Exhibit 3.1(f)
ARTICLES SUPPLEMENTARY
OF
SERIES C 10.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
IMPAC MORTGAGE HOLDINGS, INC.
Impac Mortgage Holdings, Inc., a corporation organized and existing under
the laws of the State of Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in the Board of
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Directors of the Corporation (the "Board of Directors") in accordance with
Article VI of the charter of the Corporation, including these Articles
Supplementary (the "Charter"), the Board of Directors adopted resolutions
reclassifying 1,200,000 shares (the "Shares") of Preferred Stock (as defined in
the Charter) as a separate series of stock, Series C 10.5% Cumulative
Convertible Preferred Stock, $.01 par value per share (the "Series C Preferred
Stock"), with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends or other distributions,
qualifications, and terms and conditions of redemption set forth below. Upon
any restatement of the Charter, the immediately following heading and Sections 1
through 9 of this Article FIRST shall become Section 6.8 of Article VI of the
Charter.
Series C 10.5% Cumulative Convertible Preferred Stock
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Section 1. Definitions. Unless the context otherwise requires, the terms
defined in this Section 1 shall have, for all purposes of these Articles
Supplementary, the meanings herein specified (with terms defined in the singular
having comparable meanings when used in the plural).
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a person means a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified.
"AMEX" shall mean the American Stock Exchange.
"Average Net Worth" for any period means the arithmetic average of the sum
of the gross proceeds from any sale of the Corporation's equity securities,
before deducting any underwriting discounts and commissions and other expenses
(without taking into account any losses incurred in prior periods) computed by
taking the daily average of such values during such period.
"Benefit Plan Investor" means (1) an employee benefit plan (as defined by
Section 3(3) of ERISA), whether or not it is subject to Title I of ERISA; (2) a
plan as described in Section
STATE OF MARYLAND
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I hereby certify that this is a true and complete copy of the 30 page document
on file in this office DATED: 1/31/00.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
--------------------------------------------
By: /s/ Mac Still, custodian
This stamp replaces our previous certification system.
Effective 6/95.
4975 of the Code; (3) an entity whose underlying assets include the assets of
any plan described in clause (1) or (2) by reason of the plan's investment in
such entity (including but not limited to an insurance company general account);
or (4) an entity that otherwise constitutes a "benefit plan investor" within the
meaning of the Plan Asset Regulation.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series C Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Change of Control Transaction" means the occurrence of (i) an acquisition
after the date hereof, in one or a series of related transactions, by any
individual or legal entity or "group" (as described in Rule 13d-5(b)(1) under
the Exchange Act) of more than 50% of the voting securities of the Corporation
or all or substantially all of the assets of the Corporation; (ii) any merger or
consolidation of the Corporation with or into another entity, in one or a series
of related transactions, unless the holders of the Corporation's securities
immediately prior to such transaction continue to hold, immediately after such
transaction, at least 50% of the voting securities of the entity that survives
such transaction; or (iii) the execution by the Corporation of an agreement to
which the Corporation is a party or by which it is bound providing for any of
the events set forth above in (i) or (ii).
"Common Stock" shall mean the common stock, $.01 par value per share, of
the Corporation or such shares of the Corporation's capital stock into which
outstanding shares of Common Stock shall be reclassified.
"Constituent Person" shall have the meaning set forth in subsection (d) of
Section 8.
"Conversion Date" means the date on which a Series C Holder has delivered
written notice to the Corporation that such Series C Holder elects to convert
Series C Preferred Stock into Common Stock, together with the certificate
evidencing such shares of Series C Preferred Stock.
"Conversion Price" shall mean the conversion price per share of Common
Stock at which shares of the Series C Preferred Stock is convertible into shares
of Common Stock, as such Conversion Price may be adjusted pursuant to Section 8.
The initial Conversion Price shall be $4.72 (equivalent to a conversion rate of
5.29661 shares of Common Stock for each share of Series C Preferred Stock).
"Current Market Price" of publicly traded Common Stock or any other class
of shares or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the AMEX or, if
such security is not listed or admitted for trading on the AMEX, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the Nasdaq National
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Market or, if such security is not quoted on the Nasdaq National Market, the
average of the closing bid and asked prices on such day in the over-the-counter
market as reported by Nasdaq or, if bid and asked prices for such security on
such day shall not have been reported through Nasdaq, the average of the bid and
asked prices on such day as furnished by any AMEX member firm regularly making a
market in such security and selected for such purpose by the Chief Executive
Officer of the Corporation or the Board of Directors or, if such security is not
so listed or quoted, as determined in good faith at the sole discretion of the
Chief Executive Officer of the Corporation or the Board of Directors, which
determination shall be final, conclusive and binding.
"Distribution Payment Date" shall have the meaning set forth in Section 4.
"Distribution Period" shall have the meaning set forth in Section 4.
"Dividend Ratchet Amount" shall mean for any calendar quarter, the
aggregate of all distributions (including non-regular dividends such as special
capital gain distributions) declared on the number of shares of Common Stock (or
portions thereof, without giving effect to the requirements under subsection (c)
of Section 8) into which each share of Series C Preferred Stock is then
convertible (i.e., an amount equal to the number of shares of Common Stock (or
portions thereof, without giving effect to the requirements under subsection (c)
of Section 8) into which one share of Series C Preferred Stock is convertible,
multiplied by the aggregate of all distributions (including non-regular
dividends) declared per share of Common Stock for such quarter).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value as determined in good
faith at the sole discretion of the Chief Executive Officer or the Board of
Directors, which determination shall be final, conclusive and binding.
"Incentive Compensation" shall mean the performance based compensation that
the Corporation shall be obligated to pay to certain employees of the
Corporation pursuant to their employment agreements.
"Issue Date" shall mean the first date on which Series C Preferred Stock is
issued and sold.
"Junior Shares" shall have the meaning set forth in Section 3.
"Liquidation Preference" means $25.00 per share of Series C Preferred
Stock, plus accumulated and unpaid distributions (whether or not earned or
declared) thereon.
"Net Income" means, at any date of determination, the net income of the
Corporation determined in accordance with current tax law before the total
Incentive Compensation paid to employees of the Corporation pursuant to their
respective employment agreements, the deduction for dividends paid, before any
amortization of the Termination Fee paid Imperial Credit Advisors, Inc. and any
net operating loss deductions arising from losses in prior periods.
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"Non-Electing Share" shall have the meaning set forth in subsection (d) of
Section 8.
"Ownership Limitation" means the limitation on ownership of the
Corporation's shares (or deemed ownership by virtue of the attribution
provisions of the Code) set forth in Article VII, Section 7.1 of the Charter.
"Parity Shares" shall have the meaning set forth in Section 3.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Plan Asset Regulation" means the plan asset regulation promulgated by the
Department of Labor under ERISA at 29 C.F.R. 2510.3-101.
"Plan Assets" means "plan assets" as defined in the Plan Asset Regulation.
"Preferred Stock" shall mean preferred stock, $.01 par value per share, of
the Corporation.
"Record Date" shall have the meaning set forth in Section 4.
