1
EXHIBIT 3.2
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
10/2/97 AT 2:56 p.m.
-------- -----
RGPT TRUST
ARTICLES SUPPLEMENTARY
Classifying 1,400,000 Preferred Shares of
Beneficial Interest as
SERIES A CONVERTIBLE PREFERRED
OF BENEFICIAL INTEREST
RGPT TRUST, a Maryland real estate investment trust ("Trust") formed under
Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland ("Title 8"), hereby certifies to the Maryland State Department of
Assessments and Taxation ("Department") that:
FIRST: Pursuant to the authority expressly conferred upon the Board of
Trustees by Article VI of its Declaration of Trust (the "Declaration of Trust")
in accordance with Section 8-203 of Title 8, the Board of Trustees by unanimous
written consent in lieu of meeting as permitted by the Bylaws of the Trust duly
adopted resolutions classifying 1,400,000 authorized but unissued Preferred
Shares of the Trust, par value $.01 per share, as a separate series of Preferred
Shares to be known as "Series A Convertible Preferred Shares," setting the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption of the Series A Convertible Preferred Shares, as
set forth in Article Second of these Articles Supplementary, and authorizing the
issuance of up to 1,400,000 Series A Convertible Preferred Shares.
SECOND: The Series of Preferred Shares of the Trust created by the
resolutions duly adopted by the Board of Trustees of the Trust and referred to
in Article FIRST of these Articles Supplementary shall have the following
designation, number of shares, preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption:
Section 1. DESIGNATION, AMOUNT AND PRICE.
A series of Preferred Shares designated as "Series A Convertible Preferred
Shares" (the "Series A Convertible Preferred Shares"_ is hereby established.
The number of Series A Convertible Preferred Shares shall be 1,400,000.
2
Section 2. MATURITY DATE.
The date on which all Series A Convertible Preferred Shares will be
converted into common shares of beneficial interest of the Trust, par value
$.01 per share ("Common Shares"), by the Trust as provided in Section 6 of
these Articles Supplementary shall be the fifth anniversary of the date on which
shares of Series A Convertible Preferred Shares are first issued to the holders
thereof (the "Stated Maturity Date"), subject to earlier conversion as set
forth in Section 6 and subject to Section 8 of these Articles Supplementary
establishing a date on which all Series A Convertible Preferred Shares will be
redeemed in cash by the Trust (the "Accelerated Maturity Date").
Section 3. DIVIDENDS AND DISTRIBUTIONS.
(a) From and after the date of issuance, holders of Series A Convertible
Preferred Shares will be entitled to receive, when, as and if declared by the
Board of Trustees out of funds legally available for the payment of dividends,
cumulative quarterly cash dividends (rounded to the nearest whole cent, and if
no nearest whole cent, then rounded up to the nearest whole cent) equal to the
greater of (i) 2.40% of $25.00 per share (such $25.00, the "Stated Value"), and
(ii) the Common Shares Dividend Amount payable in arrears on the third Tuesday
of January, April, July and October of each year, commencing on the first such
day after the issuance of a Series A Convertible Preferred Share (each a
"Dividend Payment Date"). The "Common Shares Dividend Amount" applicable as of
any Dividend Payment Date shall mean the amount which is the product of (i) the
dollar amount of the dividend paid per Common Share on the dividend payment
date with respect to the Common Shares which occurs on such Dividend Payment
Date or is the dividend payment date with respect to the Common Shares next
preceding such Dividend Payment Date and (ii) the number of Common Shares into
which each Series A Convertible Preferred Share is entitled to be converted, at
the Conversion Price then in effect and otherwise as set forth in these
Articles Supplementary, as of the record date established for such Dividend
Payment Date (determined, for purposes of this computation, to the fifth
decimal place). Such dividends will accrue daily on the basis of a 365/366 day
year and actual days elapsed, and will, to the extent not paid in full on a
Dividend Payment Date, compound quarterly at a rate of 2.40% per quarter
(commencing on the last day of the month next preceding a Dividend Payment
Date), whether or not the Trust has earnings or surplus. The dividend under
Section 3(a) or 3(b), or both, of these Articles Supplementary payable to a
holder of a Series A Convertible Preferred Share on the first Dividend Payment
Date after the share is issued will be the accrued dividend calculated from the
day the share is issued to such Dividend Payment Date. If any Dividend Payment
Date is not a Business Day, the dividend due on that Dividend Payment Date will
be paid on the Business Day immediately succeeding that Dividend Payment Date.
No payment of quarterly dividends with respect to the Common Shares shall be
made on a date other than Dividend Payment Date or a date not more than five
Business Days prior to a Dividend Payment Date. As used with regard to the
Series A Convertible Preferred Shares, the term "Business Day" means a day on
which both state and federally chartered banks in New York, New York are
required to be open for general banking business, and all accrued and
compounded dividends together with all accrued but not yet due dividends
(whether or not authorized) are referred to as "Accrued Dividends".
2
3
(b) From and after the date of issuance, holders of Series A
Convertible Preferred Shares will be entitled to receive, when, as and if
declared by the Board of Trustees out of funds legally available for the
payment of dividends, in addition to dividends as set forth in Section 3(a),
cumulative quarterly cash dividends (rounded to the nearest whole cent, and if
no nearest whole cent, then rounded up to the nearest whole cent) equal to
0.74171% of Stated Value, payable in arrears on any Dividend Payment Date other
than a Dividend Payment Date on which payment is not required to be made as
provided in this Section 3(b). Such dividends will accrue daily on the basis
of a 365/366 day year and actual days elapsed, and will, to the extent not paid
in full on a Dividend Payment Date, compound quarterly at a rate of 3.14171%
per quarter (commencing on the last day of the month next preceding a Dividend
Payment Date), whether or not the Trust has earnings or surplus.
Notwithstanding the foregoing, dividends which holders of Series A
Convertible Preferred Shares are entitled to receive as set forth in this
Section 3(b) will not be payable as to Series A Convertible Preferred Shares
except as set forth below, but will accrue and compound as set forth above, and
shall be included in Accrued Dividends, on each Dividend Payment Date.
(1) On and after the occurrence of a Rate Event, holders of Series A
Convertible Preferred Shares will be entitled to receive quarterly
cash dividends as set forth in this Section 3(b) on each Dividend
Payment Date, except to the extent of such dividends as shall have
previously been included in Accrued Dividends prior to the occurrence
of a Rate Event (such portion of Accrued Dividends the "Section 3(b)
Suspended Dividends").
(2) On and after the occurrence of a Rate Event, Section 3(b) Suspended
Dividends will be payable as to each Series A Convertible Preferred
Share on the earlier of (i) the Accelerated Maturity Date, and (ii)
the Stated Maturity Date, in cash, or may, in the event of conversion
at the Stated Maturity Date, at the election of the Trust, be added to
Accrued Dividends to determine the aggregate amount of Stated Value
and the per share amount of Accrued Dividends for purposes of
conversion. Upon conversion after the occurrence of a Rate Event and
prior to the Stated Maturity Date, Section 3(b) Suspended Dividends
will be added to Accrued Dividends to determine for each outstanding
Series A Convertible Preferred Share the aggregate of Stated Value and
the per share amount of Accrued Dividends for purposes of conversion;
provided, however, that at the election of the Company, upon
conversion after the occurrence of a Rate Event and prior to the
Stated Maturity Date, the amount of Section 3(b) Suspended Dividends
included in Accrued Dividends may be paid in cash at the effective
time of conversion in lieu of being included in Accrued Dividends for
purposes of conversion.
