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EXHIBIT 10.40
EXHIBIT "A"
SUN COMMUNITIES, INC.
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ARTICLES SUPPLEMENTARY OF BOARD OF DIRECTORS CLASSIFYING
AND DESIGNATING A SERIES OF PREFERRED STOCK AS
JUNIOR PARTICIPATING PREFERRED STOCK
AND FIXING DISTRIBUTION AND
OTHER PREFERENCES AND RIGHTS OF SUCH SERIES
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Sun Communities, Inc., a Maryland corporation, having its principal
office in the State of Michigan, in the City of Farmington Hills (the
"Company"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the
Charter and Bylaws of the Company, the Board of Directors pursuant to
resolutions adopted on April 24, 1998 (i) has duly classified 1,000,000 shares
of the authorized but unissued shares of the Preferred Stock of the Company as a
series designated the "Junior Participating Preferred Stock", and (ii)
determined the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the shares of such series. Such preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, and number of
shares are as follows:
SECTION 1. NUMBER OF SHARES AND DESIGNATION. This series of Preferred Stock
shall be designated the Junior Participating Preferred Stock (the "Preferred
Shares") and the number of shares which shall constitute such series shall be
1,000,000 shares, par value $.01 per share. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of Preferred Shares to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Preferred Shares.
SECTION 2. DIVIDEND RIGHTS.
(A) Subject to the rights of holders of any shares of any series of Preferred
Stock (or any similar stock) ranking prior and superior to the Preferred Shares
with respect to dividends, the holders of Preferred Shares shall be entitled
prior to the payment of any dividends on shares ranking junior to the Preferred
Shares to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the 15th day of January, April, July, and October in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Preferred Shares, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions (other than a dividend
payable in shares of common stock, par value $0.01 per share, of the Company
(the "Common Stock") or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise)) declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Preferred Shares. In the event the Company shall at any
time (i) declare or pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in
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each such case the amount to which holders of Preferred Shares were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Preferred Shares
as provided in subparagraph (A) above immediately after it declares a dividend
or distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Preferred Shares shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding Preferred
Shares from the Quarterly Dividend Payment Date next preceding the date of issue
of such Preferred Shares, unless the date of issue of such shares is prior to
the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of Preferred Shares entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
Preferred Shares in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of Preferred
Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than thirty (30) days prior to the
date fixed for the payment thereof.
SECTION 3. LIQUIDATION.
(A) Upon any liquidation, dissolution or winding up of the Company, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Preferred Shares unless, prior thereto, the holders of shares of Preferred
Shares shall have received $1.00 per share (the "Liquidation Preference"), plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment. Following the payment of
the full amount of the Liquidation Preference, no additional distributions shall
be made to the holders of shares of Preferred Shares unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stocks splits, stock dividends
and recapitalizations with respect to the Common Stock) (such number in clause
(ii), the "Adjustment Number"). Following the payment of the full amount of the
Liquidation Preference and the Common Adjustment in respect of all outstanding
Preferred Shares and shares of Common Stock, respectively, holders of Preferred
Shares and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to the Preferred Shares and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available to
permit payment in full of the Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Preferred Shares, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment
after the payment in full of the Liquidation Preference, then such remaining
assets shall be distributed ratably to the holders of Common Stock.
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(C) In the event the Company shall at any time (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 4. NO REDEMPTION.
(A) Except as provided below, the Preferred Shares shall not be redeemable.
(B) The Preferred Shares are subject to the provisions of Article VII of the
Charter, including, without limitation, the provisions for the redemption of
Excess Stock (as defined in such Article).
SECTION 5. VOTING RIGHTS. The holders of Preferred Shares shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Preferred Share shall entitle the holder thereof to 100 votes on all matters
voted on at a meeting of the stockholders of the Company. In the event the
Company shall at any time (i) declare or pay any dividend on Common Stock
payable in shares of Common Stock, or (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
Preferred Shares were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of Preferred
Shares and the holders of shares of Common Stock and any other capital stock of
the Company having general voting rights shall vote together as one voting group
on all matters submitted to a vote of stockholders of the Company.
(C) Except as set forth herein or as otherwise provided by law, holders of
Preferred Shares shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
SECTION 6. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions payable on
the Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on Preferred Shares outstanding shall have been paid in full, the
Company shall not:
declare or pay dividends on, make any other distributions on, or redeem
or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Preferred Shares; declare or pay dividends on or
make any other distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Preferred Shares, except dividends paid ratably on the
Preferred Shares and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled; redeem or purchase or
otherwise acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Preferred Shares, provided that the Company
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may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Company
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Preferred Shares; or purchase or
otherwise acquire for consideration any shares of Preferred Shares or
any shares of stock ranking on a parity with the Preferred Shares,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under subparagraph (A) of this Section 6, purchase or
otherwise acquire such shares at such time and in such manner.
SECTION 7. REACQUIRED SHARES. Any Preferred Shares purchased or otherwise
acquired by the Company in any manner whatsoever shall be canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein or in the Charter.
SECTION 8. MERGER, CONSOLIDATION, ETC. In case the Company shall enter into any
merger, consolidation, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each Preferred Share shall at
the same time be similarly exchanged or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Company shall at any time
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
Preferred Shares shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
SECTION 9. RANKING. The Preferred Shares shall rank, with respect to the payment
of dividends and distribution of assets, junior to all other series of the
Company's Preferred Stock unless the terms of any such series shall provide
otherwise.
SECTION 10. AMENDMENT. The Charter, including the Articles Supplementary
establishing the rights and preferences of the Preferred Shares, shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Preferred Shares so as to affect them
adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Preferred Shares, voting separately as one voting group.
SECTION 11. FRACTIONAL SHARES. Preferred Shares may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Preferred Shares.
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IN WITNESS WHEREOF, the Company has caused these Articles Supplementary
to be signed in its name and on its behalf and attested to by the undersigned on
this day of May, 1998 and the undersigned acknowledges under the penalties of
perjury that these Articles Supplementary are the corporate act of said Company
and that to the best of his knowledge, information and belief, the matters and
facts set forth herein are true in all material respects.
SUN COMMUNITIES, INC.
By:
Gary A. Shiffman, Chief Executive
Officer and President
Attest:
By:
Jeffrey P. Jorissen, Senior Vice
President, Treasurer, Chief Financial
Officer, and Secretary
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