"Redemption Price" shall equal $25.00 per share of Series C Preferred
Stock, plus dividends accumulated and unpaid to the redemption date (whether or
not declared) without interest, or in the case of redemption pursuant to
subsection (f) of Section 5, such other amount referred to therein.
"REIT" shall mean a real estate investment trust under Section 856 of the
Code.
"Return on Equity" means return calculated for any quarter by dividing the
Corporation's Net Income for such quarter by the Corporation's Average Net Worth
for such quarter.
"Series C Holder" means a holder of Series C Preferred Stock.
"Series C Preferred Stock" shall mean the Corporation's Series C 10.5%
Cumulative Convertible Preferred Stock, $.01 par value per share, liquidation
preference $25.00 per share.
"Series C Preferred Stock Redemption Date" shall have the meaning set forth
in subsection (g) of Section 5.
"Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Board of Directors, the allocation of funds
to be paid on any class or series of shares; provided, however, that if any
funds for any class or series of Junior Shares or any Parity Shares are placed
in a
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separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series C
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Shares-in-Trust" means shares of the Corporation transferred as set forth
in Article VII, Subsection (b) of Section 7.2.1of the Charter.
"Ten Year Average Yield" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of 10 years).
"Ten Year U.S. Treasury Rate" for a quarterly period shall mean the
arithmetic average of the weekly per annum Ten Year Average Yields published by
the Federal Reserve Board during such quarter. In the event that the Federal
Reserve Board does not publish a weekly per annum Ten Year Average Yield during
any week in a quarter, then the Ten Year U.S. Treasury Rate for such week shall
be the weekly per annum Ten Year Average Yields published by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the Corporation
for such week. In the event that the Corporation determines in good faith that
for any reason the Corporation cannot determine the Ten Year U.S. Treasury Rate
for any quarter as provided above, then the Ten Year U.S. Treasury Rate for such
quarter shall be the arithmetic average of the per annum average yields to
maturity based upon the daily closing bids during such quarter for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than securities which can, at the option of the holder, be
surrendered at face value in payment of any federal estate tax) with a final
maturity date not less than eight nor more than 12 years from the date of each
such quotation, as chosen and for each business day (or less frequently if daily
quotations shall not be generally available) in each such quarterly period in
New York City to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
"Trading Day" shall mean any day on which the securities in question are
traded on the AMEX, or if such securities are not listed or admitted for trading
on the AMEX, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted on such Nasdaq National Market, in the applicable
securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in subsection (d) of Section
7.
"Transfer Agent" means Boston Equiserve, L.P., Boston, Massachusetts or
such other agent or agents of the Corporation as may be designated by the Board
of Directors or its designee as the transfer agent for the Series C Preferred
Stock.
"Triggering Event" means any one or more of the following events (whatever
the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body): (i)
the failure of the Common Stock to be listed on AMEX, the New
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York Stock Exchange or the Nasdaq National Market System for a period of three
(3) consecutive Trading Days; (ii) any Common Stock issued upon conversion of
Series C Preferred Stock, as a distribution in respect thereof, or upon
redemption thereof is not, at the time certificates representing such shares are
delivered, listed on each national securities exchange or quotation system upon
which the Common Stock is then listed; (iii) the Corporation shall fail for any
reason to deliver certificates representing shares of Common Stock required to
be issued in lieu of cash dividends on any Distribution Payment Date within the
ten (10) days immediately following such Distribution Payment Date; or (iv) the
occurrence of any Change of Control Transaction where the aggregate
consideration per share of Common Stock, valued (if all or any portion of the
consideration is in the form of securities rather than cash) at the average
closing price for such securities as reported by the principal stock exchange or
over-the-counter trading market where such securities are listed for a period of
twenty (20) Trading Days immediately following the Change of Control
Transaction, in connection therewith is less than 110% of the Conversion Price
as in effect on the date thereof.
"25% Threshold" means ownership by Benefit Plan Investors, in the
aggregate, of 25% or more of the value of any class of equity interest in the
Corporation (calculated by excluding the value of any interest held by any
person, other than a Benefit Plan Investor, who has discretionary authority or
control with respect to the assets of the Corporation or any person who provides
investment advice to the Corporation for a fee (direct or indirect) with respect
to such assets, or any affiliate of such person).
"Underlying Shares" means, collectively, the shares of Common Stock into
which any shares of Series C Preferred Stock are convertible and the shares of
Common Stock issuable upon payment of distributions thereon in accordance with
the terms hereof.
Section 2. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series C 10.5% Cumulative Convertible
Preferred Stock" and the number of shares constituting such series shall be
1,200,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors, subject to the terms of Section 7; provided, however,
that no decrease shall reduce the number of shares of Series C Preferred Stock
to less than the number of shares then issued and outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
Section 3. Ranking. In respect of rights to receive distributions and to
participate in distributions or payments in the event of any liquidation,
dissolution or winding up of the Corporation, the Series C Preferred Stock shall
rank pari passu with any other shares of preferred stock of the Corporation that
the Board of Directors of the Corporation shall designate as ranking pari passu
(the "Parity Shares"), and will rank senior to the Common Stock, the Series A
Junior Participating Preferred Stock and any other class or series of shares of
the Corporation that the Board of Directors has not designated as ranking senior
to or pari passu with the Series C Preferred Stock (collectively, the "Junior
Shares").
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Section 4. Dividends and Distributions.
Subject to the prior and superior rights of the holders of any shares of
any series of Preferred Stock ranking prior and superior to the Series C
Preferred Stock with respect to dividends, the holders of the then outstanding
shares of Series C Preferred Stock shall be entitled to receive, when, as and if
authorized and declared by the Board of Directors out of any funds legally
available therefor cumulative dividends in an amount per share equal to the
greater of (1) $0.65625 per quarter (equal to a rate of 10.5% of the $25.00
liquidation preference (the "Liquidation Preference") per annum) or (2) the
Dividend Ratchet Amount. If for any reason the Corporation elects not to pay
cash dividends on any quarterly Distribution Payment Date, the Corporation shall
pay such dividends by issuing on such Distribution Payment Date, as a stock
dividend on the then outstanding shares of Series C Preferred Stock, the number
of shares of Common Stock equal to 100% of the cash dividend accumulated on such
Distribution Payment Date, divided by the average closing sales price of the
Common Stock as reported by the principal stock exchange or over-the-counter
trading market where the Common Stock is listed for the twenty (20) Trading Days
prior to the Business Day that immediately precedes the Distribution Payment
Date. Quarterly dividends on the Series C Preferred Stock are payable as
authorized by the Board of Directors, or if not authorized, on the fourth
Tuesday of January, April, July and October of each year, commencing on or about
January 25, 2000 (each such day being hereinafter called a "Distribution Payment
Date" and each calendar quarter immediately preceding a Distribution Payment
Date being hereinafter called the "Distribution Period" corresponding to such
Distribution Payment Date), with respect to each Distribution Period, to
stockholders of record of the Series C Preferred Stock as they appear on the
stock transfer records of the Corporation at the close of business on the
dividend record dates authorized by the Board of Directors, or if none are
authorized, on the last Friday of December, March, June and September (each, a
"Record Date"). The amount of any distribution payable for the initial
Distribution Period and for any other Distribution Period greater or less than a
full calendar quarter shall be prorated and computed on the basis of a 360-day
year of twelve 30-day months. Distributions on each share of Series C Preferred
Stock shall accumulate from and including the date of October 1, 1999 thereof,
whether or not (1) distributions on such shares are earned or declared or (2) on
any Distribution Payment Date there shall be funds legally available for the
payment of distributions. Distributions paid on the Series C Preferred Stock in
an amount less than the total amount of such distributions at the time
accumulated and payable on such shares shall be allocated pro rata on a per
share basis among all such shares of Series C Preferred Stock at the time
outstanding. Distributions on account of any arrearage for any past Distribution
Periods may be declared and paid at any time, without reference to any regular
distribution, as may be fixed by the Board of Directors.