(3) On and after the occurrence of a Rate Event, Section 3(b) Suspended
Dividends will be payable (and for purposes of interpretation, will
not be included in Accrued Dividends at the time of application or
payment of Accrued Dividends prior to the occurrence of a Rate Event)
(i) as to each Series A Convertible
3
4
Preferred Share (determined at the time of printing of the
initial preliminary or "red herring" prospectus in connection with
the Qualified Underwritten Offering, but as at a time immediately
before conversion), on the Mandatory Conversion Date (as defined in
Section 6(b) which occurs by reason of the Qualified Underwritten
Offering, but only to the extent of the amount of the Per Share IRR
Lookback Amount (defined below), and shall be paid in cash or may,
upon conversion at the election of the Trust, be added to Accrued
Dividends to determine the aggregate amount of Stated Value and the
per share amount of Accrued Dividends for purposes of conversion, and
(ii) as to each Series A Convertible Preferred Share at the time of
payment of any liquidation preference. As used herein, the "Per Share
IRR Lookback Amount" shall be the IRR Lookback Amount (as defined
below) divided by the number of Series A Convertible Preferred Shares
outstanding on the date of such determination. As used herein, the
"IRR Lookback Amount" shall mean, as of the date of such
determination, an amount payable to all holders of Series A
Convertible Preferred Shares which is sufficient for the holders,
considered in the aggregate, to receive an IRR (as defined below)
equal to 3.55581% per calendar quarter, compounded quarterly, over the
period from September 30, 1997 to said Mandatory Conversion Date. As
used herein, "IRR" shall mean, as of said Mandatory Conversion Date,
a rate equal to a compounded quarterly rate which results in (a) the
sum of all (1) dividends paid on Series A Convertible Preferred Shares
outstanding on the date of such determination, (2) distributions paid
on such number of Preferred Units (defined below) which is equal to
the number of Series A Convertible Preferred Shares outstanding on the
date of such determination), and (3) Assumed Common Shares Sales
Proceeds (defined below), discounted on a quarterly basis at such
rate from the Mandatory Conversion Date back to the day on which such
amounts were paid, or, in the case of Assumed Common Shares Sales
Proceeds, assumed received as at the Mandatory Conversion Date, minus
(b) the sum of all amounts paid as "Purchase Price" under that certain
Preferred Units and Stock Purchase Agreement dated as of September 30,
1997, among Ramco-Gershenson Properties, L.P., Ramco-Gershenson
Properties Trust, Special Situations RG REIT, Inc., and the Advancing
Party named therein (as the same may be amended or supplemented, the
"Purchase Agreement"), discounted on a quarterly basis at such rate
from said Mandatory Conversion Date to the date or dates on which such
amounts of Purchase Price were paid, being equal to zero. As used
herein, "Assumed Common Shares Sales Proceeds" means the sale, at the
Current Market Price (as defined in Section 6(e) (vii)), determined on
the date of printing of the initial preliminary or "red herring"
prospectus in connection with the Qualified Underwritten Offering, of
that number of Common Shares into which all outstanding Series A
Convertible Preferred Shares are, as provided herein, convertible if
converted on such date of determination. As used herein, "Preferred
Units" shall mean the Preferred Units of the Operating Partnerships,
as each of such terms is defined in the Purchase Agreement.
As used with regard to the Series A Convertible Preferred Shares, the
term "Rate Event" means each of the following events: (i) the Trust
shall fail to pay in full when due any
4
5
dividend on the Series A Convertible Preferred Shares; (ii) the Trust
shall (A) fail to pay in full when due any principal, premium or interest with
respect to any Indebtedness (defined below) having an outstanding aggregate
principal amount in excess of $15,000,000 (but excluding, for purposes of this
clause (ii)(A), Indebtedness which is without recourse to any Person and the
sole remedy of the lender thereof is the enforcement of a mortgage lien on real
estate, if the amount secured by such lien is in excess of the fair market
value of the real estate so encumbered (with fair market value being determined
without regard to the amount secured by the mortgage lien so to be enforced or
as to any other obligations or Indebtedness encumbering or enabling the holders
thereof to make a claim against such real estate to the extent that such other
obligations or Indebtedness are not secured by a mortgage lien which is senior
and prior to the lien so to be enforced), (B) allow such Indebtedness
(excluding as aforesaid) to be declared due and payable, or to be required to
be repaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof, or (C) fail to observe or perform any agreement or
condition relating to such Indebtedness, or contained in any instrument or
agreement evidencing, securing or relating thereto, and such failure shall
continue beyond any applicable grace period such that it could reasonably be
expected to have a material adverse effect on the financial condition, results
of operations or business of the Trust, together with Ramco-Gershenson
Properties, L.P. (together with any successor thereto, the "Operating
Partnership") and any other Subsidiary (as used herein, "Subsidiary" shall mean
any entity and "Subsidiaries" shall mean more than one of the entities in which
the Trust has a direct or indirect equity interest) taken as a whole; (iii)
there shall have occurred an IRS Termination Determination (as defined in
Section 4(c) below) and the Trust does not receive (within 90 days of the date
established in the IRS Termination Determination as the date on which the
Deficiency Dividend (as defined in Section 3(g) hereof) is required to be
paid), pursuant to the Tax Agreement, full payment by way of indemnity for any
amount paid or to be paid as a Deficiency Dividend; (iv) there shall have not
occurred prior to the Stated Maturity Date an underwritten, Widely Distributed
(defined below) offering of Common Shares, the gross proceeds of which are not
less than $40,300,000 (a "Qualified Underwritten Offering"); (v) the Trust
shall use the proceeds of the sale of the Series A Convertible Preferred Shares
(or the proceeds of the sale of the Preferred Units pursuant to the Purchase
Agreement) other than for the repayment of the principal amount of Indebtedness
or to meet its operating objectives in purchasing or redeveloping retail
properties of the nature operated by Ramco-Gershenson Properties Trust on
September 30, 1997; (vi) there shall occur any event which, under Section 4 of
these Articles Supplementary, requires the approval of holders of Series A
Convertible Preferred Shares, without such approval having been previously
obtained; (vii) there shall have occurred an event as described in Section
4(c)(iv), except as set forth below, regardless of whether or not there shall
have been obtained the approval thereof as established in Section 4 of these
Articles Supplementary; or (viii) neither Dennis Gershenson, nor a replacement
reasonably acceptable to Morgan Stanley Asset Management Inc., shall hold the
office and function in the capacity of president and chief executive officer of
the Trust, other than as a result of the death or a condition of disability
extending for a continuous period of not less than 180 days of Dennis
Gershenson. As used herein, "Widely Distributed" shall mean, in the context of
an underwritten public offering, an offering in which (i) a minimum of 30% of
the Common Shares included in such offering is purchased by retail individual
brokerage customers brought into the transaction by the members of the
underwriting syndicate and (ii) a minimum of eight institutions shall have
purchased Common Shares. With respect to a Rate Event of the nature set forth
in clause (vii)
5
6
of this paragraph, such event shall not result in an increase in dividends as
provided in Section 3(b) with respect to the holder of Series A Convertible
Preferred Shares if and to the extent such holder shall have voted such Series
A Convertible Preferred Shares affirmatively for a matter set forth in the
definition of "Change of Control" set forth below. As used herein,
"Indebtedness" shall mean all obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, but without any double counting, including in any
event and whether or not so classified: (a) all debt and similar monetary
obligations, whether direct or indirect; (b) all liabilities secured by any
Lien on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
endorsements and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to supply funds to
or in any manner to invest directly or indirectly in a Person, to purchase
indebtedness, or to assure the owner of indebtedness against loss through an
agreement to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligation to reimburse the issuer in respect of any letter of credit.
As used herein, "Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, security interest, lien
(statutory or other) or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
capitalized lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of any of the
foregoing). As used herein, "Person" shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government or other entity of whatever nature.
(c) Each dividend will be payable to holders of record of the Series A
Convertible Preferred Shares on a date (a "Record Date") selected by the Board
of Trustees which is not less than 10 nor more than 45 days before the Dividend
Payment Date on which the dividend is to be paid. No Record Date will precede
the close of business on the date the Record Date is fixed.
