CEDAR SHOPPING CENTERS, INC.
ARTICLES SUPPLEMENTARY
8 7/8% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
Cedar Shopping Centers, 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 IV of the Articles of
Incorporation of the Corporation, as amended and supplemented (the "Charter"),
the Board of Directors of the Corporation (the "Board of Directors"), by
resolution duly adopted at a meeting duly called and held on July 19, 2004 (the
"Board Resolutions"), and the Pricing Committee of the Board of Directors
established by the Board Resolutions, by resolution duly adopted at a meeting
duly called and held on July 23, 2004, classified and designated 2,350,000
shares (the "Shares") of Preferred Stock (as defined in the Charter) as shares
of 8?% Series A Cumulative Redeemable Preferred Stock, with the preferences,
conversions and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption of shares of stock as follows and provided for the issuance thereof.
Upon any restatement of the Charter, Sections 1 through 13 of this Article FIRST
shall become part of Article IV of the Charter, with such changes in enumeration
as are necessary to complete such restatement.
(1) Designation and Number. A series of shares of Preferred
Stock, designated as the "8?%% Series A Cumulative Redeemable Preferred Stock"
(the "Series A Preferred Stock"), is hereby established. The number of shares of
Series A Preferred Stock shall be 2,350,000. The par value of the Series A
Preferred Stock shall be $.01 per share.
(2) Rank. The Series A Preferred Stock will, with respect to
distribution rights and rights upon liquidation, dissolution or winding up of
the Corporation, rank (a) senior to all classes or series of Common Stock (as
defined in the Charter), and to all equity securities the terms of which provide
that such equity securities shall rank junior to the Series A Preferred Stock;
(b) on parity with all equity securities issued by the Corporation the terms of
which specifically provide that such equity securities rank on parity with the
Series A Preferred Stock; and (c) 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) Distributions.
(a) Holders of Series A Preferred Stock shall be
entitled to receive, when and if declared by the Board of Directors, out of
funds legally available for payment of distributions, cumulative preferential
cash distributions at the rate of 8?% of the liquidation preference per annum
(which is equivalent to a fixed annual amount of $2.21875 per share of Series A
Preferred Stock). Such distributions shall accrue and cumulate from the date of
original issuance (July 28, 2004) and shall be payable quarterly in arrears on
the 20th day of February, May, August and November of each year or, if not a
business day, the next succeeding business day (each a "Distribution Payment
Date"). The first distribution on the Series A Preferred Stock
shall be paid on November 20, 2004, will be for more than a full quarter and
will reflect distributions accumulated from the date of original issuance
through November 20, 2004. Any distribution payable on the Series A Preferred
Stock for any partial distribution period shall be prorated and computed on the
basis of a 360-day year consisting of twelve 30-day months. Distributions shall
be payable to holders of record as they appear in the stock records of the
Corporation at the close of business on the applicable distribution record date,
which shall be a date designated by the Board of Directors for the payment of
distributions that is not more than 60 nor less than 10 calendar days
immediately preceding such Distribution Payment Date (each, a "Distribution
Record Date").
(b) No distribution on the Series A Preferred Stock
shall be authorized or declared 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 or any other
of the Corporation's preferred stock, prohibits such authorization, declaration,
payment or setting apart for payment or provides that such authorization,
declaration, payment or setting apart for payment would constitute a breach or
default thereunder, or if such authorization, declaration, payment or setting
apart for payment shall be restricted or prohibited by law.
Notwithstanding anything to the contrary contained
herein, distributions on the Series A Preferred Stock shall accrue and cumulate
whether or not the Corporation has earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not such
distributions are declared by the Board of Directors. Accrued but unpaid
distributions on the Series A Preferred Stock shall cumulate as of the
Distribution Payment Date on which they first become payable or on the date of
redemption, as the case may be. No interest shall be payable in respect of any
distribution on the Series A Preferred Stock that may be in arrears.
(c) Except as provided in the following sentence, if
any Series A Preferred Stock are outstanding, no distributions, other than
distributions in kind of the Corporation's Common Stock or other shares of the
Corporation's equity securities ranking junior to the Series A Preferred Stock
as to distributions and upon liquidation, may be declared or paid or set apart
for payment, and no other distribution may be declared or made upon, the
Corporation's Common Stock or any other shares of equity securities of the
Corporation of any other class or series ranking, as to distributions and upon
liquidation, on parity with or junior to the Series A Preferred Stock unless
full cumulative distributions have been or contemporaneously are declared and
paid or declared and a sum sufficient is set apart for such payment on the
Series A Preferred Stock for all past distribution periods and the then current
distribution period. When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series A
Preferred Stock and all other equity securities ranking on parity, as to
distributions, with the Series A Preferred Stock, all distributions declared
upon the Series A Preferred Stock and any other equity securities ranking on
parity, as to distributions, with the Series A Preferred Stock shall be
authorized pro rata so that the amount of distributions authorized per share of
Series A Preferred Stock and each such other equity security shall in all cases
bear to each other the same ratio that accrued distributions per share of Series
A Preferred Stock and such other equity security (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such other equity securities do not
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have a cumulative distribution) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any distribution payment or
payments on Series A Preferred Stock which may be in arrears.