The amount of any distributions accumulated on any shares of Series C Preferred
Stock at any Distribution Payment Date shall be the amount of any unpaid
distributions accumulated thereon through and during such Distribution Period,
to and including such Distribution Payment Date, whether or not earned or
declared, and the amount of distributions accumulated on any shares of Series C
Preferred Stock at any date other than a Distribution Payment Date shall be
equal to the sum of the amount of any unpaid distributions accumulated thereon,
to and including the last preceding Distribution Payment Date, whether or not
earned or declared. Accumulated but unpaid distributions will not bear interest
and the holders of the Series C Preferred Stock will not be entitled to any
distributions in excess of full cumulative distributions as described herein.
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If any shares of Series C Preferred Stock are outstanding, no full distributions
shall be declared or paid or set apart for payment on any other class or series
of Parity Shares or Junior Shares for any period unless full cumulative
distributions on the Series C Preferred Stock have been declared and paid or
declared and a sum sufficient for the payment thereof has been set apart for
payment on the Series C Preferred Stock for all past distribution periods and
the then current distribution period. If distributions are not paid in full, or
not declared in full and a sum sufficient for such full payment is not set apart
for payment thereof, upon the Series C Preferred Stock and any class or series
of Parity Shares, no distributions may be paid on Junior Shares and all
distributions declared upon Series C Preferred Stock and upon any other class or
series of Parity Shares shall be paid or declared pro rata so that in all cases
the amount of distributions paid or declared per share on the Series C Preferred
Stock and Parity Shares shall bear to each other the same ratio that accumulated
distributions per share, including distributions accumulated or in arrears, if
any, on the Series C Preferred Stock and Parity Shares bear to each other.
Except as provided in the preceding sentence, unless full cumulative
distributions on the Series C Preferred Stock have been paid or declared and a
sum sufficient for such full payment set apart for payment for all past
distribution periods and the then current distribution period, no distributions
(other than distributions in shares of Common Stock or in any other Junior
Shares) shall be declared or paid or set apart for payment or other distribution
upon the Corporation's Common Stock, or, except as provided above, on any other
Junior Shares or Parity Shares, nor shall any Common Stock or any other Junior
Shares or Parity Shares be redeemed, purchased or otherwise acquired for any
consideration (or any payment made to or available for a sinking fund for the
redemption of any such shares) by the Corporation or any subsidiary of the
Corporation (except in connection with a redemption or purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan, a conversion into or exchange for Junior Shares or redemptions for
the purpose of preserving the Corporation's qualification as a REIT). Any
distribution payment made on the Series C Preferred Stock shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such shares which remains payable. Holders of the Series C Preferred
Stock shall not be entitled to any distributions, whether payable in cash,
property or shares, in excess of full accumulated distributions as herein
provided. No interest or sum of money in lieu of interest shall be payable in
respect of any distribution payment or payments on the Series C Preferred Stock
that may be in arrears.
If any shares of Series C Preferred Stock are outstanding, the Corporation shall
not declare or pay or set apart for payment any cash dividend in respect of any
Junior Shares during any Distribution Payment Period unless full cumulative
distributions on the Series C Preferred Stock are paid in the same form (i.e.,
cash, Common Stock or any combination thereof) for such Distribution Payment
Period.
Except as provided in these Articles Supplementary, the Series C Preferred Stock
shall not be entitled to participate in the earnings or assets of the
Corporation.
Section 5. Redemption.
(a) Subject to subsection (c) of this Section 5, the Shares will be
redeemable at the Redemption Price by the Corporation at any time
between the second anniversary of the date of the first issuance of
Series C Preferred Stock and the fifth anniversary of the date of the
first issuance of Series C Preferred Stock, if the
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closing sales price of the Common Stock as reported by the principal
stock exchange or over-the-counter trading market where the Common
Stock is listed averages in excess of 150% of the Conversion Price for
a period of at least 20 consecutive Trading Days ending within 30 days
prior to the notice of redemption, payable at the Corporation's option
in Common Stock or cash, as set forth in subsection (c) of this
Section 5.
(b) The Shares are redeemable at any time at the Redemption Price the
Board of Directors deems it necessary to maintain the Corporation's
status as a REIT or to prevent the Corporation's assets from being
deemed "plan assets" under the Plan Asset Regulation, pursuant to
Section 9, payable at the Corporation's option in Common Stock or
cash, as set forth in subsection (c) of this Section 5.
(c) On and after the fifth anniversary of the date of the first issuance
of Series C Preferred Stock and upon giving of notice as provided
below, the Series C Preferred Stock may be redeemed at the option of
the Corporation, in whole or from time to time in part, at the
Redemption Price, payable at the Corporation's option in (1) Common
Stock, equal in number to the Redemption Price divided by the average
of the closing sales price of the Common Stock as reported by the
principal stock exchange or over-the-counter trading market for the
twenty (20) Trading Days prior to the Business Day that immediately
precedes the date fixed for redemption, or (2) cash; provided,
however, that the Corporation may redeem shares of Series C Preferred
Stock pursuant to subsection (1) of this subsection (c) only if the
closing sales price of the Common Stock as reported by the principal
stock exchange or over-the-counter trading market for the twenty (20)
Trading Days prior to the Business Day that immediately precedes the
date fixed for redemption, exceeds the Conversion Price in effect on
the Business Day that immediately precedes the date fixed for
redemption . Fractional shares will not be issued upon redemption of
the Series C Preferred Stock, but, in lieu thereof, the Corporation
will pay a cash adjustment based on the average of the closing prices
of the Common Stock on the twenty (20) Trading Days prior to the
business day immediately preceding the date fixed for redemption.
(d) Upon the occurrence of a Triggering Event, each Series C Holder shall
(in addition to all other rights it may have hereunder or under
applicable law), have the right, exercisable at the sole option of
such Series C Holder, to require the Corporation to redeem all or a
portion of the Series C Preferred Stock then held by such Series C
Holder for an amount in cash equal to the Redemption Price for each
share of Series C Preferred Stock then held by such Series C Holder.
For purposes of this Section, a share of Series C Preferred Stock is
outstanding until such date as the Series C Holder shall have received
Underlying Shares upon a conversion (or attempted conversion) thereof.