(d) Unless and until all Accrued Dividends on the Series A Convertible
Preferred Shares under Section 3(a) through the last preceding Dividend Payment
Date have been paid, and unless and until all Accrued Dividends on the Series A
Convertible Preferred Shares under Section 3(b) (but excluding Section 3(b)
Suspended Dividends, which shall be paid only as provided in subparagraphs (2)
and (3) of the second paragraph of Section 3(b) through the last Dividend
Payment Date have been paid, the Trust may not (i) declare or pay any dividend,
make any distribution (other than a distribution payable solely in Common
Shares), or set aside any funds or assets for payment or distribution with
regard to any Junior Shares (as herein defined), (ii) redeem for purchase
(directly or through the Operating Partnership or subsidiaries), or set aside
any funds or other assets for the redemption or purchase of, any Junior Shares
or (iii) authorize, take or cause or permit to be taken any action as general
partner of the
6
7
Operating Partnership, that will result in (A) the declaration or payment by
the Operating Partnership of any distribution to its partners (other than
distributions payable to the Trust as general partner that will be used by the
Trust to fund the payment of dividends on the Series A Convertible Preferred
Shares (such distributions to the Trust being referred to as "Authorized GP
Distributions")), or set aside any funds or assets for payment of any
distributions (other than Authorized GP Distributions) or (B) the redemption or
purchase (directly or through the Operating Partnership or subsidiaries), or
the setting aside of any funds or other assets for the redemption or purchase
of, any partnership interests in the Operating Partnership, except for
exchanges of partnership interests in the Operating Partnership in the ordinary
course solely for Common Shares as a result of which the Trust's partnership
interest in the Operating Partnership increases by the amount of such
partnership interest so exchanged. As used with regard to the Series A
Convertible Preferred Shares, the term "Junior Shares" means all Common Shares
and all shares of all other classes or series of the Trust to which the Series
A Convertible Preferred Shares are prior in rank with regard to payment of
dividends or payments upon the liquidation, dissolution or winding-up of the
Trust.
(e) While any Series A Convertible Preferred Shares are outstanding,
the Trust may not pay any dividend, or set aside any funds for the payment of a
dividend, with regard to any shares of any class or series of the Trust which
ranks on a parity with Series A Convertible Preferred Shares as to payment of
dividends unless at least a proportionate payments is made with regard to all
Accrued Dividends on the Series A Convertible Preferred Shares (except that
portion of Accrued Dividends which, as Section 3(b) Suspended Dividends, are
required to be paid only upon the Stated Maturity Date, the Accelerated
Maturity Date, or, as to any Series A Convertible Preferred Shares as to which
a notice of conversion has been furnished by the holder thereof, at the
effective time of conversion). A payment of dividends with regard to the Series
A Convertible Preferred Shares will be proportionate to a payment of a dividend
with regard to another class of series of shares if the dividend per Series A
Convertible Preferred Share is the same percentage of the Accrued Dividends
(except as aforesaid) with regard to a Series A Convertible Preferred Share
that the dividend paid with regard to shares of the other class or series is of
the Accrued Dividends (except as aforesaid) with regard to a share of stock of
that other class of series.
(f) Any dividend paid with regard to Series A Convertible Preferred
Shares will be paid equally with regard to each outstanding Series A
Convertible Preferred Share, except to the extent that the Series A Convertible
Preferred Shares are outstanding for differing amounts of time during the
relevant dividend period.
(g) Except as provided below in this Section 3(g) to the contrary, to
the extent that Federal income tax for the Trust's taxable years ending
December 31, 1991, 1992, 1993 and 1994 may be avoided by the declaration and
distribution of a deficiency dividend as provided in Section 860 of the Code (a
"Deficiency Dividend"), the Trust, if, but only if, the Trust has received all
funds required therefor from Atlantic Realty Trust under the Tax Agreement
(defined below), may distributed such Deficiency Dividend to holders of record
of Common Shares at a record date established in connection therewith, whether
or not all or any Accrued Dividends have been paid on the Series A Convertible
Preferred Shares, and any such distribution of a Deficiency Dividend to holders
of Common Shares shall be disregarded in, and
7
8
any such Deficiency Dividend shall be excluded from, the determination of the
Common Shares Dividend Amount. In the event the Trust determines to make a
distribution of a Deficiency Dividend not all of the funds for which (together
with all of the funds for any previous Deficiency Dividend) have theretofore
been paid to the Trust under the Tax Agreement, then any such Deficiency
Dividend amounts may be paid only in the following order of priority:
first, in the payment of all Accrued Dividends then due,
second, in the payment equally with regard to the holders of
record of Series A Convertible Preferred Shares and the Common
Shares at a record date established in connection
therewith, with the amount so payable with respect to each
Series A Convertible Preferred Share being determined in
accordance with the procedures established with respect to the
Common Shares Dividend Amount.
Section 4. VOTING RIGHTS.
The voting rights of the holders of Series A Convertible Preferred
Shares will be only the following:
(a) The holders of Series A Convertible Preferred Shares will have
the right to vote on all matters in which the holders of Common Shares are
entitled to vote on an "as converted" basis with holders of the Common Shares,
as though part of the same class as holders of Common Shares, with such number
of Common Shares deemed held of record by a holders of Series A Convertible
Preferred Shares on any Record Date as would be the number of Common Shares
into which the Series A Convertible Preferred Shares by such holder would be
entitled to be converted on such Record Date. The holders of Series A
Convertible Preferred Shares shall receive all notices of meetings of the
holders of shares Common Shares, and all other notices and correspondences to
the holders of Common Shares provided by the Trust and shall be entitled to take
such actions, and shall have such rights, as are accorded the holders of Common
Shares in the Declaration of Trust and in the by-laws of the Corporation as are
in effect on the date hereof, in each case with the same effect as would be
taken by holders of such number of Common Shares as determined as aforesaid.
(b) While any Series A Convertible Preferred Shares are
outstanding, the Trust will not, directly or indirectly, including through a
merger or consolidation with any other corporation or otherwise, without
approval of holders of at least 51% of the outstanding Series A Convertible
Preferred Shares, voting separately as a class, (i) issue any Series A
Convertible Preferred Shares except pursuant to the Purchase Agreement or
increase the number of authorized shares of Series A Convertible Preferred
Shares, (ii) combine, split or reclassify the outstanding shares of Series A
Convertible Shares into a smaller or larger number of shares; (iii) exchange or
convert any Series A Convertible Preferred Shares for other securities or the
right to receive cash, or to propose or require an exchange or conversion, or to
require a conversion other than as expressly provided hereby, or to reclassify
any Series A Convertible Preferred Shares, or to authorize, create, classify,
reclassify or issue any class or series of stock ranking prior to or on a parity
with the Series A Convertible Preferred Shares either as to dividends or upon
liquidation, dissolution or winding-up of the Trust, (iv) amend, alter or
8
9
repeal, or permit to be amended, altered or repealed, any of the provisions of
these Articles Supplementary, the By-laws of the Trust, the agreement of
limited partnership of the Operating Partnership or the organizational document
of any Subsidiary in such a manner as would affect adversely the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption of the Series A Convertible Preferred Shares (including, without
limitation, taking any such action the result of which could be to alter the
manner or rate of exchange of partnership interests in the Operating Partnership
for securities of Ramco-Gershenson Properties Trust, a Massachusetts business
trust, as in effect on September 30, 1997) or, in the case of a proposed
amendment to the agreement of limited partnership of the Operating
Partnership, or any organizational document of any Subsidiary, in such a manner
as would affect adversely the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions, and
qualifications of the holders of the Common Shares and the Series A Convertible
Preferred Shares, considered as a whole; (v) permit to be amended or waive any
provision of that certain Tax Agreement dated May 10, 1996 between the Trust
and Atlantic Realty Trust (the "Tax Agreement"); or (vi) other than a result of
a Trustee Election (defined below) adopt a plan for or effect a voluntary
liquidation, dissolution or winding up of the Trust, the sale of substantially
all of the assets of the Trust, or the merger, consolidation or
recapitalization of the Trust. As used herein, "Trustee Election" shall mean
an election by the Trustees to liquidate the Operating Partnership and the Trust
as provided in Section 12.7 of the Amended and Restated Master Agreement, dated
as of December 27, 1995 by and among Ramco-Gershenson, Inc., Dennis
Gershenson, Joel Gershenson, Bruce Gershenson, Richard Gershenson, Michael A.
Ward, Michael A. Ward U/T/A dated 2/22/77 as amended, Ramco-Gershenson
Properties,L.P. and each of the Ramco Contributing Parties set forth on
schedule A thereto.