(d) Except as provided in clause (c), unless full
cumulative distributions on the Series A Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient is set
apart for payment for all past distribution periods and the then current
distribution period, no Common Stock or any other shares of equity securities of
the Corporation ranking junior to or on parity with the Series A Preferred Stock
as to distributions or upon liquidation shall be redeemed, purchased or
otherwise acquired for any consideration (or any monies 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 Common Stock or other
shares of equity securities of the Corporation ranking junior to the Series A
Preferred Stock as to distributions and amounts upon liquidation). The foregoing
shall not prohibit any redemption, purchase or other acquisition by the
Corporation of any class or series of equity securities of the Corporation for
the purpose of enforcing restrictions on ownership contained in the
Corporation's Charter or preserving the Corporation's status as a real estate
investment trust.
(e) Holders of Series A Preferred Stock shall not be
entitled to any distribution, whether payable in cash, property or shares, in
excess of full cumulative distributions on the Series A Preferred Stock as
described above. Any distribution payment made on the Series A Preferred Stock,
including any capital gain distributions, shall first be credited against the
earliest accrued but unpaid distribution due with respect to the Series A
Preferred Stock which remains payable.
(f) If, for any taxable year, the Corporation elects
to designate as a "capital gain dividend" (as defined in Section 857 of the
Code) any portion (the "Capital Gains Amount") of the dividends (as determined
for federal income tax purposes) paid or made available for the year to holders
of all series or classes of the Corporation's stock (the "Total Dividends"),
then, except as otherwise required by applicable law, that portion of the
Capital Gains Amount that shall be allocable to the holders of Series A
Preferred Stock shall be in proportion to the amount that the total dividends
(as determined for federal income tax purposes) paid or made available to the
holders of the Series A Preferred Stock for the year bears to the Total
Dividends. Except as otherwise required by applicable law, the Corporation will
make a similar allocation with respect to any undistributed long-term capital
gains of the Corporation which are to be included in its stockholders' long-term
capital gains, based on the allocation of the Capital Gains Amount which would
have resulted if such undistributed long-term capital gains has been distributed
as "capital gains dividends" by the Corporation to its stockholders.
(4) Liquidation Preference.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (referred to herein
sometimes as a "liquidation"), the holders of Series A Preferred Stock then
outstanding shall be entitled to receive out of the assets of the Corporation
legally available for distribution to stockholders (after payment or provision
for payment of all debts and other liabilities of the Corporation) the sum of
(i) the liquidation
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preference of $25.00 per share, (ii) the applicable premium per share (expressed
as a percentage of the liquidation preference of $25.00 per share) as set forth
in the table below during the twelve-month period beginning on July 28 of each
year and (c) an amount equal to any accrued and unpaid distributions (whether or
not declared) to the date of payment, before any distribution of assets is made
to holders of Common Stock (as defined in the Charter) or any equity securities
that the Corporation may issue that rank junior to the Series A Preferred Stock
as to liquidation rights.
12-MONTH PERIOD APPLICABLE PREMIUM
------------------------------ -------------------
July 28, 2004 to July 27, 2005 5%
July 28, 2005 to July 27, 2006 4%
July 28, 2006 to July 27, 2007 3%
July 28, 2007 to July 27, 2008 2%
July 28, 2008 to July 27, 2009 1%
July 28, 2009 and thereafter 0
(b) If, upon any such voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation are insufficient to make full payment to holders of the Series A
Preferred Stock and any shares of other classes or series of equity securities
of the Corporation ranking on parity with the Series A Preferred Stock as to
liquidation rights, then the holders of the Series A Preferred Stock and all
other such classes or series of equity securities ranking on parity with the
Series A Preferred Stock as to liquidation rights shall share ratably in any
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
(c) 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 calendar days immediately preceding
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 share transfer records of the Corporation.
(d) After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
Preferred Stock shall have no right or claim to any of the remaining assets of
the Corporation.
(e) None of a consolidation or merger of the
Corporation with or into another entity, the merger of another entity with or
into the Corporation, a statutory share exchange by the Corporation or a sale,
lease, transfer or conveyance of all or substantially all of the Corporation's
assets or business shall be considered a liquidation, dissolution or winding up
of the Corporation.
(f) In determining whether a distribution (other
than upon voluntary or involuntary dissolution) 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
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upon dissolution of the holders of Series A Preferred Stock will not be added to
the Corporation's total liabilities.
(5) Redemption.
