Exhibit 3.1
ARTICLES SUPPLEMENTARY
OF
HIGHWOODS PROPERTIES, INC.
I.
The name of the corporation is Highwoods Properties, Inc. (the
"Corporation").
II.
The purpose of these Articles Supplementary (the "Articles") is to
add the following as a new Section 5.11 of the Corporation's Articles of
Incorporation, to determine the terms of a series of the Preferred Stock:
"Section 5.11. 8% Series D Cumulative Redeemable Preferred Shares.
(a) Title. The series of Preferred Stock is hereby designated as
the "8% Series D Cumulative Redeemable Preferred Shares" (the "Series D
Preferred Shares").
(b) Number. The maximum number of authorized shares of the Series
D Preferred Shares shall be 400,000.
(c) Relative Seniority. In respect of rights to receive dividends
and to participate in distributions of payments in the event of any liquidation,
dissolution or winding up of the Corporation, the Series D Preferred Shares
shall rank (i) senior to the Common Stock and any other class or series of
shares of the Corporation ranking, as to dividends and upon liquidation, junior
to the Series D Preferred Shares (collectively, "Junior Shares") and (ii) pari
passu with the Corporation's 8 5/8% Series A Cumulative Redeemable Preferred
Shares, the Corporation's 8% Series B Cumulative Redeemable Preferred Shares and
any other class or series of shares of the Corporation ranking, as to dividends
and upon liquidation, pari passu with the Series D Preferred Shares.
(d) Dividends.
(i) The holders of the then outstanding Series D Preferred
Shares shall be entitled to receive, when and as declared by the Board of
Directors out of any funds legally available therefor, cumulative dividends at
the rate of 8% of the $250.00 per share liquidation preference per
annum of the Series D Preferred Shares (equivalent to $20.00 per share). Such
dividends shall accrue and be cumulative from the date of original issuance and
shall be payable quarterly in arrears in cash on or about the last day of
January, April, July and October of each year or, if not a Business Day (as
hereinafter defined), the next succeeding Business Day, commencing July 31, 1998
(each such day being hereafter called a "Dividend Payment Date" and each period
beginning on the day next following a Dividend Payment Date and ending on the
next following Dividend Payment Date being hereinafter called a "Dividend
Period"). Dividends shall be payable to holders of record as they appear in the
share records of the Corporation at the close of business on the applicable
record date (the "Record Date"), which shall be the first day of the calendar
month in which the applicable Dividend Payment Date falls on or such other date
designated by the Board of Directors of the Corporation for the payment of
dividends that is not more than 30 nor less than 10 days prior to such Dividend
Payment Date. The amount of any dividend payable for any Dividend Period shorter
than a full Dividend Period shall be prorated and computed on the basis of a
360-day year of twelve 30- day months.
"Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
in New York City are authorized or required by law, regulation or executive
order to close.
(ii) The amount of any dividends accrued on any Series D
Preferred Shares at any Dividend Payment Date shall be the amount of any unpaid
dividends accumulated thereon, to and including such Dividend Payment Date,
whether or not earned or declared, and the amount of dividends accrued on any
Series D Preferred Shares at any date other than a Dividend Payment Date shall
be equal to the sum of the amount of any unpaid dividends accumulated thereon,
to and including the last preceding Dividend Payment Date, whether or not earned
or declared, plus an amount calculated on the basis of the annual dividend rate
for the period after such last preceding Dividend Payment Date to and including
the date as of which the calculation is made based on a 360-day year of twelve
30-day months. When dividends are not paid in full upon the Series D Preferred
Shares (or a sum sufficient for such full payment is not set apart therefor),
all dividends declared upon Series D Preferred Shares and any other series of
preferred stock ranking on a parity as to dividends with the Series D Preferred
Shares shall be declared pro rata so that the amount of dividends declared per
share on the Series D Preferred Shares and such other series of preferred stock
shall in all cases bear to each other the same ratio that accrued dividends per
share on the shares of Series D Preferred Shares and such other series of
preferred stock bear to each other.