(e) If fewer than all of the outstanding shares of Series C Preferred
Stock is to be redeemed, the shares to be redeemed will be determined
pro rata or by lot or in such other manner as prescribed by the Board
of Directors in its sole discretion. In the event that such redemption
is to be by lot, if as a result of such redemption any
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holder of Series C Preferred Stock would own shares in excess of the
Ownership Limitation, because such holder's shares of Series C
Preferred Stock were not redeemed, or were only redeemed in part,
then, except in certain instances, the Corporation will redeem the
requisite number of shares of Series C Preferred Stock of such holder
such that he will not own shares in excess of the Ownership Limitation
subsequent to such redemption. A new certificate shall be issued
representing any unredeemed Series C Preferred Stock without cost to
the holder thereof.
(f) At any time prior to such time, if ever, as the Series C Preferred
Stock qualifies as a "publicly offered security" under the Plan Asset
Regulation, or qualifies for another exception from the "look-through"
rule (i.e., the provisions of paragraph (a)(2) of the Plan Asset
Regulation), if the Corporation determines that, as a result of
transfers, conversions or otherwise, Benefit Plan Investors own 25% or
more of the aggregate number of outstanding shares of Series C
Preferred Stock (excluding for this purpose any shares held by persons
exercising investment management authority over the assets of the
Corporation or providing investment advice for a fee with respect to
such assets and any affiliates of such persons), the Corporation will
have the right to cause any number of Series C Preferred Stock that
are held by Benefit Plan Investors to be redeemed so that following
such redemption Benefit Plan Investors own less than 25% of the
outstanding Series C Preferred Stock (but in no event may such
redemptions reduce Benefit Plan Investor ownership to less than 20% of
the Series C Preferred Stock) (excluding for this purpose any shares
held by persons exercising investment management authority over the
assets of the Corporation or providing investment advice for a fee
with respect to such assets and any affiliates of such persons). Any
such redemption will follow the redemption procedures set forth
herein, except that the Redemption Date may be fewer than 30 days
after the first notice of redemption to the extent necessary to
prevent the Corporation's assets from being deemed Plan Assets and the
Redemption Price shall be the Fair Market Value of such Series C
Preferred Stock. If fewer than all the outstanding shares of Series C
Preferred Stock that are held by Benefit Plan Investors are to be
redeemed, the number of Series C Preferred Stock to be redeemed will
be determined by the Board of Directors and such shares will be
redeemed on a pro-rata basis from the holders of such shares that are
Benefit Plan Investors in proportion to the number of Series C
Preferred Stock held by such holders or by any other method as may be
determined by the Board of Directors in its sole discretion.
(g) Notice of any redemption will be given (1) if greater than fifty (50)
holders own the Series C Preferred Stock, by publication in a
newspaper of general circulation in the City of New York, such
publication to be made once a week for two successive weeks commencing
not less than 30 nor more than 60 days prior to the date fixed for
redemption; or (2) if fifty (50) or fewer holders own the Series C
Preferred Stock, by mailing of a similar notice by the Corporation,
postage prepaid, not less than 30 nor more than 60 days prior to the
redemption date, addressed to the respective holders of record of the
Series C Preferred Stock to be redeemed at their respective addresses
as they appear on the stock transfer records
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of the Corporation and the Company shall issue a press release related to
the redemption at the time of the mailing. The notice provided shall state
the Corporation's election to redeem such shares, stating (1) the date
fixed for redemption thereof (the "Series C Preferred Stock Redemption
Date"), (2) the Redemption Price, (3) the number of shares to be redeemed
(and, if fewer than all the shares of Series C Preferred Stock are to be
redeemed, the number of shares to be redeemed from such holder), (4) the
place(s) where the Series C Preferred Stock certificates are to be
surrendered for payment, (5) that distributions on the Series C Preferred
Stock will cease to accumulate on the specified redemption date, (6) the
date on which such holder's conversion rights as to the Series C Preferred
Stock shall terminate and (7) whether the Redemption Price will be paid in
cash or shares of Common Stock.
(h) On or after the Series C Preferred Stock Redemption Date, or in
connection with a redemption under Section 5(d), each holder of Series
C Preferred Stock to be redeemed must present and surrender his Series
C Preferred Stock certificate(s) to the Corporation at the place
designated in such notice, and thereupon the Redemption Price of such
shares will be paid to or on the order of the person whose name
appears on such Series C Preferred Stock certificate(s) as the owner
thereof and each such Series C Preferred Stock certificate(s)
surrendered will be cancelled. From and after the Series C Preferred
Stock Redemption Date (unless the Corporation defaults in payment of
the redemption price, or such other time as such certificates are
delivered (in the case of a redemption under Section 5(d)), all
distributions on the Series C Preferred Stock designated for
redemption will cease to accumulate and all rights of the holders
thereof (including conversion rights), except the right to receive the
redemption price thereof (including all accumulated and unpaid
distributions up to the Series C Preferred Stock Redemption Date),
will cease and terminate, and such shares will not thereafter be
transferred (except with the consent of the Corporation) in the stock
transfer records of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. At its election,
the Corporation, prior to the Series C Preferred Stock Redemption
Date, may irrevocably deposit the Redemption Price of the Series C
Preferred Stock so called for redemption in trust for the holders
thereof with a bank or trust company, in which case such notice to
holders of the Series C Preferred Stock to be redeemed will (1) state
the date of such deposit, (2) specify the office of such bank or trust
company as the place of payment of the Redemption Price and (3) call
upon such holders to surrender the Series C Preferred Stock
certificates representing such shares at such place on or about the
date fixed in such redemption notice (which may not be later than the
Series C Preferred Stock Redemption Date) against payment of the
Redemption Price. Any monies so deposited which remain unclaimed by
the holders of the Series C Preferred Stock at the end of two years
after the Series C Preferred Stock Redemption Date will be returned by
such bank or trust company to the Corporation.
(i) Notwithstanding the foregoing, unless full cumulative distributions on
all outstanding Series C Preferred Stock for all past Distribution
Periods and the then
11
current Distribution Period have been paid, or declared and a sum
sufficient for the payment thereof set apart for payment, (1) no
Series C Preferred Stock shall be redeemed under subsections (a), (b)
or (c) of Section 5 unless all outstanding shares of Series C
Preferred Stock are simultaneously redeemed; provided, however, that
the foregoing shall not prevent the purchase or acquisition of Series
C Preferred Stock (A) pursuant to subsection (f) of Section 5 and
Section 9 or (B) pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding Series C Preferred Stock, and
(2) the Corporation shall not purchase or otherwise acquire directly
or indirectly any Series C Preferred Stock (except by conversion into
or exchange for shares of the Corporation ranking junior to the Series
C Preferred Stock as to distribution rights and liquidation
preference).
(j) The holders of Series C Preferred Stock at the close of business on a
Record Date will be entitled to receive the distribution payable with
respect to such Series C Preferred Stock on the corresponding
Distribution Payment Date notwithstanding the redemption thereof
between such Record Date and the corresponding Distribution Payment
Date or the Corporation's default in the payment of the distribution
due. Except as provided above, the Corporation will make no payment or
allowance for unpaid distributions, whether or not in arrears, on
Series C Preferred Stock which have been called for redemption.
