EXHIBIT 3.1b
ARTICLES SUPPLEMENTARY
OF
SERIES B 10.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
IMPAC MORTGAGE HOLDINGS, INC.
Impac Mortgage Holdings, Inc., a corporation organized and existing under
the laws of the State of Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in the Board of
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Directors of the Corporation (the "Board of Directors") in accordance with
Article VI of the charter of the Corporation, including these Articles
Supplementary (the "Charter"), the Board of Directors adopted resolutions
reclassifying 1,200,000 shares (the "Shares") of Preferred Stock (as defined in
the Charter) as a separate series of stock, Series B 10.5% Cumulative
Convertible Preferred Stock, $.01 par value per share (the "Series B Preferred
Stock"), with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends or other distributions,
qualifications, and terms and conditions of redemption set forth below. Upon
any restatement of the Charter, the immediately following heading and Sections 1
through 10 of this Article FIRST shall become Section 6.7 of Article VI of the
Charter.
Series B 10.5% Cumulative Convertible Preferred Stock
Section 1. Definitions. Unless the context otherwise requires, the terms
defined in this Section 1 shall have, for all purposes of these
Articles Supplementary, the meanings herein specified (with terms
defined in the singular having comparable meanings when used in
the plural).
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a person means a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified.
"AMEX" shall mean the American Stock Exchange.
"Average Net Worth" for any period means the arithmetic average of the sum
of the gross proceeds from any sale of the Corporation's equity securities,
before deducting any underwriting discounts and commissions and other expenses
(without taking into account any losses incurred in prior periods) computed by
taking the daily average of such values during such period.
"Benefit Plan Investor" means (1) an employee benefit plan (as defined by
Section 3(3) of ERISA), whether or not it is subject to Title I of ERISA; (2) a
plan as described in Section 4975 of the Code; (3) an entity whose underlying
assets include the assets of any plan described in clause (1) or (2) by reason
of the plan's investment in such entity (including but not limited to an
insurance company general account); or (4) an entity that otherwise constitutes
a "benefit plan investor" within the meaning of the Plan Asset Regulation.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series B Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Change of Control Transaction" means the occurrence of (i) an acquisition
after the date hereof, in one or a series of related transactions, by any
individual or legal entity or "group" (as described in Rule 13d-5(b)(1) under
the Exchange Act) of more than 50% of the voting securities of the Corporation
or all or substantially all of the assets of
the Corporation; (ii) any merger or consolidation of the Corporation with or
into another entity, in one or a series of related transactions, unless the
holders of the Corporation's securities immediately prior to such transaction
continue to hold, immediately after such transaction, at least 50% of the voting
securities of the entity that survives such transaction; or (iii) the execution
by the Corporation of an agreement to which the Corporation is a party or by
which it is bound providing for any of the events set forth above in (i) or
(ii).
"Common Stock" shall mean the common stock, $.01 par value per share, of
the Corporation or such shares of the Corporation's capital stock into which
outstanding shares of Common Stock shall be reclassified.
"Constituent Person" shall have the meaning set forth in subsection (d) of
Section 8.
"Conversion Date" means the date on which a Series B Holder has delivered
written notice to the Corporation that such Series B Holder elects to convert
Series B Preferred Stock into Common Stock, together with the certificate
evidencing such shares of Series B Preferred Stock.
"Conversion Price" shall mean the conversion price per share of Common
Stock at which shares of the Series B Preferred Stock is convertible into shares
of Common Stock, as such Conversion Price may be adjusted pursuant to Section 8.
The initial Conversion Price shall be $4.95 (equivalent to a conversion rate of
5.050505 shares of Common Stock for each share of Series B Preferred Stock).
"Current Market Price" of publicly traded Common Stock or any other class
of shares or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the AMEX or, if
such security is not listed or admitted for trading on the AMEX, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the Nasdaq National Market or, if such security is not
quoted on the Nasdaq National Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by Nasdaq or, if
bid and asked prices for such security on such day shall not have been reported
through Nasdaq, the average of the bid and asked prices on such day as furnished
by any AMEX member firm regularly making a market in such security and selected
for such purpose by the Chief Executive Officer of the Corporation or the Board
of Directors or, if such security is not so listed or quoted, as determined in
good faith at the sole discretion of the Chief Executive Officer of the
Corporation or the Board of Directors, which determination shall be final,
conclusive and binding.
"Distribution Payment Date" shall have the meaning set forth in Section 4.
"Distribution Period" shall have the meaning set forth in Section 4.
"Dividend Ratchet Amount" shall mean for any calendar quarter, the
aggregate of all distributions (including non-regular dividends such as special
capital gain distributions) declared on the number of shares of Common Stock (or
portions thereof, without giving effect to the requirements under subsection (c)
of Section 8) into which each share of Series B Preferred Stock is then
convertible (i.e., an amount equal to the number of shares of Common Stock (or
portions thereof, without giving effect to the requirements under subsection (c)
of Section 8) into which one share of Series B Preferred Stock is convertible,
multiplied by the aggregate of all distributions (including non-regular
dividends) declared per share of Common Stock for such quarter).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value as determined in good
faith at the sole discretion of the Chief Executive Officer or the Board of
Directors, which determination shall be final, conclusive and binding.
"Incentive Compensation" shall mean the performance based compensation that
the Corporation shall be obligated to pay to certain employees of the
Corporation pursuant to their employment agreements.
"Issue Date" shall mean the first date on which Series B Preferred Stock is
issued and sold.
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"Junior Shares" shall have the meaning set forth in Section 3.
"Liquidation Preference" means $25.00 per share of Series B Preferred
Stock, plus accumulated and unpaid distributions (whether or not earned or
declared) thereon.
"Net Income" means, at any date of determination, the net income of the
Corporation determined in accordance with current tax law before the total
Incentive Compensation paid to employees of the Corporation pursuant to their
respective employment agreements, the deduction for dividends paid, before any
amortization of the Termination Fee paid Imperial Credit Advisors, Inc. and any
net operating loss deductions arising from losses in prior periods.
"Non-Electing Share" shall have the meaning set forth in subsection (d) of
Section 8.
"Ownership Limitation" means the limitation on ownership of the
Corporation's shares (or deemed ownership by virtue of the attribution
provisions of the Code) set forth in Article VII, Section 7.1 of the Charter.
"Parity Shares" shall have the meaning set forth in Section 3.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Plan Asset Regulation" means the plan asset regulation promulgated by the
Department of Labor under ERISA at 29 C.F.R. 2510.3-101.
"Plan Assets" means "plan assets" as defined in the Plan Asset Regulation.
"Preferred Stock" shall mean preferred stock, $.01 par value per share, of
the Corporation.
"Record Date" shall have the meaning set forth in Section 4.
"Redemption Price" shall equal $25.00 per share of Series B Preferred
Stock, plus dividends accumulated and unpaid to the redemption date (whether or
not declared) without interest, or in the case of redemption pursuant to
subsection (f) of Section 5, such other amount referred to therein.
"REIT" shall mean a real estate investment trust under Section 856 of the
Code.
"Return on Equity" means return calculated for any quarter by dividing the
Corporation's Net Income for such quarter by the Corporation's Average Net Worth
for such quarter.
"Series B Holder" means a holder of Series B Preferred Stock.
"Series B Preferred Stock" shall mean the Corporation's Series B 10.5%
Cumulative Convertible Preferred Stock, $.01 par value per share, liquidation
preference $25.00 per share.
"Series B Preferred Stock Redemption Date" shall have the meaning set forth
in subsection (g) of Section 5.
"Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Board of Directors, the allocation of funds
to be paid on any class or series of shares; provided, however, that if any
funds for any class or series of Junior Shares or any Parity Shares are placed
in a separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series B
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
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"Shares-in-Trust" means shares of the Corporation transferred as set forth
in Article VII, Subsection (b) of Section 7.2.1of the Charter.
"Ten Year Average Yield" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of 10 years).
"Ten Year U.S. Treasury Rate" for a quarterly period shall mean the
arithmetic average of the weekly per annum Ten Year Average Yields published by
the Federal Reserve Board during such quarter. In the event that the Federal
Reserve Board does not publish a weekly per annum Ten Year Average Yield during
any week in a quarter, then the Ten Year U.S. Treasury Rate for such week shall
be the weekly per annum Ten Year Average Yields published by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the Corporation
for such week. In the event that the Corporation determines in good faith that
for any reason the Corporation cannot determine the Ten Year U.S. Treasury Rate
for any quarter as provided above, then the Ten Year U.S. Treasury Rate for such
quarter shall be the arithmetic average of the per annum average yields to
maturity based upon the daily closing bids during such quarter for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than securities which can, at the option of the holder, be
surrendered at face value in payment of any federal estate tax) with a final
maturity date not less than eight nor more than 12 years from the date of each
such quotation, as chosen and for each business day (or less frequently if daily
quotations shall not be generally available) in each such quarterly period in
New York City to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
"Trading Day" shall mean any day on which the securities in question are
traded on the AMEX, or if such securities are not listed or admitted for trading
on the AMEX, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted on such Nasdaq National Market, in the applicable
securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in subsection (d) of Section
7.
"Transfer Agent" means Boston Equiserve, L.P., Boston, Massachusetts or
such other agent or agents of the Corporation as may be designated by the Board
of Directors or its designee as the transfer agent for the Series B Preferred
Stock.
"Triggering Event" means any one or more of the following events (whatever
the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body): (i)
the failure of the Common Stock to be listed on AMEX, the New York Stock
Exchange or the Nasdaq National Market System for a period of three (3)
consecutive Trading Days; (ii) any Common Stock issued upon conversion of Series
B Preferred Stock, as a distribution in respect thereof, or upon redemption
thereof is not, at the time certificates representing such shares are delivered,
listed on each national securities exchange or quotation system upon which the
Common Stock is then listed; (iii) the Corporation shall fail for any reason to
deliver certificates representing shares of Common Stock required to be issued
in lieu of cash dividends on any Distribution Payment Date within the ten (10)
days immediately following such Distribution Payment Date; or (iv) the
occurrence of any Change of Control Transaction where the aggregate
consideration per share of Common Stock, valued (if all or any portion of the
consideration is in the form of securities rather than cash) at the average
closing price for such securities as reported by the principal stock exchange or
over-the-counter trading market where such securities are listed for a period of
twenty (20) Trading Days immediately following the Change of Control
Transaction, in connection therewith is less than 110% of the Conversion Price
as in effect on the date thereof.
"25% Threshold" means ownership by Benefit Plan Investors, in the
aggregate, of 25% or more of the value of any class of equity interest in the
Corporation (calculated by excluding the value of any interest held by any
person, other than a Benefit Plan Investor, who has discretionary authority or
control with respect to the assets of the Corporation or any person who provides
investment advice to the Corporation for a fee (direct or indirect) with respect
to such assets, or any affiliate of such person).
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"Underlying Shares" means, collectively, the shares of Common Stock into
which any shares of Series B Preferred Stock are convertible and the shares of
Common Stock issuable upon payment of distributions thereon in accordance with
the terms hereof.
Section 2. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series B 10.5% Cumulative
Convertible Preferred Stock" and the number of shares
constituting such series shall be 1,200,000. Such number of
shares may be increased or decreased by resolution of the Board
of Directors, subject to the terms of Section 7; provided,
however, that no decrease shall reduce the number of shares of
Series B Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
Section 3. Ranking. In respect of rights to receive distributions and to
participate in distributions or payments in the event of any
liquidation, dissolution or winding up of the Corporation, the
Series B Preferred Stock shall rank pari passu with any other
shares of preferred stock of the Corporation that the Board of
Directors of the Corporation shall designate as ranking pari
passu (the "Parity Shares"), and will rank senior to the Common
Stock, the Series A Junior Participating Preferred Stock and any
other class or series of shares of the Corporation that the Board
of Directors has not designated as ranking senior to or pari
passu with the Series B Preferred Stock (collectively, the
"Junior Shares").
Section 4. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior
and superior to the Series B Preferred Stock with respect to
dividends, the holders of the then outstanding shares of
Series B Preferred Stock shall be entitled to receive, when,
as and if authorized and declared by the Board of Directors
out of any funds legally available therefor cumulative
dividends in an amount per share equal to the greater of (1)
$0.65625 per quarter (equal to a rate of 10.5% of the $25.00
liquidation preference (the "Liquidation Preference") per
annum) or (2) the Dividend Ratchet Amount. If for any reason
the Corporation elects not to pay cash dividends on any
quarterly Distribution Payment Date, the Corporation shall
pay such dividends by issuing on such Distribution Payment
Date, as a stock dividend on the then outstanding shares of
Series B Preferred Stock, the number of shares of Common
Stock equal to 100% of the cash dividend accumulated on such
Distribution Payment Date, divided by the average closing
sales price of the Common Stock as reported by the principal
stock exchange or over-the-counter trading market where the
Common Stock is listed for the twenty (20) Trading Days
prior to the Business Day that immediately precedes the
Distribution Payment Date. Quarterly dividends on the Series
B Preferred Stock are payable as authorized by the Board of
Directors, or if not authorized, on the fourth Tuesday of
January, April, July and October of each year, commencing on
or about April 27, 1999 (each such day being hereinafter
called a "Distribution Payment Date" and each calendar
quarter immediately preceding a Distribution Payment Date
being hereinafter called the "Distribution Period"
corresponding to such Distribution Payment Date), with
respect to each Distribution Period, to stockholders of
record of the Series B Preferred Stock as they appear on the
stock transfer records of the Corporation at the close of
business on the dividend record dates authorized by the
Board of Directors, or if none are authorized, on the last
Friday of December, March, June and September (each, a
"Record Date"). The amount of any distribution payable for
the initial Distribution Period and for any other
Distribution Period greater or less than a full calendar
quarter shall be prorated and computed on the basis of a
360-day year of twelve 30-day months. Distributions on each
share of Series B Preferred Stock shall accumulate from and
including the date of original issuance thereof, whether or
not (1) distributions on such shares are earned or declared
or (2) on any Distribution Payment Date there shall be funds
legally available for the payment of distributions.
Distributions paid on the Series B Preferred Stock in an
amount less than the total amount of such distributions at
the time accumulated and payable on such shares shall be
allocated pro rata on a per share basis
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among all such shares of Series B Preferred Stock at the
time outstanding. Distributions on account of any arrearage
for any past Distribution Periods may be declared and paid
at any time, without reference to any regular distribution,
as may be fixed by the Board of Directors.
The amount of any distributions accumulated on any shares of
Series B Preferred Stock at any Distribution Payment Date shall
be the amount of any unpaid distributions accumulated thereon
through and during such Distribution Period, to and including
such Distribution Payment Date, whether or not earned or
declared, and the amount of distributions accumulated on any
shares of Series B Preferred Stock at any date other than a
Distribution Payment Date shall be equal to the sum of the amount
of any unpaid distributions accumulated thereon, to and including
the last preceding Distribution Payment Date, whether or not
earned or declared. Accumulated but unpaid distributions will not
bear interest and the holders of the Series B Preferred Stock
will not be entitled to any distributions in excess of full
cumulative distributions as described herein.