(a) Except as otherwise set forth in this Section 5
and in Section 8, the Series A Preferred Stock is not redeemable prior to July
28, 2009, except that the Corporation will be entitled to redeem, purchase or
acquire shares of Series A Preferred Stock in order to ensure that the
Corporation remains qualified as a REIT for federal income tax purposes.
(b) On or after July 28, 2009 the Corporation, at
its option, upon giving notice as provided below, may redeem the Series A
Preferred Stock, in whole or from time to time in part, for cash, at a
redemption price of $25.00 per share, plus all accrued and unpaid distributions
on such Series A Preferred Stock to the date of redemption, whether or not
declared (the "Redemption Right").
(c) If fewer than all of the outstanding shares of
Series A Preferred Stock are to be redeemed pursuant to the Redemption Right,
the shares to be redeemed shall be selected pro rata (as nearly as practicable
without creating fractional shares) or by lot or in such other equitable method
prescribed by the Board of Directors. If such redemption is to be by lot and, as
a result of such redemption, any holder of Series A Preferred Stock would become
a holder of a number of Series A Preferred Stock in excess of the Ownership
Limit because such holder's shares of Series A Preferred Stock were not
redeemed, or were only redeemed in part, then, except as otherwise provided in
the Charter, the Corporation shall redeem the requisite number of shares of
Series A Preferred Stock of such holder such that no holder will hold in excess
of the Ownership Limit subsequent to such redemption.
(d) Notwithstanding anything to the contrary
contained herein, unless full cumulative distributions on all shares of Series A
Preferred Stock have been or contemporaneously are declared and paid or declared
and a sum sufficient is set apart for payment for all past distribution periods
and the then current distribution period, no shares of Series A Preferred Stock
shall be redeemed unless all outstanding shares of Series A Preferred Stock are
simultaneously redeemed. In addition, unless full cumulative distributions on
all shares of Series A Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient is set apart for payment for
all past distribution periods and the then current distribution period, the
Corporation shall not purchase or otherwise acquire directly or indirectly any
shares of Series A Preferred Stock or any other shares of equity securities of
the Corporation ranking junior to or on parity with the Series A Preferred Stock
as to distributions or upon liquidation (except by conversion into or exchange
for shares of equity securities of the Corporation ranking junior to the Series
A Preferred Stock as to distributions and upon liquidation). The restrictions in
this Section 5 on redemptions, purchases and other acquisitions shall not
prevent the redemption, purchase or acquisition by the Corporation of Preferred
Stock of any series pursuant to Article IV of the Charter or Section 5(a)
hereof, or otherwise in order to ensure that the Corporation remains qualified
as a REIT for United States federal income tax purposes, or the purchase or
acquisition of Series A Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to all holders of the Series A Preferred Stock.
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(e) Immediately prior to any redemption of shares of
Series A Preferred Stock, the Corporation shall pay, in cash, any accrued and
unpaid distributions to the redemption date, whether or not declared, unless a
redemption date falls after a Distribution Record Date and prior to the
corresponding Distribution Payment Date, in which case each holder of Series A
Preferred Stock at the close of business on such Distribution Record Date shall
be entitled to the distribution payable on such shares on the corresponding
Distribution Payment Date notwithstanding the redemption of such shares before
the Distribution Payment Date. Except as provided in the previous sentence, the
Corporation shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series A Preferred Stock for which a notice of redemption
has been given.
(f) The following provisions set forth the
procedures for redemption.
(i) Notice of redemption will be mailed by the
Corporation, postage prepaid, no less than 30 nor more than 60
calendar days immediately preceding 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 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 the Series
A Preferred Stock may be listed or admitted to trading, each
notice shall state: (A) the redemption date; (B) the redemption
price; (C) the number of Series A Preferred Stock to be
redeemed; (D) the place or places where the holders of Series A
Preferred Stock may surrender certificates for payment of the
redemption price; and (E) that distributions on the Series A
Preferred Stock to be redeemed will cease to accrue on the
redemption date. If less than all of the Series A Preferred
Stock held by any holder are to be redeemed, the notice mailed
to each holder shall also specify the number of Series A
Preferred Stock held by such holder to be redeemed.
(iii) On or after the redemption date, each holder of
Series A Preferred Stock to be redeemed shall present and
surrender the certificates representing his Series A Preferred
Stock to the Corporation at the place designated in the notice
of redemption and thereupon the redemption price of such shares
(including all accrued and unpaid distributions up to the
redemption date) shall be paid to or on the order of the person
whose name appears on such certificate representing Series A
Preferred Stock as the owner thereof and each surrendered
certificate shall be canceled. If fewer than all the shares
represented by any such certificate representing Series A
Preferred Stock are to be redeemed, a new certificate shall be
issued representing the unredeemed shares.