(k) The Corporation covenants that any Common Stock issued upon redemption
of the Series C Preferred Stock shall be validly issued, fully paid
and nonassessable. The Corporation shall use its reasonable best
efforts to list the Common Stock required to be delivered upon
redemption of the Series C Preferred Stock, prior to such delivery,
upon each national securities exchange, if any, upon which the shares
of outstanding Common Stock are listed at the time of such delivery.
(l) The Series C Preferred Stock has no stated maturity date and is not
subject to any sinking fund or mandatory redemption provisions, except
as provided in subsection (d) of Section 5.
Section 6. Liquidation Preference.
(a) Upon the voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the holders of the Series C Preferred Stock
then outstanding shall be entitled to receive and to be paid out of
the assets of the Corporation legally available for distribution to
its stockholders, before any payment or distribution shall be made on
any Junior Shares, the amount of $25.00 per share of Series C
Preferred Stock, plus accumulated and unpaid distributions (whether or
not earned or declared) thereon.
(b) After the payment to the holders of the Series C Preferred Stock of
the full preferential amounts provided for in this Section 6, the
holders of the Series C Preferred Stock as such shall have no right or
claim to any of the remaining assets of the Corporation.
12
(c) If, upon any voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the preference amounts payable with
respect to the Series C Preferred Stock and any Parity Shares are not
paid in full, no payment will be made to any holder of Junior Shares
and the holders of the Series C Preferred Stock and of such Parity
Shares will share ratably in any such distribution of assets of the
Corporation in proportion to the full respective preferential amounts
provided for in this Section 6 to which they are entitled.
(d) None of (1) the sale or transfer of all or substantially all the
property or business of the Corporation; (2) a statutory share
exchange by the Corporation; or (3) the merger or consolidation of the
Corporation into or with any other entity or the merger or
consolidation of any other entity into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 6.
(e) In determining whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other acquisition
of shares of the Corporation or otherwise, is permitted under Maryland
law, amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders of Series C Preferred Stock will
not be added to the Corporation's total liabilities.
Section 7. Voting Rights.
Except as provided below, the holders of the Series C Preferred Stock shall
not be entitled to vote at any meeting of the stockholders for any purpose or
otherwise to participate in any action taken by the Corporation or the
stockholders thereof, or to receive notice of any meeting of stockholders.
(a) In any matter in which the holders of Series C Preferred Stock are
entitled to vote (as expressly provided herein), including any action
by written consent, each share of Series C Preferred Stock shall be
entitled to one vote.
(b) As long as any Series C Preferred Stock remains outstanding, in
addition to any other vote or consent required by law or the Charter,
the Corporation will not, without the affirmative vote or consent of
the holders of at least four-fifths of the shares of Series C
Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (such series voting separately as a
class), (1) authorize or create, or increase the authorized or issued
amount of any class or series of shares ranking prior or senior to the
Series C Preferred Stock with respect to the payment of distributions
or the distribution of assets upon liquidation, dissolution or winding
up, or reclassify any authorized shares of the Corporation into such
shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares;
(2) amend, alter or repeal the provisions of these Articles
Supplementary for the Series C Preferred Stock; or (3) amend, alter or
repeal the provisions of the Corporation's By-laws, or Charter in
connection with any merger or
13
consolidation, or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of
the Series C Preferred Stock (as determined by the Board of Directors
in good faith); provided, however, with respect to the occurrence of
any of the Events set forth in (3) above, so long as the Series C
Preferred Stock (or shares into which the Series C Preferred Stock
have been converted in any successor entity to the Corporation)
remains outstanding or, if the Corporation is not the surviving
entity, is converted into a security with substantially identical
rights, preferences, privileges and voting power, then the occurrence
of any such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting power of the
Series C Preferred Stock; and provided further that (x) any increase
in the amount of the authorized Preferred Stock or the designation or
issuance of any additional Series C Preferred Stock or Parity Shares,
or (y) any increase in the amount of authorized Series C Preferred
Stock or any other Preferred Stock, in each case ranking on a parity
with or junior to the Series C Preferred Stock with respect to payment
of distributions or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting
powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding Series C Preferred Stock shall have been redeemed
or called for redemption and sufficient Common Stock has been reserved to effect
such redemption or sufficient funds to effect such redemption shall have been
deposited in accordance with Section 5.
Section 8. Conversion.
Holders of Series C Preferred Stock shall have the right to convert all or
a portion of such shares into Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section 8,
a holder of Series C Preferred Stock shall have the right, at his
option, at any time to convert such shares into the number of fully
paid and nonassessable shares of Common Stock obtained by dividing the
aggregate Liquidation Preference of such shares by the Conversion
Price (as in effect at the time and on the date provided for in the
last paragraph of subsection (b) of this Section 8) by surrendering
such shares to be converted, such surrender to be made in the manner
provided in subsection (b) of this Section 8; provided, however, that
the right to convert shares called for redemption pursuant to Section
5 shall terminate at the close of business on the Series C Preferred
Stock Redemption Date fixed for such redemption, unless the
Corporation shall default in making payment of any amounts payable
upon such redemption under Section 5 hereof.
(b) In order to exercise the conversion right, the holder of Series C
Preferred Stock to be converted shall surrender the certificate
evidencing such shares, duly endorsed or assigned to the Corporation
or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to
14
convert such Series C Preferred Stock. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
shares of Series C Preferred Stock are registered, each share
surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized agent and an amount
sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have
been paid).
Holders of Series C Preferred Stock at the close of business on a
Record Date shall be entitled to receive the distribution payable on
such shares on the corresponding Distribution Payment Date
notwithstanding the conversion thereof following such Record Date and
prior to such Distribution Payment Date. However, Series C Preferred
Stock surrendered for conversion during the period between the close
of business on any Record Date and the opening of business on the
corresponding Distribution Payment Date (except shares converted after
the issuance of a notice of redemption with respect to a Series C
Preferred Stock Redemption Date during such period or coinciding with
such Distribution Payment Date, such Series C Preferred Stock being
entitled to such distribution on the Distribution Payment Date) must
be accompanied by payment of an amount equal to the distribution
payable on such shares on such Distribution Payment Date. A holder of
Series C Preferred Stock on a Record Date who (or whose transferee)
tenders any such shares for conversion into Common Stock on such
Distribution Payment Date will receive the distribution payable by the
Corporation on such Series C Preferred Stock on such date, and the
converting holder need not include payment of the amount of such
distribution upon surrender of Series C Preferred Stock for
conversion. The Corporation shall make further payment or allowance
for, and a converting holder shall be entitled to, unpaid
distributions in arrears (excluding the then-current quarter) on
converted shares and for distributions on the Common Stock issued upon
such conversion.