(c) While any Series A Convertible Preferred Shares are outstanding,
the Trust will not, directly or indirectly, including through a merger or
consolidation with any other corporation or otherwise, without the approval of
the holders of 51% of the outstanding the Series A Convertible Preferred
Shares, voting separately as a class, propose, authorize, take, or cause to be
taken or allow to occur any of the following actions: (1) with the exception
of (A) the public market trading of Common Shares in unsolicited transactions
or (B) a Qualified Underwritten Offering, the sale, transfer or assignment, in
a single transaction or series of transactions, of beneficial interests in or
voting rights with respect to assets of the Trust or the Operating Partnership
or any Subsidiary, or any other person (except that with respect to any
subsidiary in which the Trust or the Operating Partnership has a minority
interest such that a sale, transfer or assignment is not within the Trust's or
Operating Partnership's control, this prohibition shall not apply), owned
directly or indirectly by the Trust to the extent of the Trust's attributed
interest in such other person, having a fair market value (based on the value
of the total consideration of each such transaction, including, without
limitation, any debt assumed by any purchaser in connection therewith) in
excess of $50,000,000 within any 90-day period or $150,000,000 within any
360-day period, (ii) the Trust's termination of the election, or the taking of
any action by the Trust which would cause termination other than by election,
of the Trust as a real estate investment trust under the Internal Revenue Code
of 1986, as amended, other than a determination by the Internal Revenue Service
that it will for any period deny the Company the tax benefits associated with
the election as a real estate investment trust due solely
9
10
and directly to the Tax Case (an "IRS Termination Determination"); (iii) any
alteration in the Trust's or the Operating Partnership's business such that the
real estate assets owned directly or indirectly by the Trust are, on a square
foot basis, less than 90% invested in retail properties of the nature of the
predominant real estate assets of the Trust the on date hereof; or (iv) any
Change in Control (as defined below) of the Trust or the Operating Partnership,
or any response to a proposal the effect of which, if consummated, could be a
Change of Control. As used herein, "Tax Case" shall mean the Internal Revenue
Service's tax investigation dealing with the Trust's tax status, as described
in the Trust's SEC Reports to the extent the Trust has incurred or will incur,
directly or indirectly, voluntarily or involuntarily, any liability for which
it is entitled to be reimbursed under the Tax Agreement. As used herein "SEC
Reports" shall mean each registration statement, report, proxy statement or
information statement and all exhibits thereto prepared by the Trust or
relating to its properties filed with the Securities and Exchange Commission.
As used herein, a "Change of Control" of the Trust or the Operating
Partnership shall be deemed to have occurred if any of the following occur (or,
in the case of any proposal, if any of the following could occur as a result
thereof): (i) the Trust takes or fails to take any action such that it ceases
to be required to file reports under Section 13 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any successor to that Section;
(ii) any "person" (as defined in Sections 13(d) and 14(d) of the Exchange Act)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of either (a) 25% or more of the outstanding
Common Shares, or (b) 25% (by right to vote or grant or withhold any approval)
of the outstanding securities of any other class or classes which individually
or together have the power to elect a majority of the members of the Board of
Trustees of the Trust (the "Board"); (ii) the Board determines to recommend, or
fails to determine to recommend, the acceptance of any proposal set forth in a
tender offer statement or proxy statement filed by any person with the
Securities and Exchange Commission which indicates the intention on the part of
that person to acquire, or acceptance of which would otherwise have the effect
of that person acquiring, either (a) 25% or more of the outstanding the Common
Shares, or (b) 25% (by right to vote or grant or withhold any approval) of the
outstanding securities of any other class or classes which individually or
together have the power to elect a majority of the members of the Board; (iv)
other than as a result of the death or disability of one or more of the
directors within a three-month period, a majority of the members of the Board
for any period of three consecutive months are not persons who (a) had been
directors of the Trust for at least the preceding 24 consecutive months or (b)
when they initially were elected to the Board, (x) were nominated (if they
were elected by the shareholders) or elected (if they were elected by the
directors) with the affirmative concurrence of 66-2/3% of the directors who
were Continuing Directors at the time of the nomination or election by the
Board and (y) were not elected as a result of an actual or threatened
solicitation of proxies or consents by a person other than the Board or an
agreement intended to avoid or settle such a proxy solicitation (the directors
described in clauses(a) and (b) of this subsection (iv) being "Continuing
Directors"); (v) the Trust ceases to be the sole General Partner of the
Operating Partnership or grants or sells to any person the power to control or
direct the actions of the Operating Partnership as if such person (A) is a
general partner of the Operating Partnership or (B) is a limited partner of the
Operating Partnership with consent or approval rights greater than the consent
or approval right held by the limited partners of the Operating Partnership on
the
10
11
date hereof; or (vi) the Operating Partnership is a party to any entity
conversion or any merger or consolidation in which the Operating Partnership is
not surviving entity in such merger or consolidation or in which the effect is
of the nature set forth in the next preceding clause (v) of this Section 4(c).
(d) Prior to the occurrence after the date hereof a Qualified
Underwritten Offering, the Trust will not, directly or indirectly, without the
approval of the holders of 51% of the outstanding Series A Convertible Preferred
Shares, voting separately as a class, issue any additional Common Shares or
Preferred Shares of the Trust. Notwithstanding the foregoing, the Trust will
be permitted to issue Common Shares as part of an acquisition, or as follows:
(i) issuances of Common Shares to officers, employees or trustees of the Trust
not in excess of that number of shares permitted to be issued pursuant to the
1996 Stock Option Plan and the 1997 Non-Employee Trustee Option Plan, as each
such plan is in effect as at September 30, 1997; (ii) issuances of Common
Shares pursuant to any dividend reinvestment plan maintained by the Trust; and
(iii) issuances of Common Shares with respect to exchanges of partnership
interests in the Operating Partnership in the ordinary course solely for Common
Shares as a result of which the Trust's partnership interest in the Operating
Partnership increases by the amount of such partnership interest so exchanged.
Section 5. LIQUIDATION.
Upon the liquidation, dissolution or winding-up of the Trust, whether
voluntary or involuntary, the holders of the Series A Convertible Preferred
Shares, will be entitled to receive out of the assets of the Trust available
for distribution to its shareholders, whether from capital, surplus or
earnings, before any distributions made to holders of any Junior Shares, an
amount per share (the "Liquidation Preference") equal to the sum of (i) Stated
Value plus (ii) the per share amount of Accrued Dividends with regard to the
Series A Convertible Preferred Shares to the date of final distribution
(whether or not declared). If, upon any liquidation, dissolution or winding-up
of the Trust, the assets of the Trust, or proceeds of those assets, available
for distribution to the holders of Series A Convertible Preferred Shares and of
shares of all other classes or series which are on a parity as to distributions
on liquidation with the Series A Convertible Preferred Shares are not
sufficient to pay in full the Liquidation Preference to the holders of the
Series A Convertible Preferred Shares and any liquidation preference of all
other classes or series which are on a parity as to distributions on
liquidation with the Series A Convertible Preferred Shares, then the assets, or
the proceeds of those assets, which are available for distribution to the
holders of Series A Convertible Preferred Shares and of the shares of all other
classes or series which are on a parity as to distributions on liquidation with
the Series A Convertible Preferred Shares ratably in accordance with the
respective amounts of the liquidation preferences of the share held by each of
them. After payment of the full amount of the Liquidation Preference, the
holders of Series A Convertible Preferred Shares will not be entitled to any
further distribution of assets of the Trust. For the purposes of this Section,
neither a consolidation or merger of the Trust with
11
12
another corporation, nor a sale or transfer of all or any part of the Trust's
assets for cash or securities, will be considered a liquidation, dissolution or
winding-up of the Trust.
Section 6. Conversion Into Common Shares.