If any shares of Series B Preferred Stock are outstanding, no
full distributions shall be declared or paid or set apart for
payment on any other class or series of Parity Shares or Junior
Shares for any period unless full cumulative distributions on the
Series B Preferred Stock have been declared and paid or declared
and a sum sufficient for the payment thereof has been set apart
for payment on the Series B Preferred Stock for all past
distribution periods and the then current distribution period. If
distributions are not paid in full, or not declared in full and a
sum sufficient for such full payment is not set apart for payment
thereof, upon the Series B Preferred Stock and any class or
series of Parity Shares, no distributions may be paid on Junior
Shares and all distributions declared upon Series B Preferred
Stock and upon any other class or series of Parity Shares shall
be paid or declared pro rata so that in all cases the amount of
distributions paid or declared per share on the Series B
Preferred Stock and Parity Shares shall bear to each other the
same ratio that accumulated distributions per share, including
distributions accumulated or in arrears, if any, on the Series B
Preferred Stock and Parity Shares bear to each other. Except as
provided in the preceding sentence, unless full cumulative
distributions on the Series B Preferred Stock have been paid or
declared and a sum sufficient for such full payment set apart for
payment for all past distribution periods and the then current
distribution period, no distributions (other than distributions
in shares of Common Stock or in any other Junior Shares) shall be
declared or paid or set apart for payment or other distribution
upon the Corporation's Common Stock, or, except as provided
above, on any other Junior Shares or Parity Shares, nor shall any
Common Stock or any other Junior Shares or Parity Shares be
redeemed, purchased or otherwise acquired for any consideration
(or any payment made to or available for a sinking fund for the
redemption of any such shares) by the Corporation or any
subsidiary of the Corporation (except in connection with a
redemption or purchase or other acquisition of Common Stock made
for purposes of an employee incentive or benefit plan, a
conversion into or exchange for Junior Shares or redemptions for
the purpose of preserving the Corporation's qualification as a
REIT). Any distribution payment made on the Series B Preferred
Stock shall first be credited against the earliest accumulated
but unpaid distribution due with respect to such shares which
remains payable. Holders of the Series B Preferred Stock shall
not be entitled to any distributions, whether payable in cash,
property or shares, in excess of full accumulated distributions
as herein provided. No interest or sum of money in lieu of
interest shall be payable in respect of any distribution payment
or payments on the Series B Preferred Stock that may be in
arrears.
If any shares of Series B Preferred Stock are outstanding, the
Corporation shall not declare or pay or set apart for payment any
cash dividend in respect of any Junior Shares during any
Distribution Payment Period unless full cumulative distributions
on the Series B Preferred Stock are paid in the same form (i.e.,
cash, Common Stock or any combination thereof) for such
Distribution Payment Period.
Except as provided in these Articles Supplementary, the Series B
Preferred Stock shall not be entitled to participate in the
earnings or assets of the Corporation.
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Section 5. Redemption.
(a) Subject to subsection (c) of this Section 5, the Shares
will be redeemable at the Redemption Price by the
Corporation at any time between the second anniversary of
the date of the first issuance of Series B Preferred Stock
and the fifth anniversary of the date of the first issuance
of Series B Preferred Stock, if the closing sales price of
the Common Stock as reported by the principal stock exchange
or over-the-counter trading market where the Common Stock is
listed averages in excess of 150% of the Conversion Price
for a period of at least 20 consecutive Trading Days ending
within 30 days prior to the notice of redemption, payable at
the Corporation's option in Common Stock or cash, as set
forth in subsection (c) of this Section 5.
(b) The Shares are redeemable at any time at the Redemption
Price the Board of Directors deems it necessary to maintain
the Corporation's status as a REIT or to prevent the
Corporation's assets from being deemed "plan assets" under
the Plan Asset Regulation, pursuant to Section 9, payable at
the Corporation's option in Common Stock or cash, as set
forth in subsection (c) of this Section 5.
(c) On and after the fifth anniversary of the date of the first
issuance of Series B Preferred Stock and upon giving of
notice as provided below, the Series B Preferred Stock may
be redeemed at the option of the Corporation, in whole or
from time to time in part, at the Redemption Price, payable
at the Corporation's option in (1) Common Stock, equal in
number to the Redemption Price divided by the average of the
closing sales price of the Common Stock as reported by the
principal stock exchange or over-the-counter trading market
for the twenty (20) Trading Days prior to the Business Day
that immediately precedes the date fixed for redemption, or
(2) cash; provided, however, that the Corporation may redeem
shares of Series B Preferred Stock pursuant to subsection
(1) of this subsection (c) only if the closing sales price
of the Common Stock as reported by the principal stock
exchange or over-the-counter trading market for the twenty
(20) Trading Days prior to the Business Day that immediately
precedes the date fixed for redemption, exceeds the
Conversion Price in effect on the Business Day that
immediately precedes the date fixed for redemption .
Fractional shares will not be issued upon redemption of the
Series B Preferred Stock, but, in lieu thereof, the
Corporation will pay a cash adjustment based on the average
of the closing prices of the Common Stock on the twenty (20)
Trading Days prior to the business day immediately preceding
the date fixed for redemption.
(d) Upon the occurrence of a Triggering Event, each Series B
Holder shall (in addition to all other rights it may have
hereunder or under applicable law), have the right,
exercisable at the sole option of such Series B Holder, to
require the Corporation to redeem all or a portion of the
Series B Preferred Stock then held by such Series B Holder
for an amount in cash equal to the Redemption Price for each
share of Series B Preferred Stock then held by such Series B
Holder. For purposes of this Section, a share of Series B
Preferred Stock is outstanding until such date as the Series
B Holder shall have received Underlying Shares upon a
conversion (or attempted conversion) thereof.
(e) If fewer than all of the outstanding shares of Series B
Preferred Stock is to be redeemed, the shares to be redeemed
will be determined pro rata or by lot or in such other
manner as prescribed by the Board of Directors in its sole
discretion. In the event that such redemption is to be by
lot, if as a result of such redemption any holder of Series
B Preferred Stock would own shares in excess of the
Ownership Limitation, because such holder's shares of Series
B Preferred Stock were not redeemed, or were only redeemed
in part, then, except in certain instances, the Corporation
will redeem the requisite number of shares of Series B
Preferred Stock of such holder such that he will not own
shares in excess of the Ownership Limitation subsequent to
such redemption. A new certificate shall be issued
representing any unredeemed Series B Preferred Stock without
cost to the holder thereof.