(iv) From and after the redemption date (unless the
Corporation defaults in payment of the redemption price), all
distributions on the Series A Preferred Stock designated for
redemption and all rights of the holders thereof,
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except the right to receive the redemption price thereof and all
accrued and unpaid distributions up to the redemption date,
shall terminate with respect to such shares and such shares
shall not thereafter be transferred (except with the consent of
the Corporation) on the Corporation's stock transfer records,
and such shares shall not be deemed to be outstanding for any
purpose whatsoever. At its election, the Corporation, prior to a
redemption date, may irrevocably deposit the redemption price
(including accrued and unpaid distributions to the redemption
date) of the Series A Preferred Stock so called for redemption
in trust for the holders thereof with a bank or trust company,
in which case the redemption notice to holders of the Series A
Preferred Stock to be redeemed shall (A) state the date of such
deposit, (B) specify the office of such bank or trust company as
the place of payment of the redemption price and (C) require
such holders to surrender the certificates representing such
shares at such place on or about the date fixed in such
redemption notice (which may not be later than the redemption
date) against payment of the redemption price (including all
accrued and unpaid distributions to the redemption date). Any
monies so deposited which remain unclaimed by the holders of the
Series A Preferred Stock at the end of two years after the
redemption date shall be returned by such bank or trust company
to the Corporation.
(g) Any Series A Preferred Stock that shall at any
time have been redeemed shall, after such redemption, have the status of
authorized but unissued Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the Board
of Directors.
(6) Voting Rights.
(a) Holders of the Series A Preferred Stock shall
not have any voting rights, except as set forth below.
Whenever distributions on the Series A Preferred Stock are in arrears
for six or more consecutive quarterly periods (a "Preferred Distribution
Default"), the holders of Series A Preferred Stock (voting together as a single
class with all other equity securities of the Corporation upon which like voting
rights have been conferred and are exercisable ("Parity Preferred Stock")) shall
be entitled to elect a total of two additional directors to the Corporation's
Board of Directors (the "Preferred Stock Directors") at a special meeting called
by the holders of record of at least 10% of the outstanding shares of Series A
Preferred Stock (unless such request is received less than 90 calendar days
before the date fixed for the next annual or special meeting of stockholders)
or, if the request for a special meeting is received by the Corporation less
than 90 calendar days before the date fixed for the next annual or special
meeting of stockholders, at the next annual meeting of stockholders, and at each
subsequent annual meeting until all distributions accrued on the Series A
Preferred Stock for the past distribution periods and the then current
distribution period shall have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment. On any matter in which the
holders of Series A Preferred Stock are entitled to vote (as expressly provided
herein or as may be required by law), including any action by written consent,
each share of Series A Preferred Stock shall have one vote per share, except
that when shares of any other series of preferred stock of the Corporation shall
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have the right to vote with the Series A Preferred Stock as a single class on
any matter, then the Series A Preferred Stock and such other series shall have
with respect to such matters one vote per $25.00 of stated liquidation
preference.
(b) If and when all accrued distributions and the
distribution for the then current distribution period on the Series A Preferred
Stock shall have been paid in full or declared and a sum sufficient for the
payment thereof set aside for payment in full, the holders of Series A Preferred
Stock shall be divested of the voting rights set forth in clause (a) above
(subject to revesting in the event of each and every Preferred Distribution
Default) and, if all accrued distributions and the distribution for the then
current distribution period have been paid in full or declared by the Board of
Directors and set aside for payment in full on all other series of Parity
Preferred Stock upon which like voting rights have been conferred and are
exercisable, the term of office of each Preferred Stock Director so elected
shall terminate. Any Preferred Stock Director may be removed at any time with or
without cause by the vote or consent of, and shall not be removed otherwise than
by the vote of, the holders of a majority of the outstanding Series A Preferred
Stock when they have the voting rights set forth in clause (a) above and all
other series of Parity Preferred Stock (voting as a single class). So long as a
Preferred Distribution 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 a majority of the outstanding Series A Preferred Stock when they have
the voting rights set forth in clause (a) above and all other series of Parity
Preferred Stock (voting as a single class). The Preferred Stock Directors shall
each be entitled to one vote per director on any matter.