(a) Optional Conversion. (i) Each holder of Series A Convertible
Preferred Shares will have the right, at the holder's option, exercised by
notice to such effect (the "Notice of Election to Convert"), to convert all or
any of the Series A Convertible Preferred Shares held of record by the holder
into Common Shares, such that each Series A Convertible Preferred Share will be
entitled to be converted into (A) a number of fully paid and non-assessable
Common Shares (calculated as to each conversion to the nearest 1/100th of a
share) equal to Stated Value plus the amount, if any, of the per share amount of
Accrued Dividends (subject, to the extent of Section 3(b) Suspended Dividends,
to the proviso in the last sentence of subparagraph 2 of the second paragraph
of Section 3(b) hereof) as of the effective time of the conversion, divided by
the Conversion Price, as defined below, then in effect, or (B) such other
securities or assets as the holder is entitled to receive in accordance with
Section 6(e).
(ii) The holder of each Series A Convertible Preferred Share to be
converted must surrender the certificate representing that share to the
conversion agent of the Series A Convertible Preferred Shares appointed by the
Trust (which may be the Trust itself), with the notice of Election to Convert
on the back of that certificate duly completed and signed, at the principal
office of the conversion agent. If the shares issuable on conversion are to be
issued in a name other than the name in which the Series A Convertible
Preferred Shares is registered, each share surrendered for conversion must be
accompanied by an instrument of transfer, in form reasonably satisfactory to
the Trust, duly executed by the holder or the holder's duly authorized and by
funds in an amount sufficient to pay any transfer or similar tax which is
required to be paid in connection with the transfer or evidence that such tax
has been paid or is not payable.
(b) Mandatory Conversion. All, but not less than all, outstanding
Series A Convertible Preferred Shares will be subject to conversion on that
date which is the earlier of the occurrence of a Qualified Underwritten
Offering and the Stated Maturity Date (the earlier of such to occur, the
"Mandatory Conversion Date"), subject to the obligation of the Trust to redeem
the Series A Convertible Preferred Shares for cash on an Accelerated Maturity
Date as provided in Section 8, and subject to earlier conversion at the option
of the holders as set forth in this Section 6. Each Series A Convertible
Preferred Share shall be convertible into a Common Share at Stated Value plus
the per share amount of Accrued Dividends, if any (subject, to the extent of
Section 3(b) Suspended Dividends, to the proviso in the last sentence of
subparagraph 2 of the second paragraph of Section 3(b) hereof), for each Series
A Convertible Preferred Share so converted, for Common Shares issued on
conversion priced at the Conversion Price calculated in accordance with
Section 6(e) of these Articles Supplementary. In order to effect the mandatory
conversion of the Series A Convertible Preferred Shares, the Trust shall mail a
notice (the "Notice of Mandatory Conversion") to all holders of outstanding
Series A Convertible Preferred Shares on a date (the "Mandatory Conversion
Notice Date") at least 60 but not more than 90 days prior to the Mandatory
Conversion Date, except that in the case of the Mandatory Conversion Date which
is occasioned by a Qualified Underwritten Offering, the
12
13
Trust may provide the Notice of Mandatory Conversion which references an
expected date of such occurrence provided that the Trust confirms the Mandatory
Conversion Date in a supplemental notice to all holders of Series A Convertible
Preferred Shares immediately upon the occurrence of a Qualified Underwritten
Offering. If the Trust gives a Notice of Mandatory Conversion, the outstanding
Series A Convertible Preferred Shares will be automatically converted into
Common Shares at the close of business on the Mandatory Conversion Date
regardless of whether the holders of Series A Convertible Preferred Shares
actually surrender the certificates representing their Series A Convertible
Preferred Shares for conversion. At the close of business on the Mandatory
Conversion Date, (i) the certificates representing the Series A Convertible
Preferred Shares will cease to represent anything other than the right to
receive the Common Shares into which the Series A Convertible Preferred Shares
were automatically converted and (ii) the Trust may, at its option (the
exercise of which will be described in the Notice of Mandatory Conversion),
either (A) deliver certificates representing the Common Shares to which the
holders of the Series A Convertible Preferred Shares are entitled without
requiring the surrender of the certificates which formerly represented Series A
Convertible Preferred Shares, or (B) deliver certificates representing the
Common Shares when the holder surrenders the certificates which formerly
represented the Series A Convertible Preferred Shares and complies with the
other requirements of subparagraph 6(a)(ii) (excluding the completion of the
Notice of Election to Convert).
(c) Conversion Procedures. (i) The effective time of the conversion
under Section 6(a) shall be immediately prior to the close of business on the
day when all the conditions in Section 6(a)(ii) have been satisfied. The
effective time of the conversion under Section 6(b) shall, subject to the
rights of holders under Section 6(a) and Section 8, be immediately prior to the
close of business on the mandatory Conversion Date.
(ii) If shares are surrendered between the close of business on a
dividend payment Record Date and the opening of business on the corresponding
Dividend Payment Date ("Ex Record Date Shares"), the dividend with respect to
those shares will be payable on the Dividend Payment Date to the holder of
record of the Ex Record Date Shares on the dividend payment Record Date
notwithstanding the surrender of the Ex Record Date Shares for conversion after
the dividend payment Record Date and prior to the Dividend Payment Date. The
Trust will make no payment or adjustment for Accrued Dividends on Ex Record
Date Shares, whether or not in arrears, or for dividends on the Common Shares
issued upon conversion of the Ex Record Date Shares, other than to make payment
to the holder of record thereof on the Record Date. The provisions of this
Section 6(c)(ii) shall not limit the obligation of the Trust to issue Common
Shares in conversion of Series A Convertible Preferred Shares, including Ex
Record Date Shares, at Stated Value plus Accrued Dividends, as elsewhere
provided in these Articles.
(iii) Except as otherwise permitted in clause (ii)(B) of the last
sentence of Section 6(b), as promptly as practicably after the effect time for
conversion of Series A Convertible Preferred Shares, the Trust will issue and
will deliver to the holder at the office of the holder set forth in the Notice
of Election to Convert, or on the holder's written order, a certificate or
certificates representing the number of full Common Shares issuable upon the
13
14
conversion of the Series A Convertible Preferred Shares. Any fractional
interest in respect of a Common Share arising upon a conversion will be settled
as provided in Section 6(d).
(iv) Each conversion will be deemed to have been effected at the
effective time provided in Section 6(c)(i), and the person in whose name a
certificate for Common Shares is to be issued upon a conversion will be deemed
to have become the holder of record of the Common Shares represented by that
certificate at such effective time. All Common Shares delivered upon conversion
of Series A Convertible Preferred Shares will upon delivery be duly and validly
issued and fully paid and nonassessable, free of all liens and charges and not
subject to any preemptive rights except such preemptive rights as may exist
pursuant to the Purchase Agreement. The Series A Convertible Preferred Shares
so converted will no longer be deemed to be outstanding and all rights of the
holder with respect to those shares will immediately terminate, except the
right to receive the Common Shares or, if applicable, other securities, cash or
other assets to be issued or distributed as a result of the conversion.
(d) Fractional Shares. No fractional Common Shares will be issued upon
conversion of Series A Convertible Preferred Shares. Any fractional interest in
a Common Share resulting from conversion of Series A Convertible Preferred
Shares will be paid in cash (computed to the nearest cent) based on the Current
Market Price (as herein defined) of the Common Shares on the Trading Date next
preceding the date of conversion. If more than one Series A Convertible
Preferred Share is surrendered for conversion at substantially the same time by
the same holder, the number of full shares of Common Shares issuable upon the
conversion will be computed on the basis of all the Series A Convertible
Preferred Shares surrendered at that time by that holder.
