference of $25.00 per share, plus an amount equal to any accrued
and unpaid dividends to the date of payment, before any distribution of assets
is made to holders of Common Stock or any series of preferred stock of the
Corporation that ranks junior to the Series A Preferred Stock as to liquidation
rights.
(b) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Corporation
are insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Series A Preferred Stock and the corresponding amounts
payable on all shares of other classes or series of capital stock of the
Corporation ranking on a parity with the Series A Preferred Stock in the
distribution of assets, then the holders of the Series A Preferred Stock and all
other such classes or series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
(c) After payment of the full amount of the liquidating distributions
to which they are entitled, the holders of Series A Preferred Stock will have no
right or claim to any of the remaining assets of the Corporation.
(d) Written notice of any such liquidation, dissolution or winding up
of the Corporation, stating the payment date or dates when, and the place or
places where, the amounts distributable in such circumstances shall be payable,
shall be given by first class mail, postage pre-paid, not less than 30 nor more
than 60 days prior to the payment date stated therein, to each record holder of
the Series A Preferred Stock at the respective addresses of such holders as the
same shall appear on the stock transfer records of the Corporation.
(e) The consolidation or merger of the Corporation with or into any
other corporation, trust or entity or of any other corporation with or into the
Corporation, or the sale, lease or conveyance of all or substantially all of the
assets or business of the
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Corporation, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Corporation.
(5) REDEMPTION.
(a) RIGHT OF OPTIONAL REDEMPTION. The Series A Preferred Stock is not
redeemable prior to the five year anniversary of the issuance of the Series A
Preferred Stock. However, in order to ensure that the Corporation remains a
qualified real estate investment trust ("REIT") for federal income tax purposes,
the Series A Preferred Stock will be subject to the provisions of Article XI of
the Charter. Pursuant to Article XI, and without limitation of any provisions of
such Article XI, Series A Preferred Stock, together with other equity stock of
the Corporation, owned by a stockholder in excess of the Ownership Limit will
automatically be transferred to a Trust (as defined in the Charter) for the
benefit of a Beneficiary (as defined in the Charter). On and after the five year
anniversary of the issuance of the Series A Preferred Stock, the Corporation, at
its option and upon not less than 30 nor more than 60 days' written notice, may
redeem shares of the Series A Preferred Stock, in whole or in part, at any time
or from time to time, for cash at a redemption price of $25.00 per share, plus
all accrued and unpaid dividends thereon to and including the date fixed for
redemption (except as provided in Section 5(c) below), without interest. If less
than all of the outstanding Series A Preferred Stock is to be redeemed, the
Series A Preferred Stock to be redeemed shall be selected pro rata (as nearly as
may be practicable without creating fractional shares) or by any other equitable
method determined by the Corporation.
(b) LIMITATIONS ON REDEMPTION. Unless full cumulative dividends on all
shares of Series A Preferred Stock shall have been, or contemporaneously are,
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, no shares of Series A Preferred Stock shall be redeemed unless all
outstanding shares of Series A Preferred Stock are simultaneously redeemed, and
the Corporation shall not purchase or otherwise acquire directly or indirectly
any shares of Series A Preferred Stock (except by exchange for capital stock of
the Corporation ranking junior to the Series A Preferred Stock as to dividends
and upon liquidation); provided, however, that the foregoing shall not prevent
such action by the Board of Directors or its designee pursuant to Article XI in
order to ensure that the Corporation remains qualified as a REIT for federal
income tax purposes or the purchase or acquisition of shares of Series A
Preferred Stock pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of Series A Preferred Stock.
(c) RIGHTS TO DIVIDENDS ON SHARES CALLED FOR REDEMPTION. Immediately
prior to any redemption of Series A Preferred Stock, the Corporation shall pay,
in cash, any accumulated and unpaid dividends to and including the redemption
date, unless a redemption date falls after a Dividend Record Date and prior to
the corresponding Dividend Payment Date, in which case each holder of Series A
Preferred Stock at the close of business on such Dividend Record Date shall be
entitled to the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the redemption of such shares before such Dividend
Payment Date. Except as provided above, the Corporation will make no payment or
allowance for unpaid dividends, whether or not in arrears, on Series A Preferred
Stock which is redeemed.
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(d) PROCEDURES FOR REDEMPTION.