(c) So long as any Series A Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least two-thirds of the Series A 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), (i) authorize, create or
increase the authorized or issued amount of any class or series of equity
securities ranking senior to the outstanding Series A Preferred Stock with
respect to the payment of distributions or the distribution of assets upon
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation or reclassify any authorized equity securities of the Corporation
into any such senior equity securities, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such senior equity securities; or (ii) amend, alter or repeal the provisions of
the Charter (including these Articles Supplementary), whether by merger or
consolidation (in either case, an "Event") or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
A Preferred Stock; provided, however, that with respect to any such amendment,
alteration or repeal of the provisions of the Charter (including these Articles
Supplementary) upon the occurrence of an Event, so long as shares of the Series
A Preferred Stock remain outstanding with the terms thereof materially unchanged
in any adverse respect, taking into account that, upon the occurrence of an
Event, the Corporation may not be the surviving entity and such surviving entity
may thereafter be the issuer of the Series A Preferred Stock, the occurrence of
any such Event shall not be deemed to materially and adversely affect the
rights, preferences or voting powers of the Series A Preferred Stock; and
provided further that any increase in the amount of authorized Series A
Preferred Stock or the creation or issuance of or increase in the amount of any
other class or series of the Corporation's equity securities, in each case
ranking on parity with or junior to the Series A
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Preferred Stock with respect to the payment of distributions and the
distribution of assets upon voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, shall not be deemed to materially and adversely
affect the rights, preferences, privileges or voting powers of the Series A
Preferred Stock.
(d) The foregoing voting provisions shall not apply
if, at or prior to the time when the action with respect to which such vote or
consent would otherwise be required shall be effected, all outstanding 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.
(7) Conversion. The Series A Preferred Stock is not
convertible into or exchangeable for any other property or securities of the
Corporation.
(8) Ownership Limitations. The provisions of this Section 8
shall apply with respect to the limitations on the ownership and acquisition of
shares of Series A Preferred Stock.
(a) Definitions
For the purposes of this Section 8, the following terms shall have the following
meanings:
"Act" shall mean the General Corporation Law of Maryland.
"Beneficial Ownership" shall mean ownership of Series A
Preferred Stock by a Person who would be treated as an owner of such
shares of Series A Preferred Stock either directly or constructively
through the application of Section 544 of the Code, as modified by
Section 856(h) of the Code. The terms "Beneficial Owner," "Beneficially
Owns" and "Beneficially Owned" shall have the correlative meanings.
"Charitable Trust" shall mean the trust created pursuant to
subparagraph 8(c)(i) of this Section 8.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time. All section references to the Code shall include any
successor provisions thereof as may be adopted from time to time.
"Constructive Ownership" shall mean ownership of Series A
Preferred Stock by a Person who would be treated as an owner of such
shares of Series A Preferred Stock either directly or constructively
through the application of Section 318 of the Code, as modified by
Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"Holder" shall mean the record holder of shares of Series A
Preferred Stock, or in the case of shares held by a Purported Record
Transferee, the Charitable Trust.
"Initial Date" shall mean the date upon which the Corporation
issues the Series A Preferred Stock.
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"IRS" shall mean the United States Internal Revenue Service.
"Market Price" shall mean the last reported sales price reported
on the New York Stock Exchange of Series A Preferred Stock on the
trading day immediately preceding the relevant date, or if the Series A
Preferred Stock is not then traded on the New York Stock Exchange, the
last reported sales price of the Series A Preferred Stock on the trading
day immediately preceding the relevant date as reported on any exchange
or quotation system over which the Series A Preferred Stock may be
traded, or if the Series A Preferred Stock is not then traded over any
exchange or quotation system, then the market price of the Series A
Preferred Stock on the relevant date as determined in good faith by the
Board of Directors of the Corporation.
"Ownership Limit" shall mean 9.9% of the outstanding Series A
Preferred Stock of the Corporation, and after any adjustment as set
forth in subparagraph 8(i) of this Section 8, shall mean such greater
percentage.
"Partner" shall mean any Person owning Units.
"Partnership" shall mean Cedar Shopping Centers Partnership,
L.P., a Delaware limited partnership.
"Partnership Agreement" shall mean the Agreement of Limited
Partnership of the Partnership, of which the Corporation is the sole
general partner, as amended, as such agreement may be further amended
from time to time.
"Person" shall mean an individual, corporation, partnership,
estate, trust, 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; but does not include
an underwriter which participates in a public offering of the Series A
Preferred Stock provided that the ownership of Series A Preferred Stock
by such underwriter would not result in the Corporation failing to
qualify as a REIT.
"Purported Transferee" shall mean, with respect to any purported
Transfer (or other event) which results in a violation of subparagraph
8(b) of this Section 8, the purported beneficial transferee or owner for
whom the Purported Record Transferee would have acquired or owned shares
of Series A Preferred Stock, if such Transfer had been valid under such
subparagraph.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in a violation of subparagraph 8(b) of
this Section 8, the record holder of the Series A Preferred Stock if
such Transfer had been valid under such subparagraph.
"REIT" shall mean a Real Estate Investment Trust under Section
856 of the Code.
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"Restriction Termination Date" shall mean the first day on which
the Board of Directors of the Corporation determines that it is no
longer in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT.