Except as provided in the immediately preceding paragraph,
unless full cumulative dividends on the Series D Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment of the Series D Preferred Shares for all
past dividend periods and the then current dividend period, (A) no dividends
shall be declared or paid or set apart for payment on the preferred stock of the
Corporation ranking, as to dividends, on a parity with or junior to the Series D
Preferred Shares for any period, and (B) no dividends (other than in Junior
Shares) shall be declared or paid or set aside for payment or other distribution
or shall be declared or made upon the Junior Shares or any other capital stock
of the
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corporation ranking on a parity with the Series D Preferred Shares as to
dividends or upon liquidation ("Parity Shares"), nor shall any Junior Shares or
any Parity Shares be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any Junior Shares or Parity Shares) by the Corporation (except
by conversion into or exchange for Junior Shares).
(iii) Except as provided in this paragraph (d), the Series D
Preferred Shares will not be entitled to any dividends in excess of full
cumulative dividends as described above and shall not be entitled to participate
in the earnings or assets of the Corporation, and no interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series D Preferred Shares which may be in arrears.
(iv) Any dividend payment made on the Series D Preferred
Shares shall be first credited against the earliest accrued but unpaid dividend
due with respect to such shares which remains payable.
(v) If, for any taxable year, the Corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the Internal
Revenue Code of 1986, as amended (the "Code")), any portion (the "Capital Gains
Amount") of the dividends, within the meaning of Section 316 of the Code, paid
or made available for the year to holders of all classes of shares (the "Total
Dividends"), then the portion of the Capital Gains Amount that shall be
allocated to the holders of the Series D Preferred Shares shall equal (A) the
Capital Gains Amount multiplied by (B) a fraction that is equal to (1) the total
dividends paid, within the meaning of Section 316 of the Code, or made available
to the holders of the Series D Preferred Shares for the year over (2) the Total
Dividends.
(vi) No dividends on the Series D Preferred Shares shall be
authorized by the Board of Directors or be paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, prohibit such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law. Notwithstanding the foregoing, dividends on the
Series D Preferred Shares will accrue and be cumulative from the date of
original issue thereof whether or not the Corporation has earnings, whether or
not there are funds legally available for the payment of such dividends and
whether or not such dividends are authorized.
(e) Liquidation Rights.
(i) Upon the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation, the holders of the Series D Preferred Shares
then outstanding shall be entitled to receive and to be paid out of the assets
of the Corporation legally available for distribution to its stockholders,
before any payment or distribution shall be made to the holders of Common Stock
or any other capital stock of the Corporation ranking junior to the Series D
Preferred Shares as to
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liquidation rights, a liquidation preference of $250.00 per share, plus accrued
and unpaid dividends thereon to the date of such liquidation, dissolution or
winding up.
(ii) After the payment to the holders of the Series D
Preferred Shares of the full liquidating distributions provided for in this
paragraph (e), no holder of the Series D Preferred Shares, as such, shall have
any right or claim to any of the remaining assets of the Corporation.
(iii) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the amounts payable with respect
to the preference value of the Series D Preferred Shares and any other shares of
the Corporation ranking as to any such distribution on a parity with the Series
D Preferred Shares are not paid in full, the holders of the Series D Preferred
Shares and of such other shares will share ratably in any such distribution of
assets of the Corporation in proportion to the full respective liquidating
distributions to which they are entitled.
(iv) Neither the sale, lease, transfer or conveyance of all or
substantially all of the property or business of the Corporation, nor the merger
or consolidation of the Corporation into or with any other entity or the merger
or consolidation of any other entity into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up, voluntary or involuntary,
for the purposes of this paragraph (e).
(f) Redemption.
(i) The Series D Preferred Shares are not redeemable prior to
April 23, 2003. On and after April 23, 2003, the Corporation may, at its option,
redeem at any time all or, from time to time, part of the Series D Preferred
Shares at a price per share (the "Redemption Price"), payable in cash, of
$250.00, together with all accrued and unpaid dividends to and including the
date fixed for redemption (the "Redemption Date"), without interest, to the full
extent the Corporation has funds legally available therefor. The Series D
Preferred Shares have no stated maturity and will not be subject to any sinking
fund or mandatory redemption provisions.
(ii) Procedures of Redemption.