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(f) At any time prior to such time, if ever, as the Series B
Preferred Stock qualifies as a "publicly offered security"
under the Plan Asset Regulation, or qualifies for another
exception from the "look-through" rule (i.e., the provisions
of paragraph (a)(2) of the Plan Asset Regulation), if the
Corporation determines that, as a result of transfers,
conversions or otherwise, Benefit Plan Investors own 25% or
more of the aggregate number of outstanding shares of Series
B Preferred Stock (excluding for this purpose any shares
held by persons exercising investment management authority
over the assets of the Corporation or providing investment
advice for a fee with respect to such assets and any
affiliates of such persons), the Corporation will have the
right to cause any number of Series B Preferred Stock that
are held by Benefit Plan Investors to be redeemed so that
following such redemption Benefit Plan Investors own less
than 25% of the outstanding Series B Preferred Stock (but in
no event may such redemptions reduce Benefit Plan Investor
ownership to less than 20% of the Series B Preferred Stock)
(excluding for this purpose any shares held by persons
exercising investment management authority over the assets
of the Corporation or providing investment advice for a fee
with respect to such assets and any affiliates of such
persons). Any such redemption will follow the redemption
procedures set forth herein, except that the Redemption Date
may be fewer than 30 days after the first notice of
redemption to the extent necessary to prevent the
Corporation's assets from being deemed Plan Assets and the
Redemption Price shall be the Fair Market Value of such
Series B Preferred Stock. If fewer than all the outstanding
shares of Series B Preferred Stock that are held by Benefit
Plan Investors are to be redeemed, the number of Series B
Preferred Stock to be redeemed will be determined by the
Board of Directors and such shares will be redeemed on a
pro-rata basis from the holders of such shares that are
Benefit Plan Investors in proportion to the number of
Series B Preferred Stock held by such holders or by any
other method as may be determined by the Board of Directors
in its sole discretion.
(g) Notice of any redemption will be given (1) if greater than
fifty (50) holders own the Series B Preferred Stock, by
publication in a newspaper of general circulation in the
City of New York, such publication to be made once a week
for two successive weeks commencing not less than 30 nor
more than 60 days prior to the date fixed for redemption; or
(2) if fifty (50) or fewer holders own the Series B
Preferred Stock, by mailing of a similar notice 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 B Preferred Stock
to be redeemed at their respective addresses as they appear
on the stock transfer records of the Corporation and the
Company shall issue a press release related to the
redemption at the time of the mailing. The notice provided
shall state the Corporation's election to redeem such
shares, stating (1) the date fixed for redemption thereof
(the "Series B Preferred Stock Redemption Date"), (2) the
Redemption Price, (3) the number of shares to be redeemed
(and, if fewer than all the shares of Series B Preferred
Stock are to be redeemed, the number of shares to be
redeemed from such holder), (4) the place(s) where the
Series B Preferred Stock certificates are to be surrendered
for payment, (5) that distributions on the Series B
Preferred Stock will cease to accumulate on the specified
redemption date, (6) the date on which such holder's
conversion rights as to the Series B Preferred Stock shall
terminate and (7) whether the Redemption Price will be paid
in cash or shares of Common Stock.
(h) On or after the Series B Preferred Stock Redemption Date,
or in connection with a redemption under Section 5(d), each
holder of Series B Preferred Stock to be redeemed must
present and surrender his Series B Preferred Stock
certificate(s) to the Corporation at the place designated in
such notice or, in the case of a redemption under Section
5(d), at [insert place for notice to the Corporation], and
thereupon the Redemption Price of such shares will be paid
to or on the order of the person whose name appears on such
Series B Preferred Stock certificate(s) as the owner thereof
and each such Series B Preferred Stock certificate(s)
surrendered will be cancelled. From and after the Series B
Preferred Stock Redemption Date (unless the Corporation
defaults in payment of the redemption price, or such other
time as
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such certificates are delivered (in the case of a
redemption under Section 5(d)), all distributions on the
Series B Preferred Stock designated for redemption will
cease to accumulate and all rights of the holders thereof
(including conversion rights), except the right to receive
the redemption price thereof (including all accumulated and
unpaid distributions up to the Series B Preferred Stock
Redemption Date), will cease and terminate, and such shares
will not thereafter be transferred (except with the consent
of the Corporation) in the stock transfer records of the
Corporation, and such shares shall not be deemed to be
outstanding for any purpose whatsoever. At its election, the
Corporation, prior to the Series B Preferred Stock
Redemption Date, may irrevocably deposit the Redemption
Price of the Series B Preferred Stock so called for
redemption in trust for the holders thereof with a bank or
trust company, in which case such notice to holders of the
Series B Preferred Stock to be redeemed will (1) state the
date of such deposit, (2) specify the office of such bank or
trust company as the place of payment of the Redemption
Price and (3) call upon such holders to surrender the Series
B Preferred Stock certificates representing such shares at
such place on or about the date fixed in such redemption
notice (which may not be later than the Series B Preferred
Stock Redemption Date) against payment of the Redemption
Price. Any monies so deposited which remain unclaimed by the
holders of the Series B Preferred Stock at the end of two
years after the Series B Preferred Stock Redemption Date
will be returned by such bank or trust company to the
Corporation.
(i) Notwithstanding the foregoing, unless full cumulative
distributions on all outstanding Series B Preferred Stock
for all past Distribution Periods and the then current
Distribution Period have been paid, or declared and a sum
sufficient for the payment thereof set apart for payment,
(1) no Series B Preferred Stock shall be redeemed under
subsections (a), (b) or (c) of Section 5 unless all
outstanding shares of Series B Preferred Stock are
simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of
Series B Preferred Stock (A) pursuant to subsection (f) of
Section 5 and Section 9 or (B) pursuant to a purchase or
exchange offer made on the same terms to holders of all
outstanding Series B Preferred Stock, and (2) the
Corporation shall not purchase or otherwise acquire directly
or indirectly any Series B Preferred Stock (except by
conversion into or exchange for shares of the Corporation
ranking junior to the Series B Preferred Stock as to
distribution rights and liquidation preference).
(j) The holders of Series B Preferred Stock at the close of
business on a Record Date will be entitled to receive the
distribution payable with respect to such Series B Preferred
Stock on the corresponding Distribution Payment Date
notwithstanding the redemption thereof between such Record
Date and the corresponding Distribution Payment Date or the
Corporation's default in the payment of the distribution
due. Except as provided above, the Corporation will make no
payment or allowance for unpaid distributions, whether or
not in arrears, on Series B Preferred Stock which have been
called for redemption.
(k) The Corporation covenants that any Common Stock issued upon
redemption of the Series B Preferred Stock shall be validly
issued, fully paid and nonassessable. The Corporation shall
use its reasonable best efforts to list the Common Stock
required to be delivered upon redemption of the Series B
Preferred Stock, prior to such delivery, upon each national
securities exchange, if any, upon which the shares of
outstanding Common Stock are listed at the time of such
delivery.
(l) The Series B Preferred Stock has no stated maturity date
and is not subject to any sinking fund or mandatory
redemption provisions, except as provided in subsection (d)
of Section 5.
Section 6. Liquidation Preference.
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(a) Upon the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation, the holders of the Series
B Preferred Stock then outstanding shall be entitled to
receive and to be paid out of the assets of the Corporation
legally available for distribution to its stockholders,
before any payment or distribution shall be made on any
Junior Shares, the amount of $25.00 per share of Series B
Preferred Stock, plus accumulated and unpaid distributions
(whether or not earned or declared) thereon.
(b) After the payment to the holders of the Series B Preferred
Stock of the full preferential amounts provided for in this
Section 6, the holders of the Series B Preferred Stock as
such shall have no right or claim to any of the remaining
assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the
preference amounts payable with respect to the Series B
Preferred Stock and any Parity Shares are not paid in full,
no payment will be made to any holder of Junior Shares and
the holders of the Series B Preferred Stock and of such
Parity Shares will share ratably in any such distribution of
assets of the Corporation in proportion to the full
respective preferential amounts provided for in this Section
6 to which they are entitled.
(d) None of (1) the sale or transfer of all or substantially
all the property or business of the Corporation; (2) a
statutory share exchange by the Corporation; or (3) the
merger or consolidation of the Corporation into or with any
other entity or the merger or consolidation of any other
entity into or with the Corporation, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 6.