"Transfer" shall mean any sale, issuance, transfer, gift,
assignment, devise or other disposition of Series A Preferred Stock as
well as any other event that causes any Person to Beneficially Own or
Constructively Own Series A Preferred Stock (including (i) the granting
of any option or entering into any agreement for the sale, transfer or
other disposition of Series A Preferred Stock or (ii) the sale,
transfer. assignment or other disposition of any securities or rights
convertible into or exchangeable for Series A Preferred Stock), whether
voluntary or involuntary, whether of record or beneficially or
Beneficially or Constructively (including but not limited to transfers
of interests in other entities which result in changes in Beneficial or
Constrictive Ownership of Series A Preferred Stock), and whether by
operation of law or otherwise.
"Trustee" shall mean the Corporation as trustee for the
Charitable Trust, and any successor trustee appointed by the
Corporation.
"Units" shall mean the units into which partnership interests of
the Partnership are divided, and as the same may be adjusted, as
provided in the Partnership Agreement.
(b) Restriction on Ownership and Transfer.
(i) Except as provided in subparagraph 8(k) of this
Section 8, from the Initial Date and prior to the Restriction Termination Date,
no Person shall Beneficially Own shares of Series A Preferred Stock in excess of
the Ownership Limit.
(ii) Except as provided in subparagraph 8(k) of this
Section 8, from the Initial Date and prior to the Restriction Termination Date,
any Transfer that, if effective, would result in any Person Beneficially Owning
Series A Preferred Stock in excess of the Ownership Limit shall be void ab
initio as to the Transfer of such shares of Series A Preferred Stock which would
be otherwise Beneficially Owned by such Person in excess of the Ownership Limit;
and the Purported Transferee shall acquire no rights in such shares of Series A
Preferred Stock.
(iii) Except as provided in subparagraph 8(k) of this
Section 8, from the Initial Date and prior to the Restriction Termination Date,
any Transfer that, if effective, would result in the Series A Preferred Stock
being beneficially owned by less than 100 Persons (determined without reference
to any rules of attribution) shall be void ab initio as to the Transfer of such
shares of Series A Preferred Stock which would be otherwise beneficially owned
by the transferee; and the intended transferee shall acquire no rights in such
shares of Series A Preferred Stock.
(iv) Notwithstanding any other provisions contained
in this Section 8, from the Initial Date and prior to the Restriction
Termination Date, any Transfer or other event that, if effective, would result
in the Corporation being "closely held" within the meaning of Section 856(h) of
the Code, or would otherwise result in the Corporation failing to qualify as a
REIT (including, but not limited to, a Transfer or other event that would result
in the Corporation owning (directly or Constructively) an interest in a tenant
that is described in Section
11
856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy, any of the gross income
requirements of Section 856(c) of the Code), shall be void ab initio as to the
Transfer of the shares of Series A Preferred Stock which would cause the
Corporation to be "closely held" within the meaning of Section 856(h) of the
Code or would otherwise result in the Corporation failing to qualify as a REIT;
and the intended transferee or owner or Constructive or Beneficial Owner shall
acquire or retain no rights in such shares of Series A Preferred Stock.
(c) Effect of Transfer in Violation of Subparagraph
8(b).
(i) If, notwithstanding the other provisions
contained in this Section 8, at any time after the Initial Date and prior to the
Restriction Termination Date, there is a purported Transfer, or change in the
capital structure of the Corporation, or other event such that one or more of
the restrictions on ownership and transfers described in subparagraph 8(b) above
has been violated, then the shares of Series A Preferred Stock being Transferred
(or in the case of an event other than a Transfer, the shares owned or
Constructively Owned or Beneficially Owned) which would cause one or more of the
restrictions on ownership or transfer to be violated (rounded up to the nearest
whole share) (the "Trust Shares"), shall automatically be transferred to the
Corporation, as Trustee of a trust (the "Charitable Trust") for the exclusive
benefit of The American Cancer Society (the "Designated Charity"), an
organization described in Section 170(b)(1)(A ) and 170(c) of the Code. The
Purported Transferee shall have no rights in such Trust Shares.
(ii) The Corporation, as Trustee of the Charitable
Trust, may transfer the shares held in such trust to a Person whose ownership of
the shares will not result in a violation of the ownership restrictions (a
"Permitted Transferee"). If such a transfer is made, the interest of the
Designated Charity will terminate and proceeds of the sale will be payable to
the Purported Transferee and to the Designated Charity. The Purported Transferee
will receive the lesser of (1) the price paid by the Purported Transferee for
the shares or, if the Purported Transferee did not give value for the shares,
the Market Price of the shares on the day of the event causing the shares to be
held in trust, and (2) the price per share received by the Corporation, as
Trustee, from the sale or other disposition of the shares held in trust. The
Designated Charity will receive any proceeds in excess of the amount payable to
the Purported Transferee. The Purported Transferee will not be entitled to
designate a Permitted Transferee.