(e) Conversion Price. The "Conversion Price" per Series A Convertible
Preferred Share will initially be $17.50, and will be adjusted as follows from
time to time if any of the events described below occurs:
(i) If the Trust (A) pays a dividend or makes a distribution on its
Common Shares in its Common Shares or (B) subdivides, splits or reclassified
its outstanding Common Shares into a greater number of shares, the Conversion
Price in effect immediately prior to that event will be reduced so that the
holder of a Series A Convertible Preferred Share surrendered for conversion
after than event will receive the number of Common Shares which the holder
would have received if the Series A Convertible Preferred Shares had been
converted immediately before the happening of the event (or, if there is more
than one such event, if the Series A Convertible Preferred Shares had been
converted immediately before the first of those events and the holder had
retained all the Common Shares or other securities or assets received after the
conversion). If the Trust combines its outstanding Common Shares into a smaller
number of shares, the Conversion Price in effect immediately prior to that
event will be increased so that the holder of a Series A Convertible Preferred
Shares surrendered for conversion after that event will receive the number of
Common Shares which the holder would have received if the Series A Convertible
Preferred Shares had been converted immediately before the happening of the
event (or, if there is more than one such event, if the Series A Convertible
Preferred Shares had been converted immediately before the first of those
events and the holder had retained all the Common Shares or other securities or
assets received after the
14
15
conversion). An adjustment made pursuant to this Section 6(e)(i) will become
effective immediately after the Record Date in the case of a dividend or
distribution, and will become effective immediately after the effective date in
the case of a subdivision, split, reclassification or combination. If such
dividend or distribution is declared but is not paid or made, the Conversion
Price then in effect will be appropriately readjusted. However, a readjustment
of the Conversion Price will not affect any conversion which takes place before
the readjustment.
(ii) If the Trust issues rights or warrants to the holders of its
Common Shares as a class entitling them to subscribe for or purchase Common
Shares at a price per share less than the Conversion Price at the Record Date
for the determination of shareholders entitled to receive the rights or
warrants, the Conversion Price in effect immediately before the issuance of the
rights or warrants will be reduced in accordance with the equation set forth on
Exhibit A hereto, which is hereby incorporated by reference herein. The
adjustment provided in this Section 6(e)9ii) will be made successively whenever
any rights or warrants are issued, and will become effective immediately after
each Record Date. In determining whether any rights or warrants entitle the
holders of the Common Shares to subscribe for or purchase Common Shares at less
than the Conversion Price, and in determining the aggregate sale price of the
Common Shares issuable on the exercise of rights or warrants and any
consideration to be received by the Trust for the exercise of such right or
warrants, there will be taken into account any consideration received by the
Trust for the rights or warrants, with the value of that consideration, if other
than cash, to be determined by the Board of Trustees of the Trust (whose
determination, if made in good faith, will be conclusive). If any rights or
warrants which lead to an adjustment of the Conversion Price expire or terminate
without having been exercised, the Conversion Price then in effect will be
appropriately readjusted. However, a readjustment of the Conversion Price will
not affect any conversion which takes place before the readjustment.
(iii) If the Trust distributes to the holders of its Common Shares as
a class any shares of stock of the Trust (other than Common Shares) or evidences
of indebtedness or assets (other than cash dividends or distributions) or rights
or warrants (other than those referred to in Section 6(e)(ii)) to subscribe of
or purchase any of its securities, then, in each such case, the Conversion Price
will be reduced so that it will equal the price determined by multiplying the
Conversion Price in effect immediately prior to the Record Date for the
distribution by a fraction of which the numerator is the Current Market Price
of the Common shares on the Record Date for the distribution less the then fair
market value (as determined by the Board of Trustees, whose determination, if
made in good faith, will be conclusive) of the stock, evidences of
indebtedness, assets, rights or warrants which are distributed with respect to
one Common Share, and of which the denominator is the Current Market Price of
the Common Shares on that Record Date. Each adjustment will become effective
immediately after the Record Date for the determination of the shareholders
entitled to receive the distribution. If any distribution is declared but not
made, or if rights or warrants expire or terminate without having been
exercised, effective immediately after the decision is made not to make the
distribution or the rights or warrants expire or terminate, the Conversion
Price then in effect will be appropriately readjusted. However, a readjustment
will not affect any conversion which takes place before the readjustment.
15
16
(iv) If the Trust issues or sells (or the Operating Partnership issues
or sells, other than the issuance of partnership interests in the Operating
Partnership in the ordinary course for the purpose of the acquisition of real
property or real property interests, which partnership interests are
exchangeable solely for Common Shares as a result of which the Trust's
partnership interest in the Operating Partnership increases by the amount of
such partnership interest so exchanged), any equity or debt securities which are
convertible, directly or indirectly into or exchangeable for Common Shares
("Convertible Securities") or any rights, options (other than the issuance or
exercise after the date hereof of stock options covering no more than 286,000
Common Shares, subject to appropriate adjustment to the extent that the Trust
(A) pays a dividend or makes a distribution on its Common Shares in shares of
its Common Shares, (B) subdivides its outstanding Common Shares into a greater
number of shares or (C) combines its outstanding Common Shares into a smaller
number of shares, issued to employees or directors of the Trust or its
Subsidiaries under the Trust's existing employee stock incentive plans) or
warrants to purchase Common Shares at conversion, exchange or exercise price per
share which is less than the Conversion Price, unless the provisions of Section
6(e)(ii) or (iii) are applicable, the Trust will be deemed to have issued or
sold, on the later of the date on which the Convertible Securities, rights,
options or warrants are issued and the date on which they first may be
converted, exchanged or exercised, the maximum number of Common Shares into or
for which the Convertible Securities may then be converted or exchanged or which
are then issuable upon the exercise of the rights, options or warrants
immediately prior to the close of business on the later of the date on which the
Convertible Securities, rights, options or warrants are issued or the date on
which they may first be converted, exchanged or exercised, and the Conversion
Price shall be adjusted downward as if it were an event covered by Section
6(e)(v). However, no further adjustment of the Conversion Price will be made as
a result of the actual issuance of Common Shares upon conversion, exchange or
exercise of the Convertible Securities, rights, options or warrants. If any
Convertible Securities, rights, options or warrants to which this Section
applies are redeemed, retired or otherwise extinguished or expire without any
Common Shares having been issued upon conversion, exchange or exercise thereof,
effective immediately after the Convertible Securities, rights, options or
warrants expire, the Conversion Price then in effect will be readjusted to what
it would have been if those Convertible Securities, rights, options or warrants
had not been issued. However, a readjustment will not affect any conversion
which takes place before the readjustment. For the purposes of this Section
6(e)(iv), (x) the price of Common Shares issued or sold upon conversion or
exchange of Convertible Securities or upon exercise of rights, options or
warrants will be (A) the consideration paid to the Trust for the Convertible
Securities, rights, options or warrants, plus (B) the consideration paid to the
Trust upon conversion, exchange or exercise of the Convertible Securities,
rights, options or warrants, with the value of the consideration, if other than
cash, to be determined by the Board of Trustees of the Trust (whose
determination, if made in good faith, will be conclusive) and (y) any change in
the conversion or exchange price of Convertible Securities or the exercise price
of rights, options or warrants will be treated as an extinguishment, when the
change becomes effective, of the Convertible Securities, rights, options or
warrants which had the old conversion, exchange or exercise price and an
immediate issuance of new Convertible Securities, rights, options or warrants,
with the new conversion, exchange or exercise price.
(v) If the Trust issues or sells any Common Shares (other than (X) on
conversion or exchange of Convertible Securities or exercise of rights, options
or warrants to
16
17
which Section 6(e)(ii), (iii) or (iv) applies, (Y) the exchange of partnership
interests in the Operating Partnership in the ordinary course solely for Common
Stock as a result of which the Trust's partnership interest in the Operating
Partnership increases by the amount of such partnership interest so exchanged
or, (Z) the sale of Common Shares under a dividend reinvestment program if such
Common Shares were purchased on the open market in ordinary brokerage
transactions) for a consideration per share less than the Conversion Price on
the date of the issuance or sale (or on exercise of options or warrants, for
less than the Conversion Price on the date the options or warrants are issued),
upon consummation of the issuance or sale, the Conversion Price in effect
immediately prior to the issuance or sale will be reduced in accordance with
the equation set forth on Exhibit A hereto, which is hereby incorporated by
reference herein.
(vi) If there is a reclassification or change of outstanding Common
Shares (other than a change in par value, or as a result of a subdivision or
combination), or a merger or consolidation of the Trust with any other entity
that results in a reclassification, change, conversion, exchange or
cancellation of outstanding Common Shares, or a sale or transfer of all or
substantially all of the assets of the Trust, upon any subsequent conversion of
Series A Convertible Preferred Shares, each holder of the Series A Convertible
Preferred Shares will be entitled to receive the kind and amount of securities,
cash and other property which the holder would have received if the holder had
converted the Series A Convertible Preferred Shares into Common Shares
immediately before the first of those events and had retained all the
securities, cash and other assets received as a result of all those events. In
the event that a transaction may be viewed as causing this Section 6(e)(vi) to
be applicable and 6(e)(iii) is also applicable, then Section 6(e)(iii) will be
applied and this Section 6(e)(vi) will not be applied.