(e) In determining whether a distribution (other than upon
voluntary or involuntary liquidation), by dividend,
redemption or other acquisition of shares of the Corporation
or otherwise, is permitted under Maryland law, amounts that
would be needed, if the Corporation were to be dissolved at
the time of the distribution, to satisfy the preferential
rights upon dissolution of holders of Series B Preferred
Stock will not be added to the Corporation's total
liabilities.
Section 7. Voting Rights.
Except as provided below, the holders of the Series B Preferred Stock
shall not be entitled to vote at any meeting of the stockholders for any
purpose or otherwise to participate in any action taken by the Corporation or
the stockholders thereof, or to receive notice of any meeting of stockholders.
(a) In any matter in which the holders of Series B Preferred
Stock are entitled to vote (as expressly provided herein),
including any action by written consent, each share of
Series B Preferred Stock shall be entitled to one vote.
(b) As long as any Series B Preferred Stock remains outstanding,
in addition to any other vote or consent required by law or
the Charter, the Corporation will not, without the
affirmative vote or consent of the holders of at least four-
fifths of the shares of Series B Preferred Stock outstanding
at the time, given in person or by proxy, either in writing
or at a meeting (such series voting separately as a class),
(1) authorize or create, or increase the authorized or
issued amount of any class or series of shares ranking prior
or senior to the Series B Preferred Stock with respect to
the payment of distributions or the distribution of assets
upon liquidation, dissolution or winding up, or reclassify
any authorized shares of the Corporation into such shares,
or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any
such shares; (2) amend, alter or repeal the provisions of
these Articles Supplementary for the Series B Preferred
Stock; or (3) amend, alter or repeal the provisions of the
Corporation's By-laws, or Charter in connection with any
merger or consolidation, or otherwise (an "Event"), so as to
materially and adversely affect any right, preference,
privilege or voting power of the Series B Preferred Stock
(as determined by the Board of Directors in good faith);
provided, however, with respect to the occurrence
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occurrence of any of the Events set forth in (3) above, so
long as the Series B Preferred Stock (or shares into which
the Series B Preferred Stock have been converted in any
successor entity to the Corporation) remains outstanding or,
if the Corporation is not the surviving entity, is converted
into a security with substantially identical rights,
preferences, privileges and voting power, then the
occurrence of any such Event shall not be deemed to
materially and adversely affect such rights, preferences,
privileges or voting power of the Series B Preferred Stock;
and provided further that (x) any increase in the amount of
the authorized Preferred Stock or the designation or
issuance of any additional Series B Preferred Stock or
Parity Shares, or (y) any increase in the amount of
authorized Series B Preferred Stock or any other Preferred
Stock, in each case ranking on a parity with or junior to
the Series B Preferred Stock with respect to payment of
distributions 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.
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 Series B Preferred Stock shall have been
redeemed or called for redemption and sufficient Common Stock has been reserved
to effect such redemption or sufficient funds to effect such redemption shall
have been deposited in accordance with Section 5.
Section 8. Conversion.
Holders of Series B Preferred Stock shall have the right to convert
all or a portion of such shares into Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 8, a holder of Series B Preferred Stock shall have
the right, at his option, at any time to convert such shares
into the number of fully paid and nonassessable shares of
Common Stock obtained by dividing the aggregate Liquidation
Preference of such shares by the Conversion Price (as in
effect at the time and on the date provided for in the last
paragraph of subsection (b) of this Section 8) by
surrendering such shares to be converted, such surrender to
be made in the manner provided in subsection (b) of this
Section 8; provided, however, that the right to convert
shares called for redemption pursuant to Section 5 shall
terminate at the close of business on the Series B Preferred
Stock Redemption Date fixed for such redemption, unless the
Corporation shall default in making payment of any amounts
payable upon such redemption under Section 5 hereof.
(b) In order to exercise the conversion right, the holder of
Series B Preferred Stock to be converted shall surrender the
certificate evidencing such shares, duly endorsed or
assigned to the Corporation or in blank, at the office of
the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof elects to convert such
Series B Preferred Stock. Unless the shares issuable on
conversion are to be issued in the same name as the name in
which such shares of Series B Preferred Stock are
registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such
holder's duly authorized agent and an amount sufficient to
pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders of Series B Preferred Stock at the close of business on a
Record Date shall be entitled to receive the distribution payable
on such shares on the corresponding Distribution Payment Date
notwithstanding the conversion thereof following such Record Date
and prior to such Distribution Payment Date. However, Series B
Preferred Stock surrendered for conversion during the period
between the close of business on any Record Date and the opening
of business on the corresponding Distribution Payment Date
(except shares converted after the issuance of a notice of
redemption with respect to a Series B Preferred Stock Redemption
Date during such period or coinciding with such Distribution
Payment Date, such Series B Preferred Stock being entitled to
such distribution on the
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Distribution Payment Date) must be accompanied by payment of an
amount equal to the distribution payable on such shares on such
Distribution Payment Date. A holder of Series B Preferred Stock
on a Record Date who (or whose transferee) tenders any such
shares for conversion into Common Stock on such Distribution
Payment Date will receive the distribution payable by the
Corporation on such Series B Preferred Stock on such date, and
the converting holder need not include payment of the amount of
such distribution upon surrender of Series B Preferred Stock for
conversion. The Corporation shall make further payment or
allowance for, and a converting holder shall be entitled to,
unpaid distributions in arrears (excluding the then-current
quarter) on converted shares and for distributions on the Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates
for Series B Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver at such office to such holder, or on his
written order, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this Section 8, and
any fractional interest in respect of a share of Common Stock
arising upon such conversion shall be settled as provided in
subsection (c) of this Section 8. Each conversion shall be deemed
to have been effected immediately prior to the close of business
on the date on which the certificates for Series B Preferred
Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the distribution
payable on such shares) received by the Corporation as aforesaid,
and the person or persons in whose name or names any certificate
or certificates for Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders
of record of the shares represented thereby at such time on such
date, and such conversion shall be at the Conversion Price in
effect at such time and on such date, unless the stock transfer
books of the Corporation shall be closed on that date, in which
event such person or persons shall be deemed to have become such
holder or holders of record at the opening of business on the
next succeeding day on which such stock transfer books are open,
but such conversion shall be at the Conversion Price in effect on
the date on which such certificates for Series B Preferred Stock
have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of
Common Stock shall be issued upon conversion of the Series B
Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable
upon the conversion of a share of Series B Preferred Stock,
the Corporation shall pay to the holder of such share an
amount in cash based upon the Current Market Price of Common
Stock on the Trading Day immediately preceding the date of
conversion. If more than one share of Series B Preferred
Stock shall be surrendered for conversion at one time by the
same holder, the number of shares of full Common Stock
issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series B
Preferred Stock so surrendered.
(d) The Conversion Price or the securities into which the
Series B Preferred Stock is convertible shall be adjusted
from time to time as follows:
(1) if the Corporation's annualized Return on Equity for
the six months ended June 30, 1999 (computed by
multiplying the Return on Equity for such period by
two) is less than the Ten Year U.S. Treasury Rate plus
200 basis points, then the Conversion Price will be
reduced to $4.50 per share after August 15, 1999. Any
adjustment made pursuant to this subsection (d)(1)
shall become effective immediately after the opening of
business on August 16, 1999. If, prior to such date,
the Conversion Price is adjusted pursuant to any other
paragraph of this Section 8(d), the $4.50 price
referenced in this paragraph will be adjusted
accordingly.