(i) Notice of redemption will be mailed by the Corporation,
postage prepaid, not less than 30 nor more than 60 days prior to the
redemption date, addressed to the respective holders of record of
the Series A Preferred Stock to be redeemed at their respective
addresses as they appear on the stock transfer records of the
Corporation. No failure to give such notice or any defect thereto or
in the mailing thereof shall affect the validity of the proceedings
for the redemption of any shares of Series A Preferred Stock except
as to the holder to whom notice was defective or not given.
(ii) In addition to any information required by law or by the
applicable rules of any exchange upon which Series A Preferred Stock
may be listed or admitted to trading, such notice shall state: (A)
the redemption date; (B) the redemption price; (C) the number of
shares of Series A Preferred Stock to be redeemed; (D) the place or
places where the Series A Preferred Stock is to be surrendered for
payment of the redemption price; and (E) that dividends on the
shares to be redeemed will cease to accrue on such redemption date.
If less than all of the Series A Preferred Stock held by any holder
is to be redeemed, the notice mailed to such holder shall also
specify the number of shares of Series A Preferred Stock held by
such holder to be redeemed.
(iii) If notice of redemption of any shares of Series A
Preferred Stock has been given and if the funds necessary for such
redemption have been set aside by the Corporation in trust for the
benefit of the holders of any shares of Series A Preferred Stock so
called for redemption, then, from and after the redemption date,
dividends will cease to accrue on such shares of Series A Preferred
Stock, such shares of Series A Preferred Stock shall no longer be
deemed outstanding and all rights of the holders of such shares will
terminate, except the right to receive the redemption price. Holders
of Series A Preferred Stock to be redeemed shall surrender such
Series A Preferred Stock at the place designated in such notice and,
upon surrender in accordance with said notice of the certificates
for shares of Series A Preferred Stock so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so
require and the notice shall so state), such shares of Series A
Preferred Stock shall be redeemed by the Corporation at the
redemption price plus any accrued and unpaid dividends payable upon
such redemption. In case less than all the shares of Series A
Preferred Stock represented by any such certificate are redeemed, a
new certificate or certificates shall be issued representing the
unredeemed shares of Series A Preferred Stock without cost to the
holder thereof.
(iv) The deposit of funds with a bank or trust corporation for
the purpose of redeeming Series A Preferred Stock shall be
irrevocable except that:
(A) the Corporation shall be entitled to receive from
such bank or trust corporation the interest or other
earnings, if any, earned on any money so deposited in trust,
and the holders of any shares redeemed shall have no claim to
such interest or other earnings; and
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(B) any balance of monies so deposited by the
Corporation and unclaimed by the holders of the Series A
Preferred Stock entitled thereto at the expiration of two
years from the applicable redemption dates shall be repaid,
together with any interest or other earnings thereon, to the
Corporation, and after any such repayment, the holders of the
shares entitled to the funds so repaid to the Corporation
shall look only to the Corporation for payment without
interest or other earnings.
(e) APPLICATION OF ARTICLE XI. The shares of Series A Preferred Stock
are subject to the provisions of Article XI of the Charter, including, without
limitation, the provision for the redemption of shares transferred to the Trust
(as defined in such Article). For this purpose, the market price of the Series A
Preferred Stock shall equal $25.00 per share, plus all accrued and unpaid
dividends on the shares of Series A Preferred Stock.
(f) STATUS OF REDEEMED SHARES. Any shares of Series A Preferred Stock
that shall at any time have been redeemed or otherwise acquired by the
Corporation shall, after such redemption or acquisition, have the status of
authorized but unissued preferred stock, without designation as to series until
such shares are once more classified and designated as part of a particular
series by the Board of Directors.
(6) VOTING RIGHTS.
(a) Holders of the Series A Preferred Stock will not have any voting
rights, except as set forth below.