(iii) All stock held in the Charitable Trust will be
deemed to have been offered for sale to the Corporation or its designee for a
90-day period, at the lesser of the price paid for that stock by the Purported
Transferee and the Market Price on the date that the Corporation accepts the
offer. This period will commence on the date of the violative transfer, if the
Purported Transferee gives notice to the Corporation of the transfer, or the
date that the Board of Directors of the Corporation determines that a violative
transfer occurred, if no such notice is provided.
(iv) Any dividend or distribution paid prior to the
discovery by the Corporation that shares of Series A Preferred Stock have been
transferred in violation of subparagraph 8(b) of this Section 8, shall be repaid
to the Corporation upon demand and shall be
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held in trust for the Designated Charity. Any dividend or distribution declared
but unpaid shall be rescinded as void ab initio with respect to such shares of
stock.
(v) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Corporation, the Designated Charity shall be entitled to receive, ratably
with each other holder of Series A Preferred Stock, that portion of the assets
of the Corporation available for distribution to its stockholders as the number
of Trust Shares bears to the total number of shares of Series A Preferred Stock
then outstanding (including the Trust Shares). The Corporation, as Trustee, or
if the Corporation shall have been dissolved, any trustee appointed by the
Corporation prior to its dissolution, shall distribute to the Designated
Charity, when determined (or if not determined, or only partially determined,
ratably to the other holders of Series A Preferred Stock who have been
determined and the Designated Charity), any such assets received in respect of
the Trust Shares in any liquidation, dissolution or winding up of, or any
distribution of the assets of, the Corporation.
(vi) The Purported Transferee will not be entitled to
vote any Series A Preferred Stock it attempts to acquire, and any stockholder
vote will be rescinded if a Purported Transferee votes and the stockholder vote
would have been decided differently if such Purported Transferee's vote was not
counted.
(d) Remedies for Breach. If the Board of Directors
or its designees shall at any time determine in good faith that a Transfer or
other event has taken place in violation of subparagraph 8(b) of this Section 8
or that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution), Beneficial
Ownership or Constructive Ownership of any shares of Series A Preferred Stock in
violation of subparagraph 8(b) of this Section 8, the Corporation shall inform
the Purported Transferee of its obligations pursuant to this Section 8,
including such Purported Transferee's obligations to pay over to the Charitable
Trust any and all dividends received with respect to the Trust Shares. In
addition, the Board of Directors or its designees shall take such action as it
deems advisable to refuse to give effect or to prevent such Transfer, including,
but not limited to, refusing to give effect to such Transfer on the books of the
Corporation or instituting proceedings to enjoin such Transfer and to recover
any dividend erroneously paid and declaring any votes erroneously cast to be
retroactively invalid; provided, however, that any Transfers (or, in the case of
events other than a Transfer, ownership or Constructive Ownership or Beneficial
Ownership) in violation of subparagraph 8(b) of this Section 8 shall
automatically result in a transfer to the Charitable Trust as described in
subparagraph 8(c), irrespective of any action (or non-action) by the Board of
Directors.
(e) Notice of Restricted Transfer. Any Person who
acquires or attempts to acquire shares of Series A Preferred Stock in violation
of subparagraph 8(b) of this Section 8, or any Person who is a Purported
Transferee, shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
Transfer or attempted Transfer on the Corporation's status as a REIT.
(f) Owners Required To Provide Information. From the
Initial Date and prior to the Restriction Termination Date each Person who is a
beneficial owner or
13
Beneficial Owner or Constructive Owner of Series A Preferred Stock and each
Person (including the stockholder of record) who is holding Series A Preferred
Stock for a Beneficial Owner or Constructive Owner shall provide to the
Corporation such information that the Corporation may request, in good faith, in
order to determine the Corporation's status as a REIT.
(g) Remedies Not Limited. Nothing contained in this
Section 8 shall limit the authority of the Board of Directors to take such other
action as it deems necessary or advisable to protect the Corporation and the
interests of its stockholders by preservation of the Corporation's status as a
REIT.
(h) Ambiguity. In the case of an ambiguity in the
application of any of the provisions of subparagraph 8 of this Section 8,
including any definition contained in subparagraph 8(a), the Board of Directors
shall have the power to determine the application of the provisions of this
subparagraph 8 with respect to any situation based on the facts known to it.
(i) Modification of Ownership Limit. Subject to the
limitations provided in subparagraph 8(j), the Board of Directors may from time
to time increase the Ownership Limit and shall file Articles Supplementary with
the State Department of Assessment and Taxation of Maryland to evidence such
increase.
(j) Limitations on Modifications.
(i) From the Initial Date and prior to the
Restriction Termination Date, the Ownership Limit may not be increased if, after
giving effect to such increase, five Persons who are Beneficial Owners of Series
A Preferred Stock could (taking into account the Ownership Limit) Beneficially
Own, in the aggregate, more than 49.5% of the outstanding Series A Preferred
Stock.