(vii) For the purpose of any computation under this Section 6(e), the
"Current Market Price" of the Common Shares on any date will be the average
of the last reported sale prices per share of the Common Shares on each of the
twenty consecutive Trading Days (as defined below) preceding the date of the
computation. The last reported sale price of the Common Shares on each day will
be (A) the last reported sale price of the Common Shares on the principal
stock exchange on which the Common Shares are listed, or (B) if the Common
Shares are not listed on a stock exchange, the last reported sale price of the
Common Shares on the principal automated securities price quotation system on
which sale prices of the Common Shares are reported, or (C) if the Common
Shares are not listed on a stock exchange and sale prices of the Common Shares
are not reported on an automated quotation system, the mean of the high bid and
low asked price quotations for the Common Shares as reported by National
Quotation Bureau Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Common Shares on at least five of the ten
preceding Trading Days. If the Common Shares is not traded or quoted as
described in any of clause (A), (B) or (C), the Current Market Price of the
Common Shares on a day will be the fair market value of the Common Shares on
that day as determined by a member firm of the New York Stock Exchange, Inc.,
selected by the Board of Trustees. As used with regard to the Series A
Convertible Preferred Shares, the term "Trading Day" means (x) if the Common
Shares is listed on at least one stock exchange, a day on which there is
trading on the principal stock exchange on which the Common Shares are listed,
(y) if the Common Shares are not listed on a stock exchange, but sale prices of
the Common Shares are reported on an automated quotation system, a day on
17
18
which trading is reported on the principal automated quotation system on which
sales of the Common Shares are reported, or (z) if the Common Shares are not
listed on a stock exchange and sale prices of the Common Shares are not
reported on an automated quotation system, a day on which quotations are
reported by National Quotation Bureau Incorporated.
(viii) No adjustment in the Conversion Price will be required
unless the adjustment would require a change of at least 1% in the Conversion
Price; provided, however, that any adjustments which are not made because of
this Section 6(e)(viii) will be carried forward and taken into account in any
subsequent adjustment; and provided, further, that any adjustment must be made
in accordance with Section 6 (without regard to this Section 6(e)(viii)) not
later than the time the adjustment may be required in order to preserve the
tax-free nature of a distribution to the holders of Common Shares. All
calculations under this Section 6 will be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be.
(ix) Whenever the Conversion Price is adjusted, the Trust will
promptly send each holder of record of Series A Convertible Preferred Shares a
notice of the adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which the adjustment becomes effective and
containing a brief description of the events which caused the adjustment.
(x) If any one of the events in Sections 6(e)(i) through 6(e)(vi)
occurs then the Trust will mail to the holders of record of the Series A
Convertible Preferred Shares, at least 15 days before the applicable date
specified below, a notice stating the applicable one of (i) the date on which a
record is to be taken for the purpose of the dividend, distribution or grant of
rights or warrants, or, if no record is to be taken, the date as of which the
holders of Common Shares of record who will be entitled to the dividend,
distribution or rights or warrants will be determined, (ii) the date on which it
is expected the Convertible Securities will be issued or the date on which the
change in the conversion, exchange or exercise price of the Convertible
Securities, rights, options or warrants will be effective, (iii) the date on
which the Trust anticipates selling Common Shares for less than the Conversion
Price on the date of the sale (except that no notice need be given of the
anticipated date of sale of Common Shares upon exercise of options or warrants
which have been described in a notice to the holders of record of the Series A
Convertible Preferred Shares given at least 15 days before the options or
warrants are exercised), or (iv) the date on which the reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of record of Common Shares will be entitled to exchange
their Common Shares for securities or other property deliverable upon the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up. Failure to give any such notice or any
defect in the notice will not affect the legality or validity of the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up.
(f) (i) The Trust will at all times reserve and keep available, free
from preemptive right, out of the authorized but unissued Common Shares, for
the purpose of effecting conversion of the Series A Convertible Preferred
Shares, the maximum number of
18
19
Common Shares which the Trust would be required to deliver upon the conversion
of all the outstanding Series A Convertible Preferred Shares. For the purposes
of this Section 6(f)(i), the number of Common Shares which the Trust would be
required to deliver upon the conversion of all the outstanding Series A
Convertible Preferred Shares will be computed as if at the time of the
computation all the outstanding Series A Convertible Preferred Shares were held
by a single holder.
(ii) Before taking any action would cause an adjustment reducing
the Conversion Price below the then par value (if any) of the Common Shares
deliverable upon conversion of the Series A Convertible Preferred Shares, the
Trust will take all corporate action which may, in the opinion of its counsel,
be necessary in order that the Trust may validly and legally issue fully paid
and non-assessable Common Shares at the adjusted Conversion Price.
(iii) The Trust will seek to list the Common Shares required to be
delivered upon conversion of the Series A Convertible Preferred Shares, prior to
the delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of delivery.
(g) In connection with the conversion of any Series A Convertible
Preferred Shares into Common Shares pursuant to Section 6(a) or (b), in
determining the number of Common Shares to be issued upon conversion of each
Series A Convertible Preferred Share, there shall be excluded from Accrued
Dividends the amount of any Accrued Dividends (the "Deferred Accrued Dividends")
which were accrued on each such share in respect of the period from the last day
of the month next preceding the last Dividend Payment Date to the effective date
of the conversion (such period being referred to as the "Deferral Period").
Following the end of the Deferral Period, on the next date which would have been
a Dividend Payment Date had such Series A Convertible Preferred Share not been
converted, the Company shall pay in cash to the person or entity that was the
holder of such converted Series A Convertible Preferred Share on the conversion
date, the amount of Deferred Accrued Dividends reduced, but in no event to less
than zero, by the amount of dividends paid on the Common Shares into which such
Series A Preferred Share was converted in respect of the Deferral Period. To the
extent that a dividend is paid on such Common Shares for a period which
includes, but is longer than, the Deferral Period, the amount of dividends paid
in respect of the Deferral Period shall be deemed to be a pro rata portion of
the aggregate amount of accrued dividends paid for such longer period, based on
the number of calendar days in the Deferral Period and the total number of days
in the applicable dividend accrual period.
(h) The Trust will pay any documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of Common Shares on conversion
of Series A Convertible Preferred Shares; provided, however, that the Trust will
not be required to pay any tax which may be payable in respect of any transfer
involved in the issued or delivery of Common Shares in a name other than that of
the holder of record of Series A Convertible Preferred Shares to be converted
and no such issue or delivery will be made unless and until the person
requesting the issue or delivery has paid to the Trust the amount of any such
tax or has established, to the satisfaction of the Trust, that the tax has been
paid or is not payable.
19
20
Section 7. STATUS.
Series A Convertible Preferred Share converted pursuant to the terms hereof
or otherwise acquired by the Trust shall automatically be retired upon such
conversion or other acquisition, as the case may be, shall not be reissued as
Series A Preferred Shares and shall be restored to the status of authorized but
unissued shares of Preferred Shares, undesignated as to series.
Section 8. REDEMPTION AFTER ACCELERATION OF THE MATURITY DATE.
(a) Notwithstanding anything to the contrary contained in Section 6, each
holder of Series A Convertible Preferred Shares will have the right, exercisable
at any time prior to the Mandatory Conversion Date, to require the Trust to
redeem (the date required for such redemption, the "Accelerated Maturity Date")
any and all of the Series A Convertible Preferred Shares owned of record by the
holder at a redemption price per share (the "Redemption Price") equal to the
sum of (i) Stated Value plus (ii) the per share sum of all Accrued Dividends
(including, without limitation, Section 3(b) Suspended Dividends) through the
Redemption Date, as herein deferred, in the event that the Internal Revenue
Service makes an IRS Termination Determination such that the Internal Revenue
Service will for any period deny to the Trust the tax benefits associated with
qualification as a real estate investment trust and either or both of the
following circumstances arise: (i) the Trust does not receive (without 60 days
of the date established in the IRS Termination Determination as the date on
which the Deficiency Dividend or any other amount required to be paid by the
Trust to the IRS is required to be paid) the full indemnity payment as a result
thereof to which the Trust is entitled pursuant to the Tax Agreement, and (ii)
counsel reasonably satisfactory to Morgan Stanley Asset Management Inc. is
unable to provide to the holders of Series A Convertible Preferred Shares
affirmative advice that, commencing not later than with the taxable year ending
December 31, 1999, the Trust will, notwithstanding such IRS Termination
Determination, be able to elect to be qualified and taxed as a real estate
investment trust under the Internal Revenue Code of 1986, as amended, and its
proposed method of operation will enable it so to qualify for following years.