(2) if the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation,
statutory share exchange, self tender offer for all or
substantially all of the
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Common Stock, sale of all or substantially all of the
Corporation's assets or recapitalization of the Common
Stock (each of the foregoing being referred to herein
as a "Transaction"), in each case as a result of which
Common Stock shall be converted into the right to
receive shares, stock, securities or other property
(including cash or any combination thereof), each share
of Series B Preferred Stock which is not converted into
the right to receive shares, stock, securities or other
property in connection with such Transaction shall
thereafter be convertible into the kind and amount of
shares, stock, securities and other property (including
cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that
number of Common Stock into which one share of Series B
Preferred Stock was convertible immediately prior to
such Transaction, assuming such holder of Common Stock
(1) is not a Person with which the Corporation
consolidated or into which the Corporation merged or
which merged into the Corporation or to which such sale
or transfer was made, as the case may be (a
"Constituent Person"), or an affiliate of a Constituent
Person and (2) failed to exercise his or her rights of
election, if any, as to the kind or amount of shares,
stock, securities and other property (including cash)
receivable upon consummation of such Transaction (each
a "Non-Electing Share") (provided that if the kind or
amount of shares, stock, securities and other property
(including cash) receivable upon consummation of such
Transaction by each Non-Electing Share is not the same
for each Non-Electing Share, then the kind and amount
of shares, stock, securities and other property
(including cash) receivable upon consummation of such
Transaction for each Non-Electing Share shall be deemed
to be the kind and amount so receivable per share by a
plurality of the Non-Electing Shares). The Corporation
shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the
provisions of this subsection (d), and it shall not
consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement
with the successor or purchasing entity, as the case
may be, for the benefit of the holders of the Series B
Preferred Stock, that will require such successor or
purchasing entity, as the case may be, to make
provision in its certificate or articles of
incorporation or other constituent documents to the end
that the provisions of this subsection (d) shall
thereafter correspondingly be made applicable as nearly
as may reasonably be, in relation to any shares of
stock or other securities or property thereafter
deliverable upon conversion of the Series B Preferred
Stock. The provisions of this subsection (d) shall
similarly apply to successive Transactions.
(3) if the Corporation shall at any time or from time to
time after the initial issuance of the Series B
Preferred Stock effect a subdivision of the outstanding
Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be
proportionately decreased; conversely, if the
Corporation shall at any time or from time to time
after the initial issuance of the Series B Preferred
Stock reduce the outstanding shares of Common Stock by
combination or otherwise, the Conversion Price then in
effect immediately before the combination shall be
proportionately increased. Any adjustment under this
subsection (d)(3) shall become effective at the close
of business on the date the subdivision or combination
becomes effective.
(4) if the Corporation at any time or from time to time
after the initial issuance of the Series B Preferred
Stock shall make or issue, or fix a record date for the
determination of holders of Common Stock or other
securities entitled to receive, a dividend or other
distribution payable in additional shares of Common
Stock, then and in each such event the Conversion Price
for the Series B Preferred Stock then in effect shall
be decreased as of the time of such issuance or, in the
event such a record date shall have been fixed, as of
the close of business on such record
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date, by multiplying the Conversion Price for the
Series B Preferred Stock then in effect by a fraction:
(a) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or
the close of business on such record date; and
(b) the denominator of which shall be the total
number of shares of Common Stock issued and
outstanding immediately prior to the time of such
issuance or the close of business on such record
date, plus the number of shares of Common Stock
issuable in payment of such dividend or
distribution; provided, however, if such record
date shall have been fixed and such dividend is
not fully paid or if such distribution is not
fully made on the date fixed therefor, the
Conversion Price for the Series B Preferred Stock
shall be recomputed accordingly as of the close of
business on such record date and thereafter the
Conversion Price for the Series B Preferred Stock
shall be adjusted pursuant to this subsection
(d)(4)(b) as of the time of actual payment of such
dividends or distributions.
(5) if the Corporation at any time or from time to time
after the initial issuance of the Series B Preferred
Stock shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in
securities of the Corporation other than shares of
Common Stock or securities of any other entity
(including a subsidiary of the Corporation) or other
property, then and in each such event provision shall
be made so that the holders of Series B Preferred Stock
shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable
thereupon, the amount of securities of the Corporation
or such other entity or other property that they would
have received had their Series B Preferred Stock been
converted into Common Stock on the date of such event
and had thereafter, during the period from the date of
such event to and including the conversion date,
retained such securities receivable by them as
aforesaid during such period giving application to all
adjustments called for during such period under this
Section 8 with respect to the rights of the holders of
the Series B Preferred Stock.
(6) If the Common Stock issuable upon the conversion of
the Series B Preferred Stock shall be changed into the
same or a different number of shares of any class or
classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision
or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation or
sale of assets provided for elsewhere in this Section
8), then and in each such event the holder of each
share of Series B Preferred Stock shall have the right
thereafter to convert such share into the kind and
amounts of shares of stock and other securities and
property receivable upon such reorganization,
reclassification or other change, by holders of the
number of shares of Common Stock into which such shares
of Series B Preferred Stock might have been converted
immediately prior to such reorganization,
reclassification or change, all subject to further
adjustment as provided herein.
(7) If and whenever on or after the original date of
issuance of shares of Series B Preferred Stock the
Corporation issues or sells, or in accordance with
subparagraph (b) of this subsection (d)(7) is deemed to
have issued or sold, any Junior Shares for a
consideration per share less than the Conversion Price
in effect immediately prior to the time of such
issuance or sale, then forthwith upon such issuance or
sale the Conversion Price will be reduced to an amount
determined by dividing (i) the sum
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of (A) the product derived by multiplying the
Conversion Price in effect immediately prior to such
issuance or sale by the number of shares of Common
Stock outstanding or deemed to be outstanding
immediately prior to such issuance or sale, plus (B)
the consideration, if any, received by the Corporation
upon such issuance or sale, by (ii) the number of
shares of Common Stock outstanding or deemed to be
outstanding immediately after such issuance or sale.
(a) For purposes of determining the adjusted
Conversion Price under subparagraph (a) of this
subsection (d)(7), the following will be
applicable:
(i) If the Corporation in any manner grants any
rights or options to subscribe for or to
purchase Junior Shares or any stock or other
securities convertible into or exchangeable
for Common Stock (such rights or options
being herein called "Options" and such
convertible or exchangeable stock or
securities being herein called "Convertible
Securities") and the price per share for
which Common Stock is issuable upon the
exercise of such Options or upon conversion
or exchange of such Convertible Securities is
less than the Conversion Price in effect
immediately prior to the time of the granting
of such Options, then the total maximum
number of Junior Shares issuable upon the
exercise of such Options or upon conversion
or exchange of the total maximum amount of
such Convertible Securities issuable upon the
exercise of such Options will be deemed to be
outstanding and to have been issued and sold
by the Corporation for such price per share.
For purposes of this subparagraph (b), the
"price per share for which Junior Shares are
issuable" will be determined by dividing (A)
the total amount, if any, received or
receivable by the Corporation as
consideration for the granting of such
Options, plus the minimum aggregate amount of
additional consideration payable to the
Corporation upon exercise of all such
Options, plus in the case of such Options
which relate to Convertible Securities, the
minimum aggregate amount of additional
consideration, if any, payable to the
Corporation upon the issuance or sale of such
Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum
number of Junior Shares issuable upon the
exercise of Options or upon the conversion or
exchange of all such Convertible Securities
issuable upon the exercise of such Options.
No further adjustment of the Conversion Price
will be made when Convertible Securities are
actually issued upon the exercise of such
options or when Junior Stock is actually
issued upon the exercise of such Options or
the conversion or exchange of such
Convertible Securities.