As promptly as practicable after the surrender of certificates for
Series C Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or on his written order,
a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such shares in accordance with
the provisions of this Section 8, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall
be settled as provided in subsection (c) of this Section 8. Each
conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for Series
C Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the distribution payable on
such shares) received by the Corporation as aforesaid, and the person
or persons in whose name or names any certificate or certificates for
Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented
thereby at such time on such date, and such conversion shall be at the
Conversion Price in effect at such time and on such date, unless the
stock transfer books of the Corporation shall be closed on that date,
in which event such person or persons shall be
15
deemed to have become such holder or holders of record at the opening
of business on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price
in effect on the date on which such certificates for Series C
Preferred Stock have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of Common Stock
shall be issued upon conversion of the Series C Preferred Stock.
Instead of any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the conversion of a share of
Series C Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of
Common Stock on the Trading Day immediately preceding the date of
conversion. If more than one share of Series C Preferred Stock shall
be surrendered for conversion at one time by the same holder, the
number of shares of full Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of
Series C Preferred Stock so surrendered.
(d) The Conversion Price or the securities into which the Series C
Preferred Stock is convertible shall be adjusted from time to time as
follows:
(1) if the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share
exchange, self tender offer for all or substantially all of the
Common Stock, sale of all or substantially all of the
Corporation's assets or recapitalization of the Common Stock
(each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which Common Stock
shall be converted into the right to receive shares, stock,
securities or other property (including cash or any combination
thereof), each share of Series C Preferred Stock which is not
converted into the right to receive shares, stock, securities or
other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares,
stock, securities and other property (including cash or any
combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of Common Stock into which
one share of Series C Preferred Stock was convertible immediately
prior to such Transaction, assuming such holder of Common Stock
(1) is not a Person with which the Corporation consolidated or
into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the
case may be (a "Constituent Person"), or an affiliate of a
Constituent Person and (2) failed to exercise his or her rights
of election, if any, as to the kind or amount of shares, stock,
securities and other property (including cash) receivable upon
consummation of such Transaction (each a "Non-Electing Share")
(provided that if the kind or amount of shares, stock, securities
and other property (including cash) receivable upon consummation
of such Transaction by each Non-Electing Share is not the same
for each Non-Electing Share, then the kind and amount of shares,
16
stock, securities and other property (including cash) receivable
upon consummation of such Transaction for each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share
by a plurality of the Non-Electing Shares). The Corporation shall
not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this subsection
(d), and it shall not consent or agree to the occurrence of any
Transaction until the Corporation has entered into an agreement
with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series C Preferred Stock, that
will require such successor or purchasing entity, as the case may
be, to make provision in its certificate or articles of
incorporation or other constituent documents to the end that the
provisions of this subsection (d) shall thereafter
correspondingly be made applicable as nearly as may reasonably
be, in relation to any shares of stock or other securities or
property thereafter deliverable upon conversion of the Series C
Preferred Stock. The provisions of this subsection (d) shall
similarly apply to successive Transactions.
(2) if the Corporation shall at any time or from time to time after
the initial issuance of the Series C Preferred Stock effect a
subdivision of the outstanding Common Stock, the Conversion Price
then in effect immediately before that subdivision shall be
proportionately decreased; conversely, if the Corporation shall
at any time or from time to time after the initial issuance of
the Series C Preferred Stock reduce the outstanding shares of
Common Stock by combination or otherwise, the Conversion Price
then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this subsection
(d)(2) shall become effective at the close of business on the
date the subdivision or combination becomes effective.
(3) if the Corporation at any time or from time to time after the
initial issuance of the Series C Preferred Stock shall make or
issue, or fix a record date for the determination of holders of
Common Stock or other securities entitled to receive, a dividend
or other distribution payable in additional shares of Common
Stock, then and in each such event the Conversion Price for the
Series C Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price for the Series C
Preferred Stock then in effect by a fraction:
(a) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such
record date; and
17
(b) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such
record date, plus the number of shares of Common Stock
issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed
and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Conversion
Price for the Series C Preferred Stock shall be recomputed
accordingly as of the close of business on such record date
and thereafter the Conversion Price for the Series C
Preferred Stock shall be adjusted pursuant to this
subsection (d)(3)(b) as of the time of actual payment of
such dividends or distributions.
(4) if the Corporation at any time or from time to time after the
initial issuance of the Series C Preferred Stock shall make or
issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Corporation other than
shares of Common Stock or securities of any other entity
(including a subsidiary of the Corporation) or other property
(other than cash distributions), then and in each such event
provision shall be made so that the holders of Series C Preferred
Stock shall receive upon conversion thereof in addition to the
number of shares of Common Stock receivable thereupon, the amount
of securities of the Corporation or such other entity or other
property (other than cash distributions) that they would have
received had their Series C Preferred Stock been converted into
Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the
conversion date, retained such securities receivable by them as
aforesaid during such period giving application to all
adjustments called for during such period under this Section 8
with respect to the rights of the holders of the Series C
Preferred Stock.
(5) If the Common Stock issuable upon the conversion of the Series C
Preferred Stock shall be changed into the same or a different
number of shares of any class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 8), then and in
each such event the holder of each share of Series C Preferred
Stock shall have the right thereafter to convert such share into
the kind and amounts of shares of stock and other securities and
property receivable upon such reorganization, reclassification or
other change, by holders of the number of shares of Common Stock
into which such shares of Series C Preferred Stock might have
been converted immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as
provided herein.
18
(6) (a) If and whenever on or after the original date of issuance of
shares of Series C Preferred Stock the Corporation issues or
sells, or in accordance with subparagraph (b) of this subsection
(d)(7) is deemed to have issued or sold, any Junior Shares for a
consideration per share less than the Conversion Price in effect
immediately prior to the time of such issuance or sale, then
forthwith upon such issuance or sale the Conversion Price will be
reduced to an amount determined by dividing (i) the sum of (A)
the product derived by multiplying the Conversion Price in effect
immediately prior to such issuance or sale by the number of
shares of Common Stock outstanding or deemed to be outstanding
immediately prior to such issuance or sale, plus (B) the
consideration, if any, received by the Corporation upon such
issuance or sale, by (ii) the number of shares of Common Stock
outstanding or deemed to be outstanding immediately after such
issuance or sale.
(b) For purposes of determining the adjusted Conversion Price under
subparagraph (a) of this subsection (d)(6), the following will be
applicable:
(i) If the Corporation in any manner grants any rights or
options to subscribe for or to purchase Junior Shares or any
stock or other securities convertible into or exchangeable
for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities") and
the price per share for which Common Stock is issuable upon
the exercise of such Options or upon conversion or exchange
of such Convertible Securities is less than the Conversion
Price in effect immediately prior to the time of the
granting of such Options, then the total maximum number of
Junior Shares issuable upon the exercise of such Options or
upon conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise of
such Options will be deemed to be outstanding and to have
been issued and sold by the Corporation for such price per
share. For purposes of this subparagraph (b), the "price per
share for which Junior Shares are issuable" will be
determined by dividing (A) the total amount, if any,
received or receivable by the Corporation as consideration
for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the
Corporation upon exercise of all such Options, plus in the
case of such Options which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if
any, payable to the
19
Corporation upon the issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (B)
the total maximum number of Junior Shares issuable upon the
exercise of Options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise
of such Options. No further adjustment of the Conversion
Price will be made when Convertible Securities are actually
issued upon the exercise of such options or when Junior
Stock is actually issued upon the exercise of such Options
or the conversion or exchange of such Convertible
Securities.