(A) Notice of any redemption will be mailed by the registrar,
postage prepaid, not less than 30 nor more than 60 days prior to the Redemption
Date, addressed to each holder of record of the Series D Preferred Shares to be
redeemed at the address set forth in the share transfer records of the
registrar. No failure to give such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any Series D Preferred Shares except as to the holder to whom the Corporation
has failed to give notice or except as to the holder to whom notice was
defective. In addition to any information required by law or by the applicable
rules of any exchange upon which Series D Preferred Shares (or depositary shares
or receipts representing fractional interests in Series D Preferred Shares) may
be listed or admitted to trading, such notice shall state: (1) the Redemption
Date; (2) the Redemption Price; (3) the number of Series D Preferred Shares to
be redeemed; (4) the place or places where certificates for such shares are to
be surrendered
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for payment of the Redemption Price; and (5) that dividends on the Series D
Preferred Shares to be redeemed will cease to accrue on the Redemption Date. If
fewer than all of the Series D Preferred Shares held by any holder are to be
redeemed, the notice mailed to such holder shall also specify the number of
Series D Preferred Shares to be redeemed from such holder.
(B) If notice has been mailed in accordance with subparagraph
(f)(ii)(A) above and provided that on or before the Redemption Date specified in
such notice all funds necessary for such redemption shall have been irrevocably
set aside by the Corporation, separate and apart from its other funds in trust
for the benefit of the holders of the Series D Preferred Shares so called for
redemption, so as to be, and to continue to be available therefor, then, from
and after the Redemption Date, dividends on the Series D Preferred Shares so
called for redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding and shall not have the status of Series D Preferred
Shares and all rights of the holders thereof as holders of such shares (except
the right to receive the Redemption Price) shall cease. Upon surrender, in
accordance with such notice, of the certificates for any Series D Preferred
Shares so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such Series D
Preferred Shares shall be redeemed by the Corporation at the Redemption Price.
In case fewer than all the Series D Preferred Shares represented by any such
certificate are redeemed, a new certificate or certificates shall be issued
representing the unredeemed Series D Preferred Shares without cost to the holder
thereof.
(C) Any funds deposited with a bank or trust company for the
purpose of redeeming Series D Preferred Shares shall be irrevocable except that:
(1) the Corporation shall be entitled to receive from such bank or trust company
the interest or other earnings, if any, earned on any money so deposited in
trust, and the holders of any shares redeemed shall have no claim to such
interest or other earnings; and (2) any balance of monies so deposited by the
Corporation and unclaimed by the holders of the Series D Preferred Shares
entitled thereto at the expiration of two years from the applicable Redemption
Date shall be repaid, together with any interest or other earnings earned
thereon, to the Corporation, and after any such repayment, the holders of the
shares entitled to the funds so repaid to the Corporation shall look only to the
Corporation for payment without interest or other earnings.
(D) Except for any portion of the Redemption Price consisting
of accrued and unpaid dividends, no Series D Preferred Shares may be redeemed
except from proceeds from the sale of other capital stock of the Corporation,
including but not limited to Common Stock, preferred stock, depositary shares,
interests, participations or other ownership interests (however designated) and
any rights (other than debt securities convertible into or exchangeable for
equity securities) or options to purchase any of the foregoing.
(E) Unless full cumulative dividends on all Series D Preferred
Shares shall have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all past
Dividend Periods and the then current Dividend Period, no Series D Preferred
Shares shall be redeemed or purchased or otherwise acquired directly or
indirectly
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(except by conversion into or exchange for Junior Shares); provided, however,
that the foregoing shall not prevent the redemption of Series D Preferred Shares
to preserve the Corporation's REIT status or the purchase or acquisition of
Series D Preferred Shares pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding Series D Preferred Shares.
(F) If the Redemption Date is after a Record Date and before
the related Dividend Payment Date, the dividend payable on such Dividend Payment
Date shall be paid to the holder in whose name the Series D Preferred Shares to
be redeemed are registered at the close of business on such Record Date
notwithstanding the redemption thereof between such Record Date and the related
Dividend Payment Date or the Corporation's default in the payment of the
dividend due. Except as provided above, the Corporation will make no payment or
allowance for unpaid dividends, whether or not in arrears, on Series D Preferred
Shares to be redeemed.