(ii) If the Corporation in any manner issues or
sells any Convertible Securities and the
price per share for which Junior Shares are
issuable upon such conversion or exchange is
less than the Conversion Price in effect
immediately prior to the time of such issue
or sale, then the maximum number of Junior
Shares issuable upon conversion or exchange
of such Convertible Securities will be deemed
to be outstanding and to have been issued and
sold by the Corporation for such price per
share. For the purposes of this paragraph,
the "price per share for which
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Junior Shares are issuable" will be
determined by dividing (A) the total amount
received or receivable by the Corporation as
consideration for the issue or sale of such
Convertible Securities, plus the minimum
aggregate amount of additional consideration,
if any, payable to the Corporation upon the
conversion or exchange thereof, by (B) the
total maximum number of Junior Shares
issuable upon the conversion or exchange of
all such Convertible Securities. No further
adjustment of the Conversion Price will be
made when Junior Shares are actually issued
upon the conversion or exchange of such
Convertible Securities, and if any such
issuance or sale of such Convertible
Securities is made upon exercise of any
Options for which adjustments of the
Conversion Price had been or are to be made
pursuant to other provisions of this Section
8, no further adjustment of the Conversion
Price will be made by reason of such issue or
sale.
(iii) If the purchase price provided for in any
Options, the additional consideration, if
any, payable upon the conversion or exchange
of any Convertible Securities, or the rate at
which any Convertible Securities are
convertible into or exchangeable for Junior
Shares change at any time, the Conversion
Price in effect at the time of such change
will be readjusted to the Conversion Price
which would have been in effect at such time
had such Options or Convertible Securities
still outstanding provided for such changed
purchase price, additional consideration or
changed conversion rate, as the case may be,
at the time initially granted, issued or
sold; provided that if such adjustment would
result in an increase of the Conversion Price
then in effect, such adjustment will not be
effective until 30 days after written notice
thereof has been given by the Corporation to
all holders of shares of Series B Preferred
Stock.
(iv) Upon the expiration of any Option or the
termination of any right to convert or
exchange any Convertible Security without the
exercise of any such Option or right, the
Conversion Price then in effect hereunder
will be adjusted to the Conversion Price
which would have been in effect at the time
of such expiration or termination had such
Option or Convertible Security, to the extent
outstanding immediately prior to such
expiration or termination, never been issued.
(v) If any Junior Shares, Option or Convertible
Security is issued or sold or deemed to have
been issued or sold for cash, the
consideration received therefor will be
deemed to be the net amount received by the
Corporation therefor. In case any Junior
Shares, Options or Convertible Securities are
issued or sold for a consideration other than
cash, the amount of the consideration other
than cash received by the Corporation will be
the fair value of such consideration, except
where such consideration consists of
securities, in which case the amount of
consideration received by the Corporation
will be the Current Market Price thereof as
of the date of receipt. If any Junior Share,
Option or Convertible Security is issued in
connection with any merger in which the
Corporation is the surviving corporation, the
amount of consideration therefor will be
deemed to be the fair value of such
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portion of the net assets and business of the
non-surviving corporation as is attributable
to such Junior Shares, Options or Convertible
Securities, as the case may be. The fair
value of any consideration other than cash
and securities will be determined in good
faith by the Board of Directors of the
Corporation.
(vi) In case any Option is issued in connection
with the issue or sale of other securities of
the Corporation, together comprising one
integrated transaction in which no specific
consideration is allocated to such Option by
the parties thereto, the Option will be
deemed to have been issued without
consideration.
(vii) The number of Junior Shares outstanding at
any given time does not include shares owned
or held by or for the account of the
Corporation or any subsidiary, and the
disposition of any shares so owned or held
will be considered an issuance or sale of
Junior Shares.
(viii) If the Corporation takes a record of the
holders of Junior Shares (or any class
thereof) for the purpose of entitling them
(A) to receive a dividend or other
distribution payable in Junior Shares,
Options or in Convertible Securities or (B)
to subscribe for or purchase Junior Shares,
Options or Convertible Securities, then for
purposes of this Section 8 such record date
will be deemed to be the date of the issuance
or sale of the shares of Junior Stock deemed
to have been issued or sold upon the
declaration of such dividend or upon the
making of such other distribution or the date
of the granting of such right of subscription
or purchase, as the case may be.
(ix) Anything herein to the contrary
notwithstanding, no adjustment will be made
to the Conversion Price by reason of (A) the
issuance of securities of the Corporation
upon conversion of shares of Series B
Preferred Stock, and (B) the issuance of any
shares of the Corporation's capital stock to
employees and directors of the Corporation
pursuant to options and warrants granted to
such employees and directors upon the
approval of the Board of Directors of the
Corporation, (C) the issuance of any shares
of the Corporation's capital stock pursuant
to any employee plan, and (D) any issuances
pursuant to any of the Corporation's dividend
reinvestment plans.
(8) No adjustment in the Conversion Price shall be
required unless such adjustment would require a
cumulative increase or decrease of at least 1% in such
price; provided, however, that any adjustments that by
reason of this subsection (d)(8) are not required to be
made shall be carried forward and taken into account in
any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made
in accordance with the provisions of this Section 8
(other than this subsection (d)(8)) not later than such
time as may be required in order to preserve the tax-
free nature of a distribution to the holders of Common
Stock. Notwithstanding any other provisions of this
subsection (d), the Corporation shall not be required
to make any adjustment to the Conversion Price for the
issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of distributions or
interest payable on securities of the Corporation and
the investment of additional optional amounts in shares
of Common Stock under such
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plan. All calculations under this Section 8 shall be
made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with
.05 of a share being rounded upward),as the case may
be.
(e) If:
(1) there shall be any reclassifications of the Common
Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any
stockholders of the Corporation is required, or a
statutory share exchange involving the conversion or
exchange of Common Stock into securities or other
property, or a self tender offer by the Corporation for
all or substantially all of its outstanding Common
Stock, or the sale or transfer of all or substantially
all of the assets of the Corporation as an entity and
for which approval of any stockholder of the
Corporation is required; or
(2) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
then the Corporation shall cause to be filed with the Transfer
Agent and shall cause to be mailed to the holders of the Series B
Preferred Stock at their addresses as shown on the stock transfer
records of the Corporation, as promptly as possible, but at least
15 days prior to the applicable date hereinafter specified, a
notice stating the date on which such reclassification,
consolidation, merger, statutory share exchange, sale, transfer,
liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice
or any defect therein shall not affect the legality or validity
of the proceedings described in this Section 8.
(f) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the
Transfer Agent an officer's certificate setting forth the
Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment,
which certificate shall be conclusive evidence of the
correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the
effective date on which such adjustment becomes effective
and shall mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series B
Preferred Stock at such holder's last address as shown on
the share records of the Corporation.
(g) There shall be no adjustment of the Conversion Price in
case of the issuance of any shares of the Corporation in a
reorganization, acquisition or other similar transaction
except as specifically set forth in this Section 8. If any
action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection of
this Section 8, only one adjustment shall be made, and such
adjustment shall be the amount of adjustment that has the
highest absolute value.
(h) If the Corporation shall take any action affecting the
Common Stock, other than an action described in this Section
8, that would materially and adversely affect the conversion
rights of the holders of the Series B Preferred Stock, the
Conversion Price for the Series B Preferred Stock may be
reduced, to the extent permitted by law, in such manner, and
at such time, as the Board of Directors, in its reasonable
discretion, based in part upon advice of independent
financial and legal advisors, may determine in good faith to
be equitable in the circumstances.