(ii) If the Corporation in any manner issues or sells any
Convertible Securities and the price per share for which
Junior Shares are issuable upon such conversion or exchange
is less than the Conversion Price in effect immediately
prior to the time of such issue or sale, then the maximum
number of Junior Shares issuable upon conversion or exchange
of such Convertible Securities will be deemed to be
outstanding and to have been issued and sold by the
Corporation for such price per share. For the purposes of
this paragraph, the "price per share for which Junior Shares
are issuable" will be determined by dividing (A) the total
amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (B) the total maximum
number of Junior Shares issuable upon the conversion or
exchange of all such Convertible Securities. No further
adjustment of the Conversion Price will be made when Junior
Shares are actually issued upon the conversion or exchange
of such Convertible Securities, and if any such issuance or
sale of such Convertible Securities is made upon exercise of
any Options for which adjustments of the Conversion Price
had been or are to be made pursuant to other provisions of
this Section 8, no further adjustment of the Conversion
Price will be made by reason of such issue or sale.
(iii) If the purchase price provided for in any Options, the
additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible
into or exchangeable for Junior Shares change at any time,
the Conversion Price in effect at the time of such change
will be readjusted to the Conversion Price which would
20
have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially
granted, issued or sold; provided that if such adjustment
would result in an increase of the Conversion Price then in
effect, such adjustment will not be effective until 30 days
after written notice thereof has been given by the
Corporation to all holders of shares of Series C Preferred
Stock.
(iv) Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Security
without the exercise of any such Option or right, the
Conversion Price then in effect hereunder will be adjusted
to the Conversion Price which would have been in effect at
the time of such expiration or termination had such Option
or Convertible Security, to the extent outstanding
immediately prior to such expiration or termination, never
been issued.
(v) If any Junior Shares, Option or Convertible Security is
issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor will be deemed to
be the net amount received by the Corporation therefor. In
case any Junior Shares, Options or Convertible Securities
are issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the
Corporation will be the fair value of such consideration,
except where such consideration consists of securities, in
which case the amount of consideration received by the
Corporation will be the Current Market Price thereof as of
the date of receipt. If any Junior Share, Option or
Convertible Security is issued in connection with any merger
in which the Corporation is the surviving corporation, the
amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of
the non-surviving corporation as is attributable to such
Junior Shares, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than
cash and securities will be determined in good faith by the
Board of Directors of the Corporation.
(vi) In case any Option is issued in connection with the issue or
sale of other securities of the Corporation, together
comprising one integrated transaction in which no specific
21
consideration is allocated to such Option by the parties
thereto, the Option will be deemed to have been issued
without consideration.
(vii) The number of Junior Shares outstanding at any given time
does not include shares owned or held by or for the account
of the Corporation or any subsidiary, and the disposition of
any shares so owned or held will be considered an issuance
or sale of Junior Shares.
(viii) If the Corporation takes a record of the holders of Junior
Shares (or any class thereof) for the purpose of entitling
them (A) to receive a dividend or other distribution payable
in Junior Shares, Options or in Convertible Securities or
(B) to subscribe for or purchase Junior Shares, Options or
Convertible Securities, then for purposes of this Section 8
such record date will be deemed to be the date of the
issuance or sale of the shares of Junior Stock deemed to
have been issued or sold upon the declaration of such
dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or
purchase, as the case may be.
(ix) Anything herein to the contrary notwithstanding, no
adjustment will be made to the Conversion Price by reason of
(A) the issuance of securities of the Corporation upon
conversion of shares of Series C Preferred Stock, and (B)
the issuance of any shares of the Corporation's capital
stock to employees and directors of the Corporation pursuant
to options and warrants granted to such employees and
directors upon the approval of the Board of Directors of the
Corporation, (C) the issuance of any shares of the
Corporation's capital stock pursuant to any employee plan,
and (D) any issuances pursuant to any of the Corporation's
dividend reinvestment plans.
(7) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any
adjustments that by reason of this subsection (d)(7) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made in
accordance with the provisions of this Section 8 (other than this
subsection (d)(7)) not later than such time as may be required in
order to preserve the tax-free nature of a distribution to the
holders of Common Stock. Notwithstanding any other provisions of
this subsection (d), the Corporation shall not be required to
make any adjustment to the
22
Conversion Price for the issuance of any shares of Common Stock
pursuant to any plan providing for the reinvestment of
distributions or interest payable on securities of the
Corporation and the investment of additional optional amounts in
shares of Common Stock under such plan. All calculations under
this Section 8 shall be made to the nearest cent (with $.005
being rounded upward) or to the nearest one-tenth of a share
(with .05 of a share being rounded upward),as the case may be.
(e) If:
(1) there shall be any reclassifications of the Common Stock or any
consolidation or merger to which the Corporation is a party and
for which approval of any stockholders of the Corporation is
required, or a statutory share exchange involving the conversion
or exchange of Common Stock into securities or other property, or
a self tender offer by the Corporation for all or substantially
all of its outstanding Common Stock, or the sale or transfer of
all or substantially all of the assets of the Corporation as an
entity and for which approval of any stockholder of the
Corporation is required; or
(2) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent
and shall cause to be mailed to the holders of the Series C Preferred
Stock at their addresses as shown on the stock transfer records of the
Corporation, as promptly as possible, but at least 15 days prior to
the applicable date hereinafter specified, a notice stating the date
on which such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or
winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings
described in this Section 8.
(f) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's
certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment absent manifest error. Promptly after
delivery of such certificate, the Corporation shall prepare a notice
of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the effective date on which such adjustment
becomes effective and shall mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series C
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Preferred Stock at such holder's last address as shown on the share
records of the Corporation.
(g) There shall be no adjustment of the Conversion Price in case of the
issuance of any shares of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set
forth in this Section 8. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one
subsection of this Section 8, only one adjustment shall be made, and
such adjustment shall be the amount of adjustment that has the highest
absolute value.
(h) If the Corporation shall take any action affecting the Common Stock,
other than an action described in this Section 8, that would
materially and adversely affect the conversion rights of the holders
of the Series C Preferred Stock, the Conversion Price for the Series C
Preferred Stock may be reduced, to the extent permitted by law, in
such manner, and at such time, as the Board of Directors, in its
reasonable discretion, based in part upon advice of independent
financial and legal advisors, may determine in good faith to be
equitable in the circumstances.
(i) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock, for the purpose of effecting
conversion of the Series C Preferred Stock, the full number of shares
of Common Stock deliverable upon the conversion of all outstanding
Series C Preferred Stock not theretofore converted. For purposes of
this subsection (i), the number of shares of Common Stock that shall
be deliverable upon the conversion of all outstanding Series C
Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder.