(b) Whenever dividends on any shares of Series A Preferred Stock shall
be in arrears for six or more quarterly periods (a "Preferred Dividend
Default"), the holders of such shares of Series A Preferred Stock (voting
separately as a class with all other series of preferred stock ranking on a
parity with the Series A Preferred Stock as to dividends or upon liquidation
("Parity Preferred"), upon which like voting rights have been conferred and are
exercisable), will be entitled to vote for the election of a total of two
additional directors of the Corporation (the "Preferred Stock Directors"), and
the number of directors on the Board of Directors shall increase by two, at a
special meeting called by the holders of record of at least 20% of the Series A
Preferred Stock or the holders of any other series of Parity Preferred so in
arrears (unless such request is received less than 90 days before the date fixed
for the next annual or special meeting of stockholders) or at the next annual
meeting of stockholders, and at each subsequent annual meeting until all
dividends accumulated on such shares of Series A Preferred Stock for the past
dividend periods and the dividend for the then current dividend period shall
have been fully paid or declared and a sum sufficient for the payment thereof
set aside for payment.
(c) If and when all accumulated dividends and the dividend for the then
current dividend period on the Series A Preferred Stock shall have been paid in
full or set aside for payment in full, the holders of shares of Series A
Preferred Stock shall be divested of the voting rights set forth in Section 6(b)
hereof (subject to revesting in the event of each and every subsequent Preferred
Dividend Default) and, if all
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accumulated dividends and the dividend for the current dividend period have been
paid in full or set aside for payment in full on all other series of Parity
Preferred upon which like voting rights have been conferred and are exercisable,
the term of office of each Preferred Stock Director so elected shall terminate
and the number of directors on the Board of Directors shall decrease by two. Any
Preferred Stock Director may be removed at any time with or without cause by the
vote of, and shall not be removed otherwise than by the vote of, the holders of
record of a majority of the outstanding shares of the Series A Preferred Stock
when they have the voting rights set forth in Section 6(b) (voting separately as
a class with the Parity Preferred upon which like voting rights have been
conferred and are exercisable). So long as a Preferred Dividend Default shall
continue, any vacancy in the office of a Preferred Stock Director may be filled
by written consent of the Preferred Stock Director remaining in office, or, if
none remains in office, by a vote of the holders of record of a majority of the
outstanding shares of Series A Preferred Stock when they have the voting rights
set forth in Section 6(b) (voting separately as a class with all other series of
Parity Preferred upon which like voting rights have been conferred and are
exercisable). The Preferred Stock Directors shall each be entitled to one vote
per director on any matter.
(d) So long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote of the
holders of at least two thirds of the shares of the Series A Preferred Stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting (voting separately as a class, together with all other series of Parity
Preferred upon which like voting rights have been conferred and are
exercisable), (i) authorize or create, or increase the authorized or issued
amount of, any class or series of capital stock ranking prior to the Series A
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, or reclassify any authorized
capital stock of the Corporation into any such shares, or create, authorize or
issue any obligation or security convertible into or evidencing the right to
purchase any such shares or (ii) amend, alter or repeal the provisions of the
Charter, whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
A Preferred Stock or the holders thereof; provided, however, that with respect
to the occurrence of any event set forth in (ii) above, so long as the Series A
Preferred Stock remains outstanding with the terms thereof materially unchanged,
the occurrence of any such event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers of the Series A
Preferred Stock and; provided, further, that any increase in the amount of the
authorized preferred stock, including the Series A Preferred Stock, or the
creation or issuance of any additional Series A Preferred Stock or any other
series of preferred stock, or any increase in the amount of authorized shares of
such series, in each case ranking on a parity with or junior to the Series A
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.
(e) The foregoing voting provisions will not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of Series A Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been deposited in trust to effect such redemption.
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(7) CONVERSION. The Series A Preferred Stock is not convertible into or
exchangeable for any other property or securities of the Corporation.
SECOND: The shares of Series A Preferred Stock have been classified and
designated by the Board of Directors under the authority contained in the
Charter.
THIRD: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FOURTH: The undersigned Chief Executive Officer and President of the
Corporation acknowledges these Articles Supplementary to be the corporate act of
the Corporation and, as to all matters or facts required to be verified under
oath, the undersigned Chief Executive Officer and President acknowledges that,
to the best of his knowledge, information and belief, these matters and facts
are true in all material respects and that this statement is made under the
penalties of perjury.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its Chief Executive
Officer and President and attested to by its Secretary on this 31st day of
March, 2004.
ATTEST: ANNALY MORTGAGE MANAGEMENT, INC.
By: /s/ Jennifer S. Karve By: /s/ Michael A.J. Farrell (SEAL)
-------------------------- --------------------------------------
Name: Jennifer S. Karve Name: Michael A.J. Farrell
Title: Secretary Title: Chief Executive Officer and President
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