(b) In order to exercise its right of redemption pursuant to this Section
8, the holder must deliver a written request for redemption, accompanied by the
certificates representing the shares to be redeemed, to the Trust at any time
prior to the Mandatory Conversion Date. If, on or before the 180th day after
the date of the IRS Termination Determination, a request for redemption
pursuant to Section 8(a) is given with respect to Series A Convertible
Preferred Shares, promptly (but in no event more than ten Business Days) after
the request for redemption is given to the Trust, the Trust will pay the holder
of such shares cash equal to the Redemption Price of such shares. If, on or
after the 181st day after the date of the IRS Termination Determination, a
request for redemption pursuant to Section 8(a) is given with respect to Series
A Convertible Preferred Shares, not more than 30 Business Days after the
request for redemption is given to the Trust, the Trust will pay the holder of
such shares cash equal to the Redemption Price of such shares. The date of any
such payment is referred to herein as the "Redemption Date."
20
21
(c) If a request for redemption accompanied by the certificates
representing the shares to be redeemed is delivered to the Trust, on the
Redemption Date dividends will cease to accrue with regard to the Series A
Convertible Preferred Shares to be redeemed, and at the close of business on
that date the holders of those shares will cease to be shareholders with
respect to those shares, will have no interest in or claims against the Trust
by virtue of such shares (other than as described in Section 8(c) hereof) and
will have no voting or other rights with respect to such shares.
(d) The dividend with respect to a Series A Convertible Preferred
Share which is the subject of a request for redemption delivered on a day which
falls between the close of business on a dividend payment Record Date and the
opening of business on the corresponding Dividend Payment Date will be payable
on the Dividend Payment Date to the holder of record of the Series A
Convertible Preferred Shares on the dividend payment Record Date
notwithstanding the redemption of the Series A Convertible Preferred Shares
after the dividend payment Record Date and prior to the Dividend Payment Date.
Section 9. RANKING.
Subject to Section 4(b), the Series A Convertible Preferred Shares
will, with respect to the payment of dividends and the distribution of assets
on liquidation, dissolution or winding-up of the Trust, rank prior to any other
series of Preferred Shares, prior to Common Shares and prior to any other class
or series of capital stock of the Trust.
Section 10. MISCELLANEOUS.
(a) Except as otherwise expressly provided in these Articles
Supplementary, whenever a notice or other communication is required or
permitted to be given to holders of Series A Convertible Preferred Shares, the
notice or other communication will be deemed properly given if deposited in the
United States mail, postage prepaid, addressed to the persons shown on the
books of the Trust as the holders of the Series A Convertible Preferred Shares
at the addresses as they appear on the books of the Trust, as of the Record
Date or dates determined in accordance with applicable law and with the
Declaration of Trust and Bylaws, as in effect from time to time, with a copy
sent to Morgan Stanley Asset Management, Inc., 1221 Avenue of the Americas, New
York, New York 10020 by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service.
(b) Series A Convertible Preferred Shares will not have any
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications or terms and conditions of redemption, other than those
specifically set forth herein, in the Charter, and as may be provided under
applicable law insofar as any such provision does not conflict with the terms
hereof.
(c) The headings of the various subdivisions herein are for
convenience only and will not affect the meaning or interpretation of any of
the provisions herein.
21
22
(d) Notwithstanding Section 4 hereof, and provided that the Trust's
Board of Trustees determines that it is appropriate to submit to a vote of the
holders of Series A Convertible Preferred Shares, the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends and
other distributions, qualifications and terms and conditions of redemption of
the Series A Convertible Preferred Shares may be waived, and any of such
provisions of the Series A Convertible Preferred Shares may be amended, only
with the approval of holders of at least 60% of the outstanding Series A
Convertible Preferred Shares, voting separately as a class.
(e) Notwithstanding anything to the contrary contained in Section 3,
4, 6 or 8 hereof, each holder of record of Series A Convertible Preferred
Shares hereby agrees (subject to relinquishment by Morgan Stanley Asset
Management Inc. as provided below) that, in determining whether any holder of
Series A Convertible Preferred Shares has (i) approved a replacement to Dennis
Gershenson as contemplated by clause (viii) of the last sentence of Section
3(b), (ii) approved any action by the Trust under Section 4, (iii) elected to
cause the conversion of such holder's Series A Convertible Preferred Shares
into Common Shares or other assets under Section 6, (iv) received any notice of
the Trust required by these Articles Supplementary, including without
limitation notices required by Section 6(e)(ix), Section 6(e)(x) and Section
6(f), or (v) elected to cause the redemption by the Trust of such holder's
Series A Convertible Preferred Shares in the circumstance provided by Section
8, until such holder shall have notified in writing the Trust otherwise, Morgan
Stanley Asset Management Inc. shall have the right to grant or deny such
approvals, make or decline any such elections or receive any such notices with
regard to all the Series A Convertible Preferred Shares held of record by such
holder, and a notice received by Morgan Stanley Asset Management Inc. and a
document executed by Morgan Stanley Asset Management Inc. granting or denying
approval to any action by the Trust under Section 4, or electing or declining
to the Trust to effect the conversion as to any Series A Convertible Preferred
Shares under Section 6, or electing or declining to the Trust to effect the
redemption as to any Series A Convertible Preferred Shares shall determine the
matter for such holders as Morgan Stanley Asset Management Inc. may indicate.
Upon written notice by Morgan Stanley Asset Management Inc. to the Trust,
Morgan Stanley Asset Management Inc. may indicate. Upon written notice by
Morgan Stanley Asset Management Inc. to the Trust, Morgan Stanley Asset
Management Inc. may relinquish such rights and powers of any or all Series A
Convertible Preferred Shares. The foregoing may, but need not, be implemented
by execution by each holder of Series A Convertible Preferred Shares of a proxy
in favor of Morgan Stanley Asset Management Inc.
Section 11. PERMISSIBLE DISTRIBUTIONS.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other acquisition of shares
or otherwise, is permitted under the Maryland General Corporation Law, amounts
that would be needed, if the Trust were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
Series A Convertible Preferred Shares whose preferential rights upon dissolution
are superior to those receiving the distribution shall be added to the Trust's
total liabilities.
Section 12. SEVERABILITY OF PROVISIONS.
22
23
Whenever possible, each provision hereof shall be interpreted in a manner
as to be effective and valid under applicable law, but if any provision hereof
is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining provisions
hereof. If a court of competent jurisdiction should determine that a provision
hereof would be valid or enforceable if a period of time were extended or
shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
THIRD: The Series A Convertible Preferred Shares have been classified
by the Board of Trustees of the Trust under the authority contained in the
Declaration of Trust.
FOURTH: These Articles Supplementary have been approved by the Board of
Trustees in the manner and by the vote required by law.
FIFTH: The undersigned officers acknowledge these Articles
Supplementary to be the trust act of the Trust and, as to all matters or facts
required to be verified under oath, the undersigned officers each certify,
under penalties of perjury, that to the best of his knowledge and information
and belief these matters and facts are true in all material respects.
23
24
IN WITNESS WHEREOF, RGPT Trust 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 as of October 2, 1997.
ATTEST: RGPT TRUST
/s/ Richard Gershenson By: /s/ Dennis Gershenson (Seal)
- ----------------------------- -----------------------------
Name: Richard Gershenson Name: Dennis Gershenson
Title: Secretary Title: President
24