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(i) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock, for
the purpose of effecting conversion of the Series B
Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding Series B
Preferred Stock not theretofore converted. For purposes of
this subsection (i), the number of shares of Common Stock
that shall be deliverable upon the conversion of all
outstanding Series B Preferred Stock shall be computed as if
at the time of computation all such outstanding shares were
held by a single holder.
The Corporation covenants that any Common Stock issued upon
conversion or redemption of, or as a distribution in respect of,
the Series B Preferred Stock shall be validly issued, fully paid
and nonassessable. Before taking any action that would cause an
adjustment reducing the Conversion Price below the then par value
of the Common Stock deliverable upon conversion of the Series B
Preferred Stock, the Corporation will take any action that, in
the opinion of its counsel, may be necessary in order that the
Corporation may validly and legally issue fully paid and
nonassessable Common Stock at such adjusted Conversion Price.
The Corporation shall use its reasonable best efforts to list the
Common Stock required to be delivered upon conversion of, and any
Common Stock issued upon redemption or as a distribution in
respect of, the Series B Preferred Stock, prior to such delivery,
upon each national securities exchange, if any, upon which the
outstanding Common Stock are listed at the time of such delivery.
The Corporation shall take any action necessary to ensure that
any shares of Common Stock issued upon conversion or redemption
of, or as a distribution in respect of, shares of Series B
Preferred Stock are freely tradeable and not subject to any
resale restrictions under the Act, or any applicable state
securities or blue sky laws (other than any shares of Common
Stock which are held by an "affiliate" (as defined in Rule 144
under the Act).
(j) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the
issue or delivery of Common Stock or other securities or
property on conversion of the Series B Preferred Stock
pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of
Common Stock or other securities or property in a name other
than that of the holder of the Series B Preferred Stock to
be converted, and no such issue or delivery shall be made
unless and until the person requesting such issue or
delivery has paid to the Corporation the amount of any such
tax or has established, to the reasonable satisfaction of
the Corporation, that such tax has been paid.
In addition to the foregoing adjustments, the Corporation shall
be entitled to make such reductions in the Conversion Price, in
addition to those required herein, as it in its discretion
considers to be advisable in order that any share distributions,
subdivisions of shares, reclassification or combination of
shares, distribution of rights, options, warrants to purchase
shares or securities, or a distribution of other assets (other
than cash distributions) will not be taxable or, if that is not
possible, to diminish any income taxes that are otherwise payable
because of such event.
(k) In no event shall a Series B Holder be permitted to convert
shares of Series B Preferred Stock to the extent such
conversion would result in such Series B Holder beneficially
owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules thereunder) more than 4.999%
of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of Series B
Preferred Stock held by such Series B Holder after
application of this paragraph. The provisions of this
paragraph may be waived by a Series B Holder (but only as to
itself) upon not less than 75 days' prior notice to the
Corporation, and the provisions of this paragraph shall
continue to apply until such 75th day (or later, if stated
in the notice of waiver). Each Series B Holder shall have
the sole authority and obligation to determine whether the
restriction contained in this Section
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applies, and each conversion by a Series B Holder shall be
deemed to be accompanied by the representation that such
conversion is in accordance with the provisions of this
paragraph. No conversion in violation of this paragraph but
otherwise in accordance with the Charter shall affect the
status of the securities issued upon such conversion as
validly issued, fully paid and nonassessable.
Section 9. Ownership and Transfer Limitations.
(a) REIT-Related Restrictions. The Ownership and transfer of
the Series B Preferred Stock shall be restricted as provided
in the Charter.
(b) ERISA-Related Restrictions. No Benefit Plan Investor may
acquire Series B Preferred Stock without the Corporation's
prior written consent (which consent may be withheld in the
Corporation's sole and absolute discretion). Prior to the
Series B Preferred Stock qualifying as a "publicly-offered
security" or the availability of another exception to the
"look-through" rule (i.e., the provisions of paragraph
(a)(2) of the Plan Asset Regulation), transfers of Series B
Preferred Stock to Benefit Plan Investors that would
increase aggregate Benefit Plan Investor ownership of the
Series B Preferred Stock above the 25% Threshold will be
void ab initio. In addition, in the event that the aggregate
number of Series B Preferred Stock owned by Benefit Plan
Investors, but for the operation of this sentence, would
meet or exceed the 25% Threshold, (1) the Series B Preferred
Stock held by Benefit Plan Investors shall be deemed to be
Shares-in-Trust, pro-rata, to the extent necessary to reduce
aggregate Benefit Plan Investor ownership of the Series B
Preferred Stock below the 25% Threshold, and (2) such number
of Series B Preferred Stock (rounded up, in the case of each
holder, to the nearest whole share) shall be transferred
automatically and by operation of law to the Trust (as
described in Article VII of the Charter) to be held in
accordance with this subsection (b) of Section 9 and
otherwise in accordance with Article VII, of the Charter and
(3) the Benefit Plan Investors previously owning such
Shares-in-Trust shall submit such number of Series B
Preferred Stock for registration in the name of the Trust.
Such transfer to a Trust and the designation of Series B
Preferred Stock as Shares-in-Trust shall be effective as of
the close of business on the business day prior to the date
of the event that otherwise would have caused aggregate
Benefit Plan Investor ownership of Series B Preferred Stock
to meet or exceed the 25% Threshold.
Prior to the discovery of the existence of the Trust, any
transfer of Series B Preferred Stock by a Benefit Plan Investor
to a non-Benefit Plan Investor shall reduce the number of Shares-
in-Trust on a one-for-one basis, and to that extent such shares
shall cease to be designated as Shares-in-Trust and shall be
returned, effective at exactly the time of the transfer to the
non-Benefit Plan Investor, automatically and without further
action by the Corporation or the Benefit Plan Investor, to all
Benefit Plan Investors (or the transferee, if applicable) pro
rata in accordance with the Benefit Plan Investors' prior
holdings. After the discovery of the existence of the Trust, but
prior to the redemption of all discovered Shares-in-Trust and/or
the submission of all discovered Shares-in-Trust for registration
in the name of the Trust, any transfer of Series B Preferred
Stock by a Benefit Plan Investor to a non-Benefit Plan Investor
shall reduce the number of Shares-in-Trust on a one-for-one
basis, and to that extent such shares shall cease to be
designated as Shares-in-Trust and shall be returned,
automatically without further action by the Corporation or the
Benefit Plan Investor, to the transferring Benefit Plan Investor
(or its transferee, if applicable).
In the event that any shares of Series B Preferred Stock are
deemed "Shares-in-Trust" pursuant to this subsection (b) of
Section 9, the holder shall cease to own any right or interest
with respect to such shares and the Corporation will have the
right to redeem such Shares-in-Trust for an amount equal to their
Fair Market Value, which proceeds shall be payable to the
purported owner. This subsection (b) of Section 9 shall cease to
apply and all Shares-in-Trust shall cease to be designated as
Shares-in-Trust and shall be returned, automatically and by
operation of law, to their purported owners, all of which shall
occur at such time as the Series B Preferred Stock qualify as a
publicly
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offered security or if another exception to the "look-through"
rule under the Plan Asset Regulation applies..
SECOND: The Shares have been reclassified by the Board of Directors
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pursuant to Article VI of the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
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Directors in the manner and by the vote required by law.
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FOURTH: The undersigned Secretary of the Corporation acknowledges these
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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 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 for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be signed in its name and on its behalf by its President and attested to by
its Secretary on this 21st day of December, 1998.
ATTEST:
/s/ Ronald Morrison By: /s/ William Ashmore (SEAL)
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Ronald Morrison William Ashmore
Secretary President
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