(G) In case of redemption of less than all Series D Preferred
Shares at the time outstanding, the Series D Preferred Shares to be redeemed
shall be selected pro rata from the holders of record of such shares in
proportion to the number of Series D Preferred Shares held by such holders (with
adjustments to avoid redemption of fractional shares) or by any other equitable
method determined by the Corporation.
(g) Voting Rights. Except as required by law, and as set forth
below, the holders of the Series D Preferred Shares shall not be entitled to
vote at any meeting of the stockholders for election of Directors or for any
other purpose or otherwise to participate in any action taken by the Corporation
or the stockholders thereof, or to receive notice of any meeting of
stockholders.
(i) Whenever dividends on any Series D Preferred Shares shall
be in arrears for six or more quarterly periods, whether or not such quarterly
periods are consecutive, the holders of such Series D Preferred Shares (voting
separately as a class with all other series of preferred stock upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional Directors of the Corporation at a special
meeting called by the holders of record of at least ten percent (10%) of the
Series D Preferred Shares or the holders of any other series of preferred stock
so in arrears (unless such request is received less than 90 days before the date
fixed for the next annual or special meeting of the stockholders) or at the next
annual meeting of stockholders, and at each subsequent annual meeting until all
dividends accumulated on such Series D Preferred Shares for the past Dividend
Periods and the then current Dividend Period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
such case, the entire Board of Directors of the Corporation will be increased by
two Directors.
(ii) So long as any Series D Preferred Shares remain
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least two-thirds of the Series D Preferred Shares
outstanding at the time, given in person or by proxy, either in writing or at a
meeting (such series voting separately as a class), (A) authorize or create, or
increase the authorized or issued amount of, any class or series of shares of
capital stock ranking prior to the Series D Preferred Shares with respect to the
payment of dividends or the distribution of assets upon
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liquidation, dissolution or winding up or reclassify any authorized capital
stock of the Corporation into such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such shares; or (B) amend, alter or repeal the provisions of the Corporation's
Articles of Incorporation, including this Amendment, whether by merger,
consolidation or otherwise (an "Event"), so as to materially and adversely
affect any right, preference, privilege or voting power of the Series D
Preferred Shares or the holders thereof; provided, however, with respect to the
occurrence of any of the Events set forth in (B) above, so long as the Series D
Preferred Shares remain outstanding with the terms thereof materially unchanged,
taking into account that upon the occurrence of an Event, the Corporation may
not be the surviving entity, the occurrence of any such Event shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting power of holders of Series D Preferred Shares and provided further
that (x) any increase in the amount of the authorized preferred stock or the
creating or issuance of any other series of preferred stock, or (y) any increase
in the amount of authorized Series D Preferred Shares or any other series of
preferred stock, in each case ranking on a parity with or junior to the Series D
Preferred Shares with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.
The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding Series D Preferred Shares shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
(iii) On each matter submitted to a vote of the holders of
Series D Preferred Shares in accordance with this paragraph (g), or as otherwise
required by law, each Series D Preferred Share shall be entitled to ten (10)
votes, each of which ten (10) votes may be directed separately by the holder
thereof. With respect to each Series D Preferred Share, the holder thereof may
designate up to ten (10) proxies, with each such proxy having the right to vote
a whole number of votes (totaling ten (10) votes per Series D Preferred Share).
(h) Conversion. The Series D Preferred Shares are not convertible
into or exchangeable for an other property or securities of the Corporation.
III.
These Articles were adopted on April 16, 1998 without stockholder
approval, as such approval was not required.
IV.
These Articles were duly adopted by the Board of Directors under
authority contained in the Corporation's charter.
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IN WITNESS WHEREOF, Highwoods Properties, Inc. has caused these
Articles Supplementary to be executed and sealed by its duly authorized officers
this 22nd day of April, 1998.
HIGHWOODS PROPERTIES, INC.
By: /s/ Mack D. Pridgen, III
----------------------------
Mack D. Pridgen, III
Vice President and General Counsel
[CORPORATE SEAL]
Attest:
/s/ Edward J. Fritsch
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Edward J. Fritsch
Secretary
THE UNDERSIGNED, Vice President and General Counsel of HIGHWOODS
PROPERTIES, INC., who executed on behalf of the Corporation the Articles
Supplementary of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Mack D. Pridgen, III
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Mack D. Pridgen, III
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