(ii) Prior to the modification of any Ownership Limit
pursuant to subparagraph 8(i) of this Section 8, the Board of Directors of the
Corporation may require such opinions of counsel, affidavits, undertakings or
agreements as it may deem necessary or advisable in order to determine or ensure
the Corporation's status as a REIT.
(k) Exceptions.
(i) The Board of Directors, in its sole discretion,
may exempt a Person from the Ownership Limit, if such Person is not an
individual for purposes of Section 542(a)(2) of the Code and the Board of
Directors obtains such representations and undertakings from such Person as are
reasonably necessary to ascertain that no individual's Beneficial Ownership of
such shares of Series A Preferred Stock will violate the Ownership Limit, and
agrees that any violation of such representations or undertaking (or other
action which is contrary to the restrictions contained in this subparagraph 8 of
this Section 8) or attempted violation will result in such shares of Series A
Preferred Stock automatically being transferred to the Charitable Trust.
(ii) Prior to granting any exception pursuant to
subparagraph 8(k)(i) of this Section 8, the Board of Directors may require a
ruling from the IRS, or an opinion of counsel, in either case in form and
substance satisfactory to the Board of Directors in its sole
14
discretion, as it may deem necessary or advisable in order to determine or
ensure the Corporation's status as a REIT.
(l) Legend. Each certificate for shares of Series A
Preferred Stock shall bear legends substantially to the effect of the following:
"The Corporation is authorized to issue two classes of capital
stock which are designated as Common Stock and Preferred Stock. The Board of
Directors is authorized to determine the preferences, limitations and relative
rights of the Preferred Stock before the issuance of any Preferred Stock. The
Corporation will furnish, without charge, to any stockholder making a written
request therefor, a copy of the Corporation's charter and a written statement of
the designations, relative rights, preferences and limitations applicable to
each such class of stock. Requests for the Corporation's charter and such
written statement may be directed to Cedar Shopping Centers, Inc., 44 South
Bayles Avenue, Port Washington, New York 11050, Attention: Secretary.
The shares of Series A Preferred Stock represented by this
certificate are subject to restrictions on ownership and Transfer for the
purpose of the Corporation's maintenance of its status as a Real Estate
Investment Trust under the Code. No Person may Beneficially Own shares of Series
A Preferred Stock in excess of 9.9% (or such greater percentage as may be
determined by the Board of Directors of the Corporation) of the outstanding
Series A Preferred Stock of the Corporation with certain exceptions set forth in
the Corporation's charter. Any Person who attempts to Beneficially Own shares of
Series A Preferred Stock in excess of the above limitations must immediately
notify the Corporation. All capitalized terms in this legend have the meanings
defined in the Corporation's charter. Transfers in violation of the restrictions
described above may be void ab initio.
In addition, upon the occurrence of certain events, if the
restrictions on ownership are violated, the shares of Series A Preferred Stock
represented hereby may be automatically exchanged for Trust Shares which will be
held in trust by the Corporation. The Corporation has an option to acquire Trust
Shares under certain circumstances. The Corporation will furnish to the holder
hereof upon request and without charge a complete written statement of the terms
and conditions of the Trust Shares. Requests for such statement may be directed
to Cedar Shopping Centers, Inc., 44 South Bayles Avenue, Port Washington, New
York 11050, Attention: Secretary."
(m) Severability. If any provision of this Section 8
or any application of any such provision is determined to be invalid by any
Federal or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
(9) Status. Upon any redemption of shares of Series A
Preferred Stock, the shares of Series A Preferred Stock which are redeemed will
be reclassified as authorized and unissued shares of Preferred Stock, and the
number of shares of Series A Preferred Stock which the Corporation has the
authority to issue will be decreased by the redemption of shares of Series
15
A Preferred Stock, so that the shares of Series A Preferred Stock which were
redeemed may not be reissued.
(10) Exclusion of Other Rights. The shares of Series A
Preferred Stock shall not have any preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption other than those
specifically set forth in these Articles Supplementary. The shares of Series A
Preferred Stock shall have no preemptive or subscription rights.
(11) Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
(12) Severability of Provisions. If any preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption of the Series A Preferred Stock set forth in the Charter is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of Series A Preferred Stock set forth in
the Charter which can be given effect without the invalid, unlawful or
unenforceable provision thereof shall, nevertheless, remain in full force and
effect, and no preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of Series A Preferred Stock herein set
forth shall be deemed dependent upon any other provision thereof unless so
expressed therein.
SECOND : The Shares 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 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 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.
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IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and attested to by its Secretary on this 26th of July, 2004.
ATTEST: CEDAR SHOPPING CENTERS, INC.
/s/ STUART H. WIDOWSKI /s/ LEO S. ULLMAN
- ----------------------------- -----------------------------
Stuart H. Widowski, Secretary Leo S. Ullman, President
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