(j) The Corporation covenants that any Common Stock issued upon conversion
or redemption of, or as a distribution in respect of, the Series C
Preferred Stock shall be validly issued, fully paid and nonassessable.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value of the Common Stock
deliverable upon conversion of the Series C Preferred Stock, the
Corporation will take any action that, in the opinion of its counsel,
may be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable Common Stock at such adjusted
Conversion Price.
(k) The Corporation shall use its reasonable best efforts to list the
Common Stock required to be delivered upon conversion of, and any
Common Stock issued upon redemption or as a distribution in respect
of, the Series C Preferred Stock, prior to such delivery, upon each
national securities exchange, if any, upon which the outstanding
Common Stock are listed at the time of such delivery.
(l) The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon conversion or redemption of, or as
a distribution in respect of, shares of Series C Preferred Stock are
freely tradable and not subject to
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any resale restrictions under the Act, or any applicable state
securities or blue sky laws (other than any shares of Common Stock
which are held by an "affiliate" (as defined in Rule 144 under the
Act).
(m) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Common Stock or other securities or property on conversion of the
Series C Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issue or delivery of Common
Stock or other securities or property in a name other than that of the
holder of the Series C Preferred Stock to be converted, and no such
issue or delivery shall be made unless and until the person requesting
such issue or delivery has paid to the Corporation the amount of any
such tax or has established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
(n) In addition to the foregoing adjustments, the Corporation shall be
entitled to make such reductions in the Conversion Price, in addition
to those required herein, as it in its discretion considers to be
advisable in order that any share distributions, subdivisions of
shares, reclassification or combination of shares, distribution of
rights, options, warrants to purchase shares or securities, or a
distribution of other assets (other than cash distributions) will not
be taxable or, if that is not possible, to diminish any income taxes
that are otherwise payable because of such event .
(o) In no event shall a Series C Holder be permitted to convert shares of
Series C Preferred Stock to the extent such conversion would result in
such Series C Holder beneficially owning (as determined in accordance
with Section 13(d) of the Exchange Act and the rules thereunder) more
than 4.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of Series C Preferred Stock
held by such Series C Holder after application of this paragraph. The
provisions of this paragraph may be waived by a Series C Holder (but
only as to itself) upon not less than 75 days' prior notice to the
Corporation, and the provisions of this paragraph shall continue to
apply until such 75th day (or later, if stated in the notice of
waiver). Each Series C Holder shall have the sole authority and
obligation to determine whether the restriction contained in this
Section applies, and each conversion by a Series C Holder shall be
deemed to be accompanied by the representation that such conversion is
in accordance with the provisions of this paragraph. No conversion in
violation of this paragraph but otherwise in accordance with the
Charter shall affect the status of the securities issued upon such
conversion as validly issued, fully paid and nonassessable.
Section 9. Ownership and Transfer Limitations.
(a) REIT-Related Restrictions. The Ownership and transfer of the Series C
Preferred Stock shall be restricted as provided in the Charter.
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(b) ERISA-Related Restrictions. No Benefit Plan Investor may acquire
Series C Preferred Stock without the Corporation's prior written
consent (which consent may be withheld in the Corporation's sole and
absolute discretion). Prior to the Series C Preferred Stock qualifying
as a "publicly-offered security" or the availability of another
exception to the "look-through" rule (i.e., the provisions of
paragraph (a)(2) of the Plan Asset Regulation), transfers of Series C
Preferred Stock to Benefit Plan Investors that would increase
aggregate Benefit Plan Investor ownership of the Series C Preferred
Stock above the 25% Threshold will be void ab initio. In addition, in
the event that the aggregate number of Series C Preferred Stock owned
by Benefit Plan Investors, but for the operation of this sentence,
would meet or exceed the 25% Threshold, (1) the Series C Preferred
Stock held by Benefit Plan Investors shall be deemed to be Shares-in-
Trust, pro-rata, to the extent necessary to reduce aggregate Benefit
Plan Investor ownership of the Series C Preferred Stock below the 25%
Threshold, and (2) such number of Series C Preferred Stock (rounded
up, in the case of each holder, to the nearest whole share) shall be
transferred automatically and by operation of law to the Trust (as
described in Article VII of the Charter) to be held in accordance with
this subsection (b) of Section 9 and otherwise in accordance with
Article VII, of the Charter and (3) the Benefit Plan Investors
previously owning such Shares-in-Trust shall submit such number of
Series C Preferred Stock for registration in the name of the Trust.
Such transfer to a Trust and the designation of Series C Preferred
Stock as Shares-in-Trust shall be effective as of the close of
business on the business day prior to the date of the event that
otherwise would have caused aggregate Benefit Plan Investor ownership
of Series C Preferred Stock to meet or exceed the 25% Threshold.
Prior to the discovery of the existence of the Trust, any transfer of
Series C Preferred Stock by a Benefit Plan Investor to a non-Benefit
Plan Investor shall reduce the number of Shares-in-Trust on a one-for-
one basis, and to that extent such shares shall cease to be designated
as Shares-in-Trust and shall be returned, effective at exactly the
time of the transfer to the non-Benefit Plan Investor, automatically
and without further action by the Corporation or the Benefit Plan
Investor, to all Benefit Plan Investors (or the transferee, if
applicable) pro rata in accordance with the Benefit Plan Investors'
prior holdings. After the discovery of the existence of the Trust,
but prior to the redemption of all discovered Shares-in-Trust and/or
the submission of all discovered Shares-in-Trust for registration in
the name of the Trust, any transfer of Series C Preferred Stock by a
Benefit Plan Investor to a non-Benefit Plan Investor shall reduce the
number of Shares-in-Trust on a one-for-one basis, and to that extent
such shares shall cease to be designated as Shares-in-Trust and shall
be returned, automatically without further action by the Corporation
or the Benefit Plan Investor, to the transferring Benefit Plan
Investor (or its transferee, if applicable).
In the event that any shares of Series C Preferred Stock are deemed
"Shares-in-Trust" pursuant to this subsection (b) of Section 9, the
holder shall cease to own any right or interest with respect to such
shares and the Corporation will have the right to redeem such Shares-
in-Trust for an amount equal to their
26
Fair Market Value, which proceeds shall be payable to the purported
owner. This subsection (b) of Section 9 shall cease to apply and all
Shares-in-Trust shall cease to be designated as Shares-in-Trust and
shall be returned, automatically and by operation of law, to their
purported owners, all of which shall occur at such time as the Series
C Preferred Stock qualify as a publicly offered security or if another
exception to the "look-through" rule under the Plan Asset Regulation
applies.
SECOND: The Shares have been reclassified by the Board of Directors
------
pursuant to Article VI of the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
-----
Directors in the manner and by the vote required by law.
FOURTH: The undersigned Secretary of the Corporation acknowledges these
------
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be signed in its name and on its behalf by its President and attested to by
its Secretary on this ____ day of February, 2000.
ATTEST:
/s/ Ronald Morrison By: /s/ William Ashmore (SEAL)
- ---------------------- -----------------------------
Ronald Morrison William Ashmore
Secretary President
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